FEDERAL COURT OF AUSTRALIA

Sanders v Snell [2003] FCAFC 150

DISQUALIFICATION OF JUDGE FOR INTEREST OR BIAS – conduct of retrial – whether judge on first trial disqualified from hearing retrial

TORTS – misfeasance in public office – targeted malice – requirement of specific intent to cause harm – requirement of abuse of power – knowingly acting in excess of statutory power – whether finding of knowledge open on evidence

Norfolk Island Act 1979 ss 4, 5, 11, 12, 13, 52, 53, 59

Norfolk Island Government Tourist Bureau Act 1980 ss 3, 4, 5, 8, 10, 11, 12, 15, 17

Federal Court of Australia Act 1976 ss 24, 28

Judiciary Act 1903 ss 36, 37

Snell v Sanders SCNIs SC3/93, Judgment of 19 April 1996 considered

Northern Territory v Mengel (1995) 185 CLR 307 followed

Farrington v Thomson [1959] VR 286 considered

Sanders v Snell (1997) 73 FCR 569 considered

Sanders v Snell (1998) 196 CLR 329 considered

Sanders v Snell [2000] NFSC 5 considered

Three Rivers District Council v Governor and Company of the Bank of England [2000] 3 All ER 1 followed

Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 considered

Dunlop v Woollahra Municipal Council [1982] AC 158 cited

Bourgoin SA v Ministry of Agriculture, Fisheries and Food [1986] 1 QB 716 considered

Jones v Swansea City Council [1990] 1 WLR 54 cited

Beaudesert Shire Council v Smith (1966) 120 CLR 145 considered

L (a child) v Reading Borough Council (2001) 1 WLR 1575 considered

Martin v Tasmania Development and Resources (1999) 163 ALR 79 considered

McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409 considered

Rowan v Cornwall (No 5) (2002) 82 SASR 152 considered

Aronson and Whitmore, Public Torts and Contracts, Law Book Company Sydney, 1982

Clerk & Lindsell on Torts, 17th edn, Sweet & Maxwell London, 1995

Salmond & Heuston on the Law of Torts, 21st edn, Sweet & Maxwell London, 1996

WILLIAM WINTON SANDERS v LISLE DENNIS SNELL

N 1346/00

BLACK CJ, FRENCH and von DOUSSA JJ

BROOME (HEARD IN SYDNEY)

2 JULY 2003

ON APPEAL FROM A SINGLE JUDGE OF THE SUPREME COURT OF NORFOLK ISLAND

ORDERS

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The judgment of the primary judge be set aside and in lieu thereof it be ordered that the application be dismissed.

3. The respondent pay the appellant’s costs of the appeal and of the first and second trials in the Supreme Court of Norfolk Island.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM A SINGLE JUDGE OF THE SUPREME COURT OF NORFOLK ISLAND

REASONS FOR JUDGMENT

Introduction

1                     In June 1992, William Sanders, who was then Minister for Tourism in the Government of Norfolk Island, directed the Tourist Bureau of the Territory to terminate the contract of its Executive Officer, Lisle Dennis Snell. This set off a train of litigation which has spread over a number of years. Snell commenced an action in the Supreme Court of Norfolk Island alleging that Sanders had wrongfully procured the Tourist Bureau to breach his contract of employment and alleging misfeasance by Sanders in a public office. On 19 April 1996 the Chief Justice of the Supreme Court delivered judgment and found for Snell in relation to the cause of action for inducing a breach of contract. He awarded damages of $500 for pecuniary loss, $15,000 for loss of reputation and associated diminished prospects of reemployment and $1,500 by way of exemplary damages. The judgment went on appeal to the Full Court of the Federal Court which allowed the appeal in respect of the finding of inducement of breach of contract but proceeded to find the tort of misfeasance in public office made out and increased the damages which had been awarded. The compensatory award of $15,000, which the court regarded as aggravated damages, was increased to $40,000. Exemplary damages of $10,000 were awarded. An interest component was added to make a total award of $70,000.

2                     The matter then went on appeal to the High Court which, on 12 December 1997, allowed the appeal on the basis that the Full Court was not justified in making the findings of fact which it had made in relation to the tort of misfeasance in public office. The High Court set aside the orders of the Full Court and ordered a new trial limited to Snell’s claim alleging misfeasance in public office. On 20 June 2000,the Chief Justice of the Supreme Court gave directions relating to the conduct of the new trial. He rejected a contention that he should disqualify himself and directed that the new trial proceed on the same pleadings and on the evidence taken at the first trial. On 24 November 2000, his Honour delivered judgment in which he found the cause of action in misfeasance in public office made out on the basis that there had been an abuse of power and that Sanders had intended to inflict loss upon Snell by directing the Bureau to terminate his employment. His Honour adopted the same measure of compensatory damages as that fixed by the Full Court, namely $40,000. He also awarded the same amount of exemplary damages, namely $10,000. He awarded pre-judgment interest at 10 per centum per annum on the compensatory damages, which came to $33,000. On that basis the judgment in favour of Snell against Sanders was in the sum of $83,000 inclusive of interest. Sanders was ordered to pay Snell’s costs of the whole of the proceedings in the court, including the costs of the first trial. Sanders now appeals against that decision.

3                     After hearing the appeal the Full Court was concerned with the expense that both parties had been put to in these proceedings and the risk that, on one possible outcome of the appeal, a further retrial might have to be ordered. In the event, the matter was referred to mediation. The mediation was unsuccessful and the parties wish the matter to proceed to judgment.

Statutory Framework

4                     Before setting out the factual and procedural history leading up to this appeal, it is convenient to outline the relevant provisions of the statutes relating to the governance of the Norfolk Island Territory and the operations of the Norfolk Island Tourist Bureau.

5                     The Norfolk Island Act 1979 (“the Act”) creates the office of Administrator of the Territory who is to administer the government of the Territory as a territory under the authority of the Commonwealth (s 5(1)). The Act also establishes the Administration which is defined as the government of the Territory (s 4). It is a body politic with perpetual succession and legal capacity like that of a corporation (s 5(3)). There is an Executive Council which is created to advise the Administrator on all matters relating to the government of the Territory (s 11(1)). It consists of persons for the time being holding executive office (s 11(2)).

6                     The Act establishes a Legislative Assembly of the Territory which, subject to the Regulations, shall consist of nine members elected as provided by enactment (s 31). The Assembly has power to make laws for the peace, order and good government of the Territory with the assent of the Administrator or the Governor-General, as the case may be (s 19(1)). Certain categories of law not relevant for present purposes are excluded.

7                     Members of the Executive Council are appointed by the Administrator on the advice of the Legislative Assembly (s 13(1)(a)). The number of executive offices and their respective designations is determined by the Legislative Assembly by resolution (s 12(1)). The matters in respect of which executive members have executive authority are specified in Schedules 2 and 3 to the Act and include “tourism”.

8                     The Norfolk Island Government Tourist Bureau Act 1980 establishes a body known as “The Norfolk Island Government Tourist Bureau” (s 3(1)). The Bureau is a body corporate with perpetual succession, is required to have a seal and may sue and be sued in its corporate name (s 3(2)). The constitution of the Bureau is set out in s 4:

‘(1) The Bureau shall consist of –

(a) 7 members; or

(b) if another number is prescribed – that number of members.

(2) Members of the Bureau shall be appointed by the executive member.

(3) Not more than one member of the Legislative Assembly may be appointed a member of the Bureau.

(4) A member holds office for the period, not longer than 1 year, specified in the instrument of appointment.

(5) A member is eligible for re-appointment.

(6) Proceedings of the Bureau shall not be called into question by reason of a defect or irregularity in connection with the appointment of a member.’

9                     The executive member is authorised to declare an association or a body of persons to be a recognised association which may nominate one or two persons as being appropriate for appointment to the Bureau (s 5). Vacation of the office of member is dealt with in s 7:

‘(1) A member of the Bureau, or a deputy of a member, may resign by giving written notice to the executive member.

(2) The executive member may remove from office a member, or a deputy of a member, for misbehaviour or incapacity or if he becomes insolvent.’

10                  Section 8 provides for the filling of vacancies, albeit only in relation to members appointed on the nomination of recognised associations or members who are also members of the Legislative Assembly. It provides:

‘(1) If a member appointed on the nomination of a recognised association ceases to be a member of the Bureau, other than by expiry of his or her term of office, the executive member may fill the vacancy by the appointment of a person nominated by that recognised association.

(2) If a member who is also a member of the Legislative Assembly ceases to be a member of the Bureau, other than by expiry of his or her term of office, the executive member may fill the vacancy by the appointment of another member of the Legislative Assembly.’

11                  At any meeting of the Bureau a majority of the number of members appointed at that time constitutes a quorum (s 9(7)). The Bureau’s functions include the encouragement of visits to and travel within Norfolk Island by people from outside Norfolk Island and provision of advice to the executive member on Norfolk Island tourism, including the means by which it might be extended or improved (s 10). The Bureau is empowered, inter alia, to enter into contracts (s 11(1)(a)). Section 11(2) provides:

‘(2) In the exercise of its functions the Bureau shall at all times operate in accordance with any directions given to it by the executive member under section 15.’

12                  Section 12 authorises the Bureau to employ “such persons as it thinks fit and necessary for the purposes of the Bureau”. There is a power of delegation under s 14. Section 15 deals with directions to the Bureau by the executive member and provides as follows:

‘(1) The executive member may give to the Bureau directions as to –

(a) the conduct of the business or affairs of the Bureau; and

(b) the manner in which the Bureau carries out its functions or exercises its powers,

and the Bureau shall give effect to those directions.

(2) The executive member shall lay a copy of any directions given under subsection 15(1) before the Legislative Assembly at its first meeting after the giving of the directions.’

The Bureau is required, inter alia, to keep proper accounts and records of its transactions and affairs (s 17). The executive member shall, in accordance with a resolution of the Legislative Assembly by notice in the Gazette, appoint a person to be the auditor for the purposes of the Act. The auditor is required to inspect and audit the accounts and records of the financial transactions and other property of the Bureau and draw the executive member’s attention to any irregularity revealed by the inspection and audit which, in the auditor’s opinion, is of sufficient importance to justify his so doing. The auditor is entitled to access to the financial and property records of the Bureau and may require members or employees of the Bureau to furnish information. There is an offence creating provision relating to hindering or obstructing the auditor in the exercise and performance of the auditor’s duties and functions (s 18).

13                  The Supreme Court of Norfolk Island was created as a Superior Court of Record by the Norfolk Island Act 1957. That Act was repealed by the Norfolk Island Act 1979. However, the Supreme Court continued in existence. Its jurisdiction, practice and procedure are as provided by or under enactment (s 59). It comprises a Chief Justice and such other judges as are appointed by the Governor-General in accordance with the Act (s 52(2)). Judges are appointed from among the judges of other courts created by the Commonwealth Parliament (s 53). There are at present two judges of the Court, the Chief Justice, who was the trial judge in the present case, and Justice Wilcox. Both are judges of the Federal Court of Australia. Appeals from the Supreme Court of Norfolk Island lie to a Full Court of the Federal Court of Australia (Federal Court of Australia Act 1976 s 24(1)(b)). A Court of Petty Sessions of Norfolk Island was established in 1960 under the Norfolk Island Act 1957 from which appeals lie to the Supreme Court of Norfolk Island.

