Stan Stergiou and Ekaterine Stergiou v John Ross Reid, Dennis Mario Barbara and Gavin John Lee T/As Vandenberg Reid Pappas and Macdonald [1997] ACTSC 24 (24 April 1997)

SUPREME COURT OF THE ACT

STAN STERGIOU and EKATERINE STERGIOU v. JOHN ROSS REID, DENNIS MARIO
BARBARA and GAVIN JOHN LEE t/as VANDENBERG REID PAPPAS and MACDONALD
No. SCA76 of 1995
Number of pages - 7
Appeal

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY MILES CJ, GALLOP and MADGWICK JJ

CATCHWORDS

Appeal - against order for summary judgment made pursuant to O.17 r.1 of the Supreme Court Rules - scope of O.17 r.1 - power to order summary judgment without the consent of the parties exercisable only if the action is frivolous or vexatious or if the defendant has a good defence on the merits - appellants' claim cannot be said to be not bona fide, or to re-litigate matters, and is not necessarily completely hopeless - appeal allowed.

Supreme Court Act 1993, sub-s.9(2) Supreme Court Rules, O.17 r.1

Dey v. Victorian Railways Commissioners [1949] HCA 1; (1948) 78 CLR 62 at 90 Williams Supreme Court Practice, (Victoria, 2nd ed.) Creed v. Smith and Another (1914) VLR 652 Hall v. Johnson (1904) 29 VLR 649 Bayne and Another v. Blake and Others (No. 3) [1909] HCA 60; (1909) 9 CLR 366 Inglis and Another v. Commonwealth Trading Bank of Australia (1972) 20 FLR 30 Williams and Others v. Spautz [1992] HCA 34; (1992) 174 CLR 509 Coe v. Commonwealth of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland [1978] HCA 41; (1979) 53 ALJR 403 at 409

HEARING

CANBERRA, 6 February 1997 24:4:1997

Counsel for the appellants: Mr. S. Stergiou in person

Counsel for the third respondent: Mr. G.J.D. Richardson, SC

Solicitors for the third respondent: Minter Ellison

ORDER

THE COURT ORDERS THAT:
1. The appeal remitted to this Court by the Federal Court of Australia on 19 June 1996 be allowed and that the Master's order of 25 August 1995 that summary judgment be entered for the third respondent be set aside. 2. The statement of claim be struck out and no amended statement of claim be filed without leave of the Court. 3. If leave to file an amended statement of claim is sought, then it be sought in the first instance by application to a Judge within two months of publication of these reasons, the initial application to be made ex parte on affidavit and without notice to the respondents. 4. Leave, if granted at that stage, be restricted to permitting the appellants to file and serve a notice of motion to obtain leave to amend the statement of claim. 5. No order as to costs of the appeal or as to costs of the proceedings before the Master which concern the subject matter of the appeal.

DECISION

MILES CJ, GALLOP and MADGWICK JJ 1. This is an appeal arising out of a notice of appeal against several orders made by Master Hogan on 25 August 1995. Those orders included an order that summary judgment be entered for the third respondent against the appellants pursuant to O.17. On 19 June 1996 a Full Court of the Federal Court of Australia ordered that the appeal against the order for summary judgment be remitted to a Full Court of this Court for hearing. Other issues arising out of the same notice of appeal were resolved in the Federal Court.

2. The relevant history of the matter may be taken from the succinct statement of Beaumont J in the Federal Court.

3. The appellants filed a statement of claim against all respondents on 19 July 1995. A number of allegations, not easily understood, were sought to be made. Reference to the nature of those allegations will be made later.

4. On 17 August 1995 the third respondent took out a notice of motion seeking various orders. They included an order "that judgment be entered for the third-named defendant (a) pursuant to Order 17 of the Supreme Court Rules .....".

5. On 25 August 1995 the Master ordered that judgment be entered for the third respondent against the appellants, and that the appellants be restrained from commencing any further action against the third respondent without first obtaining leave of the Court to institute proceedings. The Master further ordered that the whole of the statement of claim be struck out as against the first and second respondents and that the appellants not file an amended statement of claim without leave of the Court. The Master also made certain orders as to costs.

