FEDERAL COURT OF AUSTRALIA Vasram v AMP Life Limited [2001] FCA 1625 PRACTICE AND PROCEDURE – power of court to strike out statement of claim - power of court to dismiss proceedings Federal Court Rules O 11 r 16, O 20 r 2 Harris v Cigna Insurance Australia Limited (1995) ATPR 41-445 followed General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 followed Dey v Victorian Railways Commissioners (1949) 78 CLR 62 followed CHIMAN LAL VASRAM v AMP LIFE LIMITED NG 667 OF 1998 STONE J 15 NOVEMBER 2001 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 667 OF 1998 BETWEEN: CHIMAN LAL VASRAM APPLICANT AND: AMP LIFE LIMITED RESPONDENT JUDGE: STONE J DATE OF ORDER: 15 NOVEMBER 2001 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. the proceedings be dismissed; 2. the question of costs is reserved; 3. the parties to provide written submissions on the question of costs by 28 November 2001. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 667 OF 1998 BETWEEN: CHIMAN LAL VASRAM APPLICANT AND: AMP LIFE LIMITED RESPONDENT JUDGE: STONE J DATE: 15 NOVEMBER 2001 PLACE: SYDNEY REASONS FOR JUDGMENT Background 1 By application filed on 6 July 1998 the applicant commenced these proceedings in a personal and representative capacity under Part IVA of the Federal Court of Australia Act 1976 (Cth) ("Act"). On 20 April 1999, pursuant to an order made by Madgwick J, the applicant filed a statement of claim. His statement of claim was struck out and the proceedings dismissed by Madgwick J on 28 May 1999. His Honour stayed his orders for seven days to allow the applicant an opportunity to apply for revocation of those orders and prepare amended pleadings. An amended statement of claim was also struck out by Madgwick J on 23 September 1999 on the ground that it was embarrassing. His Honour gave leave to the applicant "further and finally to amend the statement of claim" within 21 days after any breakdown of the proposed mediation and required that "the statement of claim as finally amended is to be verified by persons having personal knowledge of the facts". 2 A second amended statement of claim was filed on 16 February 2000 and yet another amended statement of claim ("fourth statement of claim") on 25 February 2000. In my reasons for judgment dated 21 November 2000 I commented that, "Despite this being the applicant's fourth attempt at producing a statement of claim in these proceedings, it is poorly drafted and makes it difficult to determine the precise nature of the applicant's claim. … It may be that the better approach would have been to strike out the statement of claim. However, as the present amended statement of claim is the applicant's fourth attempt, I do not have any confidence that this would achieve anything." 3 At that time I ordered that certain questions raised by the statement of claim be determined separately from any question in the proceeding. Subsequently those questions were considered and on 22 December 2000 I gave my decision on those questions and also ordered that the proceeding no longer continue under Part IVA of the Act. 4 Following that order it was clear that much of the applicant's claim against the respondent had been disposed of and that much of the statement of claim was rendered obsolete. It is not necessary at this time to list the various skirmishes between the parties but since 22 December 2000 there have been nine directions hearings and various orders made to little avail. At a directions hearing on 7 September 2001 the applicant raised as an issue, the entitlement of the respondent to lapse or forfeit the policies. This allegation was not pleaded in the fourth statement of claim and the basis of the claim was not made clear either at that time or, it would seem, in subsequent correspondence between the parties. It was clear that the statement of claim needed to be amended further to clarify that claim as well as refine the pleadings, taking into account that, as a result of my orders of 22 December 2000, this is no longer a representative proceeding. 5 On 24 September 2001, in giving leave to the applicant to amend his pleadings I said that it was my impression that much of the delay in this matter stemmed from the applicant's lack of a clear vision of what he was trying to achieve. Because of those delays and because there had already been four attempts to finalise the pleadings, I put the applicant on notice that I would give sympathetic consideration to any motion by the respondent to strike out the statement of claim if it was not properly pleaded. The fifth statement of claim 6 On 8 October 2001 the applicant filed a further amended statement of claim (the "fifth statement of claim") which is significantly different from its predecessors. It is, as its opening statement recognises, not really an amendment to the fourth statement of claim but a new statement that is intended to substitute for the previous statement of claim. 7 The respondent, by notice of motion now seeks to have the fifth statement of claim struck out under O 11 r 16 of the Federal Court Rules on the grounds that it: (a) fails to comply with the scope of leave to file an amended statement of claim that I granted on 24 September 2001; (b) fails to disclose a reasonable cause of action; (c) has a tendency to cause prejudice, embarrassment or delay in the proceeding; and (d) attempts to re-litigate issues already determined and is therefore an abuse of process. 