Golovanov v McGrath Property Management Pty Ltd

1. [1]

   HIS HONOUR: By notice of motion filed on 27 August 2021, the first defendant, McGrath Property Management Pty Ltd, seeks an order that certain proceedings be dismissed pursuant to r 13.4(1)(b) of the Uniform Civil Procedure Rules 2005 (NSW) (“the UCPR”) or, alternatively, that a statement of claim filed on 9 June 2021 by the plaintiff, Alexander Golovanov, be struck out pursuant to rr 14.28(1)(a) or (b) of the UCPR. The first defendant also seeks an order that the plaintiff pay the defendant’s costs of the proceedings, as well as the costs of this notice of motion.

2. [2]

   The basis of the orders sought, as outlined by the first defendant, is that the plaintiff’s claim for relief fails to disclose a reasonable cause of action.

3. [3]

   The plaintiff has not been legally represented throughout the proceedings and, it would seem, at the time of his filings. The hearing took place on 15 October 2021 and 11 November 2021. The plaintiff, a Russian émigré aged 63 who came to Australia in 2013, utilised the services of an interpreter in the Russian language on both hearing dates.

The background to the motion and subsequent filings

1. [4]

   At the core of the dispute between the parties is the interpretation of a residential lease that the plaintiff entered into, by which he rented a unit in Rushcutters Bay (“the property”). The first defendant was identified in the lease as the landlord’s agent. A copy of the lease, which is styled a “Standard Form Residential Tenancy Agreement”, is attached to an affidavit affirmed on 6 September 2021 by Alexandra Nieuwenhuyze. Ms Nieuwenhuyze is an employee of a subsidiary of McGrath Ltd, of which the first defendant is also a subsidiary. The lease named the landlord as Kevin Tu (“the landlord”) and the first defendant as the landlord’s agent. The lease bears the plaintiff’s signature and, alongside the words “landlord or landlords agent on behalf of the landlord”, apparently the signature of an officer of the first defendant. It is expressed to be for a period of 12 months, commencing on 25 August 2017. It appears that the plaintiff continued to reside in the property until 30 May 2019.

2. [5]

   The background to the litigation and the history of filings is partly set out in an affidavit affirmed by Daniel McCarthy on 3 September 2021 in support of the notice of motion. Mr McCarthy is a solicitor employed by Clyde & Co, the firm that represents the first defendant. The affidavit was read at the hearing of the motion without objection.

3. [6]

   By statement of claim filed on 9 June 2021 and served on the first defendant on 25 June 2021, the plaintiff sought compensation of $20,000,000 from “McGrath Property Management Edgecliff” as the first defendant and “McGrath Estate Agents Head Office” as the second defendant. There were no pleadings in the document as filed, although it is apparent from Mr McCarthy’s affidavit that the version served upon them included pleadings.

4. [7]

   On 27 July 2021, in anticipation of a directions hearing, Mr McCarthy wrote to the plaintiff by email attaching a proposed set of orders and advising him of certain matters. One was that “McGrath Property Management Edgecliff” did not exist and that the statement of claim should be corrected by agreement to the first defendant.

5. [8]

   Another matter concerned the sufficiency of the pleadings in the statement of claim. Mr McCarthy explained that r 13.4(1) of the UCPR permitted the court to dismiss proceedings if no reasonable cause of action is disclosed and that, in his opinion, the statement of claim did not disclose one. He continued:

6. [9]

   The plaintiff attended the directions hearing. By email dated 5 August 2011, a partner of Clyde & Co, Jacques Jacobs, forwarded a letter in which he encouraged the plaintiff to “seek legal advice including from a community legal centre”. Mr Jacobs continued:

7. [10]

   Mr Jacobs then referred to paragraphs of the pleadings in the statement of claim as apparently served on 25 June 2019.