6. The appellants filed a notice of appeal in this Court dated 19 September 1995 against the whole of the Master's judgment. On 27 September 1995 the appellants purported to file an amended statement of claim against all three respondents. On 13 October 1995 the appeal (and various other notices of motion) came before Higgins J, who ordered that as against all respondents the appeal be dismissed and that leave to file the amended statement of claim then propounded be declined. The Federal Court observed that this pleading suffered from defects similar to those found in the earlier version.

7. The appellants then filed a notice of appeal in the Federal Court against the decision of Higgins J. The Full Court of the Federal Court held on 19 June 1996 that the appeal to that Court, insofar as it affected the orders made by Higgins J against the first and second defendants, was an appeal against interlocutory orders and was incompetent without leave to appeal being granted. The Federal Court declined to grant leave to appeal against those orders. The Federal Court further held that the order restraining the appellants from commencing any further action against the third respondent without leave of the Court and the order which declined to accept the amended statement of claim were interlocutory orders. It likewise declined to grant leave to appeal against those orders. However, the Federal Court held that the order for judgment in favour of the third respondent was a final order and that Higgins J was acting without jurisdiction in entertaining an appeal against that final order of the Master. By sub- s.9(2) of the Supreme Court Act 1993 it is provided that: "(2) A person who is dissatisfied with a judgment of the Master made in the exercise of jurisdiction conferred by Rules of Court may appeal, as prescribed by the Rules of Court: (a) in the case of an interlocutory judgment - to the Court constituted by a single Judge; and (b) in the case of any other judgment - to the Full Court." 8. Hence the Federal Court made the order remitting to the Full Court of this Court the appeal against the Master's order of 25 August 1995 that judgment be entered in favour of the third respondent against the appellants.

9. At the hearing of the remitted appeal in this Court on 6 February 1997 Mr. Stan Stergiou appeared for himself and, although leave was not sought, for Mrs. Stergiou, the other appellant. Mr. Richardson, SC, appeared for the third respondent. The Court was informed that the Master gave only very short reasons in his ex tempore decision and that no transcript of those reasons or of the hearing before the Master was available at that stage. It was not clear on what ground or particular rule the order for judgment was made. Although it was accepted by the parties that the Master had exercised the power to order judgment under O.17 r.1, the Court considered that judgment in the appeal should not be given until it had had an opportunity to examine the transcript. We have now examined the transcript. It raises nothing that has not already been covered in argument. It confirms that the order for judgment was made pursuant to O.17 r.1.

10. Order 17 r. 1 provides: "Defendant may apply for summary judgment 1 Any defendant to an action may, within ten days after appearance, or at any later time by leave of the Court, apply to the Judge for summary judgment, and if the Judge is satisfied that the action is frivolous or vexatious, that the defendant has a good defence on the merits, or that the action should be disposed of summarily or without pleadings, the Judge - (a) may order that judgment be entered for the defendant with or without costs; (b) may order that the plaintiff shall proceed to trial without pleadings; or (c) if all parties consent, may dispose of the action finally, and without appeal, in a summary manner." 11. The power to order judgment in favour of a defendant under O.17 r.1 is an unusual one. The rule appears to be in the same terms as the former O.14A of the Rules of the Supreme Court of Victoria. It is to be emphasised that the power to order judgment is not the same as the power to strike out a pleading on the ground that it does not disclose a cause of action. Nor is it the same as the power, inherent or otherwise, to stay proceedings in an action which is an abuse of the process of the Court by reason of being frivolous or vexatious. There is an important distinction between the finality of a judgment and the effect of an order that proceedings be struck out or that proceedings be stayed. The distinction was clearly recognized by the Master insofar as judgment, which had been sought against all respondents, was ordered only against the third respondent, whereas the statement of claim, as it affected the first and second respondents, was struck out and the proceedings against the first and second respondents stayed. It is possible for the proceedings against the first and second respondents to continue or be renewed with the leave of the Court. The proceedings against the third respondent, however, being now the subject of judgment in favour of the third respondent against the appellants, may not be renewed, and the only avenue open to the appellants is to proceed, as they do, by way of appeal against the order granting judgment.

