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Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd[2022] QSC 112

Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd[2022] QSC 112

SUPREME COURT OF QUEENSLAND

CITATION:

Chapel of Angels Pty Ltd & Ors v Hennessy Building Pty Ltd & Ors [2022] QSC 112

PARTIES:

CHAPEL OF ANGELS PTY LTD (ACN 154 327 867)

(first plaintiff)

PETER JAMES McQUITTY

(second plaintiff)

SASKIA PEEK

(third plaintiff)

v

HENNESSY BUILDING PTY LTD (ACN 117 587 998) in its own capacity and its capacity as trustee for the Hennessy Family Trust (ABN 45 515 151376)

(first defendant)

JOHN PAUL HENNESSY

(second defendant)

AXIA LITIGATION LAWYERS (ACN 629 434 368)

(third defendant)

JENNIFER LAUREN RAPHAEL

(fourth defendant)

ADAM BROWN

(fifth defendant)

PETER TRAVIS

(sixth defendant)

FILE NO:

1408 of 2022

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

3 June 2022

DELIVERED AT:

Brisbane

HEARING DATE:

10 May 2022

JUDGE:

Flanagan J

ORDER:

  1. The plaintiffs’ claim is set aside.
  2. The statement of claim is struck out.
  3. I will hear the parties as to costs.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – ENDING PROCEEDINGS EARLY – SUMMARY DISPOSAL – SETTING ASIDE – WHERE EXTENSIVE PRIOR PROCEEDINGS – WHERE THE PLAINTIFFS SEEK TO BE RELIEVED OF LIABILITY FROM ALL PRIOR QUEENSLAND COST ASSESSOR DECISIONS, AND ALL DISTRICT COURT, SUPREME COURT, COURT OF APPEAL, FEDERAL COURT OF AUSTRALIA, AND HIGH COURT OF AUSTRALIA ORDERS CONCERNING THE PROCEEDING – WHERE THE CONDUCT OF THE PLAINTIFFS IS VEXATIOUS – WHETHER TO SET ASIDE THE CLAIM – WHETHER TO STRIKE OUT THE STATEMENT OF CLAIM

COUNSEL:

F Redmond for the plaintiffs

A Nicholas for the third, fourth and fifth defendants

SOLICITORS:

Ohlson & Associates for the plaintiffs

Barry.Nilsson. Lawyers for the third, fourth and fifth defendants

  1. [1]
    On 4 February 2022, the first plaintiff, Chapel of Angels Pty Ltd (Chapel), the second plaintiff, Mr McQuitty and the third plaintiff, Ms Peek, filed a claim and statement of claim in this Court.  Mr McQuitty and Ms Peek are the directors and shareholders of Chapel.
  2. [2]
    Relevantly, the claim is for the following:

“1. An order setting aside the judgment of the Brisbane Queensland District Court in matter number BD4124/14 of 12 November 2018. 

  1. An order that the defendants pay to the plaintiffs the sum of one million six hundred and fifty seven thousand eight hundred and six dollars and twenty-two cents ($1,657,806.22).
  1. A declaration that the plaintiffs are relieved from all liability to the first defendant and second defendant from all prior Queensland Costs Assessor decisions, District Court, Supreme Court, Court of Appeal, Federal Court of Australia and High Court of Australia Orders touching and concerning Brisbane District Court Proceedings matter number BD4124/14.”
  1. [3]
    The District Court judgment sought to be set aside in paragraph 1 of the claim is a judgment of Judge Porter QC delivered on 12 November 2018 after a seven day trial.[1]  Chapel was the plaintiff in those proceedings.  The defendants were Hennessy Building Pty Ltd (Hennessy) and John Paul Hennessy, who are the named first and second defendants in the present proceedings.  Chapel had contracted with Hennessy to construct a wedding chapel and surrounds at Kondalilla Falls Road at Montville.  The chapel building and much of the surrounds were constructed by Hennessy, but towards the end of the works the parties fell into dispute. 
  2. [4]
    The fourth and fifth defendants to the present proceedings, Ms Raphael and Mr Brown, are solicitors and directors of the third defendant, Axia Litigation Lawyers.  Axia acted for Hennessy and Mr Hennessy in the District Court proceedings.  The sixth defendant, Mr Travis, appeared as counsel for the defendants in those proceedings. 
  3. [5]
    Axia, Ms Raphael and Mr Brown apply for orders pursuant to r 16 of the Uniform Civil Procedure Rules 1999 (UCPR) or in the Court’s inherent jurisdiction for the claim to be set aside and, further or alternatively, for the statement of claim to be struck out pursuant to r 171 of the UCPR.
  4. [6]
    Those orders should be made for the reasons which follow. 

