Moore v Devanjul Pty Ltd[2010] QSC 250

SUPREME COURT OF QUEENSLAND

1. This is an application to strike out a counterclaim by the fifth defendant, Mrs Berthelsen, against Mr G P Ebert, who is a solicitor and his firm Finemore Walters & Story.  They have conditionally appeared, challenging the Court’s jurisdiction to determine Mrs Berthelsen’s claim.  Alternatively, they say that the pleading against them should be struck out as disclosing no reasonable cause of action and as scandalous, frivolous or vexatious.^[1] 

2. It is necessary first to discuss the events from which this counterclaim arose. Mrs Berthelsen is the registered owner of land at Burnett Heads Road, Bundaberg.  She says that she holds it as trustee of the Jadvek Berthelsen Family Trust, of which the first defendant in these proceedings, Devanjul Pty Ltd, was the previous trustee.

3. In 2002, part of the land was leased by its then owner under a registered lease, which was assigned in May 2005 by the original lessee to the plaintiff in these proceedings, Mr Moore, and his then wife, Ms Moore. The transfer to the Moores was registered in July 2005, and the register describes them as holding as trustees.  In late August 2005, Ms Moore resigned as a trustee.  She and Mr Moore subsequently divorced.  But she remained registered as a lessee.  The Moores, and after her resignation as trustee, Mr Moore as the sole trustee, conducted a business on the leased premises known as the Bundaberg Waterslide.

4. Not long after Devanjul Pty Ltd acquired the reversion in March 2006, there was an acrimonious dispute between Devanjul, represented by Mrs Berthelsen and her husband (another director of Devanjul and the third defendant), on the one hand, and Mr Moore on the other.  On 14 August 2006, Devanjul issued what purported to be a notice under s 124 of the Properly Law Act 1974 (Qld) and on 11 September 2006, Devanjul purported to terminate the lease. 

5. On 22 September 2006, an injunction was issued in the District Court restraining Devanjul from re-entering the premises or interfering in any way with what the order described as the business still owned by Mr and Ms Moore. On 23 October 2006, there was an application in the District Court made in the names of Mr and Ms Moore to be relieved from forfeiture of the lease. The solicitors on the record for the Moores were Finemore Walters & Story.  It was then ordered that “the plaintiff”, which must be taken to be a reference to Mr and Ms Moore as the co-applicants, be relieved from forfeiture of their lease and Devanjul was ordered to pay the costs. 

6. The judge found that the purported notice under s 124 was “fatally flawed” for several reasons.  According to s 124, the absence of a notice duly given meant that any right of re-entry or forfeiture was not enforceable, and a failure to serve the required notice will render any re-entry void.^[2]  Accordingly, the order granting relief against forfeiture was not apt.  The appropriate relief would have been a declaration to the effect that the lease had not been forfeited. 

7. The true character of those proceedings must be understood. At the heart of the present counterclaim is the allegation that Mr Ebert and his firm purported to act in that case and in subsequent litigation on behalf of Ms Moore without her instructions. Relief against forfeiture of a lease which had been held by more than one lessee should be granted only upon the application of all lessees because, as Maugham J explained in TM Fairclough & Sons Limited v Berliner,^[3] the effect of such relief is to alter the legal position of each lessee and to make each again bound by the lessees’ covenants.^[4]  However, a determination that the lease had not been forfeited could have been made on the application of Mr Moore alone, subject to the discretionary consideration of whether a declaration should be made without the participation of Ms Moore in the proceedings, albeit as a respondent.  Rule 62 of the UCPR provides that each person whose presence is necessary to enable the Court to adjudicate effectually and completely on all matters in dispute must be included as a party.  Rule 63 of the UCPR provides that if a plaintiff or applicant seeks relief to which another person is entitled jointly with the plaintiff or applicant, all persons entitled to the relief must be parties to the proceeding.  It further provides that a person entitled to seek relief who does not agree to be a plaintiff or applicant must be made a defendant or respondent.  But r 67 provides that despite these rules the court may decide a proceeding even if a person is not included as a party and may deal with the proceeding as it affects the rights of the parties before it.  As McPherson JA said of the predecessor to r 63^[5] in Equus Financial Services Limited v Glengallen Investments Pty Ltd,^[6] the general rule is that no proceeding is now dismissed for want of parties.^[7]  Accordingly, Ms Moore was not a necessary party to those proceedings and the effective outcome could have been no different had the solicitors brought those proceedings in the name of Mr Moore alone. 

8. On 24 April 2007, Devanjul issued what purported to be another notice under s 124 to Mr and Ms Moore.  On 25 May 2007, it again purported to terminate their lease.  On 2 August 2007, Finemore Walters & Story filed an originating application in the District Court in the names of Mr and Ms Moore.  An interim injunction was granted in their favour.  There was a final hearing of the application in October 2007 and judgment was given on 2 November 2007.  The first of the orders made was a declaration that Devanjul’s re-entry was void.  It was further ordered that “the applicant” be relieved from forfeiture of the lease, that Devanjul forthwith vacate the premises and that, except as provided for by the lease, it be restrained from entering onto the land or interfering with the business conducted upon it.  The judge reasoned that the notice purportedly under s 124 was invalid for several reasons.  The first was that it lacked the required warning of the consequences of not remedying the alleged breaches, for which the judge applied Ex parte Taylor.^[8]  Secondly, the notice had not been served upon Mr Moore.  Thirdly, it had not been served upon Ms Moore.  As I will explain, the reference to “the applicant”, rather than to the applicants, appears to have been a deliberate reference to Mr Moore alone.

