Rix v Wells

Judgment - Ex Tempore 1HIS HONOUR: These proceedings were commenced by Mr Rix on 21 January 2013 by the filing of a statement of claim. Mr Rix is a pensioner, aged 85, who lives in a unit in Kingsford. 2The first defendant, Mr Wells, is a solicitor who acted for Mr Rix's daughter and son-in-law, Mr and Mrs Mahony, in certain proceedings in this Court instituted by Mr Rix concerning the ownership of a property in Gardeners Road, Rosebery. I shall refer to that property as "the Property". 3Those proceedings were heard by Forster J, who found, amongst other things, that a 25 per cent share of the property was held by Mrs Mahony on trust for Mr Rix (see Rix v Mahony [2009] NSWSC 675). 4Subsequently, the second and third defendants, Mr Brown and Mr Di Donato, were appointed by order of this Court as trustees for sale of the Property pursuant to s 66G of the Conveyancing Act 1919. 5On 18 April 2013, the defendants filed a notice of motion seeking orders that the statement of claim be dismissed or, alternatively, that the statement of claim be struck out. That motion was heard by Ball J on 24 May 2013. On that day, Ball J gave reasons for judgment which identified what appeared to his Honour to be four complaints made by Mr Rix against the defendants (see Rix v Wells [2013] NSWSC 672). 6Ball J found that three of the complaints were liable to be summarily dismissed. However, Ball J did not reach the same conclusion in respect of the second of Mr Rix's complaints. That complaint was described by his Honour (at [7]) as follows: "Second, Mr Rix claims the trustees failed to discharge their duty to sell the property for the best price reasonably obtainable for two reasons. The first of those is that following a fire which damaged part of the property they did not take steps to protect the property from further damage. Second, they did not use the insurance moneys to reinstate the property before it was sold" 7His Honour then stated (at [13]) that this claim appeared to have two aspects, the first of which was that the trustees breached their duty by failing to reinstate the property, using insurance moneys paid out in respect of the fire, before proceeding to sell the property. His Honour considered that this aspect of the claim was bound to fail. 8However, his Honour held (at [14]) that the second aspect of the claim was not as clear. This aspect was that the trustees breached their duty by failing to take steps following the fire to protect the property from further damage. 9His Honour continued at [14] and [15]: "The statement of claim does not allege any facts from which it could be concluded that the trustees failed to take adequate steps to protect the property following the fire. Whether the trustees breached their duty by failing to take those steps is a question of fact which can only be determined once all the facts on which Mr Rix relies are identified. For those reasons I would not be prepared to dismiss the claim to the extent that it contains an allegation that the trustees breached their duties by failing adequately to protect the property following the fire without at least giving Mr Rix a further opportunity to plead that part of his case". 10Due to deficiencies in the form of the statement of claim, Ball J ordered that it be struck out, but gave leave to file an amended statement of claim "limited to the allegation that the second and third defendants breached their duties as trustees by failing to take adequate steps to protect and preserve the property following its damage by fire" (see at [20]). 11Ball J also considered it appropriate to require Mr Rix at the same time to file and serve "all the evidence on which he relies in support of that allegation" (see at [21]). 12Accordingly, Mr Rix was directed to file and serve an amended statement of claim and all the evidence upon which he relies in support of the amended statement of claim by 21 June 2013. The matter was stood over to the Registrar's List on 28 June 2013. Mr Rix did not comply with the direction made by Ball J, and did not appear on 28 June 2013. The matter was then adjourned to the Registrar's List on 18 July 2013. 13On 9 July 2013, Mr Rix filed a notice of motion seeking an extension of time for the filing and service of the amended statement of claim. The motion was returnable on 16 July 2013. On that day, Mr Rix appeared. Mr Rix informed the Senior Deputy Registrar that all of his evidence (including "a complete affidavit") was ready to be filed that day, along with an amended statement of claim. The Court granted an extension of the time for compliance with the direction made by Justice Ball to 4pm on 16 July 2013. The matter was stood over to 20 August 2013 for directions. 