FEDERAL COURT OF AUSTRALIA

Sims v Chong [2014] FCA 1069

THE COURT ORDERS THAT:

1.    The proceeding be struck out for abuse of process pursuant to R 16.21 Federal Court Rules 2011 (Cth) and summary judgment be entered for the respondent in any event under s 31A Federal Court of Australia Act 1976 (Cth) and R 26.01.

2.    The applicant pay the respondent's costs of the interlocutory application filed 20 June 2014 and the proceeding, including all reserved costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    In early 2011, the applicant, who was aggrieved by the failure of a company called Suda Ltd to honour what he considered to be a written contractual promise to reward him for his inventions, instructed the respondent, a legal practitioner practising as Patti Chong Lawyer (the practitioner), to commence a proceeding against Suda Ltd (which was then known by the name Eastland Medical Systems Ltd) to enforce the alleged promise to pay.

2    A proceeding was initially commenced in the District Court of Western Australia against Eastland and others but was subsequently transferred to the Supreme Court of Western Australia because the claim, of $3,800,000, exceeded the jurisdictional limits of the District Court. The transfer to the Supreme Court occurred in March 2012.

3    It appears that the change of name of Eastland occurred while the matter then proceeded in the Supreme Court so that the subsequent proceeding was between the applicant and Suda Ltd.

4    Despite a number of endeavours to file an unimpeachable pleading in the proceeding in the Supreme Court, Registrar C Boyle struck out the fifth version of the statement of claim on 10 January 2014, although he did so with leave to the applicant to bring in a minute of proposed substituted statement of claim.

5    It appears that before this order was made, the applicant terminated the retainer of the practitioner and thereafter handled the matter himself. In fact, it appears he terminated her services by letter dated 29 November 2013.

6    According to the applicant’s affidavit filed on 9 May 2014, he submitted a new minute of proposed substituted statement of claim, but this was objected to and Registrar Boyle struck the action out, following a hearing on 21 February 2014. It also appears that an appeal to a Master of the Supreme Court against Registrar Boyle’s decision, instituted by the applicant, failed.

7    The applicant then commenced this proceeding on 9 May 2014.

8    By the originating application in this Court, the applicant seeks relief for deceptive and misleading conduct and unconscionable conduct under the Trade Practices Act 1974 (Cth) or Australian Consumer Law (Cth) as well for alleged breaches of the practitioner’s contractual and fiduciary obligations and negligence.

9    By the statement of claim filed with the originating application the applicant pleads that:

    The action against Suda Ltd involved aspects of the law of contract, patent law, inventor’s rights for reward for their inventions, fraud by appropriation of property and unjust enrichment.

    The practitioner, after examining the applicant’s brief, advised that she was “competent to act”.

    He entered into an engagement contract with the practitioner in or about January 2011 appointing her to work for him.

    She was not competent to act in the matters and he gives particulars of that allegation: first the fact that the action was commenced in the District Court, which was the wrong court, then had to be transferred to the Supreme Court and then, despite five attempts to plead the case adequately the final statement of claim was struck out by Registrar Boyle.

    None of the statements of claim addressed all the issues raised by him.

    In essence, by reason of those various matters, the practitioner was:

    incompetent and negligent; and

    acted in an unconscionable manner by holding out she was competent to act; and

    misled and deceived him by advising that she was competent to act as well as by attempting to lodge an acceptable statement of claim; and

    breached her contractual and fiduciary duty to him.

    He was forced to dispense with the practitioner’s services and become a litigant in person.

    He appealed the striking out of the action by Registrar Boyle, which appeal was dismissed.

    He has suffered losses as a consequence of the actions of the practitioner which include reduced life expectancy, payment of legal fees, the loss of his action against Suda Ltd and the requirement to pay costs of the unsuccessful proceedings in the Supreme Court; and on top of all of that he needs to seek further legal advice.

10    The practitioner now applies for summary judgment pursuant to R 26.01(1)(a), (c) or (d) of the Federal Court Rules 2011 (Cth) on the basis that the applicant has no reasonable prospect of successfully prosecuting the proceedings or has not disclosed a reasonable cause of action or the proceedings are an abuse of process of the Court.

