Kearney v Amirbeaggi

Supreme Court of NSW|2019-08-21|Before: Ierace J

Solicitors: YPOL Lawyers (First and Second Defendant) File Number(s): 2019/96321

Judgment

HIS HONOUR: On 20 June 2019, the first and second defendants, Farshad Amirbeaggi and ACN 111 804 383 Pty Ltd trading as Yates Beaggi Lawyers, filed a notice of motion seeking orders that proceedings initiated by the plaintiff, Brian Kearney, by an amended statement of claim filed 17 April 2019, be dismissed pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), or alternatively, that the amended statement of claim be struck out pursuant to r 14.28 of the UCPR.

The amended statement of claim

The plaintiff alleged that, during the course of his retainer of the defendants, they breached certain obligations owed to him. He seeks recovery of loss and damages allegedly suffered by reason of those breaches.
The relevant history of the matter, as advanced by the plaintiff, is generally uncontested by the defendants for the purposes of this application. The plaintiff was a co-founder of Optimisation Australia Pty Limited ("Optimisation"), an online marketing company which was incorporated in October 2005. From then until 29 April 2013, the only directors of Optimisation were the plaintiff and his brother-in-law, Gary Williams. There were four shareholders, being the plaintiff, his sister Susan Williams and Gary Williams (together, "the Williams"), and Sharmark Pty Limited ("Sharmark"), which was the trustee of the Williams' family trusts. Accordingly, there were in effect three owners, with the plaintiff owning 35 per cent, Gary Williams 33 per cent and Susan Williams 32 per cent of the company. The plaintiff was also employed by Optimisation as a "road sales consultant".
Much of the history that is relevant to the plaintiff's claim and the defendants' application was canvassed by Brereton J (as his Honour then was) in In the matter of Optimisation Australia Pty Limited (2018) 362 ALR 374; [2018] NSWSC 31 ("the oppression judgment"). By early 2013, the relationship between the plaintiff and the Williams had broken down. They convened a meeting on 15 March 2013 to attempt to settle their differing views on their business arrangements. However, the following day, the Williams demanded an "exit strategy" from the plaintiff, saying that they no longer wished to be associated with him.
The plaintiff took advice from the first defendant. The plaintiff pleaded that on or about 22 March 2013, the first defendant assisted him in drafting an email to the Williams, seeking their agreement to the appointment of an independent valuer of Optimisation and to the preservation of the status quo pending negotiations following the valuation, with a view to a buyout solution.
On 24 March 2013, the plaintiff forwarded to the first defendant some emails that had been sent by Gary Williams to a solicitor, seeking advice in relation to a stated intention to remove the plaintiff as a director, terminate his employment and dilute his shareholding.
The first defendant responded by advising the plaintiff that early resolution of the dispute would be achieved by the appointment of an agreed independent valuer, if not by agreement, then by an "approach to the court".
The plaintiff retained the defendants to advise and represent him, signing a letter of engagement on 27 March 2013.
On the same date, the defendants wrote to the Williams, proposing that the status quo be preserved and seeking their agreement to the appointment of an independent valuer, with a view to the plaintiff either buying out the Williams' shareholding or so that the plaintiff could "acquire so much of the assets as he is entitled, and thereafter to operate his own concern, separate and distinct from [the Williams]". On 2 April 2013, the solicitor for the Williams wrote to the defendants, rejecting the proposal.
Later the same day, the plaintiff forwarded an email to the defendants that had been sent by Gary Williams to his solicitor after receipt of the defendants' letter, which indicated that the Williams maintained their intention to dismiss the plaintiff as a director and terminate his employment.
On 4 April 2013, the Williams called a shareholders' meeting for 29 April 2013 and gave notice of a proposed resolution to remove the plaintiff as a director and appoint Susan Williams as a director.
On 5 and 11 April 2013, the plaintiff instructed the defendants to commence court proceedings to prevent the passing of such a resolution. On 12 April, the defendants advised the plaintiff that they were preparing a summons and supporting affidavit with that objective. On 15 April 2013, the defendants wrote to the Williams' solicitor, stating that the plaintiff was left with little choice but to sue, pursuant to the oppression provisions in ss 232 and 233 of the Corporations Act 2001 (Cth).
On 17 April 2013, the Williams' solicitor replied to the defendants, noting they would not seek to pass a resolution removing the plaintiff as a director but would proceed with the appointment of Susan Williams to the board. The defendants advised the plaintiff of this communication and said that they still needed to approach the court. The defendants said that they had prepared a summons, were preparing an affidavit for the plaintiff and intended to brief counsel to settle the documents.
On 24 April 2013, the first defendant wrote to the Williams' solicitor, advising that the oppression action was to be initiated within a week and requesting the deferral of the shareholders' meeting until "further Order of the Court'". He also emailed the plaintiff, reporting that he had written to the Williams' solicitor pointing out that a change of resolution required fresh notice, so that "the Monday date has lost its heat". I note that 29 April 2013 was a Monday.
The shareholders' meeting was set for 9:30am on 29 April 2013. At 8:17am that morning, the first defendant emailed the plaintiff. According to the amended statement of claim, he advised that he: "… now wished for the directors meeting to proceed. His justification for this was 'Because it showed further oppressive conduct and disregard for the plaintiff's position.'"
The plaintiff pleaded: "In reliance on the defendant's advice, the plaintiff did not attend the shareholders meeting personally or by proxy or otherwise seek to be heard at it."
In a letter to the first defendant dated 30 April 2013, the Williams' solicitor wrote: "We refer to your letter dated 24 April 2013 which was only received at this office by email at 8.25am and by the writer at 12:42pm on 29 April 2013". He continued that the meeting took place at 9:00am and that a resolution was passed appointing Susan Williams as a director of the company.
On 29 April 2013, by a vote of majority shareholders, Susan Williams was voted in as a director of Optimisation. At 10:40am on that date, the plaintiff forwarded to the first defendant an email he received from Susan Williams giving notice of a directors' meeting on 30 April 2013 "to discuss HR and operational issues that need urgent attention". The plaintiff requested the first defendant's advice as to whether he should attend the meeting, but did not receive a response. The following day, by a directors' resolution at the meeting, the plaintiff's employment by Optimisation was terminated. On 7 May 2013, the Williams held a directors' meeting and passed a resolution to increase Susan Williams's salary from $100,000 to $150,000 per annum.
On 17 May 2013, the plaintiff filed an originating process in the Equity Division of this Court against the Williams, Optimisation, Shamark, and Orchard Office Services Pty Limited ("Orchard"), a company owned and controlled by the Williams. The originating process claimed relief by way of orders pursuant to ss 232 and 233 of the Corporations Act, for oppression in respect of the conduct of the affairs of Optimisation ("the oppression claim").
On 12 June 2013, the defendants forwarded to the Williams' solicitor an offer of settlement. The letter was in evidence. It proposed that: 1. an independent valuer, to be agreed between the parties, be engaged and jointly instructed on the scope of their work, to value the company "as at a date prior to [the plaintiff's] expulsion [from the company]"; 2. the valuer have unfettered access to the books and financial records of Optimisation and prepare an accounting reconciliation of financial benefits received by the parties "from inception of the business to date"; 3. the plaintiff would have first right of refusal to purchase the Williams' interest in the company, the price to be informed by the valuation and reconciliation; 4. irrespective of whether the plaintiff was the purchaser, he would receive payment of his remuneration "from the date of his purported termination … to the date of his reinstatement or alternatively execution of terms of settlement"; 5. if the plaintiff did not elect to purchase the Williams' interest in the company, then they would purchase the plaintiff's interest on the same basis; 6. the exiting party provide "appropriate restraints/non compete, and the parties otherwise provide mutual releases"; and 7. the Williams pay the plaintiff's "legal and associated costs in dealing with the contest/proceedings as agreed and in the absence of agreement as assessed".
By a letter dated 28 June 2013, the Williams' solicitor responded with a counter-offer, headed "without prejudice save as to costs". The closing paragraph of the letter, which was tendered in evidence, was as follows: "This offer is made in accordance with the principles of Calderbank v Calderbank [1975] 2 All ER 333 and is open until 5:00pm on Thursday 11 July 2013, after which date it will lapse. In the event that your clients do not accept this settlement offer and the matter proceeds to a final hearing, our client will tender a copy of this letter in support of an application for an indemnity costs order against your clients."
I note that the nature of a Calderbank offer was explained in Jones v Bradley (No 2) [2003] NSWCA 258 in a judgment of the Court, at [5], as follows: "'Calderbank offers' are well recognised means of making offers of settlement in circumstances where the party making the offer ultimately seeks a costs advantage if the offer is not accepted: see Calderbank v Calderbank (1975) 3 WLR 586. Such offers do not comply with the Rules of Court for making offers of compromise. Accordingly the Rules which govern costs in those circumstances do not apply and the matter remains one for the exercise of the Court's discretion."
The letter by the Williams' solicitor dated 28 June 2013 agreed that an independent valuer be engaged, and proposed a mechanism for selecting the valuer, namely, by the plaintiff from a list of three valuers nominated by the Williams.
Other aspects of the offer which, in my view, are relevant to this application were as follows: 1. The valuation was to be "as at the date of appointment of the valuer and not at a date prior to [the plaintiff] ceasing to be an employee of the company"; 2. The Williams, rather than the plaintiff, would have first right of refusal to buy out the other party's interest, at "a price to be informed by the valuation"; should they elect not to purchase the plaintiff's interest within a reasonable period of time, then the plaintiff may purchase the Williams' interest on the same valuation; 3. The purchasing party would acquire the other parties' rights, titles and interests in the business of the company on the transfer of the vendor's shares; 4. The vendor would release and discharge the purchaser from "this claim and any other claims that [the vendor] may seek to bring against [the purchaser] at any time regarding the affairs of the Company, whether as director, shareholder or employee of the Company"; 5. The deed of settlement and release would include a clause barring "any further proceedings" by the vendor; and 6. Each party to pay their own costs.
In the letter, the Williams rejected the proposition that there had been a disparity in financial benefits received by the parties since the company was established. They also rejected the suggestion that the termination of the plaintiff's employment was invalid and that he was entitled to remuneration as a consequence, and disagreed there should be a restraint/non-compete provision. A term of the offer was that the proposed deed of settlement and release would incorporate the Williams' position on these other issues.
The plaintiff pleaded that the defendants did not inform him of this offer and, in oral submissions, stated that he first became aware of it in 2018, after the hearing for the oppression claim had concluded.
On 25 June 2013, prior to the Williams forwarding their counter-offer, the defendants informed the Williams' solicitor that they rejected a proposal by them that proceedings should progress by way of a statement of claim.
On 1 July 2013, the first defendant attended a directions hearing in this Court and consented to four orders ("1 July 2013 consent orders"), which provided a timetable for the plaintiff to file and serve a statement of claim, the Williams to file their defence, the plaintiff to file and serve his evidence and for the matter to be listed for further directions on 2 September 2013. The Court noted an agreement that the defendants were to provide the plaintiff with access to "all of the books and financial records of [Optimisation] by 3 July 2013".
The plaintiff pleaded that he had not given instructions to consent to the orders and that they were contrary to the defendants' earlier advice provided to him.
The plaintiff pleaded that, consequent to the exercise of his right of access to the books and financial records of Optimisation, the first defendant became aware that, between 18 August 2013 and 4 September 2013, the Williams had altered the accounts of Optimisation to pay themselves annual leave backdated to 2006, excluding the plaintiff from those benefits.
On 23 September 2013, the defendants filed a notice of motion seeking five orders ("the September 2013 motion"). Proposed orders 1 and 2 sought the appointment of a named chartered accountant as inspector to Optimisation, who would have access to its books and financial records, so as to complete an inquiry into its financial affairs, and that the accountant undertake and complete an accounting of Optimisation and report on his findings. Proposed order 3 required the Williams to do all things necessary to facilitate the duties of the inspector, and proposed order 4 provided that the remuneration and costs of the inspector would be met by Optimisation. Proposed order 5 provided that, in the alternative to orders 1 to 4, pursuant to r 21.2 of the UCPR and s 290 of the Corporations Act, the Williams were to deliver to the plaintiff copies of "all books and financial records of [Optimisation] from the date of incorporation" within seven days, including certain specified documents.
The plaintiff pleaded that, without instruction or prior notice, the defendants, withdrew the application for proposed orders 1 to 4 by filed submissions. On the morning of the hearing of the notice of motion, which was on 4 November 2013, the first defendant recommended to the plaintiff by email that he only press order 5 of that motion. At the hearing of the motion, which was before Brereton J, an order was made that the parties' accountants confer in order to facilitate: "… the economic and convenient access on behalf of the plaintiff to the documents … and, to the extent of any remaining disagreement, report to the court the matters remaining in dispute and the reasons for the disagreement."
On 4 March 2014, the Court ordered that the September 2013 motion be dismissed and that the plaintiff pay the Williams' costs in the sum of $15,000: In the matter of Optimisation Australia Pty Limited [2014] NSWSC 275 ("the 2014 costs judgment"). The plaintiff filed his statement of claim the same day.
The plaintiff pleaded that, in October and November 2013, the terms of his retainer of the defendants were varied. On about 5 December, the second defendant terminated the retainer, contrary to the varied terms. The plaintiff pleaded: "6B In October and November 2013 the plaintiff and first defendant agreed to vary the retainer in terms that the second defendant would carry their fees (deferred payment) until such time the plaintiff was in a position to pay outstanding fees from proceeds from the sale of his shareholding in Optimisation Australia or from proceeds of an order by the court for a dividend payment. The variation of the retainer included that the plaintiff to pay any/all invoices issued by counsel. 7 On about 5 December 2013, the second defendant terminated its retainer for alleged non-payment of fees owed to it by the plaintiff."

