Plaintiff v Defendant

Supreme Court of Victoria|2009-02-11|Before: KAYE J

PRACTICE AND PROCEDURE - Counterclaim by defendant - No case submission by defendants to counterclaim - Applicable test - Abuse of process claim - Principles.

For the Plaintiff and First Defendant by Counterclaim

**1 In this proceeding, the plaintiff makes a claim against the defendant under Part 9 of the Property Law Act 1958 (Vic) in respect of seven properties acquired by the defendant during or after a domestic relationship which she alleges she had with the defendant from 1998 to 2007. Alternatively, the plaintiff claims a beneficial interest in those properties under a constructive trust.

2 In response to the plaintiff's claim, the defendant delivered a defence and counterclaim. He joined, as the second defendant to that counterclaim, David Hanlon, a solicitor, and, as third defendant to the counterclaim, Harwood Andrews Pty Ltd, a firm of solicitors of which Mr Hanlon is a member. The counterclaim pleads four causes of action. In two of those causes of action, the defendant makes claims against Mr Hanlon and Harwood Andrews.

3 The trial of the proceeding commenced before me on 2 December 2008. The defendant has represented himself during the trial. He is a qualified legal practitioner, and was admitted to practice 18 years ago. The defendant, during the case, has asserted that he has no prior litigation experience. However, it is evident that he is a very intelligent man who has a good understanding of the litigation process. Indeed, as I have remarked on a number of occasions during the case, he has a number of skills as an advocate, and has shown a ready appreciation of the rules of evidence, including the rule against the admission of hearsay evidence, and the Browne v Dunn[1] principle.

4 The plaintiff called two witnesses on her case, herself and her mother Gail Cressy. The defendant cross-examined each of those two witnesses at some length. The plaintiff closed her case on 5 December 2008. On that day the defendant called four witnesses in support of his case. He then gave lengthy evidence from 5 December to 11 December. He spent almost two days in evidence in chief, and one day in re-examination. After the defendant completed his evidence, Ms R Sofroniou, who appears on behalf of Mr Hanlon and Harwood Andrews, foreshadowed that at the conclusion of the defendant's case, she would make a no case submission in respect of the claims asserted against her client in the counterclaim. On the next day, the defendant called a further witness, who he had subpoenaed to court. He then foreshadowed calling a large number of other witnesses. I indicated to him that on his description of those witnesses, the evidence to be given on behalf of a number of them may be irrelevant. Nonetheless, I acceded to an application by the defendant that the hearing of the case be adjourned until 9 February 2009, in order to enable the defendant to call further evidence on his behalf.

5 When the hearing resumed, some time was consumed in hearing and determining applications to set aside a number of subpoenas issued and served by the defendant. In the upshot, the defendant called two further witnesses. One of those witnesses was Mr Hanlon, who he had subpoenaed to court. In addition, the defendant gave further evidence in which he tendered a number of documents and items he had located during the adjournment.

6 The defendant has now closed his case. As foreshadowed, Ms Sofroniou has made a submission to me that there is no case for her clients to answer in respect of the counterclaim. Ms Sofroniou informed me that, if the no case submission failed, she would not be calling any further evidence in the case. Accordingly, it was not necessary for me to determine whether I should put Ms Sofroniou to her election whether or not she should call any evidence on the counterclaim.

7 It is well established that, in determining whether Mr Hanlon and Harwood Andrews have a case to answer, my role is to determine whether, on the evidence thus far adduced, I could (not would) find in favour of the defendant on the counterclaim.[2]**

8 As I stated, the defendant has pleaded two causes of action in his counterclaim against Mr Hanlon and Harwood Andrews. The first cause of action (under the heading "Harwood Andrew's caveat") is in the following terms:

"22. In May 2007 Pippin and, or further and alternatively Hanlon, procured Harwood Andrews to fraudulently and, or further and alternatively, maliciously executed and registered at the Land Titles Office a caveat number AF066328D claiming a beneficial interests in one of James' six properties as described in paragraphs 5 and 6 above, namely 166 Queen Street Altona.