The First Trial and Judgment

14                  On 10 March 1993, Lisle Dennis Snell, formerly the Executive Officer of the Norfolk Island Government Tourist Bureau, commenced proceedings in the Supreme Court of Norfolk Island against William Winton Sanders, a member of the Legislative Assembly of Norfolk Island appointed as Minister for Tourism in the Norfolk Island government.

15                  Snell alleged in his statement of claim that prior to 2 April 1992 he was employed under a contract of employment as Executive Officer by the Norfolk Island Government Tourist Bureau and that from 2 April 1992 he entered into a new contract of employment with the Bureau under the provisions of s 12 of the Norfolk Island Government Tourist Bureau Act. No fixed term was placed on the contract of employment as pleaded. Under the terms of cl 9, Snell could be dismissed for cause, namely absence from duty without authority or misconduct, however, upon one month’s notice in writing or payment of one month’s salary in lieu of notice (cl 9(a)). His contract could also be terminated upon two months’ notice of intention to terminate to be given either by the Bureau or by himself (cl 9(b)).

16                  It was alleged in the statement of claim that on or about 17 June 1992 Sanders, purporting to act under s 15(1) of the Norfolk Island Government Tourist Bureau Act, gave a written notice or direction to the Tourist Bureau to take such steps, prior to 4pm on that day, as were necessary to terminate, at the earliest practicable date, the employment of Snell with the Tourist Bureau. The Chairman of the Bureau was said to have, on the same day, requested Sanders, in writing, to meet with the Bureau so that matters relating to the employment of Snell and the notice or direction to terminate that employment could be discussed. It was alleged that after receiving the request from the Chairman, Sanders revoked the appointment of all the then members of the Tourist Bureau with effect from 18 June 1992. Thereafter it is said Sanders appointed new members to the Tourist Bureau and gave them directions to terminate immediately Snell’s employment as Executive Officer of the Bureau.

17                  Although the pleadings appear to have raised several grounds for relief, the matter eventually proceeded in the Supreme Court on the basis of two causes of action in tort. The first was that Sanders had wrongfully procured the Bureau to breach his contract of employment. The second was misfeasance by Sanders in a public office. Snell claimed damages, including exemplary damages from Sanders.

18                  The defence filed on behalf of Sanders admitted Snell’s engagement and re-engagement by the Bureau, Sanders’ election as a Member of the Legislative Assembly, his appointment as Minister for Tourism, his direction to the Bureau on 17 June to terminate Snell’s contract, his revocation of the appointments of Bureau members on the same day and his appointment of new members on the following day. It also admitted his direction to the reconstituted Bureau to terminate Snell’s employment as Executive Officer. The allegations were otherwise not admitted or were denied. Sanders also brought a third party claim against the Administration of Norfolk Island based in part upon the contention that he had taken advice from the Secretary to Government, Mr Don Wright. The third party claim was defended.

19                  The trial of the action occupied five days before the Chief Justice of the Supreme Court. In a brief oral opening, supplementing an extensive written opening, counsel for Snell accepted, in answer to a question from his Honour, that he was proceeding on two causes of action, “inducing breach of contract and secondly, misfeasance in public office”.

20                  Following the trial written submissions were delivered, the last of them on 5 March 1996. His Honour delivered judgment on 19 April 1996 and found for Snell against Sanders in relation to the cause of action for inducing a breach of contract: Snell v Sanders SCNIs SC3/93, Judgment of 19 April 1996. His primary award for pecuniary loss was $500, calculated by reference to Snell’s salary at the time of his dismissal, the employment he obtained immediately thereafter and two month’s wages in lieu of notice. In addition he awarded damages in the sum of $15,000 for loss of reputation and associated diminished prospects of re-employment at a senior executive level. A further $1,500 was awarded by way of exemplary damages, reflecting what his Honour saw as Sanders’ “… contumelious behaviour which entirely disregarded the rights of the members of the Bureau and of the plaintiff to be given a reasonable opportunity to be heard in answer to the criticisms that had been made” (at p52).

21                  His Honour made no finding in relation to the cause of action for misfeasance in public office, referring to the uncertainties in the case law as to the limits of the tort and the scope of damages that may be awarded for it. His Honour observed (at p55):

‘Given these uncertainties and complexities, I prefer not to express a view on this alleged cause of action in the absence of full argument on the point. As has been noted, both causes of action relied on by the plaintiff are said to have arisen from the same circumstances, and for the reasons just given, the plaintiff could not recover more damages under the second cause of action alleged.’

22                  His Honour dismissed the third party claim with costs.

Findings in the First Judgment

23                  What follows is by way of outline of the principal findings of fact in the first judgment.

24                  His Honour found that Snell was initially appointed Executive Officer of the Bureau on 2 July 1990. His appointment was evidenced by a letter from the Chairman of the Bureau attaching a document detailing his terms and conditions of employment. The initial term was for two years, which could be extended subject to the approval of the Executive Member of the Norfolk Island Government responsible for tourism and the Bureau.

25                  Snell’s contract was reviewed by the Board in March 1992 and on 3 March 1992 the Board noted the conclusion of the then current contract would coincide with the appointment of a new Board and the elections to the Legislative Assembly. In order to avoid discontinuity it was agreed that “a change is required to remove time frame from Executive Officer’s contract” (sic). It was agreed that either party would be able to terminate the contract with two months’ notice. On the same day the Board also resolved to delegate various of its powers and functions to Snell.

26                  On 13 May 1992, elections were held for the Sixth Legislative Assembly of the Norfolk Island territory. The then Minister for Tourism, Mr Smith, was not re-elected but continued to administer the Act until the new minister was officially appointed in the following week. On 20 May, the new Legislative Assembly resolved to nominate Sanders for appointment as Minister for Tourism. He was sworn in by the Administrator on 21 May. Shortly before that swearing in, on 19 May, the Bureau resolved to proceed with its plan to draft a new contract consistent with the changes that it had agreed upon in March. Annexed to the minutes of the meeting of the Bureau held on 19 May was a document headed “Terms and Conditions of Employment” signed by Snell and Mr Ken Nobbs as Chairperson of the Bureau. It was dated 19 May. Clause 9 of the contract provided:

‘9. Termination of Employment

(a) Where in the opinion of the Bureau the employee is absent from duty without authority or is guilty of misconduct, the Bureau may dismiss the employee by giving him one month’s notice in writing of its intention to terminate the appointment or on payment of one month’s salary in lieu of such notice.

(b) Subject to 9(a) above, two months notice of intention to terminate the employment shall be given by either the Bureau or the employee.’

27                  His Honour found an early occasion of friction between Sanders and Snell occurred at a function at the Hillcrest Hotel on Norfolk Island on 22 May. According to Sanders, he was publicly put in the position by Snell of having to respond at short notice to a speech made by the Commonwealth Minister for Tourism who was attending Norfolk Island’s Tourist Minister’s Conference. There was some dispute about the events that took place that evening, his Honour did not need to resolve that dispute but did make the finding (at pp15-16):

‘…that relations between the two men deteriorated considerably after this point.’

28                  At a meeting of the Bureau held on 2 June 1992, Sanders, who was in attendance, expressed his disapproval of the Bureau’s conduct in making a new contract with Snell prior to the election of the new Legislative Assembly. He was of the view that the Bureau should have acted as “caretakers” only.

29                  Following his appointment as Minister, Sanders put in train an examination of the financial operations of the Bureau, appointing Ernst & Young, New Zealand, as auditors of the Bureau for the year ended 30 June 1992, an appointment confirmed by a letter from Ernst & Young to Snell dated 26 May 1992.

30                  On 3 June 1992, Sanders also employed Ernst & Young, Brisbane, to investigate specific concerns he had about the Bureau’s financial operations. He arranged for a “spot audit” to be carried out in June. This involved an inquiry into the Bureau’s financial status with a view to either confirming or dispelling suspicions which Sanders held as a result of accusations which had been made to him about Snell by Mrs Davis, a member of the Bureau’s staff.

31                  In the following week, Sanders gave a direction to the Bureau, which was delivered to Snell on 9 June 1992, requiring the Bureau to pay travelling allowances to its members and employees in accordance with existing administration policy and guidelines which were identified. He met with members of the Brisbane office of Ernst & Young and with Mrs Davis on 9 June 1992. She repeated her accusations about lack of accountability in the Bureau, especially with regard to travel allowances. In the light of these concerns, Sanders instructed Ernst & Young, Brisbane to examine the Bureau’s accounting system to check that all allowances paid to employees had been accounted for and to prepare a report. A draft report was sent to Sanders on 16 June detailing what were said to be deficient financial practices on the part of the Bureau. It was stated in the report that the Bureau and its members had “failed to implement appropriate policies and procedures to ensure that all payments by the Bureau [were] properly authorised”. This report, it should be noted, was admitted as evidence of the fact that the statements in it were made and not as evidence of their truth. It would have been relevant to the Minister’s state of mind and the purposes of his subsequent actions. Among the detailed findings of the report were the following:

(a) There was no independent authorisation or verification of expense claims by the Executive Officer – related to this, members of the Bureau frequently pre-signed cheques which meant that the control of requiring two cheque signatories was completely ineffective.

(b) There was very little documentation to support expenses paid by the Bureau in respect of travel allowances and other reimbursements. In a number of cases the Executive Officer had paid himself significant sums in respect of round-sum travel allowances, entertainment allowances, car hire and other expenditure but could not provide vouchers to support them.

(c) The Executive Officer had made several payments to his wife and other family members during the period under investigation. No documentary evidence was available to support that expenditure, although Mr Ken Nobbs, the Bureau’s Chairman, had indicated that he was aware of these payments and that they were legitimate.

32                  Following the report, Sanders had a conversation with Nobbs, the Chairman of the Bureau and expressed his wish to see Snell removed from office. There were differing versions of the conversation between himself and Nobbs but common to both was the expression of Sanders’ wish to see Snell out of office.

33                  On the afternoon of 17 June, Sanders sent a direction to Nobbs to take such steps prior to 4pm on that day as were necessary to terminate at the earliest practicable date Snell’s employment. Nobbs faxed Sanders a letter asking him to reconsider his direction in view of the fact that he had not had ample opportunity to fully digest the auditors’ report. Sanders then requested the Secretary to the Government, Mr Don Wright, to draft a revocation of appointments of the Bureau’s members. The Bureau in the meantime convened to discuss the Ernst & Young report, Sanders’ direction to the Bureau and Nobbs’ letter to Sanders. Following that meeting, Nobbs wrote to Sanders telling him the Board had unanimously endorsed the view expressed in his earlier letter. This letter was faxed to Sanders. Shortly after receiving it a signed revocation of the appointment of members of the Bureau, with effect from 18 June 1992, was delivered to Nobbs. On the following day, Sanders appointed four new members to the Bureau under s 8 of the Act and directed the new Bureau to take such steps prior to 10am on Friday 19 June 1992 as were necessary to terminate Snell’s employment at the earliest practicable date. Subsequently, Sanders also revoked all previous appointments of auditors and reappointed a Mr Summerson of Ernst & Young’s New Zealand office as auditor.