The hearings

The substantive matter was heard on dates in March, May and June 2016 before Brereton J. The oppression judgment was handed down on 31 January 2018. The plaintiff's claim was described by Brereton J in these terms: "1 … [The plaintiff] claims relief for oppression in respect of the conduct of the affairs of Optimisation, pursuant to (CTH) Corporations Act 2001, ss 232 and 233, by way of a compulsory purchase order against [Gary Williams, Susan Williams] and/or Sharmark, at a price to be determined by the Court; and, by a statutory derivative action under Corporations Act, s 236, on behalf of Optimisation against [Gary Williams and Susan Williams] and the fifth defendant Orchard Office Services Pty Limited, a company owned and controlled by [Gary Williams and Susan Williams], compensation in respect of various alleged breaches of their duties as directors of Optimisation, which correspond with matters the subject of the oppression claim. These claims comprise the 'oppression and directors' duties issues'. 2 In addition, [the plaintiff] personally claims against Optimisation unpaid entitlements upon termination of his employment, including pay in lieu of notice, and accrued unpaid annual leave and personal (sick) leave. Optimisation has brought a cross-claim against [the plaintiff] which claims repayment of annual leave said to have been overpaid to him following his termination. Together, these are the 'employment entitlements' issues." (footnotes omitted)
Brereton J determined the matter in the plaintiff's favour in respect of his oppression claim pursuant to the Corporations Act. The plaintiff's "employment entitlement" claim was substantially dismissed, succeeding only on an additional month's notice of termination of employment, which was the sum of $8,333.33, plus interest. The cross-claim by Optimisation was dismissed. In a subsequent judgment concerning costs, his Honour made an order that the defendants pay 75 per cent of the plaintiff's costs of the proceedings, including the costs of the cross-claim: In the matter of Optimisation Australia Pty Ltd (Costs) [2018] NSWSC 280 ("the 2018 costs judgment").

The defendants' obligations

The plaintiff pleaded that the defendants' retainer was a contract with implied terms, relevantly: 1. that the defendants would perform their duties with reasonable skill and diligence; 2. that the defendants would carry out the plaintiff's instructions "by all proper means"; 3. that the defendants would keep the plaintiff informed of matters arising in the performance of the retainer and consult with him "on all questions of doubt which do not fall within the implied discretion given to the defendant"; and 4. that the defendants would advise him "of both legal and non legal alternatives and options to give effect to the retainer and the strategy of early resolution of the dispute".
The plaintiff pleaded that a term of the contract was that the defendants would not terminate the retainer for non-payment of legal fees and the second defendant would: "… carry its fees until the plaintiff received payment from the sale of his shares in Optimisation Australia or [a] court ordered shareholder loan as an advance of the plaintiff's eventual distribution from the company."
The plaintiff pleaded that the defendants had a fiduciary duty to him which entailed "a duty of care to take all responsible steps to avoid or minimise the materialisation of harm".
The plaintiff pleaded that the subject of the retainer was a "litigious matter" for the purposes of Div 3 of Pt 3.2 of the Legal Profession Act 2004 (NSW), which obliged the second defendant to provide to the plaintiff in writing, in clear plain language, before or as soon as practicable after the retainer, an estimate of costs. This entailed, pursuant to s 309 of that Act, the total amounts that the plaintiff may be charged or a range of estimates and an explanation of the major variables that would affect the calculation of those costs, an estimate of the range of costs that may be recovered if the plaintiff was successful and those that he might be ordered to pay if he was unsuccessful. In addition, pursuant to s 316 of that Act, the second defendant was obliged to disclose any substantial change to those estimates as soon as was reasonably practicable after the second defendant became aware of the change.

Failure to take steps to prevent the shareholders' meeting of 29 April 2013

The plaintiff pleaded that the emails obtained by the plaintiff and forwarded to the defendants, in which the Williams sought legal advice in respect of Optimisation, evidenced the Williams' intention to adopt a course that would be oppressive to the plaintiff, by removing him as a director and dismissing him as an employee of Optimisation. Although this would have been apparent to the defendants, contrary to the plaintiff's instructions, they failed to take steps to prevent that oppressive conduct, in particular, the shareholders' meeting of 29 April 2013.
The plaintiff pleaded that, but for the defendants' "negligence and breach of contract", the Williams would have responded to the court-ordered valuation and injunctive prohibition of the shareholders' and directors' meetings of 29 and 30 April 2013 by making an offer "along the lines of the 28 June 2013 Calderbank offer", which the plaintiff would have accepted, or a variation of it, or at least the issues in dispute would have been narrowed. The plaintiff pleaded that "the most likely outcome" of negotiations would have been a buyout by the defendants of the plaintiff's interest, although it was "a feasible option" that he would have bought out the Williams' interest in the company.

The plaintiff's loss and damage

The plaintiff alleged that the loss and damage occasioned by the defendants' breaches of their obligations falls into six categories, as follows: 1. The difference between the costs which would have been incurred had the defendants commenced legal action prior to the shareholders' meeting of 29 April 2013, and had the plaintiff known of the defendants' Calderbank offer, so that he could have acted on it, and the unrecovered costs that were paid by the plaintiff pursuant to the costs order, which was the sum of $529,960; 2. The interest incurred by the plaintiff from refinancing his mortgage "so as to fund payment of part of those legal costs"; 3. "Loss of the use of the balance of the costs paid, and of the purchase price of the shares which would otherwise have been received in 2013, which the plaintiff would otherwise have invested into the purchase of Sydney real estate to leave in and to develop by way of adding a granny flat for dual rental purposes and/or a two lot subdivision with construction of a rental premises in accordance with a schedule to be provide[d]"; 4. "Loss of income by virtue of the plaintiff's inability to engage in income-producing activities in addition to, [or] alternatively instead of, the property development referred to above during the time devoted by the plaintiff to the oppression action in accordance with a schedule to be provide[d]"; 5. "Distress and inconvenience occasioned by the stress of the protracted litigation, its unexpected costs, and the unexpected financial risks and uncertainty associated with it in accordance with a schedule to be provide[d]"; and 6. The order that the plaintiff pay the Williams' costs of the September 2013 motion, which was $15,000.
In relation to (1) above, the plaintiff noted that the defendants' agreed scope of work and costs disclosure estimates that were provided to the plaintiff by letter dated 25 March 2013 were as follows: 1. Review instructing materials and provide preliminary advice - estimated $2,000 to $3,000; 2. Engage in correspondence with a view to early resolution and provide brief to a valuer - estimated $2,000 to $3,000; 3. If necessary, initiate proceedings before the Court - estimate TBA, however "as an early signal provision for $30,000 to $40,000"; and 4. Services on a general retainer basis.
A scale of hourly rates was also included in the letter. The plaintiff pleaded that the defendants rendered invoices amounting to a total of $239,744.50, which was qualified in his written submissions to be an amount of over $190,000 for work allegedly carried out over the period March to December 2013.
On 17 April 2013, the defendants emailed the plaintiff, stating that an application to the Court to prevent the meeting of 29 April 2013 would incur costs and fees of about $15,000.
In relation to (5) above, the plaintiff pleaded that on 26 November 2014, he was admitted to Sutherland Hospital "by ambulance with serious mental health illness and breakdown". He was diagnosed with a major depressive and anxiety disorder, which he attributed to the stress of litigation and his financial situation.
The defendants' failures of their obligations, as pleaded by the plaintiff, are summarised by me as follows.