8 The notice of motion also seeks to have the proceedings dismissed pursuant to O 20 r 2. In the alternative the respondent seeks certain substantial amendments to the statement of claim, costs of the motion on an indemnity basis, leave to proceed to taxation of costs orders already made, a stay of the proceedings until those costs are paid or the applicant provides security for costs in the amount of $10,000. 9 The fifth statement of claim indicates that my lack of confidence as to the utility of further amendments to the statement of claim (see [2] above) was well-founded. A brief comparison between the fourth and fifth statements of claim should assist in understanding the scope of the difficulty. The fourth statement of claim consisted of twenty nine paragraphs of which seventeen were rendered obsolete as a result of my orders of 22 December 2000. In addition a number of the remaining twelve paragraphs required amendment for the same reason. Quite apart from these consequences, the statement was noticeably lacking in particulars and suffered from the defects to which I earlier referred; see [2] above. 10 The fifth statement of claim was considerably expanded. It consists of forty-six paragraphs of which twenty deal solely with issues that have already been decided. For example, paragraphs 30 – 46 seek to reinstate the proceeding as a representative proceeding despite my express order of 22 December 2000 (see [3] above). Paragraphs 15-17 raise issues relating to the terms of the applicant's insurance policy with the respondent that have already been decided. Paragraphs 2-10 consist of entirely new material. Most of the remaining paragraphs also contain some new material and/or claims that have already been decided. 11 It is totally unacceptable for the applicant to seek to reagitate issues determined adversely to him in my judgments of 21 November and 22 December 2000. If the applicant wished to challenge decisions already made the appropriate course would have been to seek to appeal from my orders. Such appeal would, of course, have required leave and, at this late stage, would also require an extension of time. Power to strike out a pleading 12 It is no doubt a serious matter to strike out a pleading. The power is exercised only in a clear case and with the utmost caution: Harris v Cigna Insurance Australia Limited (1995) ATPR 41-445; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128-9. The Court's power to strike out a pleading, in whole or in part, is found in O 11 r 16 of the Federal Court Rules: "Where a pleading- (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading; (b) has a tendency to cause prejudice, embarrassment or delay in the proceeding; or (c) is otherwise an abuse of the process of the Court, the Court may at any stage of the proceeding order that the whole or any part of the pleading be struck out." 13 The fifth statement of claim does nothing to clarify the issues between the parties. It goes well beyond the scope and purpose of the leave to amend that I gave on 24 September 2001. It contains much irrelevant material. It does not identify the causes of action on which the applicant relies and it completely fails to particularise the applicant's claims. It would be virtually impossible for the respondent to put on a comprehensible defence to this pleading. It is embarrassing in the extreme and, in my opinion, it is an abuse of the process of the Court. It should be struck out in its entirety. Power to dismiss proceedings 14 The more difficult issue is the respondent's prayer that the proceedings should be dismissed under O 20 r 2 or whether the applicant should be given an opportunity to replead. In Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91, Dixon J made the following comment: "A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. … once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process." 15 A similar view was expressed by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128-9 pointing out that the jurisdiction to dismiss proceedings, "is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion… The test to be applied has been variously expressed; 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; 'discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; … At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed…" 16 Bearing these tests in mind I have reviewed the fifth statement of claim to see if the claims that are made can be interpreted as disclosing such a case. In considering this issue it is necessary to bear in mind that the only relief presently sought by the applicant is damages under s 82 of the Trade Practices Act 1974 (Cth) ("TPA") and that s 82(2) of the TPA provides for a limitation period of three years from the date when the cause of action accrues. Although it is nowhere stated, it would appear that the claim for damages purports to be based on a breach of s 52 of the TPA, namely a claim that the respondent engaged in misleading and deceptive conduct. 17 On 22 December 2000 I ruled that the life insurance policy which the applicant obtained from the respondent did not contain any term or give rise to a representation that the policy-holder was entitled to an agent of his choice. I also ruled that the policy did not contain a term or give rise to a right of the insured to have the policy reinstated or considered for reinstatement if it should lapse. The applicant now pleads that representations to this effect were made during the three-month training period that the respondent provided to him in 1988. No particulars of such representations are provided. Paragraph 13 of the fifth statement of claim states that such representations should have been contained in the policy and should form part of the contract of insurance between the parties. The applicant does not state the grounds on which he asserts that the representations should have been incorporated in the contract. In any event, it is hard to see the relevance of this claim as no relevant relief, such as rectification is sought. 