Lazarus, Lazarus & Lazarus v Kane & Ors

1. [1]

   WILSON J: On 12 July 2017, the Independent Commission Against Corruption (the second defendant) and the New South Wales Director of Public Prosecutions (the third defendant) filed a Notice of Motion asking the Court to make orders pursuant the Uniform Civil Procedure Rules 2005 ("UCPR") to either dismiss the plaintiffs’ amended summons filed on 27 June 2017 (r 13.4), or strike it out (r 14.28). The proceedings on that Motion were heard before me on 23 August 2017. On 24 August 2017, although reserving my reasons, I made the following orders:

2. [2]

   These are my reasons for making those orders. For ease of reference, and – without intending to be disrespectful - to distinguish between the plaintiffs where necessary, Ms Sandra Lazarus (the first plaintiff) will be referred to as P1, Ms Michelle Lazarus (the second plaintiff) will be referred to as P2, and Ms Jessica Lazarus (the third plaintiff) will be referred to as P3. The second defendant will be referred to as ICAC, and the third defendant as the DPP.

The Background to these Proceedings

1. [3]

   The current proceedings have a considerable background of litigation which began following an investigation by ICAC into the activities of P1 in 2008 and 2009, an investigation dubbed “Operation Charity”. Following that investigation, ICAC concluded that P1 had acted corruptly, and that her sister P2 had given false evidence during the course of the investigation. It recommended to the DPP that charges be brought against both P1 and P2. The charges recommended against P1 were for fraud offences, whilst those for P2 related to lies said to have been told to ICAC. (P3 is the sister of P1 and P2 and has not been charged or convicted of any offence.)

2. [4]

   Subsequent to the completion of Operation Charity the High Court handed down its judgment in Independent Commission Against Corruption v Cuneen (2015) 256 CLR 1; [2015] HCA 14. It is common ground that, in accordance with that decision, Operation Charity had been conducted by ICAC without authority.

3. [5]

   Following the decision in Independent Commission Against Corruption v Cuneen, the Parliament passed the Independent Commission Against Corruption Amendment (Validation) Act 2015 (NSW) (“the Validation Act”), with retrospective effect to validate investigations such as Operation Charity.

4. [6]

   On 27 November 2014, following a defended hearing that commenced on 25 August 2014 and concluded on 22 October 2014, P1 was found guilty by Magistrate Keogh in the Local Court of 44 criminal offences. These were 16 offences contrary to the now repealed s 178BB of the Crimes Act 1900 (NSW) of obtaining money or financial advantage by false or misleading statements; and 28 offences contrary to s 300 of that Act of making or using false instruments. The matter was stood over for sentence.

5. [7]

   All of the charges related to frauds committed upon two Sydney hospitals, the Royal Hospital for Women and the Royal North Shore Hospital, between 2008 and 2009.

6. [8]

   At the summary hearing of the charges, the prosecution case was that P1 obtained access to hospital staff and facilities on the basis that she was a PhD student seeking to conduct trials of a device intended to diagnose various cancers. Using that access, P1 subsequently submitted fraudulent documents to claim moneys for work performed or services provided, by forging the signatures of doctors and others connected with the hospitals authorising the payments. The invoices were rendered in the names of companies of which P1 or P2 were the directors or shareholders. A large sum of money was obtained in this way for work or services never provided, with the charges of which P1 was convicted relating to over half a million dollars paid out.

7. [9]

   The prosecution case depended upon evidence obtained after ICAC issued a number of summonses as part of Operation Charity.

8. [10]

   In her defence, P1 asserted that the invoices were rendered for work or services genuinely carried out, and the signatures authorising payment were also genuine.

9. [11]

   In early February 2015, P1 sought an ex parte judicial review of the Local Court proceedings against her in this Court. Button J, sitting as Duty Judge, granted P1 leave to file the summons in Court and stood the matter over until the following day. On 12 February 2015, P1 filed an amended summons in which she sought to have Magistrate Keogh disqualified, and have the matter reheard and determined by another Magistrate

10. [12]

    On 13 April 2015, the judicial review proceedings were heard in this Court by Garling J, who on 14 April 2015 ordered that the proceedings be dismissed: Lazarus v DPP (NSW) [2015] NSWSC 426.