(1) Failure to disclose changes to the costs estimate and to pass on the Williams' Calderbank offer

The plaintiff alleged that the cost estimates provided by the second defendant did not comply with its obligations pursuant to the Legal Profession Act and, to the extent that an estimate was provided, they underestimated the costs for which the plaintiff was charged. The defendants failed to give written disclosure of substantial changes to the costs estimates as soon as was reasonably practicable after becoming aware that the estimate would be exceeded.
The failure of the defendants to inform the plaintiff of the Williams' Calderbank offer, and to properly inform him of his likely costs, deprived him of an opportunity to assess the value of the offer and determine whether he should accept it or make a counter-offer, or alternatively, agree with the Williams to significantly narrow the issues in dispute.

(2) Failure to obtain instructions for the 1 July 2013 consent orders

The plaintiff pleaded that the defendants' failure to obtain instructions prior to agreeing to the 1 July 2013 consent orders was a breach of "their duty of care, their instructions duties and the retainer". The plaintiff was not informed why the defendants had departed from their earlier advice as to how proceedings should be commenced. The plaintiff pleaded that the defendants' agreement to this course: "… materially and significantly increased the costs of litigation, delaying the proceedings and moving the parties f[u]rther [a]way from their mutual intention to dissolve the business relationship by agreement that there be a share buy out."
It was also pleaded that, although the 1 July 2013 consent orders required the plaintiff to file his statement of claim by 29 July 2013, the defendants failed to draft or file it prior to the termination of their retainer.

(3) Failure to obtain instructions for the withdrawal of orders sought in the September 2013 notice of motion

The plaintiff pleaded that the filing of the motion seeking orders that the Court had no power to make, and upon this realisation, failing to take appropriate remedial steps or to advise the plaintiff in a timely manner, was a breach of the retainer and of a duty of care owed to the plaintiff by the defendants, resulting in loss and damage.

(4) Failure to seek an order for the appointment of an independent valuer

The plaintiff alleged that, in the course of the retainer, the defendants failed to enable and/or seek an order for the appointment of an independent valuer with a view to an early resolution of the matter, "pursuant to the express, inferred and implied terms of the retainer". The defendants failed to file a summons seeking injunctive relief on or before 29 April 2013 for orders for the appointment of an independent valuer to value Optimisation as a necessary step for informal resolution as between the parties and for final orders under s 233 of the Corporations Act, or at any subsequent time prior to the termination of the retainer, including as an interlocutory order in the originating process filed on 17 May 2013, in negotiation of the 1 July 2013 consent orders, or in the notice of motion filed on 23 September 2013.

(5) Breach of the varied terms of the retainer

The plaintiff pleaded that the defendants' failures were contrary to express and implied terms of the retainer and to the defendants' obligations pursuant to Div 3 of Pt 3.2 of the Legal Profession Act, in particular, that the defendants' advice concerning anticipated costs, and "costs risk" of litigation, was in breach of the duties of care and cost advice duties ("the costs advice breaches").
The plaintiff pleaded that as a consequence of the breach of contract, he engaged in protracted litigation, incurring unnecessary costs of engaging a new law firm and suffered adverse effects to his mental health.

Generally: the plaintiff's loss and damage

The defendants noted that, at the time the second defendant's retainer was terminated, the oppression proceedings were at an early stage; they did not go to trial until mid-2016. The plaintiff retained two subsequent sets of lawyers and then represented himself.
The common conclusion that the plaintiff seeks to draw from the various alleged breaches of duties by the defendants is that, if they had not occurred, the Williams predictably would have negotiated a settlement that would have been satisfactory to the plaintiff, either prior to or in the early stages of the oppression proceedings, thus entirely avoiding the loss and damage that he now seeks to recover. The defendants submit that there is no evidence that allows a reasonable inference to be drawn to that effect. To the contrary, the findings of Brereton J in respect of the Williams' oppressive behaviour in March and April 2013 in particular, does not indicate any inclination to settle the matter on their part. In that sense, the plaintiff's amended statement of claim is an attempt to re-litigate facts that have already been determined as issues that were central to Brereton J's determination of the oppression and costs proceedings, which would therefore constitute an abuse of process of this Court: Rippon v Chilcotin Pty Limited (2001) 53 NSWLR 198; [2001] NSWCA 142.
The defendants submitted that the plaintiff's claim for the 25 per cent of his party/party costs that were lost in the 2018 costs judgment is also an attempt to re-litigate that matter and is thus an abuse of process on the same basis. In any event, the order that the Williams pay 75 per cent of the plaintiff's costs reflected his relatively unsuccessful employment entitlements claim.
In relation to the plaintiff's claim that he was deprived of the use of his share of the value of Optimisation, which he would have used in alternative income-producing activities, the defendants submitted that the plaintiff had the benefit of interest on his share of the value of Optimisation as of April 2013, adjusted by his receipt of dividend payments as a shareholder of Optimisation over that period.
At the hearing of the motion, the defendants referred for the first time to cost recovery proceedings in the Local Court that had been initiated by the defendants against the plaintiff and tendered a bundle of documents pertaining to them, that was unopposed on the basis that their only relevance was on the basis of res judicata, should the plaintiff's claim venture into issues covered in those proceedings. In subsequent written submissions, the plaintiff contended that this was an attempt by the plaintiffs to raise a further ground of "solicitors advocate immunity" to their notice of motion. In their written response, the defendants eschewed such a claim but maintained that the proceedings are relevant, because: "… they provide a further basis for this claim to be struck out as an abuse of process because there has already been litigation between Mr Kearney and his former solicitors (the defendants) and which has been the subject of judicial order."
However, other than tendering a judgment in this Court for costs, and the pleadings for the subsequent proceedings for recovery of the costs in the Local Court, the defendants made no submissions as to how, and to what extent, the plaintiff's claim traverses the costs judgment in this Court, and the Local Court cost recovery proceedings.
In their further written submissions, the defendants contended that the pleading by the plaintiff that the terms of the retainer had been orally varied, so that the defendants would carry their fees until the litigation was concluded, was "self-evidently hopeless" and "the material facts pleaded do not support the existence of a valid contract varying the terms of the retainer between Mr Kearney and the second defendant".
I have summarised the defendants' submissions in respect of the failures of obligations that are alleged against them by the plaintiff according to the same sub-headings, although there is some overlap in the responses.

