Stanizzo v Badarne

Stanizzo v Badarne - [2014] NSWSC 1334 - NSWSC 2014 case summary — Zoe

[3]

Background 5Mr Stanizzo was at all relevant times a solicitor practising at Warrawong, New South Wales. Between about February 2006 and 24 August 2009, Mr Badarne worked as a solicitor at Mr Stanizzo's firm. During that time, Mr Badarne was remunerated according to a fee sharing arrangement with Mr Stanizzo. 6Mr Stanizzo terminated Mr Badarne's employment with his firm in about August 2009, after which Mr Badarne practised with the second defendant ("Good Legal"). Good Legal is a law firm, the principal of which is a Mr Lagopodis. 7There were disputes between Mr Stanizzo and Mr Badarne in relation to clients for whom Mr Badarne performed work and the fees charged to the clients and in respect of monies which Mr Stanizzo alleges were received on account of fees and expenses but which were, on Mr Stanizzo's case, treated by him as payments for a different purpose because Mr Badarne misrepresented the basis on which the client had paid the money to the firm. Complaints were made by Mr Stanizzo to the Legal Services Commissioner relating to various aspects of Mr Badarne's conduct. Mr Badarne also made complaints to the Legal Services Commissioner concerning Mr Stanizzo's conduct. 8On 30 July 2010 Mr Stanizzo and Mr Badarne entered into a Deed of Settlement ("the Deed") which provided for Mr Badarne to collect outstanding fees and the percentages to which each would be entitled and, inter alia, that the parties to the Deed thereby released each other from any liability to each other, and waived and abandoned any right that either had or will have against the other, arising out of Mr Badarne's former association with Mr Stanizzo's firm. The Deed is significant because Mr Badarne claims that most of Mr Stanizzo's claims in the proceedings are precluded by virtue of the Deed, as Robb J found. 9By Notice of Motion dated 8 November 2013 Mr Badarne and Good Legal sought orders for either or both summary dismissal of Mr Stanizzo's claim and the striking out of the Statement of Claim. By Notice of Motion dated 11 November 2014 the fourth defendant ("Mr Aouad") also sought orders striking out the Statement of Claim, however Mr Stanizzo discontinued proceedings against Mr Aouad. Therefore, the only findings relevant to this application are those made by Robb J in relation to motion filed by Mr Badarne and Good Legal. The third defendant Mr Charmand, one of the clients of Mr Stanizzo, did not file a defence, and a declaration was made in chambers by Robb J at an earlier time that Mr Stanizzo is entitled to payment "of professional costs and disbursements" in the Charmand v Aouad case, and to an equitable lien on the proceeds of settlement and that Mr Charmand was to do all things necessary to enable Mr Stanizzo to enforce the lien by Mr Charmand making an application for payment of the costs due under the order made against Mr Aouad. 10Robb J (at [25]-[36]) was satisfied that Mr Stanizzo's claims in relation to: (a)the misappropriation of trust funds in connection with a client, Mr Ayoub, or his companies ("the Ayoub matter'); (b)the withdrawal of Caveat No. AE 260513N; and (c)the recovery of fees arising from matters known as "the Boumelhem matter" and "the Theoharidis matter" which were subject to the fee sharing arrangement should be summarily dismissed because they had all been released by Mr Stanizzo by the terms of the Deed. 11As to the balance of the Statement of Claim, Mr Stanizzo claimed recovery of fees against Mr Badarne and Good Legal in relation to matters known as "the Charmand matter" and "the Mazzone matter". Robb J struck out these claims because Mr Stanizzo had not adequately pleaded the material facts upon which the allegations were based. 12I note that, in relation to Mr Stanizzo's claim against Mr Badarne arising from the Charmand matter, Robb J said (at [50]): "In my view Mr Stanizzo is entitled to plead, if he can, a proper cause of action arising out of the Charmand matter in relation to the operation of clause B of the deed of settlement." In relation to Mr Stanizzo's claim against Good Legal, Robb J said (at [54]): "It is in my view highly doubtful that Mr Stanizzo will be able to plead any proper cause of action against Good Legal in relation to the Charmand claim." 13Mr Stanizzo (for whom Mr M Rollinson of counsel appears) now seeks leave to file an Amended Statement of Claim. In the amended pleading, Mr Stanizzo claims that Mr Badarne procured his execution of the Deed by misrepresentations and misleading and deceptive conduct and seeks: (a)a declaration that the Deed is voidable and has been voided, or (b)orders setting the Deed aside ab initio Mr D Pritchard SC appears with Mr D Krochmalik for Mr Badarne and Good Legal. 14On the basis that his claims to set aside the Deed are accepted by the Court Mr Stanizzo then claims further relief against Mr Badarne in respect of: (a)recovery of fees arising from the Boumelhem and Theoharidis matters; (b)misappropriation by Mr Badarne of trust funds in the purchase of the Property, such funds said by Mr Stanizzo to have been recovered from Mr Ayoub or his company for the payment of fees; (c)the extension of Caveat No. AE 260513N over land contained in Folio Identifier 22/1070953 ("the Goulburn Valley property") or equivalent injunctive relief; and (d)relief against Mr Badarne and Good Legal in respect of what are claimed to be outstanding legal fees arising from the Charmand and Mazzone matters. He has also added a claim in respect of two other clients, Mr & Mrs Tannous ("Tannous") for whom his firm acted against the Bank of Western Australia. Mr Stanizzo has explained in his affidavit of 19 August 2014 how he forgot about these clients. 