Burgess v Gill [2022] QDC 62

DISTRICT COURT OF QUEENSLAND CITATION: Burgess v Gill [2022] QDC 62 PARTIES: Elisha BURGESS (Appellant) v Ella Gill (Respondent) FILE NO: 2268/21 DIVISION: Criminal PROCEEDING: Appeal ORIGINATING COURT: Magistrates Court, Southport DELIVERED ON: 23 February 2022, ex tempore DELIVERED AT: Brisbane HEARING DATE: 23 February 2022 JUDGE: Kent QC, DCJ ORDER: 1. Leave is granted to appeal. 2. Appeal is allowed. 3. Orders made by Magistrate Nunan in the Magistrates Court of Queensland on the 2 August 2021 are set aside. 4. Costs of and incidental to the Appeal to be reserved. 5. The parties have liberty to apply 6. Leave granted for Mrs Gill to act as Miss Gill’s McKenzie Friend. CATCHWORDS: MAGISTRATES – APPEAL AND REVIEW – QUEENSLAND – APPEAL – GROUNDS where the plaintiff has applied for leave under rule 304 of the UCPR to discontinue the proceeding without the consent of the defendant - whether the solicitors, not the party, should be paying the costs - whether the Magistrate erred in law and granted leave to discontinue in the face of serious allegations of fraud against the plaintiff respondent – whether the Magistrate erred in law in ordering costs in the circumstances where the proceedings were allegedly brought pursuant to fraud and, alternatively, as an abuse of process -- 1 of 12 -- 2 LEGISLATION: Justices Act 1886 (Qld), s 222 Magistrates Court Act 1921 (Qld), s 44, s 45(2)(a) CASES: Wanstall v Burke [1925] ST r Qd 295 American Express International Incorporated v Hewitt [1993] 2 Qd R 352 Myers v Elman (1940) AC 282 White Industries v Flower & Hart (1998) 156 ALR 169 Fuller v Toms [2010] QCA 283 COUNSEL: Mr Van Grinsven for the appellant Mrs Gill as McKenzie Friend for the respondent SOLICITORS: SLF Lawyers for the appellant No appearance for the respondent Introduction [1] This is a civil appeal by the appellant, Ms Burgess, previously the defendant in proceedings in the Magistrates Court. The relevant determinations of which Court were made by a Magistrate on the 2nd of August 2021. The circumstances of both the background and the way in which the decision under appeal arose are somewhat singular and, thus, I will catalogue the background in some detail. Having said that, the result at the end of the day, having heard from Mr Van Grinsven on behalf of the appellant and having heard – for reasons which will become obvious – from the respondent’s mother as a McKenzie friend, it is tolerably clear and, thus, in my view, susceptible of being dealt with on an ex-tempore basis. [2] The appeal is pursuant to section 45(2)(a) of the Magistrates Court Act 1921 because the amount of the claim – which, from memory, is only slightly more than $5000.00 – did not exceed the minor civil dispute limit of $25,000.00. The appeal only lies to this Court by leave and, generally, such leave will not be granted unless the Court is satisfied that some important principle of law or justice is involved. My conclusion, amongst other things, is that that test is satisfied in this case for reasons to which I will return. The background is somewhat convoluted, but I will attempt to summarise as best I can, given the circumstances. -- 2 of 12 -- 2 [3] The action which was on foot in the Magistrates Court involved a claim for property damage arising out of a motor vehicle accident, as we now know, even more clearly to me than the material previously did, it was quite a minor accident involving, it seems, Ms Gill’s car being reversed into by Ms Burgess who was, in fact, not only known to but a friend of hers. Apparently, fairly minor damage was done to her vehicle. Summarising the circumstances as they appear, and without making conclusive findings of fact about these events, I describe them because most, if not, all of them – if not substantiated by evidence – are, at least to this point, uncontested. And there seems good reason to believe that they will never be contested. [4] What I am alluding to is the following: (a) The action was commenced apparently on behalf of the plaintiff. I say “apparently” because apparently, at the end of the day, in truth it was not on behalf of the plaintiff, but, apparently, on her behalf by State Lawyers, a firm of solicitors who were said to have premises at Broadbeach in Queensland. They were issued in the Southport Registry of the Magistrates Court in November 2020. The statement of claim was brief in the extreme, indeed to the point of obscurity. For example, there is nothing on the face of the statement of claim to give rise to a conclusion that the place where the tort allegedly happened was within the Districts Court jurisdiction of the Magistrates Court at Southport. It simply said it happened somewhere in Queensland. (b) There were other ways in which pleading is obscure, but, nevertheless, it got across the idea that there was a claim for property damage arising out of a motor vehicle accident at some stage. The defendant was indemnified by an insurer, and what followed was that a defence was filed by SLF Lawyers, which, understandably – and I am not being critical – was also rather brief. [5] One thing it did make clear was that there was an issue about quantum, which the defence pleaded was improperly inflated in the statement