McILRAITH v ILKIN [2008] NSWCA 11 (21 February 2008)

Last Updated: 25 February 2008

NEW SOUTH WALES COURT OF APPEAL

CITATION:
McILRAITH v ILKIN [2008] NSWCA 11


FILE NUMBER(S):
40637/07

HEARING DATE(S):
18 February 2008

JUDGMENT DATE:
21 February 2008

PARTIES:
John Howard McIlraith - Claimant
Alexander Leon (Alex) Ilkin - Opponent

JUDGMENT OF:
Basten JA Bell JA

LOWER COURT JURISDICTION:
Supreme Court

LOWER COURT FILE NUMBER(S):
SC 11667/07

LOWER COURT JUDICIAL OFFICER:
Brereton J

LOWER COURT DATE OF DECISION:
23 August 2007; 21 September 2007

LOWER COURT MEDIUM NEUTRAL CITATION:
[2007] NSWSC 911; [2007] NSWSC 1052

COUNSEL:
Claimant - Self-represented
M A Bradford - Opponent

SOLICITORS:
Claimant - Self-represented
Yeldham Price O'Brien Lusk - Opponent

CATCHWORDS:
LEAVE TO APPEAL – exercise of supervisory jurisdiction – claim not pleaded before primary judge – appeal against costs order – costs of solicitor acting for himself – application for leave without real prospects of success

LEGISLATION CITED:
[<i>Legal Profession Act</i>] 2004

CATEGORY:
Principal judgment

CASES CITED:
[<i>Atlas Corporation Pty Ltd v Kalyk</i>] [2001] NSWCA 10
[<i>Garcia v National Australia Bank Ltd</i>] [1998] HCA 48; (1998) 194 CLR 395
[<i>Gundry v Sainsbury</i>] [1910] 1 KB 645
[<i>Guss v Veenhuizen [No. 2]</i>] [1976] HCA 57; (1976) 136 CLR 47
[<i>Khera v Jones</i>] [2006] NSWCA 85
[<i>Ohn v Walton</i>] (1995) 36 NSWLR 77
[<i>Ritter v Godfrey</i>] [1920] 2 KB 47

TEXTS CITED:


DECISION:
1. Leave to appeal is refused.[<br>][<br>]2. The applicant is to pay the respondent’s costs on an indemnity basis.



JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 040637/07

SC 11667/07

BASTEN JA

BELL JA

21 February 2008

John Howard McILRAITH v Alexander Leon ILKIN

Judgment

1 THE COURT: The applicant seeks leave to appeal against the orders made on 23 August 2007 by Brereton J summarily dismissing the proceedings: McIlraith v Ilkin [2007] NSWSC 911.

2 The applicant appeared in person and supported his application with written submissions to which he spoke, which were in addition to his outline of argument that had been filed with his summons for leave to appeal.

The substantive claim

3 The proceedings were commenced by summons. Subsequently Hidden J ordered that the applicant articulate his claim in a statement of claim. This was done. Thereafter the respondent moved on notice for summary dismissal of the proceedings. The amended statement of claim sought to invoke the inherent supervisory jurisdiction of the Court to obtain declaratory and compensatory relief against the respondent, who is a solicitor, arising out of the latter’s asserted professional misconduct.

4 The circumstances that give rise to the applicant’s claim occurred on 16 February 1998. On that date the respondent wrote to his client, the managing agent of the body corporate of a strata plan, giving legal advice concerning the powers of the agent under its agency agreement (the letter). The advice was conveyed to the members of the body corporate in the course of the annual general meeting which was held on 16 February 1998. The applicant was the Chairman of the body corporate at the time. Parts of the advice were wrong. The applicant claims to have suffered loss and injury by reason of the publication of the wrongful advice to the members at the meeting.

5 The letter was before Brereton J on the hearing of the motion. It disclosed that the respondent’s advice had been sought on an urgent basis. On the hearing his Honour was informed (for the purposes of the proceedings) that the respondent acknowledged that his advice concerning the agent’s authority to expend moneys was wrong and that he had not read the agency agreement when he prepared the advice – a circumstance which he submitted was self-evident from the terms of the letter, in which he referred to “the agency agreement I understand you hold”. (Judgment [5])

6 Brereton J reviewed the authorities that deal with the compensatory supervisory jurisdiction, concluding that the jurisdiction is not limited to a case of misconduct such as would warrant striking off or suspension from practice and may be attracted in a case of negligent breach of professional duty, provided the negligence is of a culpable quality amounting to a “serious dereliction of duty” (Judgment [43]). His Honour held that a solicitor is not guilty of a serious dereliction of duty by the expression of an opinion which is erroneous because an assumption on which it was made is false, at least where the assumption is not unreasonably made and the fact that it is no more than an assumption is apparent. (Judgment [44]) Nothing was advanced in support of the application to suggest that his Honour was arguably wrong in his statement of the relevant principles.

7 His Honour found that on the facts alleged by the applicant, and on the evidence that the applicant could adduce at trial, he could not raise a sufficiently arguable case against the respondent to require an answer.

8 The applicant informed this Court that the evidence upon which he would rely should his claim be permitted to go forward is the material that was before Brereton J comprising the letter of 16 February 1998 and the minutes of meetings of the body corporate.

9 Whether the Court can or should exercise its supervisory jurisdiction over its officers at the behest of a private individual, in order to award compensation to the individual, in circumstances where no private cause of action is available or invoked, may be doubted but need not be pursued. The primary judge held that the applicant’s claim had no reasonable prospect of success: see [2007] NSWSC 911 at [25] and [40]. These conclusions have not been shown to be attended by sufficient doubt to warrant a grant of leave.