11. [13]

    On 27 April 2015 P1 was sentenced by Magistrate Keogh, with an effective sentence of one year and nine months imprisonment with a non-parole period of one year and four months imposed.

12. [14]

    Immediately upon sentence, P1 filed a notice of appeal to the District Court against conviction and sentence. The commencement of appeal proceedings had the effect of staying the sentence imposed by Magistrate Keogh, pending the hearing and determination of the appeal. In the interim, P1 was granted bail. That bail continues.

13. [15]

    At about the same time as filing her all grounds appeal to the District Court, P1 initiated two proceedings in this Court. On 15 May 2015, she commenced an appeal under Part 5, Division 1 of the Crimes (Appeal and Review) Act 2001 (NSW), purported to be an appeal against the Local Court’s orders; and, on 20 July 2015 P1 applied for judicial review of Magistrate Keogh’s decision. The proceedings were heard together by RS Hulme AJ, being dismissed by his Honour on 2 December 2015: Lazarus v Director of Public Prosecutions NSW [2015] NSWSC 1776.

14. [16]

    P1 next sought leave from the Court of Appeal to appeal the decision of Garling J from April 2015. On 16 December 2015 leave was refused: Lazarus v Director of Public Prosecutions (NSW) [2015] NSWCA 408.

15. [17]

    The charges against P2, being seven counts of giving false or misleading evidence contrary to s 87 of the Independent Commission Against Corruption Act 1988 (NSW) ("ICAC Act"), all relate to her conduct as a witness during a compulsory examination (on 12 July 2010) and the later public hearing (on 21 February 2011) held by ICAC relevant to Operation Charity.

16. [18]

    The charges were heard in the Local Court before Magistrate Barnes over five days on various dates between 21 October 2013 and 8 April 2014. One of the contentions raised by P2 during the hearing was a claim that the prosecution against her had been invalidly commenced, in that the Court Attendance Notices (“CAN”) which initiated proceedings had been signed by an ICAC officer (the first defendant) in the capacity of “prosecutor”. That argument was not accepted in the Local Court: DPP v Lazarus (unreported decision of Magistrate Barnes in the Local Court of NSW of 23 May 2014, at p.4 – 5).

17. [19]

    On 23 May 2014 P2 was found guilty by Magistrate Barnes of the seven charges. She was sentenced on 14 July 2014, with an overall term of 6 months imprisonment imposed, suspended pursuant to s 12 of the Crimes (Sentencing Procedure) Act 1999 (NSW).

18. [20]

    P2 immediately filed an all grounds appeal to the District Court.

19. [21]

    On 23 February 2015, P2 commenced proceedings in this Court seeking judicial review of the Local Court hearing, arguing that her conviction was invalid as the originating process, the CANs, were invalid. Garling J dismissed the proceedings on 21 August 2015: Lazarus v NSW Director of Public Prosecutions [2015] NSWSC 1116.

20. [22]

    An application for leave to appeal filed in the Court of Appeal was also dismissed: Lazarus v NSW Director of Public Prosecutions [2016] NSWCA 47.

21. [23]

    As noted, P3 has not been charged with or convicted of any offence arising from Operation Charity. It would appear that her only involvement in Operation Charity is to have been adversely named during the proceedings.

22. [24]

    Having been convicted in the Local Court and lodged their respective appeals to the District Court, P1 and P2 both launched various proceedings in the District Court in late 2015 to early 2016, in effect seeking to have the appeal filed by each permanently stayed. Five motions were before the court for determination: seeking to have the criminal proceedings struck out or dismissed, or declarations made that evidence had been improperly obtained and was inadmissible.