The chronology of events leading to the filing of the claim and statement of claim

  1. [7]
    Prior to the trial before Judge Porter QC, Hennessy and Mr Hennessy applied to Reid DCJ for additional security for costs and other orders in relation to disclosure, and the striking out of certain paragraphs of Chapel’s pleading.  Judge Reid also dealt with an application by Chapel seeking the determination of separate questions concerning licensing issues.  The Court accepted an undertaking from Mr McQuitty and Ms Peek that they would be responsible for any costs order made against Chapel.
  2. [8]
    After Judge Porter QC had delivered judgment on 12 November 2018, his Honour heard the parties further as to the form of orders and costs.  On 11 December 2018 his Honour ordered that Chapel pay a judgment of $85,989.86 to Hennessy.  His Honour further ordered that Chapel pay 75 per cent of Hennessy’s costs of the proceedings, including reserved costs, to be assessed on the standard basis for costs incurred up to 23 May 2018 and thereafter on the indemnity basis.
  3. [9]
    Chapel applied for a stay of execution of this costs order before Morrison JA in the Court of Appeal.  The matter was heard on 17 October 2019 and on 25 October 2019 Morrison JA dismissed the application with costs.
  4. [10]
    On 7 October 2020, the Court of Appeal (Fraser, Philippides and McMurdo JJA) refused with costs Chapel’s application for an extension of time within which to apply for leave to appeal against the judgment of Judge Porter QC.
  5. [11]
    Chapel applied for special leave to appeal from the Court of Appeal judgment.  The High Court refused special leave on 4 March 2021. 
  6. [12]
    On 4 February 2021, two costs assessor’s certificates were issued, assessing the costs payable by Chapel to Hennessy Building and Hennessy in the sums of $216,787.28 and $168,960.74 respectively. 
  7. [13]
    On 17 February 2021, the Registrar of the District Court made orders requiring Chapel to pay Hennessy’s costs in that amount. 
  8. [14]
    Chapel applied to the District Court to set aside the costs assessor’s certificate and on 18 March 2021 Muir DCJ dismissed that application.
  9. [15]
    After the High Court dismissed the application for special leave, Chapel attempted to file an application in the High Court seeking the issuance of a writ of certiorari against all judicial officers who had found against it in the District Court, the Court of Appeal and the High Court.
  10. [16]
    On 26 May 2021, Gageler J directed the Registrar of the High Court to refuse to issue or file Chapel’s application without first obtaining leave of a Justice of the High Court.  Chapel applied ex parte for leave to file its application.  On 12 July 2021, that application was dismissed by Gleeson J.
  11. [17]
    In June 2021, Hennessy issued statutory demands to Chapel for amounts including the costs of the District Court proceedings.  Chapel applied to the Federal Court to set aside the statutory demands.  The application was dismissed by Derrington J who further ordered that Chapel pay the costs on an indemnity basis.  His Honour identified that the grounds on which Chapel sought to have the statutory demands set aside were somewhat obscure but the principal argument was that there were errors in the judgments of Judge Porter QC on which the debts claimed in the statutory demand were based.  In his reasons for judgment,[2] Derrington J outlined the history of the proceedings in the District Court and subsequent appeals.  His Honour observed at [25]:

“The effect of the judgments of the District Court is that, as between the plaintiff and the defendant in each action, there exists a judicial determination following a contested hearing as to the former’s liability to the latter.  As between those parties, the respective liabilities and obligations arising from the issues between them have been settled by a final and binding decision.”

  1. [18]
    In awarding indemnity costs, Derrington J observed:

“… at best, the plaintiff has acted in a high-handed manner by bringing these applications or, at worst, sought to use them to vex and harass Mr Hennessy and Hennessy Building.”

  1. [19]
    On 20 April 2021, Hennessy issued a bankruptcy notice to Mr McQuitty, and Ms Peek.  They did not comply with the requirements of the bankruptcy notice and applied to the Federal Court to have these notices set aside.  In dismissing the applications, Rangiah J noted that the applications were preceded by a lengthy history of judgments and orders made by the District Court, the Queensland Court of Appeal and the High Court.[3]  His Honour set out the history of the litigation.  His Honour noted the submissions of Mr McQuitty and Ms Peek that he should ignore the decisions and orders made by the District Court, Court of Appeal and the High Court.  The basis of this submission was that Hennessy had “no valid claim in law as the Queensland Rule of Law set out in the Queensland Building Services Authority Act, 1991 (the QBSA Act) and the Queensland Building Services Authority Regulations, 1991 (the QBSA Regulations) was not applied”.[4]  Rangiah J, in rejecting this submission and refusing to set aside the bankruptcy notices, observed that the judgment of Judge Porter QC of 11 December 2018 was a final judgment and all rights to appeal had been exhausted.  His Honour also noted that there was no suggestion that the orders of the District Court were obtained by fraud or collusion or that there was a miscarriage of justice.  The claim was simply that the judgments of Judge Porter QC and the subsequent decisions of the Court of Appeal and the High Court were wrong and should be ignored. 
  2. [20]
    In 2022 Hennessy filed a creditor’s petition in the Federal Court of Australia seeking sequestration orders against the estates of Mr McQuitty and Ms Peek.  On 4 February 2022, they filed a notice stating grounds of opposition to the creditor’s petition.  For the first time Mr McQuitty and Ms Peek raised an allegation of fraud:

“The judgment for costs on which the creditor’s petition relies was obtained by fraud, collusion and miscarriage of justice in that it is dependent on the underlying Brisbane District Court judgment which was obtained by fraud, collusion and miscarriage of justice.

