Solicitors:
Gerard Malouf and Partners (Defendant)
File Number(s): 2020/337173
[2]
JUDGMENT
The plaintiff commenced proceedings against six defendants by a statement of claim filed on 27 November 2020. The action against the third, fourth and sixth defendants was dismissed by Schmidt AJ on 23 April 2021 (Martin v Malouf [2021] NSWSC 415).
A further amended statement of claim was filed by the plaintiff on 21 October 2021. On 13 April 2022 the first, second and fifth defendants filed a notice of motion seeking orders that the plaintiff's proceedings against them be permanently stayed. This notice of motion is the subject of these reasons.
For convenience I will refer to the applicants on the motion as the defendants and the respondent as the plaintiff.
The notice of motion is supported by the following affidavits:
1. Mr Gerard Malouf (the first defendant) sworn on 21 July 2022;
2. two affidavits by Mr Vrege Kolokossian (the second defendant) sworn on 31 May 2022 and 25 July 2022 respectively;
3. Mr Sasho Petrovski (the fifth defendant) affirmed on 3 June 2022;
4. Mr Michael Maxwell sworn on 22 July 2022;
5. Mr Philip Beale affirmed on 18 May 2022;
6. Mr Nassir Bechara sworn on 31 May 2022; and
7. two affidavits by Mr Keegan Behrens sworn on 3 December 2021 and 20 January 2022 respectively.
The plaintiff relies on the following affidavits:
1. three affidavits of the plaintiff, affirmed on 18 January 2022, 16 June 2022 and 1 August 2022 respectively;
2. Mr Stephen Field (the plaintiff's son) affirmed on 16 June 2022; and
3. Ms Belinda Ban (the plaintiff's daughter) affirmed on 14 June 2022.
The plaintiff's court books also contain a mass of assorted documents which became Exhibit B. An opening statement by the plaintiff was marked as Exhibit A.
In addition to the decision of Schmidt AJ there are also orders and directions made by Adamson J on 4 February 2022 (Martin v Malouf, (Supreme Court (NSW), Adamson J, 4 February 2022, unrep).
The saga began with an injury to the plaintiff in July 1996. She was working as a bookkeeper when, in the course of her employment, she lifted some boxes, resulting in a back injury. Her injury was serious enough to ultimately need surgery.
The suit in this court has been preceded by proceedings in the District Court and in the Compensation Court of New South Wales. In both of these venues the plaintiff was represented by Gerard Malouf and Partners Pty Ltd. The first defendant is a director of this company. The second and fifth defendants were, at the relevant times, employees of the company. The District Court proceedings were brought against Gow Gates Insurance Brokers Pty Ltd (where the plaintiff was working when she hurt her back) and against Julia Ross Personnel Pty Ltd (the plaintiff's employer). She sued the defendants in negligence alleging that, in breach of the duty of care to her as a worker, she had been required to lift "heavy" boxes.
It is clear from the two (unreported) judgments of Boyd-Boland ADCJ that the principal issue in the case was whether or not the boxes were heavy. His Honour found they were not, and consequently the plaintiff failed in her claims. Verdicts were entered for the defendants. The two judgments were handed down in February 2000 (following a hearing on 1, 2 and 3 February 2000).
Part of the allegations now made by the plaintiff, arising from the District Court proceedings, is that an offer made by the defendants (to those proceedings) in the sum of $250,000 inclusive of costs was never communicated to her by her solicitors. She states it is simply not true that she rejected the offer. Further, the plaintiff says that had she been told of the offer she would have accepted it.
The compensation proceedings were commenced by an Application for Determination filed on 12 December 2001. Julia Ross Personnel Pty Ltd was the only respondent. The application came on for hearing before Burke ADJC on 11 September 2003. The events of this day are at the core of the most serious current allegations against the defendants.
