Procedure - Costs - Security for costs - Plaintiff - Natural persons - Inherent power - Exceptional circumstances.

Judgment Number: [2004] TASSC 127

TIMOTHY G BUGG, M B BARTLETT, M F DALY, R A BROWN,

CHRISTOPHER A CUNNINGHAM, F Di GIOVANNI, N R READETT,

P A KIMBER, KASS A M PITT QC, PHILIP JACKSON, JAN MARTIN

MAX McMULLEN, J P UPCHER, K A M AGH, D F ZEEMAN (No 2)

1 The plaintiff has brought this action against the Law Society of Tasmania ("the Society") and 15 legal practitioners whom he alleges to be present or past members of its investigations committee. From his statement of claim, it appears to be his case that he complained about another legal practitioner to the Society in March 2000; that the Society and the other defendants did not properly discharge their duties under the Legal Profession Act 1993 in relation to his complaint; and that, as a result, he and his wife suffered mental distress and ill health, his earning capacity was affected, and he incurred certain costs in relation to a caveat and some legal proceedings. The statement of claim also contains allegations to the effect that the Society and the investigations committee defamed the plaintiff.

2 Under the Legal Profession Act, the Society, and any investigations committee established by it pursuant to s65 of that Act, have certain roles in relation to the investigation of complaints by members of the public concerning legal practitioners. However a breach by the Society or a member of an investigations committee of any statutory duty imposed by the Legal Profession Act does not give rise to a private cause of action for damages for breach of statutory duty, or negligence, for the reasons explained by Master Holt in Spaulding v Law Society of Tasmania [2004] TASSC 1. There could be some merit in the plaintiff's claim for damages for defamation, but none of his other claims has any hope of success because he is claiming damages in respect of matters which, if proved, would not entitle him to damages.

3 The defendants have filed an interlocutory application by which, following an amendment, they are now seeking the following orders:

"1A That the Plaintiff's statement of claim be struck out as failing to disclose a reasonable cause of action, or alternatively as frivolous or vexatious.

1 That the Plaintiff be ordered to give security for the costs of the Defendants in the amount of $20,000.00.

2 That the security be provided within twenty-eight (28) days.

3 That the action be stayed until such time as the security is paid.

4 That if the Plaintiff defaults in payment of the security that the Plaintiff's action be dismissed at the expiration of twenty-eight (28) days and the Defendants be at liberty to enter judgment against the plaintiff together with an order that the plaintiff pay the Defendants' costs of and incidental to the action to be taxed upon the filing of an affidavit by the Defendants' solicitors certifying that the security has not been paid.

5 That the Plaintiff pay the Defendants' taxed costs of and incidental to this Interlocutory Application."

4 The Court has the power to strike out a statement of claim both as a result of its inherent jurisdiction and pursuant to the Supreme Court Rules 2000, r259(a). The principles to be exercised upon an application for the striking out of a pleading containing a claim that has no hope of success were summarised by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 128 - 130 as follows:

"... the jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion. I have examined the case law on the subject, to some of which I was referred in argument and to which I append a list of references. There is no need for me to discuss in any detail the various decisions, some of which were given in cases in which the inherent jurisdiction of a court was invoked and others in cases in which counterpart rules to Order 26, r 18, were the suggested source of authority to deal summarily with the claim in question. It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; 'discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would involve useless expense'.

At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or 'so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument'; 'so to speak apparent at a glance'.

As I have said, some of these expressions occur in cases in which the inherent jurisdiction was invoked and others in cases founded on statutory rules of court but although the material available to the court in either type of case may be different the need for exceptional caution in exercising the power whether it be inherent or under statutory rules is the same. Dixon J (as he then was) sums up a number of authorities in Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 where he says (1949) 78 CLR, at p 91: 'A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.' Although I can agree with Latham CJ in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings (1949) 78 CLR, at p 84, in my opinion 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 case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed."