(1) Failure to take steps to prevent the shareholders' meeting of 29 April 2013

In their written submissions, the defendants, inaccurately in my view, characterised this ground as a failure to "threaten the oppression proceedings earlier", submitting that they had in fact threatened proceedings before the April 2013 shareholders' and directors' meetings (the plaintiff had not pleaded otherwise in his amended statement of claim).
More relevantly, the defendants submitted that it is apparent from the oppressive conduct of the Williams at that time, as determined by Brereton J in the oppression judgment, that if they had sought an injunction preventing oppressive conduct by the plaintiff's partners before the shareholders' meeting on 29 April 2013, the dispute would not have resolved without litigation and the plaintiff would have lost the central platform of his successful action on the basis of oppression. This is because the shareholders' and directors' meetings of 29 and 30 April 2013 were the basis of the plaintiff's claim against the Williams in the oppression proceedings and was found to be oppressive by Brereton J.

(2) Failure to disclose changes to the costs estimate and to pass on the Williams' Calderbank offer

The defendants accepted that the motion must be determined on the presumption that the plaintiff was not informed of the Calderbank offer at the time that it was made, and that the defendants did not reply to the Williams in relation to the offer. They submitted that the plaintiff's claim of breach of the defendants' "statutory costs duties" to him, which was pleaded in the amended statement of claim, was only relied upon by the plaintiff as being relevant to his alleged lost opportunity to assess the Williams' Calderbank offer if he had known of it. The plaintiff pleaded: "22A But for the breaches of Statutory costs duties the plaintiff lost the opportunity to assess the value of the 28 June 201[3] calderbank offer from the Williamses and whether he should make a counter offer and on what terms to bring about an early resolution of the dispute (in accordance with the objectives of the retainer)."
The defendants submitted that the plaintiff's claim that, had he been informed of the Williams' Calderbank offer at the time it was made, the matter would have settled, is unsustainable. The defendants noted that the offer proposed an independent valuer be engaged and their report be accepted, but was silent as to what mechanisms of valuation would be applied by the valuer, and the methodology for valuation was a disputed issue in the oppression hearing, as noted.
In addition, the benefits obtained by the plaintiff from the oppression judgment would need to be brought into account in assessing any loss attributable to the proceedings not having settled at an earlier time.

(3) Failure to obtain instructions for the 1 July 2013 consent orders

The defendants submitted that there was no need for the defendants to take instructions for the directions hearing and in any event, the 1 July 2013 consent orders did not cause any loss, since they were: "… sensible, appropriate case management orders of the kind this Court makes daily in civil proceedings. They were necessary for the pursuit of the oppression claims."

(4) Failure to obtain instructions for the withdrawal of orders sought in the September 2013 notice of motion

As to the costs incurred by the plaintiff on the hearing on 4 March 2014, the defendants denied responsibility, noting that their retainer had been terminated by then and that in making the costs order against the plaintiff, Brereton J had determined that the plaintiff's further pursuit of the motion had been ill-advised.
In the 2014 costs judgment, Brereton J was, in general terms, approving of the steps taken by the parties to sensibly resolve issues of access to Optimisation's documentation until 25 November 2013, which included the 1 July consent orders and the 23 September notice of motion, the purpose of which his Honour described, at [27], as "in substance … to enforce the plaintiff's right of access and inspection of the corporate documents of [Optimisation]". His Honour noted there was a hearing on 4 November 2013 and a meeting that occurred on 21 November 2013 between an accountant retained by the plaintiff (Mr Koutzoumis) and a solicitor employed by the second defendant, which resolved outstanding issues concerning access to documents. His Honour noted that from that point on, there was no point in the plaintiff maintaining the notice of motion. His Honour said: "28 However, after 4 November, the position was quite different. By 25 November, Mr Koutzoumis had accepted that the Schedule A documents had been produced (except for the item (d) documents, which were produced shortly thereafter). His ongoing reservations, when one closely reads his January affidavit, are plainly concerned with matters that go beyond the scope of Schedule A. 29 An enormous amount of time, effort and no doubt cost has been devoted to continuing argument over the issue after 4 November, both in Mr Koutzoumis' affidavit and in the numerous responsive affidavits. The affidavits on both sides address many issues extraneous to an application for access to corporate documents. 30 It seems to me that after 4 November 2013, and at least after the outcome of the conference on 21 November, there was no occasion for the motion to remain on foot, and no occasion for the costs associated with it to be incurred."
Accordingly, the defendants submitted that the costs were attributable to the plaintiff's decision to not withdraw the notice of motion once he had access to the relevant documentation.

(5) Failure to seek interlocutory orders for the appointment of an independent valuer

The defendants submitted that there is no basis on which the plaintiff could reasonably contend that the Court would have granted such an order earlier than it did and that, had it done so, the result would have been an earlier settlement of the oppression proceedings or any settlement at all, let alone on the kinds of terms for which the plaintiff now wished to contend.
The defendants noted that a valuer could not have prepared a valuation until it had access to the relevant material, and that it is apparent from the 2014 costs judgment, in which Brereton J reviewed proceedings concerning the plaintiff's access to Optimisation's documentation, that all the relevant material was not produced or made available to the plaintiff until after 2 December 2013: see [16]-[24] of the 2014 costs judgment.
In the oppression judgment, Brereton J noted that the Court had appointed an accountant to enquire into and report on the valuation of Optimisation and the plaintiff's shareholding. The report was produced on 15 April 2015. Its methodology and findings were contested by the defendants, and thus it is apparent that an earlier appointment of an independent valuer would not necessarily have resolved the proceedings.

The plaintiff's filings and submissions on the defendants' motion

An affidavit sworn by the plaintiff and filed on 16 July 2019 was read at the hearing ("the July 2019 affidavit"). Annexed to the affidavit were copies of some of the pleadings and correspondence in the oppression hearing and in the plaintiff's action against the defendants. The plaintiff also filed written submissions in this matter on 16 August 2019 and, subsequently to the hearing of the motion, material annexed to an affidavit filed by him on 1 October 2019 and further written submissions. To the extent that this material adds to, or differs from, his pleadings in his amended statement of claim, I note the following, grouping it according to the same sub-headings as were used above in respect of the defendants' submissions, where there were further relevant submissions.

Generally: the plaintiff's loss and damage

The plaintiff stated that he had legal representation by multiple firms after the defendants withdrew, explaining that he had financial difficulties following the termination of his employment in April 2013 by the Williams. By August 2014, his financial standing was "catastrophic", and thereafter he was unable to afford continuing legal representation.
In response to the defendants' submission that the costs order made by Brereton J reflected the plaintiff's relatively unsuccessful employment entitlements claim, the plaintiff submitted in his written submissions that the reason he included that claim was because the defendants had failed to give him proper advice and take steps to protect his interests on those matters, even though they were aware of them from at least June 2013.
In his written submissions filed after the hearing, the plaintiff further developed this argument to link it to his complaint about the withdrawn September 2013 notice of motion, noting that an item that the first defendant had agreed to remove from the list of documents to be produced by the Williams was "documents detailing holiday pay paid to the plaintiff, [the Williams] for the period from inception to date".