8. [11]

   On 24 August 2021 the plaintiff served on the first defendant a document titled “statement of claim” which has not been filed (“the 24 August 2021 document”). It correctly named the first defendant and contained “pleadings and particulars” which were apparently in the same terms as those that had been in the statement of claim as served on 25 June 2021. The relief claimed was compensation in the same amount, being $20,000,000. At the hearing the plaintiff explained that he had difficulty in complying with filing requirements. The plaintiff also served a document titled “statement”. It was agreed that both documents should be discarded for the purposes of the hearing of the motion.

9. [12]

   On 3 September 2021, the plaintiff filed and served an amended statement of claim (“the ASoC”) which correctly described the first defendant. The “pleadings and particulars”, which were in the same terms as in the 24 August 2021 document, were simply stated:

10. [13]

    Although the notice of motion identified only the statement of claim filed on 9 June 2021, the hearing proceeded on the basis that the ASoC filed on 3 September 2021 was to be regarded as the subject of the motion, which I note occasioned no disadvantage to the plaintiff, since it was the only filed version that had pleadings.

11. [14]

    On 10 September 2021, in response to the notice of motion and the supporting affidavit of Mr McCarthy, the plaintiff filed a “Reply” (“the first reply”). On 1 October 2021, the first defendant filed written submissions. On 6 October 2021, the plaintiff filed a further document titled “Reply”, which was significantly different in context from the first reply (“the second reply”).

12. [15]

    The plaintiff also filed a lever-arch folder, coloured purple, of 368 pages of documentation (“the purple folder”). The contents include a transcript of the plaintiff’s academic record at TAFE NSW; correspondence concerning his attempts to gain employment with the assistance of the Commonwealth government’s Disability Employment Services; documentation concerning his medical condition and treatment; and correspondence and photographs concerning the state of the property.

13. [16]

    I allowed the contents of the purple folder into evidence, indicating that the attribution of appropriate weight would remain a critical consideration.

14. [17]

    I note that the Lease contains a number of “Standard Terms of Agreement”. Clause 18 is titled “Landlords General Obligations for Residential Premises”, and includes the following obligations:

15. [18]

    Ms Nieuwenhuyze also annexed to her affidavit a copy of an “Exclusive Residential Management Agency Agreement” between the first defendant and the landlord in respect of the subject apartment, signed by the parties on 28 November 2016 and expressed to commence the same date (“the agency agreement”). Clauses that were relevant to the parties’ submissions are as follows.

16. [19]

    Clause 1 of the Agency Agreement states that the landlord “authorise[s] [the first defendant] to lease and manage my property”.

17. [20]

    Clause 5, titled “Repairs and Maintenance” states that:

18. [21]

    Clause 7, titled “Administration” states that:

19. [22]

    Clauses 9 and 10 are in the following terms:

20. [23]

    Clause 17, titled “Premises for Residence” states that:

21. [24]

    The purple folder includes a copy of a judgment of the New South Wales Civil and Administrative Tribunal (Consumer and Commercial Division) (“NCAT”) dated 19 December 2019 (“the NCAT judgment”), in which the plaintiff was partially successful in a claim against the landlord, based on the lease, for compensation due to there being mould throughout the property which had affected his health.

22. [25]

    The NCAT judgment discloses that, at the hearing on 2 October 2019, the plaintiff sought compensation for the “reduction or withdrawal of goods, services or facilities” due to the emergence of the mould and the failure to remove it. The plaintiff had originally nominated McGrath Edgecliff as the respondent but, consequent to orders made on 2 August 2019, the respondent’s name was amended to that of the landlord.

23. [26]

    In the reasons for decision, General Member Sutherland concluded:

24. [27]

    The first defendant was neither named as a party to the proceedings in the decision nor subject to any order of the Tribunal.

The plaintiff’s case

1. [28]

   I infer from the plaintiff’s ASoC pleadings that the essence of his case is that:

   1. (1)

      The plaintiff and the first defendant were parties to the lease.

   2. (2)

      Between July 2018 and May 2019, the first defendant was in breach of its obligations pursuant to the terms of the lease.