34                  On 19 June 1992, the newly constituted Bureau met in the presence of the Crown Solicitor, Mr Foulds and, according to the minutes, resolved:

‘…to terminate forthwith the employment of [Snell] as Executive Officer and to pay him two months pay in lieu of notice pursuant to Clause 9(b) of his contract of employment.’

His Honour found, however, that Foulds had advised Mr Horton, the new Chairman of the Board, that if the Board decided to terminate Snell’s employment using cl 9(b) it could only give pay in lieu by agreement. Horton and John Brown, President of the Legislative Assembly who was also one of the new Bureau members appointed by Sanders, told Snell of the termination of his employment on the afternoon of 19 June.

35                  Having found these facts, his Honour then looked to the legal principles relating to the tort of inducing breach of contract. He set out the relevant principles thus (at 27):

‘…to maintain an action on this tort it is incumbent upon a plaintiff to show that the defendant had the intention to procure a breach of contract; that they did in fact induce it; and that damage was a consequence.’

Moreover the defendant must have induced or procured the doing of what he knew would be a breach of contract.

36                  On the question of intention, his Honour noted that for some considerable time prior to the meeting of 2 June 1992 at which Sanders had protested about the signing of the fresh contract on 19 May, Sanders had been told by Mrs Davis of her anxieties about aspects of the financial management of the Bureau. By 2 June he shared her concerns. His Honour found (at pp32-33):

‘By this time, in my view, [Sanders] had decided that he would bring about the termination of [Snell’s] contract at the earliest possible date, either by obtaining [Snell’s] resignation or, if this was not forthcoming, by directing that [Snell] be “sacked” forthwith.’

Further (at p33):

‘…as a matter of substance, if not also of form, Messrs Horton and Brown were merely intermediaries, acting as agents to do the bidding of [Sanders] as the Minister.’

37                  Foulds, the Crown Solicitor, had advised that two months’ notice should be given under cl 9(b) and that payment of salary in lieu of that notice could only be made by agreement. Wright did not express any different view and Foulds’ advice was clearly correct. His Honour said (at p34):

‘Indeed, it appears that Mr Wright’s instructions did not extend into this area. What [Sanders] required of Mr Wright was to draw the necessary documentation to achieve steps (1), (2) and (3) of the above plan.’

38                  In his Honour’s opinion, Sanders had no interest in seeking, and did not seek, advice about whether Snell could insist upon being given two months’ notice. According to his perception of the circumstances, it was not material. At all times he held the firm conviction that the Bureau, and Snell particularly, were “incompetent” and that he should procure the termination of Snell’s employment at the earliest date. He said (at p35):

‘In other words, in my opinion, the possibility that [Snell] might be entitled to two months’ notice, or that his agreement might be required before payment in lieu of notice could be given, were scenarios which [Sanders], in the vigorous pursuit of his own agenda, did not wish even to contemplate, let alone explore with Mr Wright.’

His instructions to Wright were specifically and consciously limited to drafting the documentation required for the appointment of the auditors, the removal of former members of the Bureau and their replacement and for directing the new Bureau to terminate Snell’s employment at the earliest date.

39                  The evidence did not allow for a specific finding that Sanders was aware of Foulds’ advice that a payment in lieu of notice would require Snell’s agreement. In his Honour’s opinion, Sanders intended to bring about a situation whereby Snell was, in effect, summarily and immediately dismissed. In the absence of any suggestion that cl 9(a) might apply it followed, in his Honour’s opinion, that Sanders intended to procure a breach of contract. He was aware of its terms and intended to proceed to achieve summary dismissal without seeking to rely on cl 9(a). He found that the necessary elements of knowledge and intent were present.

40                  Turning to the question whether Sanders in fact induced a breach of contract, he found that Snell had not acquiesced in what had been done to him nor waived his rights. He was not afforded any free choice in the matter. No waiver was pleaded by Sanders. Nor was it pleaded by Sanders that Snell had agreed to accept payment in lieu of notice. His Honour then made the following finding (at pp42-3):

‘I find that [Sanders], acting by himself and acting through Messrs Horton and Brown, his intermediaries and agents for this purpose, did in fact induce a breach of contract by purporting to summarily determine [Snell’s] employment contract without recourse to cl 9(a).’

41                  His Honour then turned to whether Snell suffered damage as a consequence of Sanders’ actions. He was satisfied that more than nominal damage had been suffered. Snell had suffered the indignity of a public announcement that he had been in effect summarily dismissed in circumstances where his incompetence or misconduct would readily be inferred by those reading or hearing of Sanders’ press statement.

42                  His Honour considered the measure of damages for inducement of the breach of contract and assessed the pecuniary loss having regard to the fact that Snell’s salary at the time of dismissal was approximately $600 per week. Upon his dismissal he had obtained employment driving a tourist bus and for the balance of 1992 his earnings averaged $400 per week which allowed a difference of $200 per week. He also received two months’ termination wages of $4,771.30. This was offset against his loss. After assessing the time at which he would have been given two months’ notice had the contract not been breached, his Honour rounded off Snell’s net loss at $500.

43                  His Honour then turned to the claim for loss of reputation including his prospects of re-employment at a senior executive level. He referred to a statement which Sanders released to the press on 19 June stating that members of the Bureau had been dismissed after failing to comply with a direction which he had issued, that he had appointed new members on 18 June and issued a similar direction to them and that on 19 June Snell’s employment had been terminated. The press notice had concluded (at p47):

‘…certain matters may well be referred by me to the N.I. Police…it is therefore not appropriate for me to comment at this time.’

His Honour found that such a statement was bound to damage Snell’s reputation and his prospects for any future senior appointment. Moreover it was republished in a leading article in The Norfolk Islander newspaper dated 20 June. The article also referred to an interview with Snell in which he denied any shortcomings. The paper also carried a letter written by Nobbs which was published in its correspondence section and, his Honour found, must have lessened the impact of Sanders’ press statement, a fact to be taken into account in assessing the loss of reputation suffered by Snell. His Honour was nevertheless of the view that (at p50):

‘…publicity of his dismissal by the Minister and the Bureau in an apparently summary fashion, suggestive as it necessarily was of incompetence or misconduct, coupled with the suggestion of possible criminality, must have caused [Snell] some, not insubstantial, loss.’

His Honour assessed that loss at $15,000. He then turned to the question of exemplary damages. He expressed the opinion that Sanders’ conduct, “even if it fell short of malicious action (in the sense that [Sanders] apparently believed that the Bureau was not soundly managed) was contumelious behaviour which entirely disregarded the rights of the members of the Bureau and of [Snell] to be given a reasonable opportunity to be heard in answer to the criticisms that had been made.” He noted the very short deadlines Sanders imposed on the Bureau in each of the directions, notwithstanding that he had been advised by another minister, King, that he should ensure that Snell received natural justice. His unfair conduct which inevitably led to the equally unfair dismissal of Snell should be reflected in an award of exemplary damages and his Honour assessed $1,500 as appropriate.

44                  His Honour considered the question of liability for misfeasance in public office. He noted the decision of the High Court in Northern Territory v Mengel (1995) 185 CLR 307 (“Mengel”) which recognised the tort of misfeasance in public office. He quoted passages from the judgments in the High Court dealing with the elements of the tort. He referred, in particular, to the joint judgment where it was said (at 539):

‘It was recognised as recently as 1973 that the precise limits of the tort of misfeasance in public office were then undefined. … In important respects, that is still true.’

He referred to doubts about the scope of damages that could be awarded for the tort including the possibility that exemplary damages were not available: Farrington v Thomson [1959] VR 286 (“Farrington”). In the event, he decided not to express a view on this cause of action.

45                  His Honour dealt with the third party claim. He dismissed that claim and it is not necessary to set out in any detail his findings in relation to that, save for one relating to the drafting work done by Donald Wright. His Honour said (at pp60-1):

‘In my opinion, although Mr Wright was a qualified lawyer, his responsibility in the present matter ended with the drafting of the direction. In my view, this was not negligently drafted. I would also find, if it be necessary, that even if Mr Wright had been asked to advise [Sanders] on some wider basis, that advice would not have been acted on by [Sanders] if it had sought to dissuade [Sanders] from achieving the immediate resignation, or summary dismissal, actual or constructive, of [Snell]. As I have already found, by 18 June [Sanders] was irrevocably committed to that course of action and, in my view, he was not then open to persuasion to the contrary, even by Mr Wright.’

The Appeal to the Full Court of the Federal Court

46                  By a notice of appeal filed on 10 May 1996, Sanders appealed to the Full Court of the Federal Court. A cross-appeal was filed in relation to the damages award and his Honour’s failure to make a finding on the cause of action for misfeasance in a public office.

47                  The Full Court heard the appeal on 27 February 1997 and gave judgment on 9 April 1997: Sanders v Snell (1997) 73 FCR 569. The Court, comprising Wilcox, O’Loughlin and Lindgren JJ, ordered that the appeal be dismissed with costs and the cross-appeal allowed. The damages award was increased to $70,000.

48                  The Court dealt with the issues on the appeal under three headings:

1. Sanders’ appeal against his Honour’s finding of inducement of breach of contract.

2. Snell’s cross-appeal seeking a finding in his favour of misfeasance in public office.

3. Snell’s cross-appeal against his Honour’s award of damages.

49                  The Court began by examining the revocation of the appointments of the Bureau members on 17 June 1992 which it held was invalid having regard to the requirements of the Act. It also found to be invalid the appointment of the four replacement members on 18 June. And even if the removal of the six members had been valid, further questions would have arisen as to the validity of subsequent steps taken by Sanders. The Court held however, that it was not necessary for it to address those matters further. It accepted a submission made by Sanders’ counsel that it would be unfair to decide the appeal by reference to those irregularities having regard to the fact that he had lost any opportunity of seeking indemnity by the Administration in respect of any breach of duty owed to him by Wright in connection with them. The Court was not satisfied that these issues had been litigated by Snell against Sanders. They were not raised in Sanders’ third party action against the Administration.

50                  In relation to the tort of inducement of breach of contract, the Court observed that there was no evidence of any communication by Sanders to any of the four members of the Bureau whom he had appointed, outside the terms of the written direction dated 18 June, as to the course of action which he desired them to take in relation to Snell. No evidence was elicited suggesting that Sanders had instructed, directed, or sought to persuade Horton or any of the other new appointees to terminate Snell’s services in a manner inconsistent with cl 9 of his contract. And even if Sanders had harboured an intention to cause the Bureau to dismiss Snell instantly in breach of his contract, the Court did not think that it was open to his Honour on the evidence to conclude that the Bureau was in fact induced to act in that way by Sanders. The four newly appointed members of the Bureau had been advised at their meeting on the morning of Friday 19 June by Foulds as to the courses available to them, consistent with Snell’s contract, to terminate his services. Foulds had subsequently advised Horton and Brown that the Bureau was not at liberty to make a payment in lieu of notice unless Snell agreed. The Court was of the view that the Bureau’s breach of contract had occurred because it forced Snell to accept payment in lieu of notice and that that occurred because Horton and Brown misunderstood or ignored Foulds’ advice, and not because of any instruction given by Sanders. On this basis the Court did not think it was open to his Honour to conclude that Snell had established either of the first two elements of the case against Sanders of inducement of breach of Snell’s contract of employment.