11    Alternatively, she seeks an order that the statement of claim be struck out pursuant to R 16.21(1)(e) or (f) of the Rules on the basis it discloses no reasonable cause of action or is otherwise an abuse of process of the Court.

12    It is understood that by s 31A of the Federal Court of Australia Act 1976 (Cth) the Court has the power to give summary judgment to a party when a proceeding has no reasonable prospect of succeeding. See Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118.

13    She also seeks the costs of the application and the proceeding.

14    Essentially, the practitioner submits that in light of the decision of the Registrar in the Supreme Court striking out the last statement of claim filed in that proceeding, this proceeding should be seen as involving an abuse of process in that it seeks to re-litigate a matter already determined. Further, and in any event, that the proceeding should be struck out because the matters complained of are subject to advocate’s immunity.

15    There are then two primary issues raised by the practitioner’s application:

(1)    Should the proceeding be struck out as an abuse of process?

(2)    Should the proceeding be struck out because of the practitioner’s immunity from suit?

Is the proceeding an abuse of process?

16    The practitioner submits that the applicant’s pleaded claim is based on the proposition that he has lost something of value, namely a cause of action against Suda Ltd. She notes that he says his lost cause of action is based on an exchange of letters in October and November 2007. This is made clear by [2] of the statement of claim which is in the following terms:

Suda Ltd agreed in a written contractual promise to reward the Applicant for his inventions, but following the termination of his employment resolved not to honour its obligation to the Applicant despite having partly performed the promise and its acceptance by the Board. The value for the unperformed component of the promise to pay is $3,800,000.

17    The practitioner submits the Supreme Court, by Registrar Boyle, has determined that the applicant does not have a claim based on that exchange or any prior oral exchange.

18    She says the question whether the applicant had a contract with Suda Ltd was critical to his claim against Suda Ltd and it has been determined that he did not have a contract because he could not establish that he had provided good consideration.

19    She submits the finding of the Supreme Court in this regard is binding on the applicant and it is an abuse of process to now raise the same argument that has been rejected in the Supreme Court, in support of this fresh claim against his former lawyer. The Supreme Court has decided the issue adverse to the applicant and it would undermine the administration of justice to permit him to raise the issue in this application, given the prospect of a conflicting decision.

20    In response to the application for summary judgment, the applicant filed an affidavit, primary submissions and supplementary submissions. In one of his supplementary submissions, filed 17 September 2014, in response to further written submissions I allowed from the practitioner concerning the extent of advocate’s immunity, the applicant suggested that the late filing and serving of the practitioner’s submissions was an abuse of process “in that the time allowed for the applicant to research and respond is insufficient and is prejudicial to the applicant”. I reject that submission. The matter was argued fully at the summary judgment hearing. The applicant put on primary submissions and has had the opportunity to put on further supplementary submissions. The fact that he is self-represented and not a lawyer does not mean, at least in circumstances such as these, that some longer period to file any supplementary submissions is required.

21    In his affidavit, which contains in many respects submissions and assertions, and in his written submissions, the applicant continues to emphasise the material facts pleaded in the statement of claim. He continues to assert that if only the practitioner had the relevant expertise an appropriate statement of claim would have been or could have been filed and the proceeding would not have come to the unfortunate end to which Registrar Boyle brought it.

22    The applicant in particular in his various submissions emphasises statements made about a lawyer’s duty to the Court. See, for example, Ipp J “Lawyers’ duties to the Court” (1998) 114 Law Quarterly Review 63.

23    In the result, it is necessary to look more closely at precisely what has been pleaded here and what was decided by Registrar Boyle in the Supreme Court.

24    There can be little doubt that what is said on behalf of the practitioner, concerning what Registrar Boyle decided in relation to the fifth statement of claim, is correct. The decision of Registrar Boyle is to be found at Sims v Suda Ltd [2014] WASC 3. At [11]-[13] the Registrar stated as follows:

11     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.