9. As with the previous proceedings in the District Court, the grant of relief in the form of relief against forfeiture was not apt, given the court’s determination that the lease had not been duly terminated. So again, the absence of Ms Moore as a party, and in particular as a co-applicant, would not have been a discretionary bar to the grant of appropriate declaratory and injunctive relief against Devanjul. And in proceedings brought by Mr Moore alone, each of the grounds of invalidity of the purported termination of the lease would have been available to him. Although Ms Moore had resigned as trustee, she remained a lessee because the land title register had not been changed and there was no right of re‑entry or forfeiture without service of a notice under s 124 on both the lessees. 

10. There was no appeal against that judgment, as there had been no appeal against the judgment of October 2006. However, on 3 December 2008, Devanjul filed an application to set aside the various orders made in those two proceedings upon the basis that they had been obtained by fraud. Mr Ebert was named as a respondent to that application. On 18 December 2008, it was dismissed with costs. The application had been based upon the evidence of Mrs Berthelsen to the effect that Ms Moore’s resignation as a trustee had not been disclosed to Devanjul and that had this event not been fraudulently concealed by “the defendants” (Mr Moore, Ms Moore and Mr Ebert), the various orders in those proceedings would not have been made.  In substance, these are the same matters which Mrs Berthelsen, as the new trustee in place of Devanjul, now pleads in the subject counterclaim.  The judge’s reasons for the dismissal of that application are not available.

11. The present proceedings were commenced by Mr Moore in December 2009. He claims damages against the defendants in the sum of $200,000, together with exemplary damages. In essence, his case is that the defendants did certain things upon the premises which were in breach of the covenant for quiet enjoyment and which were otherwise wrongful. In particular, he alleges they took possession by forcing their way into the buildings and changing the locks, and that they removed or damaged improvements to the premises and equipment which had been used in his business. This claim has been made in his name alone. Mr Ebert’s firm are not his solicitors in these proceedings.

12. As appears from the heading, Mrs Berthelsen is named as the second defendant and also as the fifth defendant.  It appears from the statement of claim that this was thought necessary because she has become the trustee of the Jadvek Berthelsen Family Trust.  The subject counterclaim is made by her as the fifth defendant.  It was filed on 2 February 2010 against Mr Moore and “Geoffrey Paul Ebert of/and Finemore Walters & Story”. 

13. On 5 February 2010, Finemore Walters & Story wrote to Mrs Berthelsen, who is without legal representation, saying that the counterclaim was defective and requiring her to file a notice of discontinuance. That suggestion was aggressively rejected by her in terms which did not address the solicitors’ arguments. On 19 February, she applied for orders to the effect that Mr Ebert and his firm were liable as she has pleaded. Her application was dismissed on 26 February. On 26 March, Mr Ebert and the firm filed a conditional notice of intention to defend and subsequently filed the present application.

14. Mrs Berthelsen’s counterclaim contains some 83 paragraphs which extend over 18 pages, together with a prayer for relief occupying a further five pages. The prayer for relief sets out claims not only by Mrs Berthelsen, but also by her on behalf of other defendants. There is no basis for her claiming on behalf of the others, irrespective of whether by the facts pleaded or otherwise, any of them has a cause of action against any of the defendants to the counterclaim.

15. This pleading, apparently drafted by Mrs Berthelsen, is difficult to summarise and in many places, to comprehend. But at the heart of her case is the fact that Ms Moore had resigned as a trustee in 2005. She alleges that in consequence, this deprived Mr and Ms Moore, or even Mr Moore alone, of any rights under the lease. She alleges that this fact, the retirement of Ms Moore as trustee, was fraudulently concealed from Devanjul with the consequence that the proceedings in the District Court resulted in miscarriages of justice and that Devanjul, and beneficiaries of the trust of which she is now the trustee, lost the benefit of possession of the premises which had been leased.

16. A recurring statement in this counterclaim is that Mr Moore and Ms Moore, as trustees for the Moore Investment Trust until her retirement in August, constituted an “entity” with distinct rights and obligations. She pleads^[9] that upon Ms Moore’s retirement as trustee, this “entity” became “defunct”.  She then pleads that Mr Moore has “falsely pretended that the said ‘Entity’ was valid” and that Mr Ebert and his firm were parties to a representation, in the District Court proceedings and otherwise, which was to the effect that the so-called entity was still in existence.  The basis of this extensive counterclaim appears in paragraphs 7 and 8 as follows:

7. Upon Robyn Gail Moore’s retirement as Trustee, the former united entity, namely “Stanley Gordon William Moore and Robyn Gail Moore As Trustees for the Moore Investment Trust” was no longer a real or legal entity.