  1. In the original Brisbane District Court proceedings 4124/14 (the District Court proceedings), being the proceedings on to which the Creditor’s petition is dependent, the Applicant, and its legal advisors, fraudulently concealed critical documents from the respondent’s company, the Chapel of Angels Pty Ltd, ACN 154 327 867 (the Chapel of Angels), which was the plaintiff in the District Court proceedings, the District Court, the Chapel of Angels legal advisors and the respondents.”
  1. [21]
    This allegation was particularised by reference to the documents said to have been fraudulently concealed:

“… The entire 1107059 QBCC Compliance Report concerning the QBCC investigation into [Hennessy’s] breaches of the Queensland Building and Construction Commission legislation which the QBCC administers which contained, inter alia, QBCC emails to and from the applicant, a QBCC Infringement Notice and Schedule and other critical evidence documents.”

  1. [22]
    Mr McQuitty and Ms Peek further alleged that during the course of the District Court proceedings, Hennessy and its legal advisors fraudulently concealed the QBCC Compliance Report both from Chapel and Chapel’s expert witnesses.  A further allegation was that Hennessy and its legal advisors fraudulently misled Chapel’s expert witness. 
  2. [23]
    On 8 March 2022, Derrington J adjourned the creditor’s petition to a date to be fixed but ordered that Mr McQuitty and Ms Peek pay the costs of and incidental to the creditor’s petition on an indemnity basis.  In his reasons for judgment Derrington J stated:[5]

“[2]    The underlying disputation between the parties has a long history involving other substantial litigation, particularly in the District Court of Queensland.  Similarly, the bankruptcy proceedings have been protracted.  In general terms, during the course of these proceedings, the respondents have raised a wide variety of grounds in order to stave off their obligations to pay the judgment creditor.  Some have been fanciful and farfetched.  It is apparent that they were raised for the purposes of delay only.

[3]    However, the most serious of such grounds relied upon by the respondents was that raised in the Notice of Grounds of Opposition to the creditor’s petition.  By it, Mr McQuitty and Ms Pryce, through their legal advisors, alleged that the judgment creditor, Hennessy Building Pty Ltd (Hennessy Building), its director, Mr John Hennessy, Axia Litigation Lawyers, the solicitors Ms Jennifer Lauren Raphael and Mr Adam Brown, and Counsel Mr Peter Travis, had engaged in the fraudulent concealment of certain documents in the course of the District Court proceedings from which the judgment debt which underpins the bankruptcy notice arose.  I have read and examined closely all of the material filed in these proceedings and in particular, the respondents’ affidavits and other documents which were relied upon to make those allegations.  From that careful consideration, it can only be concluded that:

  1. (a)
    The allegations of fraudulent concealment against each of the persons identified were absolutely baseless.  They were not supported by any evidence at all.
  1. (b)
    There was no evidence that the documents in question were concealed from the respondents or any other entity.  In fact, the evidence makes it pellucidly clear that the documents in question were provided by Hennessy Building and its solicitors, including Ms Raphael and Mr Brown, to the opposing solicitors in the District Court proceedings.
  1. (c)
    There was, in fact, no duty on the solicitors or Hennessy Building or anyone else to provide the documents in question to any other party or entity.  The alleged foundation for suggesting the existence of a duty to disclose them was fanciful, and it is not possible to believe that any reasonable practitioner could have thought otherwise.
  1. (d)
    It is a matter of grave concern that the falsity of the allegations of fraudulent concealment could have been discovered by the simplest of investigation.  A letter, email or telephone call to Axia Lawyers, Ms Raphael or Mr Brown, or even the opposing solicitors in the District Court proceedings would have disclosed that no concealment had occurred.

[4]    In summary, the allegations of fraudulent concealment made by the respondents were baseless and bereft of any substance at all.  They ought never to have been made.  There is not a skerrick of evidence to support them.  In fact, the evidence which is available demonstrates that the legal representatives of Hennessy Building acted with the utmost propriety in relation to the documents in question.  In particular, in the District Court proceedings, Ms Raphael acted in the best interests of her client by maintaining that the documents were not relevant, but in order to avoid a costly interlocutory application, provided them to the opposing solicitors.  Similarly, there is  nothing to suggest that Mr Travis of Counsel acted other than with complete propriety at all times.  On the basis of the evidence available on this application, it is difficult to avoid the conclusion that the allegations of fraudulent concealment were made in an attempt to intimidate Hennessy Building, its directors, its legal advisors or to otherwise vex and harass them.  It is not possible to understand how any legal professional could have made the allegations of such misconduct in any public document.”

