Madsen v Pope[2014] QDC 45

DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   These are applications, in an existing proceeding, by both defendants which seek, essentially, to strike out the plaintiff’s Statement of Claim or otherwise give permanent relief by staying the Claim or setting it aside.

2. [2]
   The plaintiff has sought, because of problems with the expiry of limitation periods concerning causes of action founded in tort, to advance causes of action founded on breaches of fiduciary duty against the first defendant, her biological father, and against the second defendant, her biological mother. The breaches are primarily centred around sexual conduct alleged to have been engaged in by the first defendant concerning the plaintiff and actions and omissions by the second defendant with respect to such sexual conduct.

3. [3]
   There is the subsidiary issue about whether the claim for damages is within the ambit of the Personal Injuries Proceeding Act 2002 (“PIPA”) and, if so, whether there has been compliance with that Act and, if not, whether the proceeding ought to be stayed until such compliance. 

4. [4]
   And there is a preliminary point about whether it is necessary that the first defendant be granted an extension of time pursuant to r 7(1) of the Uniform Civil Procedure Rules 1999 (“UCPR”) to comply with r 144(4).

Procedural matters

5. [5]
   Since the first defendant filed a Conditional Notice of Intention to Defend on 9 September 2013, he was required, at that time, by r 144(4) of the UCPR, to apply within 14 days after the filing of that Notice for an order pursuant to r 16. He did not do that. On 1 October 2013 he filed an “unconditional” Defence. 

6. [6]
   Rule 144(5) of the UCPR states that if the defendant does not apply for an order under r 16 within that 14 days, the conditional notice of intention to defend “becomes” an unconditional notice of intention to defend; and, by r 144(6), within 7 days after a conditional notice of defence becomes an unconditional notice of intention to defend, the defendant must file a defence.  As can be seen from the brief chronology just canvassed, that is exactly what the first defendant did. Accordingly, the rules taking effect as they did, there is no requirement now to seek an extension of time in order to bring an application pursuant to r 16. As for r 144(7) and the potential waiver of an irregularity, that question will be addressed later.

7. [7]
   In any event, it seems that the appropriate provision to consider first in these circumstances, given the actual history of the pleadings, is r 171 of the UCPR. And if that leads to a striking out of the statement of claim, then further consideration can be given to whether leave should be given to replead, or whether some more drastic order(s) should be made.

Striking out statement of claim

8. [8]
   In Projects Company No.2 P/L v Cushway Blackford & Associates P/L & Anor [2011] QCA 102 Muir JA, with whom White JA and Peter Lyons J agreed, referred to High Court and House of Lords decisions which outlined the following propositions: that where the law is uncertain, and especially where it is in a state of development, it is inappropriate to put a plaintiff out of court if there is a real issue to be tried, especially where, as in many actions (for example, based on negligence), the factual details may help to throw light on the existence of a legal cause of action; and that, unless it was possible to give a certain answer to the question whether the plaintiff’s claim would succeed, the case is inappropriate for striking out, particularly in an area of law which is uncertain and developing, it being normally inappropriate to strike it out (because it is of great importance that such development should be on the basis of actual facts found at trial and not on hypothetical facts assumed – possibly wrongly – to be true for the purpose of the strikeout): at [27]-[30].

9. [9]
   My attention has been drawn to numerous cases in which the courts, at various levels, have discussed – and sometimes ruled upon – actions based on a breach of fiduciary duty where the allegation has been the abuse of a relevant relationship by conduct, whether of commission or omission, involving not only sexual conduct but also lack of care. I will undertake a brief survey of some of the more significant cases in order to canvas the proposition of whether the law relating to fiduciaries can, at least at the moment, arguably extend to protect other than economic interests and, in particular, those interests embraced by the relationship of parent and child.

10. [10]
    In Queensland in Woodhead v Elbourne [2001] 1 Qd R 220, White J (as she then was) struck out allegations in a statement of claim in so far as they relied upon a breach alleged against the defendant (who was a friend of the plaintiff’s adoptive parents and who allegedly assaulted her in a sexual way on a number of occasions when she was a child), to the extent at least to which the action was based upon a breach of fiduciary duty.  It was struck out as disclosing no reasonable cause of action.  This was not a particularly strong case as it was held that there was no alleged fact in the action which could support a relevant relationship of parent and child or guardian and ward: at 231 [34].