5 With the possible exception of the claim for damages for defamation, the plaintiff's claims have no hope of success, as I have said. It is therefore appropriate for those parts of the statement of claim that do not relate to defamation to be struck out. The parts to be struck out are specified in the final paragraph of these reasons. Insofar as the action relates to defamation, I do not have what Barwick CJ called "the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion". That is because I have insufficient details of any allegedly defamatory statement.

6 The critical paragraph in the statement of claim simply asserts the following:

"44 THE PLAINTIFF CLAIMS that the Law Society of Tasmania and its Investigation Committee Breached an Undertaking to the Court by slandering and defaming the complainant."

The solicitors for the defendant delivered a lengthy request for further and better particulars in June 2003. In relation to par44 of the statement of claim, they sought only particulars of the alleged undertaking, and not any particulars of the allegations of slander and defamation. However, in an affidavit sworn on 30 June 2004 in response to that request for particulars, the plaintiff responded in relation to the relevant part of the request by referring to "the defamatory letter containing a serious falsehood addressed to the Auckland District Law Society written By J Martin and sanctioned by P Jackson as President". The documentary evidence before me does not include a copy of the letter referred to. I am not able to undertake a full evaluation of the chances of success that the claim for defamation would have if it were properly pleaded and particularised, and therefore cannot conclude, definitely and certainly, that it would have no chance of success. It is therefore necessary for me to consider whether to order the provision of security for costs in relation to the defamation claim.

7 This Court has the power to make orders for the provision of security for costs either in the exercise of its inherent jurisdiction or pursuant to the Supreme Court Rules, r828. That rule lists a number of situations in which the Court has a discretion to order security, eg, where a party is ordinarily resident out of Tasmania, or where the address of a party is not stated in the originating process. In this case, the defendants do not rely on r828, but contend that orders for security for costs should be made because the plaintiff is apparently impecunious; because the total amount owing by him in respect of various judgment debts and orders for costs exceeds the value of the only asset that could possibly be his, that asset being a sum of money paid into Court plus interest thereon; and because, they argue, his case is weak.

8 Evidence relating to the plaintiff's financial position was presented for the defendants in the form of an affidavit by Mr Gunson SC, whom the plaintiff cross-examined. I am satisfied that the following facts are established by that evidence. The plaintiff is not earning an income. Apart from a sum of $102,479.29 that was paid into Court by Tasmanian Trustees Ltd in November 2000, and the interest thereon, all of which might very well belong to the plaintiff, the plaintiff has no assets known to Mr Gunson SC. At some stage in the last two or three years, an attempt was made to enforce a judgment debt in the sum of $5,633.78 owing by the plaintiff by means of a writ of fieri facias, but that attempt was unsuccessful because no property owned by the plaintiff could be found. The plaintiff is indebted to various individuals as a result of at least twelve orders for costs made in this Court and the Federal Magistrates Court of Australia. Four of those costs orders relate to Full Court appeals. Two of them relate to unsuccessful proceedings taken by the plaintiff in the Federal Magistrates Court of Australia against a legal practitioner and Master Holt of this Court. At least two of the orders for costs were made in favour of the legal practitioner who was the subject of the complaint by the plaintiff to the Society. Apart from the orders for costs, the plaintiff is also indebted to a couple named Falcone in the sum of $26,000 for damages pursuant to a judgment. As at 10 February 2004, the total of the plaintiff's judgment debts for damages and costs was $110,704.57.

9 The plaintiff made some oral submissions in relation to this interlocutory application. On 6 July 2004 I directed that any further submissions that he wished to make were to be made in writing. He subsequently filed in these proceedings an affidavit and four notices. I will treat all of them as submissions relating to this interlocutory application. Unfortunately the plaintiff's oral submissions and written material have not focused on the factors relevant to the exercise of the Court's common law discretion to order the provision of security for costs. On the first day that this interlocutory application came before me, the plaintiff submitted that I should disqualify myself, but I decided not to. He submitted that I should not deal with the interlocutory application because the defendants had made an application for particulars which was part heard before Slicer J, but I rejected that submission. He opposed the application to amend the interlocutory application by adding par1A thereof, but I entertained the defendants' oral amendment application, and granted the amendment sought. In his written material, the plaintiff has sought to revisit those matters, but I see no reason to reconsider my earlier rulings in relation to them. The plaintiff has apparently written to all members of both Houses of the Tasmanian Parliament suggesting that I be amoved, but it is now more than three months since he wrote to them, and I think it appropriate to rule on the interlocutory application without further delay. It is very clear from the plaintiff's oral submissions and written material that he sincerely believes that a great injustice will be done to him if I make any of the orders sought by the defendants.