  1. [24]
    In opposing the creditor’s petition Ms Peek filed an affidavit on 4 February 2022.  In that affidavit Ms Peek refers to Chapel submitting a complaint to the QBCC on 29 November 2016 against Hennessy in relation to work carried out by it allegedly outside the scope of Hennessy’s low rise builder licence class.  Ms Peek further states that on 28 April 2020 she made an application to the QBCC pursuant to the Right to Information Act 2009 (Qld) requesting certain information which was provided by the QBCC on 10 July 2020.  She subsequently provided a copy of these documents to her legal advisor on a date that is not specified.  Ms Peek then states:

“The Company, Mr Peter James McQuitty and I have subsequently decided to commence an action in the Supreme Court of Queensland against the Applicant and the Applicant’s legal advisors on the grounds of fraud, fraudulent concealment, collusion and miscarriage of justice.  Annexure D to this affidavit is a true and correct copy of the claim and statement of claim with an attachment schedule 1 which the company has now filed in the Supreme Court of Queensland.”

  1. [25]
    It is this claim and statement of claim which is sought to be set aside and struck out.

The statement of claim

  1. [26]
    The relevant pleading of fraud is contained in paragraph 41 of the statement of claim.  It alleges that each of the defendants “fraudulently concealed by non-disclosure” certain QBCC documents.  It is alleged that these documents were not only fraudulently concealed from the District Court but also from the experts engaged by Hennessy, namely Barry Fullerton and Lloyd Carey, as well as Chapel’s own expert James Dunstan. 
  2. [27]
    The allegation of “fraudulent concealment by non-disclosure” is particularised by reference to rules 211 and 214 of the UCPR.  Rule 211 deals with a party’s duty of disclosure and rule 214 refers to disclosure by delivery of a list of documents and copies.  The particulars in (a) to paragraph 41 alleges that contrary to rules 211 and 214, certain QBCC documents were not disclosed by Hennessy and Mr Hennessy in the District Court proceedings.  Apart from the alleged contravention of rules 211 and 214, no material facts are pleaded to establish how such non-compliance constitutes a fraudulent concealment of those documents.  While the allegation of fraudulent concealment is particularised in paragraph 41 by reference to a failure to comply with rules 211 and 214, earlier in the statement of claim at paragraphs 34 to 37 reference is also made to the Australian Solicitor Conduct Rules 2012 and the Queensland Bar Association Rules. 
  3. [28]
    These rules are later referred to in the statement of claim at paragraph 106 which is headed “The Paramount Duties”. 
  4. [29]
    Paragraph 42 of the statement of claim pleads that the third, fourth and fifth defendants misled the experts Barry Fullarton and James Dunstan, by not briefing them at the joint conclave with certain QBCC documents including the QBCC infringement notice, the QBCC infringement schedule and “the bundle of QBCC evidence documents”.  The documents referenced in paragraph 42 appear to be the same documents alleged to have been fraudulently concealed by non-disclosure in paragraph 41.
  5. [30]
    Paragraphs 43 to 63 of the statement of claim make allegations in relation to the interlocutory applications determined by Judge Reid.  Paragraph 63 alleges that had Axia, Ms Raphael and Mr Brown “not fraudulently concealed” the QBCC Compliance Report from the Court and others, it was probable that Judge Reid would not have ordered that Mr McQuitty and Ms Peek be jointly and severally responsible for any costs order made against Chapel and further, that his Honour would have ordered the determination of separate questions concerning licensing issues.  Paragraph 65 pleads that had Hennessy disclosed the QBCC Compliance Report both to the Court and to its own expert witness Mr Carey, the only conclusion that could have been reached in the trial conducted by Judge Porter QC was that Hennessy’s carpentry licence did not authorise a claim by Hennessy against Chapel on a quantum meruit basis but only pursuant to s 42(4) of the Queensland Building Services Authority Act. 
  6. [31]
    Paragraphs 66 to 69 allege that in providing instructions to Mr Carey, Hennessy, Axia, Ms Raphael and Mr Brown breached “their paramount duty” by fraudulently concealing from their own expert critical documents and failing to inform their expert about relevant legislation.  Paragraph 70 alleges that Mr Carey (who is not a party to the present proceedings), “negligently incorporated into his report numerous claims or estimates for the same items of building work” and “disguised claims under different descriptions and claimed for work items in excess of the amounts claimed in the quotation and invoices”.   
  7. [32]
    Paragraphs 71 to 76 plead additional allegations that Hennessy, Axia, Ms Raphael and Mr Brown “fraudulently briefed Lloyd Carey” with certain incorrect information, including 47 quotations and various invoices.  The most serious allegation in relation to the briefing of Mr Carey is contained in paragraph 76 which alleges that Ms Raphael and Mr Brown “knew or ought to have known that the brief they provided to Lloyd Carey constituted fraudulent concealment of information in breach of their paramount duties which caused the District Court, the Queensland Court of Appeal and the High Court to be misled as to the true facts concerning the licensing requirements of the QBCC Act and QBCC Regulations and the reasonable remuneration payable by [Chapel] to [Hennessy] pursuant to the criteria set out in s 42(4) of the QBCC Act.”
  8. [33]
    Under the heading “Judge Porter QC DCJ” paragraphs 80 to 94 allege that by relying on the evidence of Mr Carey, Judge Porter QC made certain erroneous findings.  Paragraph 86 pleads that if there had not been fraudulent concealment of documents from Mr Carey, the calculations of the parties’ “respective restitutionary claims” would have been different.  Paragraph 94 pleads that the actions of Axia, Ms Raphael, Mr Brown and Mr Travis “constituted an abuse of the process of the Court and undermined rather than promoted the administration of justice and had the tendency to bring the administration of justice into disrepute”.
  9. [34]
    Paragraphs 95 to 107 plead that the alleged fraudulent concealment of the QBCC Compliance Report affected various stages of the litigation including the joint conclave of experts, the pretrial mediation and the District Court trial itself.
  10. [35]
    Paragraph 106 pleads what is said to be “the paramount duties” of Axia, Ms Raphael, Mr Brown and Mr Travis.  No less than 17 duties are pleaded.  They include “act honestly and conduct themselves in a professional and honourable manner”, “not mislead expert witnesses or accept witnesses’ evidence which they knew or ought to know was misleading or contrary to instructions given”, “promote the exact laws and regulations”, “exercise duties of skill, diligence and competence”, “not engage in conduct, in the course of practice or otherwise, which demonstrates that the person is not a fit and proper person to practice law”, “… to conduct their law practice in accordance with the Australian Solicitor Conduct Rules” and “minimise delay and legal costs”.
  11. [36]
    Paragraph 107 seeks to summarise all of the above allegations as follows:

“In summary, each of the third, fourth, fifth and sixth defendants by their conduct fraudulently and complicitly contravened their paramount duties throughout the entire District Court and related subsequent Court proceedings including the legal costs assessments touching and concerning these proceedings.”

  1. [37]
    Paragraph 108 alleges that as a consequence of the matters pleaded Chapel has suffered loss and damage in the amount of $1,657,805.40.  This includes an amount of $671,947, which is the amount alleged to be owed by Hennessy to Chapel rather than the amount the subject of Judge Porter QC’s decision of 12 November 2018.  The other amounts are all in relation to legal costs incurred in relation to all proceedings, including those in the Court of Appeal and the High Court.

Consideration

  1. [38]
    The power under r 16(e) of the UCPR to set aside an originating process may be exercised by the Court on the same grounds that are applicable to the exercise of the inherent jurisdiction.[6]  The power to summarily dismiss a proceeding in the Court’s inherent jurisdiction should be treated with caution.  Similarly the power to strike out pursuant to r 171 of the UCPR or in the inherent jurisdiction of the Court is to be exercised only in clear cases.  It is, however, appropriate to exercise the power in circumstances where the proceeding amounts to an abuse of process or is vexatious.  The Court must, however, take “great care”[7] if it exercises a discretion to terminate proceedings prior to trial, bearing in mind that the consequence is to deprive a party of the chance to prove his or her claim or defence at trial. 
  2. [39]
    By their claim and statement of claim the plaintiffs seek to have the judgment of Judge Porter QC set aside on the basis of fraud.  The central allegation is that the defendants fraudulently concealed documents, in particular the QBCC Compliance Report.  As set out at [24] above, Ms Peek made a Right to Information application to the QBCC on 28 April 2020 and received various documents on 10 July 2020.  The plaintiffs therefore rely on an allegation of fraud based on their receipt of alleged fresh evidence received after the conclusion of the District Court proceedings.
  3. [40]
    The principles for setting aside a judgment on the basis of fraud were recently considered by Fraser JA in YIC Industrial Pty Ltd & Anor v SPA Investments Pty Ltd & Ors [2022] QCA 95 at [37]:

“The primary judge set out the presently relevant principles concerning what a plaintiff needs to plead and prove in a case of this kind:

‘In Wentworth v Rogers (No. 5), Kirby P identified six principles relevant to setting aside judgment on the basis of fraud. It is unnecessary to go to any but the first which was expressed by his Honour in these terms:

“First, the essence of the action is fraud. As in all actions based on fraud, particulars of the fraud claimed must be exactly given and the allegations must be established by the strict proof which such a charge requires: Jonesco v Beard [1930] AC 298 at 301; McHarg v Woods Radio Pty Ltd (at 497).”