23. [25]

    The sisters argued that the Validation Act (NSW) did not apply to criminal proceedings and could not validate what had been done during the investigation into the crimes each was convicted of having committed. If Operation Charity was not retrospectively authorised, much of the evidence against P1 had been illegally obtained and may have been subject to discretionary exclusion, and the examination and hearing before which P2 gave false evidence were not valid.

24. [26]

    On 19 August 2016 Zahra SC DCJ refused to order a stay with respect to the appeals before the District Court.

25. [27]

    On 15 September 2016 P1 and P2 filed a summons in the Court of Appeal (which was later amended) in which they sought judicial review of the District Court proceedings. On 7 March 2017, the Court of Appeal dismissed the plaintiffs’ further amended summons: Lazarus v Independent Commission Against Corruption [2017] NSWCA 37.

26. [28]

    On 19 June 2017 P1’s all grounds appeal was listed for hearing before the District Court. P1 did not appear and the matter was adjourned until the following day. When she again failed to appear on 20 June 2017, her conviction appeal was dismissed. Her appeal against the asserted severity of sentence was adjourned, and is listed for hearing on 18 September 2017.

27. [29]

    P1 has also sought judicial review of the District Court’s order dismissing her conviction appeal, by filing a summons (later amended) to the Court of Appeal. Those proceedings are pending.

28. [30]

    P2’s all grounds appeal was also listed for hearing before the District Court on 19 June 2017. She failed to appear on that day and the appeal was dismissed for want of prosecution.

The Current Proceedings

1. [31]

   The multiplicity of proceedings outlined above provides the background to the proceedings before this Court.

2. [32]

   The plaintiffs have, at various times, been represented by legal practitioners and self-represented before the courts. Both the first and second plaintiffs were represented by counsel in their criminal hearings in the Local Court. In the current proceedings, the plaintiffs represented themselves.

3. [33]

   By amended summons filed on 27 June 2017, the plaintiffs name five defendants: Mr Michael Kane (an ICAC officer); ICAC; the DPP (NSW); the Local Court of NSW; and the District Court of NSW. The active contradictors are ICAC and the DPP. Mr Kane, and the Local and District Courts, filed a submitting appearance.

4. [34]

   The plaintiffs seek a number of orders which, significantly, are said to be orders made pursuant to the Vexatious Proceedings Act 2008 (NSW). The orders sought are:

5. [35]

   By Notice of Motion filed on 12 July 2017 ICAC and the DPP jointly ask the Court to dismiss or strike out the plaintiffs’ Amended Summons, and award costs against the plaintiffs both of the Motion, and the proceedings, in their favour.

6. [36]

   The second and third defendants argue that the plaintiffs’ claim is obviously untenable and an abuse of process or, alternatively, no grounds are pleaded and no reasonable cause of action is disclosed. It is submitted that the Amended Summons should be summarily dismissed as an abuse of process, or struck out as failing to disclose a reasonable cause of action.

The Law

1. [37]

   There is no issue that the Court has the power to set aside originating process, the statutory power being found in Part 13 of Division 4 of the UCPR.

2. [38]

   Rule 13.4 of the UCPR provides for summary dismissal:

3. [39]

   Further, a pleading may be struck out, pursuant to the power provided by rule 14.28 of the UCPR:

4. [40]

   There is no doubt about the principles to be applied when summary dismissal or strike out is sought. The power is to be exercised sparingly and only in clear cases where no tenable claim exists. For summary dismissal or strike out to be appropriate, the plaintiffs’ claim must, in effect, be manifestly groundless. When referring to the authorities on the subject, Barwick CJ said, in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129:

The Plaintiffs’ Claim

1. [41]

   As can be seen from the detail of the Amended Summons set out at [34] above, the plaintiffs ask the Court to order and declare that various aspects of Operation Charity or the operation of ICAC were, in essence, vexatious proceedings. Prayers 1 – 4, 6 – 7, and 9 – 17 all seek orders pursuant to the Vexatious Proceedings Act 2008 (NSW) (“the VP Act”). Prayer 5, whilst not referring to the VP Act, appears to adopt the definition of “vexatious proceedings” provided by s 6 of that Act in seeking a declaration that reports of the ICAC furnished by it to Parliament pursuant to s 74 of the ICAC Act are an abuse of process, conducted wrongfully, without reasonable grounds, or to harass.