15Mr Stanizzo has not appealed from Robb J's decision to dismiss summarily all of the claims that were held to be precluded by virtue of the Deed (or in respect of the decision to strike out the remaining portions of the Statement of Claim). Instead what he now seeks to do in his draft Amended Statement of Claim is to assert that the Deed was obtained by fraudulent misrepresentation and misleading and deceptive conduct (see paras 23-36 of the draft Amended Statement of Claim). The pleading initially also seems to assert non fraudulent misrepresentation as an alternative basis but Mr Rollinson made it clear that fraud is what is alleged. In summary Mr Stanizzo says that he did not know that Mr Badarne had, in conjunction with a Ms Vivian Valvano, concocted claims against Mr Stanizzo to induce a police prosecution of Mr Stanizzo and an investigation by the Law Society or the Legal Services Commissioner. Mr Stanizzo was charged with 12 offences involving Ms Valvano and initially pleaded guilty to those charges but later sought, successfully, to withdraw his plea. I shall refer to these as "the Valvano charges". The Valvano charges were "no-billed" in August 2013. Mr Stanizzo claims that Mr Badarne also made false claims to the Police concerning Mr Stanizzo's conduct towards Mr Badarne which also led to a separate charge additional to those involving Ms Valvano. I shall refer to this as "the Badarne charge". The Badarne charge was no billed in January 2014 and Mr Stanizzo was informed of that fact on 15 Janaury 2014 (see para 9 of Mr Stanizzo's affidavit dated 22 May 2014). He alleges that Mr Badarne intended by his actions to prevent Mr Stanizzo from enforcing Mr Badarne's obligations under the Deed and that the conduct involved a fraudulent "misrepresentation by silence" or misleading and deceptive conduct in trade or commerce in breach of s 42 of the Fair Trading Act 1987 (NSW) ("the Fair Trading Act"). 16In the District Court proceedings to which I earlier referred Mr Stanizzo is suing Mr Badarne for malicious prosecution in connection with the Valvano charges and the separate Badarne charge. 17There are four issues: (1)Should leave be granted to Mr Stanizzo to file the proposed Amended Statement of Claim insofar as it relates to Boumelhem, Theoharadis, Ayoub and Tannous. Mr Rollinson accepted that the Tannous claim is in the same category and cannot be pursued if the Deed stands. (2)Should leave be granted to Mr Stanizzo to file the proposed Amended Statement of Claim so far as it deals with Charmand and Mazzone. (3)Whether an existing caveat is to be permitted to remain on the Title. The Registrar-General has indicated that no action will be taken to remove the caveat: see Exh B. (4)Whether the District Court proceedings should be transferred to this Court. 18Mr Badarne and Good Legal say that leave should not be granted for the filing of the Amended Statement of Claim for the following reasons: (1)That all of the causes of action which the plaintiff seeks to maintain were dealt with by Robb J (other than Charmand and Mazzone) because his Honour held that by the Deed Mr Stanizzo had lost any rights that he otherwise might had had to claim from Mr Badarne. Mr Badarne and Good Legal claim that since there has been no appeal from Robb J's decision the right of the plaintiff to claim has been lost after "a hearing on the merits" and that the only basis on which that decision can be undone is by meeting the requirement of s 91(2). They claim that there is no evidence of any facts or circumstances not known to the plaintiff at the time of the hearing before Robb J. (2)That the rule in Brimaud v Honeysett Instant Print Pty Ltd 214 ALR 44 applies, and further that the contention that the Deed is liable to be set aside is an abuse of process with reliance on Sea Culture International v Scales (1991) 32 FCR 275 at [279] per French CJ (as his Honour then was). (3)That the principle of Anshun estoppel (Port of Melbourne Authority v Anshun (1981) 147 CLR 35) applies and the plaintiff's failure to bring any claim in the Statement of Claim to set aside the Deed precludes him from now being able to maintain such a claim. (4)That application of ss 56-60 of the Civil Procedure Act 2005 (NSW) ("the CPA") either alone or in conjunction with (1)-(3) should prevent the agitation of the misrepresentation/misleading conduct claims. (5)That insofar as the plaintiff seeks to set aside the Deed on the grounds that the Deed was procured by misrepresentation and or fraudulent conduct that claim cannot be advanced because the plaintiff elected to commence proceedings against Mr Badarne on the basis of the Deed in the Statement of Claim, and that is inconsistent with the claim that the Deed should be set aside, and constitutes an irrevocable election. (6)Insofar as the claim to set aside the Deed is based on s 42 of the Fair Trading Act it discloses no cause of action because silence per se is not enough, and no adequate basis for misleading conduct has been identified. (7)That since the plaintiff's claim to be entitled to set aside the Deed is based on fraud it must be, and has not been, properly particularised. 19In order to understand the issues and the contentions of both parties in respect of them I need to refer to some parts of the evidence. 20The plaintiff's evidence explaining why he did not include the present misrepresentation and misleading and deceptive conduct claims is that shortly before the original Statement of Claim was filed and served in August 2013, he consulted Mr Charles Waterstreet, a barrister: "...about commencing proceedings against Badarne for the misappropriations and other matters pleaded in the ASC, which could involve applying to set aside the Deed on the ground of Badarne's conduct leading up to it. He advised me not to include such allegations in any pleading I filed, given that the second criminal trial was still pending and the fact that Badarne would be a witness in it. Mr Rollinson had supplied a draft pleading similar to but more detailed than the draft of 2010. Mr Waterstreet advised me to commence the action in this form and consider amendment after the second trial was disposed of. I accepted this advice and filed the original SC on 26 September 2013." (para 6 affidavit of plaintiff 19 August 2014, CB Tab 9F) 21The reference in the paragraph cited above to "the second criminal trial" was the trial concerning the Badarne charge. 22Mr Stanizzo says that Mr Waterstreet informed him at the time that the Badarne charge was no billed that the amendment could then be made to the Statement of Claim but, neither Mr Waterstreet, nor another barrister whom Mr Stanizzo briefed in his stead, did make the changes which now appear in the Amended Statement of Claim, prior to the hearing before Robb J. There is no suggestion in Mr Stanizzo's affidavit that anything was said to Robb J about a wish to amend the pleadings to include an allegation that the Deed was procured by misrepresentation, fraudulent or otherwise, or misleading and deceptive conduct. His Honour noted at [7] of his judgment that Mr Stanizzo had informed the solicitors for Mr Aouad that he intended to amend his Statement of Claim "to join those solicitors as defendants" but apparently nothing more was said about amendment. His Honour noted that although Mr Stanizzo advised the Court of his difficulties in not having counsel to represent him but did not seek an adjournment "so that he could secure the representation of counsel" (at [9]). His Honour therefore proceeded with the hearing of the strike out and summary dismissal motions. 