In Clones Pty Ltd v Players Pty Ltd (in liq), a question before the High Court was whether “…the power of a court to set aside its perfected judgment extends to…misconduct by the party who succeeded at trial which does not amount to fraud”. In answering that question in the negative, the court held:

“55. The general power to set aside a judgment on the ground of fraud required actual fraud. The ‘essence of the action [was] fraud’. The general ground of fraud was not diluted to allow, for instance, the judgment to be set aside for misconduct, accident, surprise, or mistake. This point was made pellucidly in 1867 in Patch v Ward. In that case, as Lord Cairns LJ observed, the application was not brought on the basis of either category of the bill of review – either error of law or fresh evidence discovered since the decree. Rather, it was brought upon the basis that the decree was obtained by fraud. His Lordship explained that it was necessary that the fraud be ‘actual fraud…the person chargeable with it…acting in order to take an undue advantage of some other person for the purpose of actually and knowingly defrauding him”. Similarly, Sir John Rolt LJ, after observing that a particular ground of review in cases of foreclosure was inapplicable, remarked of the claim to set aside the order for fraud:

‘I think, for the reasons which have been given by my learned brother, that the fraud must be actual positive fraud, a mediated and intentional contrivance to keep the parties and the Court in ignorance of the real facts of the case, and obtaining that decree by that contrivance. Mere constructive fraud not originating in actual contrivance, but consisting of acts tending possibly to deceive or mislead without any such intention or contrivance, would probably not be sufficient – at all events I think would not, after such delay as has occurred in this case, be deemed sufficient – to set aside the order which has been made. What, therefore, the Appellant has to do is satisfy the Court that the decree was obtained by the positive and actual fraud and contrivance of the party obtaining it.’ (emphasis added).

And later:

“57. The narrow scope of the general power of a court to rescind a judgment for fraud was reiterated after the Supreme Court of Judicature Act in The Ampthill Peerage. In the course of considering whether a declaration of legitimacy could be set aside, Lord Wilberforce compared an application to a court to set aside its own judgment and said that equitable fraud or ‘lack of frankness’ would not suffice to set aside a judgment and that ‘only fraud in a strict legal sense will do’. Similarly, Lord Simon of Glaisdale said that ‘lack of frankness or an ulterior or oblique or indirect motive is insufficient’.” (emphasis added).”

  1. [41]
    Kirby P in Wentworth v Rogers (No. 5)[8] also referred to the requirement that it must be shown by the party asserting that a judgment was procured by fraud, that there has been a new discovery of something material in the sense that fresh facts have been found which, by themselves or in combination with previously known facts, would provide a reason for setting aside the judgment. 
  2. [42]
    Having considered the statement of claim, I am of the view that the plaintiffs’ claim “is so obviously untenable that it could not possibly succeed, that it is manifestly groundless, that it is manifestly faulty that it does not admit of argument and that it does not disclose a case”.[9]  The statement of claim makes extremely serious allegations of professional misconduct said to amount to fraudulent concealment of documents in breach of what is pleaded as “paramount duties”.  The pleading is unclear as to whether these “paramount duties” constitute tortious, contractual or statutory duties.  As a breach of these “paramount duties” is alleged to give rise to a claim for damages, it is implicit that the plaintiffs are alleging that such duties were owed to them.  While legal advisors owe their client a duty of care in both contract and tort, such a duty is not ordinarily owed to a third party.
  3. [43]
    As Bond J (as his Honour then was) observed in Lee v Abedian:[10]

“In my view, the suggested duty runs up against the stumbling block of the following statement by Brennan CJ in Hill v Van Erp (1997) 188 CLR 159, 167 (footnote omitted):

‘Generally speaking, however, a solicitor’s duty is owed solely to the client subject to the rules and standards of the profession.  That is because a solicitor’s duty is to exercise professional knowledge and skill in the lawful protection and advancement of the client’s interest in the transaction in which the solicitor is retained and that duty cannot be tempered by the existence of a duty to any third person whose interests in the transaction are not coincident with the interests of the client’.”

  1. [44]
    Bond J at [51] identified certain exceptions to the general rule, none of which are applicable in the present case.
  2. [45]
    Bond J further observed at [62]:

“It does not follow from the foregoing that there can be no remedy for a client’s adversary or potential adversary if a solicitor has engaged in misconduct in carrying out a retainer. It is just that the safeguards against impropriety may have to be found in the rules and remedies relevant to the regulation of the professional conduct of solicitors, or, in appropriate cases (and no such case is advanced against the fourth defendants), the intentional torts. In Al-Kandari v J R Brown & Co [1988] QB 665, Lord Donaldson of Lymington MR (with whom Dillon LJ agreed) observed (at 672):

‘A solicitor acting for a party who is engaged in “hostile” litigation owes a duty to his client and to the court, but he does not normally owe any duty to his client’s opponent: Business Computers International Ltd v Registrar of Companies [1987] 3 WLR 1134. This is not to say that, if the solicitor is guilty of professional misconduct and someone other than his client is damnified thereby, that person is without a remedy, for the court exercises a supervisory jurisdiction over solicitors as officers of the court and, in an appropriate case, will order the solicitor to pay compensation: Myers v Elman [1940] AC 282. ...’”

