Victor Warren Ollis v Aaron Gregory Lye & Anor

Supreme Court of NSW|2016-11-16|Before: Slattery J

EX TEMPORE Judgment

The plaintiff in these proceedings, Mr Victor Warren Ollis, alleges that he entered a joint venture agreement with the trustee from time to time of the Shiels Family Trust ("the Trust"), for the development and sale of the Goulburn Heritage Lodge Motel ("the Motel"). The precise date the joint venture agreement was made is presently unclear. But it appears to have been by late 2006 or early 2007.
Mr Ollis alleges that the trustee of the Trust at the time of the alleged agreement was Mr Christopher Lye. The defendants, Mr Christopher Lye and Mr Aaron Lye, were at different times the trustee of the Trust: Mr Christopher Lye (the second defendant) in 2006 and 2007, and Mr Aaron Lye (the first defendant) between 2007 and 2014. Unfortunately, the precise terms of the joint venture agreement are not clearly defined in the Statement of Claim.
The defendants seek three kinds of relief by motion in the proceedings against the plaintiff, Mr Ollis. They seek: 1. to strike out the Statement of Claim under UCPR, r 13.28; 2. a restraining order preventing Mr Dibb, who is a counsel appearing on a direct access basis on behalf of the plaintiff, from continuing to act for the plaintiff in the proceedings; and 3. security for costs against the plaintiff in the sum of $30,000 as a condition of him being permitted to proceed further with the action.
Mr Dibb of counsel appears on the motion by direct instructions on behalf of the plaintiff. The defendants appear without legal representation.
The Statement of Claim was filed on 30 May 2016. Defences, which plead only the general issue, were filed 28 June 2016. The defendants' strikeout motion was filed on 19 July 2016. The defendants filed an Amended Motion on 8 November 2016, perfecting what was a purely formal amendment.

The Issues on the Motion - the Strike Out Claim

The principles that govern the striking out of proceedings under r 13.4(1) have been explained by the Court to the parties. Rule 13.4(1) in substance provides that where it appears in the Court that proceedings generally or in relation to a particular claim are frivolous or vexatious or do not disclose a reasonable cause of action or are an abuse of process, they can be dismissed.
The principles that govern the operation of that provision are well established. The Court must be satisfied that the proceedings cannot succeed or there is no possibility of there being a good cause of action, or it is manifest that to allow the cause of action or the pleadings to stand would involve useless expense: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125.
The Statement of Claim, inadequate though it is in places, allows the Court at least to understand the equitable claim for relief that is pleaded. It does not qualify for dismissal under UCPR, r 13.4.
The defendants with greater justification, also say that the pleading is embarrassing under UCPR, r 14.28(1)(b), which provides that the Court may at any stage of the proceedings order that the whole or any part of the pleading be struck out if it has a tendency to cause prejudice, embarrassment or delay in the proceedings.
The pleading does have that tendency. It does not plead: the precise terms of the alleged joint venture agreement; nor the date of the alleged joint venture agreement, nor the intended consequences of, nor the scope of the joint venture agreement. For example, the pleading does not explain whether the alleged joint venture includes the work the plaintiff allegedly did in the Motel business, or whether it covers merely the payment of money to discharge mortgages.
Nor does the pleading set out how the plaintiff performed the agreement according to its terms, such as would entitle him to relief in Equity. It merely recites a series of facts. The pleading is quite unclear as to these and many other matters.
In my view, the better course is to strike out the whole Statement of Claim and to require the plaintiff to re-plead it: so that the agreement is clear, the steps constituting its performance are clear, and the way that that performance founds any entitlement to relief is clear.
Once the claim is re-pleaded the defendant will be required to put on a Defence. The Court will require the defendant to do that in more detailed terms than the current Defence, which pleads the general issue, a course that is now not permissible at law.

