Plaintiff v Defendant

3 While in possession, Fogerty-Young made certain improvements to the Property.

4 The Property is a reasonably modest residence in the suburbs of south east Melbourne. I would be surprised if its value could justify protracted and hard-fought litigation as to its ownership.

5 This proceeding has already had an unfortunately extended history for what is a relatively straightforward dispute. Jason wants possession of the Property. Fogerty-Young refuses to give it up, asserting he is now entitled to be registered as lawful owner of the Property, or at least has some beneficial interest in the Property.

6 I now provide a brief history, which is not intended to be exhaustive.

7 On 2 November 2009, Jason was put on notice by a third party that Fogerty-Young intended to claim ownership of the Property. After some initial communications between the parties, on 12 April 2011 Jason served a notice to quit on Fogerty-Young.

8 On 19 April 2011, solicitors acting on behalf of Fogerty-Young stated Fogerty-Young had no intention to quit and deliver up the premises on the Property. The letter also stated unequivocally that Fogerty-Young had been in possession of the Property since December 1995.

9 On 2 May 2011, a caveat was lodged by Fogerty-Young claiming an interest in fee simple. The basis on which the claim was made was: "Entitled in equity pursuant to an implied resulting or constructive trust." No mention was made of any claim based on adverse possession.

10 A proceeding was commenced in the Victorian Civil and Administrative Tribunal ("VCAT") on 28 November 2011 in which Jason sought possession of the Property ("the First VCAT Proceeding").

11 Points of claim were filed by Jason in the First VCAT Proceeding ("the Points of Claim"). In paragraph 4 of the Points of Claim, Jason alleged Fogerty-Young had occupied the Property since in or about December 1995.

12 Apparently the wrong form was used to commence the First VCAT Proceeding. Accordingly, a second proceeding was commenced on 7 December 2011 ("the Second VCAT Proceeding").

13 On 14 December 2011, Fogerty-Young's solicitors sent a letter to Jason's solicitors which stated, amongst other things, that Fogerty-Young had entered into possession of the Property "in or about December 1995" (emphasis added).

14 On 2 March 2012, Fogerty-Young filed a defence in the Second VCAT Proceeding. He admitted the allegation in paragraph 4 of the Points of Claim. He went on to further respond to that paragraph. In so doing, Fogerty-Young identified the date he took possession as being: "from about 15 December 1995" (emphasis added).

15 This proceeding was commenced on 9 March 2012. On 13 March 2012 the parties agreed to stay the Second VCAT Proceeding on the basis that this proceeding and any counterclaim in this proceeding were to be taken to have been commenced on 7 December 2011 ("the VCAT Agreement").

16 A mediation was held on 16 November 2012. Self-evidently, the proceeding was not settled. Fogerty-Young subsequently referred to the mediation and deposed to his state of mind on the issue of when he took possession. In an affidavit of Fogerty-Young sworn 13 June 2013 the following appeared:

It was not until the mediation which occurred on 16 November 2012 that I first began to doubt whether the date of 15 December 1995 was accurate, in terms of reflecting the date that I took possession of the Property.

(Emphasis added).

It follows from this that Fogerty-Young apparently had little or no doubt about the date of 15 December 1995 being accurate up until the time of the mediation.

17 The significance of that date in the circumstances is as follows.

18 A landowner can sue for recovery of its land, but that right will expire if legal proceedings are not commenced within 15 years of the other party taking adverse possession of the land. Once that limitation period expires, the owner's title to the land is automatically extinguished.[1] In the case of a tenancy at will, the right is deemed to have accrued at the end of 1 year, at which point the tenancy automatically terminates.[2] Therefore, the date by which any claim by Jason was required to be made by Jason was, under the Limitation of Actions Act 1958 (Vic), 16 years after Fogerty-Young first took possession.

19 Fogerty-Young's case now includes allegations to the effect that Fogerty-Young was a tenant at will for a period of 12 months from 28 November 1995. It is now alleged that, from 28 November 1996, Fogerty-Young took adverse possession of the Property. The change in date, from 15 December 1995 to 28 November 1995, as the original date of his possession has only been contended in this proceeding after Fogerty-Young swore his affidavit on 13 June 2013. The change in his position on the timing of taking possession means it is now open for Fogerty-Young to make a case pursuant to s 18 of the Limitation of Actions Act that the period prescribed of 15 years has expired; and, therefore, any action to recover the Property that Jason might have had is barred by reason that Jason's title to the Property has been extinguished.