23The plaintiff says that Mr Badarne never told him that he had, in November 2009, given to the police a statement that was supportive of Ms Valvano's claim and indeed he says that Mr Badarne provided him with an affidavit that would assist Mr Stanizzo's defence of Ms Valvano's claims against him: see para 11 of Mr Stanizzo's affidavit of 19 August 2014 and Annexure A thereto. That latter asserted fact is not a matter pleaded in the Amended Statement of Claim. Mr Rollinson in the course of submissions contended that Mr Badarne had in late 2009 and 2010 a choice to proceed with assisting the prosecution by providing evidence or proceeding with the Deed but not both. Mr Rollinson submitted Mr Badarne was required to inform Mr Stanizzo he was "in touch with the police in regard to the matters involving himself and the plaintiff and involving Ms Valvano and the plaintiff" (T 119.1-4) and that Mr Badarne's failure to advise was fraudulent or amounted to misleading and deceptive conduct since what he was doing was actually assisting in promoting Ms Valvano's claims and hence the prosecution of Mr Stanizzo. 24The most significant underlying claim precluded by the judgment of Robb J in April 2014 is one based on the receipt by Mr Stanizzo for $220,000. It was received in August 2007 in two lots, one for $200,000 and one for $20,000. 25There is no dispute that on 2 August 2007 Mr Stanizzo received $200,000 and himself issued a receipt to Mr Carlo Habib which described the monies received as "Re Badarne Purchase (B19)" (see T31.50). Mr Stanizzo also issued a receipt to Enviro Energy for $20,000 on 21 May 2007 which contained the words "purchase from Mataglia". Mr Mataglia, it is common ground, was the vendor of the property that Mr Badarne was at the time buying. 26Mr Stanizzo says that Mr Badarne at the time of his completion of the receipts told him that the $220,000 was a loan from Mr Ayoub (or his companies) which Mr Ayoub had agreed to make to help Mr Badarne buy the property. He says he accepted what Mr Badarne told him and issued the receipts on that basis. 27It seems to be undisputed that Mr Ayoub and his various companies had been clients of another firm, LBC, at which Mr Badarne had previously been employed and for whom Mr Badarne, whilst so employed, had carried out work and that Mr Badarne had become friendly with Mr Ayoub. 28Mr Stanizzo claims that the statement made to him about the $220,000 being a loan was untrue because of subsequent conversations to which he deposes in para 50 of his affidavit of 23 July 2014 which I set out below: "On 19 December 2008, first Ayoub and later another person who identified himself to me as Carlo Habib rang me requesting return of $200,000.00. The following conversation took place to the best of my recollections: Ayoub said: "I am standing in front of the Law Society building in Sydney. If you don't remove the Caveat I will do you in" I said; "Why should I remove the caveat you haven't paid my costs as you promised" Ayoub said: "I paid them to Badarne". Ayoub terminated the call. Within seconds I received another call from a person who identified himself as Carlo Habib and he said words to the following effect: "you and that f... Badarne better watch your step. I want my $200,000.00 back. They were to be used to buy into Michael's service station." I was taken aback by such revelations. This money was the same moneys credited to my Trust account on 2 August 2007 without my knowledge (at the time of banking). I do not know who banked the money. I issued a trust account receipt subsequently from details given me by Badarne." and see also paras 51-54 of that affidavit. 29The reference to a caveat I take to have been to a caveat lodged by Mr Stanizzo over the Goulburn Valley property. The first caveat lodged on the Property (i.e. owned by Mr Badarne) was on or about 5 September 2009 claiming: Interest as beneficiary under constructive trust, arising from misappropriation by registered proprietor of moneys belonging to caveator and use of the moneys to acquire the subject property. (CB, p 25 Tab 10(e)). 30Mr Stanizzo having received a letter from LBC in which LBC claimed that Mr Ayoub had paid $200,000 to Mr Badarne on account of fees owed to LBC: see para 42 of Mr Stanizzo's affidavit dated 23 July 2014, decided to withdraw that caveat over the Goulburn Valley property on Mr Badarne's assurance to him that he would write to LBC and clarify the issue (para 45). I should note that Mr Rollinson sought to tender the letter itself but this was objected to by Mr Pritchard on the basis that it was a without prejudice letter sent in connection with negotiations to resolve the dispute between LBC and Mr Badarne and or Mr Stanizzo. Paras 42-45 were not however the subject of objection. 31The second caveat was lodged on 23 April 2014. The Registrar-General threated to remove it following a lapsing notice served on Mr Stanizzo's office (the address given by Mr Stanizzo in his caveat) and a statutory declaration provided to the Land and Property Service by Mr Lagopodis. Mr Stanizzo seeks to lodge a third caveat, or to obtain an order maintaining the second caveat until his claims are heard. 32Mr Badarne, in his affidavit, claims that the $200,000 of the $220,000 represented monies assigned to him by a Mr Ahmed Abou Ria, his cousin, pursuant to a deed dated 31 July 2007. Mr Badarne claims that those monies represented a payment by Mr Ayoub to Mr Ria in compensation for injuries Mr Ria had incurred whilst working for one of Mr Ayoub's companies (see paras 19 to 20 of Mr Badarne's affidavit of 5 June 2014, CB Tab 10(e)). The deed to which Mr Badarne, Mr Ria and Mr Ayoub are parties is found at "L" (CB, p 70) and provides for the payment of the $230,000 to Mr Ria and assignment of that debt by Mr Ria to Mr Badarne. It also provides that Mr Badarne was to repay the $230,000 less deductions after three years. Mr Badarne says that the $20,000 of the $220,000 came from the sale to Enviro Energy of an excavator.