11. [11]
    In Victoria in SB v State of New South Wales (2004) 13 VR 527, Redlich J held that, where the plaintiff alleged that the defendant as guardian failed to take reasonable or proper care of her as a ward, relying upon a breach of fiduciary duty in a claim for equitable compensation, it was not possible to characterise any of the conduct of the defendant as falling within the purview of the doctrines of equity, remarking that intentional, negligent or wrongful conduct may be appropriately compensated by applying common law principles: at 623 [661].

12. [12]
    Much Australian authority has made reference to Cubillo v Commonwealth of Australia [2001] 112 FCR 455.  There, the Full Court of the Federal Court considered claims for breaches of fiduciary duty where the trial judge had held that, concerning a relationship of guardian and ward, the claims failed because they lacked an economic aspect.  It was held on appeal that, even if the Commonwealth did owe fiduciary duties to the plaintiff, those duties did not encompass the matters alleged by the plaintiff.  This was based upon the conclusions: that such fiduciary duties were proscriptive and not prescriptive; and that the matters alleged to constitute the alleged fiduciary duties and breaches were largely co-extensive with the alleged breaches of the Commonwealth’s duty of care and, consequently, that it was not permissible to superimpose fiduciary duties on common law duties simply to improve the nature and extent of the remedies available to an aggrieved party. See, in particular, the analysis of Cubillo in Webber v New South Wales [2003] NSWSC 1263: at [40]-[44]. 

13. [13]
    Neither the first defendant nor the second defendant has brought to this Court’s attention any case which directly involves a consideration of conduct such as alleged here, whether by commission or omission, involving direct conduct by a parent, or both parents, towards a child. In Secretary, Department of Health and Community Services v JWB & SMB (1992) 175 CLR 218 (“Marion’s case”), McHugh J held that the powers which the parent exercises on behalf of the child “are exercised in the course of a fiduciary relationship”, stating that, at all events, the role of parent, when acting for the benefit of his or her child, and the role of the fiduciary are sufficiently similar “to make at least some of the principles concerning fiduciaries applicable to the parent-child relationship”:  at 317.  Although it can be immediately observed that Marion’s case was concerned with the authority of a parent to act on “behalf” of a child where a conflict might arise between the interests of the parents and the interests of the child, there is no binding decision on this Court which clearly shows that the causes of action relied upon here by the plaintiff are not arguable and, on that ground, ought to be struck out.  In making that remark, I am mindful of the fact that it may well be thought to be likely that a court would, after a full hearing, come to a conclusion that no such causes of action were maintainable.  It is unnecessary to engage with the Canadian decisions in this area given the approach of the High Court in Breen v Williams (1996) 186 CLR 71 which distinguished the Canadian law on fiduciary duties as being “very different” from the law of Australia with respect to this subject:  for example, see Gaudron and McHugh JJ at 112.

14. [14]
    It must be peripheral for the purposes of determining this application that the plaintiff has previously attempted to rely on tortious claims and that she was statute barred from pursuing such claims, despite the contention that these causes of action seek to circumvent those restrictions on suing for tortious liability. This is because both the causes of action and any application, by analogy, of limitation periods depend on a principled application of law and equity, acknowledging that analogies might be more easily drawn in cases such as this – but that would not depend on the serendipitous circumstance that any analogous cause of action was now barred. Additionally, it is unimportant that the plaintiff has claimed against her former lawyers and that that proceeding remains on foot. If the fiduciary based claims are not to be struck out, then the basis for considering abuse of process on the grounds of impermissible relitigation of resolved issues has not been established.

Equity’s application, by analogy, of limitation periods

15. [15]
    The second defendant has referred to In the matter of Auzhair Supplies P/L (In Liq) (2013) 272 FLR 304 in this context. First, in Auzhair Brereton J held that it would be inequitable to apply the analogous limitation period (in the particular circumstances of that case): at 330-331 [96]. Secondly, it is clear that the result of his analysis was, on the facts of that case, that the equitable claim and the “corresponding statutory right” were “so similar” that the time limit applicable to the latter “should” be applied to the former: at 328 [81]. Thirdly, he held that any application by analogy was in order to inform equity’s application of the doctrine of laches in the exclusive jurisdiction: at 328 [83].

16. [16]
    In the more recent decision of Alec Finlayson P/L v Royal Freemason Benevolent Institution of NSW Nominees Ltd [2013] NSWSC 1168 Ball J (also in the Equity Division) comprehensively re-examined the “analogous” principles. He concluded by stating that, leaving aside what might be implicit in the provision [in Queensland, it being s 10(6)(b) of the Limitation of Actions Act 1974] in asking the question whether a limitation period can apply by analogy, it is necessary to consider “both the facts which are said to give rise to the cause of action as well as the nature of the relief that is available”, because that approach is consistent with the provision which describes the cause of action “in terms of the relief that is granted rather than the facts which must be proved...”: at [48].