(Harwood Andrew's Caveat')

In November 2007 Hanlon procured that, or further and alternatively, Harwood Andrews executed and registered at the Land Titles Office an instrument of withdrawal of Harwood Andrew's Caveat.
1. Neither Pippin, Hanlon nor Harwood Andrews provided James with any written explanation for that withdrawal of caveat.
2. It is unclear whether Hanlon or, further and alternatively, Harwood Andrews, have validly and fully released 166 Queen Street Altona from the Harwood Andrew's Caveat. While 166 Queen Street Altona was the only property the subject of the Harwood Andrew's Caveat, the instrument of withdrawal of that caveat prescribes the title details for another of James' properties, 9/2 Gibson Street Caulfield East rather than the correct title particulars for 166 Queen Street Altona.
3. By reason of Hanlon's procuring and, or further and alternatively, Harwood Andrew's registration, maintenance, delay in withdrawal (and perhaps defectiveness in withdrawal) of the Harwood Andrew's Caveat, James has suffered loss and damage, full particulars of which will be provided prior to trial."

9 The second cause of action pleaded against Hanlon and Harwood Andrews is set out in paragraphs 27 to 33 of the counterclaim. At paragraph 27, the defendant alleged that the plaintiff, between May and November 2007, unlawfully retained, and refused to return, records and possessions of the defendant, and had committed theft and burglary against the defendant and his properties. In essence, the defendant alleges that the plaintiff, in that period, stole documents relating to the purchase by him of the seven properties, two mobile phones, and other items. In his evidence, he particularly referred to a theft which he alleged the plaintiff committed at the Dorrington Street, Point Cook property on 16 November 2007. At paragraph 28 of the counterclaim, the defendant alleges as follows:

"28. Hanlon, and or further, Harwood Andrew's, is intimately involved in the last of these burglaries and thefts committed by Pippin on 16 November 2007 when Pippin unlawfully entered James' residence and stole records, equipment and devices that:

28.1 Were recovered from Pippin by the Victorian Police on or about 1 December 2007 by execution of a search warrant at the premises where Pippin presently resides;

28.2 Hanlon and, or further, Harwood Andrews have subsequently subpoenaed from the Victorian Police; and

28.3 Are presently situated under security in the Federal Magistrates' Court, Corner of Latrobe and William Streets, Melbourne;

28.4 pursuant to that subpoena issued on behalf of Pippin by Hanlon and, or alternatively, Harwood Andrews, purportedly as evidence in proceedings number 10308/2007 that James commenced in that Honorable Court on 8 October 2007 against Pippin and one other person."

10 At paragraph 32 of the counterclaim the defendant alleges:

"Hanlon, and or alternatively Harwood Andrews, was motivated by malice in issuing the subpoena and in the circumstances described in paragraphs 27 to 30 above."

11 In paragraph 33 the defendant claims damages against the plaintiff, and against Hanlon and Harwood Andrews, by reason of the matters set out in paragraphs 27 to 32 of the counterclaim.

**12 The facts relating to the caveat, referred to in the counterclaim, may be shortly stated. Mr Hanlon, as an employee of Harwood Andrews, acted for the plaintiff until early 2008. One of the properties, which is the subject of the plaintiff's claim, is situated at 166 Queen Street, Altona ("the Altona property"). On 8 May 2007, the plaintiff lodged, with the Office of Titles, a caveat number AF058952B. In that caveat, the plaintiff claimed an "interest in fee simple" in six properties of which the defendant was the registered proprietor, including the Altona property "by virtue of the resulting implied or constructive trust in favour of the caveator arising from the contribution made by the caveator towards the acquisition, conservation and improvement of the said land". In his counterclaim against the plaintiff, the defendant claims relief in respect of that caveat. On 8 May 2007, the plaintiff executed, in favour of Harwood Andrews, a charge over all her "legal and equitable interest" in the Altona property, to secure payment of legal costs, disbursements and interest incurred or to be incurred by Harwood Andrews on her behalf in this proceeding. On 9 May 2007, Harwood Andrews lodged with the Office of Titles a caveat number AF066328D by which Harwood Andrews gave notice of "an interest as chargee" in the property pursuant to "an unregistered instrument of charge bearing date the eighth day of May 2007 given by Pippin Cressy as chargor to Harwood Andrews Pty Ltd ... as chargee".