(1) Failure to disclose changes to the costs estimate and to pass on the Williams' Calderbank offer

In oral submissions and in written submissions filed subsequent to the hearing of the motion, the plaintiff explained that he became aware of the Williams' Calderbank offer as a result of affidavit evidence filed by him and the Williams' solicitor, Ms Crowley, in preparation for the costs hearing. In response to affidavit evidence by the plaintiff that the Williams had not responded to an offer that he had instructed the defendants to make in June 2013, Ms Crowley stated that the Williams believed they had responded by a letter dated 27 June 2013, an unsigned copy of which she annexed to her affidavit as she was unable to locate a signed copy. The annexed copy, which was attached to a further affidavit of the plaintiff sworn on 1 October 2019, was in identical terms to the signed Calderbank offer letter dated 28 June 2013 that was subsequently produced by the defendants to the plaintiff.

(2) Failure to obtain instructions for the 1 July 2013 consent orders

The plaintiff submitted that his instructions had not been sought prior to the defendants consenting to the orders. Further, they did not file a statement of claim before the termination of the retainer six months later, yet rendered bills for substantial costs in that period.

(4) Failure to seek an order for the appointment of an independent valuer

The plaintiff submitted that the orders sought by the defendants in the originating process filed on 17 May 2013 were deficient, because they did not include an order for an independent valuation.

The relevant law

Rule 13.4 of the UCPR provides: "13.4 Frivolous and vexatious proceedings (1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings - (a) the proceedings are frivolous or vexatious, or (b) no reasonable cause of action is disclosed, or (c) the proceedings are an abuse of the process of the court, the court may order that the proceedings be dismissed generally or in relation to that claim. (2) The court may receive evidence on the hearing of an application for an order under subrule (1)."
In Shaw v New South Wales (2012) 219 IR 87; [2012] NSWCA 102, Barrett JA (Beazley, McColl, Macfarlan JJA and McClellan CJ at CL agreeing) formulated the test for summary dismissal as follows, at [32]: "The question is ... whether the claims in question are so obviously untenable or groundless that there is 'a high degree of certainty' that they will fail if allowed to go to trial; and whether this is one of the 'clearest of cases' in which the court may accordingly intervene to prevent the claims being litigated."
That assessment is to be made taking the plaintiff's case at its highest. The party applying for summary dismissal must accept the truth of all allegations in the statement of claim, and the ranges of meaning which the assertions of fact in the statement of claim are capable of bearing: see Simmons v New South Wales Trustee and Guardian [2014] NSWCA 405 per Gleeson JA (Beazley P and Barrett JA agreeing) at [200].
The dismissal of proceedings is not to be taken lightly. Barwick CJ stated in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69, at 130: "Great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his cause by the appointed tribunal."
Rule 14.28 of the UCPR provides as follows: "14.28 Circumstances in which court may strike out pleadings (1) The court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading: (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or (b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or (c) is otherwise an abuse of the process of the court."
As with summary dismissals, the power to strike out pleadings must be exercised cautiously, and it should only be done in plain and obvious cases.