   3. (3)

      The alleged breaches were, firstly, a failure by the first defendant to resolve a hot water system leak in a timely fashion. Secondly, the first defendant then failed to “eliminate the mould in [the property]” that grew as a result of the untreated hot water system leak.

   4. (4)

      As a consequence of the breaches, in particular the presence of the mould, the plaintiff suffered serious mental and physical harm, which included a relapse of a pre-existing condition of lung cancer and associated psychological trauma.

2. [29]

   It is to be noted that a critical element in the plaintiff’s case is his contention that, pursuant to the lease agreement, the first defendant was obliged to repair the hot water system and clean out the mould. In the first reply, the plaintiff submitted:

3. [30]

   The plaintiff contended that he was obliged to remain in the property for a period of 40 weeks while he awaited the availability of social housing. He stated, also in the first reply, that:

4. [31]

   By the time the plaintiff filed the second reply, he was aware of the nature of the basis of the first defendant’s motion, namely, a denial that the lease created a contractual relationship between it and the plaintiff. In his second reply, the plaintiff referred to cll 9 and 10 of the agency agreement and submitted:

The hearing

1. [32]

   The first defendant submitted that the plaintiff’s ASoC did not disclose an underlying cause of action and therefore it could not possibly succeed. The plaintiff’s claim is dependent upon the first defendant having contractual obligations to the plaintiff arising from the lease, whereas the lease did not constitute a contract between the parties and therefore it could not have created any such obligation.

2. [33]

   The first defendant noted the existence of a general rule to the effect that an agent is not liable on a contract unless it can be shown to be the real principal. The lease disclosed the name of the principal, being the landlord, and identified the first defendant as the principal’s agent. The substance of the lease identified the landlord as being responsible for the condition of the property, including its fitness as a residence, cleanliness, repair and compliance with statutory obligations concerning health and safety: cl 18.

3. [34]

   The plaintiff made oral submissions on two dates. An interpreter in the Russian language had been booked for the first day of the hearing for a period of two hours. Following the first day of the hearing, the plaintiff contacted my Chambers indicating that he had not completed his oral submissions during the period that the interpreter was available. The first defendant did not oppose a second date being allocated for that purpose.

4. [35]

   On the first day of the hearing, the plaintiff referred to correspondence to the first defendant from himself and his health care professionals, copies of which were in the purple folder, requesting that the first defendant address the health concerns in the property. Through the interpreter, he said:

5. [36]

   On the second day of the hearing, the plaintiff stated that the landlord had not visited the property and he did not have contact details for him. The works, visits and inspections were by the first defendant and the agency agreement provided that the landlord would compensate the agent, on the plaintiff’s interpretation, “if any damage was done to anyone because of the dangerous state of the premises”. He continued:

6. [37]

   The plaintiff said that NCAT had found the first defendant to be liable, not the landlord:

7. [38]

   The plaintiff stated that he had commenced steps to join the landlord to be added as a third defendant, but maintained that the first defendant was liable. I note that a notice of motion to this effect was filed by the plaintiff on 25 October 2021.

The legislative provisions

1. [39]

   This Court has an express discretionary power to dismiss proceedings where it is of the view that no reasonable cause of action has been disclosed in relation to either the proceedings generally or any claim for relief in the proceedings: UCPR, r 13.4(1)(b). This is the order primarily sought by the first defendant. Rule 13.4 provides:

2. [40]

   This Court also has an express discretionary power to strike out a pleading if it discloses no reasonable cause of action, which is the alternative order sought by the first defendant. This is provided for in r 14.28 of the UCPR, as follows:

3. [41]

   The test applied to determine whether no reasonable cause of action is disclosed, which is well known, is derived from the principles set out by Barwick CJ in General Steel Industries v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69 at 128-130 (“General Steel Industries”). The Court is to consider whether “the case of the plaintiff is so clearly untenable that it cannot possibly succeed”: see at 130.