12     The rule that past consideration is not good consideration comes very early in any undergraduate course in contract law. However, accessible authorities on just what it means are few and far between. Both parties submitted that the principle is perhaps best explained in the advice of the Privy Counsel in Pao On v Lau Yiu Long [1980] AC 614, at 629,

An act done before the giving of a promise to make a payment or to confer some other benefit can sometimes be consideration for the promise. The act must have been done at the promisors' request: the parties must have understood that the act was to be remunerated either by a payment or the conferment of some other benefit: and payment, or the conferment of a benefit, must have been legally enforceable had it been promised in advance.

13     That passage required three elements. The first is that the act must have been done at the request of the promisor. The defendant asserts that this is not pleaded. It is necessary to examine the structure of the statement of claim in some detail.

25    The Registrar then closely examined the manner in which the applicant pleaded his case in the fifth statement of claim. The Registrar analysed the pleading to the following effect at [14]-[42]:

    The applicant claimed to have invented a patent, two trademarks and two “strategies”.

    He applied for a provisional patent in May 2006 and a standard patent in May 2007.

    He devised a trademark in February 2007.

    He devised a strategy in February 2007.

    He devised another strategy in February 2007.

    There were some five entities involved in these various matters.

    There is a “cloud of uncertainty” obscuring the claimed agreement.

    At [17] of the pleading, the applicant pleads that the agreement was entered into between February and November 2007, a remarkably long period.

    A contract normally comes into existence when an offer is accepted, but it is usually possible at least to give a definite date by which a contract may be said to have become enforceable.

    The plea that a contract only came into existence during a nine month period is embarrassing for that reason.

    The plea at [17] thus continues the “attempted emulsion of immiscible fluids that has confused the plaintiff’s claim from the beginning”.

    There are in fact two exchanges. [18] to [20] of the pleading deal with the first and seem to involve two pleaded representations but no mention of the strategies is involved.

    [20] pleads that the plaintiff “verbally agreed to the terms as pleaded” and particularised at [18] and [19].

    The pleading at that point looks like a classic claim of contract by offer and acceptance but for one thing: the consideration to be paid by the defendant for the sale of the trademarks and patent to it was not settled. The contract would fail for uncertainty.

    That would not leave the applicant without a remedy. He could seek compensation quantum meruit. However there is no such alternative claim in the pleading.

    The second exchange is at [23] and [24] relating to an October 2007 letter from the applicant to Suda Ltd setting out a proposal for his reward.

    [24] says that was agreed to by Suda Ltd. The proposal required that the applicant variously be paid a sum of money and be allowed to purchase at specified prices shares or options in the defendant or another company and he claims damages by the failure to pay in accordance with that proposal.

    The October exchange is referred to as “the contract”, which is a change of language in the pleading to that point.

    [25] pleaded that by virtue of the matters pleaded and particularised at [17]-[24], the applicant and Suda Ltd agreed the reward set out in the proposal.

    This suggests there was no binding agreement until the October/November exchange but other parts of the pleading suggest otherwise – for example, [21]-[23] plead steps were taken pursuant to a February agreement.

    The pleading left unresolved the fundamental question, when did a binding contract come into existence?

    If it is said to have been as a result of the February exchange, then the applicant faces the problem that, as the consideration the defendant was to pay was unspecified, there was no certainty as to a critical term. There could be no binding contract.

    On the other hand if the contract was formed by the October/November exchange then the difficulty the plaintiff faces is that by then he had performed all that he was to be rewarded for. His consideration was executed, not executory. In other words there was only past consideration which was not good consideration.

26    It is clear enough to me that the pleading of an actionable claim by the applicant has challenged the legal practitioners engaged at material times to advance his claim against Suda Ltd.

27    The facts shown by the affidavits of the parties read on the interlocutory application show that the practitioner engaged barristers to draft an appropriate statement of claim that would pass muster, reflecting the instructions she had from her client about his dealings with Suda Ltd.

28    The applicant said in his submissions on the hearing of the interlocutory application that he considered that it should be possible to plead a statement of claim that was not amenable to attack. He appeared to raise questions why, perhaps, a quantum meruit action had not been pursued or some other possible claims.