51                  The Court considered the cause of action for misfeasance in public office. It reviewed case law and referred in particular to the observation of Brennan J in Mengel that an officer’s administrative act may be invalid for failure to accord procedural fairness. After referring to a number of passages from the judgments in Mengel, relating to the elements of the tort, the Court continued (at 590):

‘As we have observed, several actions of Mr Sanders were legally invalid. However, for the reason stated above, the only invalidity we are prepared to consider in connection with the claim for misfeasance in public office is Mr Sanders’ denial of procedural fairness to Mr Snell. In contrast to his other actions mentioned earlier, this issue was directly and clearly raised at the trial. Nor is it a matter in relation to which it could be suggested there was a breach of duty to Mr Sanders by The Administration.’

52                  Their Honours accepted the argument that the Executive Member could give a direction requiring the Bureau to take an action directly adverse to a particular individual only after giving the individual an opportunity to be heard (at 590). The critical event was Sanders’ decision to require the Bureau to terminate Snell’s employment. Although there was a two step mechanism for dismissal, it remained governed by the principles of procedural fairness (at 590). The Court referred to the passage in his Honour’s judgment about the short deadlines imposed on the Bureau and on Snell and the fact that he had been advised by another Minister to ensure that Snell received natural justice. In the Court’s view there was ample warrant for those findings (at 591). The Court then referred to evidence which had been before his Honour of communications between Sanders and Nobbs, noting that counsel for Sanders had not challenged the substance of any of that evidence and that Sanders did not contradict it when he gave evidence. Consequently, in the Court’s view, it had to be regarded as “beyond dispute” (at 592). So the Court said (at 592):

‘In that situation, it must be concluded that, in deciding to give the first direction, Mr Sanders specifically intended not to allow Mr Nobbs the opportunity, before the situation became irretrievable, to consult his fellow Bureau members, provide to Mr Sanders his own comments about the report, or discuss the situation with Mr Snell.’

The Court referred to Nobbs’ letter to Sanders intimating that the auditors’ report was wrong and the fact that Sanders did not allow any of that to divert him from his path. In the Court’s view the case fell squarely within the principles enunciated in Mengel. Sanders’ acts, it held, were “calculated in the ordinary course to cause harm” and “done with reckless indifference to the harm that [was] likely to ensue” (at 593). The Court found the case to be one of “… a public officer recklessly disregarding both a known constraint on his power and an obvious means of fulfilling his known duty of fairness” (at 593).

53                  On the issue of damages, the Court held that having regard to its finding that Sanders’ conduct did not amount to an inducement to commit a breach of contract, the award of $500 could not stand and neither could the remaining $16,500 in so far as it represented damages for inducement of breach of contract. In the Court’s view, however, the compensatory award of $15,000 which it regarded as aggravated damages, was manifestly inadequate. This was increased to $40,000. Exemplary damages of $10,000 were also awarded. As a result the overall damages award was $50,000. An interest component of $20,000 was added to make a total award of $70,000 substituted for the damages of $17,000 assessed by his Honour.

The Appeal to the High Court

54                  On 12 December 1997, the High Court granted Sanders special leave to appeal from the judgment and order of the Full Court. A notice of appeal was filed thereafter together with a notice of cross-appeal and a notice of contention. On 8 October 1998, the High Court allowed the appeal and made the following orders:

1. Appeal allowed with costs.

2. Application for special leave to cross-appeal refused with costs.

3. Set aside the orders of the Full Court of the Federal Court made 9 April 1997 and in lieu thereof order that:

(i) The appeal be allowed in part.

(ii) The cross-appeal be allowed in part.

(iii) Paragraph 1 of the judgment entered on 19 April 1996 be set aside.

(iv) There be a new trial limited to the plaintiff’s claim alleging misfeasance

in public office.

(v) The costs of the first trial, as between plaintiff and defendant, be in the discretion of the judge who will hear the new trial.

(vi) Each party bear his own costs of the appeal and cross-appeal.

The majority of the Court, in a joint judgment, held that the Full Court was right to conclude that Sanders did not procure or induce the breach of contract that was committed when the Bureau terminated the contract summarily rather than by giving notice: Sanders v Snell (1998) 196 CLR 329 at 340. Callinan J agreed with this aspect of the reasons of the majority (at 351).

55                  The Court rejected an argument that Sanders’ conduct constituted the commission of the tort of wrongful interference with Snell’s trade or business interests by an unlawful act. Their Honours did not think it necessary to decide whether such a tort should be recognised in Australia. It was sufficient for their purposes to consider the element of unlawfulness that must be established if such a tort were to be recognised. Their Honours were of the view that considerations of principle required that acts, unlawful because they are ultra vires or void, be excluded from the understanding of what is an unlawful act for the purpose of the tort. If they were not excluded, the tort of interference with trade or business interests by an unlawful act would cover the whole field covered by the tort of misfeasance in public office or would cover that field and much more thereby extending the liability of public officers very greatly. Their Honours held that Snell had not made out a case of interference with his trade or business interests by unlawful means.

56                  As to the cause of action in misfeasance in public office, the joint judgment noted that the Full Court had held that it should consider “…only one alleged invalidity in connection with [Snell’s] claim for misfeasance in public office – [Sanders] denial of procedural fairness to [Snell] in giving the second direction to the Bureau” and had held that Sanders acted beyond power in giving that direction (at 590). Their Honours posed the question whether Sanders was bound to accord natural justice to Snell before giving the direction that he did. It was necessary to distinguish between the position of Sanders as Minister and the position of the Bureau as employer. The power to give directions was a power that should be read as requiring the giving of procedural fairness to those whose rights or legitimate expectations were affected by its exercise. Snell was such a person. Sanders had taken no step to permit him to say anything about the proposal to direct the Bureau to terminate his employment. It was then not necessary to consider what steps Sanders should have taken in order to give procedural fairness.

57                  There was, however, an additional ingredient for misfeasance in public office which had been adverted to by the Full Court, namely “the absence of an honest attempt to perform the functions of the office”. On this aspect of the Full Court’s decision, the majority in the High Court observed that the Chief Justice of the Supreme Court had made no findings about the claim of misfeasance in public office and that it was surprising the Full Court felt able to make findings about the honesty of Sanders’ conduct. The majority referred to what the Chief Justice had said in connection with exemplary damages, including the short timeframes imposed by the direction and the warning that Sanders had received from one of his fellow ministers, King, about natural justice. Their Honours said (at 349):

‘… it is of the first importance to recall what it was that had happened in this regard. [Sanders] who had no legal training was found to have been told by Mr King (and for that matter was told, in writing, by Mr Nobbs) that he should give [Snell] “natural justice” or a chance to put his side of the story. Neither Mr King nor Mr Nobbs was a lawyer and neither of them pretended to give legal advice to [Sanders]. They counselled him to give [Snell] a chance to put his side of the story because they thought that was the fair thing to do, not because they thought that giving a hearing was necessary as a matter of law to the valid exercise of the power to give directions. And all that the trial judge found was that [Sanders] had been given this advice but ignored it. The judge made no finding about what [Sanders] knew about his power (or the asserted lack of it) to give the second direction before giving the chance to [Snell] to put his side of the story.’

Their Honours were of the view that at most the Chief Justice’s finding was that Sanders had acted peremptorily and with no regard to what he had been told would be fair. That was very different from finding that Sanders knew that he was acting beyond power. Their Honours said (at 350):

‘Nothing in what was found by the judge to have happened, and nothing that was revealed in the evidence, warranted the Full Court in making a finding that [Sanders] knew or was reckless to the possibility that what he was doing was without power for want of procedural fairness let alone making a finding of want of honesty on his part. And yet that is what the Full Court found.’

They continued (at 350):

‘The trial judge not having considered the allegations of misfeasance in public office, and the Full Court having erred in deciding that that cause of action was made out, the judgment entered by the Full Court cannot stand. But should this aspect of the matter go back for retrial so that findings can be made? That any matter should have to be remitted for retrial is unfortunate. The costs of prolonging any matter, let alone a matter such as this which arises from within a small community, are not just financial costs. But no findings of fact having been made on this aspect of the matter, there is no choice but to remit the matter for retrial on the claim for misfeasance in public office.’

58                  Given that there was to be an order for retrial of the claim for misfeasance in public office, it was not appropriate to say anything about the assessments of damages made by the Full Court. Those were to be matters for the trial judge at the new trial. The Court said it was not, however, to be taken as endorsing in its entirety the approach adopted by the Full Court in making those assessments or in allowing, as it did, interest on amounts allowed for exemplary damages (at 350).

The Conduct of the New Trial

59                  On 20 June, the Chief Justice of the Supreme Court considered and gave directions relating to the conduct of the new trial. In written submissions on behalf of Sanders, it was contended that neither the Chief Justice who had heard the first trial nor the other member of the Supreme Court, Justice Wilcox, who presided at the hearing of the Full Court, should sit on the new trial. Secondly, Sanders submitted that any new trial was limited “… both in terms of issues for retrial and the availability of evidence”. Reference was made to the findings of fact made by the Chief Justice at first instance and by the Full Court which would again fall to be determined on a retrial. It was submitted that those findings would give rise to a reasonable apprehension of bias in relation to both the Chief Justice and Wilcox J who had presided on the Full Court.

60                  It was further submitted that the High Court had contemplated that the judge hearing the retrial would not be the judge at first instance. The submissions then dealt with the doctrine of necessity but it was contended that there was nothing to prevent the Administration of Norfolk Island appointing an additional judge for the purpose of hearing the retrial.

61                  As to the content of the retrial, counsel for Sanders submitted that:

(a)                Snell was not at liberty to amend his statement of claim to introduce any new or materially different cause of action. The High Court had ordered a retrial limited to the existing count of misfeasance.

(b)               No amendment should be permitted without it being brought forward so that the parties would have the opportunity of dealing with its precise form.

(c)                Given that the High Court had ordered a limited retrial and given that the trial was conducted in a particular way by counsel for Snell, it was not open to counsel for Snell to conduct the trial in any different way by calling additional witnesses or the same witnesses to give additional evidence. It was not open to counsel for Snell to improve in any material or significant way the evidence given at the first trial.

(d)               Some parts of the evidence could be tendered and there would be no need for particular witnesses to be recalled for examination-in-chief and cross-examination. This would depend upon the identity of the trial judge and the consent of the parties.