14Despite what was said to the Court on 16 July 2013, there was no compliance with the direction, at least insofar as it required the filing and service of evidence. Only an amended statement of claim was filed, albeit that such document contained an affidavit of verification sworn by Mr Rix. This pleading was clearly not in accordance with the terms of the leave granted by Ball J. Its subject matter went well beyond those terms. 15On 31 July 2013, the second and third defendants filed a notice of motion seeking orders that the amended statement of claim filed on 16 July 2013 be dismissed pursuant to Uniform Civil Procedure Rules 2005 r 13.4, or alternatively, that the amended statement of claim be struck out, either in whole or in part, pursuant to UCPR r 14.28. The motion was listed for hearing before me on 16 September 2013. 16At the hearing on that date, Mr Coleman of Senior Counsel, who appeared with Mr Yezerski for the second and third defendants, read affidavits sworn by Majella Turner on 30 July 2013 and 10 September 2013 in support of the motion, and tendered the exhibit to the first of those affidavits. 17Mr Rix, who was unrepresented (as has been the case throughout) tendered two bundles of photographs, most of which were taken of the interior or exterior of the Property before it was damaged by fire in March 2010. Some of the photographs show the Property in a dilapidated state. I assume that these were taken after the fire at a time when the Property was vacant. Some of the photographs appear to be of different properties. 18During the course of the hearing, I expressed the tentative view that, in circumstances where Mr Rix was unrepresented, I was minded to give him a further opportunity to file and serve a pleading confined to the claim the subject of the leave given by Ball J, and to place before the Court the evidence he relies on in support of that claim. I was also minded to give Mr Rix an opportunity to obtain some legal advice and representation. 19Following a short adjournment, orders were made, including that the amended statement of claim be struck out and that the plaintiff be given leave to re-plead, but limited to the allegation that the second and third defendants breached their duties as trustees by failing to take adequate steps to protect and preserve the Property following its damage by fire. The plaintiff was directed to serve any further amended statement of claim, and all evidence upon which he intended to rely, on or before 14 October 2013. The motion was then adjourned part-heard to today, 30 October 2013. 20On 3 October 2013, Mr Rix filed a further amended statement of claim. This document, which, in many respects, is similar to the earlier pleadings, is plainly unsatisfactory. It is unintelligible in parts and is largely embarrassing in form. It contains allegations which go beyond the terms of the leave granted for the filing of a further amended statement of claim. It contains material on page 2 in the following terms: "Neglect and causation allowing the property under care at XXX Gardeners Road Rosebery to fall into a serious state of disrepair, resulting in the property to be purchased at the auction sale at a vastly reduced value. ... On 10 March 2010 due to a major fire on the top floor of the four storey residence for two separate families causing 80% damage to the roof area of the above property whilst the trustees were in the process of selling the estate at auction, causing a delay whilst the Insurers, Chubb Insurance, had the assessors survey the damage, eventually accepting its liability for a pay-out in the sum of $575,000. ... On account of the delay in accepting the offer of $575,000, the property insurers, Chubb Insurance accepted liability and paid out the sum of $550,000 to the appointed trustees, Malcolm George Brown and Romando Di Donato late May 2011. Thus in the expectation that the usual procedure of repair and replacement of the property and contents to the original or close configuration construction. Up to this time the insurers carried out their responsibility with the utmost care with 24/7 private security and security fencing to protect the property and contents". 21The following appears on page 4: "Due to the trustees neglect in selling the property at the earliest convenient time the property was allowed to be in a position of the elements (storms) - vandalism (local louts). Pillage (break and entry) also having an extra-large back swimming pool that was left exposed when the damage to the back wall area was vandalised with a criminal risk to children's safety. The plaintiff's lower ground and first floor area of the property suffered the full extent of the three elements stated above over the extraordinary time that was negligent in the trustees Court appointment to sell the property after the payout money was paid into the trust of the trustees. The trustees ignored repeated requests from the plaintiff for the trustee's to secure the roof area of the property that had been firstly covered by the