4. [42]

   In General Steel Industries, Barwick CJ, at 128, emphasised the need for a court to be clearly satisfied that there is no reasonable cause of action disclosed.

5. [43]

   Rule 13.4(1)(b) of the UCPR was considered by the Court of Appeal in Ugur v Attorney General for New South Wales [2019] NSWCA 86. White JA, at [70], considered the purposes of the power in r 13.4 of the UCPR:

6. [44]

   In Leerdam & Anor v Noori & Ors (2009) 227 FLR 210; [2009] NSWCA 90, Macfarlan JA observed that the General Steel Industries principles may more frequently be satisfied where questions of law are in issue. His Honour, at [75], stated that:

7. [45]

   In Seidler v Carrol & O’Dea [2013] NSWSC 338, McCallum J (as her Honour then was) set out a summary of the relevant principles in relation to a strike out application under r 14.28 of the UCPR. As part of this summary, her Honour, at [6]a, alluded to the need to consider such applications in light of s 56 of the Civil Procedure Act 2005 (NSW):

8. [46]

   As such, the Court must have regard to the overriding purpose of civil litigation contained in s 56 of the Civil Procedure Act, which relevantly provides:

9. [47]

   As Seidler v Carrol & O’Dea concerned pleadings provided by a self-represented litigant, McCallum J also discussed the specific considerations which must be balanced in such a case:

Consideration

1. [48]

   I respectfully concur with her Honour’s observations extracted above from Seidler v Carrol & O’Dea. The plaintiff informed me that he had attempted to obtain legal assistance from a number of agencies including community legal centres but was advised that it was unavailable for a matter such as this. I approach the application with particular care in light of the fact that the plaintiff is a self-represented litigant.

2. [49]

   I note that the plaintiff’s characterisation of the NCAT decision, insofar as he suggested that the first defendant was held to be liable, is at odds with the judgment itself.

3. [50]

   The plaintiff’s oral submissions substantially echoed the content of his second reply, to the effect that it appeared to him to be self-evident that since the first defendant was the point of contact concerning the maintenance of the apartment, and since he had no contact with the landlord or means of directly contacting him, it followed that the first defendant should be liable.

4. [51]

   Regrettably, it appears that the plaintiff has taken a view as to who, in his opinion, should be held accountable for his alleged suffering as opposed to who is responsible at law, if anyone.

5. [52]

   The plaintiff’s claim presumes that, in due course, he can establish that the terms of the lease render the first defendant liable for necessary repairs to the property which is the subject of the lease. I find that the only parties to the lease are the plaintiff and the landlord and that it expressly provides that the landlord bears the responsibility of carrying out necessary repairs and ensuring that it complies with statutory obligations relating to health and safety. All references in the lease to the first defendant are in the context of it being the landlord’s agent and therefore it could not be liable: Railway Commissioners for New South Wales v Orton (1922) 30 CLR 422; [1922] HCA 16 at 426 per Knox CJ, Gavan Duffy and Starke JJ.

6. [53]

   Accordingly, I find that the proceedings disclose no reasonable cause of action by the plaintiff against the first defendant. They should be dismissed pursuant to r 13.4(1)(b) of the UCPR.

7. [54]

   The plaintiff was put on notice by the first defendant by email dated 27 July 2021 that his statement of claim was, in the opinion of a solicitor acting for the first defendant, fatally deficient. By letter dated 5 August 2021, the first defendant’s solicitors advised the plaintiff in detail of those deficiencies. The tone and content of the letter was, in my view, impressive in its sensitivity to the fact that the plaintiff was seriously unwell, unable to communicate in the English language and without the benefit of legal representation through no fault of his own. The plaintiff was warned that if he did not remedy the flaws in his statement of claim, the first defendant would seek to have it struck out and would seek costs.

8. [55]

   In all of those circumstances, I find that an order that the plaintiff pay the first defendant’s costs in the proceedings and the costs of the notice of motion is appropriate.

Orders

1. [56]

   I make the following orders: