Kostov v YPOL Pty Ltd

1. [1]

   HIS HONOUR: These proceedings were commenced by statement of claim filed on 29 April 2016.

Background

1. [2]

   On 2 June 2016, Ms Kostov filed a notice of motion seeking default summary judgment against the first defendant pursuant to UCPR 16.7. That application was supported by Ms Kostov’s affidavit sworn on 2 June 2016. It is unnecessary further to refer to that application.

2. [3]

   On 2 June 2016, the second defendant filed a notice of motion seeking in the alternative orders that service of the statement of claim upon him be set aside pursuant to UCPR 11.7(2)(a) or a declaration that the statement of claim had not been duly served upon him pursuant to UCPR 12.11(1)(c). The second defendant sought an order in the further alternative that service of the statement of claim be set aside pursuant to UCPR 12.11(1)(b). That application was supported by an affidavit affirmed by Amanda Kim Banton on 2 June 2016.

3. [4]

   On 7 June 2016, the first defendant filed a notice of motion seeking in the alternative orders that the claim against the first defendant be dismissed pursuant to UCPR 13.4(1)(b) or that the statement of claim be struck out pursuant to UCPR 14.28(1)(a). That application was supported by two affidavits affirmed by Malcolm John Cameron on 7 June and 16 June 2016 respectively.

4. [5]

   On 7 June 2016, Ms Kostov filed a notice of motion seeking leave to amend the statement of claim. That motion was supported by an affidavit sworn by Ms Kostov on 7 June 2016.

5. [6]

   The proceedings came before the Registrar on 16 June 2016, when, renumbered for convenience, the following relevant orders were made:

   1. (1)

      Ms Kostov is to be in attendance on 7 July 2016.

   2. (2)

      Any evidence not served in accordance with this timetable is not to be relied upon without leave of the Court.

   3. (3)

      By 23 June 2016 Ms Kostov is to file and serve any evidence on which she relies in relation to the notice of motion filed by the first defendant on 7 June 2016, by the second defendant on 2 June 2016 and by Ms Kostov in respect of her notice of motion.

   4. (4)

      The defendants are to file and serve any evidence in reply on or before 20 June 2016.

   5. (5)

      The motion [sic, motions] referred to in order (3) be set down for hearing on 7 July 2016.

   6. (6)

      If Ms Kostov seeks leave to discontinue, she is directed to file and serve a notice of motion seeking such leave, with any evidence upon which she relies in support, by 23 June 2016, with any such motion for leave to be set down for hearing on 7 July 2016.

6. [7]

   The proceedings came before Schmidt J on 20 June 2016, on Ms Kostov’s application by notice of motion filed on 18 June 2016 seeking leave to discontinue the proceedings: see Kostov v YPOL Pty Ltd [2016] NSWSC 827. The matter was listed before her Honour for some unexplained reason on an urgent basis, notwithstanding the Registrar’s orders made on 16 June 2016. The application was supported by an affidavit sworn by Ms Kostov on 18 June 2016. That application was adjourned until 7 July 2016, as anticipated by the orders of the Registrar, with an order that Ms Kostov pay the defendants’ costs of 20 June 2016 on an indemnity basis.

7. [8]

   An affidavit sworn by Ms Kostov on 1 July 2016 was rejected by the Court on 5 July 2016 because it had not been filed in accordance with the timetable directed by the Registrar on 16 June 2016.

8. [9]

   All matters came before me on 7 July 2016. Ms Kostov did not attend but instead was represented by Ms Tannous who sought to have the hearing of all matters on that day adjourned. I rejected that application. Ms Kostov had sent an email directly to me on 4 July 2016. That email had not been copied to the defendants. I marked it as exhibit “A” on Ms Kostov’s application for an adjournment. I took account of the contents of that email notwithstanding the irregularities associated with it.

9. [10]

   Ms Tannous was not instructed beyond her appearance in order to apply for an adjournment on Ms Kostov’s behalf and she did not thereafter continue to appear for Ms Kostov in response to the defendants’ motions.

