Rich v Auswide Constructions Pty Ltd (No 3)
[2021] QDC 2
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- Unreported Judgment
- Rich v Auswide Constructions Pty Ltd (No 3)[2021] QDC 2
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Rich v Auswide Constructions Pty Ltd (No 3)[2021] QDC 2
Rich v Auswide Constructions Pty Ltd (No 3)[2021] QDC 2
DISTRICT COURT OF QUEENSLAND
CITATION: | Rich v Auswide Constructions Pty Ltd (No 3) [2021] QDC 2 |
PARTIES: | ALEXANDER DAVID WILLIAM RICH (plaintiff) v AUSWIDE CONSTRUCTIONS PTY LTD ACN 114 157 925 as trustee for the Auswide Constructions Trust (first defendant) and GARRY BRAND (second defendant) |
FILE NO/S: | 15/19 |
DIVISION: | Civil |
PROCEEDING: | Trial |
DELIVERED ON: | 21 January 2021 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 2, 3, 18 December 2020 (and subsequent written submissions) |
JUDGES: | Barlow QC DCJ |
ORDER: |
|
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS – INFORMAL OFFERS AND CALDERBANK LETTERS – UNREASONABLE REFUSAL OF OFFER – defendant seeks costs on the indemnity basis – plaintiff was successful on the majority of the principal issues in the proceeding, but was ultimately unsuccessful – whether the plaintiff’s rejection of a Calderbank offer was unreasonable in the circumstances prevailing at the time the offer was made UNQUALIFIED PERSONS AND DISQUALIFIED PRACTITIONERS – ACTING FOR PARTY – leave granted for an unqualified person to act as the plaintiff’s McKenzie friend – McKenzie friend, in preparation for the trial, carried out tasks such as informing the plaintiff of trial processes, resources regarding civil procedure, legal research and editing and drafting of correspondence – McKenzie friend, during the trial, drafted oral submissions for the plaintiff to make, although the plaintiff did not understand the submissions made – whether the McKenzie friend’s conduct warrants investigation by the Legal Services Commission as a potential breach of s 24 of the Legal Profession Act Legal Profession Act 2007, s 24 Calderbank v Calderbank [1976] Fam Law 93, applied Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435, applied Legal Practice Board v Giraudo [2010] WASC 4, considered Paycorp Payment Solutions Pty Ltd v Chai (No 3) [2011] NSWSC 1632, cited R v Bow County Court; ex parte Pelling [1999] 4 All ER 751, cited Velvet Glove Holdings Pty Ltd v Mount Isa Mines Ltd (No 2) [2011] QSC 156, cited |
COUNSEL: | Self-represented plaintiff A Marinac (solicitor) for the defendant C Templeton for Stephen Arulogun |
SOLICITORS: | Pacific Maritime Lawyers for the defendant ACLG Lawyers for Stephen Arulogun |
- [1]On 18 December 2020, I gave judgment for the first defendant[1] on the plaintiff’s claims.[2] Upon delivering that judgment, I adjourned the proceeding to enable the parties to make submissions on costs and on the form of orders I should make consistently with my reasons for judgment. I also invited submissions from the parties and Mr Stephen Arulogun, who had acted as the plaintiff’s McKenzie friend during the trial, as to whether I should take steps to refer Mr Arulogun to the Legal Services Commissioner to enable the latter to consider whether to investigate his practise as a “litigation process consultant” and whether those practices constituted acting as a lawyer.
- [2]I have since received submissions from the plaintiff and the defendant on costs, I have received submissions from the defendant, by way of providing assistance to the court, on the principles relevant to the practice of law and McKenzie friends, and I have received submissions on behalf of Mr Arulogun opposing reference to the Legal Services Commissioner. The plaintiff has also made submissions about the orders I might make. I have not received any submissions from the defendant about the form of orders.
- [3]These reasons and consequent orders concern those respective issues.
Costs
- [4]The defendant, Auswide, submits that the plaintiff, Mr Rich, should pay the defendant’s costs of the proceeding on the indemnity basis. Mr Rich submits that he should not be ordered to pay the costs of the proceeding at all, notwithstanding that he was unsuccessful.
