New South Wales Supreme Court CITATION : Bhattacharya v Freedman [2001] NSWSC 498 CURRENT JURISDICTION: Common Law Division FILE NUMBER(S) : SC 20363/98 HEARING DATE(S) : 07/06/01 JUDGMENT DATE : 19 June 2001 PARTIES : Pranay Kumar Bhattcharya - Plaintiff Harry Norman Freedman Trading as Milne Berry and Berger - Defendant JUDGMENT OF : Badgery-Parker AJ LOWER COURT Supreme Court JURISDICTION : LOWER COURT FILE NUMBER(S) : LOWER COURT Master Malpass JUDICIAL OFFICER : COUNSEL : Mr Bhattacharya in person Mr Strasser for defendant SOLICITORS : Mr Harry Norman Freedman CATCHWORDS : Litigant in person - application for summary judgment - application for summary dismissal - security for costs. Mental Health Act LEGISLATION CITED : Legal Profession Act 1987 Supreme Court Act 1970 Rakski v Powell (1987) 11 NSWLR 522 at 524 Warren v Coombes (1979) 142 CLR 531 at 551-552 CASES CITED : Rajski v Computer Manufacture and Design Pty Ltd (1983) 2 NSWLR 122 Merribee Pastoral Industries Pty Ltd v ANZ Banking Group Ltd Morris v Hanley (unreported, Equity Division 25 August 2000; 2000 NSWSC 957; BC 200006146 Powell v Taylor (1885) 31 ChD 34, 38) DECISION : Appeal against the decisions of Master Malpass dismissed - Order for security for costs made by Master Malpass be confirmed - the plaintiff to pay the defendant's costs. IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION BADGERY-PARKER AJ TUESDAY 19 JUNE 2000 PRANAY KUMAR BHATTACHARYA V HARRY NORMAN FREEDMAN Trading as MILNE BERRY AND BERGER (20363/98) JUDGMENT BACKGROUND 1 The plaintiff's wife died on 15 November 1992. The plaintiff has always believed that she was poisoned; that there was a conspiracy to murder her; and a conspiracy to conceal the truth acts about her death. 2 The plaintiff instructed the defendant who is a solicitor to act on his behalf in relation to his wife's death and the conduct of those responsible. The plaintiff believes that the solicitor did not do what he was retained to do - both initially, and from time to time thereafter in relation to connected matters. 3 There is a dispute between the parties as to the precise scope of the original retainer, and in particular whether any action by the solicitor in pursuance of it was in the first place dependent upon the provision by the plaintiff of further information. 4 There is a dispute also as to whether subsequently the defendant's retainer was expanded to embrace other matters, including the detention of the plaintiff, to purportedly under the Mental Health Act, litigation to secure his release, an appeal in respect thereof made to the Court of Appeal, proceedings to compel the Coroner to hold an inquest, and an appeal in respect of that matter also. 5 From time to time the defendant has rendered bills of costs in respect of such actions as he has taken on the plaintiff's behalf and although some of the costs so billed have been paid, other amounts are outstanding. The outstanding costs have been assessed and the certificate of determination in respect thereof was filed by the defendant in the Local Court. Such filing of the certificate has the effect of the entry of judgment and in reliance thereupon, a bankruptcy notice has been issued. The plaintiff has made unsuccessful applications to set it aside. THE PRINCIPAL LITIGATION 6 By a statement of claim filed on 14 September 1998 (number 020363/98) the plaintiff claimed damages against the defendant. The statement of claim was evidently drafted without the benefit of professional legal assistance and it is not entirely clear what are the causes of action which the plaintiff wishes to assert. In substance, however, I would understand the plaintiff to be advancing a claim for damages for professional negligence both as a tort and as a breach of the contract constituted by the plaintiff's retainer of the defendant. The plaintiff also asserts breaches of statutory duties said to arise under the provisions of s 193 (1) of the Legal Profession Act 1987 and regulation 22A (1) (h) made thereunder. 7 As a pleading, the plaintiff's statement of claim is from a technical point of view seriously flawed and will undoubtedly require amendment before the matter goes to trial, if it is to go to trial. 8 Notwithstanding the deficiencies in the document as a pleading, the defendant filed a defence on 15 February 1999. The defence admits paragraph 1 of the statement of claim which was pleaded by the plaintiff in the following term - " In all material times the plaintiff sort (sic) legal services of the named defendant who traded as firm of solicitors named Milne Berry and Berger". Otherwise, the defence traverses the allegations made in the statement of claim. In particular the defendant denies any negligence or breach of retainer or breach of statutory duty. 9 The relief sought by the plaintiff in the statement of claim is set out in paragraph 32 thereof: "exemplary damages of $1 000 000 and order for the specific performance of his legal duties of his undertaking with respect to investigations related to killing of plaintiff's wife. PARTICULAR OF INJURIES 33. The plaintiff suffered the following injuries 1 damage to his reputation 2 pain, suffering and loss of enjoyment of life 3 damages to his professional standing 4 litigation in Courts and the associated loss of time and money." The defence denies that the plaintiff is entitled to the relief sought and denies the so called "particular of injuries". PROCEEDINGS BEFORE THE MASTER 10 On 6 December 1999 the plaintiff filed a motion, returnable on 15 December 1999 by which he sought the following orders: " 1 Judgment be entered for the defendant to pay plaintiff $1000 000 as damages for full satisfaction against plaintiff's claim against the defendant. Alternatively, 2 issues of defendant's breach of contract be summarily determined in accordance with the provisions of section 68 of the Supreme Court Act 1970". On 15 December 1999 a Deputy Registrar gave directions and stood the motion over to 4 February 2000. 