62                  On 20 June 2000, for reasons which he published, his Honour decided that the interests of justice required that the new trial proceed upon the basis of the existing pleadings of the claim for misfeasance in public office and the evidence already adduced before him on that claim: Snell v Sanders [2000] SCNI 2. He said (at [7]):

‘In my view, there is no reason why at this late stage any party should have the opportunity to amend a pleading or adduce fresh evidence. That opportunity was fully available at the trial and to permit fresh material at this stage would inevitably cause the parties considerable cost and delay.’

Nevertheless counsel would have the opportunity of supplementing their earlier submissions made at trial by addressing the effect of the High Court’s decision. It was appropriate that this be done in written submissions. Accordingly, his Honour directed that any further written submissions be filed and served on or before 11 August 2000.

63                  His Honour also dealt with the submission that he should disqualify himself from hearing the case. His Honour said (at [9]):

‘In all the circumstances, given especially the fact that I have at no time expressed any view whatsoever on the misfeasance claim (then finding it unnecessary to do so in light of my opinion of the other claim) I do not propose to accede to the disqualification application.’

64                  Written submissions were lodged in accordance with his Honour’s directions. There was no further evidence adduced. His Honour relied entirely upon the evidence given at the first trial. He delivered judgment on 24 November 2000: Snell v Sanders [2000] NFSC 5.

Judgment After the Retrial

65                  After reciting the procedural history leading to the new trial, his Honour referred to the claims, the factual background and the findings made at the first trial. This was essentially an outline of the salient findings of fact made at the first trial. He then reviewed the Full Court’s decision on the misfeasance claim and the reasons for decision of the High Court on appeal from the Full Court. The Chief Justice then set out reasons for his “Conclusions on the retrial of the misfeasance claim”.

66                  Under this heading, his Honour first referred to the decision of the House of Lords in Three Rivers District Council v Governor and Company of the Bank of England [2000] 3 All ER 1 (“Three Rivers”). He characterised that case as holding, consistently with Mengel, that the tort of misfeasance in public office involved an element of bad faith and arose when a public officer exercised a power, specifically intending to injure the plaintiff; or when the officer acted in the knowledge of, or with reckless indifference to, the illegality of the act and in the knowledge of, or with reckless indifference to, the probability of causing injury to the plaintiff and that subjective recklessness in the sense of not caring whether the act was illegal, or whether the consequences happened, was sufficient.

67                  His Honour set out extracts from the speeches in Three Rivers and proceeded on the basis that the tort could be subdivided into two classes, or limbs. The first limb would be satisfied if the plaintiff could show that there had been an abuse of power accompanied by subjective bad faith, specifically an actual intention to cause harm to a plaintiff. His Honour then said (at [89]):

‘In the present case, it is clear, as the High Court has here held that there was an abuse (in the sense of a failure to afford due procedural fairness) of the power to give directions under s 15. The remaining question is whether the plaintiff has established the requisite subjective (ie actual) intention. To use Lord Hobhouse’s words, did the defendant’s mind go with his act (that is, of termination of the plaintiff’s employment through the defendant’s appointed intermediaries, Messrs Horton and Brown)?’

The Chief Justice referred to a number of matters which he said ought to be borne in mind in approaching that question. It is convenient to set out the findings that followed:

‘91. First, as Oliver LJ noted (at 777) in Bourgoin, [a reference to Bourgoin SA v Ministry of Agriculture, Fisheries and Food [1986] QB 716] above (at 87), if an act (here the direction to terminate the plaintiff’s employment) is done deliberately (as this was) and with knowledge of its consequences (ie the termination of the plaintiff’s employment), the defendant cannot be heard to say that he did not “intend” the consequences or that the act was not “aimed” at the person (the plaintiff) who will suffer loss (upon loss of his employment).

92. Secondly, there can be no doubt that the defendant intended to cause harm (through loss of employment) to the plaintiff. Further, if it be needed, the publication of the reference to the police indicates the defendant’s intention to harm the plaintiff’s reputation. In the words of Lord Hobhouse, this was a case of “targeted malice”.

93. Thirdly, as Lord Millett pointed out, an inference of actual intention to harm the plaintiff cannot be rebutted by showing that the defendant acting beyond power acted not for his own personal purposes (ie spitefully or maliciously) but for the public benefit.

94. I find that the defendant actually intended to cause harm to the plaintiff by peremptorily and unlawfully removing him from office. The defendant’s actions and statements at the time are consistent with no other conclusion.

95. It follows that the first limb of the tort of misfeasance is established. I need not consider the second limb.’

68                  His Honour considered the question of compensatory damages and concluded that he should defer to and adopt the measure of damages fixed by the Full Court in the sum of $40,000. He took a similar course with respect to exemplary damages, adopting the measure fixed by the Full Court at $10,000. In relation to pre-judgment interest on compensatory damages he adopted the rate, 10% per annum, which had been used by the Full Court and applied that to the compensatory damages for the period from June 1992 to the date of judgment. Rounded off, that produced an amount of $33,000. In the exercise of his discretion he was not prepared to allow the claim for pre-judgment interest on exemplary damages which had been the subject of a specific reservation by the High Court. He refused to apportion costs between the issues of inducing a breach of contract and the misfeasance claim as they covered similar ground. For these reasons, his Honour awarded judgment to Snell against Sanders in the sum of $83,000 inclusive of interest. He also ordered Sanders to pay Snell’s costs of the whole of the proceedings in the Court, including the costs of the first trial.

Grounds of Appeal

69                  There are twenty-two grounds of appeal in the Notice of Appeal. They raise challenges to the Chief Justice’s judgment on the procedural questions relating to the new trial and the final judgment which followed that trial.

70                  In relation to the procedural judgment, it is contended that his Honour should have disqualified himself from hearing the new trial and that he failed to give adequate reasons for not doing so (Grounds 1 and 2). Linked to that is the contention that his Honour effectively, but wrongly relied upon findings of fact which he had made in the first trial (Ground 3).

71                  The Chief Justice’s approach to the principles governing the tort of misfeasance in public office and factual findings made which he found satisfied the elements of that tort are attacked (Grounds 4 to 9). In particular, it is said that he had failed to find that Sanders knew his conduct in issuing the direction of 18 June 1992 to the Bureau was unlawful (Ground 5). His judgment is also challenged on the basis that he did not make a finding that Sanders lacked an honest intention in issuing that direction (Ground 7). Various findings going to the question of Sanders’ intention and the status of Messrs. Horton and Brown as his intermediaries and agents are challenged (Grounds 10 to 13). Grounds 14 and 15 relate to Sanders’ statement made to the press on 19 June 1992 and his Honour’s decision to admit and use that statement in evidence and to permit cross-examination of Sanders on that statement. Grounds 16 to 21 attack his Honour’s assessment of damages, both compensatory and exemplary. Ground 22 challenges the costs order made by his Honour.

The Conduct of the Retrial

72                  The first three grounds of appeal involve the contention that his Honour should have disqualified himself from hearing the retrial and that he erred in the mode of retrial which he directed. The grounds were that his Honour erred in:

(a)    failing to disqualify himself from hearing the retrial of the proceedings between the parties;

(b)   failing to give any or any adequate reasons for failing to disqualify himself from hearing the retrial of the proceedings between the parties;

(c)    adopting the procedure, which he did for the hearing of the retrial of the proceedings between the parties.

73                  A threshold question was taken by counsel for Snell that Sanders had waived any objection to his Honour hearing the retrial or acquiesced in his so doing by failing to seek leave to appeal against the directions given on 20 June 2000 at which time his Honour rejected the disqualification submission and gave directions relating to the conduct of the trial. That submission should not be accepted. While it may have been open to Sanders to seek leave to appeal against his Honour’s directions and his decision to sit he was entitled to await the outcome of the case. The decision may have been made simply on the basis that an interlocutory appeal would have added delay and expense to the resolution of the proceeding and might have been proved unnecessary had the outcome been favourable to Sanders. There can be no inference of waiver or acquiescence arising from the decision not to seek leave to appeal from his Honour’s interlocutory ruling.

74                  In considering the directions given by the Chief Justice, it is necessary first to refer to the judgment of the High Court and the orders it made in relation to the retrial. The Court, as we noted, upheld the conclusion of the Full Court that Sanders had not, by his direction to the Bureau, induced a breach of Snell’s contract of employment. The direction he gave to the Bureau was compatible with a termination in accordance with the terms of the contract and the High Court rejected an argument that Sanders had intentionally interfered with Snell’s economic interests.

75                  The High Court held that the Full Court had been wrong to make a finding of misfeasance in public office, observing in the joint judgment (at 349):

‘The trial judge having made no findings about the claim of misfeasance in public office, it is surprising that the Full Court felt able to make findings about the honesty of the appellant’s conduct.’

The only aspect of the Chief Justice’s judgment relevant to the Full Court’s conclusion was said to be his finding as to exemplary damages. It is implied in that observation that the High Court did not regard his Honour as having reached any conclusion as to honesty or want of good faith on the part of Sanders. What he said in relation to exemplary damages did not amount to such a conclusion. He had said that (at p52):

‘… the defendant’s conduct, even if it fell short of malicious acts (in the sense that the defendant apparently believed that the Bureau was not soundly managed) was contumelious behaviour which entirely disregarded the rights of the members of the Bureau and of the plaintiff to be given a reasonable opportunity to be heard in answer to the criticisms that had been made.’

It was Sanders’ “unfair conduct which inevitably led to the equally unfair dismissal of the plaintiff” which his Honour held ought to be reflected in an award of exemplary damages (at p52). It is clear that there was no finding of dishonesty or bad faith in that passage.

76                  As their Honours said in the High Court (at 350):

‘At most, the trial judge’s finding (made in the context of his conclusion that the appellant had procured a breach of the respondent’s contract) was that the appellant had acted peremptorily and with no regard to what he had been told would be fair. That is very different from finding that the appellant knew that he was acting beyond power.’

The joint judgment went on, in the passage quoted earlier, to conclude that nothing in what was found by the Chief Justice or in what appeared from the evidence justified the Full Court’s finding that Sanders knew or was reckless to the possibility that what he was doing was without power for want of procedural fairness, let alone making a finding of want of honesty on his part.

77                  The primary question to be addressed in respect of the first three grounds of appeal before this Court is whether or not his Honour’s conduct of the retrial was in accordance with the orders made by the High Court. That requires a consideration of those orders in the light of the High Court’s reasons for judgment, its powers and the dispositive powers of the Full Court, which powers may be assumed by the High Court in the exercise of its appellate jurisdiction.

78                  The express powers of the High Court in the exercise of its appellate jurisdiction are set out in ss 36 and 37 of the Judiciary Act 1903. Under s 36 the High Court may grant a new trial in any cause in which there has been a trial with or without a jury. By s 37 it can affirm reverse or modify the judgment appealed from and may give such judgment as ought to have been given in the first instance. It can also remit the matter to the court appealed from, which in this case was the Full Court. The Full Court had dismissed the appeal brought against the decision of the learned primary judge because, although his Honour had based his award of damages on inducement of breach of contract, the damages the Full Court was prepared to award for the tort of misfeasance in public office were the same as those recoverable for misfeasance in public office.