2. [42]

   Prayer 8 is the only prayer seeking relief of a different nature (an order setting aside the findings of ICAC following Operation Charity).

3. [43]

   As the second and third defendants observed, the Amended Summons contained no grounds which could have identified the proceedings said to be vexatious or the basis upon which such proceedings might be concluded to be vexatious.

4. [44]

   In oral submissions to the Court on 23 August 2017 (the plaintiffs having failed to file and serve any written submissions in accordance with the earlier directions of the Court) the plaintiffs referred to affidavit evidence filed in support of the Amended Summons to elucidate the grounds relied upon. (This material was received over objection and on the basis that the affidavits were more properly characterised as submissions, rather than evidence, much of the contents being inadmissible for various reasons.)

5. [45]

   Of the three affidavits referred to, the affidavits of Sandra Lazarus of 9 July 2017 and 31 July 2017 either provide copies of submissions made to other courts on other occasions, or produce material relevant to the health of the plaintiffs, and is not further referred to here. Suffice to say the material was read and considered.

6. [46]

   The plaintiffs principally relied on the third of the affidavits read. In paragraphs 6 to 11 of what purported to be the joint affidavit of both P1 and P2 affirmed on 26 June 2017, the plaintiffs referred to the functions of ICAC, and the consequences of the decision in Independent Commission Against Corruption v Cuneen to assert that Operation Charity was beyond the jurisdiction of ICAC to investigate.

7. [47]

   It was submitted that, in addition to being outside the [then] proper scope of its functions, Operation Charity was instituted for an improper or wrongful purpose. The plaintiffs relied upon paragraphs 15 - 18, 40 - 55, and 66 - 98 of the same affidavit in support of that contention, those being paragraphs which referred back to similar submissions of bad faith put during the course of the Local Court prosecution of P2. What was there advanced was that:

   1. (1)

      although ICAC was the true prosecutor relevant to the matters involving P1 and P2, an officer of ICAC and could not be a prosecutor, thus rendering the prosecution invalid;

   2. (2)

      that the questioning of P2 by ICAC was improper, and would not have been permitted in a court;

   3. (3)

      that document examination evidence adduced by P1 at her summary hearing should have been accepted; and

   4. (4)

      that the real reason for the conduct of Operation Charity and the subsequent prosecutions of P1 and P2 was to force them to sign a document releasing hospital staff from any legal action P1 or P2 might otherwise have taken against them, and to recover the monies paid out to P1 and P2.

8. [48]

   Although the VP Act would not appear to have any bearing on the operations of the ICAC, or the matters raised by the plaintiffs to supply the place of the absent grounds, P1 put the argument this way:

Consideration

1. [49]

   In Dey v. Victorian Railways Commissioners (1949) 78 CLR 62 Dixon J (as he then was) summed up a number of authorities on the question of summary dismissal, and said (at 91)

2. [50]

   This is one such case.

3. [51]

   Not only is the pleading sufficiently inadequate as to fail to disclose any reasonable cause of action, but it also constitutes an abuse, in that it asks for relief which is either wholly inapposite, or which has already been refused by another court, or both.

4. [52]

   Each of these prayers for relief seeks an order or declaration “pursuant to the Vexatious Proceedings Act” on the basis that the action or thing referred to is:

5. [53]

   The phrases used at sub-prayers (a) to (d) in each case are drawn directly from s 6 of the VP Act, which provides:

6. [54]

   The actions or things with respect to which orders or declarations are sought vary, but share one common feature, that being that none of them could be concluded to be “proceedings” for the purpose of the application of the VP Act.