[4]

The effect of the decision of Robb J 33The defendants rely on UCPR 13.5 which is in the following terms: If, in any proceedings: (a) a party applies for an order for dismissal of proceedings, and (b) the proceedings are not wholly disposed of by dismissal, the proceedings may be continued as regards any claim or part of a claim not disposed of by dismissal. This, and Robb J's orders, they say, permits Mr Stanizzo to continue only with the matters which were not dismissed, subject to a proper repleading. The proposed Amended Statement of Claim therefore does not meet the requirement imposed by Robb J. 34The defendants also rely on s 91 of the CPA which is in the following terms: 91 Effect of dismissal of proceedings (1) Dismissal of: (a) any proceedings, either generally or in relation to any cause of action, or (b) the whole or any part of a claim for relief in any proceedings, does not, subject to the terms on which any order for dismissal was made, prevent the plaintiff from bringing fresh proceedings or claiming the same relief in fresh proceedings. (2) Despite subsection (1), if, following a determination on the merits in any proceedings, the court dismisses the proceedings, or any claim for relief in the proceedings, the plaintiff is not entitled to claim any relief in respect of the same cause of action in any subsequent proceedings commenced in that or any other court. 35Mr Pritchard submits that there has been a hearing on the merits and that Robb J, implicitly applying the principles application to summary dismissal reiterated in O'Brien v Bank of Western Australia (2013) BPR 31,705; [2013] NSWCA 71 at [3] per MacFarlan JA and at [66]-[68] per Ward JA, dismissed pursuant to UCPR 13.4 the claims made in the Statement of Claim except those relating to Charmand and Mazzone. He submits that the present application for leave to file an Amended Statement of Claim which in effect re-agitates the claims which Robb J dismissed is not within the contemplation of the orders made by Robb J from which there has been no appeal. 36In resisting this conclusion Mr Rollinson contends that the decision by Robb J was an interlocutory decision and not a "determination on the merits" as required by s 91(2). He submits that Robb J was not called on to decide whether the Deed was valid or not and that there has never been any determination of that question. He also submits that the right to set aside the Deed was not a valid reply to such a defence so that the existence of such a right was not even implicitly in issue. 37Mr Pritchard relies on Bridie v Messina (1965) 66 SR (NSW) 446 at 453 per Sugerman J; Tawil v Public Trustee of NSW [2009] NSWSC 256 per Brereton J; Ferella v Otvosi [2005] NSWSC 678 per Hamilton J; and Hargraves Security Investments Ltd v Michael Slaven as Trustee of Bankrupt Estate of Roslyn Edwina Waller [2013] NSWSC 673 per Hall J. 38Mr Rollinson also relies on Bridie contending that what occurred before Robb J was akin to a non-suit. 39I should note that s 75A(8) of the Supreme Court Act 1970 (NSW) ("the SCA") uses the words "after a trial or hearing on the merits" in connection with precluding the Court from receiving further evidence "except on special grounds" and reference was made to Deputy Commissioner of Taxation v Jane Mary Sakovits [2010] NSWSC 1322 per Davies J; Martin v Abbott Australia Pty Ltd [1981] 2 NSWLR 430; and Wickstead v Browne (1992) 30 NSWLR 1 but later in submissions Mr Rollinson conceded that Sakovits, Martin, and Wickstead are all cases on s 75A of the SCA and that these cases are dealing with such a different context that discussions about the meaning of merits in that section are of little utility in considering s 91(2): see T102.42-49. 40Mr Pritchard accepts that a decision for summary dismissal is treated as an interlocutory decision: see Macatangay v State of New South Wales (No 2) [2009] NSWCA 272 at [11] per Allsop P, Tobias JA and Handley AJA agreeing, with the consequence that there is no res judicata applicable. He submits however that the Court has determined, adversely to the plaintiff, that the causes of action have been terminated by the Deed and the plaintiff has given away whatever rights he may have had. That, Mr Pritchard submits, is a hearing on its merits, and Mr Stanizzo must either appeal or bring himself within s 91(2) to proceed with causes of action that were ruled on by Robb J. 41The passage, at pp 453 in Bridie to which both counsel refer, is expressed in the following terms by Sugerman J: "A hearing on the merits is one in which the issues of fact or law, or both, between the parties are fought out to a final conclusion binding upon the parties - a decision "upon the merits". It does not seem to matter that the determination of one or some only of the issues may suffice to decide the whole controversy, or that the issues may be decided on facts which are the subject of admission and not of dispute or even of evidence. Without purporting to make an exhaustive enumeration, or to state all the qualifications which may be necessary, a hearing may be said not to have been on the merits if it resulted in a decision which was not final but analogous rather to a non-suit, or if, for some such reason as withdrawal, want of jurisdiction, non-compliance with some preliminary requirement, defect in the information, or other technical or procedural informality or irregularity, it did not result, or could not have resulted, in a decision on the merits, final in its nature and capable of supporting (in criminal cases) a plea of autrefois acquit or autrefois convict." 42In Bridie Maguire J agreed with Sugerman J and Wallace J agreed with the conclusion and said nothing casting doubt on Sugerman J's analysis. It will be observed that the case involved a criminal prosecution for assault, and that it was a dismissal of an information pursuant to a plea of autre fois acquit was held to be a hearing "upon the merits". Nevertheless the obiter dictum set out above provides important guidance from the Court of Appeal as to how a decision that a Deed entered into by a plaintiff precludes claims being brought is to be viewed. 43In Tawil the plaintiff had many years previously brought proceedings seeking a declaration that property had been given to him as a donatio mortis causa. The trial judge Hodgson CJ in Equity as his Honour then was held that the Public Trustee joined as a defendant but which did not appear was not an appropriate contradictor but he also concluded that the gift was not an effective donatio mortis causa. Brereton J held that Tawil could not bring proceedings against the administrator of an estate because of s 91: "The merits of a claim, naturally enough, involve its legal merits as well as its factual merits. A determination on the merits is normally to be distinguished from a determination by default or by consent or by a dismissal for non-prosecution which does not involve examination of the merits. In this case, what took place before Hodgson CJ in Eq on 1 July 1998 was the final hearing of a summons for a declaration. While no contradictor was present, the evidence in support of that declaration was put before the Court and considered by the Judge. The Judge did not dismiss the case for want of prosecution, but because on the merits his Honour came to the conclusion that the plaintiff was not entitled to the relief sought." 