17. [17]
    Helman J in Sit Simplex Stulte P/L v Carter & Ors [2003] QSC 99, in determining an interlocutory application, held that he was not satisfied that the analogy could be made for claims for equitable compensation with claims in tort, referring to both s 10 (generally) and s 10(6)(b) of the Act: at [9]. Conversely perhaps, in 2006 the New South Wales Court of Appeal in Aussie Ideas P/L v Tunwind P/L [2006] NSWCA 286, in reliance on English Court of Appeal authority, upheld a primary judge’s conclusion that a claim for compensation for breach of fiduciary duty, involving elements of dishonesty, was relevantly analogous to an action for breach of professional duty in contract or in tort: at [22]-[24].

18. [18]
    Hence, again, although it may well be that, at trial, the facts of the case at hand will satisfy the trial judge that the analogy is sustainable, given the nature of the claim here and, more pertinently, the plaintiff’s own evidence as to her knowledge and as to the effect on her (in circumstances where laches applies a weighting in conscience), I conclude that these defences involving such an equitable consideration justify a hearing on the claim rather than striking it out altogether.

Application of PIPA?

19. [19]
    Given the terms of ss 6(1) and 6(4) of PIPA it is not, in my view, open to the plaintiff to successfully contend that PIPA does not apply to this matter. 

20. [20]
    In particular, there is nothing in the analysis of equitable compensation engaged in by Sackville AJA, with whom Meagher and Barrett JJA agreed, in Nicholls & Ors v Michael Wilson & Partners Ltd [2012] NSWCA 383 which gainsays that conclusion.  That is particularly so where the Dictionary to PIPA defines: not only the word “claim” as meaning a claim, however described, for damages based on a liability of personal injury “whether the liability is based in tort or contract or in or on another form of action”; but also “damages” as including “any form of monetary compensation”. This is despite the principle that, while, at common law, assessment of the relief to be granted is made at the time the cause of action accrues, in equity it is assessed at the time the orders are to be made:  see, for example, the analysis by Lindsay J in ACI Operations P/L v Tallant [2013] NSWSC 367, at [37]. 

Effect of application of PIPA

21. [21]
    While, consistently with the analysis I undertook in Boulter v Batten & Anor [2010] QDC 56, non-compliance with the pre-court requirements in PIPA does not lead to the originating process being a nullity, such an outcome does not mean that PIPA has no application where one defendant does not rely upon r 144 of the UCPR but still challenges such a failure to comply under r 16. Regardless of the first defendant’s position, the second defendant has used her conditional notice rights regularly. But, for the first defendant, the specific mandatory provisions of PIPA cannot be displaced by the general, notional provisions of r 144(7) concerning waiving any irregularity. Therefore, both have the capacity, if it were to have been needed, to have a resolution of the questions here undertaken pursuant to r 16. There is certainly no preclusion for r 171.

22. [22]
    Accordingly, as analysed – although admittedly, obiter - by McGill SC DCJ in Walker-Eyre v Emirates [2012] QDC 364, where PIPA does apply, even though the proceeding would not be a nullity, the proceeding should be stayed until there is compliance with Part 1 of Chapter 2 of PIPA:  at [54]-[56]. 

Has there been compliance with PIPA?

23. [23]
    The plaintiff contends that the Notice given by the plaintiff’s former solicitors, together with the information provided by the plaintiff in her application to extend time under the Limitation of Actions Act 1974 before Reid DCJ, mean that the defendants have been given all necessary information and explanations required by PIPA, with the only matter outstanding being the holding of a compulsory conference. 

24. [24]
    The plaintiff further contends with respect to the compulsory conference that, given the demonstrated attitude of the defendants, there would be no benefit in any such conference and it should therefore be dispensed with pursuant to the provisions of PIPA. 

25. [25]
    The bases relied upon by both the first defendant and the second defendant for relevant non-compliance with PIPA embrace: failure to provide a reasonable excuse for delay in giving the purported Notice of Claim; failure to provide the names and addresses of any witnesses to the alleged incidents; failure to provide the names and addresses of any other persons able to provide relevant particulars about the incidents; failure to provide details of the treatment and the names and addresses of the treatment providers; failure to provide details of any disability suffered from personal injury; failure to provide adequate details in the answer provided in section 23 of the purported Notice of Claim; and failure to disclose documentation pursuant to the provisions of s 22(1) of PIPA. 

