Rix v Wells [2013] NSWSC 672

Supreme Court New South Wales

Medium Neutral Citation: Rix v Wells [2013] NSWSC 672 Hearing dates: 24 May 2013 Decision date: 24 May 2013 Before: Ball J Decision: See paragraphs 19 to 24 of this judgment. Catchwords: PROCEDURE - civil - application for summary dismissal of proceedings pursuant to UCPR r 13.4 - application for pleadings to be struck out pursuant to UCPR r 14.28. Legislation Cited: Conveyancing Act 1919 (NSW) Crown Proceedings Act 1988 (NSW) Law Reform (Vicarious Liability) Act 1983 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Frederick Rix v Lisa Mahony & Ors [2011] NSWSC 1308 McLean v Power [2013] NSWSC 193 O'Brien v Bank of Western Australia [2013] NSWCA 71 Rix v Mahony [2009] NSWSC 675 Category: Principal judgment Parties: Frederick George Rix (Plaintiff) Paul Wells (First Defendant) Malcolm George Brown (Second Defendant) Romano Di Donato (Third Defendant) Representation: In Person (Plaintiff) AP Coleman SC / RA Yezerski (Defendants) Yeldham Price O'Brien Lusk (Defendants) File Number(s): 2013/19198 Publication restriction: Nil

