FRANCISC CATALIN DELIU V BOON GUNN HONG HC AK CIV-2010-404-006349

FRANCISC CATALIN DELIU V BOON GUNN HONG HC AK CIV-2010-404-006349 17 June 2011IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2010-404-006349BETWEEN FRANCISC CATALIN DELIUFirst PlaintiffAND AMICUS LAWYERS LTDSecond PlaintiffAND BOON GUNN HONGDefendantAND RICHARD ZHAOFirst Counterclaim DefendantAND ANTHONY VINCENT RAMSecond Counterclaim DefendantHearing: 17 June 2011Appearances: F C Deliu (First Plaintiff acting for himself) and for First and SecondCounterclaim DefendantsA Banbrook for DefendantJudgment: 17 June 2011ORAL JUDGMENT OF ASSOCIATE JUDGE BELLSolicitors/Counsel:Amicus Lawyers Ltd, PO BoxB G Hong Law Firm, PO Box 233, Shortland Street, AucklandA Banbrook, PO Box 3600, Shortland Street, AucklandWhat the case is about[1] Mr Deliu is a barrister of Auckland. He operates in chambers called Amicus Chambers, which is the trading name for Amicus Lawyers Ltd. That is an incorporated law firm under the Lawyers and Conveyancers Act 2006. Mr Zhao, the first counterclaim defendant, and Mr Ram, the second counterclaim defendant, are barristers in Amicus chambers. They are employees of the company. Mr Deliu is adirector of the company. Mr Hong is a barrister and solicitor who, I understand,carries on a predominantly conveyancing practice.[2] In 2010, a Mr and Mrs Ma issued a proceeding in the District Court at Auckland. The proceeding arises out of their purchase of an apartment which was a leaky building. Mr Hong was the lawyer who had acted for them on the purchase. Mr and Mrs Ma sued Mr Hong, the vendor and also another firm of lawyers. In the District Court proceeding, the Ma's solicitor was Mr Baker but the counsel instructed to issue the proceedings were Mr Zhao and Mr Ram. There was no letter to Mr Hong before the proceeding.[3] Mr Hong took objection to being sued. He wrote a letter on 5 May 2010 to Mr Baker and to Messrs Zhao and Ram. In his letter, he said he would file a strike out action, make a complaint to the New Zealand Law Society about their lack ofcompetence, and that he would also seek full costs against the lawyers personally,and sue them for defamation.[4] The District Court proceeding has since been discontinued, apart from the issue of costs. Mr Hong applied for a strike out of the District Court proceeding. An order was made for strike out without opposition from Mr and Mrs Ma. So far as that proceeding is concerned, it appears that once the facts were fully investigated, it seems to have been accepted on behalf of Mr and Mrs Ma that they could not succeed. I draw no more inferences against the people who were responsible for the issue of that proceeding, other than the fact that the proceeding would not be able to succeed at a final hearing. There was nothing put in evidence from which I can infer any further adverse inferences against those responsible for the issue of the proceedings. I say that because Mr Hong has made suggestions of more corruptmotives. I want to make it clear that I have not seen any evidence to support those allegations.[5] Mr Hong's letter of 5 May 2010 triggered the matters that have given rise tothis proceeding. Mr Zhao and Mr Ram did not reply to Mr Hong's letter. Mr Deliudid instead as head of chambers. He wrote a letter on 6 May 2010. His reply was robust. He also sent a complaint to the Lawyers Complaints Service of theNew Zealand Law Society against Mr Hong. There then followed correspondence tothe Law Society and also to other lawyers involved in the proceedings, including MrBaker, Mr Zhao and Mr Ram and also counsel instructed for Mr Hong. Mr Hongmade a cross-complaint against Mr Deliu. In their letters, Mr Deliu and Mr Honghave said uncomplimentary things about each other. They have not only eachattacked the other's professionalism and competence, but also their sanity and havecast various other unpleasant slurs against the other. Mr Deliu said that Mr Hongacted improperly when he was sued by attacking Mr Zhao and Mr Ram personallyinstead of addressing the merits of the dispute. They have each taken the other totask for alleged breaches of the Lawyers' Conduct and Client Care Rules. Mr Hongalso made a search of cases in which Mr Deliu had appeared and tried to construct anargument that, because Mr Deliu has not always been successful in his litigation,then Mr Deliu cannot be a competent lawyer. On his side, Mr Deliu has taken aconsistent stance that he will not back down and that for any step taken by Mr Hong,he will up the ante. Mr Hong included in his evidence a record of a message MrDeliu left on his telephone. Mr Hong complains that this was threatening.