  1. [46]
    The type of fraud required to set aside a judgment is, as discussed above, actual fraud in the strict legal sense.  The statement of claim does not plead any material facts to support the serious allegation that the legal representatives of Hennessy intentionally concealed documents that should otherwise have been disclosed in the proceeding.  Nor is there any pleading of material facts which identifies how a breach of the alleged “paramount duties” constitutes actual fraud on the part of the legal representatives of Hennessy.
  2. [47]
    There is a more fundamental difficulty with the plaintiffs’ claim.  As outlined at [23] above, Derrington J, in ordering Mr McQuitty and Ms Peek to pay the costs of and incidental to the creditor’s petition on an indemnity basis, observed that the allegations of fraudulent concealment were “absolutely baseless” and not supported by any evidence at all.  His Honour further observed that it was a matter of “grave concern” that the falsity of the allegations of fraudulent concealment could have been discovered by the simplest of investigation:

“A letter, email or telephone call to Axial Lawyers, Ms Raphael or Mr Brown, or even the opposing solicitors in the District Court proceedings would have disclosed that no concealment had occurred.”[11]

  1. [48]
    This Court in exercising its inherent jurisdiction to set aside a claim on the basis that it constitutes an abuse of process may have regard to evidence.  The applicants rely on the affidavit of Ms Raphael filed 9 May 2022.  A consideration of Ms Raphael’s affidavit shows that the allegations in the statement of claim that documents were “fraudulently concealed by non-disclosure” are entirely without foundation.[12]  Ms Raphael’s evidence shows that the relevant documents were either:
    1. (a)
      provided to the solicitors acting for Chapel in the District Court proceeding; or
    2. (b)
      not in the possession or control of the defendants during the course of the District Court proceeding.[13]
  2. [49]
    Ms Nicholas, counsel for Axia, Ms Raphael and Mr Brown, has helpfully summarised the effect of Ms Raphael’s evidence in paragraphs 35 to 38 as follows:

“35. At paragraph 41 of the statement of claim filed in this proceeding, it is alleged that, throughout the District Court proceeding, the following documents were “fraudulently concealed by non-disclosure” by the third to fifth defendants (amongst others):

  1. (a)
    ‘the 6 December QBCC email’ (defined at paragraph 23 of the SoC);
  1. (b)
    ‘the 8.09am 8 December 2016 QBCC email’ (defined at paragraph 25 of the SoC);
  1. (c)
    ‘the 9.55am 8 December 2016 QBCC email’ (defined at paragraph 26 of the SoC);
  1. (d)
    ‘the Fourth Defendant’s submissions to the QBCC’ (defined at paragraph 27 of the SoC);
  1. (e)
    ‘the 16 February 2017 QBCC emails’ (defined at paragraph 28 of the SoC);
  1. (f)
    ‘the 13 and 15 March 2017 QBCC letters and attachments’ (defined at paragraph 30 of the SoC);
  1. (g)
    ‘the QBCC Infringement Notice’ number: 20329 dated 15 March 2017 (defined at paragraph 31(i) of the SoC);
  1. (h)
    ‘the QBCC Infringement Schedule’ (defined at paragraph 31(ii) of the SoC);
  1. (i)
    ‘the bundle of QBCC evidence documents’ (defined at paragraph 31(iii) of the SoC); and
  1. (j)
    ‘the QBCC Compliance Report’ (as defined at paragraph 56 of the SoC).
  1. As to each category of document said to have been ‘fraudulently concealed’:
  1. (a)
    first¸ the documents identified at subparagraph (a), (b), (c) and (d) above were all exhibited to an affidavit affirmed by the defendants’ solicitor, Ms Jennifer Raphael, on 22 February 2017 and filed in the District Court.  A copy of that affidavit was served on Chapel of Angels’ solicitors on 22 February 2017.  That affidavit was relied upon in support of an application made by Hennessy Building for security for costs, and associated orders;
  1. (b)
    secondly, the documents identified at subparagraph (g), (h), (i) and (j) above were provided to the solicitors acting for Chapel of Angels in the District Court proceeding under cover of a letter dated 1 June 2017;
  1. (c)
    thirdly, the documents identified at subparagraph (e) above were not in the possession of the defendants during the course of the District Court proceeding;
  1. (d)
    fourthly, as to the documents described in subparagraph (f) above:
  1. (i)
    the 15 March 2017 letter was included in the attachments to the 1 June 2017 letter;
  1. (ii)
    the 13 March 2017 letter was not in the possession of the defendants during the course of the District Court proceeding.
  1. The plaintiffs allege that the District Court proceeding was commenced on 23 October 2014.
  1. As to Ms Raphael’s affidavit of 22 February 2017, about which complaint is made in paragraphs 44-45 of the statement of claim, that affidavit was filed prior to the issuance of the QBCC infringement notice on 15 March 2017.  However, a copy of the QBCC infringement notice was duly provided to the plaintiffs’ solicitors on 1 June 2017 by the defendants.  That was well in advance of the trial of the District Court proceedings, which commenced on 10 September 2018.  In fact, Chapel of Angels’ legal representative sought to rely upon the relevant document at trial.”  (footnotes omitted).
  1. [50]
    I accept Ms Nicholas’s submission that the “very serious allegations of fraud contained in the statement of claim, made against legal practitioners, are baseless and unsupported by evidence”.[14]
  2. [51]
    The defects in the statement of claim and the evidence of Ms Raphael constitutes a sufficient basis for setting aside the claim and striking out the statement of claim without leave to replead. 
  3. [52]
    There is, however, a further difficulty with the claim as formulated.  Paragraph 3 of the claim seeks a declaration that the plaintiffs be relieved from all liability to Hennessy from all prior decisions, including decisions of the Court of Appeal, Federal Court of Australia and High Court of Australia.  Even if an order was made setting aside the judgment of the District Court on the basis of fraud, this Court does not have jurisdiction to make declarations affecting orders made by those Courts.