11 On 1 February the defendant filed a motion (in respect of which time for service was abridged by an appropriate officer of the court) returnable on 4 February. By that motion the defendant sought the following orders: "1 The plaintiff's proceedings be summarily stayed or dismissed pursuant to part 13 rule 5. 2 The plaintiff's proceedings be stuck out pursuant to part 15 rule 26. 3 The plaintiff be ordered to deposit a sum of money to be determined by this Honourable Court by way of security for cost". 12 On 4 February directions were given for the filing of affidavits on either side, and eventually the motions came on for hearing together, before Master Malpass on 19 May 2000. 13 Before the Master the plaintiff relied upon affidavits sworn by himself dated 3 December 1999, 3 February 2000 and 18 march 2000. However, when the appeal proceedings came before me, it appeared that the plaintiff was under the impression that the Master had before him, and that I should have before me, certain other documents and affidavits which he had filed, apparently in pursuance of directions given under the Differential Case Management scheme, and Mr Strasser of Counsel for the defendant indicated that he was content that I should proceed on the basis that all of that material was before both the Master and myself. The additional material consisted of the plaintiff's DCM document filed on 1 October 1998 and affidavits filed by the plaintiff dated 7 April 1999, 28 April 1999, 3 June 1999 and 1 February 2000, in addition to the three specifically noted by Master Malpass. As well the plaintiff relied upon a bundle of documents labelled exhibit A which was exhibited to his December affidavit and a further bundle of documents labelled exhibit BB which was exhibited to his March 2000 affidavit. 14 The defendant relied upon affidavits sworn by himself on 1 February 2000 and 24 February 2000 and on the following documents which were marked as exhibits before the master: Exhibit 1 Judgment of Hulme J in the matter entitled Bhattacharya v The Director General of Department of Education and Training (2000 NSWCA 74). Exhibit 2 Judgment of Dunford J in a proceeding entitled Bhattacharya v Hamilton (2000 NSWSC/02). Exhibit 3 Judgment of Handley J in the Court of Appeal dated 24 April 1994 together with a bundle of documents which was marked Exhibit F1 and a further bundle of documents marked exhibit V, which were annexed to the defendant's affidavits. 15 The proceedings before the master were heard on 19 May, when the evidence was completed, both parties being cross-examined extensively on their affidavits, and on 10 July, when the parties addressed. 16 The master delivered judgment on 27 July 2000. Master Malpass dismissed the application of each party for summary relief. The master granted the defendant's application, for an interim order only, in respect of security for costs. In precise terms the master ordered as follows "I order that the proceedings be stayed until security towards the costs of the defendant be provided by the plaintiff in the sum of $20 000. Any question as to the manner of the giving of the security can be dealt with by a registrar. The defendant is to have liberty to apply for additional security for his cost. The plaintiff is to pay the costs of the application for security for costs" APPEAL TO A SINGLE JUDGE 17 Within the time allowed by the rules, the appellant on 21 August 2000 filed a notice of appeal pursuant to Part 60 Rule 12, namely an appeal "To the court constituted by a single judge from whole of the written judgment of Master Malpass given on 27 July 2000". The document thus filed again very clearly reflects the fact that it was prepared by a person without legal training and without professional legal assistance. It is lengthy and discursive, and unfortunately displays a general misunderstanding of the nature of proceedings for damages in this court, the nature of the causes of action (if any) which may be available to him, and the nature of this appeal. It is a very detailed document and under the heading GROUNDS [ie of appeal] identifies twelve particular criticisms, not of the substance of the master's judgment but of the words and expressions used by the master in what was a full (and if I may say so with respect) a very fair and accurate summary of the factual background to the proceedings. I do not intend any criticism of Mr Bhattacharya when I make these observations about his notice of appeal. The skill of the trained pleader is not to be expected of a litigant in person. So long as the document filed by such adequately serves the purpose for which it is intended, the Court should extend a degree of latitude (see Rajski v Powell (1987) 11 NSWLR 522 at 524 per Kirby P). However, none of the criticisms of the Master's judgment advanced by the appellant in ground 1 is a matter of any relevance to this appeal. Even if every one of his criticisms could be made good, in the terms in which he asserts it, that would not serve to establish an error in the Master's decision. 