13 On 24 December 2007, the defendant entered into a contract to sell the Altona property to David Cudmore or nominee for the sum of $770,000. Under the contract, settlement was due on 22 February 2008. It is common ground that Harwood Andrews' caveat over the Altona property was withdrawn on or about 2 November 2007. I pause to note that it appears that the Harwood Andrews' caveat was apparently withdrawn in error. On 29 October 2007, the defendant wrote to Mr Hanlon requesting that the caveat lodged on behalf of the plaintiff over his six properties be withdrawn in respect of one of those properties at Gibson Street, Caulfield East, because that property was the subject of a sale. Pursuant to that request, Mr Hanlon instructed Axis Searching and Settlements ("Axis") to withdraw the plaintiff's caveat in respect of that property. By what appears to be an error, he included, in the documents sent to Axis, a document which purported to withdraw a caveat lodged by Harwood Andrews over the same property. I interpolate that at no time has Harwood Andrews lodged a caveat over the Caulfield East property. It appears that someone (not authorised by Mr Hanlon) altered the title particulars on that withdrawal of caveat to substitute the title particulars for the Altona property. As a consequence, the Harwood Andrews' caveat, registered over the Altona property, was withdrawn on 2 November 2007.

14 The defendant gave evidence that the sale of the property to Mr Cudmore did not settle on 22 February 2007. Subsequently, on 6 March 2008, Harwood Andrews lodged a second caveat number AF709814N over the property. It is in the same terms as the first caveat. However, as I understand it, the mortgagee has taken possession of, and sold, the Altona property. Harwood Andrews has withdrawn the caveat, pursuant to an order made by Cavanough J on 20 June 2008.

15 With that background in mind, I turn to the counterclaim alleged against Hanlon and Harwood Andrews in respect of the Harwood Andrews' caveat.

16 The nature of the cause of action alleged by the defendant in paragraphs 22 to 26 of the counterclaim is unclear. The defendant was not able to identify any recognised cause of action, in tort or otherwise, to which the allegations of fraud and malice, in paragraph 22, relate. If and insofar as those allegations relate to any cause of action known to law, there is not one scintilla of evidence, adduced thus far, which would support, in any way, the allegation that Harwood Andrews or Mr Hanlon acted either fraudulently or maliciously. In this respect, I note that on 12 December, the defendant expressly acknowledged that he did not suggest that either Mr Hanlon or Harwood Andrews had any knowledge that the claims made by Ms Cressy in this case are fraudulent.[3] Further, there is not the slightest indication of any evidence that Mr Hanlon or Harwood Andrews acted "maliciously". There is no indication in the evidence at all that either of them had an ulterior motive, other than to protect the legitimate interest of Harwood Andrews in securing payment to them of their costs by way of the equitable charge. No suggestion to that effect was put by the defendant to the plaintiff in cross-examination. No other evidence has been adduced to that effect.

17 Mr Johnson submitted that the plaintiff did not have any case against him under Part 9 of the Property Law Act, or under the principles of constructive trusts. He submitted that the fate of his claim against Harwood Andrews in relation to its caveat depended on the outcome of the plaintiff's claim against him.

18 The submission made by Mr Johnson is patently a non sequitur. The outcome of the claims by the plaintiff against the defendant will be determined, ultimately, on the balance of probabilities, and on the basis of admissible evidence. If the plaintiff's claim fails against the defendant, it does not follow that Harwood Andrews or Mr Hanlon acted fraudulently or maliciously in lodging the caveat on the Altona property. On the face of it, the lien executed by the plaintiff in favour of Harwood Andrews is a valid lien. No argument was addressed to me to the contrary by Mr Johnson. Nor did he make any submission to me that such a lien would not support a caveatable interest.

19 Furthermore, and without expressing any view, at this stage, on the evidence of the plaintiff, nonetheless her evidence, on its face, would, at the very least, support a prima facie arguable case that the defendant held his interest in the Altona property on a constructive trust for her, pursuant to the principles stated in cases such as Baumgartner v Baumgartner[4] and Mushinski v Dodds[5]. The plaintiff has given evidence as to the length and duration of the relationship which she said she had with the defendant, and of contributions made by her to that relationship and to the Altona property. Without expressing any concluded, or even tentative, view on the claims by the plaintiff, on that evidence, the plaintiff has a prima facie arguable case that she has a beneficial interest in the Altona property.