20 On its face, the change in Fogerty-Young's recollection after all these years is extremely fortuitous. There may be very cogent evidence at trial to support this change. These are not matters to determine on an interlocutory application. The simple point is that there is nothing on the evidence before the court to suggest that Jason, or Jason's solicitor, were put on notice of this change before it occurred.

21 Fogerty-Young was granted leave to make this new case pursuant to an order of the court on 14 June 2013. This has been pleaded in the alternative to the existing claim, namely that the legal title to the Property is held on trust for Fogerty-Young either absolutely or "in a share to be determined by the court as representing the improvements and their value".

22 In a defence filed on 7 August 2013 to the amended statement of claim, Jason alleges various bases upon which he says the proceeding was commenced within the statutory 15-year period. Further, by way of defence, it is pleaded that Jason conducted himself in reliance upon representations made by Fogerty-Young as to when Fogerty-Young said, and the basis upon which he said, he took possession. Jason pleads[3]:

Had the defendant been aware that the plaintiff would allege that:

1. he began to occupy the property on 28 November 1995;
2. the tenancy at will pursuant to which he occupied the property expired on 27 November 1996 and he thereafter occupied the property adverse to the plaintiff's interest; and

1. any claim which the defendant may have had to defeat the plaintiff's adverse possession claim would be statute barred on 26 November 2011,[4]

1. commenced proceedings to recover possession of the premises prior to 26 November 2011[5] and prior to the expiry of the notices served on the plaintiff pursuant to the Residential Tenancies Act 1997 (Vic) and otherwise;
2. not entered into the VCAT Agreement; and/or
3. required the originally drafted clause 2(b) of the VCAT Agreement to remain unamended so as to preserve the defendant's right to defeat a claim for adverse possession.

23 Detriment and unconscionability are then pleaded in support of a plea that the relevant allegation should be struck out. The correspondence between the parties has referred to this part of the pleading as the estoppel argument put forward by Jason.[6]

24 Also, by the amended defence and counterclaim, Jason raises a different version of events as to the original agreement between Fogerty-Young and Anna Jason. It is alleged that it was a lease for 6 months and a rental of $150 a week. I will return to the significance of this.[7]

25 On 14 August 2013, the solicitors for Fogerty-Young sent a letter to the solicitors for Jason, which included the following:

The inclusion of this estoppel argument highlights the conflict of interest your firm has. As you acted for Mr Jason in issuing the Notice to Quit and the eventual commencement of proceedings at VCAT, your firm must seek to explain why proceedings were not issued sooner and it is in your professional interests to do so in a manner which does not implicate your firm for the delay which has rendered Mr Jason's claim barred by statute. It is for this reason that we consider it inappropriate for your firm to continue to act in this matter.

In light of above comments, the Defence requires further amendment. Furthermore, we note your firm is in a position of conflict in continuing to act in this matter. This conflict will be raised with the Court, if Mediation as proposed below is not successful.

26 The contents of this letter make plain that there was no objection to Jason's solicitors continuing to act at a mediation anticipated to occur in the then near future.

27 On 16 August 2013 Jason's solicitors responded and, amongst other things, rejected the assertions made on 14 August 2013. They also foreshadowed the mediation taking place in the week commencing 15 September 2013. However, some time after 16 August 2013, Jason's attitude towards mediation changed, and he declined to agree to a further mediation.

28 This change in position prompted a further letter from Fogerty-Young's solicitors. A letter sent by them dated 17 September 2013 stated:

In our facsimile of 14 August 2013, we suggested the prospect of a further Mediation. When we say "further", it is true that a Mediation was conducted previously - we were not involved and our client's claim was based on the Statement of Claim which is very different from the Amended Statement of Claim. That facsimile also pointed out a number of deficiencies in your client's Defence and the conflict that your firm has in continuing to act. In all the circumstances, we suggest a further Mediation to maximise the prospect of resolving this matter in the interests of avoiding our respective clients expending further unnecessary legal costs.