insurers, but over time ripped and became useless against the wind and rain, also becoming dangerous by forming large water dam entrapments in the roof above the home area, that continually poured rain water into the interior of the home that over time destroyed all the plaintiff's personal contents. The plaintiff became frustrated with the trustees neglect of maintaining in their fiduciary responsibility and seeing the property deteriorate into a disgraceful condition, that he began at his own expense to spend money and time to clean and protect the property from further neglect and prevent the continuous vandalism and break and entry. This resulted in the Trustees having the police arrive at the premises and threaten the plaintiff with trespass on the property". 22On 14 October 2013, Mr Rix filed yet another further amended statement of claim. This time, the document had a subheading "Final affidavits and documents in reply to Justice Darke's orders 16 September 2013". The document contains the following: "2. When Chubb Insurance Co accepted liability for the insurance claim with the property and contents at XXX Gardeners Road, Rosebery in the sum of $550,000 they withdrew the security fencing surrounding the entire perimeter of the estate and also withdrew the employed security guards of 24/7. 3. Under the Trust Act for Trustee's to perform expected professional responsibility to carry out their duty of care in the same manner for protection and surveillance from any loss or deterioration of that property with contents that could be caused by the elements of weather - vandals - looters - squatters or any other circumstances to devalue the property and also cause irreplaceable damage and loss of the beneficiaries possessions and memorabilia. 4. The plaintiff will rely on photo evidence prior to the fire March 2010 of the estate of XXX Gardeners Road, Rosebery. 5. The plaintiff will then rely on photo evidence of the lower ground floor and surrounds at the time of the auction by N G Farrah, Kingsford June 2011". 23Again, no evidence was filed and served by Mr Rix in compliance with the direction of the Court, although reference was made, in the document referred to the in preceding paragraph, to reliance being placed on photographs of the property taken before the fire and photographs of parts of the property taken in June 2011. 24As noted earlier, various photographs were tendered by Mr Rix on 16 September 2013. I understood Mr Rix to confirm today that the photographs referred to in the further amended statement of claim document were included in the photographs which were tendered on the last occasion. 25At the resumed hearing today, Mr Coleman read an affidavit sworn by Dougal Langusch on 24 October 2013. That affidavit contains evidence, albeit hearsay, to the effect that: (a)the property was damaged by fire on 4 March 2010 and again on 6 June 2010; (b)on about 15 April 2011, the trustees and an insurer agreed to a settlement of the property damage claim whereby the insurer agreed to pay $550,000; (c) the payment of that amount was made on 3 June 2011; and (d)the property was sold at auction in a fire damaged state on 28 July 2011 for $750,000. 26The principles which apply on a summary dismissal application are not in doubt. The leading case remains General Steel Industries Incorporated v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 129 - 130. Reference should also be made to Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 at [57] and the more recent decision of the High Court in Spencer v The Commonwealth [2010] HCA 28; (2010) 241 CLR 118, in particular at paragraphs [23] - [25] and [54] - [55]. 27These principles have been reiterated in recent times in the Court of Appeal (see, for example, in the context of summary judgment, O'Brien v Bank of Western Australia Limited [2013] NSWCA 71 at [3] per Macfarlan JA and at [66] per Ward JA and, in the context of summary dismissal, Simmons v Henwood [2013] NSWCA 184 at [95] per Emmett JA). 28The second and third defendants have, through their counsel, provided written submissions dated 10 September 2013 and 25 October 2013 and made oral submissions to the Court on 16 September 2013 and today. In essence, the second and third defendants press for the proceedings to be dismissed on two main grounds. These are: (1) that the pleading is liable to be struck out and dismissed on identical grounds to those which moved the Court to strike out the original statement of claim and the amended statement of claim and, for that reason, the pleading should be struck out in its entirety and leave to re-plead refused. It is submitted that where the plaintiff has had three opportunities to plead his case and failed to cure the deficiency in his pleading, any further leave to re-plead would be futile and the proceedings should, therefore, be dismissed; and (2) the plaintiff having failed to comply with the Court's orders to serve his evidence, such that the defendants cannot know the case they have to meet, the proceedings are properly subject to dismissal as an abuse of process. 29In essence, the submissions were to the effect that, having regard to the various orders which have been made and the non-compliance with those orders, the point has been reached where "enough is enough". 30Notwithstanding the deficiencies in the further amended statement of claim it is possible, in my view, to glean from it that Mr Rix wishes to pursue a case broadly to the effect that after the insurers ceased to have control over security for the fire damaged property (which seems to be about May 2011, although, in the course of submissions today, Mr Rix suggested that it was at some time in 2010), the trustees failed in their duty to protect and preserve the Property and its contents such that further damage was suffered, with the result that some of the contents were lost and the price obtained at auction was lower than it would have been had the trustees not been neglectful. 31Leaving aside for the moment the photographs which were tendered by Mr Rix, he has not adduced any evidence which, in any cogent way, supports the allegations of breach of duty on the part of the trustees, or the allegation that loss was thereby sustained by Mr Rix. This is the position despite Mr Rix being ordered to file and serve evidence in support of his claim on three occasions, namely, 24 May, 16 July and 16 September 2013. I do not regard Mr Rix's affidavits of verification of his pleadings as evidence of the character envisaged by those orders of the Court (compare ICM Agriculture Pty Ltd v Young [2009] FCA 109 at [76] per Lindgren J). 32The photographs themselves are clearly inadequate on their own to establish, even at a prima facie level, any breach of duty, let alone a breach which caused loss. In circumstances where the claim which the plaintiff has been permitted to pursue has, despite several attempts, not been able to be pleaded so as to identify with even a modicum of clarity the breaches alleged and the losses said to be caused by such, coupled with the failure, despite three directions of the Court, to adduce any cogent evidence which supports the allegations of breach or loss, I have very serious doubts about whether the claims could ever succeed. I am concerned that the proceedings are likely to prove futile and that, in the meantime, the second and third defendants will be put to unnecessary trouble and expense. 33However, the tests laid down in the authorities referred to earlier indicate that unless the Court is satisfied that the case "cannot possibly succeed", or that "under no possibility can there be a good cause of action", or that there is "a high degree of certainty about the ultimate outcome", then it is not appropriate to summarily dismiss a proceeding. 34I do not think that those tests are satisfied in the present case in relation to Mr Rix's claim, as described above. The claim is one which, at least in theory, is capable of being supported by evidence. The fact that Mr Rix has been unable to adduce any cogent evidence at this stage does not mean that he will inevitably be unable to do so in the future. 35The second and third defendants in their submissions do not suggest that the claim is of a type which is unknown to the law, or otherwise fundamentally flawed. It is not submitted, in terms, that the claim cannot possibly succeed, or even that it is almost certain that it will fail. Rather, it is put that, having regard to Mr Rix's failure to produce a proper pleading, "further leave to re-plead would be futile and the proceedings should therefore be dismissed". 36There is a distinction between the existence of a reasonable cause of action and the pleading of a reasonable cause of action, even if a failure after ample opportunity to plead a reasonable cause of action may suggest that none exists (see Lindgren J in White Industries Australia Limited v Federal Commissioner of Taxation (2007) 160 FCR 298 at 309 [47], cited in Spencer v Commonwealth (supra) at [23]). 37In the present case, the inability to plead a reasonable cause of action is no doubt explained, at least in part, by the fact that Mr Rix has not had assistance from a lawyer. 38The second and third defendants also refer to Mr Rix's failure to adduce evidence as required by the directions of the Court. It is submitted that the second and third defendants cannot know the case they have to meet and the proceedings are thus "subject to dismissal as an abuse of process". There is some force in that submission. 