79                  The High Court set aside the order of the Full Court dismissing the appeal from the Chief Justice. It then directed ‘… a new trial limited to the plaintiff’s action alleging misfeasance in public office’. This was an order the Full Court itself could have made pursuant to s 28 of the Federal Court of Australia Act. Indeed the Full Court, whose powers were effectively assumed by the High Court, could have set aside his Honour’s orders and remitted the proceeding to him for further hearing and determination under s 28(1)(c). Alternatively, it could have ordered a new trial under s 28(1)(f).

80                  There is an overlap between remitter and new trial. A remitter can relate to the whole proceeding (s 28(1)(c)). It does not appear the High Court in this case intended that there would be a new trial of all the issues that had been before the learned primary judge. The two torts of inducing breach of contract and intentional interference with economic interests had not been made out. It remained to determine the question of misfeasance in public office which was based in part upon substantially the same factual matrix as the other two torts. On the reasoning of the High Court this did not involve or require a rehearing viva voce of the whole of the evidence establishing that factual base. A new trial was ordered but the mode of the trial was a matter for the trial judge.

81                  In the circumstances, a trial of one cause of action was what was required. The High Court’s direction did not in terms preclude the Chief Justice from trying that cause of action. And in the circumstances it was open to him, as a matter of procedure, to treat evidence in the first trial as evidence on the retrial. The directions given by the Chief Justice in that respect were in accordance with the reasoning and the orders made in the High Court.

82                  This leaves the question whether his Honour should have disqualified himself from undertaking the new trial. It follows from the conclusion already reached that there could be no issue of bias or apprehended bias. The new trial was in substance a rehearing of the proceedings with a view to deciding upon the as yet unresolved cause of action of misfeasance in public office. The trial judge was able to receive the evidence led at the first trial and to make findings many of which were, not surprisingly, congruent with the findings he had made at that trial but with a view to determining the question which he had not examined. He did that and found that the tort had been committed. The correctness or otherwise of his finding is no basis for asserting that the judge should have disqualified himself. Such a complaint would be analogous to a complaint that a judge who had determined a preliminary issue of fact adversely to a particular party should be precluded from hearing and determining remaining issues in the proceedings.

83                  Counsel for the appellant also submitted that the primary judge failed to give adequate reasons for failing to disqualify himself from hearing the retrial of the proceedings. In support of this submission, counsel referred to Soulemezis v Dudley (Holdings) P/L (1987) 10 NSWLR 247. In that case, Mahoney JA noted three things about the requirement to give reasons (at 269):

‘First, the reasons must be sufficient, where there is a right of appeal, to allow that right to be exercised. Secondly, the giving of reasons is not limited to cases where there is a right of appeal: there are reasons in the nature of the judicial process which may require that reasons be given as an incident of the decision in question. And, thirdly, the giving of reasons is a normal but not a universal incident of the judicial process: there are some case, or kinds of cases, where they need not be given.’

Mahoney JA observed (at 270) that, to determine whether there is a duty to give reasons and the extent of that duty, regard should be had to the function to be served by the giving of reasons. He noted that reasons will ordinarily be sufficient if they apprise a party of the “broad outline and constituent facts” on which the judge has acted (at 273). See also Kirby P at 260 and McHugh JA at 282.

84                  The response of the primary judge to the appellant’s submission on the question of disqualification is found in paragraph 9 of his reasons (cited above at [63]). Those reasons, although brief, do state the ground for the decision of the primary judge not to disqualify himself from hearing the retrial and they are sufficient for the exercise of a right of appeal, as the appellant has done.

85                  For these reasons the appeal must fail in so far as it is directed to his Honour’s decision of 20 June 2000 relating to the conduct of the new trial.

Misfeasance in Public Office

86                  Counsel for Sanders grouped appeal grounds 4 to 9 together in attacking the conclusion of the Chief Justice that the tort of misfeasance in public office had been made out. The grounds as formulated in the notice of appeal were as follows:

‘4. His Honour erred in finding the appellant guilty of misfeasance in public office in the absence of a finding that the appellant was actuated by malice in issuing the direction date of 18 June 1992 to the Norfolk Island Government Tourist Bureau.

5. His Honour erred in finding the appellant guilty of misfeasance in public office in the absence of a finding that the appellant knew that his conduct in issuing the direction dated 18 June 1992 to the Norfolk Island Government Tourist Bureau was unlawful.

6. His Honour erred in finding the appellant guilty of misfeasance in public office in the absence of a finding that the appellant in issuing the direction dated 18 June 1992 to the Norfolk Island Government Tourist Bureau was motivated only by an intention to cause harm to the respondent.

7. His Honour erred on finding the appellant guilty of misfeasance in public office in the absence of a finding that the appellant did not have any honest intention in issuing the direction dated 18 June 1992 to the Norfolk Island Government Tourist Bureau.

8. His Honour erred in finding the appellant, for the reasons given, could not be heard to say that he did not “intend” the consequences of his conduct nor that his conduct was not aimed at the respondent.

9. His Honour erred in finding that the appellant for the reasons given was guilty of targeted malice.’

The grounds were together directed to whether Sanders possessed the requisite state of mind to bring his conduct within the scope of the tort.

87                  In Dunlop v Woollahra Municipal Council [1982] AC 158 (“Dunlop”)at 172 Lord Diplock, delivering the judgment of the Judicial Committee of the Privy Council, described the tort of misfeasance by a public officer in the discharge of his duties as “well established”. It is nevertheless a tort which is still evolving. In 1982 Aronson and Whitmore in Public Torts and Contracts, Law Book Company Sydney, 1982 at 121, observed that, at that time, the existence of the new tort could not be taken to have been established beyond doubt. The precedents to that point did not necessarily carry a common theme. Nevertheless there was even then in Australia “.. an impressive body of cases in which the tort’s existence had been accepted”. In Clerk & Lindsell on Torts, 17th edn, Sweet & Maxwell London, 1995 par 16.136, misfeasance in public office was described as “an emergent tort” which, although declared “well established” by the Privy Council and recognised in other Commonwealth countries, remained of ill-defined ambit in England. In Salmond & Heuston on the Law of Torts, 21st edn, Sweet & Maxwell London, 1996 the tort was dealt with in a chapter entitled “New and Emergent Torts” at 315. Most recently in the decision of the High Court in these proceedings it was said that (at 346):

‘…the precise limits of the tort are still undefined.’

88                  The historical origins of the tort were discussed by Smith J in Farrington v Thomson [1959] VR 286 at 293 and subsequently by Mann J in Bourgoin SA v Ministry of Agriculture, Fisheries and Food [1986] 1 QB 716 (“Bourgoin SA”) at 735-740. Smith J at 293 cited Comyn’s Digest under the title Action on the Case for Misfeasance (A1) where it was said:

‘an action on the case lies for misfeasance; as, if an officer misdemeans himself by any falsity… or otherwise misbehave himself in his office.’

On one view the origins of the tort can be traced back to Ashby v White (1704) 1 Brown 62. An action on the case was made out against returning officers who unlawfully rejected an elector’s vote albeit malice was not shown. It was held to be necessary in later cases: see Aronson and Whitmore op cit at 121 citing Cullen v Morris (1819) 2 Stark 577 and Tozer v Child (1857) 7 E and B 377. Some of the old cases however may have been better explained as actions for breach of statutory duty – op cit at 125 and footnote 56.

89                  The essence of the tort today was described by Slade LJ in Jones v Swansea City Council [1990] 1 WLR 54 (“Jones v Swansea City Council”)at 71 as follows:

‘… someone holding public office has misconducted himself by purporting to exercise powers which were conferred on him not for his personal advantage but for the benefit of the public or a section of the public either with intent to injure another or in the knowledge that he was acting ultra vires.’

A statement of its rationale was made by Nourse LJ in the same case at 85:

‘The assumptions of honour and disinterest on which the tort of misfeasance in a public office is founded are deeply rooted in the polity of a free society… It ought to be unthinkable that the holder of an office of government in this country would exercise a power thus vested in him with the object of injuring a member of that public by whose trust alone the office is enjoyed. It is unthinkable that our laws should not require the highest standards of a public servant in the exercise of his office.’

90                  The leading recent Australian authority on the scope of the tort is Mengel. The case involved unauthorised restrictions, imposed by Northern Territory government stock inspectors, on the movement of cattle on two pastoral properties because of a concern about brucellosis. The inspectors had not known that the restrictions which they imposed were beyond power. The High Court held the owners of the cattle were not entitled to recover against them or the Territory through an action on the case for damages for misfeasance.

91                  The Court overruled its decision in Beaudesert Shire Council v Smith (1966) 120 CLR 145 (“Beaudesert”). That case had stood for thirty years for the proposition that an action on the case for damages would lie at the suit of a person who had suffered harm or loss as the inevitable consequence of the unlawful, intentional and positive acts of another. This was a principle rejected in the United Kingdom: Lonrho Limited v Shell Petroleum Co Ltd (No 2) [1982] AC 173 at 187-188 and in New Zealand, Takaro Properties Ltd v Rowling [1978] 2 NZLR 314 at 339. It was on the Beaudesert principle that the Mengels had succeeded at first instance. On appeal to the Northern Territory Court of Appeal, the judgment at first instance was upheld on the basis of Beaudesert and the amount of damages increased. In the High Court the Mengels argued that they were entitled to succeed either because of the decision in Beaudesert or on separate causes of action identified in the Court of Appeal and, in any event, on their claim for misfeasance in public office. They asserted that the mental element of that tort was made out if the public officer either knew or ought to have known that he or she was acting without authority.

92                  In considering the tort of misfeasance in public office, the High Court acknowledged that its precise limits were, in important respects, still undefined. In the joint judgment of Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ, their Honours said (at 345):

‘However, the weight of authority here and in the United Kingdom is clearly to the effect that it is a deliberate tort in the sense that there is no liability unless either there is an intention to cause harm or the officer concerned knowingly acts in excess of his or her power.’

The Australian cases referred to were Farrington at 293 per Smith J; Tampion v Anderson [1973] VR 715 at 720; Pemberton v Attorney-General (Tas) [1978] Tas SR 1 at 25-31 and Little v Law Institute of Victoria and Others (No 3) [1990] VR 257 at 269-270. The English cases referred to were Dunlop; Bourgoin SA; Jones v Swansea City Council and Elguzouli-Daf v Commissioner of Police of the Metropolis [1995] 2 QB 335 at 346-347 per Steyn LJ.

93                  Their Honours rejected the principle which it was suggested in Farrington had emerged from the old Privy Council decision in Brayser v Maclean [1875] LR 6 PC 398, that action beyond power was enough to ground the tort without regard to the state of mind of the actor (at 346). They also rejected the proposition that misfeasance in public office is made out simply by an act of a public officer which he or she knows is beyond power and which results in damage (at 347). Policy and principle required that the liability be more closely confined. The policy consideration was that the tort was one for which the officer was liable personally. As to principle it was said (at 347):

‘… principle suggests that misfeasance in public office is a counterpart to, and should be confined in the same way as, those torts which impose liability on private individuals…’

Their Honours also rejected the contention that the tort could be established by showing that the public officer ought to have known that his or her action was beyond power and that it involved a foreseeable risk of harm (at 348). In so saying they accepted that the cause of action is made out where the public officer actually knew that it was beyond power and intended to cause harm (at 345). There was also “… much to be said for the view that … misfeasance in public office is not confined to actual knowledge but extends to the situation in which a public officer recklessly disregards the means of ascertaining the extent of his or her power” (at 347).

