FEDERAL COURT OF AUSTRALIA

Letten v Templeton [2014] FCAFC 131

THE COURT ORDERS THAT:

1.    The applicant’s application for leave to appeal dated 10 July 2014 be dismissed.

2.    The respondents’ notice of objection to competency dated 7 August 2014 be dismissed.

3.    The respondents’ interlocutory application dated 7 August 2014 be dismissed with no order as to costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

BESANKO J:

1    I have had the advantage of reading the reasons for judgment of Davies J. I agree with the orders which her Honour proposes. Subject to one matter, I also agree with her Honour’s reasons. The one matter relates to her Honour’s conclusion that Mr Letten does not satisfy the second limb of the test on an application for leave to appeal in that he has not shown that substantial injustice would result if leave were refused supposing the decision be wrong (DÉcor Corporation Pty Ltd and Another v Dart Industries Inc (1991) 33 FCR 397). I appreciate that the test of whether Mr Letten has standing to appeal is different from the second limb of the test on an application for leave to appeal. Nevertheless, in circumstances where Mr Letten has standing to appeal, I am disposed to think that he also satisfies the second limb of the test on an application for leave to appeal. However, I do not need to decide whether the second limb of the test is satisfied because plainly, for the reasons given by Davies J, Mr Letten does not satisfy the first limb on an application for leave to appeal.

Associate:

Dated:    3 October 2014

REASONS FOR JUDGMENT

DAVIES j:

introduction

2    In June 2014, the respondents, Mr Damian John Templeton and Mr Phillip Hennessey (“the Receivers”), applied for, and obtained, a direction from the Court that they are justified in deploying funds held by them in a bank account designated as the “Common Fund” to institute civil proceedings against the applicant, Mr Mark Ronald Letten (“Mr Letten”), and another person, Mr Paul James Lane: Australian Securities and Investments Commission v Letten (No 22) [2014] FCA 681. The Common Fund was set up by the Receivers in their capacity as receivers and managers of various unregistered managed investment schemes and related corporate entities previously operated by Mr Letten which had been wound up. It contains the pooled assets of these schemes and entities for distribution rateably to investors. The proceedings against Mr Letten and Mr Lane, for knowing assistance in relation to alleged breaches of trust by the corporate entities, have since been commenced.

3    Mr Letten was not a party to the Receivers’ application for judicial advice, which was made ex parte, but he did appear at the hearing and was given leave to put submissions in opposition to the giving of the judicial advice that the Receivers sought. Mr Letten raised several arguments in opposition, all of which were rejected by the primary judge who concluded that it was appropriate to give the judicial advice and make the direction sought by the Receivers.

4    Mr Letten has applied under s 24(1A) of the Federal Court of Australia Act 1976 (Cth) (“the Federal Court Act”) for leave to appeal from the interlocutory judgment and the application has been referred to a Full Court for determination and for the appeal to be treated as heard, if leave is granted. The Receivers contend that leave should be refused because the proposed appeal is not competent, or if competent, should be refused in the exercise of the Court’s discretion because the usual criteria for the grant of leave are not met.

5    For the reasons that follow I would dismiss the objection to competency but would refuse Mr Letten leave to appeal.

background

6    It is unnecessary to go into the background in any detail. For present purposes, it is sufficient to note that in February 2010, the Court ordered the winding up of various unregistered managed investment schemes operated by Mr Letten in breach of s 601ED of the Corporations Act 2001 (Cth) and the Receivers were appointed by the Court as receivers and managers of the property of the schemes and corporate entities associated with these schemes: Australian Securities and Investments Commission v Letten [2010] FCA 140. The corporate entities were subsequently ordered to be wound up and the Court appointed the Receivers as the liquidators: Australian Securities and Investments Commission v Letten (No 10) [2011] FCA 498.

7    Following their appointment as receivers and managers, the Receivers sought, and obtained, directions from the Court that they were justified in pooling the assets of the schemes and corporate entities and placing any surplus from the proceeds of sale of those assets into a Common Fund for distribution rateably amongst claimants who have a claim: Australian Securities and Investments Commission v Letten (No 7) (2010) 190 FCR 59; [2010] FCA 1231. The Receivers did so and have since distributed $6.1 million of the Common Fund to investors in the schemes. As at 27 March 2014, $8.8 million remained in the common fund available for distribution, net of the Receivers’ remuneration costs and expenses.