Disposition

  1. [53]
    The Court makes the following orders:
  1.  The plaintiffs’ claim is set aside.
  1.  The statement of claim is struck out.
  1.  I will hear the parties as to costs.

Footnotes

[1]Chapel of Angels Pty Ltd v Hennessy Builder Pty Ltd & Anor [2018] QDC 218.

[2]Chapel of Angels Pty Ltd v Hennessy [2021] FCA 875.

[3]Peek v Hennessy [2021] FCA 1187.

[4]Peek v Hennessy [2021] FCA 1187 at [25].

[5]Hennessy Building Pty Ltd v Pryce [2022] FCA 198.

[6]Custodial Ltd v Greig [2005] 2 Qd R 115.

[7]Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87.

[8] (1986) 6 NSWLR 534.

[9]Markan v Queensland Police Service [2015] QCA 22, [4].

[10][2017] 1 Qd R 549 at [50].

[11]Hennessy Building Pty Ltd v Pryce [2022] FCA 198, [3].

[12]Submissions on behalf of the applicants, paragraph 34.

[13]Affidavit of Raphael at [40].

[14]Submissions on behalf of the applicants, paragraph 39.

Close

Editorial Notes

  • Published Case Name:

    Chapel of Angels Pty Ltd & Ors v Hennessy Building Pty Ltd & Ors

  • Shortened Case Name:

    Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd

  • MNC:

    [2022] QSC 112

  • Court:

    QSC

  • Judge(s):

    Flanagan J

  • Date:

    03 Jun 2022

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2022] QSC 11203 Jun 2022-
Appeal Determined (QCA)[2022] QCA 23222 Nov 2022-

Appeal Status

Appeal Determined (QCA)

Cases Cited

Case NameFull CitationFrequency
Al Kandari v J.R. Brown & Co [1988] QB 665
1 citation
Jump To
Cite 1 - [1988] QB 665
Business Computers International Ltd v Registrar of Companies [1987] 3 WLR 1134
1 citation
Jump To
Cite 1 - [1987] 3 WLR 1134
Chapel of Angels Pty Ltd v Hennessy [2021] FCA 875
1 citation
Jump To
Cite 1 - [2021] FCA 875
Chapel of Angels Pty Ltd v Hennessy Builder Pty Ltd [2018] QDC 218
1 citation
Jump To
Cite 1 - [2018] QDC 218
Custodial Limited v Cardinal Financial Services Limited[2005] 2 Qd R 115; [2004] QSC 452
1 citation
Jump To
Cite 1 - [2005] 2 Qd R 115
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
1 citation
Jump To
Cite 1 - (1983) 154 CLR 87
Hennessy Building Pty Ltd v Pryce [2022] FCA 198
2 citations
Jump To
Cite 1 - [2022] FCA 198
Cite 2 - [2022] FCA 198
Hill v Van Erp (1997) 188 CLR 159
1 citation
Jump To
Cite 1 - (1997) 188 CLR 159
Jonesco v Beard (1930) AC 298
1 citation
Jump To
Cite 1 - (1930) AC 298
Lee v Abedian[2017] 1 Qd R 549; [2016] QSC 92
3 citations
Jump To
Cite 1 - [2017] 1 Qd R 549
Cite 2 - [2017] 1 Qd R 549
Cite 3 - [2017] 1 Qd R 549
Markan v Queensland Police Service [2015] QCA 22
1 citation
Jump To
Cite 1 - [2015] QCA 22
Myers v Elman (1940) AC 282
1 citation
Jump To
Cite 1 - (1940) AC 282
Peek v Hennessy [2021] FCA 1187
2 citations
Jump To
Cite 1 - [2021] FCA 1187
Cite 2 - [2021] FCA 1187
Wentworth v Rogers (no 5) (1986) 6 NSW LR 534
1 citation
Jump To
Cite 1 - (1986) 6 NSW LR 534
YIC Industrial Pty Ltd v SPA Investments Pty Ltd(2022) 10 QR 768; [2022] QCA 95
1 citation
Jump To
Cite 1 - [2022] QCA 95

Cases Citing

Case NameFull CitationFrequency
Chapel of Angels Pty Ltd v Hennessey Building Pty Ltd [2022] QCA 2323 citations
Collins v Metro North Hospital and Health Service(2023) 16 QR 268; [2023] QSC 1947 citations
Collins v Metro North Hospital and Health Service [2025] QSC 2252 citations
Courtney v Chalfen [2023] QSC 1262 citations
Stevens v Birtic [2024] QDC 1602 citations
1

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