Frikton v Plastiras[2010] QSC 5

SUPREME COURT OF QUEENSLAND

[1] MARGARET WILSON J: The defendant seeks an order dismissing or permanently staying this proceeding, or alternatively striking out a large part of the statement of claim.

Background

[2] In August 2003 the plaintiff ("Mr Frikton") and Ari Jelekainen ("Mr Jelekainen") agreed to purchase land at Maleny. The defendant, a solicitor practising under the firm name Plastiras Meredith Mohr, acted for Mr Frikton and Mr Jelekainen in the purchase of the land, which was ultimately completed on 29 December 2003.

[3] After agreeing to purchase the land, Mr Frikton and Mr Jelekainen entered into a joint venture agreement with a number of investors, in order to subdivide the land and on-sell it. Mr Frikton was to contribute $100,000 towards the joint venture. Bank finance was arranged with HSBC. Mr Frikton retained Mr Fox of Fox Midwaters, solicitors, to act for him in relation to the joint venture agreement, and Mr Plastiras acted for Mr Jelekainen. The negotiations were fairly protracted, and various draft documents passed between the parties and their solicitors.

[4] Mr Frikton signed a version of the joint venture agreement on 29 November 2003 at Mr Jelekainen’s parents’ house. At the time, the pages of the agreement were loose and some of the information on a schedule to it was handwritten.

[5] On 2 December 2003 Mr Frikton signed a typewritten copy at Mr Plastiras’ office in Brisbane. He also signed documentation for the finance that was being obtained from HSBC.

[6] Soon after signing the joint venture agreement, Mr Frikton wanted to be released from obligations to the bank. There were further negotiations between Mr Frikton and Mr Plastiras.

[7] The transfer of the land from the vendor to Mr Jelekainen and Mr Frikton was prepared in typewriting; under the sub-heading "Transferee" it contained Mr Jelekainen’s name followed by that of Mr Frikton and the words "as Tenants in Common in equal shares". Before the transfer was lodged in the Queensland Land Registry, the words "equal shares" were struck through, and the words "in the shares of 99/100 and 1/100 respectively" were inserted in handwriting.

Proceeding BS 3205/05

[8] In 2005 Mr Jelekainen and the other three joint venturers commenced a proceeding against Mr Frikton (BS 3205/05). They alleged that Mr Frikton was bound by the terms of a joint venture agreement entered into on 2 December 2003 in respect of which his interests and those of Mr Jelekainen were not equal; Mr Frikton alleged that they were equal. The plaintiffs alleged that Mr Frikton was bound by a release agreement made on 29 December 2003 or alternatively on 8 January 2004. Mr Frikton denied the existence of the release agreement and counterclaimed, alleging:

(a)that he signed the joint venture agreement under a unilateral mistake, or that the parties were not ad idem, or that no joint venture agreement arose, or that the agreement was void for uncertainty;

(b)unconscionable conduct on the part of Mr Jelekainen in relation to his entry into the joint venture agreement;

(c)misleading or deceptive conduct.

[9] On 2 May 2006 Mr Frikton sought leave to file a third party notice and statement of claim against Mr Plastiras. The application was dismissed on 8 June 2006.

Commencement of this proceeding BS 4823/06

[10] Mr Frikton commenced this proceeding (BS 4823/06) against Mr Plastiras on 9 June 2006. He alleged (inter alia) –

(a)that after the contract for the purchase of the land had been completed Mr Plastiras altered the Transfer so that the words "as Tenants in Common in equal shares" were altered to "as Tenants in Common in the shares of 99/100 (Jelekainen) and 1/100 (Plaintiff) respectively";

(b)that he had not authorised or instructed Mr Plastiras to effect that alteration;

(c)that he had not received any notice of the alteration from Mr Jelekainen or Mr Plastiras;

(d)that Mr Plastiras had not advised or warned him that the effect of the alteration of the Transfer was that he would lose a 49% interest in the land;

(e)that Mr Plastiras did not advise or warn him that he would nevertheless remain liable jointly and severally on the bank loan; and

(f)that Mr Plastiras did not afford him an opportunity to decline to authorise the transfer.

[11] On 23 November 2006 Muir J entered this proceeding on the Commercial List.