[6] Most of the correspondence does not bear repeating. However, on 9 June 2010, Mr Baker, the instructing solicitor, sent an email to Mr Deliu and to Mr Hong. His letter said:I have been following the correspondence between yourselves with growing concern. It is my opinion that this has gone far enough. The two of you are getting personal and this is both unseemly and unnecessary. Complaints and cross-complaints to the Law Society are not a credit to either of you or the profession. I strongly urge the both of you to take a step back, take a few deep breaths and reconsider your approach. I submit that once the both of you have calmed down, you should apologise to each other for the personal comments and attacks and you should write to the Law Society jointly, apologising for wasting their time and withdraw your mutual complaints. I am not a litigator and do not pretend to be one. As I understand it,cases are formulated and go to court. A judge makes a decision of the facts and the law. We then live with the consequences. In conclusion, I again strongly suggest that you set aside the personal issues and let the courtdeal with the facts and the law. If I can be of any assistance in resolvingissues between you, please feel welcome to contact me.[7] The parties did not take up Mr Baker's suggestion.[8] The Law Society made a preliminary determination to dismiss both complaints on 16 September 2010. Mr Deliu has taken proceedings for judicial review of that decision and some other matters involving the Law Society. On 1 October 2010, the Law Society wrote to advise that the complaints had been re- opened in the light of further correspondence that had been filed. The Law Society made an offer to arrange mediation by a senior retired High Court judge. That offerwas not taken up. The Law Society made a final decision dismissing complaintsfrom both men in November 2010.[9] Both men would complain if I tarred them with the same brush. To that extent, it is necessary to record that there are differences between the way Mr Hong has conducted himself and the way that Mr Deliu has conducted himself. Mr Hong has made an attack on Mr Deliu that goes beyond Mr Deliu's professional capacityand attacks him in a general way that casts a slur on the character of Mr Deliu. Mr Deliu, on the other hand, has concentrated his attack simply on the professional conduct of Mr Hong. Mr Deliu has taken a consistently combative stance. He is unrepentant and unforgiving. For his part, Mr Hong has shown a distinct lack of judgment.[10] In the meantime, this proceeding has been started. Mr Deliu and Amicus Lawyers Ltd sue Mr Hong for malicious falsehood and abuse of process, intentional infliction of emotional distress, defamation and malicious falsehood. Mr Hong sues Mr Deliu for abuse of legal process and malicious prosecution. He seeks a declaration under the Declaratory Judgments Act 1908 that Mr Deliu is not competent and is not a fit and proper person to practise law and should be suspended from practice. He also sues Mr Deliu for defamation for statements reported in anarticle in the National Business Review. Mr Hong also sues Mr Zhao and Mr Ramfor abuse of legal process and malicious prosecution, and seeks declarations against them as to their fitness to practise.[11] Mr Deliu applied for an interim injunction against Mr Hong to restrain Mr Hong from making any further defamatory comments about him. In a decision of 27 October 2010, Venning J dismissed the application. He followed the traditional approach that interim injunctions will not be given to restrain further publication of alleged defamatory statements where the defendant says that he will claim privilege, fair comment or truth by way of defences. He also held that Mr Deliu had not made out a basis for interim injunctive relief for the claim for malicious falsehood. Mr Deliu had not made out an arguable case for malicious prosecution or for intentional infliction of emotional distress. Venning J also held that, even if there were serious issues to be determined, Mr Deliu had not established that the balance of convenience favoured the issue of an interim injunction. Mr Deliu has appealed the decision.The applications todayThe matters for today are Mr Deliu's application to strike out Mr Hong's statement of defence and counterclaim, and Mr Hong's applications to strike out the claim by Amicus Lawyers Ltd. Mr Deliu's strike out application attacks Mr Hong's pleadingon a wide number of grounds. Mr Banbrook had no part in the pleadings. Mr Hong's pleadings leave a lot to be desired. In Marshall Futures Ltd v Marshall1, Tipping J, rather colloquially, drew a distinction between pleadings that were a total wreck compared with those which might be the subject of effective repair. I will not go into full details as to the defects of Mr Hong's pleadings, but they are a totalwreck and if Mr Hong were to continue, he would have to start completely afresh.[12] Mr Hong's application against Amicus Lawyers Ltd is that the company doesnot have a reasonably arguable cause of action. He argues that, to the extent that anyone has been defamed, it is only Mr Deliu and not the company itself. Bothapplications allege that the other's proceeding is frivolous, vexatious and an abuse ofprocess.1 [1992] 1 NZLR 316 (HC) at 324.Does this proceeding have a serious purpose?[13] This case is about a squabble between two lawyers. Each of them has attacked the other personally. Mr Hong started the personal attacks when he threatened Mr Zhao and Mr Ram with costs personally in the proceeding they had issued against him. But Mr Deliu has largely responded in kind. Each of them has sought vindication for his attacks by recourse to authorities: first, the New ZealandLaw Society, and second, the courts. With the Law Society, the complaints wereframed as allegations of breaches of the Lawyers' Conduct and Client Care Rules. Inthis Court, the attacks are in the form of pleaded causes of action. While Mr Deliu'scomplaints and Mr Hong's complaints are put before this Court as pleaded causes ofaction, the reality is that both sides are running this case to score points against eachother in a petty squabble. Each of them claims that he has suffered a genuineinfringement of his rights entitling him to relief against the other. Each of themproposes that, on a defended hearing, the Court should solemnly embark on aninquiry to determine the merits of the insults they have traded. Such a process wouldbe absurd.[14] Here, the Court should look behind the causes of action each party has pleaded against the other to see whether there are genuine interests at stake. In this proceeding, each party alleges torts against the other. The law of torts provides rights and remedies for the protection of certain interests against harm caused by the actions of others. It does not protect every interest. The interests at issue in this proceeding are the wounded egos of Mr Deliu and Mr Hong. The law of tortsgenerally does not concern itself with the hurt to parties' egos. These are not genuine interests to be protected under the law of torts.[15] The clash between Mr Deliu and Mr Hong arose out of litigation. Lawyers know that litigation is adversarial. Lawyers know that, in the course of a case, the conduct of a case by lawyers on one side may be subject to comment and criticism.Lawyers conducting litigation are expected to maintain objectivity and professional judgment, even while they are parties themselves. We all remember the old adage that a lawyer who acts for himself has a fool for a client. Both Mr Deliu and Mr Hong have conducted this litigation personally, although for some parts of theproceeding, Mr Hong has engaged counsel to appear on his behalf. The present proceeding shows that both lawyers have lost that objectivity required to run litigation. This proceeding is an unseemly spectacle. That is borne out by an article which appeared in the National Business Review on 14 October 2010, reporting onthe interim injunction hearing before Venning J. The headline to the article is ―Weirdcourtroom slanging match. The publicity given to that hearing is a clear sign thatthe public will take a dim view of the law generally when this kind of proceeding is allowed to run.[16] No reasonable lawyer would advise a client to take this sort of proceeding. Mature counsel would advise that not every insult and adverse allegation has to be followed up with legal proceedings.[17] Unfortunately, it appears that neither of the parties is willing to bring thepresent proceeding to a halt, perhaps out of fear of losing face or being seen to giveway to the other. The parties did not accept the sensible suggestion of Mr Baker.The Law Society's offer of mediation was not taken up, and the Law Society'sdismissal of both parties' complaints should have told both parties that what theywere complaining about in the end was not all that serious.[18] Today, I have explored with the parties whether there was some way of burying the hatchet so that both can move on. I invited them to take instructions andexplore these issues over adjournments. It is apparent that there is no realwillingness on the part of either side to bury the hatchet, accept the costs they haveborne, and move on.The Court's power[19] The question here is whether the Court has power to stop these parties continuing their quarrel in this Court.[20] The power is within the Court's inherent jurisdiction and under r 15.1 of the rules:15.1 Dismissing or staying all or part of proceeding(1) The court may strike out all or part of a pleading if it—(a) discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or(b) is likely to cause prejudice or delay; or(c) is frivolous or vexatious; or(d) is otherwise an abuse of the process of the court.(2) If the court strikes out a statement of claim or a counterclaim under subclause (1), it may by the same or a subsequent order dismiss the proceeding or the counterclaim.(3) Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.(4) This rule does not affect the court's inherent jurisdiction.[21] Rule 15.1(1)(c) allows the Court to strike out a pleading if it is frivolous or vexatious. The frivolous ground is a stand-alone ground for striking out. That isclear from the disjunctive ―frivolous or vexatious. While the frivolous ground may overlap with other grounds under r 15.1, a pleading may be struck out as frivolous, even if it does not fall within the other grounds under r 15.1(1). That is, a pleading may not be an abuse of the process of the Court, and it may not be vexatious, and it may disclose a reasonably arguable cause of action, but it can still be struck outbecause it is frivolous. The New Shorter Oxford dictionary, 4th ed, defines―frivolous as:1 Of little or no value or importance, paltry; (of a claim, charge, etc.), and for a claim or charge having no reasonable grounds.2 Lacking seriousness or sense; silly.[22] The claims by Mr Deliu and by Mr Hong are frivolous. The parties are using the pleadings to direct insults at each other. This proceeding is not being used to uphold interests which the law of torts sets out to protect. In the eyes of the law, the matters in issue in this proceeding are trivial. This proceeding lacks the seriousnessrequired of matters for the Court's determination.[23] This decision that the pleadings are frivolous does not turn on whether Mr Deliu or Mr Hong have tenable causes of action for their claims, although that isa relevant consideration. This proceeding does not merit a detailed analysis to decide whether the causes of action are sustainable, but I propose to review the causes of action briefly.[24] First, Mr Deliu's claims against Mr Hong for defamation and malicious falsehood. Mr Deliu has pleaded the correspondence that has passed and has referred to relevant passages in that correspondence which appear to have a defamatory meaning. He shows that they refer to himself. So far as the claim against Amicus Lawyers is concerned, I accept, if I had to decide the point, that there are relevant references to Amicus Lawyers Ltd in the sense that it is a triable issue whether Amicus Lawyers Ltd has been referred to in the correspondence and whether it has been damaged in its commercial reputation.[25] Mr Hong appears to rely on s 14 of the Defamation Act 1992, which says:14 Absolute privilege in relation to judicial proceedings and other legal matters(1) Subject to any provision to the contrary in any other enactment, in any proceedings before—(a) A tribunal or authority that is established by or pursuant to any enactment and that has power to compel the attendance of witnesses; or(b) A tribunal or authority that has a duty to act judicially,—anything said, written, or done in those proceedings by a member of the tribunal or authority, or by a party, representative, or witness, is protected by absolute privilege.(2) A communication between any person (in this subsection referred to as the client) and a barrister or a solicitor for the purpose of enabling the client to seek or obtain legal advice, and a communication between that solicitor and any barrister for the purpose of enabling legal advice to be provided to the client, are protected by absolute privilege.[26] Mr Hong's defence appears to be that everything he wrote about Mr Deliu fell within the absolute privilege under s 14 because he set them out in hiscorrespondence with the Law Society about Mr Deliu's complaints and his own complaints. However, Mr Deliu's pleading is that Mr Hong also sent his correspondence to others – Mr Zhao, Mr Ram, Mr Baker and also counsel acting forMr Hong. Mr Deliu may be able to argue that, to the extent that the correspondence was sent to people other than the Law Society, it is not protected under s 14 of the Defamation Act. Those who received Mr Hong's correspondence (other than theLaw Society) know Mr Deliu far better than Mr Hong does and I am sure they would be able to form their own views about Mr Deliu without being influenced by Mr Hong's letters. The tenor of Mr Hong's letters is such that a person would form the view that the author of the letters is somewhat obsessive. Somewhat obsessive may under-stating the matter. I doubt that anyone would come to the view that what Mr Hong was saying was to be taken at face value. For my part, it seems to be entirely speculative that Mr Hong's letters could have caused any real harm to Mr Deliu's reputation.[27] Both sides have alleged malicious prosecution against the other. Under the present state of the law, a claim for malicious prosecution of a civil proceeding is not available except for petitions in bankruptcy and proceedings for a company to be put into liquidation. That is a result of the full court of the Supreme Court, as it was, inJones v Foreman.2 It has sometimes been suggested that the Court of Appeal might review that decision. That possibility was referred to in NZ Social Political League vO'Brien3 and Rawlinson v Purnell Jenkinson Roscoe.4 On the other hand, inGregory v Portsmouth City Council5 the House of Lords ruled that, with some exceptions, English law does not allow a claim for malicious prosecution of a civil claim. That decision was given in the context of a claim made by someone who had been the subject of unsuccessful disciplinary proceedings. No doubt anyNew Zealand appellate court would have regard to that. This case is certainly not thetest case to decide whether the decision in Jones v Foreman should be changed.[28] As regards Mr Deliu's claim for intentional infliction of emotional distress, Ishare Venning J's view that Mr Deliu has shown himself to be robust and combative. While the statements made about Mr Deliu are certainly hurtful, the matter falls far2 [1917] NZLR 798.3 [1984] 1 NZLR 84 (CA) at 88-894 [1999] 1 NZLR 479 (HC).5 [2000] 1 AC 419 (HL).short of giving rise to a claim of the Wilkinson v Downton6 sort, which Mr Deliu seems to be raising.[29] As regards the allegations that the other has committed the tort of abuse of process, I share with Venning J the view that when Mr Hong corresponded with the Law Society, he was entitled to respond to Mr Deliu's complaints and to put forwardhis own complaints. In doing that, he could not be said to be acting in an abuse of process. But I go further. The way the claims have been framed in this case does not amount to the tort of abuse of process. That tort has a very confined operation. There are very few successful cases of the tort of abuse of process. The originatingcase is Grainger v Hill7 where enforcement of a judgment was undertaken solelywith a view to obtaining a register, not something that could be obtained by legalprocess. That was held to have been using the legal process for a wrongful purpose.[30] The English Court of Appeal has recently reviewed the tort in Land Securities Ltd v Fladgate Fielder.8 The English Court of Appeal held that the tort should not be expanded. The real danger with allowing the tort of abuse of process to be expanded is that it involves a re-litigation of matters that have already beendetermined. The courts have adequate powers through the rules of court, awards ofcosts and the powers to punish for contempt to deal with abuse of procedure. Thereis limited place for tortious remedies. What has simply happened here is that bothparties have used combative tactics. Those tactics are not to be recommended, butthey do not fall within the narrow scope of the tort of abuse of process.[31] Both parties have sought relief directed at challenging the competence of the other to be a lawyer and haves sought remedies under the Lawyers & Conveyancers Act. This Court does have a power to strike lawyers off the rolls,9 but the parties need to bear in mind that the Law Society has already considered the complaints that each has made against the other. The Law Society has already determined that those complaints should not be taken further. That is a clear signal, I suggest, that any6 [1897] QB 57 (EWHC).7 (1838) 4 Bing NC 212, 132 ER 769 (Common Pleas).8 [2010] 2 All ER 741 (EWCA).9 Sections 266 – 270 Lawyers and Conveyancers Act 2006.proceeding in this Court to have any of the lawyers struck off by order of this Court is, to put it mildly, extremely optimistic.[32] Mr Hong's claim for defamation against Mr Deliu is based on the media report of the hearing before Venning J. Mr Hong did not sue the National Business Review. There was debate during the hearing that the article was a report of an interview between Mr Deliu and the journalist, rather than a report of the hearing itself. A copy of the report was provided to me. It reads as a report of a legal proceeding rather than of an interview with Mr Deliu. To the extent that the report is simply a report of what Mr Deliu said before Venning J, Mr Deliu has the protection of absolute privilege under s 14 of the Defamation Act. On the evidence given so far, Mr Hong's claim that it is the report of an interview is not plausible.[33] I do not say that all Mr Deliu's or Mr Hong's causes of action are completelyuntenable but their cases are very weak. They are contrived simply as vehicles in which to deliver attacks against each other. The point remains that this proceeding is not being run to serve any useful purpose.[34] Both Mr Deliu and Mr Hong are taking very big risks if they were to take their claims to a full defended hearing. The risks they run are that a judge hearing the case may make findings as to their character, conduct and competence which might reflect adversely on them in their professional capacities.[35] It is well established that the Court should exercise its power to strike out pleadings sparingly and only in clear cases. It is a serious step to rule at an interlocutory stage that a proceeding is not fit to be heard in this Court. But to allow this proceeding to continue would only prolong a dispute that should be put to rest. It is a dispute in which none of the parties can hope to obtain any advantage and in which they may do themselves harm.[36] I have given as grounds for my decision the fact that this proceeding is frivolous. Neither Mr Deliu nor Mr Banbrook referred to these matters in their submissions. That was understandable. Any argument that one of the parties mightraise against the other's claim being frivolous would be a double-edged swordbecause the arguments directed against one party would also operate against theother. However, the Court cannot remain mute. The Court has to ensure that its owntime is not being wasted when proceedings are frivolous. The Court can exercise itsown power to bring a proceeding to an end when the case is a frivolous proceeding.[37] I voiced my concerns to counsel during the hearing as to the course this proceeding was taking. Mr Deliu submitted that one effect of the statements madeby Mr Hong was that he had lost instructions from solicitors. I have addressed thatin considering the effect of the defamation on Mr Deliu and on Amicus Lawyers Ltd.In my view, it is trifling. I repeat my earlier comment that I doubt that anyonereading Mr Hong's letters would place serious weight on them. In the end, I remainfirmly of the view that to allow this proceeding to continue will be wasteful of theCourt's time, and it will reflect adversely on the parties, on the law and on the legalprofession.[38] The arguing between these parties has to be brought to an end. The Court'smessage to the parties is: stop it.[39] I need to indicate, however, that if either of the parties were to indulge further in the kind of silly conduct that has given rise to this proceeding, this decision would not necessarily stand as a precedent against further action being taken against that party in future.Result[40] I make these orders:(a) Mr Deliu's statement of claim is struck out;(b) The claim by Amicus Lawyers Ltd is struck out; and(c) Mr Hong's counterclaim against Mr Deliu, Mr Zhao and Mr Ram is struck out.Costs[41] All parties will pay their own costs.Postscript[42] The judgment above is the one I gave on 17 June 2011, with correctionsmade for errors of expression. Since then, my clerk, Fergus Whyte, has referred meto the decision of the English Court of Appeal in Jameel (Yousef) v Dow Jones & CoInc.10 The English Court of Appeal struck out a claim for internet defamation on thegrounds that there was no real and substantial tort and the proceeding was an abuseof process. The Court's reasons were given at [69]:If the claimant succeeds in this action and is awarded a small amount of damages, it can perhaps be said that he will have achieved vindication for the damage done to his reputation in this country, but both the damage and the vindication will be minimal. The cost of the exercise will have been out of all proportion to what has been achieved. The game will not merely not have been worth the candle, it will not have been worth the wick.[43] Subsequent cases that have followed that approach in England are Kaschke v Osler11 and Khader v Aziz.12 The approach taken in these cases is consistent with the approach I have taken in this decision.__________________________R M BellAssociate Judge10 [2005] QB 946.11 [2010] EWHC 1075 (QB) (Eady J).12 [2010] EWCA Civ 716.