- [5]The basis of Auswide’s submission is that there is no reason why costs should not follow the event. As for indemnity costs, it submits that Mr Rich repeatedly rejected offers to settle the matter, each of which would have resulted in a superior outcome for him than he obtained by taking the matter to trial. They rely on three offers, which they contend were made pursuant to the principles in Calderbank v Calderbank [1976] Fam Law 93.
- [6]The first offer on which Auswide relies was made orally at a face to face meeting with Mr Rich on 27 July 2020. However, the evidence of that meeting and of what was said does not demonstrate that the offer was made other than as a normal without prejudice offer. In particular, there is no reference to the offer having been made on the Calderbank principles. It seems to me that I should not pay any regard to that offer in the circumstances.
- [7]The second offer relied upon was in a letter dated 14 September 2020 from Auswide’s solicitors to Mr Rich. That letter was expressly stated to be made without prejudice save as to costs and subject to the principles in Calderbank. The letter said that the offer was open for seven days and that, if it was not accepted and Mr Rich was unsuccessful in the proceeding, Auswide would seek an order for indemnity costs against him. The offer was that Mr Rich withdraw his action with each party to bear its own costs.
- [8]The third offer relied upon by Auswide is said to have been made on 30 November 2020. However, the only evidence of that offer is that of Mr Jerome Heron, a director of Auswide, as to instructions that he gave to Auswide’s solicitor, Dr Marinac, to make an offer to Mr Rich. Mr Heron does not say that his instructions were to make the offer subject to the Calderbank principles. In any event, there is no evidence that Dr Marinac in fact made that offer to Mr Rich. Again, I disregard that alleged offer.
- [9]In the circumstances, the only offer relevant to the exercise of my discretion is that made on 14 September 2020.
- [10]The principles to be applied in consideration of costs consequent on the making and rejection of a Calderbank offer were set out by Margaret Wilson J in Velvet Glove Holdings Pty Ltd v Mount Isa Mines Ltd (No 2) [2011] QSC 156 at [9], where her Honour quoted at length from – and then applied – the principles set out in the reasons of the Victorian Court of Appeal in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435, at [21] to [25]. I respectfully adopt the principles there set out. In particular, the critical question is whether the losing party’s rejection of the offer was unreasonable in the circumstances prevailing at the time the offer was made.
- [11]It is therefore the circumstances prevailing in the period during which the offer was open (14 to 21 September 2020) to which I should principally have regard.
- [12]Mr Rich submits that he should not have to pay costs, and particularly not on the indemnity basis, because both he and Auswide were the victims of a fraud perpetrated by Andrew Eustice, who purportedly sold the same vessel to each of them. He also notes that, of the five issues relevant to the potential success of his case, he was successful on four. It was only because I found that, in the circumstances in which he purportedly purchased the vessel, he was not acting in good faith, that he lost his claim. Furthermore, in not acting in good faith, I did not make any finding of dishonesty but merely of a failure to make enquiries in respect of which he was put on notice by the unusual circumstances.
- [13]In the trial, Mr Rich said that he did not consider there to be anything unusual in the transaction. Effectively, he did not consider that he was put on notice of anything unusual which should cause him to make further inquiries or to be hesitant in purchasing the vessel. I have found that a prudent purchaser would be put on notice and enquire further, for the reasons set out in my principal reasons for judgment.
- [14]It is in these circumstances that Mr Rich submitted that he should not have to pay Auswide’s costs. I also take him to contend that these circumstances are relevant to whether, if I do order him to pay Auswide’s costs, they should be on the indemnity basis.
- [15]Mr Rich is correct in stating that, of the five principal issues in the proceeding, he was successful in four. It seems to me that, in considering the offer that was made to him on 14 September 2020 and whether he should accept it, Mr Rich (who was self-represented both at that time and during the trial) had reasonable grounds to consider that he had reasonable prospects of success in the proceeding and therefore that the offer then made to him was simply an offer that he capitulate which was not reasonable or acceptable. I note, in this regard, that Auswide’s solicitors did not give any detailed explanation as to why he should consider that he had poor prospects of success and therefore should accept the offer then being made. Particularly when dealing with a self-represented litigant, it is relevant that no such explanation was given, which might have made it unreasonable for the offer not to be accepted.
- [16]In the circumstances, I do not consider that it was unreasonable for Mr Rich not to have accepted the offer made on 14 September 2020. I do not consider that the making and refusal of that offer justify an order that Mr Rich pay Auswide’s costs on the indemnity basis.