7. [55]

   Prayers 1 to 4 all refer to aspects of the conduct of Operation Charity, being either the whole of the investigation known by that name, search warrants issued during its currency, or compulsory examinations or the public hearing into the matter. Prayers 5 and 6 refer to reports produced by ICAC pursuant to s 74 of the ICAC Act, either in relation to Operation Charity or generally. Prayer 7 refers to the findings and decisions of ICAC relevant to Operation Charity, whilst prayers 9, 10, 11, and 17 refer to matters connected with the commencement and conduct of Local Court criminal proceedings. Prayers 12 to 14 refer to the application of the Validation Act to the plaintiffs’ criminal matters, whilst prayers 15 and 16 refer to the conduct of the Office of the Director of Public Prosecutions.

8. [56]

   Section 4 of the VP Act provides,

9. [57]

   Although that definition is a wide one, it clearly refers only to litigation before a court or tribunal. It does not extend to the operation of an investigatory body such as ICAC, or to a prosecutorial authority such as the Office of the Director of Public Prosecutions (“ODPP”), or to decisions taken by either.

10. [58]

    The conduct of an investigation, the issue of search warrants, the conduct of investigatory hearings before a Commission of inquiry, the issue of reports by such a body or the making of decisions by it cannot be “proceedings” within the meaning of s 4 of the VP Act. Nor can matters connected with the validity and application of legislation of itself be “proceedings”.

11. [59]

    Whilst the ODPP is or can be a party to proceedings meeting the s 4 definition, the conduct and actions of the Office itself are not “proceedings”.

12. [60]

    Prayers 1 to 7, and 9 to 16 all seek relief of a type which is simply not available, and are thus wholly misconceived. Nothing referred to in those parts of the Amended Summons is capable of being “proceedings” which the Court could declare vexatious, even if some legitimate basis for such a declaration had been established or even advanced.

13. [61]

    Even could such a declaration be made, it is meaningless in and of itself, since the VP Act is not intended to provide declaratory relief as such; rather it provides a mechanism by which to declare individual persons “vexatious” and thereby restrain future litigation by such persons. The ICAC or the ODPP (or the Local and District Courts) are not “persons” whose past conduct can be the subject of a declaration or finding, or whose future conduct can be regulated pursuant to s 8 of the Act, which provides:

14. [62]

    Since the section has no application to investigative or prosecutorial bodies, it is sufficient to note that no evidence was placed before the Court that could establish the matters referred to in s 8(1)(a).

15. [63]

    Prayers 1 to 7 and 9 to 16 then are both misconceived and disclose no reasonable cause of action.

16. [64]

    Only prayer 17 seeks relief with respect to an action which could be a “proceeding”, that being (finalised) prosecutions before the Local Court, but the other problems remain: the VP Act provides a mechanism to restrain vexatious litigants, rather than to declare individual actions vexatious as an end in itself; and there is, in any event, no grounds advanced as to the basis for such a declaration, nor evidence adduced in support of it.

17. [65]

    There are other issues relevant to these prayers.

18. [66]

    Prayer 6 asks the Court to order that the report to Parliament provided by ICAC concerning Operation Charity be withdrawn “pursuant to” the VP Act, in circumstances where that Act provides no power for the Court to make such an order.

19. [67]

    Many of the issues raised by other individual prayers have all been considered and determined by this Court or the Court of Appeal on earlier occasions, or are pending for determination by the Court of Appeal. The relief sought thus seeks to go behind and relitigate matters already heard by a court or to be heard, and is an abuse of process.

20. [68]

    Prayer 7 asks this Court to grant relief which would ignore the decision of the High Court in Duncan v Independent Commission Against Corruption (2015) 256 CLR 83 in which the validity of the Validation Act was upheld; and which would be contrary to the conclusions of the Court of Appeal in Lazarus v Independent Commissioner Against Corruption [2017] NSWCA 37, wherein it was concluded that the Validation Act applies to pending criminal proceedings (as those against P1 and P2 were at the material time), and applies to the prosecution of P1 and P2, and to their subsequent appeals.