44In Tawil there had earlier been a final hearing of a summons for a declaration so the case is not directly in point but Brereton J's distinction between a determination of the merits as opposed to "a determination by default or by consent or by a dismissal for non-prosecution which does not involve examination of the merits" is very similar to the approach of the Court of Appeal in Bridie. 45In Hargraves Hall J held that the lender was not precluded from enforcing a loan debt against the trustee in bankruptcy of the estate of Ms Waller because of earlier decisions of the High Court based on the need to comply with notice provisions in respect of farm debts when Ms Waller had not been a bankrupt. His Honour at [45] of Hargraves said: "Reference has been made above to the dicta of Sugerman J in Bridie v Messina. His Honour's observations in that case to the effect that the determination on one or some only of issues in proceedings may suffice to decide the whole controversy is, in my opinion, relevant to the issue raised on behalf of Ms Waller in terms of the submission that there has been a determination on the merits. As his Honour there observed, a hearing may be said not to have been on the merits if it resulted in a decision which was final but not analogous, for example, to a non-suit or where there has been non-compliance with a preliminary requirement." His Honour, by this, clearly accepts that decision in Bridie as providing guidance in the civil arena although I note that the citation of part of the passage from Sugerman J's judgment at [25] is incorrect inverting "not final but analogous" to "final but not analogous" which may have led Hall J to put the proposition in the manner that he did in the paragraph (from Hargraves) set out above. 46I do not read Newmont Pty Ltd v Laverton Nickel NL [No 2] [1981] 1 NSWLR 221 per Needham J or Ferella v Otvosi (2006) 63 NSWLR 523 per Hamilton J as assisting on the question of whether a summary dismissal can amount to a "determination on the merits". 47I have referred to Mr Rollinson's contention that the question which Robb J had to determine was whether the Deed precluded claims from being advanced - not whether the Deed was valid. In one sense that is true but his Honour must implicitly have proceeded on the assumption that the Deed was valid because if not valid it would not have provided an effective bar to Mr Stanizzo's claims and his Honour did so, I infer, because he was not apprised of any argument by the plaintiff to the contrary - indeed the pleading, at least in part, relied on the Deed. What Robb J decided was that the claims which Mr Stanizzo sought to propound were no longer available to him. 48Bridie, Tawil and Hargraves all seem to proceed upon the basis that there is a difference between dismissal of proceedings for procedural or jurisdictional reasons and dismissal for reasons which are inherent in or part of the justiciable dispute or the absence of such a dispute. A decision that proceedings are statute barred leading to dismissal (for example) or are precluded by reason of a deed of settlement (as here) are of a type that would be sufficient to decide the whole controversy even if all other issues had been decided adversely to the defendant although in the taxonomy of interlocutory and final decision summary dismissal is said to fall in the former category and not yield a res judicata. 49Non-suits and their history are described in detail by Windeyer J in Jones v Dunkel (1959) 101 CLR 298 at pp 321-332 the procedure starting off as a means by which a plaintiff could seek to terminate proceedings when he feared, or was aware, that he did not have sufficient evidence to make out his claims and would be free to commence his actions again after the non-suit (see also Young, O'Leary & Hogan Supreme Court Civil Procedure in New South Wales, 2nd Ed, 1987, para 24.216). The non-suit has found its way (under another name) into the UCPR 29.9 and also relevant is 29.10 which are concerned with cases where the defendant or opposing party contends that on the evidence given by the plaintiff or moving party, a judgment for the plaintiff or moving party could not be supported. I do not accept that summary dismissal based on the existence of a deed which bars a plaintiff's claims is analogous to, or akin to, a non-suit. 50The decision in the present case was not based on, for example, failure to meet a timetable, want of prosecution, failure to pay an outstanding costs order in earlier proceedings or the proceedings being brought in the wrong jurisdiction. In my view the reasoning of the Court of Appeal in Bridie supports the conclusion for which Mr Badarne and Good Legal contend. 51S 91 is solely concerned with cases of dismissal. The section does not limit itself to hearings in which all matters in dispute on the pleadings are determined, indeed it focuses on "claims for relief" and "determinations on the merits". In construing the statute I am required by s 56(2) to give effect to the overriding purpose of the CPA and rules of the Court in civil proceedings, which is to facilitate the just, quick and cheap resolution of the real issues in the proceedings (s 56(2)), and I note that parties are required to assist the Court to further the overriding purpose. The mechanism of summary dismissal is provided by part 13.4 and it is a useful provision to deal with cases in which there is some fundamental problem with the claim brought by a plaintiff the determination of which will remove the need for (and expense for both parties of and use of the Court's resources on) a hearing on all of the matters advanced by the pleading. The section does not completely shut out a plaintiff from reagitating the causes of action if he can establish the conditions specified in s 91(2). An interpretation of s 91(2) which would lead to a plaintiff being able to commence fresh proceedings without the earlier determination having practical effect and without meeting the requirement of s 91(2) is not one which promotes the just quick and cheap resolution of disputes. 52In my view the question of whether the causes of action are barred has been determined by Robb J "on the merits". I recognise however that there is a close relationship between this point and the Brimaud v Honeysett point with which I deal below. 53I hold therefore that s 91(2) applies and as the plaintiff has failed to establish (indeed has not even put forward any evidence) that any of the matters now asserted were not within his knowledge when the Statement of Claim was issued, leave to file the Amended Statement of Claim should be refused.

