Legal Principles Governing striking out Frivolous and Vexatious claims under rule 13.4 UCPR

Whether you are defending or prosecuting on a motion brought under rule 13.4 UCPR it goes without saying that in order to succeed you need to be aware of the caselaw applicable to such a claim. The rule basically allows a party to seek summary dismissal of an unmertitorious claim. The rule is designed to protect a defendant.

By understanding the boundaries set by the cases you can determine, in advance, whether to bring on such a motion under r 13.4 or the scope as plaintiff to dismiss such a motion.

As you will see the cases set a very high bar.

What is Rule 13.4?

Rule 13.4 of the Uniform Civil Procedure Rules (UCP Rules) empowers the Court, in its discretion, to order that proceedings be dismissed where the proceedings are frivolous or vexatious; or no reasonable cause of action is disclosed; or the proceedings are an abuse of the process of the Court.

Rule 13.4 provides as follows:

13.4 Frivolous and vexatious proceedings

(cf SCR Part 13, rule 5; DCR Part 11A, rule 3; LCR Part 10A, rule 3)

(1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings:

(a) the proceedings are frivolous or vexatious, or

(b) no reasonable cause of action is disclosed, or

(c) the proceedings are an abuse of the process of the court,

the court may order that the proceedings be dismissed generally or in relation to that claim.

(2) The court may receive evidence on the hearing of an application for an order under subrule (1).

The Legal Principles to Be Applied

In Augment Communications Pty Limited (In Liquidation) v Sedgwick & Ors [2008] NSWDC 251 at [72] Levy DCJ held that the test for determining whether an action ought to be terminated summarily and not be permitted to proceed to a hearing on the merits is to be found in the judgment of Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 approving the passage within the dissenting remarks of Dixon J as he then was in Dey v Victorian Railways Commissioner [1949] HCA 1; (1949) 78 CLR 62.

In Dey, at page 91, Dixon J reviewed the authorities and expressed the test in the following terms:

“A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.”

In General Steel, at pages 129 to 130, Barwick CJ confirmed that the jurisdiction to summarily terminate an action is to be sparingly employed and is not to be used except in clear cases. He described the test thus:

“It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action – if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal – is clearly demonstrated. The test to be applied has been variously expressed; “so obviously untenable that it cannot possibly succeed”; “manifestly groundless”; “so manifestly faulty that it does not admit of argument”; “discloses a case which the Court is satisfied cannot succeed”; “under no possibility can there be a good cause of action”; “be manifest that to allow them” (the pleadings) “to stand would involve useless expense”.

At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or “so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument”; “so to speak apparent at a glance”.

As I have said, some of these expressions occur in cases in which the inherent jurisdiction was invoked and others in cases founded on statutory rules of court but although the material available to the court in either type of case may be different the need for exceptional caution in exercising the power whether it be inherent or under statutory rules is the same.”

In AAMI v NRMA Insurance Ltd [2002] 124 FLR 518 Conti J referred to the General Steel test as restated in Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598 to require a finding that the action ought not be permitted to go to trial in the ordinary way because it was apparent that it must fail. In Webster Mason CJ, Deanne and Dawson JJ said at 602-603:

“The power to order summary judgment must be exercised with ‘exceptional caution’ and ‘should never be exercised unless it is clear that there is no real question to be tried’. Nowhere is that need for exceptional caution more important than in a case where the ultimate outcome turns upon the resolution of some disputed issue or issues of fact.”

The High Court, in Burton v The President of the Shire of Bairnsdale [1908] HCA 57; (1908) 7 CLR 76, referred to the discretion in the following way:

“The rule is that every plaintiff is entitled to have his action tried unless it can be shown obviously that the action is frivolous or vexatious, or otherwise an abuse of the process of the Court. A litigant is entitled to use, not to abuse, the process of the Court… So, there is power to strike out a pleading on the ground that it discloses no reasonable cause of action or of defence; and in any such case, or in the case of the action being shown by pleadings to be frivolous or vexatious, the Court may order the action to be stayed or dismissed, or judgment to be entered. This rule applies to a wider area of cases than the general power; and yet it has been held not to apply except in plain or obvious cases; and if there is a point of law that requires any serious discussion, it should be set down for argument: Hubbuck v Wilkinson. The pleading must be ‘obviously frivolous or vexatious, or obviously unsustainable,’ if it is to be struck out (per Lindley LJ in Attorney General of the Duchy of Lancaster v London and North Western Railway Co). The pleading must be ‘so clearly frivolous that to put it forward would be an abuse of the process of the Court’: Young v Holloway.” (Per Higgins J at 98, 99, 100)

In Cox v Journeaux [1935] HCA 48; (1935) 52 CLR 713, the principles relating to a strike out of this kind were once more discussed. Sir Owen Dixon, who dealt with the notice of motion then before the Court, said:

“The inherent jurisdiction of the Court to stay an action as vexatious can be exercised only when the action is clearly without foundation and when to allow it to proceed would impose a hardship upon the defendants which may be avoided without risk of injustice to the plaintiff. The principle, in general paramount, that a claim honestly made by a suitor for judicial relief must be investigated and decided in the manner appointed, must be observed. A litigant is entitled to submit for determination according to the due course of procedure a claim which he believes he can establish, although its foundation may in fact be slender. It is only when to permit it to proceed would amount to an abuse of jurisdiction, or would clearly inflict unnecessary injustice upon the opposite party that it should be stopped. But the Court is not concluded by the manner in which the litigant formulates his case in his pleadings. It may consider the undisputed facts. Further, it is not limited to cases where there is no dispute of fact….

In the present case I am satisfied that the Court should exercise its power to stop the action summarily. The plaintiff’s case is clearly hopeless. It is true that some examination of the facts is necessary before this appears.” (Per Dixon J at 720)

The Court of Appeal in England has expressed the view that in order for the inherent jurisdiction to be invoked successfully it must be “impossible for the party concerned to succeed on his claim”: Charles Forte Investments Ltd v Amanda [1964] 1 Ch 240 at 250-251.

In Shalhoub Holdings Pty Ltd and Ors v Cba [2006] NSWSC 607 at [34] Rothman J noted that the Supreme Court had dealt with the principles and application of them on a number of occasions, the three best known examples of which are: Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937; Peter Kent Development Propriety Ltd v ANZ Banking Group Ltd (unreported, NSWSC, Hunt J, 6 May 1980); Pountney v Dang (unreported, NSWSC, Barr J, 22 August 1997).

In Brimson, Cross J referred to: Bayne v Baillieu [1908] HCA 39; (1908) 6 CLR 382 at 387; Dey v Commissioner of Railways; and General Steel Industries v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125. His Honour said:

“Where the court is asked to reject the plaintiff’s case, either under its statutory rules or its inherent jurisdiction, the fundamental principle is that prima facie a plaintiff is entitled to have his case come to trial; and applications to deprive him of that right will succeed only in the clearest of cases. True, the court will not look merely at the suggested weakness of the plaintiff’s case… but… at the suggested strength of the defendant’s case; and, true, forensic argument and subsequent judicial reflection are not necessarily inconsistent with a firm conclusion that the cause of action should not be allowed to proceed. But fatal defects in the plaintiff’s case must be very clear before the court will intervene in this fashion.” (at 944)

The principle is that the defendant must show that there is no possibility that there could be a good cause of action consistent with the pleadings and the facts. These same principles and this same approach were adopted in the other two judgments; Hunt J in Peter Kent Development, supra, described the power here discussed as “much wider” than the power to strike out pleadings. His Honour went on to say:

“Both Rules reflect the inherent jurisdiction of the Court to deal with the abuse of its process… Under that inherent jurisdiction – although now more properly under Part 13 Rule 5 [now UCP Rules Rule 13.4] – there is power to stay an action which, although properly pleaded, is bound to fail. Such an action may be called either vexatious or an abuse of process.

One such case would be where the legislature has provided an absolute defence…

Another such case would be where a second action was brought seeking to litigate an identical issue to that already decided against the plaintiff…

Such cases are very rare; the genus of which they are but species is aptly named an abuse of the Court’s process, for relief will not be given in such cases unless the claim or defence being dismissed or struck out under such power amounts to an improper use of the machinery of the Court.”