...we seek your urgent confirmation that your client is prepared to participate in this Mediation ... As raised in our facsimile of 14 August 2013 and discussed with you, we maintain that you are in an untenable position of conflict in relation to this Proceeding. Again, your firm must seek to explain why proceedings were not issued sooner and your professional interests prevent you from doing this in an objective manner. We reiterate that it is for this reason that we consider it inappropriate for your firm to continue to act in this manner and will make an Application for the Court to exercise its discretion to restrain your firm from continuing to act in accordance with the principles set out in Kallinicos v Hunt [2005] NSWSC 1181 should the matter proceed.

(Emphasis added.)

29 On 20 September 2013, Jason's solicitors confirmed they would not agree to attend a mediation, and also declined to discontinue to act for Jason.

30 The application is made by Fogerty-Young pursuant to the inherent jurisdiction of the court to control the conduct of solicitors as officers of the court.[8] Essentially it is made on the basis that, because of the history of the matter, the solicitors for Jason, so it is submitted, have an interest in the outcome of the matter personally. Accordingly, it is contended Jason's solicitors are compromised in their ability to act with objectivity and professional detachment.

31 The test to be applied in considering this matter is common ground between the parties, namely[9]:

[W]hether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice.

32 Before applying this test, I must be mindful of the caution with which the court must approach the exercise. As was stated by Middleton J in Bahonko v Nurses Board of Victoria (No.3)[10]:

The court must be careful not to intervene unless it is absolutely required in the circumstances of the case. Further, the court should be mindful that sometimes applications for restraining legal practitioners may be misused or quite inappropriately pursued by a party to proceedings. In Freeman v Chicago Musical Instrument Co the court observed[11]:

We do not mean to infer that motions to disqualify counsel may not be legitimate, for there obviously are situations where they are both legitimate and necessary; nonetheless, such motions should be viewed with extreme caution for they can be misused as techniques of harassment.

33 I have a number of reasons to be particularly cautious in this case.

34 First, the proceeding has been on foot since March 2012. It would undoubtedly give rise to considerable inconvenience and expense if I were to grant the relief sought. Although the issue giving rise to the argument might be said to have arisen only relatively recently on the pleadings, the timing of the application would require a clear case for the discretion to be exercised in Fogerty-Young's favour.

35 Secondly, the circumstances in which this application has been brought are substantially, if not entirely, because of the very recent change of the position of Fogerty-Young. Without making any finding, I cannot discount the possibility that this change of position has occurred opportunistically and for tactical reasons.

36 Thirdly, Fogerty-Young and his legal representatives were and remain content for Jason's solicitors to continue to act if the matter is referred to mediation. The concerns expressed must be viewed in that light. Although it is ultimately a matter for the court as to whether it is appropriate for the solicitors to continue to act, such an attitude of the moving party weighs heavily against a suggestion that the solicitors should cease to act forthwith.

37 In my view, a fair-minded and reasonably informed member of the public would not conclude that the orders sought are necessary, or even desirable.

38 The conduct of Jason's solicitors is not raised on the face of the pleadings. Further, what is pleaded expressly does not impliedly raise any issue. The highest the submission might properly be put is that because Jason's state of mind is in issue as to why he commenced the First VCAT Proceeding when he did, it is possible the timing might be explained by a failure of the solicitors. This is clearly in the realm of speculation, and, subject to one matter I will come to, nothing in the evidence before the court suggests the timing had anything to do with the negligent acts or omissions of the solicitors.

39 The one exception is the fact that the First VCAT Proceeding was apparently commenced using the wrong form. This resulted in the Second VCAT Proceeding being commenced after 28 November 2011. It appears highly unlikely to me that anything will ultimately turn on this short period of delay. There are a number of reasons for this.

40 First, Jason's case is that the timing of the filing was due to Jason's reliance upon a representation made by Fogerty-Young.

41 Secondly, paragraph 24 of the counterclaim sets out that:

In about December 1995 the previous owner agreed to lease the property to the defendant for a period of 6 months for $150 per week ("Agreement")

Particulars

The Agreement is partly oral and partly implied.