94                  The action in that case did not succeed because although the directions given by the inspectors were beyond power there was no finding that they were acting other than in good faith. Nor were they found to have known that they lacked the relevant power or to have been recklessly indifferent to its availability (at 360).

95                  Deane J, who agreed with the other Justices that misfeasance in public office could not be established, set out the elements of the tort as follows (at 370):

(a)    an invalid or unauthorised act;

(b)   done maliciously;

(c)    by a public officer;

(d)   in the purported discharged of his or her public duty;

(e)    which causes loss or harm to the plaintiff.

Malice could be made out if the act were done with an actual intention to cause injury. It could be shown if the act were done in the knowledge of invalidity or lack of power and with knowledge that it would cause or be likely to cause injury. It would also exist if the act were done with reckless indifference or deliberate blindness to that invalidity or lack of power and that likely injury. These elements, with respect, are consistent with the views of the majority albeit that some of those views were expressed tentatively having regard to the basis upon which the case before them was presented.

(a)    The judgment of the High Court in the present case did not further delineate the scope of the tort. It is however clear from their Honours’ judgment, read with what was said in Mengel, that misfeasance in public office could not be made out unless there were a finding of one or other of the following states of mind on the part of Sanders: an actual intent to cause injury; or

(b)   actual knowledge that his action was beyond power or reckless indifference to that possibility coupled with knowledge of or reckless indifference to the possibility that his action would cause or be likely to cause injury.

96                  Since the decision of the High Court in Sanders v Snell the House of Lords in Three Rivers has again considered the tort. Lord Steyn, with whom Lord Hope, Lord Hobhouse and Lord Millett agreed on the scope of the tort, adopted the rationale identified by Nourse LJ in Jones v Swansea County Council restating it thus (at 7):

‘The rationale of the tort is that in a legal system based on the rule of law executive or administrative power “may be exercised only for the public good” and not for ulterior and improper purposes.’

Lord Steyn identified as the ingredients of the tort (at 8):

(a)    the defendant must be a public officer;

(b)   the impugned act must have involved the exercise of power as a public officer;

(c)    the defendant must have had the requisite state of mind:

                                                               i.      targeted malice – a specific intention to injure a person or persons; or

                                                             ii.      knowledge that he has no power to do the act complained of and that it will probably injure the plaintiff. This was said to involve “bad faith” in as much as the public officer does not have an honest belief that the act is lawful.

His Lordship also held that recklessness as well as actual knowledge of want of power and likely harm was sufficient to show the state of mind necessary to make out the tort:

‘It can … now be regarded as settled law that an act performed in reckless indifference as to the outcome is sufficient to ground the tort in its second form.’

97                  In the subsequent decision of the Court of Appeal in L (a child) v Reading Borough Council (2001) 1 WLR 1575, the Court was concerned with a pleading issue in a case arising out of the investigation by officials of a fabricated claim by the mother of a child alleging sexual abuse of the child by its father. Otton LJ, with whom Keen LJ and Maurice Kay J agreed, referred to the Three Rivers decision and Lord Steyn’s analysis and said (at 1588):

‘Following his analysis two forms are identified and pleaded to embrace: (a) targeted malice, where a public officer engages in conduct intended to injure the claimant; (b) where a public officer knows that he has no power to do the act complained of and that the act will probably injure the claimant. There is no honest belief in the lawfulness of the act.’

His Lordship identified as the essence of the tort that it is concerned with “a dishonest abuse of power” (at 1588).

98                  Reference should also be made to Australian decisions at first instance decided after Mengel and Sanders v Snell. The first of these, two of them decisions of judges of this Court, Martin v Tasmania Development and Resources (1999) 163 ALR 79, involved termination without notice of a contract of employment. An action for misfeasance in public office was brought against the Chief Executive Officer of Tasmania Development and Resources, which is a public authority. The claim for misfeasance failed because the CEO was found to be acting honestly and on the basis that he was acting within power. Heerey J said (at 99):

‘This tort is committed where a holder of a public office acts in that capacity either with intention to cause harm or knowingly in excess of his or her power … The public office holder must know that the act is beyond the power and that it involves a foreseeable risk of harm.’

His Honour did not advert to recklessness, no doubt because the case was not put on that basis.

99                  The tort was also considered in the context of a pleadings dispute by Weinberg J in McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409 who, in addition to the elements referred to by Heerey J, adverted to the recklessness element (455). In dealing with the pleading of the cause of action his Honour said (at 459):

‘Whatever view may be taken of the requisite state of mind on the part of the person said to have committed this tort, it is not sufficient to plead that the minister ought to have known that he was exceeding his powers or contravening designated Commonwealth laws. Northern Territory of Australia v Mengel at CLR 345 and 347-8. Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ, in a joint judgment, held that the elements of the tort of misfeasance in public office are the infliction of damage and either an intention, as the actuating motive, to inflict damage or the performance of an act which the public officer knows is beyond power and which involves a foreseeable risk of harm.’

His Honour added that at the very least it must be pleaded that the Minister has recklessly disregarded the means of ascertaining the extent of his or her power and not that he has merely acted with reckless indifference to the applicants.

100               In Rowan v Cornwall (No 5) (2002) 82 SASR 152 (“Rowan v Cornwall”), Debelle J, after reviewing the authorities observed (at 358):

‘There are two forms of the tort. The first is where the public officer acts with an intention to injure a person or persons. It is sometimes called acting with targeted malice… The second is where the public officer knowingly acts in excess of his or her power and with knowledge that it would cause or be likely to cause injury, or acts with reckless indifference to possible lack of power or invalidity and likely injury.’

That was a case in which the tort was made out against a Minister of the Crown, who without observing procedural fairness, and in the process of denying funding to a women’s shelter, published a report containing unsubstantiated allegations against the shelter operators. This was done, so it was found, with the intention of silencing the shelter operators in any subsequent political debate. Debelle J found that the Minister had acted in an improper way and with an intention to cause harm (at 361).

101               The Chief Justice, at first instance in the present case, in reaching his conclusions of misfeasance in public office, referred to the Three Rivers decision and identified the two forms of the tort emerging from that decision and from the decision of the High Court in Mengel. The grounds of appeal numbered 4 to 9 involve, collectively, the contention that his Honour failed to find the requisite state of mind to establish the tort.

102               The pleading in support of the claim of misfeasance in public office was set out at par 21 of the statement of claim thus:

‘The Plaintiff further says that the Defendant was at all material times an elected member of the Legislative Assembly of Norfolk Island and had been duly appointed as Executive Member/Minister having responsibility to administer the Norfolk Island Government Tourist Bureau Act 1980 and the Defendant was thereby a public officer and the Plaintiff says that the Defendant in carrying out such actions and in giving such directions and in making such requests and such demands as have been referred to above was acting outside and beyond the proper and legal exercise of his powers duties and functions as such a public officer and that the Defendant thereby abused, misused and failed properly to use his powers duties and functions as such a public officer and acted against the Plaintiff in bad faith whereby the Plaintiff as a consequence of the said abuse misuse and failure properly to use and the said bad faith of the Defendant suffered damage and loss as set out below and was otherwise damnified.’

This has to be read with par 22 which asserts that in carrying out the actions and giving the directions alleged the defendant “was at all material times doing such unlawful, intentional and positive acts, directions, requests and demands as would cause inevitable harm and loss to the Plaintiff by bringing about the termination of his contract of employment with the Tourist Bureau and the dismissal from the said employment of the Plaintiff …”. The claim for exemplary damages is pleaded at par 24 thus:

‘The Plaintiff says that the Defendant in abusing, misusing and failing to use his powers, duties and functions as a public officer acted at all times in bad faith and with improper motives towards the Plaintiff and the Plaintiff seeks exemplary damages against the Defendant as the said abuse, misuse and failure to use was at all times deliberately oppressive, arbitrary, unconstitutional and unfair as regards the Plaintiff.’

103               In a statement of facts and contentions filed in the proceedings at first instance Snell alleged that the actions of Sanders in procuring and inducing his dismissal from his employment were “… oppressive, malicious, arbitrary and a denial of natural justice towards him”. He also alleged that “all such actions of the Defendant were positively and intentionally directed to causing him inevitable harm and loss and damage and the said actions of the defendant were wrongful and illegal”. The pleading is not set out with particularity but appears to be wide enough to embrace an intention on the part of Sanders to inflict harm upon Snell and also actual knowledge by Sanders with respect to the invalidity of the direction and the possibility of harm to Snell.

104               It was submitted on behalf of Sanders that the only allegation of ultra vires action available to Snell is the claim that Sanders had denied procedural fairness when giving the second direction to the Tourist Bureau relating to the termination of his contract. In the first trial there was no finding that Sanders knew of any such lack of power or that he was reckless with respect to that issue. It was said that the evidence at the first trial did not permit any such finding. This contention was based upon the observations in the High Court that (at 350):

‘Nothing in what was found by the Judge to have happened, and nothing that was revealed in the evidence warranted the Full Court in making a finding that the appellant knew or was reckless to the possibility that what he was doing was without power for want of procedural fairness let alone making a finding of want of honesty on his part.’

Accordingly it was submitted that having regard to the mode of retrial undertaken there can be no question of any tortious liability arising from any allegation that Sanders knowingly acted beyond power. The Chief Justice, it was said, made no specific finding that Sanders acted either knowingly or unlawfully, or that he acted without honesty.

105               The basis upon which the Chief Justice did arrive at his conclusion appears from par 94 in his reasons for judgment, which has already been set out. This is the critical paragraph and it bears repetition:

‘I find that the defendant actually intended to cause harm to the plaintiff by peremptorily and unlawfully removing him from office. The defendant’s actions and statements at the time are consistent with no other conclusion.’

As indicated in pars 92 and 95 of his judgment, set out at [67] above, his Honour treated this case as one of “targeted malice”.

106               As noted earlier the concept of “targeted malice” as explained by Lord Steyn, involves the exercise of public power for the improper or ulterior purpose of injuring a person or persons. An example of such conduct is that found by Debelle J in Rowan v Cornwall. In the present case the Chief Justice made findings of fact that Sanders intended that Snell’s contract “… be terminated at the earliest possible date” (at [49]) and at [57] he said:

‘… in my opinion … the defendant intended to bring about a situation whereby the plaintiff was, in effect, summarily and immediately dismissed.’