8. As from the date of Robyn Moore’s retirement (26^th August 2005), the Lessor of the Premises no longer had a real nor legal entity as Lessee, rendering the former ‘valid’ lease to be ‘defunct’ and ‘null and void’.

17. She pleads^[10] that from September 2006, Mr Moore and the solicitors made submissions and led evidence which in each case misrepresented that the so-called entity still existed.  She goes as far as pleading that all defendants to her counterclaim committed “frauds and other criminal acts” in an effort “to extort large amounts of money and/or property” from Devanjul and others including herself.  Just what money or property was collected from any of those parties, other than by orders for costs against Devanjul, is not explained.  Nor is there any apparent basis for her allegation of criminal activity on the part of any defendants of the counterclaim. 

18. By paragraph 67 of her pleading, she alleges that the defendants to the counterclaim have “stalked, harassed, intimidated, abused and threatened” and “caused extreme detriment/loss/damage/stress/trauma … to [the]:

1. mental, physical, emotional health

2. personal and social lives …”

of a number of parties including Devanjul.

This and other references in the counterclaim to the same effect are the basis for one of the applicants’ present arguments, which is that Mrs Berthelsen is in fact seeking damages for personal injuries subject to the Personal Injuries Proceedings Act 2002 (Qld) and that as she has failed to give the requisite notice under s 9 of that Act, the claim for such damage should be struck out.^[11]  In her prayer for relief, she claims, even as trustee, that she should have “aggravated damages; for suffering of an emotional and personal nature in connection with Court related and other matters being brought by the plaintiff/defendant added by counterclaim against the Trust … in the sum of $250,000” as well as “contemptuous damages” and exemplary damages “to punish the defendant added by counterclaim for his criminal and corrupt attributes”.  The pleading then refers to many provisions of the Criminal Code said to have been breached by “the plaintiff/defendant added by counterclaim” including, so as to demonstrate an absence of any connection with reality, s 309 (conspiracy to murder) and s 320A (torture). 

19. I will not attempt to deal with this lengthy pleading paragraph by paragraph. What I have said already should indicate that much of it is scandalous and has no factual or legal basis. It is sufficient to address here the flaw which affects the entirety of this pleading. It proceeds from the false premise that Mrs Berthelsen’s side of this landlord and tenant dispute was wrongly deprived of success because the position of Ms Moore was not disclosed. The trust of which Mr and Ms Moore were trustees was not a separate legal entity: Kemtron Industries Pty Ltd v Commissioner of Stamp Duties.^[12]  Ms Moore’s resignation did not affect her entitlements and obligations as a lessee; she remained a lessee whilst the land title register was unaffected and absent some discharge by Devanjul, she remained personally liable to perform the covenants under the lease.  Her resignation as a trustee did not render the lease “void”. 

20. The fact of her resignation and her joinder as an applicant in the District Court proceedings were inconsequential to the outcomes of those proceedings. Indeed, the reasons for judgment in the 2007 proceedings recorded that Ms Moore had resigned as a trustee.^[13]  The judge noted that Ms Moore was still one of the lessees but he then explained that his reference to “the applicant” thereafter in his judgment was a reference to Mr Moore alone.  This explains then his making orders in favour of “the applicant”.

21. Mrs Berthelsen’s affidavit in this application exhibits a statutory declaration by Ms Moore, in which she says that she was not informed by Mr Moore or his solicitors about the District Court proceedings which they issued, in each case, also in her name.  It seems that she learned of the 2007 proceedings when she says that she was contacted by Mrs Berthelsen before the final hearing.  According to her statutory declaration, Ms Moore then contacted Mr Ebert who assured her that she had nothing to worry about and she was subsequently assured by Mr Moore that she was not involved as a party to the proceedings.  She says that at no time did she instruct Mr Ebert to commence proceedings in her name.  When she became aware of the application by Mrs Berthelsen in the District Court in December 2008, and prior to the hearing of that application, she contacted Finemore Walters & Story and was informed that her interests would be protected.  Again, she says that she did not instruct the firm.  This evidence is concerning, because on its face it is to the effect that the solicitors purported to act on her behalf but with no instructions from her.  If Ms Moore’s version is true, there was professional misconduct and an abuse of the Court’s process.  But such misconduct would not give Mrs Berthelsen an entitlement to any of the relief claimed in this counterclaim.  Mr Ebert and his firm owed no duty of care to Devanjul or to Mrs Berthelsen.^[14]  In an appropriate case, a court may, in the exercise of its jurisdiction over its own officers, order a solicitor to compensate the opposing party in litigation where the solicitor is in breach of his or her duty to the Court.^[15]  But the present case, the fundamental flaw would remain that such misconduct could not have affected the outcome of the District Court proceeding or otherwise affected the respective positions of the landlord and tenants. 

22. The result is that Mr Ebert and his firm have demonstrated at least that this counterclaim against them should be struck out under r 171 as disclosing no reasonable cause of action and as scandalous.  It will be ordered that the counterclaim filed by the fifth defendant on 2 February 2010 against Geoffrey Paul Ebert and Finemore Walters & Story be struck out.  I will hear the parties as to costs.