- [17]However, Mr Rich was, in the ultimate outcome, entirely unsuccessful in the proceeding. The fact that the proceeding arose out of a fraud perpetrated on him does not constitute a reason why the ordinary costs consequences of failure in a proceeding in this court should not follow.
- [18]Accordingly, I shall order that Mr Rich pay Auswide’s costs of the proceeding on the standard basis.
Appropriate orders
- [19]In my principal reasons, at [104]-[108], I discussed what may be appropriate orders as a consequence of my finding that Mr Rich failed in his claim and Auswide succeeded in its counterclaim. In its counterclaim, Auswide sought a declaration that it is the owner of the vessel and orders pursuant to s 182 of the Personal Property Securities Act 2009 (Cth) requiring the registration of financing change statements to remove registration of the security interests that had been registered by Mr Rich against the vessel. I particularly discussed that part of the counterclaim at paragraph [107].
- [20]For the reasons set out in paragraph [107], I do not consider it appropriate to make the orders sought in the counterclaim about the Personal Property Securities Register. However, I do note that it would be appropriate for Mr Rich to provide documents necessary to remove those security interests from the register. If he does not, then Auswide could proceed under s 178 if it considers it necessary.
- [21]Mr Rich submits that I should order Auswide to pay him a sum of $1,426.68 to recompense him for the registration fees that he has paid since he purportedly purchased the vessel in 2018. Attached to his submissions on costs is a bundle that contains (among other things) evidence of registration of the vessel in his name and some of the costs of maintaining that registration. It appears presently to be registered in Mr Rich’s name until 6 February 2021. However, the documents that he has attached (as Appendix D to his submission) are simply multiple copies of the registration for the year to 6 February 2021. They do not indicate what he paid in earlier years. In the circumstances I am not able to order a specific amount. However, as I made clear in my reasons, it is appropriate that Auswide reimburse to Mr Rich the entirety of the registration fees that he has paid, upon production to Auswide of proof of payment of those fees.
- [22]Mr Rich also seeks payment of $400.00 for the costs of personal possessions and crockery and cutlery that he maintains were on the vessel and never returned to him or accounted for. When he was asked, during his evidence, whether he left any personal goods on board the vessel, Mr Rich said that he put crockery and cutlery in the galley and left them there.[3] On the other hand, Mr Jerome Heron said that he did not remember seeing any personal effects that were not those of his family.[4]
- [23]Mr Rich’s evidence was not precise as to exactly what he left on board and he gave no evidence as to its value. In the circumstances, there is no basis on which I might order that he be compensated for the value of any items that he may have left on board.
- [24]Mr Rich submits that he should be ordered to release and remove the Personal Property Security Register charges and to sign any necessary documents to transfer the vessel to the defendant. I have considered the charges above. As for the transfer documents, it is appropriate that I order that he sign any transfer documents upon being paid for the past registration fees.
Orders
- [25]In the circumstances, the orders that I propose to make are to declare that Auswide is the true owner of the vessel and to make orders to the effect that, upon Auswide paying Mr Rich the total amount of registration fees that he has paid since he purchased the vessel, Mr Rich sign and provide to Auswide any documents necessary to transfer the registration of the vessel to the defendant.
Mr Arulogun
- [26]The defendant’s solicitor, as I said, provided submissions about the nature of steps that a McKenzie friend may take[5] and the meaning of the expression “engage in legal practice” in the Legal Profession Act 2007.[6] Counsel for Mr Arulogun provided submissions in which he effectively adopted the defendant’s submissions and added to them with additional authorities.[7] In particular, counsel for Mr Arulogun cited the decision of Brereton J in Paycorp Payment Solutions Pty Ltd v Chai (No 3) [2011] NSWSC 1632. The question there was whether the plaintiff’s principal should be referred to the Attorney-General in respect of certain criminal offences. His Honour said, among other things, that obviously the court would not refer a matter unless it thought that the evidence sufficiently disclosed the crime concerned, or that further investigation based on that evidence was very likely to do so.[8]
- [27]Section 24 of the Legal Profession Act provides that a person must not engage in legal practice unless the person is an Australian legal practitioner. It is an offence to contravene that section, the maximum penalty for which is 300 penalty units or two years’ imprisonment. Mr Arulogun is not an Australian legal practitioner.