of claim, the true quantum being precisely pleaded as $2,093.00, whereas, $5,854.11 - for reasons which are unknown but suspected - appeared in the statement of claim. [6] What followed sometime later was an amended defence. I will do my best to summarise a fairly extensive pleading – and, in that description, I am not being critical – but many things were said about many parties in the amended defence, including -- 3 of 12 -- 3 many parties – almost all of the parties with which it deals were, at that stage, not parties to the action. Yes, and it is what it is pleaded. I think I can summarise by saying is that there are good reasons to suspect that companies including – if it is a company – an entity trading as Cars, Accident and Management; a company called Indigo Vehicle Solutions Pty Ltd; Compass Corp Holdings Pty Ltd; Accident Management Global Pty Ltd, which apparently trades as Cars, Accident and Management; State Lawyers Pty Ltd, which is apparently the corporate body trading as State Lawyers, possibly mainly in New South Wales, and a Mr Daniel Nerezov, company director and secretary of some of the companies that I have mentioned, and said to be a solicitor in the current employ of State Lawyers apparently according to the Law Society of New South Wales. [7] I was told by Mr Van Grinsven that there is more recent material to indicate that Mr Nerezov may be at least located in Queensland presently. Whether he’s admitted in Queensland or, in fact, practicing law in Queensland is not something with which I need to concern myself. [8] Returning to the amended defence, the concerning circumstances pleaded therein are to the broad effect that the entities that I have mentioned – and perhaps people associated with them, including another business, Statewide Auto conducted by Drive Happy Accident Management Pty Ltd – have, there is good reason to suspect, been involved in a scheme which dishonestly has been attempting to extract more from accident claims than the properly provable quantum. It is inevitable if the pleadings, or something consistent with the broad thrust of the pleadings of the amended defence, are made out, that people have been acting dishonestly in what the insurer thinks is a deliberate scheme. I am not in a position to make positive findings about any of that. [9] However, what is clear is that subsequent to the amended defence being filed and served, the attitude of State Lawyers, who were purporting to act on behalf of Ms Gill, the plaintiff in the Magistrates Court action, drastically shifted. That gave rise to the proceeding which I am presently concerned with on this appeal, which was the hearing on Monday of the 2nd of August 2021 in the Magistrates Court at Brisbane - to which registry to file had been transmitted - of an application by counsel instructed by State Lawyers - said, at that stage on the record, to be for Ms Gill at that time – -- 4 of 12 -- 4 were applying for leave under rule 304 of the UCPR to discontinue the proceeding; because that was not with the consent of the defendant. The consequence of the machinery of rule 304 was that the plaintiff would be required to pay the relevant costs. And that ended up being the order, quantified in accordance with a schedule in the Rules; I think, from memory, $1,125.00. [10] Curiously – and I say curiously from the perspective of Courts and lawyers – the application by the plaintiff to unilaterally capitulate in that action was vigorously resisted by the defendant for reasons which will become more clear as I continue. Mr Templeton of counsel was then acting on behalf of the defendant, and he agitated a number of arguments before the magistrate. They were to the effect, broadly, that although discontinuance, when that is a plaintiff’s desire, and accompanied by a willingness to pay the relevant costs, normally follows without much contention, there are circumstances in which that is not appropriate. And some of these kinds of ideas are identified in some of the cases. So where, for example, the entire proceeding has a collateral and improper purpose which should be ventilated, that is the kind of idea which has motivated other Courts to be concerned about this kind of procedure. [11] Those arguments were thoroughly ventilated by Mr Templeton with the magistrate, who was not persuaded by them. Mr Sam’s, then appearing on the instructions of State Lawyers, advanced the conventional ideas that a plaintiff should not be compelled to litigate, particularly where what was being envisaged was a complete capitulation. And he did indicate on the record, which I think gave his Honour some comfort, the submission that – from the Bar table without evidence, his instructions were to the effect that Cars Accident Management, the claim company, intended to indemnify Ms Gill for any costs made against her in the proceeding. So as he described it, that became something of a non-issue. [12] That was in the context of the alternative order that Mr Templeton was pressing for, and now seems to be the central thrust of the ongoing litigation, namely that the defendant seeks orders pursuant to rule 690 of the UCPR to the effect that the solicitors, not the party, should be paying the costs. This is in the context, if