12. In Dey v. Victorian Railways Commissioners [1949] HCA 1; (1948) 78 CLR 62 at 90, Dixon J, as he then was, apparently unaware of O.17 of the Rules of this Court, said: "..... Order XIVA., an order peculiar to Victoria. ..... is the counterpart for defendants of Order XIV. It confers a power of summarily dealing with an action which Barton J said should be reserved for exercise as to actions that are absolutely hopeless." 13. Cases referred to in Williams Supreme Court Practice, (Victoria, 2nd ed.) include several from jurisdictions which do not have a rule in the same terms as O.17 r. 1. Accordingly, those cases are of very little assistance. The author of the text (at p.1203) offers the view that the statement of Dixon J, that summary judgment for the defendant (as it has come to be called) should be reserved for claims that are "absolutely hopeless", needs to be qualified and that "if, as a result of argument, the Court reaches a clear decision which could not be altered by any evidence which could be adduced at the trial, then the action should be dismissed instead of allowing the parties to incur completely useless expense". Several decisions in the Supreme Court of Victoria are cited in order to illustrate that summary judgment will be ordered if the plaintiff has admitted that he has no cause of action and has stated that he does not intend to proceed with the action (Creed v. Smith and Another (1914) VLR 652), or if it is clear that the plaintiff cannot succeed by reason of non-compliance with the Statute of Frauds (Hall v. Johnson (1904) 29 VLR 649), or if the action raises matters which have already been decided against the plaintiff in previous litigation between the same parties (Bayne and Another v. Blake and Others (No. 3) [1909] HCA 60; (1909) 9 CLR 366), or if the court lacks jurisdiction over the subject matter of the action (Inglis and Another v. Commonwealth Trading Bank of Australia (1972) 20 FLR 30).

14. The scope and purpose of O.17 r.1 is not entirely clear. An order for judgment is not the only relief available. There is no power to grant any of the relief available under the rule unless the judge is satisfied of one or more of three matters: (1) that the action is frivolous or vexatious, (2) that the defendant has a good defence on the merits, or (3) that the action should be disposed of summarily or without pleadings.

15. Provided that one or other of the above is established to the satisfaction of the judge, then the judge may, in the exercise of discretion, take one of three steps. First, the judge may order that judgment be entered for the defendant with or without costs. That was the course taken by the Master in the present case. Secondly, and alternatively, the judge may order that the plaintiff shall proceed to trial without pleadings. Either of these two alternatives may be made without the consent of the parties. The third option, however, that the judge may dispose of the action finally and without appeal in a summary manner, is different in character and is exercisable only if the parties consent. Thus it may be seen that, unless there is consent by both parties, the power to order summary judgment under para. (a) is exercisable only if the judge is satisfied that the action is frivolous or vexatious or that the defendant has a good defence on the merits.

16. There is nothing in the present case to indicate that the appellants' claim against the third respondent is frivolous in the sense that it is not bona fide. Nor are we able to see that it is vexatious in the sense that it repeats or continues the pursuit of litigious issues which have been pursued in previous proceedings. Nor is it apparent that the proceedings are an abuse of process in the sense that they are brought for an improper purpose as in Williams and Others v. Spautz [1992] HCA 34; (1992) 174 CLR 509.

17. The essence of the case for the third respondent (which the Master accepted) is that he has an unchallenged good defence on the merits. In order to decide that issue, it is necessary to look at the nature of the appellants' claim and the factual material in the affidavit evidence, taking a view of the facts deposed to that is most favourable to the appellants.

18. The appellants' claim appears to arise out of events which occurred between 1987 and 1992.

19. In 1987 a firm of solicitors, then constituted by the first and second respondents (and possibly other persons who have nothing to do with the case), acted for the appellants and some companies or businesses including those known as Nesco Travel and Nesco Finance. In particular the firm acted for the appellants personally in connection with the re-financing of a loan from National Westminster Finance Australia Limited and the taking out of a new loan from Citibank Savings Limited.