[12] On 7 February 2007 Mr Plastiras applied for an order striking out part of the statement of claim. Mr Frikton was represented by senior and junior counsel on the hearing of the application. Relevantly for present purposes, Mr Frikton’s counsel  submitted that there were issues common to the two proceedings and sought (inter alia) an order that both parties be bound by findings made in proceeding BS 3205/05. On Mr Plastiras giving an undertaking to be bound by the findings of fact in that other proceeding, Muir J struck out the disputed paragraphs of the statement of claim, and gave Mr Frikton leave to file an amended pleading

Determination of Proceeding BS 3205/05

[13] The trial of proceeding BS 3205/05 took place before Muir J in April 2007. His Honour found –

(a) that Mr Frikton entered into the joint venture agreement in the circumstances and on the terms alleged by Mr Jelekainen and without having been placed under any pressure to do so ([2007] QSC 098 paras 39, 55 and 56);

(b) that Mr Frikton knew and understood the contents of the joint venture agreement when he signed it ([2007] QSC 098 paras 26, 37, 56, 57, 63 and 90);

(c) that Mr Frikton referred the draft joint venture agreement to his own solicitor and obtained advice in relation to it ([2007] QSC 098 paras 8, 10, 11, 20 and 21);

(d) that by no later than 8 January 2004 there was an agreement by which Mr Frikton was to be released from obligations under the joint venture agreement; in consideration of Mr Jelekainen procuring the release of Mr Frikton from any obligations to the bank and from any obligations under the joint venture agreement, Mr Frikton would transfer to Mr Jelekainen his interest as contributor under the joint venture agreement, any other interest under the joint venture agreement and his interest in the land except his entitlement to share equally in any proceeds of the development project under clause 7 of the joint venture agreement ([2007 QSC 098 paras 84, 88, 89);

(e) that Mr Frikton sought and obtained independent advice about the release agreement and its implementation ([2007] QSC 098 paras 23, 25, 30, 31, 32, 33, 67, 68);

(f) that Mr Frikton entered into the release agreement because he was concerned that the project might not prosper and he could be cheated ([2007] QSC 098 paras 22, 85);

(g) that to implement the release agreement the parties to it had to execute other documents and obtain consents or releases from others – matters which were placed in the hands of their respective solicitors;

(h) that on 8 January 2004 Mr Plastiras advised Mr Jelekainen that in order to minimise stamp duty the transfer of the land might be altered so that Mr Frikton would be shown as holding a 1% interest and Mr Jelekainen a 99% interest ([2007] QSC 098 paras 27, 68);

(i) that Mr Jelekainen caused the transfer to be altered with a view to implementing the release agreement, and not with a view to defrauding Mr Frikton ([2007] QSC 098 para 79);

(j) that on 1 May 2004 Mr Frikton proposed that Mr Jelekainen acquire his 1% registered interest in the land for $14,000, and that on 6 May 2004 Mr Jelekainen accepted that proposal ([2007] QSC 098 paras 34, 35, 69);

(k) that Mr Frikton repudiated the release agreement;

(l) that Mr Frikton’s claims relating to the alteration of the transfer were of no material consequence having regard to the findings about the release agreement; in any event his Honour was “not satisfied that Mr Frikton did not give Mr Jelekainen his approval of the alteration of the transfer) ([2007] QSC 098 para 92);

(m) that, as the loan from the bank had been repaid and Mr Frikton no longer appeared on the title, no orders were required to protect his interests under the release agreement ([2007] QSC 098 para 94).

On 26 April 2007 his Honour ordered that:

1. Within 30 days Mr Frikton execute and provide to Mr Jelekainen’s solicitors a transfer to Mr Jelekainen of Mr Frikton’s right, title and interest in the land;

2. Mr Frikton take all such steps and do all such things as reasonably necessary, apart from paying any duties, charges or imposts, in order to enable the land to be transferred;

3. The caveat over the land lodged by Mr Frikton be removed;

4. The counterclaim be dismissed;

5. Mr Frikton pay the plaintiff’s [sic] costs of and incidental to the proceedings, including reserved costs, if any, to be assessed on the standard basis.

[14] Mr Frikton appealed against Muir J’s decision to the Court of Appeal; his appeal was dismissed. Then he made an application for special leave to appeal to the High Court, which was dismissed on 28 August 2008.

Further conduct of this Proceeding BS 4823/06

[15] In July 2009 the defendant applied for judgment in this proceeding or alternatively for a guillotine order in relation to the plaintiff’s filing and serving of an amended statement of claim. P D McMurdo J extended time for the amended statement of claim. Subsequently Dutney J extended that time further until 15 August 2009, and ordered that in default of compliance, the proceeding be dismissed with costs.