I have not made it clear to this point – I may have overlooked it – that the pleadings also agitate the idea that in truth, State Lawyers were never retained by the plaintiff. And there has been discussion in some of the material of a system whereby signatures are -- 5 of 12 -- 5 transposed from other documents to give that false impression. Again, I don’t make any conclusive findings about that. [13] That is what is behind the defendant’s perception of this scheme. As I say, once these allegations were set out in the amended defence, the result was State Lawyers attempting to discontinue. So as I have described, his Honour found that indication by the counsel appearing on State Lawyers’ instructions comforting, and he concluded that even though, as Mr Templeton pointed out, the pleadings indicated significant cause for concern that Ms Gill had been unknowingly, innocently and wrongly involved in this, the effect of his Honour’s order would be to make a costs order against her, albeit one that his Honour thought was going to be paid by someone else. [14] The defendant was not happy with this, and promptly thereafter – and certainly within the dictated time for an appeal – initiated the appeal to this Court. Grounds advanced in the notice of appeal include essentially that the magistrate erred in law in granting leave to discontinue in the face of serious allegations of fraud against the, in essence, plaintiff’s representatives and other bodies that I have described associated therewith. [15] I should also pause to note, because I haven’t to this point, that I am told, and I accept, that the transcript of the proceedings that I have does not set out the entire record of what happened that day. [16] In fact, what I am told and what I accept is that the parties – that is, the lawyers involved, I presume mainly the counsel involved, had approached the Court – the Magistrates Court on that day with the intention of having the application adjourned. That is because there was another application in almost identical circumstances in another case which was pending before another magistrate. And the desire was to adjourn this matter to revisit it when the result of the other case was known. The magistrate was disinclined to adjourn it, rather wishing to conclude what he thought was a fairly straightforward matter without wasting further Court time. That left the counsel retained on behalf of the plaintiff’s solicitors in what he perceived to be, no doubt, something of an advantageous position and the application proceeded with the result I have described. So hence the appeal. -- 6 of 12 -- 6 [17] Mr Van Grinsven, who now appears but was not the counsel at first instance, sets out in his outline of argument the relevant principles and background and the reasons why, firstly, leave should be granted because an important principle of law or justice is involved, in essence. At the commencement of the hearing of the appeal, what I wished to clarify – and Mr Van Grinsven was able to clarify for me – was the exact utility of the appeal and any further consequent proceedings in the Magistrates Court. What I was concerned about is what other proceedings could properly evolve in the Magistrates Court given that the plaintiff had no wish to continue. As he made clear, the matter, which was not overlooked, but may have been undervalued by the magistrate, was the impropriety of ordering costs personally against the innocent plaintiff when the alternative being advanced – that is, making the solicitors responsible for their – what the defendant argued was apparent wrongdoing under rule 690 of the UCPR – was, in fact, the point of most importance. And by proceeding in the way he did and refusing to engage in a rule 690 application, which admittedly was not then strictly on foot - the parties having originally agreed to adjourn the matter - his Honour erred. [18] Returning then to the question – having set out that extensive background, returning to the question of leave and an important principle of law or justice, I have been helpfully referred to the commentary in Wanstall v Burke [1925] ST r Qd 295 and the adoption of a practice by the High Court, pursuant to the Judiciary Act at that time – and I quote from Chief Justice Griffiths in Johansen v City Mutual Life Assurance Society Ltd, the way in which his Honour described this exercise is examining whether the case is one of gravity or involving some important question of law, or affecting property of considerable value; or unless it is a case which is otherwise of public importance or of very substantial character. [19] I am helpfully referred to other authorities but most recently, American Express International Incorporated v Hewitt [1993] 2 Qd R 352 at paragraph 19. Justice of Appeal Davies expressed that an important principle of justice requires that there be a question going beyond the consequence of the decision for the immediate parties to the proceeding. [20] In my view, this appeal can be so categorised, perhaps in two separate ways. Firstly and broadly, as has been advanced to me from the Bar table – and again, it seems, -- 7 of 12 -- 7 without any controversy because it was mentioned before the Magistrates Court in the transcript