21. [69]

    The operation of Clauses 34 and 35 of Schedule 4 to the ICAC Act means that prayer 7 (and prayer 8) could never succeed.

22. [70]

    Prayers 9 to 11 seek to relitigate questions concerning the authority of an officer of ICAC to issue a Court Attendance Notice, and the validity of the prosecutions of P1 and P2 as a consequence. These issues with respect to P2, however, were determined by Garling J in Lazarus v New South Wales Director of Public Prosecutions [2015] NSWSC 1116, leave to appeal to the Court of Appeal against that decision having been refused: Lazarus v New South Wales Director of Public Prosecutions [2016] NSWCA 47.

23. [71]

    Since the legal questions are the same, there is no basis upon which to conclude that the position of P1 would be any different from that of P2.

24. [72]

    The validity of the Court Attendance Notices and the prosecutions was also considered in Lazarus v Independent Commissioner Against Corruption [2017] NSWCA 37, with the arguments advanced by P1 and P2 being rejected.

25. [73]

    That decision also considered the operation of clauses 34 and 35 of Schedule 4 to the ICAC Act adversely to the plaintiffs, this being the issue raised by prayers 12 to 14.

26. [74]

    The doctrine of res judicata applies between the parties with respect to these prayers.

27. [75]

    This prayer does not seek orders pursuant to the VP Act, but it must fail nevertheless, as an abuse of process. The relief sought is a permanent stay of (or to quash or set aside) the findings or decisions of ICAC in Operation Charity. Although no grounds are particularised, it is evident from the affidavit material that the plaintiffs contend that the Validation Act and clauses 34 and 35 of Schedule 4 of the ICAC Act do not operate in such a way as to validate Operation Charity.

28. [76]

    As noted with respect to prayer 7, the construction and application of the Validation Act is one of the issues considered and determined by the Court of Appeal in Lazarus v Independent Commission Against Corruption [2017] NSWCA 37. Leeming JA, with whom McColl JA and Simpson JA agreed, concluded (at [136] – [138]):

29. [77]

    These matters cannot be relitigated in this Court in hopes of achieving a different result. The declaration sought represents an abuse of process.

30. [78]

    There is a final question of the standing of P3 with respect to all but prayers 5 to 7, but this matter need not be further considered having regard to my conclusions above, other than to observe that P3 does not appear to have the necessary standing to seek the relief sought in the remaining prayers.

31. [79]

    These prayers are all concerned with costs orders, and in light of my conclusions, need not be further considered.

Conclusion

1. [80]

   I am mindful of the principles that govern the exercise of the power to summarily terminate an action before the Court, and the caution with which such an application must be approached.

2. [81]

   I am also mindful of the fact that the plaintiffs have not been assisted by any legally qualified person in drafting their Amended Summons, and they should not be prevented from seeking access to a determination of the Court because of infelicities of drafting. However, this is not a case in which the pleading could be amended such that it should be permitted to proceed to full adjudication.

3. [82]

   I have reached the firm conclusion that, consistent with the principles that apply to applications such as that brought by the second and third defendants, the Court should intervene at this early stage of proceedings to prevent the matter going further. In my opinion, the plaintiffs’ claim is “manifestly groundless”, “obviously untenable” “manifestly faulty” and “cannot succeed”. To allow it to proceed would not just “involve useless expense”, it would, with respect to much of the relief sought, permit the processes of the Court to be abused.

4. [83]

   The proper course is to dismiss the plaintiffs’ action pursuant to r 13.4 of the UCPR.

Costs

1. [84]

   The second and third defendants sought costs against the plaintiffs in the event the Amended Summons was dismissed or struck out. Although the plaintiffs opposed any order for costs, in circumstances where the plaintiffs’ claim represents an abuse of process that was doomed to fail, costs should be awarded as the second and third defendants ask. Orders 2 and 3 of 24 August 2017 were thus made.