8    In June 2014, the Receivers sought a direction from the Court that they are justified in deploying funds from the Common Fund in the institution and prosecution of civil proceedings (“the proceedings”) against Mr Letten and Mr Lane for knowing assistance under the second limb of Barnes v Addy (1874) LR 9 Ch App 244 in relation to alleged breaches of trust by the corporate entities. Approximately $12 million is sought to be recovered.

THE APPLICATION FOR JUDICIAL ADVICE

9    The question addressed by the primary judge in considering whether the judicial advice should be given was whether the deployment of the funds in the Common Fund to fund the proceedings is in the best interests of the investors. In addressing that question, the primary judge considered whether the proceedings would be “fruitless”: Re Atkinson [1971] VR 612 at 615-6.

10    Mr Letten argued that the proposed proceedings would be “fruitless” because, on his assertion (without putting evidence before the Court), he had no assets out of which to satisfy a judgment debt against him and the Receivers could not demonstrate that they had any means of enforcing a successful judgment against him. He also argued that the proposed proceeding was an abuse of process because the Receivers were bringing the proceeding for the improper purpose of:

… exert[ing] pressure on people who would not be parties to the proceeding (the financial backers of Mr Letten and Mr Lane), so as to force them to make a financial contribution to the Common Fund to “keep Mr Letten out of bankruptcy”.

11    The primary judge rejected both arguments (and other arguments advanced on behalf of Mr Letten that are not presently relevant) and concluded that it was appropriate to make the direction sought by the Receivers. The following orders and directions were made:

1.    The Receivers … are justified in deploying funds from the Common Fund (as defined in the Orders made by the Honourable Justice Gordon on 11 November 2010) in the institution and prosecution of the Breach of Trust Litigation ...

2.    The Receivers are justified in entering into the Proposed Legal Costs Agreement with King & Wood Mallesons, Exhibit DJT 291 to the 47th Affidavit of Damien John Templeton sworn 5 June 2014.

3.    The Receivers are justified in entering into the Proposed KPMG Fee Agreement, Exhibit DJT 292 to the 47th Affidavit of Damien John Templeton sworn 5 June 2014.

4.    Notwithstanding paragraph 20 of the order made by Gordon J on 25 February 2010, the Receivers shall not be entitled to any remuneration for time spent by the Receivers, their partners and staff, in the performance of their duties in connection with the institution or conduct of the Breach of Trust Litigation save as provided in paragraph 5.

5.    In the event that the Breach of Trust Litigation results in a Recovery … , the Receivers shall be entitled to reasonable remuneration and reasonable costs and expenses properly incurred (not exceeding the amount of the Recovery) as may be fixed by the Court on the application of the Receivers, such sum to be calculated on the basis of the time reasonably spent by the Receivers, their partners and staff, in the conduct of the Breach of Trust Litigation at the rates previously ordered by the Court multiplied by 1.25 as per the Proposed KPMG Fee Agreement.

6.    Costs reserved.

THE OBJECTION TO COMPETENCY

12    The Receivers contended that the proposed appeal is incompetent because:

(a)    Mr Letten was not a party to the Receivers’ application before the primary judge and is not sufficiently affected or aggrieved by the orders to have standing to appeal;

(b)    the orders made were in the nature of advice or direction and did not determine any rights.

Standing to appeal

13    It is well settled that a non-party can appeal from a judgment under s 24 of the Federal Court Act with the leave of the Court: Commonwealth v Construction, Forestry, Mining and Energy Union (2000) 171 ALR 379; [2000] FCA 453 at [18]; Ashby v Slipper (2011) 281 ALR 38; [2014] FCAFC 15 at [311]-[319]. To have standing to apply for leave to appeal, the non-party must be “aggrieved” by the order to be appealed or be “sufficiently interested” in it: Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher [2011] FCAFC 89 at [35]; Ashby v Slipper (2011) 281 ALR 38 at [311]-[319].

14    The Receivers contended that Mr Letten cannot show standing because the “only way in which he is affected by the orders and directions made is that they have facilitated the funding of a suit against him”. The fact that the orders and directions made have facilitated the funding of a suit against him is, in my view, sufficient however to show standing as the orders and directions have a direct impact upon him. He is a defendant in the very proceedings to which the orders and directions relate and “necessarily affected” by the judicial advice given: Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 at [45] (Gummow CJ, Kirby, Hayne and Heydon JJ).