His Honour observed that no reasons for dismissal were ever given and no attempt made in the proceedings to “justify” the termination of Snell’s employment by alleging or by seeking to prove his incompetence or misconduct (at [59]). His Honour also found that publicity of the dismissal by the Minister and the Bureau in an apparently summary fashion was suggestive of incompetence or misconduct coupled with the suggestion of possible criminality and must have caused the plaintiff not insubstantial loss (at [71]). Importantly, at [72] his Honour said:

‘In my opinion, the defendant’s conduct, even if it fell short of malicious action (in the sense that the defendant apparently believed that the Bureau was not soundly managed) was contumelious behaviour which entirely disregarded the rights of the members of the Bureau and of the plaintiff to be given a reasonable opportunity to be heard in answer to the criticisms that had been made.’

This finding was made in the context of his Honour’s conclusion that Snell was entitled to exemplary damages.

107               It is true that actual knowledge of unlawfulness on the part of the public officer is not an element of the first form of the tort based on targeted malice. And that may be because, as Lord Hobhouse said in Three Rivers in a passage cited by the Chief Justice at [86]:

‘Here the official does the act intentionally with the purpose of causing loss to the plaintiff, being a person who is at the time identified or identifiable. This limb does not call for explanation. The specific purpose of causing loss to a particular person is extremely likely to be consistent only with the official not having an honest belief that he was exercising the relevant power lawfully. If the loss is inflicted intentionally, there is no problem in allowing a remedy to the person so injured.’

108               But in the particular case of a decision by a public officer to terminate or direct the termination of a person’s contract of employment it is not enough, in order to make out the tort, to show that the public officer wanted to terminate the contract and acted in excess of power in doing so. If that were sufficient, any ultra vires decision by a public officer having a foreseen adverse effect on a person would constitute misfeasance in public office, a consequence quite contrary to the close confinement of liability to which policy and principle point: see Mengel at 347. The termination of a contract may be integrally involved in the exercise of the statutory power to give a direction to that effect and the purpose of such a direction may quite legitimately be to end the person’s employment for any one of a variety of reasons within the proper scope of the power. The “targeted malice” that is central to the first form of the tort requires in the present case a finding of an intention to terminate the plaintiff’s employment as a means of inflicting harm upon him. The intention to inflict harm must be “the actuating motive” for the exercise of the power: see Weinberg J in McKellar v Container in the passage we have previously cited at [99]. Since the essence of the tort in each of its forms is the “dishonest abuse of power”, it cannot be sufficient merely to show that harm was intended when harm of that nature would necessarily result from the proper exercise of the power: see Mengel at 357 per Brennan J; Three Rivers at 7 per Lord Steyn; L (a child) v Reading Borough Council (2001) 1 WLR 1575 at 1588; Rowan v Cornwall at 357 [589]; and Sanders v Snell (1998) 196 CR 329 at 344.

109               There is nothing in any of the Chief Justice’s findings of fact to support a conclusion that Sanders intended to use the termination of Snell’s contract as a means of inflicting harm upon him otherwise than in good faith. Sanders wanted him out of the job, rightly or wrongly, because of the views he held about him in relation to that job. As his Honour expressly found, at [54] of his judgment:

‘At all times, in my opinion, the defendant held the firm conviction that the Bureau and its Executive Officer especially, were, in the words of the defendant’s own evidence, “incompetent” and that he, the defendant, should procure the termination of the plaintiff’s employment at the earliest date.’

In our opinion the conclusion of targeted malice cannot be sustained and the finding of misfeasance in public office on that basis cannot be supported.

110               The question then arises whether the conclusion of misfeasance in public office could be supported by reference to the criteria for the second form of the tort. There is the related question whether this Court can determine that issue or whether it has to be remitted for further hearing and determination. Counsel for Snell understandably expressed his reservations about the possibility of yet another trial. He also observed, as was the case, that there was no dispute as to the conversations that had taken place or the actions that occurred. In our opinion the question whether the second form of the tort was made out is a matter of inference from facts which were not in substantial dispute and in respect of which both parties have had ample opportunity to put their cases, both as to evidence in the first trial and submissions in the second.

111               The direction given by Sanders to the new Bureau was capable of being implemented consistently with the terms of Snell’s contract. The Full Court so found in rejecting the contention that he had induced a breach of the contract of employment and the High Court agreed. The issue of unlawfulness was therefore confined to the want of procedural fairness in connection with the direction to the reconstituted Bureau.

112               The learned Chief Justice found (at [89]) that there was an abuse of the statutory power to give directions to the Bureau by virtue of the failure to afford Snell procedural fairness. His Honour also found that Sanders had been advised or perhaps warned by another Minister, Mr King, that he should ensure that Snell receive natural justice. This finding, as noted earlier, was made in the context of his assessment of exemplary damages. The High Court said of this finding however that neither Mr King nor Mr Nobbs, who also counselled natural justice, was a lawyer. Neither was purporting to give legal advice to Sanders. They gave the advice they did because they thought it was the fair thing to do. They did not suggest that it was a condition of the validity of the direction. It is not suggested, in any of the findings of fact made by his Honour, that Sanders had received legal advice about the issue of procedural fairness. There was however a finding that he sought the assistance of Mr Wright, the Secretary to the Government, who had a legal background. But that was in connection with the question whether payment of two months’ salary could be made in lieu of notice.

113               In his evidence-in-chief Sanders was asked whether, when he signed the direction he gave to the new Bureau, he had a belief about whether the direction was legal or illegal. He said:

‘My belief was then that it was legal, it was very lawful.’

Asked the basis for that belief, he said it was the advice that he had received from Mr Wright.

114               Sanders was asked in cross-examination whether in carrying out his ministerial functions in the past he had heard of “natural justice”. He said he had not had occasion to. The concept of “fairness” had been discussed with him in the context of immigration matters but he did not recall receiving any advice in such matters about natural justice. He was aware that his obligation and duty as a minister was to act fairly at all times. Later in the course of cross-examination there was discussion between the Chief Justice and Sander’s counsel about whether or not the power of termination was subject to the requirements of procedural fairness. Counsel for Sanders submitted that there was no implication of procedural fairness. It was not put to Sanders in cross-examination that he had any knowledge of the requirement to observe procedural fairness as a condition of the power to give the direction that he did to the new Bureau.

115               In closing submissions on the retrial before the Chief Justice, counsel for Snell relied primarily upon “targeted malice”, that is to say the first form of the tort of misfeasance in public office. The final submissions, however, also relied, by way of alternative, upon the second form of the tort, referred to in the submissions as “the second limb”. In this respect it was said:

‘This limb deals with reckless indifference both as to knowledge of actions as being outside power and as to the consequences to the plaintiff from those actions. In this regard the plaintiff relies on a number of actions, aimed at removing him from office, being outside power. Looming large throughout the course of the various actions of the defendant is his total and deliberate failure to comply with the rules and the spirit of natural justice or procedural fairness as it is now alleged. At all relevant times, the defendant acted deliberately and intentionally to prevent and deprive the plaintiff of any opportunity to make any explanations relating to the factors and materials which the defendant was claiming justified and supported the action being taken of immediate removal from his office as Executive Officer of the Bureau.’

The submissions went on to refer to Sanders having previously held ministerial office particularly in the areas of immigration and tourism. It was submitted that he must be taken to have been aware of his duties and obligations in those roles. It was submitted:

‘It cannot really be suggested that because he was a butcher, and not a lawyer, he could be excused for not knowing about rules of natural justice. In cross-examination he admitted that he was aware that, as a minister, he had, at all times, to act fairly. He admitted that should it be necessary, he was required to allow opportunities to be heard by those affected, or likely to be affected, by his actions and decisions. If a person accepts the responsibility and status of power as a minister for government, he must accept all of the duties and obligations necessary and inherent in the exercise of such powers. To allow such a person to suggest or even to claim that he was ignorant of such duties and obligations, and particularly so where he has previously served as a Minister, is to set out nought the well developed principles of administrative law. A person who exercise such powers must be taken to be bound by and subject to the consequences of wrongful exercise of those powers. The concept of recklessness and of indifference to such matters has been introduced into the law relating to the tort of misfeasance to avoid the claims of ignorance and inadvertence to the duties and obligations arising out of the exercise of administrative powers.’

The case thus stated appeared to allege constructive knowledge of, or imputed indifference to, the scope of Sanders’ statutory powers. However the way in which the case was conducted did not raise the issue of procedural fairness as a matter going to the lawfulness of the direction. Sanders was not cross-examined about whether he had considered its lawfulness from that point of view. He was of course cross-examined about the fairness of what he was doing, but that appeared to be directed towards establishing that he had an intention to harm Snell.

116               In the circumstances we conclude that there was no basis upon which it could have been concluded that misfeasance in public office had been made out by reason of actual knowledge of want of power or reckless indifference to the absence of power based upon want of procedural fairness. In this respect Sanders’ position is analogous to that of the defendant, Cornwall, in Rowan v Cornwall. It will be recalled that Debelle J found Dr Cornwall liable for misfeasance in public office in its first form. As to the second form, in connection with absence of procedural fairness in the decision to withdraw funding from the women’s shelter, Debelle J said:

‘The power to withdraw funding of course existed but Dr Cornwall did not turn his mind to the question of procedural fairness, that is to say, whether he should give the shelter an opportunity of being heard before funding was withdrawn. Nor did he receive any advice on the question of procedural fairness. He was plainly set upon a course to close the shelter. So fixed was his purpose that he was oblivious to the obligation to accord procedural fairness. He simply did not think of that obligation. I do not think that constitutes a reckless indifference as to the question whether he had power because, plainly, the power existed subject to the obligation to accord procedural fairness.’ (358)

His Honour quoted Brennan J in Mengel:

‘The history of the tort shows that a public officer whose action has caused loss and who has acted without power is not liable for the loss merely by reason of an error in appreciating the power available. Something further is required to render wrongful an act done in purported exercise of a power when the act is ulta vires.’ (356)

True it is that there was evidence that Sanders had been told of the desirability of according procedural fairness but not on the basis that this went to power, nor was he cross-examined on that basis. His Honour’s decision in favour of Snell cannot be upheld by reference to the second form of the tort.

117               We should add that we do not understand the learned trial judge’s finding that the defendant intended to cause harm by “unlawfully” removing the plaintiff from office to be a finding that the defendant knew that his actions were unlawful. We consider that this is apparent from the context including, particularly, [89] of the judge’s reasons from which it seems clear that the unlawfulness referred to was not unlawfulness of which the defendant was necessarily aware. In other words, the intention that was the subject of the judge’s finding was an intention to cause harm by the exercise of power in a way that was in fact unlawful, and not an intention to cause harm in the knowledge that the power was exercised

unlawfully.

Conclusion

118               The conclusions we have reached make it unnecessary to consider the remaining grounds of appeal. Mr Snell no doubt has an understandable sense of grievance about the manner in which his contract of employment was terminated upon Mr Sander’s direction. That direction, it appears, was invalid for want of procedural fairness. That invalidity does not, however, translate into a cause of action against Sanders. As has been explained earlier in these reasons, the scope of the tort of misfeasance in public office is confined for reasons of both policy and principle in the way we have outlined. The appeal must be allowed, the judgment given by his Honour set aside and in lieu thereof the application dismissed with costs.

Associate:

Dated: 2 July 2003