18 The nature of such an appeal as this has been made clear in successive judgments of this Court and the Court of Appeal. The appeal is governed by section 75A of the Supreme Court Act 1970 and by subsection (5) it is provided that the appeal "shall be by way of re-hearing". The authorities establish that that is not the same as a hearing de novo. The matter proceeds on appeal upon the same material as was before the Master and "the Court shall not receive further evidence except on special grounds". In summary, the position upon such an appeal is that the Master's primary findings of fact are to be adopted unless it is demonstrated that they are flawed to such an extent as to attract review according to the principles laid down in Warren v Coombes (1979) 142 CLR 531 at 551-552. This is not a case where the Master has made crucial findings of fact which depended upon any assessment of the credibility of witnesses; for the most part the evidence is in documentary form and what is said in the affidavits is to be read in the light of what was said in the course of the cross examination. I am in as good position as was the Master to determine the questions of fact such as they are. I have considered the whole of the Master's judgment in the light of the voluminous material which was before him and I find no error in any matter of fact relevant to the decision to which he came or to the decision to which I should come. 19 The second ground of appeal asserts 12 specific errors of law. I do not propose to deal separately with any of them except those identified as (J) and (K). The others attribute to the Master decisions of law which the Master did not in fact make, nor had any occasion to make, in dealing with the motions which were before him. Some of the complaints appear to be meaningless. All of them reflect the same lack of understanding of the nature of legal proceedings as I have referred to earlier. Because the matters to which the complaints are directed were irrelevant to the Master's task, even if it could be shown that the Master has erred, in one or more of the respects asserted, no such error would invalidate his ultimate decision. The two matters which do require some attention, those identified as (J) and (K), appear to refer only to the Master's reasoning leading to the order for security for costs, and they are matters which I will refer to later. REFUSAL OF SUMMARY RELIEF 20 The Master correctly, albeit briefly, directed himself as to the relevant law. In paragraph 10 of his judgment, he said - "The Court is faced with the extraordinary situation of both parties seeking summary relief. The Court has a discretionary power to grant such relief. The discretion is exercised having regard to the relevant circumstances of the particular case before the Court and so that justice is best served between the parties. The effect of the decided cases is to impose restriction on the exercise of the discretion (it is to be exercised only in what might be described as clear cases). The party seeking summary relief bears the onus of demonstrating an entitlement to it". 21 That brief but adequate of principle accurately stated the position in relation to a claim by a plaintiff for summary judgement pursuant to Part 13 Rule 2, which presumably was the intended basis of the plaintiff's application, and under Part 13 Rule 5 invoked by the defendant. The Master might perhaps have added, to make the position abundantly clear, a statement that summary relief should be refused unless the party seeking it is able to establish that there is no serious question to be tried. 22 The Master set out clearly and adequately his reasons for refusing the plaintiff's application in paragraph 12 of the judgment, which it is convenient to set out in full - "The material offered by the plaintiff even falls short of satisfying the formal matters required by the rules. The claim is founded on either breach of contract or breach of duty. It is rare that summary relief is granted in negligence cases. The court has always been loath to summarily intervene where questions of negligence are involved. The view has been taken that these can only really be satisfactorily resolved at trial where the court has the advantage of all the evidence. Where there is a claim for damages, the damages need to be assessed. This is not appropriate in a hearing for summary relief. On the material before the court, the plaintiff has failed to demonstrate either a clear case of liability or quantum in the sum of $1,000,000 or any other amount." 23 There is, of course, no challenge by Mr Bhattacharya to the Master's refusal of relief to the defendants, nor is that the subject of any appeal by the defendant. Nevertheless it is appropriate to note the Master's comment on the plaintiff's prospects of success in paragraph 13 of his judgment - "The material reveals that the plaintiff's case may have real difficulties. Whilst remaining doubt has prevented me from reaching the conclusion that it is clearly hopeless, the prospects of success seem to be at best very slender. Not only are there serious liability problems, there are real difficulties confronting the recovery of exemplary damages." 24 That finding was insufficient to justify the grant of summary relief to the defendant; but it was of particular relevance to the decision to grant the defendant's application for security for costs and I shall return to it in that context. 25 It is convenient to note for the sake of completeness that the master was well aware of the pleading deficiencies in the plaintiff's statement of claim, but took the view that he should not grant relief under Part 15 Rule 26, in view of the fact that the defendant had pleaded over. SECURITY FOR COSTS 26 The Supreme Court Rules make very restricted provision in respect of security for costs and could not be invoked by the defendant in the present case. The defendant relied upon the court's inherent jurisdiction. 