[5]

The Brimaud v Honeysett point 54In Brimaud v Honeysett McLelland J (as his Honour then was) struck out a motion seeking to set aside an order appointing a provisional liquidator that had previously been made by the Court. His Honour noted that the matters which the defendant sought to agitate were all matters which could have been the subject of evidence and raised at the earlier hearing and struck out the motion. At p 46.12-.27 his Honour said: "The private injustice and public undesirability of permitting the relitigation of matters already litigated once is recognised in a number of principles of law, notably the rules relating to res judicata and issue estoppel, the more flexible rules under the rubric of vexation and abuse of process illustrated in such cases as Stephenson v Garrett [1891] 1 QB 677 and Hunter v Chief Constable, West Midlands Police [1982] AC 529 ; [1981] 3 All ER 727, and the restrictive provisions governing the adducing of further evidence on the hearing of an appeal even by way of rehearing: see, for example s 75A(8) of the Supreme Court Act 1970 (NSW). Interlocutory orders, of their very nature, create no res judicata or estoppel, and the court retains jurisdiction to set aside, vary or discharge an interlocutory order up to the time of the final disposition of the proceedings. However the general rationale of the principles last referred to applies even in the case of interlocutory orders. It would be conducive to great injustice and enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order relitigated at will." 55There are several points to made concerning the passage set out above: (1)His Honour in focusing on the private injustice and public undesirability of permitting the re-litigation of matters already litigated is addressing a theme linked to a more general concern that limited judicial resources and the resources of litigants are not wasted which is also reflected in ss 56-60 of the CPA and see AON Risk Services v Australian National University (2009) 239 CLR 175 at [111]-[114] per Gummow, Hayne, Crennan, Kiefel and Bell JJ, and it is also reflected by the inherent power to prevent misuse of its own processes see Sea Culture at p 279. (2)His Honour draws a distinction between orders of a merely procedural matter (and orders made by agreement and without contest until further order) on the one hand and orders of "a substantive nature made after a contested hearing" on the other. (3)The imposition of limits on re-litigation of an interlocutory application does not preclude an application to set aside, vary or discharge the order based on "a material change of circumstances" since the original application was heard, or the discovery of new material which could not reasonably have been put before the Court on the hearing of the original application. (4)The importance of the restraint is enhanced, if contrary to the view I have expressed above, the hearing on the issue of the availability of causes of action said to be precluded by the Deed was not a determination on the merits within the meaning of s 91(2). 56In Bank of Western Australia v Tannous No 4 [2013] NSWSC 182 Davies J relevantly having held that the Anshun principle was not engaged relying on Welker v Rinehart (No 6) [2012] NSWSC 160 at [15]-[18] and other cases, but then said: "Nevertheless, similar considerations may apply to an interlocutory application. In a case where there has been a contested interlocutory hearing the ordinary rule is that there would need to be a material change of circumstance's to set aside, vary or discharge the earlier order: Brimaud v Honeysett Instant Print Pty Ltd (1982) 217 ALR 44". 57I have referred to the plaintiff's explanation for his failure to advance the allegations concerning the Deed. Of course Mr Waterstreet has no opportunity to respond to the allegation concerning the advice that he is said to have given and whilst I find it somewhat unlikely that a barrister of Mr Waterstreet's years of experience would give such advice and find the supposed rationale, namely that it would be, because of the criminal charges, inadvisable for Mr Stanizzo to bring a case against Mr Badarne based on fraud and misleading and deceptive conduct when it was not inadvisable to bring a claim against Mr Badarne for breach of the Deed and other matters, difficult to follow, I must, for the purposes of this application, accept that that is what he did tell Mr Stanizzo. Accepting that it was given there are three problems with it in the present context: (1)The supposed obstacle to the misrepresentation and s 42 case being pleaded was removed well before the hearing before Robb J. (2)The failure to ensure that it was pleaded after the prosecution indicated in January that it would not proceed with the sole remaining charge and prior to 29 April 2014 cannot be laid only (if at all) at the door of counsel. The plaintiff, as a solicitor, must have appreciated that he had the option of drafting the amendment himself or briefing counsel who was available. (3)The failure of the plaintiff to advise the Court when he appeared for the hearing of the summary dismissal motion that he wished to amend when on his evidence he was fully cognisant of the nature of the amendment and at the very least the thrust of that amendment, is a very relevant matter in considering whether the discretion should be exercised against him. 58I would add that in considering the question of discretion I doubt that the fact that a barrister has advised the client not to bring forward a claim is a matter that should be permitted to weigh in favour of the party who has failed to bring that matter forward, particularly where the supposed rationale has no logical basis. However, given the three matters adverted to in [57] I do not think it is necessary to express a concluded view on that question. 59In my view the plaintiff ought not be permitted to advance a claim to set aside the Deed. That contention should have been advanced in the Statement of Claim or in an Amended Statement of Claim served before the date Robb J had to deal with the defendant's motion. At the very least the plaintiff ought to have apprised Robb J of his desire to amend the Statement of Claim at the commencement of the hearing of the defendant's motion. His failure to include the relief in his original Statement of Claim, to arrange an amendment of the Statement of Claim or to apprise Robb J of the desire to amend all tell against him now being permitted to do so.

