SUMMARY JUDGMENT AND INDEMNITY COSTS – THE CONSEQUENCES OF PLEADING CONSPIRACY AND FRAUD WITHOUT EVIDENCE

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By David McKenna, Partner 

Jeffrey Stewart Lee [Lee] is the sole director and shareholder of Kingsfield Holdings Pty Ltd (Kingsfield).  Lee is a Legal Practitioner and a Pharmacist.  In 2012, Kingsfield was leasing  premises at Rottnest Island (off the coast of Western Australia) and those premises included a health food café business trading as “Quokka Joe’s” (the café).  At the relevant time, Paolo Amaranti (Amaranti) was the CEO of the Rottnest Island Board and was responsible for administering amongst other things, the lease.

On 23 January 2012, officers of the Food Unit at the Department of Health attended at the café and conducted a routine food safety assessment.  Some issues of noncompliance were raised with Lee but none of the officers required the café to close. Shortly after the inspection, the owner of one of the other businesses on the island told the leasing agent responsible for all of the leases on the island (Sullivan Commercial) that the café had closed early following the inspection. Sullivan Commercial’s representative, Mr Duffield (Duffield), then wrote to Lee and Kingsfield stating that he had been informed the plaintiffs had been advised the café had been closed following the health inspection the previous week and asked Kingsfield to confirm whether the inspection had taken place and to provide a copy of any health notices issued in relation to the café.

Following receipt of the letter from Sullivan Commercial, the plaintiffs instructed solicitors who wrote to Duffield and asked him to identify the source of the “early closure information”.

On 2 May 2012, solicitors for Sullivan Commercial advised Lee by email that Mr Rutherford (Rutherford), another business owner, had provided the early closure information to  Duffield. Rutherford initially denied he had imparted the early closure information and Kingsfield and Lee commenced proceedings against Rutherford for damages for defamation and also commenced proceedings against Sullivan Commercial and Duffield, alleging that they had published the letter in that it had been copied to an officer of the Rottnest Island Authority. It transpired that officer had never received the letter and the defamation actions against the leasing agent and its representative were dismissed by consent with Lee and Kingsfield being ordered to pay their costs.

Kingsfield and Lee proceeded with the defamation action against Rutherford and in April 2016, the two actions were dismissed after trial, with the trial judge finding the plaintiffs had failed to make good of any of the defamatory meanings and that further, Lee had not been identified as an object of the alleged publication. Kingsfield and Lee were ordered to pay Rutherford’s costs.

In late December 2020, Kingsfield and Lee then commenced proceedings against Rutherford, Sullivan Commercial, Duffield, Amaranti, the Rottnest Island Board and Others, alleging that they had engaged in a common design to deceive Lee and Kingsfield as to who informed  Duffield the café had closed early following the health inspection.  They alleged that a representative at the Health Department had communicated to Amaranti that Lee had said the café might close early on that day and that Amaranti had communicated those matters to Duffield. They alleged that Rutherford, Duffield and others had given false evidence in the defamation proceedings.

In respect of Amaranti’s involvement in the common design, they referred to previous disputes between Kingsfield and Lee and the Rottnest Island Board in which Amaranti had been involved and an action that Kingsfield and Lee had commenced against Amaranti and others alleging misfeasance in office and misrepresentation but nothing more.

After the plaintiff had filed an Amended Statement of Claim, Rutherford, Sullivan Commercial, Duffield, Amaranti and the Rottnest Island Board each commenced applications to strike out the Writ and Amended Statement of Claim and in the alternative, they each be granted summary judgment against Lee and Kingsfield.

In his Affidavit in support of those applications, Amaranti said he had no recollection of having received information from the Health Department Officer or imparting it to Duffield and he had never been asked by Lee or Kingsfield whether he did either of those things.

Lee swore an Affidavit in opposition to the orders sought and, in that Affidavit, did no more than refer to the previous disputes between Kingsfield and Lee and the Rottnest Island Board in which Amaranti was involved. In submissions in opposition to the orders sought, Kingsfield and Lee admitted they had no evidence to support the allegations made against Amaranti but hoped that through the discovery process they would elicit some evidence.

The Court noted the plaintiffs had not challenged or produced evidence to contradict the Affidavit of Duffield in which he denied that Amaranti was the source of the information about the closure of the café and that even if the Court were to accept all of the facts alleged to found the conspiracy, including that Amaranti had received the information and communicated it to Duffield, the inference that he was a party to the agreement could not be drawn.  The plaintiffs did not allege he did anything, none of the conduct on which the plaintiffs rely was attributed to Amaranti either alone or in concert with any other defendant. They did not allege he knew or ought to have known of anything that any of the other alleged conspirators did.

The plaintiffs relied upon a line of authority regarding a plaintiff’s application for summary judgment where a Court may refuse an application on the grounds that there “ought to for some other reason, be a trial of the claim” but found those authorities did not avail or assist the plaintiffs in a defendant’s application for summary judgment where the plaintiffs were confined to their pleading and cannot, as they were seeking to do, rely on the possibility  material facts other than those they had pleaded might be elicited through discovery, interrogation and cross examination.

The Court subsequently granted applications by each of the defendants for indemnity costs, finding the plaintiff’s case had no prospect of success and on proper consideration, should have been seen as hopeless at the outset. The plaintiffs alleged a conspiracy in furtherance of which the defendants combined to give false testimony so as to commit a fraud upon the Court. The foundation for such serious allegations was not merely flimsy but logically incapable of supporting them.  Lee, is himself, a legal practitioner. The plaintiffs were represented by solicitors and counsel.  In drafting and settling the Statement of Claim, someone should have appreciated the case could not be sustained.

The Court also took into account the defendants had put the plaintiffs on notice that they would be seeking indemnity costs.

Kingsfield Holdings Pty Ltd and Lee v Paolo Amaranti and Ors [2021] WASC 289

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