Sims v Suda Ltd

Federal Court of Australia|2015-03-27|Before: Gilmour J

REASONS FOR JUDGMENT 1 The respondent's application dated 12 September 2014 seeks orders that: (a) the originating application dated 14 August 2014 and the statement of claim dated 13 August 2014 be struck out pursuant to r 16.21(1) of the Federal Court Rules 2011 (Cth) (Rules) and the action be dismissed, alternatively judgment be entered for the respondent pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) (FCA Act); (b) the originating application dated 14 August 2014 and statement of claim dated 13 August 2014 be removed from the Court file pursuant to r 16.21(2) of the Rules; and (c) the applicant pay the respondent's costs on an indemnity basis. 2 The respondent relies upon affidavits by Rachel Megan King sworn 12 September 2014 and 12 November 2014.

The Court's jurisdiction 3 The Court has jurisdiction to strike out pleadings pursuant to r 16.21(1) of the Rules and to dismiss the proceedings and award summary judgment pursuant to s 31A of the FCA Act and r 26.01 of the Rules. 4 Rule 16.21(1) of the Rules enables the Court to strike out all or part of a pleading where it: (a) contains scandalous material; or (b) contains frivolous or vexatious material; or (c) is evasive or ambiguous; or (d) is likely to cause prejudice, embarrassment or delay in the proceeding; or (e) fails to disclose a reasonable cause of action or defence or other case appropriate to the nature of the pleading; or (f) is otherwise an abuse of the process of the Court. 5 By s 31A of the FCA Act the Court has the power to give summary judgment to a party if the Court is satisfied that the party prosecuting the proceedings has no reasonable prospect of successfully prosecuting all or part of the proceedings.

Background 6 The respondent is a company, listed on the ASX, formerly known as Eastland Medical Systems Ltd. The applicant is a former director and employee of the respondent. That relationship ended in June 2009 upon his resignation from both positions. Then began a series of legal actions by the applicant against the respondent. 7 The applicant, although self-represented, is well experienced in litigation having commenced at least 40 separate proceedings in his own name in various jurisdictions across Western Australia. 8 Whilst the Court affords some degree of "latitude" to an unrepresented litigant this does not extend to conferring on a litigant a licence to place to one side or to disregard the procedural requirements: Nyoni v Chee Koon Hee (No. 2) [2013] FCA 703 at [4]-[5], citing Underdown (estate of the late Samantha) v Secretary, Department of Education, Employment and Workplace Relations (2009) 50 AAR 54 at [17], and SZNFR v Minister for Immigration and Citizenship [2009] FCA 851 at [16]. As the Full Court of the Federal Court observed in Manolakis v Carter [2008] FCAFC 183 at [10]: Courts do not exist to allow self-represented litigants to make scatter-gun claims against all and sundry and to indulge themselves by using proceedings they have instituted as vehicles for what might be seen to be private 'Royal Commissions'. 9 The applicant has been made aware of the need to properly set out his claims when seeking redress by way of the judicial system. The Court of Appeal in Western Australia in Sims v Jooste QC [2013] WASCA 245 stated at: [17] The appellant, in his oral submissions, said that he wanted 'justice'. He did not seem to appreciate that justice required a disclosure of the legal basis for a claim put in a form that the respondent and court could understand in order to adjudicate fairly between the parties; . . . [19] If the appellant has genuine causes of action, then it appears that he requires the assistance of a lawyer before they will emerge. 10 This last observation of the Court of Appeal was adopted by the Federal Circuit Court in Suda Ltd v Sims [2013] FCCA 1833 at [73] when determining an application by the respondent in this proceeding to strike out a counterclaim made by the applicant in this proceeding. 11 Moreover, Barker J recently considered and dismissed another related proceeding commenced by the applicant as being an attempt to re-litigate previously determined disputes. In Sims v Chong [2014] FCA 1069 his Honour noted at [36] that: There must be finality in litigation. A litigant cannot take the same cause of action from one court to another when they are unsuccessful in the earlier proceeding. Indeed, in this case, the applicant had the opportunity to lodge a further statement of claim, if he (whether personally or on further legal advice) thought it was possible to do so. He attempted to file an acceptable statement of claim himself but was unsuccessful. The applicant then decided to divert that litigation to this Court and in the guise of an action against his former lawyer. In that regard, the decision of the New South Wales Court of Appeal in Rippon v Chilcotin Pty Ltd [2001] NSWCA 142; (2001) 53 NSWLR 198 provides a good example of how attempts to litigate or relitigate issues decided in other proceedings should not be allowed to go forward.

Basis of the application 12 The basis of the respondent's application, in short, is that the applicant's claim is entirely misconceived, fails to disclose a reasonable cause of action, attempts to re-litigate matters heard and determined by other courts, and is an abuse of process such that it should be struck out in its entirety and judgment of dismissal be entered without the applicant being afforded leave to re-plead. 13 I accept the respondent's submission that the applicant fails to clearly articulate his claim or sufficiently explain the required link between the factual matrix giving rise to the alleged causes of action and the relief sought. The statement of claim consists of disparate, generalised allegations against the respondent unsupported by the required facts or particulars.

The applicant's claims 14 The allegations made by the applicant in his statement of claim can be broadly categorised into three separate 'claims' for which the applicant seeks relief: (a) Breach of Contract - the applicant alleges that the respondent is in breach of an agreement to indemnify him with respect to a particular category of legal costs arising from a settlement deed (First Claim); (b) Breach of (Promise) Pledge - the applicant claims that the respondent agreed to pay him a sum of money for his "inventive steps" which he says was never completely paid and as a result claims (Second Claim); • $1,000,000 damages for breach of s 18 [of the Competition and Consumer Act 2010 (Cth) Sch 2] (ACL) and, or alternatively, s 52 of the Trade Practices Act 1974 (Cth) (TPA); and • $1,000,000 in quantum meruit; (c) Fraud - the applicant claims that debts owed to him by the respondent were not paid in a manner he says constitutes misleading and deceptive conduct in breach of s 18 [of the ACL], and, or alternatively, s 52 of the TPA, and contravened s 210 of the Corporations Act 2010 (Cth) and the provisions of the Competition and Consumer Act 2010 (Cth) (Third Claim). 15 I will deal with each of these in turn.

First Claim 16 The applicant alleges that the respondent breached its contractual obligations to the applicant contained in a deed dated 22 December 2010 and in doing so breached s 18 of the ACL and, or alternatively, s 52 of the TPA. The applicant pleads that the applicant and respondent entered into a deed whereby the respondent agreed to indemnify and release the applicant from all future litigation surrounding the $60,000 "Round Table Settlement". 17 As the respondent correctly identifies the applicant has failed to plead: (a) what the respondent's "Contractual obligations" were; (b) when or how they were breached; (c) which part of the deed provides the indemnity and release claimed; (d) what the $60,000 "Round Table settlement" is; (e) how the respondent is said to have "re-ignited the indemnified allegation" and how that is said to constitute a breach of the deed; or (f) how the alleged breach constitutes a contravention of s 18 of the ACL and, or alternatively, s 52 of the TPA (for example, the applicant fails to plead reliance). 18 I agree that the First Claim is legally unintelligible, ambiguous and vague and fails to identify material factual allegations or disclose a cause of action. 19 Moreover, I also accept the respondent's submission in respect of the relief sought that the applicant fails to particularise with any specificity: (a) how the legal costs claimed (apparently as a "counterclaim") relate to the alleged breach; (b) what legal costs were incurred and in relation to what proceedings; (c) when and in respect of which proceedings the firms of solicitors of Gibson & Gibson, and Michael Paterson & Associates were engaged; (d) what the legal costs in District Court proceedings CIV 2168 of 2012 are and why they are said to be recoverable by the applicant pursuant to an indemnity; (e) what the legal costs in Supreme Court, Court of Appeal proceedings CACV 11 of 2014 are (which is still on foot in any event) and why they are said to be recoverable. 20 I considered the terms of the pleaded deed in order to determine what, if any, merit there was, or potentially might be in relation to its terms and in turn whether I should grant the applicant liberty to re-plead. 21 Clause 3.3 of the deed is relied upon by the applicant. It imposed an obligation upon a company called Fee-Zone Pty Ltd to pay $60,000 to the respondent in certain circumstances. It imposed no obligation nor conferred any benefit upon the applicant. 22 Clause 5 is in the following terms: 5 RELEASE AND INDEMNITY 5.1 The Parties release and discharge each other from all liability for any claim arising in respect of, or in connection with: (a) The Action; and (b) The Counterclaim; and (c) The shares referred to in paragraph 3.3 above; and (d) The matters referred to in a Heads of Agreement signed by the parties on 16 November 2010 ("Heads of Agreement"); and (e) Any legal or other costs, charges, fees or expenses incurred in connection with the matters referred to in subclauses (a) to (d) above. 5.2 The releases referred to in paragraph 5.1 above do not apply in relation to any action to enforce the Heads of Agreement or this Deed. 23 No term of the indemnity provisions operates for the benefit of the applicant in relation to cl 3.3. No claim for breach of the indemnity under cl 5 referrable to the terms of cl 3.3 has any reasonable prospect of success. This claim will be struck out pursuant to r 16.21(1) of the Rules as failing to disclose a cause of action. I will not give leave to the applicant to re-plead in this respect. I would also give summary judgment in favour of the respondent under s 31A of the FCA Act as this supposed cause of action has no reasonable prospect of success.

Second Claim 24 This claim is for alleged non-payment for "inventive steps". 25 Apart from the other legitimate criticisms which may be levelled at this aspect of the pleading, it is apparent that, in part, the matters sought to be raised by the applicant are the subject of res judicata or the extended doctrine of Anshun estoppel in light of the decision of Registrar C Boyle in Sims v Suda Ltd [2014] WASC 3 (Sims v Suda Ltd [2014]). Registrar Boyle in that case considered the fifth iteration of the applicant's pleading in which he claimed breach by the respondents of an alleged contract that was entered into between February 2007 and November 2007 to pay him for the development and subsequent transfer of various trademarks and patents. 26 Registrar Boyle, in his reasons for judgment striking out the applicant's claim at [11] stated: The question of consideration has dogged the plaintiff's pleadings from the start. It is worth repeating that this is the fifth version of the statement of claim. Earlier versions approached the question differently. Each in essence pleaded that the plaintiff did certain things to the benefit of the company, and then made an agreement with the company that it would pay him for having done so. The plaintiff did not plead that he had done these things at the request of the company. Nor did he plead that he did these things as part of his then existing relationship with the company: indeed, it is central to his case that what he did was outside the scope of his engagements from time to time. 27 Thereafter the applicant sought, in effect, to re-agitate that claim in this Court: Sims v Chong. Justice Barker struck out the applicant's claim against the solicitor representing him in Sims v Suda Ltd [2014] for "deceptive and misleading conduct and unconscionable conduct … as well for alleged breaches of the practitioner's contractual and fiduciary obligations and negligence" (at [8]). His Honour said, in striking out the proceeding: [33] [I]t nonetheless appears to me to be an abuse of process to re-litigate essentially the same point through this proceeding against the practitioner; . . . [35] [I]it is not now open to the applicant to essentially re-litigate the contract argument in this proceeding. To do that is, in my view, an abuse of the process of the Court; [36] … The applicant then decided to divert that litigation to this Court and in the guise of an action against his former lawyer. 28 I have considered the correspondence relied upon by the applicant in support of this claim: his letter to the respondent dated 8 October 2007 and the response thereto dated 12 November 2007. 29 It is quite evident from that correspondence that this claim raises the same factual elements as were raised before Registrar Boyle in Sims v Suda Ltd [2014]. Of course, in that case the claim was solely based in contract. Here the applicant has sought to place the same essential facts within claims under s 18 of the ACL or, alternatively, s 52 of the TPA as well as a claim in quantum meruit. 30 Registrar Boyle's judgment is subject to an appeal which is yet to be determined. It should be noted that in that judgment Registrar Boyle acknowledged at [45] that the applicant might have an arguable claim, for example, in quantum meruit. Any such further claim ought to have been raised in that proceeding and not in this Court on the coattails of an asserted federal cause of action which, in my opinion, has no reasonable prospects of success. 31 Even if the respondent were in breach of an enforceable promise, and the judgment in Sims v Suda Ltd [2014] is to the opposite effect, the mere breach of such a promise does not give rise to any contravention of either s 18 of the ACL or s 52 of the TPA, at least not on the facts pleaded by the applicant. 32 Accordingly, I find that the applicant's claim in equity cannot be considered in isolation. A non-federal cause of action must not be severable from the federal cause of action in order for it to arise under the Court's accrued jurisdiction: Fencott v Muller (1983) 152 CLR 570 at 592-593 (per Gibbs CJ), at 605-607 (per Mason, Murphy, Brennan and Deane JJ). 33 There are, in any event, substantial technical difficulties with this part of the pleading which is so vague as to be embarrassing. It is unnecessary to detail these. 34 The Second Claim, reliant upon the statutory causes of action, should be dismissed pursuant to s 31A of the FCA Act. The further claim in quantum meruit should be struck out as an abuse of process pursuant to r 16.21(f) of the Rules.

Third Claim 35 The applicant alleges a "Fraudulent Act imposed upon the Applicant by the Respondent" and sets out a number of factual assertions in apparent support of this plea. They do not support it. Allegations of fraud must be distinctly alleged and distinctly proved. 36 A party should not be obliged to defend any legal proceedings, for any period, involving unspecified causes of action based on generalised allegations or impropriety: Oldfield Knott Architects Pty Ltd v Ortiz Investments Pty Ltd [2000] WASCA 255 at [41] per Ipp J with Wallwork J agreeing and see the Court of Appeal's comments in Sims v Jooste QC at [12]. 37 Even if the word "fraud" is used in the pleading, it is insufficient if it is no more than a bald assertion, absent reasonable particularity of the circumstances which are said to constitute the fraud: The Australian Metropolitan Life Assurance Company Ltd v Ure (1923) 33 CLR 199 at 219-220. 38 These requirements have not been met in this case. The applicant claims "misleading and deceptive conduct" but without any specificity. There is no attempt to address the elements required to prove such a claim. 39 The plea of misleading and deceptive conduct is particularised as follows: i) On the 17th June 2009, 5 days after the appointment of Michael Robert Stewart as the Applicant's replacement Director on the 12th June 2009, the Respondent paid Michael Robert Stewart $1403.33 Directors Fees, and ii) On the 22 June 2009 the Respondent paid Michael Robert Stewarts associated Company Kamala Holdings $141,000.00 without ratification of the Board or approval or knowledge of its Shareholders. iii) On the 22 June 2009 the Respondent paid its Chairman Peter Innes Jooste $31,400.00. iv) The Respondent in claiming it did not have the cash reserves to pay the Applicant and then proceeding to pay Director Michael Robert Stewart and his associated company contravened s18 of Australian Consumer Act 2010, and/or s52 of The Trade Practices Act 1974, and contravened of 210 of Corporations Law and in doing so, committed a criminal offence. v) The passing of that Resolution was an act designed to defraud the Applicant and force the Applicant to engage Legal Counsel to commence legal actions to obtain his payments. vi) The Resolution was made notwithstanding the Respondent's promise to pay the Applicant. The Applicant claims damages arising from this fraudulent Act and Resolution as assessed by the Court. 40 Allegations of misleading and deceptive conduct needs to be pleaded with the same level of care as that of fraud. The applicant's pleading falls well short of the required standard. 41 The thrust of the applicant's complaints seems to be that the respondent paid others but did not pay him and lied about not having the money to pay the applicant. Even if true, as to which I make no findings, such conduct is not actionable fraud nor is it actionable misleading or deceptive conduct. 42 Allegations of payments made by the respondent to Mr Michael Stewart or to his company or to Mr Peter Jooste QC are patently, on their face, incapable of constituting fraud. Even if it were otherwise, and it is not, they could not, on the basis of the pleaded facts, be a fraud actionable at the instance of the applicant. 43 Likewise the passing of the "Resolution" by the respondent never to pay the applicant anything, pleaded by the applicant, assuming this in fact occurred, is not capable of itself in sustaining a claim of fraud or misleading and deceptive conduct. 44 Furthermore, the pleading that the alleged conduct constituted a criminal offence by the respondent is scandalous. 45 The pleading in respect of the Third Claim does not disclose a cause of action and should be struck out. Further, because it has no prospect of success there will be judgment of dismissal pursuant to s 31A of the FCA Act.

Orders 46 It will be convenient to make orders globally covering all three asserted causes of action. The statement of claim in its entirety will be struck out pursuant to r 16.21 of the Rules. There will be judgment of dismissal in favour of the respondent under s 31A of the FCA Act. 47 The unsupported and unsupportable allegations of the commission by the respondent as a criminal offence are scandalous. Further I have found the claims, in part, are an abuse of process. I will, for those reasons, order that the statement of claim, pursuant to r 16.21(2), be removed from the Court file. 48 The applicant should also pay the respondent's costs on an indemnity basis. His claims, some of which were an abuse of process, were individually and in combination wholly without merit. A competent legal practitioner practising in litigation of this kind would have so advised him: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 400-401. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour.

Trade Practices Act 1974(Cth)s 52

Corporations Act 2010(Cth)

Federal Court Rules 2011(Cth)rr 16.21(1), 26.02

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