15    In my view, Mr Letten is entitled to appeal the judgment, subject to the grant of leave, and this ground of objection fails.

Orders

16    The issue here is whether an appeal can lie from the directions and orders of the primary judge because, it was submitted, they are “advisory in character” and “not a judicial determination of rights” and therefore no appeal lies under s 24 of the Federal Court of Australia Act. Driclad Pty Ltd v Federal Commissioner of Taxation (1968) 121 CLR 45 and Mellifont v Attorney-General for the State of Queensland (1991) 173 CLR 289 were cited in support of this contention.

17    It is unnecessary to consider this contention in any detail. Section 24 of the Federal Court Act confers jurisdiction on the Court to hear and determine appeals from judgments of the Court constituted by a single judge. The word “judgment” is defined in s 4 to mean relevantly, “a judgment, decree or order, whether final or interlocutory”. The words “judgment, decree or order” have been held to have the same meaning as the words “all judgments, decrees, orders” in s 73 of the Constitution: Anying Group Pty Ltd v Wang [2012] FCA 702; Ah Toy v Registrar of Companies (1985) 61 ALR 583; [1985] FCA 237; Moller v Roy (1975) 132 CLR 622. It is uncontentious that a “judgment” in this context means an operative judicial act, that is the formal judgment or order made by the Court that deals with, or disposes of, the issue for determination: Driclad Pty Ltd v Federal Commissioner of Taxation (1966) CLR 45.

18    It is also uncontentious that a “mere advisory opinion” is not amenable to appeal because there is no justiciable controversy: Re Judiciary and Navigation Acts (1921) 29 CLR 257. The fact however that the directions made were in the nature of advice is not to say that the advice given constitutes a “mere advisory opinion”: namely, an opinion that is purely hypothetical not involving the rights or duties of any person: see too Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334.

19    This was not the case here – the Receivers’ application for directions was not merely for an “advisory opinion” on a hypothetical issue without reference to any concrete facts but for the determination of a question about the proper exercise of the Receivers’ powers in relation to the use of the funds in the Common Fund held by them on trust for the claimants. As the High Court stated in O’Toole v Charles David Pty Ltd (1990) 171 CLR 232 at 244:

An advisory or consultative opinion given by a court in the context of proceedings actually in train before a court, tribunal or arbitrator is an exercise of judicial power. It would seem to follow that such an advisory or consultative opinion amounts to an order within the meaning of s 73 of the Constitution, even if it does not bind the court, tribunal or arbitrator who states the case. After all, the expectation is that the opinion will be applied and acted upon by those who seek it; that is what the relevant statute invariably contemplates, even if the statute does not require by means of explicit directional provision. The hierarchy of courts and the doctrine of precedent makes it an imperative, despite the absence of any direct means of enforcement short of challenge to a final determination that fails to incorporate or proceed in accordance with the opinion.

In Mellifont v Attorney-General for the State of Queensland (1991) 173 CLR 289, the majority stated:

In O'Toole, it was explicitly recognized that answers given by the full court of a court to questions reserved for its consideration in the course of proceedings in a "matter" pending in that court do not constitute an advisory opinion or abstract declaration of the kind dealt with in In re Judiciary and Navigation Acts whether or not those answers, of themselves, determine the rights of the parties. Such answers are not given in circumstances divorced from an attempt to administer the law as stated by the answers; they are given as an integral part of the process of determining the rights and obligations of the parties which are at stake in the proceedings in which the questions are reserved. Once this is accepted, as indeed it must be, it follows inevitably that the giving of the answers is an exercise of judicial power because the seeking and the giving of the answers constitutes an important and influential, if not decisive, step in the judicial determination of the rights and liabilities in issue in the litigation. Viewed in this context, it matters not whether the giving of the answers is, as a matter of legal theory, a binding determination, that is, binding on the court at first instance and the parties, as Mason C.J. and Dawson J. thought, or influential, that is, binding in a practical sense or virtually so, as Deane, Gaudron and McHugh JJ thought.

These cases make it clear that a critical consideration is whether the judgment of the Court was delivered in a matter forming part of a justiciable controversy between the parties.