10 It is well established that impecuniosity on the part of a plaintiff is not sufficient, of itself, to warrant an order for security for costs: Ross v Jacques [1841] EngR 530; (1841) 8 M & W 135 at 136[1841] EngR 530; , 151 ER 980 at 981; Cowell v Taylor (1885) 31 Ch D 34; Sir Lindsay Parkinson & Co Ltd v Triplan Ltd [1973] QB 609 at 612 - 613. Because it is important that the impecunious should have access to the courts, security for costs should be ordered against natural persons only in exceptional circumstances: Shannon v Australia and New Zealand Banking Group Ltd (No 2) [1994] 2 Qd R 563. It has been said that "the circumstances in which the discretion should be exercised in favour of making an order cannot be stated exhaustively": Spiel v Commodity Brokers Australia Pty Ltd (1983) 35 SASR 294 at 300. If the order sought would frustrate the plaintiff's claim, that is always a very relevant factor. In this case, I have no doubt that making an order for security for costs would frustrate the plaintiff's claim for damages for defamation. The bona fides and merits of the plaintiff's claim are also relevant. The authorities dealing with that point were listed by French J in Bryan E Fencott Pty Ltd v Eretta Pty Ltd [1987] FCA 102; (1987) 16 FCR 497 at 513 - 514. As I have said, I have no doubt that the plaintiff is sincere, and I am not in a position to evaluate the merits of his claim conclusively without having any evidence as to what was allegedly written to the Auckland District Law Society. However I think I can properly take into account the fact that the plaintiff has a history of litigious failures, as evidenced by the costs orders that I have referred to, and the fact that his other claims in this action were all misconceived. Those matters strongly suggest that the defamation claim might fail. The fact that the plaintiff is an unemployed resident of New Norfolk suggests that, in the event of him recovering damages for defamation against some or all of the defendants, the damages awarded are quite likely to be somewhat small, given that the cause of action concerns a letter said to have been published to the Auckland District Law Society. Even if Auckland is the plaintiff's home town, it seems unlikely that an enormous award of damages would be appropriate to compensate him for any injury to his reputation amongst the lawyers there.

11 Because it is likely that any award of damages for defamation would be small, because of the matters suggesting there is a strong chance that the plaintiff's defamation claim will fail, and because of his apparent impecuniosity, I think it appropriate to make an order for security for costs, despite the fact that such an order is likely to frustrate his claim for damages for defamation. Mr Gunson SC estimated the likely costs of the proceedings, including a trial, to be $20,000, but that estimate did not refer to a trial of the defamation claim alone. Since the plaintiff is not to be permitted to pursue his other claims, I think an order for $10,000 would be sufficient. There being no submission to the contrary, I will order that the security be given by paying money into Court. The defendants have sought an order that judgment be entered for them in the event that the plaintiff fails to give security within 28 days of it being ordered. Ordinarily the consequence of failing to provide security is that the action is stayed: r828(1). I see no reason to make a more draconian order in this case.

1 That the following parts of the statement of claim be struck out: pars21 - 43, par45, the words "Breaches of Statutory Duty, and Undertaking, confidentiality, and Trust" in par46, subpars(a) to (d) and (f) to (i) of par46, and subpars(a) to (c) of par47.

2 That the plaintiff give security for the costs of the defendants by paying into Court the sum of $10,000.

3 That the action be stayed until the plaintiff pays into Court the said sum of $10,000.