27 That there is an inherent power to order security for costs is now well established. It is exercised, as are the court's other inherent powers, to regulate its own practice and procedure in order to procure proper and effective administration of justice and to prevent abuse of process: Rajski v Computer Manufacture and Design Pty Ltd (1983) 2 NSWLR 122 (Court of Appeal) and at first instance (1982) 2 NSWLR 443 at 447-448 per Holland J. Merribee Pastoral Industries Pty Ltd v ANZ Banking Group Ltd 193 CLR 502. The master correctly summarised the relevant principles in the following brief statement - "The court has a discretion to make the orders sought. It is exercised having regard to the circumstances of the particular case before the court and so that justice is best served between the parties. The defendant bears the onus". 28 A number of cases, to some of which the master referred, have identified some particular aspects of the exercise of the relevant discretion. It is clear that the discretion should not be exercised so as to stultify litigation where the plaintiff is impecunious but has a case which he ought be permitted to pursue. The discretion is more readily exercised against a plaintiff whose impecuniosity is result of his own deliberate conduct, and particularly where it appears that the plaintiff has deliberately divested himself of his assets in order to protect them from adverse costs orders. In Morris v Hanley (unreported, Equity Division 25 August 2000; 2000 NSWSC 957; BC 200006146) Young J reviewed some of the relevant authorities in dealing with a submission that the previously understood "general rule… that poverty is no bar to a litigant" (Powell v Taylor (1885) 31 ChD 34, 38) should be replaced with a rule to the effect "that a defendant is entitled to obtain an order for security where a plaintiff is impecunious unless the plaintiff can demonstrate that he or she has suffered actual loss and damage and has a reasonably strong cause of action". His Honour declined to do that for two reasons - first, that the so called "poverty rule" was but one of the factors that the court looks at in considering the basic question whether it would be vexatious to allow the proceedings to continue without security and that it would be undesirable to limit the court's jurisdiction and discretion too finely; and secondly, because a rule so stated would not adequately deal with the kinds of case which, his Honour said, caused the court particular concern, namely those "where there is a litigant in person who is alleged by the defendant to have an obsession against the defendant and who brings very expensive proceedings against the defendant with little intervention by lawyers". His Honour instanced the case of Rajski v Computer Manufacturer and Design Pty Ltd (1982) 2NSWLR 443; on appeal (1983) 2 NSWLR 122. Having reviewed the cases, Young J said - "The leading cases show that the factors a court must take into account when considering the general question as to whether the inherent power should be exercised to order security for costs include: a. whether the plaintiff's claim is bona fide and not a sham b. whether the plaintiff has a reasonably good prospect of obtaining the orders he or she seeks c. whether an order for security would bring the proceedings to an end d. whether the plaintiff has a want of assets and how this was brought about e. whether there is anyone standing behind the plaintiff who might benefit from the action but who is unwilling to contribute to the risk involved in the action; f. the question of delay". His Honour described that as a "non-exhaustive list of guidelines" and identified as the basic question, "whether the action is harassing and vexatious". 29 The master made the following relevant findings of fact - 1 Any trial of these proceedings "could be expected to occupy several days". 2 "The plaintiff is a prolific litigator (the word "vexatious" has been used). He has instigated numerous proceedings and appeals (since at least 1982). Largely he has been unsuccessful". 3 Many costs orders have been made against the plaintiff which have not been satisfied. 4 In particular costs owed to the defendant have not been paid. 5 "The plaintiff is not in a position to satisfy an adverse order for costs. He appears to be impecunious". 6 In 1992 the plaintiff divested his major asset (his house) to his daughters in consideration of love and affection. 7 "For some years the plaintiff has been in a position where he has been able to litigate without being subjected to the costs burdens of litigation". 8 "In this case he is prosecuting litigation which at best has very slender prospects of success". 30 The plaintiff's notice of appeal challenges the finding that the plaintiff "appears to be impecunious"; and asserts that "master erred in law inferring evidence which justifies an order for the security and making such order". I take the second point (paragraph K of ground 2) as intended to challenge the adequacy of the factual basis for the order which was made, and, perhaps generously to the appellant, as having two aspects - a that the findings of fact which the master made were not justified by the evidence before him b that upon the facts found by the master, he could not properly have exercised his discretion as he did. 31 In relation to the finding that the appellant appears to be impecunious, the appellant raised a specific challenge, namely that it was an error so to find "when my cross demand for monetary claim against the Defendant is substantial". He did not otherwise suggest that the finding of impecuniosity was not open on the evidence. In my view, clearly it was. So too, having reviewed the evidence which was before the master (which I do not propose to take time to analyse in this judgment) I am satisfied that each of the findings of facts which the master made was open to him, and none should be overturned. 