The defendants state that the application was resolved on 11 September 2003, by agreement between the parties, for a sum of $9,400. The assertion is consistent with the Compensation Court's file which includes a number of documents signed by the legal representatives and, in some instances, by the plaintiff herself. These include Short Minutes of Order, a Statement of Agreed Facts and a list of Applicant's Admissions.
The plaintiff however says that not only are her purported signatures not hers, but she was not even present on the day and did not know about the hearing. She says her signatures were forged and the whole settlement was a concoction and conspiracy created by the defendants (including the third, fourth and sixth defendants).
The basis for the permanent stay is that the defendants state it is impossible for them to have a fair trial, because:
1. the plaintiff possessed the "key documents" from October 2004 but then destroyed them between 2018 and November 2020. These documents included their file notes (for example about settlement offers and attendances at court) and advices from the barristers they had briefed;
2. the effluxion of time has so withered the memories of the defendants, and other persons (like the barristers), who were involved in the key events that they have little or no prospect of being able to recall the facts needed to rebuff the plaintiff's assertions. They are restricted to a reliance upon their "usual practice"; and
3. the incapacity to meet the plaintiff's claim has been "compounded by the death" of the senior counsel who acted for the plaintiff at her District Court hearing.
The power to order a permanent stay is provided by s 67 of the Civil Procedure Act 2005 (NSW). The principles to be applied were summarised by Bell P (as his Honour then was) in Moubarak bht Coorey v Holt [2019] NSWCA 102 at [71], and then re-stated by Michelmore JA in The Trustees of the Roman Catholic Church for the Diocese of Lismore v GLJ [2022] NSWCA 78 at [95]:
"(i) the onus lies "squarely" on the defendant;
(ii) a permanent stay should only be ordered in exceptional circumstances;
(iii) a permanent stay should be granted when the interests of the administration of justice so demand;
(iv) the categories of cases are not closed;
(v) one category of case where a permanent stay may be granted is where the proceedings or their continuance would be vexatious or oppressive;
(vi) the continuation of proceedings may be oppressive if that is their objective effect;
(vii) proceedings may be oppressive where their effect is seriously and unfairly burdensome, prejudicial or damaging;
(viii) proceedings may be stayed on a permanent basis where their continuation would be manifestly unfair to a party; and
(ix) proceedings may be stayed on a permanent basis where their continuation would bring the administration of justice into disrepute."
In both Moubarak and GLJ a permanent stay was granted on appeal. I note however that leave to appeal to the High Court was granted in GLJ on 22 November 2022. It is also worth noting that GLJ is a historic abuse case so that the effects of the Royal Commission into Institutional Responses to Child Sexual Abuse may play a part.
The following facts are said to be central to the current application:
1. the first defendant, Mr Malouf, has limited recollection of the District Court and compensation litigation. He did not attend the District Court hearing and he relied on counsel to discuss any settlement offer with a client;
2. the second defendant, Mr Kolokossian, also has little recollection and is only able to respond on the basis of his "usual practice";
3. Mr Kolokossian has examined a box of documents produced by the plaintiff and said to be the "complete file of Gerard Malouf and Partners". He says in his second affidavit, at [7]:
"There is nothing in boxes that represents any semblance of a GMP file that would assist. There are no file notes, records of telephone conversations with the plaintiff, advices from barristers, letters to the plaintiff and interoffice memos as to the matter, all of which I would expect to be on our file."