Consideration

As noted earlier, the defendants relied upon authority to the effect that, in certain circumstances, it may be an abuse of process for a party to assert a fact that is inconsistent with a finding made in an earlier proceeding, even though they were not a party: see Tomlinson v Ramsey Food Processing Pty Limited (2015) 256 CLR 507; [2015] HCA 28 at [26]. Rippon v Chilcotin concerned an appeal from a decision to dismiss the appellant's motion for summary dismissal of an action for abuse of process. In 1991, the appellant sold a business to the respondents, and the purchasers sued the vendor in relation to the sale in an earlier action in this Court, pleading that the profits were not at a level that had been warranted in the contract of sale and that certain representations in a financial statement for the year 1991 provided by the vendor were misleading or deceptive, contrary to s 52 of the Trade Practices Act 1974 (Cth) (as it then was). In that earlier action, Brownie J found for the purchasers on the breach of contract ground but dismissed the other ground, finding that the purchasers had not relied on the figures in the 1991 financial statement. The purchasers sued the accountants who had prepared that financial statement for the vendor for negligent misrepresentation and the Court of Appeal (Handley JA, with Mason P and Heydon JA agreeing) found that the fresh action against the accountants was an abuse of process and allowed the appeal. His Honour stated: "17 The issue of reliance or causation was an essential constituent of the purchasers' cause of action for misleading and deceptive conduct: see Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525. The finding by Brownie J that the purchasers had not relied upon the vendor's representations in the 1991 figures in annexure D related to an ultimate fact, fundamental to the decision, which formed part of the right in issue. See Blair v Curran (1939) 62 CLR 464 at 532, per Dixon J. … 28 The present proceedings are an attempt to litigate or re-litigate issues which were either decided in or are barred by the earlier proceedings. In substance, ignoring the camouflage, the purchasers are attempting to re-litigate the issue of reliance on the 1991 figures which they lost. If they cannot succeed against anyone in respect of the 1991 figures because they did not rely on them, they could hardly succeed in establishing reliance on the earlier figures. … 36 There is no question here of oppression and unfairness because the accountants were not parties to the earlier action, but these proceedings do threaten the integrity of the administration of justice and raise the prospect of conflicting judgments."
The defendants submitted that, analogously, it would be an abuse of process for the plaintiff to re-litigate his claimed entitlement to all of his costs incurred in the oppression case, since Brereton J found in the 2018 costs judgment that he was not entitled to a quarter of them.
The essence of the plaintiff's case, as I understand it, is that although he was successful in the oppression claim, the litigation could have been either avoided altogether or narrowed in scope if the defendants had done any of the acts that their duties obliged them to do at certain points of the oppression proceedings.
These acts included applying for court orders preventing the shareholders' meeting of 29 April 2013, applying for the appointment of an independent valuer of Optimisation and informing the plaintiff of the Williams' Calderbank offer, any of which would likely have opened the door to successful negotiations between the parties. The defendants' submission in response is that it is apparent from Brereton J's findings as to the attitudes and behaviours of the Williams between March and September 2013 that the plaintiff would not have succeeded in negotiating an acceptable outcome.
The defendants' application to strike out was fashioned in the form of a response to five grounds purportedly advanced by the plaintiff. In considering the motion, it is convenient to apply the same structure. Ground one was titled "failure to threaten the oppression proceedings earlier". As I have already noted, in my view, this is a mischaracterisation of the plaintiff's pleading. The plaintiff acknowledged that the defendants had threatened oppression proceedings, but pleaded that they had not followed through, in particular, by seeking court orders preventing the shareholders' meeting of 29 April 2013 from proceeding.
The defendants conceded that they did not initiate such proceedings, but submitted that the plaintiff was ultimately so advantaged, rather than disadvantaged, by this change in tactics, that any claim of loss or damage based on it is untenable. I am satisfied that the plaintiff desired to avoid litigation as far as possible, from the outset and even more so when his employment was terminated on 30 April 2013. I am not satisfied that the plaintiff's pleading in this respect would inevitably fail, and accordingly I reject the defendants' submission in relation to the first ground.
The second ground concerned the Williams' Calderbank offer. For the purposes of the application, I assume that the plaintiff was not advised by the defendants of the Williams' Calderbank offer at the time it was made, or indeed, before the conclusion of the oppression hearing.
In the oppression judgment, Brereton J expressed a strong view that by the time of the shareholders' and directors' meetings of 29 and 30 April 2013, the Williams had no interest in agreeing to an independent review of Optimisation's financial affairs, a valuation or the plaintiff buying out the Williams' shares. His Honour said, referring to the Williams as "Gary and Susan" and the plaintiff as "Brian": "269 … In my view, Gary and Susan had no genuine interest in being bought out by Brian. Brian had asked for an indication of what they would be prepared to pay for his interest, and for a valuation so that he could make an offer for theirs; they frustrated any exit strategy, by denying both. Although Susan denies that the plan had become dismissing Brian as an employee and removing him as a director, there does not appear to have been any other. Discussions about a buyout, or a division of the company, evaporated. … 274 Gary and Susan demanded an exit strategy, but did not propose one. They made no offer to buy Brian out, nor did they make an offer to sell their interests to him. There were really four options: that Gary and Susan purchase Brian's interest; that Brian purchase Gary and Susan's interest; that the business of the company be divided; and that the company be wound up. Gary and Susan did nothing to advance any of them. They opposed having a valuation; their response to his request for a joint valuation was to commence action to remove him as an employee and director - although the latter aspect of the proposal ultimately did not proceed. They dissembled and rejected anything Brian raised or proposed, but did not themselves do anything to advance the development of an exit strategy, let alone propose one - beyond the removal of Brian as a director and employee."
The terms of Brereton J's finding in favour of the plaintiff in respect of his termination of employment suggest that the Calderbank offer, if known, may have been relevant. His Honour said, at [445]: "The affairs of Optimisation have been conducted in a manner oppressive of and/or unfairly prejudicial to Brian, and/or contrary to the interests of the members as a whole, in the following respects: … (4) the dismissal of Brian from employment, when he had a legitimate expectation of ongoing employment and participating in earnings on an equivalent basis with Gary and Susan, without giving him the opportunity to sell his interest in the company at a fair price. While this would be so, even if his position had become redundant, he was not in truth redundant, and the manner in which his dismissal was orchestrated exacerbates the oppressive nature and effect of the decision to dismiss him: Gary and Susan decided that they wanted to be rid of Brian but, while purporting to demand an 'exit strategy', effectively obstructed one by declining to make an offer to buy him out, and by refusing a valuation which would have enabled him to make an offer for their interests …"
However, Brereton J did not refer to the Williams' Calderbank offer letter, the contents of which are, at least on their surface, contrary to the behaviour that his Honour found. Neither party suggested that Brereton J was aware of the letter during the oppression proceedings, which of course, one would expect to be the case, since it was a "without prejudice" Calderbank offer.