EX TEMPORE Judgment 1Before me is an application to dismiss these proceedings under Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 13.4 or, alternatively, an order that the statement of claim be struck out pursuant to UCPR r 14.28. UCPR r 13.4 gives the court power to dismiss proceedings generally or in relation to a particular claim where the proceedings or claim are frivolous or vexatious, or no reasonable cause of action is disclosed, or the proceedings are an abuse of process of the court. 2The proceedings arise out of the sale of a property at Rosebery by judicial trustees appointed under section 66G of the Conveyancing Act 1919 (NSW). The property was originally occupied by the plaintiff, Mr Rix, and Mr Rix's daughter and son-in-law, Mr and Mrs Mahony. At the relevant time the legal owners of the property were Mr Mahony as to 25 per cent and Mrs Mahony as to 75 per cent. 3Following proceedings before Forster J, his Honour found that Mrs Mahony held a 25 per cent share of the property on trust for Mr Rix (Rix v Mahony [2009] NSWSC 675). Subsequently, on 25 August 2009, his Honour made orders that Mr Brown, the second defendant, and Mr Di Donato, the third defendant, be appointed trustees for the sale of the property. The first defendant, Mr Wells, acted as the solicitor for Mr and Mrs Mahony in the proceedings. 4In making the orders his Honour did, Forster J left open the question of the beneficial ownership of a further 25 per cent held by Mrs Mahony. In subsequent proceedings heard by Bergin CJ in Eq (Frederick Rix v Lisa Mahony & Ors [2011] NSWSC 1308) after the property had been sold, Mr Rix contended that Mrs Mahony held that 25 per cent on trust for him. That claim was rejected by her Honour. 5Mr Rix, who is now 84, represented himself before me. As might be expected the statement of claim he has filed leaves much to be desired. It assumes rather than pleads the roles of the defendants in the sale of the property. It contains broad assertions rather than a clear statement of the facts forming the basis of the claim. It appears, however, from a reading of the statement of claim, and from what Mr Rix has said in court today, that he makes four complaints. 6First, he complains that the trustees were appointed improperly because of what is said to have been a close relationship between one of the trustees and Mr Wells. Underlying this allegation appears to be an allegation that Forster J was deceived in a number of respects in making the order appointing Mr Brown and Mr Di Donato. 7Second, Mr Rix claims the trustees failed to discharge their duty to sell the property for the best price reasonably obtainable for two reasons. The first of those is that following a fire which damaged part of the property they did not take steps to protect the property from further damage. Second, they did not use the insurance moneys to reinstate the property before it was sold. 8Third, Mr Rix claims that the three defendants conspired to lower the price of the property to enable the co-owners, Mr and Mrs Mahony, to buy the property at the cheapest possible price. The conspiracy appears to have the following elements: (a) the first defendant, as Mr and Mrs Mahony's solicitor, made an application to the court for an order permitting Mr and Mrs Mahony to buy the property; (b) the first defendant chose the trustees, although he is said to have a close association going back 20 years with one of them; and (c) the trustees allowed the property to deteriorate with a view to minimising the sale price. 9The fourth claim made by Mr Rix is that the first defendant is said to be vicariously liable for the conduct of the second and third defendants. 10The principles applicable to summary dismissal of proceedings were set out by Macfarlan JA, with whom Beazley P agreed, in O'Brien v Bank of Western Australia [2013] NSWCA 71 at [3]: The High Court decision in Spencer v Commonwealth [2010] HCA 28; 241 CLR 118 was concerned with s 31A(2) of the Federal Court Act 1976 (Cth) but the following principles stated in it are of general application: (a) On a summary judgment application, the real issue is whether there is an underlying cause of action or defence, not simply whether one is pleaded (at [23]). (b) The critical question can be expressed as whether there is more than a "fanciful" prospect of success (at [25]) per French CJ and Gummow J) or whether the outcome is so certain that it would be an abuse of the process of the court to allow the action to go forward (at [54] in the judgment of the plurality). Demonstration of the outcome of the litigation is required, not an assessment of the prospect of its success (ibid). (c) Powers to summarily terminate proceedings must be exercised with exceptional caution (ibid at [55]; see also French CJ and Gummow J at [24]). 11In my opinion, there are insuperable problems with Mr Rix's first claim. In essence, that claim seeks to challenge the order of Forster J appointing the second and third defendants as trustees. As Mr Coleman SC, who appeared for the defendants, pointed out in submissions the appropriate course for Mr Rix to have taken in that case was either to appeal the decision of Forster J or to seek to set aside that decision under UCPR r 36.15. It is an abuse of process to permit a collateral attack of the orders made by Forster J by way of a personal action against the defendants: see McLean v Power [2013] NSWSC 193 at [14]. 12The position is even clearer in this case because the trustees were parties to the proceedings before Bergin CJ in Eq, but no issue was taken by Mr Rix before her Honour concerning their appointment at that time. 13So far as Mr Rix's second claim is concerned, as I have said, it appears to have two aspects. One aspect is that the trustees breached their duty by failing to reinstate the property using insurance moneys paid out in respect of the fire before selling the property. I very much doubt that trustees appointed for the sale of a property have a duty of the kind Mr Rix appears to allege they have. In any event, in my opinion, this aspect of Mr Rix's claim is completely answered by section 66H of the Conveyancing Act, which required the trustees to act in accordance with the wishes of the majority owners. In this case it was their wish that the property be sold without reinstating it. In those circumstances I think this aspect of Mr Rix's claim is bound to fail. 14The second aspect of Mr Rix's claim is not as clear. The statement of claim does not allege any facts from which it could be concluded that the trustees failed to take adequate steps to protect the property following the fire. Whether the trustees breached their duties by failing to take those steps is a question of fact which can only be determined once all the facts on which Mr Rix relies are identified. 15For those reasons I would not be prepared to dismiss the claim to the extent that it contains an allegation that the trustees breached their duties by failing adequately to protect the property following the fire without at least giving Mr Rix a further opportunity to plead that part of his case. 16The third claim made by Mr Rix is a conspiracy claim. A claim of that type is very serious. It should be properly particularised if it is to be made at all. In my opinion the statement of claim fails to identify any facts which could justify an allegation that the defendants engaged in a conspiracy of the type that I have described, and Mr Rix, in oral submissions, did not point to any additional facts which could take the matter further. 17More importantly, as things have transpired, the property was never sold to Mr and Mrs Mahony and, in my opinion, in the circumstances of this case that fact alone must be fatal to any claim of conspiracy. 18The fourth claim is a claim that the first defendant is vicariously liable for the conduct of the second and third defendant. That claim appears to be based on s 5 of the Crown Proceedings Act 1988 (NSW) and s 8 of the Law Reform (Vicarious Liability) Act 1983 (NSW). Those sections say nothing about vicarious liability in the circumstances of this case. They are concerned with the vicarious liability of the Crown. 19It is clear from the facts I have described that there can be no basis for a claim that the first defendant is vicariously liable for the conduct of the second and third defendant. It follows, from what I have said, that the claim against the first defendant should be dismissed. 20The statement of claim in its existing form should be struck out. Mr Rix should be given leave to file an amended statement of claim, but limited to the allegation that the second and third defendants breached their duties as trustees by failing to take adequate steps to protect and preserve the property following its damage by fire. 21I think it is appropriate in this case to require Mr Rix, at the same time, to file and serve all the evidence on which he relies in support of that allegation. 22I will direct that Mr Rix file and serve an amended statement of claim and all the evidence on which he relies in support of that amended statement of claim on or before 4pm Friday 21 June 2013. 23I will stand the matter over to the Registrar's List on 28 June 2013. 24I order that Mr Rix pay the defendant's costs of the motion.