1. Mr Petrovski, the first defendant, says that he was not involved "in the day-to-day conduct of the Plaintiff's file" and he only attended the Compensation Court on 11 September 2003 at the request of Mr Kolokossian. He says "I have no independent recollection of this day and the events of 11 September 2003";
2. Mr Maxwell, the junior barrister who appeared for the plaintiff in the District Court matter, says that he too has no independent recollection of the case. He says it was his usual practice to tell a client about any settlement offer and to make a file note to this effect. The note would have been returned with the brief. He has no records;
3. Mr Beale, the barrister who appeared for the plaintiff at the Compensation Court hearing on 11 September 2003 also has no recollection, to the extent that even reading the transcript was of no assistance;
4. the plaintiff complained to the Legal Services Commissioner about Gerard Malouf and Partners not providing her file, it would seem in about 2004. The plaintiff also consulted a firm of solicitors called Kerrisons. The "bulk" of the workers compensation file was forwarded to these solicitors. The common law file seems to have been sent to the Commissioner;
5. a subpoena issued to Kerrisons produced no results; and
6. the plaintiff seems to have obtained seven boxes consisting of the files of Gerard Malouf and Partners in 2007, perhaps even in 2004. She discarded some of them leaving her with "a few manila folders, lever arch files with documents in them, but they don't relate".
Although not specifically relied upon by the defendants, I think another important element, and one relevant to my discretion, is that the proceedings have little apparent prospect of success. As seen in the reasons given by Schmidt AJ, there is a real argument that the plaintiff's action is time-barred, especially if she had the same complaints in 2003. Further some of the assertions made by the plaintiff, in particular the forging of her signature and the pretence of her presence on 11 September 2003, would suggest she faces a very uphill battle.
No evidence from a handwriting expert was included in the material for this motion, however I note that in the decision of Schmidt AJ, her Honour observed, at [23]:
"In evidence is the admissions document, on its face signed by Ms Martin on 11 September 2003, which was provided to the Compensation Court with other documents signed by her counsel and solicitor that day, when the orders were made. Ms Martin contends that her signature was forged, even though she had the document examined by a handwriting expert, who on her account, could not detect such a forgery."
The admissions document referred to by her Honour is the same document referred to above as the Applicant's Admissions.
It was also apparent during the cross-examination of the plaintiff that she, not surprisingly, suffers from memory lapses of detail over the last 20 years. Generally speaking the plaintiff maintained her position during cross-examination, in particular insisting that she had not destroyed any important documents, she had not attended the workers compensation hearing and the offer of settlement in the District Court had never been communicated to her. As already mentioned, she said she would have accepted the offer.
I found her assertion that the offer would have been accepted somewhat difficult to believe. In the present proceedings she seeks $17 million. In the proceedings against the third, fourth and sixth defendants she sought $48 million. She made the point that one of the items of negligence of the first defendant was not seeking the extended jurisdiction of the District Court. Further Mr Hall QC had valued the case at more than $1 million. I doubt very much that she would have been interested in $250,000 inclusive of costs.
The plaintiff also had a somewhat confused perception of the negotiating process, stating more than once that the District Court Judge had never been informed of the offer.
Although the plaintiff asserts she did not become aware of the compensation Court hearing until 2020, this is contradicted by the letter from the defendants in September 2003. This letter is significant because:
1. it specifically addresses the communication of an offer in the District Court proceedings and the resolution of the Compensation Court proceedings;
2. the complaints now being made by the plaintiff had been made by her in 2003 so that any suggestion that she discovered the failings of the solicitors some 16 or more years later must be treated with considerable scepticism; and
3. if the plaintiff was aware of her current assertions in 2003 she is likely to face significant limitation obstacles.
Besides the matters stated above, the plaintiff's evidence before me was not overly controversial, certainly not to the extent that I would make a finding that she was overtly dishonest. A finding of this type was called for by the defendants, in particular the plaintiff's evidence that she had not destroyed vital documents was not true and that her evidence to this effect should not be accepted.
I am not prepared to make a finding of deliberate destruction of the documents. Their presence in boxes in garages and on balconies over a number of years (including movement between addresses) is sufficient to at least raise the possibility that documents went missing.
The important point is that the documents are no longer available and certainly cannot be used by the defendants to resist the plaintiff's allegations. The plaintiff made the point that this circumstance lay at the feet of the defendants, pointing out that the Legal Services Commissioner had suggested to the defendants that the file could be copied. This is a good point but is counteracted somewhat by Mr Kolokossian writing to the Legal Services Commission on 30 September 2004 stating:
"In view of the urgency of the request we have not photocopied anything in terms of the common law file and trust that should we require anything from that file access will be made available to us in the future."