[16] Mr Frikton filed an amended statement of claim on 14 August 2009.  A copy of that pleading is annexed to these reasons for judgment.

This application

[17] Mr Plastiras filed the present application on 13 October 2009. He seeks the following orders –

"1.Pursuant to the inherent jurisdiction of this Honourable Court the proceeding be dismissed or permanently stayed;

2.Alternatively, paragraphs 3, 8 to 15, 16(b), 21 to 30, 31to 37, 38 to 49, 50 to 56, 62, 64, 65, 66, 67, 68, 70, 71 and 72 to 83 of the amended statement of claim filed 14 August 2009 be struck out;

3.The plaintiffs pay the defendant’s costs of and incidental to the proceeding and this application to be assessed on the indemnity basis."

[18] On the hearing of the application Mr Plastiras was represented by Mr R P S Jackson of counsel and Mr Frikton was self-represented.

Issues now arising in proceeding BS 4823/06

[19] The amended statement of claim filed on 14 August 2009 runs to 21 pages and contains 83 paragraphs plus the prayer for relief for damages under seven heads, exemplary damages, interest and costs.

[20] In paragraph 5 of the amended statement of claim Mr Frikton pleads that he and Mr Jelekainen retained Mr Plastiras to act for them in the purchase of the land. So much has never been in dispute and indeed Muir J found it to have been so. But Mr Frikton goes on to allege acts and omissions on the part of Mr Plastiras in breach of that retainer (paragraphs 13 and 15).  These are all  predicated upon Mr Plastiras’ being retained by Mr Frikton as well as by Mr Jelekainen in relation to the joint venture agreement. Mr Frikton alleges that had he been advised or warned of the various matters in paragraph 13, he would not have signed the joint venture agreement in the form it was in or the loan documentation, and that he would have sought advice about other arrangements. He alleges that by reason of Mr Plastiras’ conduct he became liable to transfer duty payable to the Office of State Revenue and he entered into a joint venture agreement that effectively deprived him of the share he expected from the net proceeds of the project.

[21] However –

(a) Muir J found that Mr Frikton retained his own solicitor Mr Fox to advise him with respect to the joint venture agreement, and he obtained his advice about draft documents on a number of occasions – 28 October 2003 ([2007] QSC 098 para 8), 26 November 2003 ([2007] QSC 098 para 10), 28 November 2003 ([2007] QSC 098 para 11), 1 December 2003 and 2 December 2003 ([2007] QSC 098 para 20);

(b) Muir J found that Mr Frikton understood the terms of the joint venture agreement;

(c) Mr Frikton does not plead what he would have done if Mr Jelekainen had not been prepared to negotiate on the sharing of profits.

[22] In paragraph 24 Mr Frikton pleads a second retainer of Mr Plastiras – that on 2 December 2003 he retained Mr Plastiras to advise him and protect his interests in relation to the HSBC loan. Then in paragraph 27 he pleads acts and omissions by Mr Plastiras in breach of the second retainer, and in paragraph 30 he pleads that by reason of that conduct he entered into the joint venture agreement on terms that effectively deprived him of the share that he expected from the net proceeds of the project and entered into the release agreement that effectively deprived him of a larger share of the net proceeds which he expected.

[23] Muir J found that on 3 December 2003 Mr Frikton emailed Mr Fox about the execution of the documentation in favour of the bank. Mr Frikton said he had “felt cornered” and that in having Mr Plastiras look over it for him he had done “the next best thing” to having his own solicitor do so. Thus it cannot be said that the allegation of a second retainer flies in the face of findings by his Honour.

[24] But even if Mr Plastiras breached the second retainer in one or more of the ways alleged, any finding that such breach caused the alleged loss would be contrary to Muir J’s findings that Mr Frikton was independently advised with respect to the joint venture agreement and the release agreement, that he entered the release agreement because he was concerned the project might not prosper and he could be cheated, that the release agreement provided him with only a 10% interest in the profits of the development, and that he repudiated the release agreement by his refusal to sign a transfer of his 1% interest in the land.

[25] In paragraph 31 Mr Frikton alleges that on 5 December 2003 Mr Plastiras arranged for him to sign a statutory declaration for the bank which was incorrect. He alleges in paragraph 34 that Mr Plastiras did not correct the statutory declaration or ensure he did not make a false declaration. He alleges that this conduct was in breach of the first or second retainer (para 36), and that by reason of it (in accumulation with the conduct earlier referred to) he entered into the release agreement giving up all but 10% of his share of the net proceeds (para 37). This allegation of causation is inconsistent with the findings by Muir J to which I have referred in paragraph 24 of these reasons for judgment.