Ms Kostov’s motion to amend

1. [11]

   Ms Kostov’s supporting affidavit does not refer to or annex a copy of the draft amended statement of claim that is the subject of her application for leave to amend. It seems reasonably apparent from the correspondence between her and the solicitor for the first defendant that Ms Kostov’s concern to amend her pleadings was a response to suggestions that her current statement of claim was likely to be struck out. Her affidavit does not give any indication of how the re-worked statement of claim would cure the manifold defects in her current pleading or what cause of action she hoped to articulate in the amended form. I have no material upon the basis of which I could even begin to understand what new case Ms Kostov wishes to propound. I am prepared to infer from the available material that Ms Kostov is in a similar position.

2. [12]

   I assume that the burden of Ms Kostov’s approach is to say that she should be given an opportunity to re-plead her case against the defendants, having regard to the fact that the proceedings are not of long standing, that she is self-represented and that she deserves at least one chance to put her pleadings in order. I would ordinarily be attracted to such a submission. However, I am not prepared to grant the leave that Ms Kostov requires in the complete absence of any evidence suggesting that to do so would not be completely futile. Acceding to Ms Kostov’s request is likely to do no more than postpone the inevitable and unnecessarily increase the costs of the litigation.

3. [13]

   I am not prepared to grant Ms Kostov leave to amend her statement of claim.

YPOL’s notice of motion

1. [14]

   The acronymically named first defendant is an incorporated legal practice. The so-called allegations in the statement of claim are apparently propounded as a basis for a claim for damages for economic loss and non-economic loss, as well as aggravated damages. The statement of claim purports to particularise a claim against the first defendant in negligence. Ms Kostov does not allege that the first defendant has ever received or taken instructions from her to act as her lawyer and the first defendant has never acted for her in fact. Ms Kostov does not plead the existence of any contract of retainer or other circumstances in or from which the first defendant is alleged to have owed her a duty. The particulars of negligence do not specify or identify any term of a retainer or duty of care that the first defendant is alleged to have breached.

2. [15]

   It would appear that on 16 September 2015, upon instructions from a third party, the first defendant wrote to Ms Kostov. The letter complained about certain matters and requested information. The letter specified in terms that the first defendant did not act for Ms Kostov and that she should seek her own advice if she thought that it was appropriate to do so. That letter would seem to have germinated further correspondence and, in some indirect way, the present proceedings as well. Ms Kostov also appears to complain about an email dated 10 February 2016, written by the first defendant’s client to Ms Kostov’s employer. Ms Kostov subsequently employed another firm of solicitors to act for her and to respond to correspondence with the first defendant. Unfortunately, Ms Kostov is not represented in the present proceedings.

3. [16]

   Mr Cameron wrote to Ms Kostov on 7 June 2016. He advised her that the statement of claim failed to disclose any cause of action and that the proceedings were liable to be summarily dismissed, or that the statement of claim was liable to be struck out.

4. [17]

   The statement of claim does not disclose a cause of action known to the law. It is in fact not possible conveniently or efficiently to summarise or describe it in any meaningful way. If it is correct to characterise it as a claim against a firm of lawyers for damages for negligence for breach of a professional duty, it is conspicuously deficient. It fails to assert the most fundamental basis for any such claim, that the first defendant acted for Ms Kostov in its professional capacity as her legal adviser. If the statement of claim is intended to formulate some other cause of action, it simply does not do so.

5. [18]

   The first defendant has sought alternative forms of relief. It seems to me that there is little utility in merely striking out the statement of claim as it is patently beyond resuscitation. Ms Kostov’s foreshadowed amendment to her pleading has so far not produced the slightest hint of what the amended document might be. It is difficult to conceive of any viable claim that Ms Kostov might wish to launch against a firm of solicitors that has never acted for her: see Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) (2001) 188 ALR 566 at [170] – [171]; Thors v Weekes [1989] FCA 795; (1989) 92 ALR 131; Hardware Services Pty Ltd v Primac Association Ltd [1988] 1 Qd R 393 at 397.

6. [19]

   In my opinion the proceedings should be dismissed with costs.