The Application to Restrain Mr Dibb from Acting

The second issue on the motion is the defendants' application to prevent Mr Dibb of counsel from continuing to act in these proceedings. At this stage of the case and on the evidence available, I cannot conclude that there is sufficient material to require Mr Dibb not any longer to act in the proceedings.
On this application the defendants have adduced evidence that Mr Dibb has acted for them in various other proceedings in the past, proceedings between themselves and the Goulburn Council ("the Council"), proceedings between their mother and the New South Wales Crime Commission, proceedings between themselves and the Council, Westpac Banking Corporation and Mr Ollis.
The applicable legal principles for such applications are clear: Kallinicos v Hunt [2005] NSWSC 1181, see especially at [33], [34], [35] and [36]. This is not a case in which Mr Dibb is said currently to act for the defendants, such as might lead to a present conflict of interest. The defendants allege that Mr Dibb is a former legal representative of the defendants, and through so acting in the past still holds confidential information that may be used to the defendants' disadvantage in these proceedings.
When the Court asked the defendants whether they could identify the particular confidential information that they feared might be used against them, they were not able to do so. It seems to me therefore they are not able to get to first base in relation to Mr Dibb's removal, because of their inability to do that.
I decline at this stage to order that Mr Dibb be restrained from continuing to act for the plaintiff in these proceedings. But I have observed to Mr Dibb in the course of debate on this issue that it does appear, from the material already before the Court, that a significant possibility exists that he may have been a witness to some of the relevant events in the proceedings.
One of the allegations in the proceedings is that Mr Ollis says he works full-time, possibly pursuant to the alleged joint venture agreement in the Motel. The fact of the agreement and the nature and amount of the work done are in contest. Mr Dibb was present at the Motel from time to time during the relevant period. When the matter comes on for hearing, Mr Dibb may have to think very carefully whether he can continue to be counsel in the case as he may be a potential witness. But at this stage when the evidence is so scanty, I will say no more about that subject.

Security for Costs

Finally, the defendants/applicants claim security for costs. The applicable legal principles are clear. The impecuniosity of a plaintiff who has brought what appears to be a bona fide claim, is not sufficient by itself for the Court to order security for costs in favour of a defendant: Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 at 505, and North Groongal Pty Ltd v ANZ McCaughan (1993) 61 SASR 302 at 307 per Perry J.
Although Mr Ollis was bankrupt in the past, he appears not to be bankrupt now. The defendant/applicants point out that his only income is a pension and he may well go bankrupt in the future, given his past bankruptcies. They submit that security for costs therefore should be ordered against him. The defendants indicated that they thought that if they were successful, he might go bankrupt again, and he certainly has a history of bankruptcy, and they would not be able to get their costs.
There are two answers to that. First, the defendants are continuing to act without legal representation and so they will not have any legal costs. They will incur some disbursements and no doubt wasted time in a successful proceeding, if that is what happens.
But the better answer is this: the Court is going to bring this case to a head and will require the plaintiff to put on his evidence quickly, so that the strength or weakness of his case is obvious. The matter can then be set down for hearing as soon as possible with the expenditure of minimum costs on all sides.
There is no sufficient basis to make a security for costs order against the plaintiff. I decline to do so.
It may appear that when this case is properly pleaded that the cause of action available to the plaintiff arose before his bankruptcy and was an asset which should have been declared in his bankruptcy as available to the trustee in bankruptcy for the benefit of his creditors. It seems reasonably clear in what has been put before me today that the plaintiff's trustee in bankruptcy was not informed about this cause of action. When the matter comes back before me and when the facts are clearer I will give consideration to whether or not the trustee in bankruptcy should be informed of the proceedings.
The Court will dispose of the motion in accordance with these reasons. The Court will also give directions, so the Court can discharge its overriding obligation under Civil Procedure Act, s 56 to promote the just, quick and cheap resolution of the proceedings.

Application of Supreme Court Practice Note Equity No. 11

These directions are unusual in one respect. They permit the return of subpoenas before the parties have fully served their evidence. The Court takes the course of allowing disclosure here, before the filing of evidence, within Supreme Court Practice Note Equity 11 on the basis that there are exceptional circumstances necessitating early disclosure. The exceptional circumstances are the self-evident incapacity of these parties without subpoenas to access the necessary documents to understand the transactions in which they have been involved. They do not have very many of the documents they need and which seem only to be held by former solicitors. Were they to be required to put on their evidence now before subpoenas are issued, I am not confident that the evidence filed would be useful in any degree. To require it to be filed now before the return of subpoenas would not serve the objectives of Civil Procedure Act 2005 s 56.
The Court therefore orders as follows: 1. Strike out the Statement of Claim. 2. Order the plaintiff to file an Amended Statement of Claim within 7 days by Wednesday 23 November at 5pm. 3. Direct the defendants to file a Defence within a further 7 days, namely by Wednesday 30 November 2016. 4. Otherwise dismiss the defendants' application under prayer 1 of the motion of 8 November 2016. 5. Dismiss the defendants' application under prayer 2 of the 8 November 2016 motion. 6. Dismiss prayer 3 of defendants' motion of 8 November 2016, for security costs to be ordered. 7. Direct the plaintiff to file put on all his evidence by Monday, 12 December 2016. 8. Give leave to the plaintiff to issue subpoenas returnable before 6 December 2016 at 9am before Registrar. 9. Adjourn these proceedings before me at 9.30am on Thursday, 15 December 2016. 10. Costs of the motion reserved. 11. Note the plaintiff's address for service in Statement of Claim is: [address not published]. 12. Note the defendant's address for service in the Defence is: [address not published].

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 December 2016

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