[26] Mr Frikton alleges that on 2 December 2003 Mr Plastiras advised him on a deed of covenant to settle a dispute with Channel 7 about access to the land, that he executed it that day, and that Mr Plastiras retained the original (paras 38-39). He alleges that on 22 December 2003 Mr Plastiras altered the original without his authority or consent (paras 41-42). Upon learning of the alteration from Mr Jelekainen shortly before settlement of the land purchase he became confused and distressed and refused  to sign a new deed without further advice from Mr Plastiras (paras 43-45). He alleges that, in breach of the first or second retainer,  Mr Plastiras failed to advise him properly, and that by reason of that conduct (in accumulation with the conduct earlier referred to), he entered into the release agreement giving up all but 10% of his share of the net proceeds of the project (para 49). This allegation of causation is inconsistent with the findings by Muir J to which I have referred in paragraph 24 of these reasons for judgment.

[27] Then Mr Frikton alleges that Mr Plastiras failed to give him appropriate advice and warnings about the release agreement in breach of the first or second retainer (paras 53, 55). He alleges that had Mr Plastiras given him such advice or warnings he would have required a written release agreement (para 54). He alleges that by reason of that conduct he has had disputes with Mr Jelekainen and the other parties to the joint venture agreement, and incurred litigation costs (para 56).

[28] But Muir J found that Mr Frikton sought and obtained independent advice about the release agreement and its implementation. These allegations are inconsistent with his Honour’s findings.

[29] Mr Frikton alleges that on or about 8 January 2004 Mr Jelekainen instructed Mr Plastiras to alter the Form 1 Transfer of the land so that instead of their holding equal interests Mr Jelekainen would hold 99% and Mr Frikton 1% (para 62(a)), and that Mr Plastiras did so, without his authority or knowledge (paras  62(b), 64, 65). He alleges that this conduct was in breach of the first or second retainer (para 67), and that by reason of that conduct (in accumulation with the conduct earlier alleged) –

(a) he was deprived of a 49% interest in the land without receiving any benefit under the release agreement;

(b) he had additional stress and anxiety;

(c) he had increased uncertainty about the terms of the release agreement;

(d) he had increased animosity towards Mr Jelekainen;

(e) he had disputes with Mr Jelekainen and the other parties to the joint venture agreement; and

(f) he incurred litigation costs.

[30] Muir J said at paragraph 92 of his judgment –

“The claims relating to the alteration of the transfer of the land are of no material consequence, having regard to my findings in respect of the Release Agreement. In any event, I am not satisfied that Mr Frikton did not give Mr Jelekainen his approval of the alteration of the transfer.”

As I understand Muir J’s reasons for judgment, his Honour was satisfied that the change was made in implementation of the release agreement.

[31] The allegation that Mr Frikton was deprived of 49% interest in the land without receiving any benefit under the release agreement is inconsistent with Muir J’s findings that in consideration of Mr Jelekainen procuring the release of Mr Frikton from any obligations to the bank and from any obligations under the joint venture agreement, Mr Frikton would transfer to Mr Jelekainen his interest as contributor under the joint venture agreement, any other interest under the joint venture agreement and his interest in the land except his entitlement to share equally in any proceeds of the development project under clause 7 of the joint venture agreement, and that it was Mr Frikton who repudiated the release agreement.

[32] The allegation that the conduct caused Mr Frikton increasing stress, uncertainty, and animosity towards Mr Jelekainen, and disputes with him and the other investors in relation to the release agreement and the incurring of litigation costs (including costs Mr Frikton was ordered to pay Mr Jelekainen and the other investors) is an unusual one which has doubtful prospects of passing the foreseeability test.

[33] Mr Frikton alleges that Mr Plastiras attempted to mislead and deceive his solicitors about the time he had spent with Mr Frikton advising him on the HSBC loan documentation and the extent of the meeting on 2 December 2003 (para 78). He alleges that in breach of the first or second retainer Mr Plastiras did not ensure that Mr Frikton maintained trust and confidence in his integrity in continuing to act in relation to joint venture related matters, did not ensure that the plaintiff’s stress and anxiety were not unreasonably increased, did not avoid creating or extending mistrust between him and Mr Jelekainen, and did not act in accordance with instructions (para 79). He alleges that by reason of that conduct (in accumulation with the other conduct referred to) he incurred additional costs to ensure he made informed decisions in accordance with his obligations under the joint venture agreement, he incurred additional costs to ensure that the joint venture was properly managed, and he incurred additional costs to ensure Mr Plastiras was not misleading or deceiving him and his advisers in relation to all joint venture matters, including the joint venture litigation (para 82).