Fresh claim

10 Brereton J commented on the fact that more than nine years have passed since the respondent’s advice was given. He observed that the applicant is out of time to bring an action in negligence and that an extension of time would be required before a disciplinary complaint could be made under the Legal Profession Act 2004.

11 On 21 September 2007 the parties were again before Brereton J. On this occasion the applicant sought leave to file a further amended statement of claim. Brereton J refused to grant leave. His Honour said:

“I have already ordered that the proceedings be dismissed, following a contested hearing in which that was the relief sought. The application was not for striking out of all or part of the statement of claim for deficiencies in the pleading, but for summary dismissal on the basis that the case brought was doomed to fail. Mr McIlraith conducted the matter on the basis that it involved (and only involved) the invocation of the court’s summary supervisory jurisdiction. There was never the slightest suggestion that Mr McIlraith was seeking to invoke the ordinary jurisdiction of the court in an action at law. The reason why Hidden J directed pleadings in the first place was to enable Mr McIlraith’s allegations to be articulated with specificity.” (McIraith v Ilkin [2007] NSWSC 1052 at [3])

12 In the course of oral submissions on the leave application the applicant referred the Court to the facts pleaded in paragraphs 15 and following of the amended statement of claim and submitted that he had pleaded material facts which give rise to an arguable cause of action against the respondent for the tort of injurious falsehood. However that claim was not pleaded in the proceedings dismissed on 23 August 2007. Leave to appeal should not be granted upon a case that was not advanced before the primary Judge.

Challenge to costs order below

13 Brereton J directed that the applicant pay the respondent’s costs of the proceedings on an indemnity basis: McIlraith v Ilkin [2007] NSWSC 1052. The applicant sought leave to appeal against the costs order. He advanced two arguments in support of his application. He asserted that the proceedings arose out of the respondent’s “wrongful conduct” and that this circumstance justifies a departure from the ordinary rule that costs follow the event. This misconceives the basis upon which orders for costs are made, which is that they are to compensate the party in whose favour the order is made (generally the successful party) for the costs incurred in the conduct of the proceedings: Gundry v Sainsbury [1910] 1 KB 645; Ohn v Walton (1995) 36 NSWLR 77.

14 It is of course true that an award of costs is discretionary and an order for costs need not be made in favour of the successful party. The principle invoked by the applicant appears to depend upon the statement by Atkin LJ in Ritter v Godfrey [1920] 2 KB 47 at 60 in the following terms:

“In the case of a wholly successful defendant, in my opinion the judge must give the defendant his costs unless there is evidence that the defendant (1) brought about the litigation, or (2) has done something connected with the institution or the conduct of the suit calculated to occasion unnecessary litigation and expense, or (3) has done some wrongful act in the course of the transaction of which the plaintiff complains.”

15 In expanding on those principles, Atkin LJ held that (1) required that the defendant “has so conducted himself as to lead the plaintiff reasonably to believe that he had a good cause of action against the defendant, and so induce him to bring the action”. That is not this case. In relation to (3), Atkin LJ explained that the reference to a “wrongful act” extends to cases where the facts complained of “though they do not give the plaintiff a cause of action, disclose a wrong to the public ... by which I understand some criminal or quasi criminal misconduct”: p 61. This test is not necessarily the same as that relevant to the exercise of the Court’s supervisory jurisdiction over solicitors, but its application must be rejected in the present circumstances, for reasons similar to those on which the substantive claim failed.

Costs of solicitor acting for himself

16 The second ground on which the applicant sought to challenge the costs order made by the primary judge was that his Honour held that the respondent was entitled to his costs incurred in acting as his own solicitor. How that issue arose was not explained to this Court. The respondent referred to “the inclusion of [his] profit costs in the order” – written submissions, par 23 – but no order appears to have been taken out and the statement of orders in each of the judgments of 23 August and 21 September 2007 is silent on this point. (The fact that the coversheet of the second judgment refers to the “decision” as “plaintiff to pay defendant’s costs (including his professional costs of acting for himself) on indemnity basis” is not part of the judgment or orders as made.) It would be unusual for a primary judge to make such an order, as the assessment of costs is usually left to the statutory jurisdiction of an assessor, from whom an appeal may be brought in particular circumstances: see Atlas Corporation Pty Ltd v Kalyk [2001] NSWCA 10 and Khera v Jones [2006] NSWCA 85.

17 If no order can be identified, no appeal is possible from the conclusions reached by his Honour in the second judgment. If an order had been made, leave would in any event have been refused. As this Court held in Atlas Corporation, the principle his Honour applied was decided by the High Court in Guss v Veenhuizen [No. 2] [1976] HCA 57; (1976) 136 CLR 47. Despite a different approach taken in other jurisdictions, it is not open to this Court to depart from that conclusion, as indeed was held in Atlas Corporation at [10], Handley JA (Meagher and Sheller JJA agreeing) referring to the statement by the High Court in Garcia v National Australia Bank Ltd [1998] HCA 48; (1998) 194 CLR 395 at 403 that “it is for this Court alone to determine whether one of its previous decisions is to be departed from or overruled”.

18 Leave to appeal against the costs order should be refused.

Costs of application

19 Mr Bradford who appeared on the respondent’s behalf submitted that, in the event leave was refused, the Court should order that the applicant pay the respondent’s costs on an indemnity basis. The respondent notified the applicant by letter dated 5 October 2007 of his intention to make such an application should the application for leave be maintained. The application for leave was without any real prospects of success. In these circumstances it is appropriate to make order the order that the respondent seeks.

ORDERS

1. Leave to appeal is refused.

2. The applicant is to pay the respondent’s costs on an indemnity basis.

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LAST UPDATED:
21 February 2008