[6]

Anshun 60Mr Rollinson submitted that Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45, (1981) 147 CLR 589 ("Anshun") requires that for an estoppel of this kind to operate the matter which was not raised was one so clearly part of the subject matter of the initial litigation and so clearly could have been raised that it would be an abuse of process to allow a new proceeding (see p 602 per Gibbs CJ, Mason and Ackin JJ) but also that there must be a likelihood that omission to plead a matter will contribute to the existence of conflicting judgments. I think there is considerable scope for debate as to whether all matters pertinent to an application for summary dismissal should be ventilated on the one occasion and if they are not as to whether a party can be precluded from subsequently raising them on the basis of Anshun. I do not think that counsel's advice that the point did not need to be raised can provide adequate justification for the failure to do so unless the advice provided cogent reasons for that course. The plurality in Anshun did point to the importance of the prospect of conflicting judgments (even if not describing it as a second requirement) but I think there will here be a prospect of inconsistent judgments - one from Robb J that says the plaintiff has no cause of action in respect of all former clients and matters (except for Charmand and Mazzone) and a judgment (if the plaintiff's claims be upheld) which says that he does have a right to claim from Mr Badarne on all matters. The defendants may be able at a final hearing to gain support from Electra Private Equity Partners v KDMF [2001] BCLC 589 at 625; Stokes v McCourt [2013] NSWSC 1014 and Spencer, Bower and Handley Res Judicata 4th Ed at 5.31-32, on which I express now view, but there is, however, authority for the proposition that Anshun does not apply to summary dismissal of a claim: see the cases collected in Bank of Western Australia v Tannous (No 4) at [47], which means that the defendant cannot, on a summary basis, succeed on the basis of Anshun estoppel.

[7]

Election 61The plaintiff in his Statement of Claim pleads against Mr Badarne the Deed with, on his evidence, knowledge of the matters said by him to give rise to a right to set aside the Deed for fraud and misrepresentation. In my view that is a very clear case of election which precludes the plaintiff from contesting that the Deed ought be set aside for any reason, because with knowledge of all relevant matters he has chosen between two inconsistent courses of action - suing on the Deed on the one hand, and seeking to set it aside on the other: see ASL Developments Ltd v Sargent [1973] 1 NSWLR 481 and see Meagher, Gummow & Lehane, Equity Doctrines & Remedies, 4th ed (2002) [34030] which is in the following terms: "In all senses of rescission, a person with the right to rescind may elect to affirm the contract instead of rescinding it, and if he does so he loses his right of rescission". The pleading of the Deed (paras 23 and 24), the claim that Mr Badarne had breached his obligations under the Deed (paras 25-27) and the claim for damages for breach of contract (para 80(f)) are a positive affirmation of the contract and justifiable only on the footing that the contract was subsisting see Turner v Lab Fox International (1974) 131 CLR 660 at pp 663-4 per Stephen J and p 670 per Mason J referencing ASL v Sargent; Commonwealth v Verwayen (1990) 170 CLR 394 dealing with estoppel and or waiver and United Australia Limited v Barclays Bank Limited [1941] AC 1 dealing with an election to recover in contract or tort cited by Mr Rollison do not assist the plaintiff in resisting this conclusion. 62Mr Rollinson says that for an election to be effective it must be unequivocal. He contends that it was not unequivocal here because the plaintiff relied in his Statement of Claim not only on the Deed but on other matters. The fact that cause of action additional to a claim based on the Deed does not make the plaintiff's reliance on the Deed unequivocal. 63I hold that in addition to the more general grounds to which I have referred the plaintiff is also precluded from advancing any claim to set aside the Deed on any basis known to the law of contract. That does not deal however with the misleading and deceptive conduct claim since that is not based on contract but on statute. There may be arguments of some complexity in relation to whether rights under s 42 and its analogues can be lost by election but that is certainly not a matter for summary judgment.

[10]

The caveat 67Mr Rollinson accepted that if the plaintiff was not entitled to proceed with a claim to set aside the Deed Mr Stanizzo's caveat could not stand and nor any claim to interim injunctive relief. Whilst it is strictly not necessary to deal separately with the $220,000 in respect of the caveat issue I will do so. 68In my view the plaintiff has not demonstrated a convincing case that he is entitled to $220,000 from Mr Badarne. (1)He has no evidence that fees of that amount have been charged by his firm to Mr Ayoub or even to Mr Ayoub's companies; (2)The only invoice of which there is evidence is one for $89,000 to Goulburn Valley Auction House Pty Ltd (CB, p 58 Tab 9C); (3)There is no evidence from Mr Ayoub directly that he intended to pay the $220,000 in payment of fees owed by him or his companies to Mr Stanizzo notwithstanding that Mr Stanizzo has had ample time to obtain such an affidavit were Mr Ayoub willing to provide one; (4)The conversation on which the plaintiff relies in support of his claim that Mr Ayoub was in paying $220,000 to Mr Badarne to pay fees is: (a)ambiguous - Mr Ayoub does not in the conversation identify (and nor does Mr Stanizzo) the fees which Mr Ayoub says have been paid, the "as you promised" is not supported by any evidence of an earlier conversation; (b)given that the only evidence of fees rendered to Mr Ayoub or his companies before the Court is the $89,000 invoice it is unlikely that Mr Ayoub was intending to pay $220,000 to meet it; (c)contradicted by the fact that Mr Carlo Habib (Mr Ayoub's agent) was given receipts made out by Mr Stanizzo which showed that the money was paid towards the purchase of a property by Badarne; (d)contains in the same paragraph a conversation with Mr Habib that the $200,000 was paid towards purchase of a service station; (e)Mr Stanizzo said he believed that Mr Ayoub and his companies were insolvent making it highly unlikely that Mr Ayoub would pay an account of one of his companies (see para 40 of Mr Stanizzo's affidavit of 23 July 2014); (f)There is no fee agreement with Mr Ayoub or his companies annexed to Mr Stanizzo's affidavit; and (5)There is evidence suggests that $200,000 was owed by Ayoub or his interests to LBC lawyers and not to Mr Stanizzo: see para 42 of Mr Stanizzo's affidavit of 23 July 2014. 69It is clear, in my view, that the lapsing notice was served in accordance with the requirement of the Real Property Act 1900 (NSW) and that the second caveat was not properly lodged and should have been removed. The only question which would remain is whether Mr Stanizzo has made out a case for an injunction in lieu of a caveat. Given that the only basis for the caveat is the $220,000 payment and given Robb J's conclusions the plaintiff has no present interest in land and my conclusion that he is precluded from advancing a case to set aside the Deed the caveat on title should be removed, and injunctive relief in lieu should be refused.