20    In the present case, the directions and orders made did resolve a justiciable controversy between the parties and the Court was not merely acting in an advisory way. Accordingly, this ground of objection also fails.

Application for leave to appeal

21    Accordingly it is necessary to determine whether Mr Letten should be given leave to appeal. In the Commonwealth v Construction, Forestry, Mining and Energy Union (2000) 171 ALR 379, the Full Court stated that where a non-party seeks leave to appeal from an interlocutory judgment or order, the matters to be taken into account include those that are customarily considered on an application for leave to appeal by a party in accordance with the guidelines referred to in DÉcor Corporation Pty Ltd v Dart Industries (1991) 33 FCR 397; [1991] FCA 655. It was common ground that the principles to be applied in the determination as to whether leave should be granted are:

1.    whether the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court; and

2.    whether substantial injustice would result if leave was refused, supposing the decision to be wrong.

Prospects of success

22    The draft notice of appeal raises four grounds:

(1)    the primary judge did not make a positive finding that the proposed proceeding would not be fruitless;

(2)    any finding that the proposed proceeding would not be fruitless was not reasonably open on the evidence or was against the weight of the evidence;

(3)    the primary judge erred in finding that deploying funds from the Common Fund in the institution and prosecution of the proposed proceeding was not an abuse of process; and

(4)    the primary judge’s finding that the propose proceeding was not an abuse of process was not reasonably open on the evidence or was against the weight of the evidence.

23    I do not think that any of these grounds raise an arguable case that the decision below was wrong.

Grounds 1 and 2

24    As to grounds 1 and 2, no legal error is demonstrated in the primary judge’s reasoning. At [31], the primary judge correctly identified that the question for the Court was whether:

… what is proposed to be done in the best interests of the trust estate, or in this case, in the best interests of the investors

25    As the primary judge noted, one consideration for the Court was whether the proposed proceeding would not be “fruitless”. In Re Atkinson [1971] VR 612 at 615-6, Gillard J observed that:

On an originating summons seeking [a] direction [whether a trustee was bound to take legal proceedings], … a court … has merely to determine whether or not the proceedings should be taken. ... On the other hand the matter should be sufficiently investigated to determine whether or not the proceedings would be fruitless.

26    At [29], the primary judge stated:

[I]n determining whether to allow the application, the question is not whether the Court is positively satisfied that the proceedings would be fruitful. Instead, the Court must be satisfied that the proceedings would not be fruitless.

27    Before the primary judge, Mr Letten argued, amongst other things, that the proceedings would be fruitless because, on his assertion, he had no assets out of which to satisfy a judgment debt against him. At [14], the primary judge stated:

As noted above, Mr Letten asserts he is a man of straw and no judgment against him will be satisfied. Counsel for Mr Letten submits that there was no sworn evidence to refute that contention, just supposition and belief. In an affidavit filed in support of the current application, Mr Templeton [of the solicitors for the Receivers] identified two factors which he submitted led him to believe that Mr Letten may have access to sufficient funds to make a material contribution to the Common Fund. First, for the past four years Mr Letten appears to have had recourse to sufficient funds to enable him to pay the legal fees of solicitors and Counsel in these proceedings in the Federal Court, in the Westpac Proceedings and in criminal proceedings culminating in the sentencing hearing in the County Court of Victoria. Second, because the Westpac Proceedings appeared to have settled, Mr Letten or someone on his behalf is thought to have paid a material sum to secure releases of the claims against him.

The “Westpac Proceedings” were proceedings by Westpac to recover monies under personal guarantees provided by Mr Letten. The proceedings were listed for trial on 27 May 2013 but the trial did not proceed and on 28 June 2013 were discontinued. In the criminal proceedings Mr Letten pleaded guilty to 21 criminal charges of operating unregistered managed investment schemes, five charges of breaching directors’ duties and one charge of carrying on a financial services business without an Australian Financial Services licence. Mr Letten has since been sentenced to a term of imprisonment.

28    It is clear from a fair reading of the primary judge’s reasons that Her Honour did address whether the proceedings would be fruitless having regard to Mr Letten’s assertion he had no assets out of which to satisfy a judgment debt against him. At [47], Her Honour stated:

There is nothing other than Mr Letten’s word that he has no money or assets to satisfy any judgment obtained against him. He has not provided sworn evidence to the Court of his financial position or responded positively to the proposal put to him by the Receivers: see [13] above. In those circumstances it is difficult to assess that contention especially in light of the fact that Mr Letten appears to have had access to funds in relation to earlier and related proceedings: see [9] and [10] above. Moreover, he did not seek leave to cross examine Mr Templeton about these issues.