- [28]Counsel for Mr Arulogun submits that I cannot be satisfied that the evidence of the steps that Mr Arulogun took in his role as a McKenzie friend for Mr Rich sufficiently discloses that he engaged in legal practice contrary to s 24 and therefore I should not refer him to the Legal Services Commissioner to investigate whether he has breached that section.
- [29]Both the defendant’s solicitors and counsel for Mr Arulogun noted that the proper role of a McKenzie friend appears to be expanding and, particularly in the United Kingdom, it appears that persons may charge fees for acting as McKenzie friends and, effectively, conduct businesses to that effect.
- [30]That may be in the case in the United Kingdom but I am not satisfied it is appropriate in this jurisdiction.
- [31]It is not necessary for me, in considering whether to refer Mr Arulogun to the Legal Services Commission, to determine what conduct would amount to engaging in legal practice and whether Mr Arulogun did in this case. That is a matter which, if I refer the matter to the Legal Services Commission, the Commissioner may investigate or consider or ask the courts to determine. However, I do note the decision of the Western Australian Supreme Court, to which I have been referred by counsel for Mr Arulogun, in Legal Practice Board v Giraudo [2010] WASC 4, particularly at [12] to [15]. Mr Arulogun may not have prepared legal documents such as claims or other documents tendered or relied upon in court. However, in his affidavit filed on 27 November 2020, he said that, in the course of his engagement by Mr Rich, he had carried out tasks such as informing Mr Rich of the trial process, informing him of resources to which he could refer regarding civil procedure, carrying out research at Mr Rich’s direction into relevant cases and editing and drafting correspondence as requested. While not amounting to steps such as those taken in the cases referred to by Justice Hall in Giraudo, these steps are certainly more than merely undertaking work of a clerical kind. It also appeared to me at trial that, at least in some respects, Mr Arulogun drafted submissions for Mr Rich to make orally to the court, which Mr Rich attempted to make even though he did not understand them. That seems to me to be much closer to the type of work undertaken by a solicitor or counsel than that of a McKenzie friend.
- [32]In the circumstances, although, of course, I do not find that Mr Arulogun, in conducting his practice as a “litigation process consultant”, is engaging in legal practice, it does seem to be a matter which, in my view, might warrant investigation and could potentially constitute a breach of s 24 of the Legal Profession Act.
- [33]Counsel for Mr Arulogun also submitted that there is no statutory power for a court in circumstances such as this to make a referral to the Legal Services Commissioner or a similar authority. However, even if it is not an exercise of judicial power, but rather administrative, it is not unusual for a civil court, where it appears in the course of proceedings that the evidence discloses a possible offence, to refer the papers to the appropriate authority. That does not mean that an offence has been committed, but merely that it warrants consideration by that authority. Whether any steps are taken upon a referral is of course entirely up to the authority and not within the province of the court.
- [34]It seems to me that it is appropriate that I refer to the Legal Services Commission the papers to which I referred in the addendum to my principal reasons and I will therefore make a direction to the Registrar to that effect.
Footnotes
[1]Although there are two named defendants, the second defendant (apparently another purchaser) has taken no part in the proceeding and the plaintiff seeks no relief against him. Therefore, I shall simply refer to the first defendant as ‘the defendant’.
[2]Rich v Auswide Constructions Pty Ltd (No 2) [2020] QDC 330.
[3]T1-73: 5-20.
[4]T2-22: 40-42.
[5]Referring to the Queensland Equal Treatment Benchbook, [145], R v Bow County Court; ex parte Pelling [1999] 4 All ER 751 and the English Legal Services Consumer Panel report to the Legal Services Board regarding Fee-Charging McKenzie Friends (April 2014).
[6]Referring to Reichman v Legal Services Commissioner [2017] QDC 158, Legal Services Commissioner v Walter [2011] QSC 132 and Cornall v Nagle [1995] 2 VR 188.
[7]Craig v Slater [2017] NZHC 874 and other cases referred to below.
[8]Counsel also relied on Mohareb v Palmer (No 4) [2017] NSWDC 127, [108] and Rafidi v Commonwealth Bank of Australia Ltd [2017] NSWCA 96, [16]-[18].