20 In the course of submissions Ms Sofroniou, who appears on behalf of Mr Hanlon and Harwood Andrews, drew to my attention the decision of the Full Court of the Family Court in Hodges Hall & Jovanovic & Markov[6]. In that case the husband had executed an equitable charge over his interest in the former matrimonial home as security for costs. The solicitors lodged a caveat to protect their interest. Before the hearing of the parties' property application the solicitors ceased acting for the husband. The former matrimonial home was sold before the hearing. At the conclusion of the hearing the trial judge made orders apportioning the proceeds of sale between the parties, without notice to the solicitors. On appeal, the Full Court of the Family Court held that the solicitors had not been given adequate notice of the orders made and that they had been entitled to be heard in respect of them, by reason of their equitable interest in the proceeds of the sale of the property. In reaching that conclusion, the court observed[7] that it was not an uncommon practice in that jurisdiction for solicitors to require their clients to execute a charge over their property to secure the payment of legal costs and for a caveat to be lodged in respect of that charge. In my view, Ms Sofroniou is correct in submitting that it is therefore unremarkable, in a case such as this between the plaintiff and the defendant, for the plaintiff's solicitors to take a charge over the plaintiff's claimed interest in the defendant's properties, in order to secure their costs. The observations of the Full Court of the Family Court in the Hodges Hall case reinforce my conclusion that, per se, there was nothing either malicious nor fraudulent about the solicitor taking such a charge in the circumstances of a case such as this.

21 Accordingly, the defendant has failed to adduce any evidence which could support the allegations by him that Harwood Andrews and Hanlon acted fraudulently or maliciously in lodging a caveat over the Altona property, of which the defendant is and was the registered proprietor.

22 The second reason why any cause of action, pleaded in paragraphs 22 to 26 of the counterclaim, must fail is that the defendant has not proven, nor could he prove, any loss occasioned to him as a consequence of the lodgement of the Harwood Andrews' caveat. As I have stated, that caveat was withdrawn in November 2007. The second Harwood Andrews' caveat was not lodged until 6 March 2008. In his evidence[8] the defendant agreed that at the time at which the sale to Mr Cudmore failed to proceed (22 February 2008) there was no Harwood Andrews' caveat on the property. He attributed the failure of that sale to the existence of the caveat lodged by the plaintiff on the property. Thus, the defendant has not proven, nor could he prove, any loss sustained by him by reason of the lodgement of the Harwood Andrews' caveat.

23 For the purpose of completeness I note that Mr Johnson also addressed some submissions to me relating to the allegations in paragraph 25 of the defence and counterclaim. He criticised Mr Hanlon and Harwood Andrews in relation to the manner by which the Harwood Andrews caveat was withdrawn on 2 November 2007. As I have observed, the evidence of Mr Hanlon was that the caveat, in fact, seems to have been inadvertently withdrawn. In any event, whatever the circumstances which attended its withdrawal, the fact remains that the caveat ceased to be registered over the title to the Altona property from about 2 November 2007, before the sale of the property to Mr Cudmore. Thus, it had nothing to do with the fact that Mr Cudmore failed to proceed with the purchase of the property in February 2008.

24 For those reasons, I have reached the conclusion that there is no case to answer on the causes of action pleaded by the defendant in paragraphs 22 to 26 of the counterclaim.**

**25 I turn, then, to the allegations against Mr Hanlon and Harwood Andrews contained in paragraphs 27 to 33 of the counterclaim.

26 In her evidence, the plaintiff stated that in 2007 she took possession of some records of the defendant. She stated that those documents were the joint financial information documents of herself and the defendant. She said that she took possession of those documents, in order to pass them to her lawyer for evidence. The plaintiff also took possession of two mobile telephones of the defendant, because they had evidence of him stalking her. However, before the plaintiff was able to pass the documents on to her then solicitors (Harwood Andrews), the police seized the documents and mobile telephones under a search warrant, which they had executed on her.

27 The plaintiff was cross-examined on that aspect of her evidence by Ms Sofroniou, before the defendant cross-examined the plaintiff. In answer to questions put to her by Ms Sofroniou, the plaintiff agreed that Mr Hanlon, who was then her family law solicitor, was not present when she took possession of the documents and mobile telephone on 16 November 2007. She stated that she had not previously informed Mr Hanlon of her intention to take possession of those items. She said that she only informed Mr Hanlon that she had taken the documents and telephones, after the police had seized those items from her under the search warrant. As a result of discussions she then had with Mr Hanlon, a decision was taken to issue a subpoena to the police to produce the documents to the Federal Magistrates' Court, before which the plaintiff and the defendant had proceedings on foot.

28 The defendant then cross-examined the plaintiff at some length. He did not address one single question to the plaintiff in respect of the evidence which she had given in answer to the questions put to her by Ms Sofroniou, and in particular as to her evidence that Harwood Andrews and Mr Hanlon had nothing at all to do with her actions by which she took possession of the documents and mobile telephones. At the conclusion of the defendant's cross-examination of the plaintiff, Ms Sofroniou, quite properly, brought to the defendant's attention that he had not addressed that issue at all, and foreshadowed that she would rely on the principles of Browne v Dunn[9], should the defendant later seek to make any allegation, or lead any evidence, on that topic. I interpolate that throughout the cross-examination of the plaintiff, the defendant had displayed a good understanding of the rule in Browne v Dunn. Notwithstanding the clear warning given to him by Ms Sofroniou, the defendant expressly declined to further cross-examine the plaintiff. At one stage, he indicated that he would withdraw his claim against Mr Hanlon and Harwood Andrews[10], but in the upshot he declined to do so.

29 The defendant gave detailed, and well ordered, evidence in the case. In the course of that evidence he described, in some detail, the circumstances in which he alleged that the documents, mobile telephones and other items were stolen from the Dorrington Street address on 16 November 2007[11]. He did not give any evidence at all that Mr Hanlon or Harwood Andrews were "involved" in that theft. Nor did he call any witness to support that allegation in his counterclaim. When he called Mr Hanlon to give evidence, he did not ask Mr Hanlon any questions about the alleged theft by the plaintiff of the documents and records.

30 It is therefore clear that there is not one scintilla of evidence to support the allegation, in the defendant's counterclaim, that Mr Hanlon and/or Harwood Andrews were "intimately involved" in the theft, which he alleges was committed by the plaintiff on 16 November 2007. There is no evidence, whatsoever, of any involvement, whether direct, indirect or otherwise, by Hanlon or Harwood Andrews, whether acting in concert or otherwise, in the taking of the documents, mobile phones and the like which occurred on that day. The unchallenged evidence of the plaintiff is to the contrary. As I have already stated, the defendant has demonstrated that he has a good appreciation of the principles of Browne v Dunn. He made no challenge to the evidence of the plaintiff that Mr Hanlon and Harwood Andrews had nothing to do with her taking of the documents and mobile telephones, and that they had not even known that she intended to do so. The defendant did not lead any evidence to contradict the evidence of the plaintiff on that topic, nor did he lead any evidence whatsoever to indicate any involvement by Hanlon and Harwood Andrews in the alleged theft of the documents and the records. The allegation made by the defendant is serious, and, as such, attracts the principles in Briginshaw v Briginshaw.[12] On the evidence before me, it is entirely baseless. There was not even the faintest scintilla of evidence adduced before me to support the serious allegation made against Mr Hanlon and Harwood Andrews. That allegation is nothing more than a totally unsubstantiated assertion made in a pleading. Indeed, in the course of some submissions to me on 12 December 2008 Mr Johnson expressly acknowledged that Mr Hanlon had no knowledge that the documents were being taken by the plaintiff.[13] Further, he did not address any submissions to me, on this aspect of the counterclaim, in response to Ms Sofroniou's no case submission to me. Self-evidently, Mr Hanlon and Harwood Andrews have no case to answer in respect of that part of the claim.