The further evidence and submissions of the plaintiff also provide a convincing explanation as to why the plaintiff's Calderbank offer was not tendered in the 2018 costs proceedings. Although Ms Crowley referred to the letter in her affidavit, which I assume was tendered in the 2018 costs hearing, she also conceded that she could not establish that the letter had in fact been sent, and since the defendants had not responded to the letter, there was no evidence of the Williams' Calderbank offer ever having been made. I note that the copy advanced by the plaintiff, that was produced to him by the defendants, was signed. In their written submissions filed after the hearing, the defendants sought to argue that the letter had been before Brereton J in the 2018 costs hearing, in the form of Ms Crowley's affidavit. That submission is unsustainable. Clearly the reason that Brereton J did not refer to it was that the defendants could not rely upon it, since they could not establish that it had been sent.
It follows, in my view, that the defendants' reliance on Tomlinson v Ramsey Food Processing Pty Limited and Rippon v Chilcotin on this question is misplaced; the Calderbank offer letter was not in evidence before Brereton J, in coming to the findings that are relied upon in the oppression judgment and the 2018 costs judgment by the defendants, and those proceedings made no determinations as to whether the offer was likely to have been genuine or otherwise.
Assuming it was a genuine offer of settlement, its terms were significantly less favourable to the plaintiff than the outcome he secured in the oppression judgment. Although the Williams' Calderbank offer outlined a buy-out mechanism that in some respects was similar to that offered by the plaintiff on 12 June 2013, it proposed a significantly earlier date at which the company was to be valued, which would have been less favourable to the plaintiff. Brereton J found that the value of the company declined from the time that the plaintiff's employment ceased, thus favouring a time in April 2013 for the company's valuation. His Honour explained his reasoning as follows: "387 Another and to my mind decisive reason, which would suffice of itself, for selecting the April 2013 valuation date is that, consistent with the principles to which I have referred, to the effect that there was oppression in dismissing Brian without affording him a fair opportunity to sell his shareholding, there should have been a fair offer made to Brian at the time of his dismissal. A plaintiff should not be prejudiced by the oppressive act itself, namely the failure to make a timely fair offer … 388 While those observations related to the question of costs, their present relevance is to the timing of the offer. In the context that the defendants were pressing for an 'exit strategy', the time for them to make an offer was in, or very soon after, April 2013. Moreover, even in the absence of an offer by the defendants, the litigation may have been avoided had they permitted the valuation then sought by Brian. 389 Brian should not have to bear the consequences of a decline in the company's fortunes, after his exclusion, which would not have been visited on him had a fair offer been made when it ought to have been made, all the more so when Brian endeavoured to take steps to enable one to be made, but was frustrated by the defendants. The price to which Brian is entitled should not be affected by a decline in company's fortunes which took place after he was excluded without any offer, after the defendants had frustrated any attempt to develop an 'exit strategy' at the time, and while the company was under the management of the defendants - in particular of Susan whose capacity to be an effective manager was, to the knowledge of Gary and herself, compromised by her alcoholism. Accordingly, I adopt the April 2013 valuation date."
Although the plaintiff's allegation of oppression was the dominant issue between the parties, the matters that were in dispute before Brereton J, and which were determined in the plaintiff's favour, went well beyond a buy-out mechanism or the value of the company to its shareholders. His Honour determined, at [445], that the Williams had engaged in a range of conduct that was oppressive and/or unfairly prejudicial to the plaintiff, which also included salary and annual leave payments to Gary Williams and Susan Williams (in Susan Williams' case, $142,469.27), an overpayment to Orchard of $208,618.75, payments made by the company to the Williams' legal representatives in the oppression proceedings and a proposed back payment to Gary Williams which had no proper commercial purpose and was contrary to the interests of the company.
If the plaintiff had accepted the Williams' Calderbank offer when it was made, he would have been prevented by the terms of the deed of settlement and release from pursuing those claims, if and when he became aware of the payments. In my opinion, having regard to Brereton J's findings as to the manner in which the Williams conducted their case, it is inevitable that, if the plaintiff had sought to carve out those areas in negotiations with the Williams of a settlement following on from their Calderbank offer, the Williams would not have agreed.
I find that, although the Williams' Calderbank offer, in itself, fell short of what the plaintiff ultimately achieved in the oppression judgment, having regard to the relevant test, it cannot be concluded that the plaintiff's claim that the defendants failed to inform him of the offer did not deprive him of an opportunity to negotiate with the Williams and either avoid further litigation or confine the issues in dispute. In my view, whether the plaintiff suffered loss and damage as a consequence is not to be assessed by having regard to his ultimate success in the litigation. In mid-2013, he found himself suddenly unemployed and facing what could reasonably be described as astronomical invoices issued by the second defendant for the legal services of both defendants, as a result of the matter proceeding to litigation, rather than being resolved by negotiation. It is clearly relevant, for the purposes of this application, that the defendants did not pass on to the plaintiff the Williams' offer to settle, or respond to it.
The third ground was titled "the failure to seek the appointment of an independent valuer earlier". This aspect of the plaintiff's claim is partly fused with his contention that, contrary to instructions, the defendants did not take timely steps to prevent the meetings of 29 and 30 April 2013 and otherwise pursue a negotiated settlement. To that extent, I find that the defendants have not established that this part of the plaintiff's claim is incapable of success.
However, the plaintiff's claim that the originating process filed on 17 May 2013 was deficient for not including an order seeking the appointment of an independent valuer is misconceived. The orders sought were effectively for a buyout by one party of the other, "at a value to be determined". Implicit in those draft orders is the necessity for either an agreement as to, or a mechanism to determine, the value of the company's assets. In my opinion, a separate order to that effect was not required.
Again, it is appropriate to evaluate this ground in the context of the plaintiff's broader complaint that, in the nascent stages of the litigation, the defendants failed to lock in steps that would facilitate the means of an early resolution. It is apparent from the findings of Brereton J and an examination of the correspondence between and on behalf of the parties, that there was no prospect of that occurring before the Williams' Calderbank offer was forwarded, but whether it was possible if that offer had received a positive response is another matter.
The fourth ground was the seeking of timetabling directions, being the 1 July 2013 consent orders and directions for the September 2013 motion. I accept the defendants' contention that, considered discretely, the orders and directions were consistent with an efficient litigation process. However, the broader context of the plaintiff's pleading is that the acquiescence of the first defendant to the 1 July 2013 consent orders was contrary to his consistent earlier advice to the effect that a statement of claim was unnecessary and, in agreeing to those orders, he unnecessarily incurred significant additional costs on behalf of the plaintiff. For those reasons, the terms of the retainer and other duties owed by the defendants to the plaintiff, in my view, are not rendered incapable of success.
The plaintiff's submission that his unsuccessful employment entitlements claim was attributable to the defendants' failure to give proper advice and take action is not a matter that was pleaded in the amended statement of claim, and I disregard it for the purposes of the determination of the defendants' motion. If the plaintiff wishes to press this submission and connect it to the defendants' agreement to the directions made by Brereton J in September 2013, it will be necessary for him to seek leave to further amend his amended statement of claim.
The fifth ground was described as "the costs of the plaintiff's further pursuit of interlocutory relief after the second defendant ceased to act". Having regard to the 2014 costs judgment by Brereton J, I am satisfied that, pursuant to the requisite test, the plaintiff has no prospects of success on this basis.