20. The firm, as it was then constituted, ceased to carry out any acts as the appellants' solicitors by 15 November 1989 (or on another view, January 1990). The third respondent joined the employ of the firm in October 1990 and became a member of the firm on 1 July 1991. In January 1992 the firm received instructions from Citibank Savings Limited to take action against the appellants for possession of land arising out of default of payment of principal and interest owing on a mortgage dated 24 September 1990. The matter was assigned to the third respondent. On 23 March 1992 the writ of summons was issued by the third respondent. It appears that the writ was served on the appellants and that they sought advice or representation from various solicitors in Canberra. Eventually, at a hearing on 25 September 1992, the appellants advised the third respondent of their contention that the firm had acted for them previously in the same matter. At no time before then was the third respondent aware of any prior links between the firm and the appellants. The third respondent wrote that day to the appellants' then solicitor, Mr. Evans, seeking details and offering to cease to act if in fact the firm had previously acted for Mr. Stergiou. Details were requested and supplied and on 28 September 1992 the third respondent wrote to Mr. Evans stating that from the details furnished "we have now been able to determine from our records that we should not act and will immediately contact our client to appoint alternative solicitors". On 29 September 1992 the firm sent the file to another firm of solicitors and ceased to act for Citibank Savings Limited in the proceedings against the appellants. The third respondent ceased to be a member of the firm on 30 June 1994.

21. The statement of claim of 19 July 1995 against the present respondents is extremely confusing. However, at its heart may be seen an allegation that the appellants were placed at a disadvantage in the Citibank litigation because of some unconscionable conduct on the part of the respondents, including the third respondent, which arose out of the duties imposed on the firm when acting for the appellants in 1987. It is possible that the claim against the third respondent could include a claim not only of a personal breach of duty (such as a failure to ascertain that the firm had not acted previously for the appellants in relation to any relevant matter) but also of a joint liability as partner for some personal breach of duty on the part of one or both of the other two respondents. It is not enough to say, as was submitted on behalf of the third respondent, that he could not be liable in respect of any event which occurred or related to the time when he was not a partner of the firm. There is here a question of mixed fact and law which could not be described as unarguable and which, in our view, is not sufficiently clear for us to reach the conclusion that the appellants' claim must be regarded necessarily as completely hopeless. The nature of the appellants' claim at the moment is of course very difficult to understand, whether it be a claim at law or whether it be a claim in equity, and we would observe that Mr. Stergiou appears to have misconceived the nature of the damages that might flow from establishing a breach of the nature apparently relied on. Indeed, it is the very confused nature of the appellants' claim that makes it impossible to conclude that the third respondent incontestably has a good defence to whatever merits there might be in the appellants' claim.

22. As Gibbs CJ said in Coe v. Commonwealth of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland [1978] HCA 41; (1979) 53 ALJR 403 at 409: "If there are serious legal questions to be decided as to the existence or nature of such rights, no doubt the sooner they are decided the better, but the resolution of such questions by the courts will not be assisted by imprecise, emotional or intemperate claims. In this, as in any other litigation, the claimants will be best served if their claims are put before the court dispassionately, lucidly and proper form." 23. In the circumstances we are of the view that the appropriate order to have been made by the Master against the third respondent was the same as that made against the other two respondents, namely that the statement of claim be struck out and that no amended statement of claim be filed without leave of the Court.

24. We add a further condition in order to avoid the incurring of further unnecessary costs, namely that if leave to file a further amended statement of claim is sought, then it is to be sought in the first instance by application to a Judge within two months of publication of these reasons. The initial application is to be made ex parte on affidavit and without notice to the respondents. Leave, if granted at that stage, would be restricted to permitting the appellants to file and serve a notice of motion to obtain leave to further amend the statement of claim.

25. We uphold the appeal and make the orders accordingly. In the circumstances, we make no order as to the costs of the appeal or as to the costs of the proceedings before the Master which concern the subject matter of the appeal.