In relation to the date when the documents fell into the hands of the plaintiff, the evidence was somewhat conflicting, to an extent even bizarre. The plaintiff agreed that the defendants' files had been picked up by a friend, Mr Hecimovic, from the Legal Services Commission on 13 October 2004. However, there is also a facsimile from the plaintiff to the Legal Services Commission dated 13 January 2005, suggesting that the file had been sent the solicitors (Kerrisons) she was then consulting.
When questioned about the facsimile the plaintiff initially doubted its genuineness, but then later fell back on the possibility that it might have been sent by her daughter.
To add to the confusion about documents the plaintiff produced in court the originals of the documents. These are the settlement offer of $250,000 and a file note stating the workers compensation insurer had accepted liability respectively. She said these documents had appeared in a manila envelope on her doorstep about three years ago, seemingly with no indication of their source.
Returning to the fact of the absence of vital documents, it is apparent that the defendants will have to rely on their "usual practice" in order to meet the plaintiff's claims. Such reliance is not unusual when there has been a significant passage of time between events and can be useful in establishing facts. However, in this case the facts that need to be rebutted are specific and relate to serious allegations, effectively of fraud and highly unethical conduct.
In Elayoubi v Zipser [2008] NSWCA 335, at [86], Basten JA said this:
"In respect of the first contention, the challenge is unpersuasive because it relies upon a purported acceptance of "usual practice". Evidence of usual practice may be of assistance in circumstances where mechanical steps or routine tasks are in issue and the witness who supposedly undertook the task on a particular occasion has no recollection of the occasion. The weight to be given to such evidence will depend upon the possibility or likelihood of departure from such practice. However, the present case was not concerned with a mechanical step or routine task: it was concerned with a quite unusual procedure in professional practice. Nor was the task itself in any sense mechanical: rather, it involved conveying important medical information to a patient in a hospital ward."
In this case usual practice might well be called to establish, for example, that a solicitor takes notes at a conference. It is of much lesser weight in deciding if a person was present at all at a hearing. File notes of the hearing would no doubt be of significant assistance.
I am left then with these competing interests. The plaintiff alleges very serious misconduct on the part of the defendants. She has been waiting for compensation, in one form or another, for over 20 years and the fact that she has not received any compensation, if her allegations are correct, may be the fault of the defendants.
On the other hand, the defendants have no recollection of the vital facts and have no access to the documents that might assist their recollections. Other persons, like the barristers, also have no more to add than their usual practice.
If the defendants' files only became available to the plaintiff shortly before she commenced proceedings in 2020, the position may have been different. However, she has had the material probably since October 2004 (certainly since 2007) and while she may well have been stressed, as she asserts, every year that passed without her considering them was also a year in which the recollections of the defendants and their potential witnesses would have continued to fade. In one case, the potential witness, Mr Hall QC, died.
I think the facts of this case fall within the categories referred to in Moubarak and GLJ, in particular the continuation of proceedings would be oppressive upon the defendants and manifestly unfair to them. They would be required to meet very serious allegations, essentially on the basis of: "that's not the sort of thing I would normally do". While they do have some documents that would unquestionably help them (like the letter to the plaintiff from Mr Kolkossian referred to above) I think the absence of documents prepared either contemporaneously or very shortly after the crucial events (like file notes and barristers' advices of their appearances) will place an overwhelming burden on the defendants in defending the litigation.
I am therefore of the view that the proceedings should be permanently stayed.
I make the following orders:
1. The proceedings against the first, second and fifth defendants are permanently stayed.
2. The plaintiff is to pay the costs of the notice of motion filed by the first, second and fifth defendants on 13 April 2022.
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Decision last updated: 10 February 2023