18 If the applicant is claiming that the misleading and deceptive conduct of the respondent led him to enter into the contract then the cause of action would presumably have accrued at that time, that is in 1988, or at least within a reasonable time after the entry into the contract. Without needing to explore that issue further it is hard to see that the limitation period would not have expired at this stage. In any event, the solicitor for the applicant appeared to concede this point in argument but submitted that a party who has the advantage of an expired limitation period may not wish to plead it. In this case, however, the respondent has made it perfectly clear that it would rely on the expiry of the limitation period wherever possible. 19 Apart from the paragraphs that contain allegations already the subject of previous decisions of the Court, the only other claims appear to relate to alleged representations that the respondent would consider a proposal by the applicant concerning the appointment of an agent of the applicant's choice. The applicant's position seems to be that he was not prepared to deal with an agent of whom he did not approve and therefore ceased to pay the premiums required under the policy. Consequently the policy lapsed. According to the applicant, the respondent's usual policy was to allow such policies to be revived if the outstanding premiums were paid within two years. The representations alleged to have been made by the respondent, namely that the matter was under consideration, led the applicant to believe that he would not be prejudiced by the passing of the two years. Paragraph 25 of the fifth statement of claim states: "As a result of the said representations the Applicant, and other policy holders, did not pay the premiums to renew their Policy/ies whilst waiting for an answer to the oral representations since May 1922[sic] and letters as promised in the various responses. During this time the Respondent lapsed the policy. But for the said representations in the response, and on the Respondent allowing the defendant [sic] to appoint an Agent to this own choice, the Applicant would have paid the premiums on the policy." (emphasis added) 20 The claim seems to be that the applicant lost the chance to revive the policy by paying overdue premiums. The above paragraph makes it clear, however, that the applicant would have paid the premiums only if the applicant, after consideration, had agreed to appoint an agent approved by the applicant. That being so, in the absence of a legal obligation on the respondent to appoint an agent of the applicant's choice, it could not be maintained that the respondent is responsible for the applicant's failure to pay the overdue premiums and revive the policy. 21 In my opinion the claims made by the applicant in the fifth statement of claim are so obviously untenable that they could not succeed. Moreover, the history of this matter suggests to me that there is no real prospect that the applicant would be able to articulate a viable cause of action against the respondent even if given another chance to replead. It is over three years since this proceeding commenced and from to six to thirteen years since the events in question. During that time both parties have obviously expended a great deal of money, time and effort. It is time to call a halt and dismiss the proceeding. Costs 22 The respondent already has the benefit of a number of costs orders made against the applicant in these proceedings. It seeks orders that it be granted leave now to proceed to taxation of those costs orders and that the applicant is to pay those costs, as agreed or assessed forthwith. The respondent also seeks an order for the costs of this motion on an indemnity basis against the applicant or the applicant's solicitor. In addition Ms Rees, counsel for the respondent, has indicated that, if the proceedings are dismissed, the respondent wishes to make submissions to the Court on the question of costs of the proceedings and in particular that costs should be awarded to the respondent on an indemnity basis. Ms Rees submitted that if such an order were to be made then it automatically increases the level of costs which the respondent would be entitled to recover in respect of the interlocutory hearings where costs orders have already been made in its favour. 23 In light of Ms Rees' submission I do not propose to make any order in relation to the costs of this motion at this stage or in relation to the taxation of the existing costs orders. It should be possible to set an early date for submissions on the questions of costs and to deal with all the issues concerning costs at the same time. Given that the proceedings are to be dismissed it is not necessary to make an order that the fifth statement of claim be struck out, despite the conclusion that I express in [13] above. 24 For these reasons, the orders of the Court will be that the proceedings are dismissed and costs reserved. The parties may provide written submissions on the issue of costs no later than Wednesday 28 November 2001. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone. Associate: Dated: 15 November 2001 Solicitor for the Applicant: Mr Karam Ramrakha Counsel for the Respondent: Ms Kelly Rees Solicitor for the Respondent: Mallesons Stephen Jaques Date of Hearing: 12 November 2001 Date of Judgment: 15 November 2001