[11]

The Charmand and Mazzone claims 70A solicitor who carries out work for a plaintiff in a litigious matter is if the litigation produces a favourable result for the plaintiff entitled to be paid out of the monies obtained by the client from the defendant subject of course to the precise terms of the retainer between the client and the first solicitor: Firth v Centrelink [2002] 55 NSWLR 451, [33]-[45] per Campbell J as his Honour then was. He is entitled to an equitable lien over the proceeds so obtained which lien is often referred to as "a fruits of the action lien". 71In this case Mr Stanizzo says that he did perform work for Charmand and Stanizzo through his employee Mr Badarne, that Mr Badarne was aware of the fact that Mr Stanizzo's fees had not been paid and that these clients did obtain judgment against defendants. Mr Stanizzo claims that Mr Badarne's knowledge of all relevant matters is to be attributed to Good Legal and therefore Good Legal is liable to Mr Stanizzo for having paid out to the client without setting aside money owing to the Mr Stanizzo. 72The attribution of knowledge of Mr Badarne to Good Legal may raise questions but the logic of the claim is not inherently unsound. The problem is however that Mr Stanizzo is not able to say to what amount of fees he is entitled - he has no evidence of what work he personally has performed and no evidence of the work performed by Mr Badarne whilst Mr Badarne was working for him. Nor does he know what amounts have been paid to Mr Badarne or Good Legal. A further complication may be that under the Deed Mr Badarne was to undertake the recovery of fees from the clients listed in the schedule (i.e. including Mazzone and Charmand) which might affect the lien. Further I think there is a difficulty with the Mazzone claim to a lien because Mr Mazzone has not been joined as a party. 73Mr Pritchard made reference to the fact that Mr Stanizzo has not sought preliminary discovery of documents from the defendants and that as matters stand Mr Rollinson has accepted that he is not able even to say what amounts are claimed: see T89, 11, 54-55, 87.10-14 and 91-92. 74Until the amounts received by the clients are known, and the level of fees for which Mr Stanizzo's firm claims to be entitled to charge, even in broad terms, is ascertained, it is just not possible to assess what amounts are at stake here. Mr Rollinson also conceded that it may turn out that nothing is owing by Mr Badarne and Good Legal on some of them. In these circumstances I think that the Court's process should not be utilised on claims that are of unknown extent unless the only relief sought by Mr Stanizzo is the handing over to him of the files which Mr Badarne has allegedly taken and details of the bills which have been rendered to the client covering the period that Mr Badarne was employed by Mr Stanizzo, and details of the amounts paid by the third parties to Mr Charmand and Mr Mazzone. If Mr Stanizzo is seeking to recover monies from Mr Badarne and Good Legal (as I understand him to be) then I see utility and a saving of time if, before Mr Stanizzo is required to serve yet another proposed Amended Statement of Claim, Mr Badarne and Good Legal produce all documents detailing: (a)what amounts he has billed to these two clients in the name of Mr Stanizzo's firms; (b)what amounts he has billed it for the clients in the name of Good Legal; (c)what amount were paid out to the clients by Good Legal; (d)what amount he has received out of any proceeds received by the clients from litigation in which Mr Badarne was involved; and (e)any arrangement made between the clients and Mr Badarne and/or Good Legal including any costs agreement. 75I will invite the parties to address me on the question of whether a process which will give Mr Stanizzo access to those documents should be put in place and if so what process.

[14]

Application to adduce further evidence 78By correspondence sent to chambers by Mr Pritchard with the consent of Mr Rollinson I received on Wednesday of this week an affidavit of Mr Badarne in support of an application by Mr Badarne to lead evidence from Mr Ayoub. The affidavit of Mr Ayoub upon which Mr Badarne (and Good Legal) wish to rely was also provided. The explanation for the late affidavit of Mr Ayoub essentially is that Mr Badarne did not think of the need to obtain such evidence until in the course of the hearing on 9 September 2014 I raised with Mr Rollinson the absence of any evidence from Mr Ayoub. The application to reopen the defendant's case and lead the further evidence of Mr Ayoub was resolutely opposed by Mr Rollinson on behalf of the plaintiff. The principles relevant to an application of this kind were summarised by me in Sam Management Services (Aust) Pty Ltd v Bank of Western Australia Ltd [2009] NSWSC 702 at [6] (and acknowledged to be derived from Australian Securities and Investments Commission v Rich [2006] NSWSC 826 at [18]). I accept that the evidence tends to undermine Mr Stanizzo's case because Mr Ayoub: (a)Denies having said that he had said the amount paid in was in respect of fees; (b)Denies that he or the companies controlled by him owed any fees to Mr Stanizzo; (c)Supports the explanation for the payment of monies into the trust account that is proffered by Mr Badarne; and (d)Asserts that he was given the original receipt by Mr Stanizzo. 79Mr Rollinson put to me a detailed argument covering the reasons why the evidence of Ms Ayoub might be impugned and submitted that the Court would in the light of these discrepancies be likely to view the plaintiff's case as stronger. As Mr Pritchard pointed out however the essence of Mr Ayoub's evidence is wholly supportive of Mr Badarne's case and destructive of Mr Stanizzo's. The contention that the receipts do not reflect the intention of Mr Ayoub cannot be maintained if Mr Ayoub's evidence of an intention that is the opposite of what Mr Stanizzo contends is accepted. 80The explanation for the delay in obtaining the evidence of Mr Ayoub does not provide an adequate basis for permitting its reception but in any event on the view I have taken in relation to the attack on the Deed, the strength or weakness of Mr Stanizzo's claim in respect of the $220,000 does not affect the outcome of the two matters and could not of itself found a refusal to permit the amendment. For those reasons I have decided to refuse the application to adduce the further evidence, and have not relied on Mr Ayoub's evidence in coming to my conclusion

At a glance

Court

Decision date

Before

Source

Judgment (16 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (27)

Cited By (2)