31 The second aspect of the claim, pleaded in paragraphs 27 to 33 of the counterclaim, relates to the issue of the subpoena by Mr Hanlon to Werribee Police, so that the documents seized by them might be produced to the Federal Magistrates' Court. It is not clear what cause of action is asserted by the defendant in those paragraphs. I shall assume, in favour of the defendant, that the pleading is an allegation based on the tort of abuse of process. It is fundamental that, central to the establishment of an abuse of process, is the proof by the defendant in this case that Mr Hanlon and Harwood Andrews issued the subpoena for an ulterior purpose. The defendant must prove such an improper purpose as the predominant purpose of Hanlon and Harwood Andrews in causing the subpoena to be issued to the Werribee Police.[14] In Butler v Simmonds Crowley and Galvin[15] the Queensland Court of Appeal, consisting of McMurdo P, Pincus JA and Thomas JA, stated the relevant principles as follows:**

"In order to succeed in an action for collateral abuse of process it is not necessary to allege or prove that the initial proceeding has terminated in favour of the plaintiff, or that there was no reasonable and probable cause for instituting the initial proceeding. It is however essential for a plaintiff to show that the defendant instituted proceedings for a purpose or to effect an object beyond that which the legal process offered. Such a purpose of the defendant in instituting the earlier proceedings is of crucial importance. It is not sufficient to assert that the proceedings were instituted with an improper motive. The ulterior objective needs to be identified, and it also needs to be able to be seen as the predominant purpose of those proceedings and as outweighing any legitimate purpose that they might otherwise have."

**32 In this case, there is no suggestion that the documents and the telephones, taken by the plaintiff, and subpoenaed to the Federal Magistrates' Court, were not relevant to the proceedings then on foot in the Federal Magistrates' Court. Those documents consist of financial documents, which no doubt would be relevant to the claim by the plaintiff against the defendant for child support. I further note that the plaintiff has stated that the two mobile telephones contained evidence by which she alleged that the defendant had stalked her. I would expect that any such evidence, if it did exist, may be relevant to the proceedings before the Federal Magistrates' Court. There is no suggestion or evidence that Mr Hanlon was motivated by any ulterior purpose in issuing the subpoena. No such ulterior motive has been proven whatsoever, let alone as the predominant motive of Mr Hanlon in issuing the subpoena. When Mr Hanlon gave evidence, the defendant did not ask him any questions about the subpoena, and in particular as to his motive or purpose in issuing and serving it. Accordingly, the defendant has not adduced any evidence of the critical element of the cause of action of abuse of process which, I assume, he has alleged in his pleading against Mr Hanlon and Harwood Andrews.

33 Further, the defendant has not adduced any evidence of any special damage suffered by him as a result of the subpoena issued by Mr Hanlon. It would seem that the proof of such special damage is a necessary ingredient of the cause of action constituted by an abuse of process[16].

34 Accordingly, it follows that Mr Hanlon and Harwood Andrews do not have a case to answer in respect of the cause of action which seems to be pleaded against them by the defendant in respect of the subpoena addressed to the Werribee Police. Indeed, I observe that the defendant did not address any submission to me in answer to Ms Sofroniou's submissions to me in this aspect of the counterclaim.**

35 Thus, for the reasons which I have stated, the second defendant to the counterclaim, Mr David Hanlon, and the third defendant to the counterclaim, Harwood Andrews Pty Ltd, do not have a case to answer in respect of any of the causes of action pleaded against them in the amended counterclaim. Accordingly the proceedings against them, by way of counterclaim, must be dismissed.

[2] Protean (Holdings) Limited (receivers and managers appointed) & Ors v American Home Assurance Co [1985] VicRp 18; [1985] VR 187, 215 (Young CJ), 239 to 240 (Tadgell J); Sarkis & Ors v Deputy Commissioner of Taxation [2005] VSCA 67, [13] (Nettle JA).

[14] Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509, 523, 529; Hanrahan v Ainsworth (1990) 22 NSWLR 73, 96 (Kirby P), 118 (Clarke JA); White Industries (Qld) Pty Ltd v Flower & Hart [1998] FCA 806; (1998) 156 ALR 169, 236-240 (Goldberg J); on appeal Flower & Hart v White Industries (Qld) Pty Ltd [1999] FCA 773; (1999) 163 ALR 744, 758-759 [59]-[64].

[16] Hanrahan v Ainsworth [1985] 1 NSWLR 370, 375 (Hunt J).

(1995) 19 Fam LR 241

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