[34] The alleged second retainer was to advise Mr Frikton in relation to the HSBC loan arrangements (para 24). The allegation that Mr Plastiras continued to act for Mr Frikton in relation to joint venture matters is inconsistent with Muir J’s finding that he was independently advised in relation to those matters. The allegation of failing to act in accordance with instructions is not particularised.

Abuse of process

[35] Mr Frikton asserted that he never agreed to be bound in this proceeding by the findings of Muir J in the other proceeding. He submitted that there were many errors made by his Honour, and that he should not be prevented from re-litigating issues his Honour determined against him.

[36] Those submissions must be viewed in light of the submission made by his counsel on 7 February 2007 that there were issues common to the two proceedings and that both parties ought to be bound by findings made in BS 3205/05. And they need to be viewed in light of the Court of Appeal’s having dismissed his appeal against Muir J’s decision and the High Court’s having refused him leave to appeal further.

[37] The Court has inherent power to prevent an abuse of process. In Rogers v The Queen[1] Mason CJ said –

“The concept of abuse of process is not confined to cases in which the purpose of the moving party is to achieve some foreign or ulterior object, in that it is not that party’s genuine purpose to obtain the relief sought in the second proceedings. The circumstances in which abuse of process may arise are extremely varied and it would be unwise to limit those circumstances to fixed categories.[2] Likewise, it would be a mistake to treat the discussion in judgments of particular circumstances as necessarily confining the concept of abuse of process.”

And in Walton v Gardiner[3] Mason CJ, Deane and Dawson JJ said –

“The inherent jurisdiction of a superior court to stay its proceedings on grounds of abuse of process extends to all those categories of cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness. Thus, it has long been established that, regardless of the propriety of the purpose of the person responsible for their institution and maintenance, proceedings will constitute an abuse of process if they can be clearly seen to be foredoomed to fail.[4] Again, proceedings within the jurisdiction of a court will be unjustifiably oppressive and vexatious of an objecting defendant, and will constitute an abuse of process, if that court is, in all the circumstances of the particular case, a clearly inappropriate forum to entertain them.[5] Yet again, proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings.[6] The jurisdiction of a superior court in such a case was correctly described by Lord Diplock in Hunter v Chief Constable of the West Midlands Police[7] as ‘the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people’."

[38] It may be an abuse of process to allow a party to relitigate an issue decided between him and a third party if the subsequent proceeding was initiated to mount a collateral attack on a final decision against him made by another court of competent jurisdiction in which he had a full opportunity of contesting the decision.[8] The Court’s powers to prevent an abuse of process are to be exercised sparingly and with great caution.[9] As Giles CJ explained in Stenhouse,[10] whether there is an abuse of process depends very much on the circumstances –

“The guiding considerations are oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice, and amongst the matters to which regard may be had are –

(a) the importance of the issue in and to the earlier proceedings, including whether it is an evidentiary issue or an ultimate issue;

(b) the opportunity available and taken to fully litigate the issue;

(c) the terms and finality of the finding as to the issue;

(d) the identity between the relevant issues in the two proceedings;

(e) any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceedings; all part of –

(f) the extent of the oppression and unfairness to the other party if the issue is re-litigated and the impact of the re-litigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and

(g) an overall balancing of justice to the alleged abuser against the matters supportive of abuse of process.”

[39] In analysing Mr Frikton’s statement of claim in this proceeding, I have set out how the allegations he makes conflict with findings made by Muir J. Underlying his present claims are allegations that he did not have access to or receive independent legal advice to allow him to protect his own interests, that he did not understand or have legal advice in relation to the nature, effect and risks inherent in the joint venture agreement, and that he did not understand or obtain independent legal advice in relation to the release agreement. Muir J found to the contrary in relation to the joint venture agreement, and that he had independent advice in relation to the release agreement. His Honour’s findings were critical to his disposition of the case before him.

[40] In my view Mr Frikton’s attempt to re-litigate these issues is an abuse of process, and ought not be allowed. His statement of claim should be struck out, and the proceeding should be dismissed with costs. In all the circumstances those costs should be assessed on the indemnity basis.