which is before me – there is at least one other – and I am told there may be a number of other – cases where this exact complained-of practice is being agitated in other cases. There is one particular case in which Mr Van Grinsven has been involved which actually did proceed in the Magistrates Court to an order being made under rule 690 against this same firm of solicitors. [21] Rule 690 is one which has not produced a great body of jurisprudence but there are a number of authorities dealing with this general area, although not per se with rule 690. One is familiar with the older principles from Myers v Elman (1940) AC 282 and Australian, and particularly Queensland, lawyers are probably more familiar with White Industries v Flower & Hart (1998) 156 ALR 169. Those cases deal with this idea that where there is misconduct by lawyers as comprehended by rule 690, it may well be that it is the lawyers, not the client, who have to pay. None of the authorities that I have been referred to deal specifically with the problem that I am currently engaged in, which is the intersection of the application for leave to discontinue under rule 304, the reason for resistance to discontinuance being to keep the proceeding on foot being in order to provide for the ability to apply for an order under rule 690. [22] So it is the confluence of those two procedural streams in these particular circumstances which are very unusual, but I have no reason to think are particularly unique, that give rise to the more general idea that an important principle of law or justice is involved. That is, a question going beyond the consequence of the decision for the immediate parties to the proceeding. What I am saying is that the possibility of applying for a rule 690 order seems to me to be a legitimate reason for refusal of leave to discontinue under rule 304. And that does seem to be a question of law or of general importance. So the conclusion is that in my view, leave should be granted. [23] Having got that far and proceeding on the basis that those two reasons are the reasons leave is granted, and the way in which the appeal has procedurally unfolded, the actual result of the appeal is not really in significant doubt. I should say that present in Court today is Mrs Gill, the mother of the respondent Ella Gill. Ella is a student in Melbourne at the moment, and thus not able to be physically present. I considered it cautious to permit Mrs Gill to appear at the Bar table as a McKenzie friend to inform the Court of her daughter’s attitude to the appeal, which understandably enough is -- 8 of 12 -- 8 that it should not be resisted in circumstances where her daughter was, as she confirms, and as the defendant’s pleading outlines, apparently unknowingly involved in litigation which really had nothing to do with her rights at all, her car having already been repaired, as she understood it, without any contention at the time when this litigation was initiated without her knowledge and continued on the material before me at the moment apparently without her explicit instructions. [24] So in considering the merits of an appeal which is uncontested, Mr Van Grinsven is quite right to outline, as he does, the nature of this kind of appeal. It is one to be conducted by way of rehearing, and there is power in rule 766(1)(c) to allow the receipt of further evidence. Further evidence was allowed by me in the exercise of that jurisdiction in the form of a further affidavit from Mr Hu of SLF Lawyers, the lawyers on the record for the respondent. That exhibits a number of pieces of correspondence which I won’t repeat in fine detail, but I have read thoroughly during the hearing of the appeal, and are very concerning. In essence, as is pointed out by Mr Van Grinsven, the – State Lawyers have apparently, at various times, taken the stance that they were originally instructed because the application for leave to discontinue was made on the plaintiff’s instructions. They apparently remained instructed in the sense that they accepted without demur the service of the notice of appeal and then they negotiated apparently, on the face of the correspondence, on behalf of Ms Gill, such things as the withdrawal of an application of the Magistrates Court to re-open the matter under section 44 of the Act, and then a conclusion that it would be better to – instead of proceeding with that application – to merely await the determination of the appeal, all apparently on instructions. As the catalogue of correspondence describes, that kind of attitude, namely, that their retainer continued, continued until the very recent past. And it is only advised a week or two ago, that the different position has been expressed in correspondence to the effect that their retainer terminated on the order by the Magistrate discontinuing the Magistrates Court action. To attempt to hold these two diametrically opposed positions is untenable. [25] I should say that State lawyers have not taken any part in the hearing of the appeal. This conduct alone, as demonstrated in the correspondence exhibited to the affidavit that I have mentioned, is very concerning. Again, I make no final factual conclusions about it having not heard from State Lawyers, however, what