Jeffrey Easton’s notice of motion

1. [20]

   Paragraph 3 of Ms Kostov’s statement of claim is in the following terms:

2. [21]

   The claim against Mr Easton seems to be that he was copied in on an allegedly confidential email sequence and that he failed to do anything about it. Precisely what it is alleged that he should have done is not made clear. What loss is alleged to have flowed from this asserted failure is equally unclear. It is important to note that Ms Kostov does not assert that Mr Easton misused the email he received or any information that it contained. Although it was not contended, having regard to the particular circumstances of Mr Easton’s limited involvement in these proceedings, that the statement of claim failed to disclose a cause of action against him, it is my independent view that it does not do so. This is referred to below in context.

3. [22]

   Mr Easton resides in the United States where the statement of claim was served upon him. He contends that he was not properly served. UCPR 11.7(2)(a) provides as follows:

4. [23]

   UCPR 12.11(1)(b) and (c) are in these terms:

5. [24]

   Schedule 6 to the Uniform Civil Procedure Rules provides for the circumstances in which originating process may be served outside Australia. To the extent that the statement of claim reveals anything at all about the nature or existence of some identifiable cause of action against Mr Easton, only the following paragraphs of the Schedule could possibly be relevant:

6. [25]

   Mr Easton’s argument was in two parts as follows. First, service of the statement of claim in the United States is not authorised unless the pleaded cause of action falls within one of the categories listed in Schedule 6. If it does not, the service is not authorised and Mr Easton has not properly been made a party to the proceedings. In such a case the service should be set aside. Secondly, if the pleaded cause of action does, or appears to, fall within one of the specified categories, the service can be set aside if the statement of claim discloses no reasonable cause of action or is otherwise liable to be set aside.

7. [26]

   In Clark v Auspicious Yacht Sales [2006] NSWSC 37 at [13] - [17], Malpass AsJ said this:

8. [27]

   It will be apparent that I have already come to the view that the statement of claim fails to disclose a cause of action of any sort. That includes any cause of action against Mr Easton. The statement of claim is therefore also liable to be set aside against him.

9. [28]

   To the extent that the statement of claim is deficient as a pleading disclosing a cause of action known to the law against Mr Easton, it is correspondingly difficult to assess whether or not the pleading identifies any of the relevant circumstances nominated in Schedule 6. The statement of claim gives no express or implied indication that the cause of action it attempts to promote has arisen in New South Wales. The statement of claim does not allege a breach wherever occurring of a contract made anywhere. It does not clearly appear to be founded on a tort, whether committed in New South Wales or not. Even assuming that Ms Kostov alleges that she has suffered damage in New South Wales, her claim is not based upon a tortious act or omission occurring anywhere. In summary, the infelicities and inadequacies of the pleading effectively lead to, or at least assist in forming, the conclusion or determination that none of the Schedule 6 circumstances has been triggered. In the words of Malpass AsJ, the functional requirements of Schedule 6 are not met.

10. [29]

    Mr Easton does not seek to strike out the statement of claim or to have the proceedings summarily dismissed. He does contend that the service should be set aside. The fact that the statement of claim discloses no cause of action against Mr Easton and is for that reason liable to be set aside in my view reliably informs the question of whether or not it meets any of the Schedule 6 requirements. In my view it does not. The service of the statement of claim upon Mr Easton was not in my view authorised by the rules. It should be set aside.

Costs

1. [30]

   Each of the defendants sought costs on an indemnity basis. I am not troubled that the usual order that costs should follow the event should apply to these applications. I am, however, not satisfied that these applications are anything other than an unexceptional example of motions of their kind. The usual costs order, payable on the ordinary basis, should apply.

Orders

1. [31]

   I make the following orders:

   1. (1)

      Refuse leave to the plaintiff to amend her statement of claim.

   2. (2)

      Dismiss the proceedings against the first defendant.

   3. (3)

      Set aside service of the statement of claim upon the second defendant.

   4. (4)

      Order the plaintiff to pay the costs of the first defendant and the second defendant of and incidental to the proceedings.