26. [26]
    Any further alleged additional non-disclosure and non-compliance particulars are contained in a letter from Kerwin Solicitors to the plaintiff’s former solicitors dated 14 September 2012.

27. [27]
    The response by the plaintiff to the submissions of non-compliance with PIPA as outlined above is not convincing. Simply referring to all available additional information, most of it prepared for other purposes, does not convince me that there is compliance with the very specific documentary “Notice” requirements under PIPA. Furthermore, it was not done pursuant to a specific response for compliance. The recipients of such Notices are entitled to have a coherent set of written notifications which demonstrates actual compliance. Given that position, I will not, at this time, exercise any power under s 36(5)(b) of PIPA. Sections 40(2) and 56 do not yet bite; and do not expressly exclude mandatory final offers. There is nothing which satisfies me that all alleged instances of non-compliance have not been, on balance, established. Thus, the only conclusion that can be reached is there has been relevant non-compliance. 

28. [28]
    Given the conclusions that I have otherwise reached, the appropriate order to make is that this proceeding be stayed until the plaintiff complies with the relevant provisions of PIPA.  I will, in the orders I make, request that all parties make a submission as to the appropriate form of such an order. 

Is the plaintiff’s claim, for equitable “damages”, competent?

29. [29]
    The analysis undertaken by the first defendant in his Outline of Argument demonstrates that the proper claim for breach of a fiduciary duty sounds not in “equitable damages” but in “equitable compensation”. At its very basis, s 8 of the Civil Proceedings Act 2011, bearing the heading “Equitable damages”, states that, if a court has jurisdiction to hear an application for an injunction or specific performance, the court may award damages as well as, or instead of, an injunction or specific performance.  As was established in Barbagallo v J & F Catelan P/L [1986] 1 Qd R 245, in order to claim equitable damages pursuant to such a provision, the plaintiff must be entitled to equitable relief either by way of a grant of specific performance or by way of an injunction:  at 251-252, per McPherson J (as he then was).  With respect to equitable compensation, that thorough examination of it by Sackville AJA in Nicholls shows: first, that exemplary damages in conjunction with equitable compensation are not appropriate (at [171], referring to R P Meagher, J D Heydon and M J Leeming, Equity Doctrines and Remedies (LexisNexis Butterworths, 4^th ed, 2002) at [2-310] where exemplary damages are expressly mentioned although Australian appellate authority may yet, sometime, come to consider it viable where the fiduciary duty does not arise from contract); and, secondly, that the purpose of equitable compensation is not to punish wrongdoing but, rather, to place the party who suffers following the breach of an equitable obligation in, as nearly as possible, the position that the person would have been in had there been no breach of that obligation: at [174]. It is, therefore, obvious that such compensation, rather than damages, should be the relief sought. The English Court of Appeal in Cia de Serguros Imperio v Heath (REBX) Ltd & Ors [2001] 1 WLR 112 appeared to have accepted that the correct term is “compensation” rather than “damages” in contexts such as are applied here: see, for instance, Waller LJ, at 119 and 121.

30. [30]
    Hence, the most appropriate way to deal with a problem is to give leave to the plaintiff to re-plead the Statement of Claim after, initially, giving leave to amend the Claim, such that those pleadings correctly plead equitable compensation rather than equitable damages.

31. [31]
    Since, inevitably, further amendments will be necessary to both the first defendant’s and the second defendant’s pleadings, I will be seeking submissions about appropriate orders and as to the costs that follow upon such orders.

Conclusions

32. [32]
    Since I have determined that the purported Notice of Claim that the plaintiff has given – even though in connection with another proceeding – is a notice which can cover this proceeding but is non-compliant with the provisions of PIPA, I will stay the present proceeding until compliance has been achieved.  For the exact nature of these orders, as indicated, I will rely upon submissions which I will seek from all parties as to the formulation of that order.

33. [33]
    Since I have declined to strike out the Statement of Claim pursuant to r 171 but have determined that the claim for equitable “damages” is not sustainable although, potentially, a claim for equitable compensation is, I intend to give leave to the plaintiff to amend both the Claim and the Statement of Claim to replead those pleadings to comply with the law.  Again, as I have indicated, I will be asking for submissions by all parties as to the exact form of that order.

34. [34]
    Necessarily, the conclusions that I have reached will have an effect on the costs of the applications brought which have been the subject of my consideration. Again, as indicated, I will be seeking submissions from all parties on those.