29    But in the end, he considered that on the facts as he had alleged them, an enforceable contract could be discerned and a pleading to that effect was possible.

30    The Court asked of the applicant what it was that the lawyers should have pleaded that would have got around the defects Registrar Boyle identified. He replied as follows:

MR SIMS: Well, the simple reason – the simple thing to be pleaded was that the

company did invite a proposal – and I mean, they didn’t have to invite a proposal. I could simply give a proposal anyway. They’re my inventions, they have admitted

that, and there’s ample evidence that they are my inventions. The company didn’t

have the ability in IP – any expertise in IP whatsoever.

31    When the Court asked the applicant whether he was saying that the case could have been and should have been presented in a way that the Registrar found was acceptable in terms of enforceable contract law, the applicant responded:

MR SIMS: Or in a way that he could not have ruled it was enforceable. It is

absolutely enforceable when an executive board, or anybody for that matter – and it

has been proved in real estate many times. An acceptance of an offer is a promise to

pay but this was even more so because in the acceptance of 12 November, they

accepted all of the terms of the offer. Now, I half expected that they would come

back and contest the offer or parts of the offer but they didn’t, the executive board

didn’t. They all knew that I was the inventor. We had worked closely, globally, 18

hours a day for months so there was no question about whose inventions they were, what was the value of them and they went further than that.

They accepted the offer in its totality and then, in the closing paragraph,

acknowledged I hadn’t been rewarded or paid and they intended to do so in the near

future. Now, that is the promise. So you didn’t only have the acceptance of the

offer, you had added onto that the promise and that’s not defeatable. Now, if it is

defeatable, as was ruled by Registrar Boyle, then they also misled and deceived me.

But the issue before this court today, which has gone off the tracks to a certain

degree and I understand why, is that all this happened because Patti Chong held out

to me that she had the expertise. She didn’t have the expertise and she was out of her

depth.

32    In these circumstances, there is considerable force in the submission made on behalf of the practitioner that for the applicant to pursue this proceeding on the basis outlined in the statement of claim, where he says he lost a chance to sue Suda Ltd because of what the practitioner held out and did and did not do, is really to create something of a smokescreen or a distraction, when all of the complaints that the applicant makes boil down to the central proposition that, in his view, it was possible to devise an appropriate statement of claim reflecting his instructions, and despite numerous attempts to do that before Registrar Boyle, the fifth version of the statement of claim was professionally inadequate.

33    In those circumstances, whether or not, strictly speaking the decision of Registrar Boyle may be said to have resolved the contract allegations for all time (although I think there is force in the argument that it did, especially in circumstances where there was an unsuccessful appeal against the decision of the Registrar and the matter was not pursued further thereafter), it nonetheless appears to me to be an abuse of process to re-litigate essentially the same point through this proceeding against the practitioner.

34    While the applicant raises questions about what his lawyer allegedly held out or did or did not do, all of those allegations depend on his claim that there was an enforceable promise made by Suda Ltd and only if the lawyers had done better, he would still be able to pursue that action in the Supreme Court.

35    In my view, in light of the findings made by Registrar Boyle in striking out the fifth statement of claim, 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    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 re-litigate issues decided in other proceedings should not be allowed to go forward.

37    In those circumstances, I find that the proceeding should be struck out as an abuse of process.

Should the proceeding be struck out because of advocate’s immunity?

38    On behalf of the practitioner it is said that the sting in the applicant’s complaints is the failure of his former lawyer to present the Supreme Court with a statement of claim immune from challenge.

39    In my view, that submission is correct; as is the allied submission made on behalf of the practitioner that the contention underpins the applicant’s allegations of incompetence, negligence, unconscionable conduct, misleading and deceptive conduct and breach of contract and fiduciary duty, as I have explained above.

40    The case pressed by the applicant and what he said to the Court in the passages set out above, all indicated that the applicant’s belief is that, only if a “more competent” lawyer had drafted the pleadings, the Registrar would not have had occasion to strike out the statement of claim.