Insofar as it was oral it was comprised of a conversation between the plaintiff and the defendant at the property.

Insofar as it is implied it is implied by the conduct of the parties and to give efficacy to the Agreement.

In his reply and defence to counterclaim, Fogerty-Young, in the alternative, embraces this allegation and alleges that the lease expired in June 1996. At trial Fogerty-Young will contend that time commenced to run against Jason from this point in time. Therefore, on this aspect of the case, the relatively minor delay between late November 2011 and 7 December 2011 ought be of no consequence.

42 Thirdly, the issue said to give rise to the "conflict" is only one of many matters in the case, and could not be described as a primary issue in dispute.[12]

43 I was informed by counsel for Jason that there is no intention to call the solicitor as a witness. Although it was initially submitted by Fogerty-Young that the solicitor must "inevitably" be called or a Jones v Dunkel[13] inference may be drawn, ultimately it was accepted there was nothing more than a mere possibility that he would be required to give evidence.

44 As to the position of the solicitor himself, obviously I am in no position to make any finding on this interlocutory application when many, and probably most, of the relevant facts are not before the court. However, I am in a position to observe that the case now put in the alternative by way of adverse possession is fundamentally different to the case previously put.

45 The solicitors for Fogerty-Young described the case as "very different" in their letter dated 17 September 2013.[14] Of course, Fogerty-Young is entitled to adopt this approach. But it is most unlikely, on the evidence put before the court on this application, that it can seriously be suggested Jason's solicitor could have reasonably anticipated this, and, in particular, the change of the date of taking possession (and therefore anticipated the significance of the timing of the commencement of the First VCAT Proceeding and the Second VCAT Proceeding or the significance of the terms of the VCAT Agreement in relation to a deemed commencement date). I do not infer from the timing of these events that it demonstrates Jason's solicitor had such issues in mind. As I have already stated[15], Jason's solicitor was not on notice of this possible change in position before it occurred.

46 In addition, I am already concerned about the length of time this matter has taken to get to trial. Although there has been a fresh round of pleadings, discovery has been completed,[16] and answers to interrogatories have been given. The matter should be set down for trial as soon as practicable to avoid the continual escalation of costs in relation to a finite asset.

47 The application to remove the solicitors for Jason will be dismissed. I will direct that any further interlocutory application be made returnable before me this Friday for hearing.

[1] Limitation of Actions Act, s 18.

[2] Limitation of Actions Act, s 13(1). This deeming of the termination of the tenancy at will only applies if the tenancy at will has not been determined before the period of 1 year has elapsed.

[4] By leave granted by the court today, that date will now read 28 November 2011.

[5] That date will also be amended to refer to 28 November 2011.

[6] It is not immediately apparent to me that a cause of action based on estoppel is expressly pleaded. No doubt this is a matter which can be considered in due course.

[8] See, for example, R&P Gangemi Pty Ltd v D&G Luppino Pty Ltd [2012] VSC 168, [5] (Sifris J), citing Kallinicos v Hunt [2005] NSWSC 1181, [76] (reported at [2005] NSWSC 1181; (2005) 64 NSWLR 561).

[9] Kallinicos v Hunt [2005] NSWSC 1181; (2005) 64 NSWLR 561, 582 [76], citing, amongst others, Everingham v Ontario (1992) 88 DLR (4th) 755, 761H-762A, Black v Taylor [1993] 3 NZLR 403, 406.5 (Cooke P), 408.5 (Richardson J), 418 (McKay J), Grimwade v Meagher [1995] VicRp 28; [1995] 1 VR 446, 452.3 (Mandie J).

[10] [2007] FCA 491, [3].

[11] [1982] USCA7 831; 689 F2d 715 (1982), 722.

[12] Cf TJ Board & Sons Pty Ltd v Samuel Castello [2008] VSC 91, [23] (Hollingworth J).

[13] [1959] HCA 8; (1959) 101 CLR 298.

[16] This observation is made subject to a suggestion by Fogerty-Young that he may seek discovery of Jason's solicitor's file. Even if this were done, it should not delay the matter being set down for trial.