39In the absence of either a proper pleading, or some cogent evidence in support of the claim, the second and third defendants are left in a position of not knowing what case is really put against them. Nevertheless, I accept that Mr Rix, rightly or wrongly, genuinely believes there is a case against the second and third defendants, but, in the absence of assistance from a lawyer, he is finding it difficult, if not impossible, to properly formulate or advance his case. 40In these circumstances, I am not prepared to find that pursuit the proceedings is an abuse of process and liable to be dismissed on that basis. 41I therefore decline to dismiss the proceedings pursuant to UCPR r 13.4. 42The further amended statement of claim filed on 3 October 2013 should, however, be struck out pursuant to UCPR r 14.28. For the reasons referred to earlier, this pleading as a whole has a tendency to cause prejudice, embarrassment or delay in the proceedings. No good purpose would be served by attempting to retain any part of the pleading. Those parts which concern the claim in relation to the protection and preservation of the property are themselves embarrassing in form and, to a large degree, unintelligible. I would not require the second and third defendants to plead to such material. 43The document headed "Further amended statement of claim" filed on 14 October 2013, apparently in intended satisfaction of the direction made on 16 September 2013 concerning the filing of evidence, should also be struck out, either pursuant r 14.28 insofar as it can be regarded as a pleading, or otherwise pursuant to r 4.15 as irrelevant matter. 44Mr Rix did not request that he be given leave to re-plead in the event that his pleadings were struck out. I would not, in any case, grant such leave in the presently existing circumstances. It seems to me that merely giving such leave at this stage, perhaps coupled with another direction for the filing and service of evidence, would only be likely to produce yet another defective pleading with no cogent evidence in support of it. 45It is clear that Mr Rix requires the assistance of a lawyer to pursue his case. I accept that he is, as he says, impecunious and that it is difficult to obtain such assistance. However, there are pro bono legal aid schemes in existence, such as the scheme conducted by the Law Society of New South Wales, and Mr Rix should attempt to take advantage of such a scheme. Mr Rix seems to now accept that he needs such assistance. 46In this regard, it should also be noted that Mr Rix has previously been urged to obtain legal advice, including by the solicitors for the defendants in a letter dated 12 March 2013, and by the Court on 16 September 2013. 47Ultimately, if Mr Rix wishes to advance his claim in these proceedings, which I am not going to dismiss today, he will have to obtain the leave of the Court to file a pleading. He will need to file a notice of motion seeking such leave, supported by a draft pleading and, if possible, some evidence which supports his case. If such an application is made the Court will need to consider whether it is appropriate for leave to be given for the draft pleading to be filed and, if so, whether any such leave should be granted on terms, including as to payment by Mr Rix of some or all of the significant costs which the second and third defendants have no doubt wasted in responding to the inadequately pleaded case to date. 48I propose to order: (1)That the further amended statement of claim filed on 3 October 2013 be struck out pursuant to UCPR r 14.28. (2)That the further amended statement of claim filed on 14 October 2013 be struck out, either pursuant to UCPR r 14.28 or otherwise pursuant to UCPR r 4.15. (3)That the plaintiff pay the second and third defendants' costs of the notice of motion filed on 31 July 2013. 49The second and third defendants sought an order, pursuant to UCPR r 42.7, that such costs (and other costs the subject of earlier orders in their favour) be payable forthwith, primarily on the basis that if the proceedings are not dismissed leaving further pursuit of the matter dependent upon the plaintiff making an application for leave to file a pleading, it would be unsatisfactory if the second and third defendants were left in a position where they were unable to satisfy their costs orders for an indeterminate period. 50However, in circumstances where recovery is unlikely in any event, and the deficiencies in the way the matter has proceeded have been at least to some extent due to Mr Rix's inability to conduct the case unaided, as opposed to any unreasonable conduct on his part, I am not prepared to "otherwise order" under UCPR r 42.7, so as to make the costs payable forthwith. 51As I have said, however, there has clearly been a significant waste of costs due to the manner in which the case has been conducted to date by Mr Rix, and this would undoubtedly be relevant on any future question of whether terms should be imposed as a condition of any grant of leave to Mr Rix to file a pleading. 52I will make orders in accordance with the orders which I outlined in [48] above.