it does demonstrate is -- 9 of 12 -- 9 that the actual merits of the appeal itself are very much in favour of the appellant, quite apart from the arguments being uncontradicted. [26] The Appellant embodies all of this in a number of different grounds. The first one is that the Magistrate misconceived the application and the consent orders sought by the parties. [27] His Honour’s approach to that is, perhaps, concerning but, in my view, it is not the determinative ground vis-à-vis the merits of the appeal. In my view, the error that his Honour made was to rely on, unquestioningly, the indication given from the bar table that one of the companies involved would indemnify the plaintiff for costs in the circumstances where there was a discontinuance granted, and costs to be paid by the plaintiff. The way in which the proceeding was constituted at the time when the Magistrate heard the application, the only order that he could have made upon permitting discontinuance was to order costs against Ms Gill. [28] But, as pointed out by the Appellant, there are very good reasons to think that – and it seems to be the case – Ms Gill was not only entirely innocent, but completely unknowing. And yet his Honour’s attention had been drawn to rule 690. In my view, perhaps the ground which most accurately encompasses the proper concerns is ground 4, which is: (a) The learned Magistrate erred in law and granted leave to discontinue in the face of serious allegations of fraud against the plaintiff respondent. [29] In fact, it is slightly miscast. The allegations of fraud were not really, as I understand everything that is being advanced, ever against the plaintiff. They were against a number of other bodies and the plaintiff’s lawyers; hence the application being foreshadowed for orders under rule 690. But where that ground does gain traction is the submission that the learned Magistrate should have more carefully considered the principles from such cases as Fuller v Toms [2010] QCA 283 at paragraph which identifies that it – in a different kind of case and a different cause of action – the possibly broad principle that leave to discontinue might properly be refused if a proceeding was brought for an improper purpose. [30] And improper purposes of course include dishonest purposes and an abuse of process. That – as the Appellant’s outline goes on to say was that the amended defence made -- 10 of 12 -- 10 allegations essentially of fraud by State Lawyers, not the plaintiff herself. His Honour seems to have been well aware that that was the territory that was being canvassed by the defence, but was distracted by the assurance he received from the bar table about the plaintiff not having to pay the costs, and in my view that is where his Honour’s discretion miscarried. His Honour should have been more alert to the necessity, before a discontinuance, for the foreshadowed application under rule 690 to be properly determined so that an innocent party was not at any risk of being left with an undeserved costs order. [31] That analysis probably also encompasses ground 5 which is that: (a) The Magistrate erred in law in ordering costs in the circumstances where the proceedings were allegedly brought pursuant to fraud and, alternatively, as an abuse of process. [32] Again I emphasise that on all of the material that has nothing to do with the plaintiff but everything to do with the people who at the time were purporting to be her legal representatives, as well as others, and I have catalogued how the representation of Ms Gill by State Lawyers has waxed and waned over the ensuing months. There may be perfectly good explanations for all of these apparent anomalies. Curiously and unilaterally, State Lawyers appear to have – well, firstly, they have not appeared today despite being aware of the date, and have apparently purported to unilaterally withdraw from the record. There is simply no indication that they have taken any of the required steps under rule 990 of the UCPR. [33] And that being the case, even though they have not entered an appearance in the appeal, they remain the solicitors on record for Ms Gill at the moment. All those considerations lead me to the conclusion that leave should be granted and the appeal allowed. I have been helpfully given a draft order by Mr Van Grinsven that says it seeks five orders in total. As I have noted, the first two are that leave is granted and the appeal be allowed. Thirdly, that the orders made by Magistrate Nunan in the Magistrates Court of Queensland on the 2nd of August 2021 are set aside. That means that there was no leave to discontinue, and no costs order against the plaintiff. [34] The fourth and fifth orders are that: -- 11 of 12 -- 11 (a) The costs of and incidental to the appeal are to be reserved with the parties having liberty to apply. [35] The purpose of those two final orders is that what is planned is, in this jurisdiction as well as the Magistrates Court, the appellant will file and pursue an application for orders under rule 690; that State Lawyers pay the costs, because that application is not ready to proceed in this Court today. That is why I am being asked to reserve the costs with liberty to apply, and that is appropriate. -- 12 of 12 --