32 In relation to the question of impecuniosity, the submission that that finding is unjustified by reason of the potential value of the plaintiff's claim involves something in the nature of circularity. If the plaintiff's claim against the defendant is substantial and is successful, he would not become the subject of an adverse cost order in these proceedings; if his claim is indeed substantial and has good prospects of success, that would not bear upon the finding that he was impecunious, but would provide a sound reason for refusing to make an order for security notwithstanding his impecuniosity. 33 It is to be observed that although the Master found as a fact (as was clearly open on the evidence) that the appellant had divested himself of his house in 1992, the Master did not make a finding that he did so for the purpose of protecting that asset from adverse cost orders already in existence or which might subsequently be made. There was evidence before the Master as to the circumstances of the transfer, and although the Master did not expressly indicate acceptance of that evidence, the absence of a finding that the divesting was to protect the asset from adverse costs orders is consistent with the Master having accepted that evidence or at least not being satisfied that he should reject it. Nor should I. 34 The question then is whether upon the facts found by the Master but bringing into account also that he did not find that the divesting of assets was motivated by a desire to defeat adverse cost orders which might be made against him in the future, it was reasonably open to the Master to exercise his discretion as he did. 35 I am not prepared to find that the plaintiff's claim is not bona fide, in that it appears to me that, however wrong headed or even delusional he may be, the plaintiff genuinely believes that he has been wronged by the defendant and has an entitlement to damages against him. I do however accept the submission that the plaintiff's prospect of success in the action is very slender. Like Master Malpass, I am not prepared to say, having perused the material before me, that the case is hopeless. However, before the plaintiff can succeed, much will have to be done after the conclusion of the present interlocutory proceedings to put the case into a condition where it is fit to be tried. There are already outstanding costs orders in favour of the defendant; if this appeal is unsuccessful there will be another; and if the defendant is to make ready to defend the case, to prepare it for trial and then to conduct his defence at a trial, he will incur a great deal of expense with, it seems on the evidence, no prospect whatsoever of indemnification from the plaintiff if the plaintiff is ultimately unsuccessful in the litigation. 36 This is one case where the plaintiff's slight prospects of success must weigh very heavily indeed in the exercise of the discretion to order or not order security. I agree with Young J (Morris v Hanley supra at paragraph 29) that "The fact that the action will probably be stultified if any substantial order for security to costs is made is….. an extremely important factor against making an order for security for costs". But that, as his Honour made clear, focuses attention immediately on the prospects of success. Leaving aside that there does not appear to be particular evidence in these proceedings that, if the order for security is allowed to stand the plaintiff will be unable to satisfy it, and hence the action will be stultified, but assuming in favour of the plaintiff that that is the case, there is a difference between the stultification of a case which if not hopeless has but slender prospects of success, and the stultification of a case where the prospects of success are manifest. 37 While it is true that orders for security against an individual impecunious plaintiff are regarded as rare, and have most often been made only where the plaintiff has divested himself or herself of assets in order to defeat possible adverse cost orders, it does not appear to me that a finding that such was the motivation for the plaintiff's divesting of his asset is an essential prerequisite to an exercise of the court's discretion in favour of a defendant. So to hold would be unduly to circumscribe the width of the discretion, which must look at all aspects of the justice of the case. 38 The plaintiff has not persuaded me that the Master erred in the exercise of his discretion nor that he made any error of fact or of law. 39 For those reasons I am of the opinion that the appeal against the decisions of Master Malpass should be dismissed and I so order. For clarity, I confirm the order for security for costs made by Master Malpass in the terms in which the Master made it and the costs orders which the Master made. The plaintiff is to pay the defendant's costs of this appeal. ********** Last Modified: 06/20/2001 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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