41    This raises fairly and squarely the question whether what was done at material times by or on behalf of the practitioner was within the field of legal work that was subject to immunity from suit.

42    In D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 at [45], the plurality of the High Court of Australia upheld the doctrine of advocate’s immunity and said that the central justification for it is the principle that controversies, once resolved, are not to be reopened except in a few narrowly defined circumstances.

43    Their Honours said that if an exception to that tenet were to be created by abolishing advocate’s immunity, a peculiar type of re-litigation would arise. There would be re-litigation of a controversy (already determined) as a result of what happened during or in preparation for the hearing that had been designed to quell that controversy.

44    Their Honours added, at [84], that to remove the advocate’s immunity would make a significant inroad upon what their Honours considered a fundamental and pervading tenet of the judicial system and that inroad should not be created.

45    In saying all of that their Honours acknowledged that there is always a risk that the determination of a legal controversy is imperfect. And it may be imperfect because of what a party’s advocate does or does not do. The law aims at providing the best and safest system of determination that is compatible with human fallibility. But underpinning the system is the need for certainty and finality of decisions. Their Honours said the immunity of advocates is a necessary consequence of that need.

46    The plurality went on, at [85] and [86], to state as follows:

85 No sufficient reason is proffered for reconsidering the Court's decision, in Giannarelli, that an advocate is immune from suit whether for negligence or otherwise in the conduct of a case in court. Should the boundary of the operation of the immunity be redrawn?

86    Again, we consider that no sufficient reason is proffered for doing so. In particular, there is no reason to depart from the test described in Giannarelli as work done in court or ‘work done out of court which leads to a decision affecting the conduct of the case in court’…

(Emphasis added.)

47    The drafting of the statement of claim in this case, by which the applicant is aggrieved, is plainly work done out of court which leads to a decision affecting the conduct of a case in court. It was that document that was found to be inadequate in court by Registrar Boyle.

48    In this particular case, while the Trade Practices Act and the Australian Consumer Law are each referred to and in some cases might raise the question whether the immunity from suit doctrine necessarily applies in respect of a statutory cause of action where Parliament has made it clear that a party can sue a legal practitioner (including an advocate) for work done of the type currently covered by the advocate’s immunity, that is not the true nature of the claims made. On any proper view of the pleading, confirmed by what the applicant has said in Court on the hearing of this interlocutory application, his complaint is fairly and squarely about the inadequacy of the pleading. His claims of incompetence are based on the outcome of the work done by the practitioner culminating in the Registrar striking out a pleading, despite five attempts having been made to perfect it. The same point relates to all the other apparent causes of action.

49    In any event, it appears that there is authority to support the proposition that advocate’s immunity applies to any claim against a legal practitioner however framed, whether or not, for example, it involves a claim for contravention of the Australian Consumer Law. See NT Pubco Pty Ltd v Strazdins [2014] NTSC 8 where Hiley J came to that view at [108]-[109] and [114] following Goddard Elliott (a firm) v Fritsch [2012] VSC 87 and Yates Property Corporation Pty Ltd v Boland (1997) 145 ALR 169.

50    In those circumstances, even if it were possible to construe any of the claims made by the applicant in this proceeding as relying on a statutory, not general law, cause of action, based on those authorities I would conclude that the advocate’s immunity from suit applies in this case and the proceeding has no reasonable prospect of succeeding.

51    I would therefore, further to striking out the proceeding for abuse of process, give summary judgment to the practitioner on the basis of the doctrine of advocate’s immunity from suit in respect of the matters the applicant wishes to litigate.

conclusion and order

52    For these reasons, the proceeding should be dismissed with costs including any reserved costs.

1.    The proceeding be struck out for abuse of process pursuant to R 16.21 Federal Court Rules 2011 (Cth) and summary judgment be entered for the respondent in any event under s 31A Federal Court of Australia Act 1976 (Cth) and R 26.01.

2.    The applicant pay the respondent’s costs of the interlocutory application filed 20 June 2014 and the proceeding, including all reserved costs.

Associate:

Dated:    3 October 2014