Some other aspects of the plaintiff's claim

There are some aspects of the defendants' motion and the plaintiff's claim that do not fall neatly within the above-mentioned five grounds but are nevertheless relevant to the application. These are as follows.

Breach of the oral terms of the retainer

In relation to the defendants' claim that the plaintiff's pleading about the variation of the retainer had changed, I note that, prior to the notice of motion, the defendants had not sought further and better particulars of the plaintiff's claim. Accordingly, the terms of the alleged oral variation of the retainer are, at this stage, unknown, and in those circumstances, it would be premature to strike out that aspect of the amended statement of claim.

The Williams' receipt of the defendants' letter dated 24 April 2013

In relation to the first defendant's letter to the Williams' solicitor dated 24 April 2013, in a later passage in the oppression judgment than that relied upon by the defendants, his Honour said, at [283]: "On 24 April, Yates Beaggi sent a letter to [the Williams' solicitor], foreshadowing an application for oppression, and demanding that the notice of meeting be withdrawn." In a footnote to that sentence, his Honour stated: "In a response of 30 April, [the Williams' solicitor] maintained that that letter was not seen until after the meeting had taken place on the morning of 29 April." It is apparent from the footnote that his Honour was aware of the claims made in the Williams' solicitor's letter dated 30 April 2013, but nevertheless concluded that the defendants had sent the letter in question on 24 April 2013.
In my opinion, it would be an abuse of process for the plaintiff to maintain against the defendants that, contrary to Brereton J's finding, the claim by the Williams' solicitor should be accepted as the sole basis for inferring that the defendants' email dated 24 April 2013 had not been sent until 29 April 2013. The finding by Brereton J on that issue favoured the plaintiff's case in the oppression proceedings, and he now seeks to submit the contrary position, in order to succeed against the defendants. I note that this is a minor detail, in the context of the defendants' application.

Conclusion

The motion must fail in terms of both alternative orders that were sought. It is appropriate to caution that, in relation to the summary dismissal application, my conclusion is not an assessment of the strength of the plaintiff's case; rather, it is a determination that the plaintiff's pleadings in his amended statement of claim, taken at their highest, are not "so obviously untenable or groundless that there is 'a high degree of certainty' that they will fail if allowed to go to trial": see Shaw v New South Wales at [32].

The production of documents

As noted at the outset of my judgment, the matter was also listed before me by the Registrar for the purpose of resolving an issue with the production of documents by the second defendant. A consequence of my judgment is that the matter will proceed, although the plaintiff may wish to seek leave to further amend his amended statement of claim. In light of that development, it is appropriate that any further issue concerning the production of documents by the second defendant be referred back to the Registrar.

Costs

The plaintiff has been largely successful in opposing the defendants' application, and costs should follow that outcome. However, I note that the plaintiff was self-represented. It is not appropriate, in that circumstance, that there should be an order for costs in his favour, and I decline to make one.

Orders

Accordingly, I make the following orders: 1. The defendants' notice of motion filed on 20 June 2019 is dismissed. 2. No order as to costs. 3. Any remaining issues in respect of the production of documents by the second defendant to the plaintiff be referred to the Registrar's list on 17 August 2020 for directions.

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: 06 August 2020

Legal Profession Act 2004(NSW)

Trade Practices Act 1974(Cth)

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