The proposal that the Receivers had put to Mr Letten was that he consent to an order that the Court appoint an independent forensic accountant to investigate his personal financial affairs.

29    It was contended for Mr Letten that the primary judge had to go further and make a positive finding that the proposed proceeding would not be fruitless and that the Receivers had to provide sufficient information to the Court to enable the Court to determine that the Receivers would be able to obtain the fruits of any judgment. No authority was cited in support of either submission and I do not accept those submissions as correct in law.

30    In giving the judicial advice, it is not the role of the Court to determine whether the proposed proceedings will or will not be successful. So too it is not the role of the Court to determine whether, if the proposed proceedings will be successful, that any judgment debt will be satisfied. The Court is not bound to make a finding that a proposed proceeding will be not be fruitful, any more than it is bound to make a finding that a proposed proceeding will be fruitful. Whether the directions sought should be given by the Court is a matter for the Court in the exercise of its discretion and the factors that may bear upon the exercise of discretion will vary from case to case.

31    In the present case, it may be accepted that Mr Letten’s financial position and ability to satisfy the judgment debt was a consideration for the Court in determining whether it should make the direction sought, but the Court took that consideration into account and did not consider that Mr Letten’s asserted lack of financial capacity was reason to conclude that the advice sought should not be given. It is implicit from Her Honour’s reasoning that her Honour was not satisfied that the proceedings would be fruitless and it was plainly open to Her Honour to form that view on the evidence that was before her. Furthermore, Her Honour identified the correct legal principle to apply and no error has been shown in her approach or reasoning.

32    In view of this conclusion it becomes unnecessary to consider and deal with the Receivers’ application to adduce further evidence about Mr Letten’s financial position.

Grounds 3 and 4

33    As to grounds 3 and 4, again no legal error is demonstrated in the primary judge’s reasoning.

34    It was submitted for Mr Letten before the primary judge that the proposed proceedings were an abuse of process. At [40]-[42], the primary judge set out the argument:

This fact or matter arises because Mr Letten has maintained, and continues to maintain, that he has no assets with which to satisfy any judgment that might be entered against him. For that reason, he submits that the Court should query the purpose of the Proposed Proceeding and, in particular, whether the application is an abuse of process or for an improper purpose. In particular, Counsel for Mr Letten submitted that if the Proposed Proceeding was being brought to bluntly shake down some third party who might assist Mr  Letten (or who has assisted Mr Letten in the past), that is not a proper purpose.

Counsel for Mr Letten referred to the following submissions made on the Receivers’ behalf as providing support for the contention that the Proposed Proceeding was an abuse of process. Counsel for Mr Letten drew the Court’s attention to paragraph 18 of Mr Templeton’s 45th affidavit (sworn 27 March 2014) where he stated:

... Many investors have called the Receivership investor hotline and have enquired about the legal avenues being pursued against Mr Letten . A view has been expressed by some [i]nvestors that they wish for action to be taken against Mr Letten to ensure he provides some recompense to [i]nvestors for the suffering caused to many investors.

Counsel for Mr Letten submitted that the language of that paragraph was suggestive of some retributive element, punishment or penalty motivating the Proposed Proceeding, possibly with a view to ensuring Mr Letten becomes bankrupt, rather than with a view to recovering assets held by Mr Letten. Counsel for Mr Letten submitted that this paragraph should give the Court reason to doubt whether the purpose for which the proceeding is being brought is one of the proper purposes set out in the Appointment Order.

Next, Counsel for Mr Letten referred to oral submissions made by the Receivers’ Counsel at the hearing where it was stated:

What we suspect is that there are assets that have been made available to [Mr Letten] for various purposes, if he indeed truly has none himself, and they include fairly expensive representation right through the course of these proceedings, and they include the inference that we drew, which is a commercial inference, from the discontinuance of the [Westpac Proceeding] that we learned of late in the middle of last year. So what the Receivers needed – approach to this is to say, “Well, we think there is something there. We think there is someone who has been willing to provide funds to keep Mr Letten out of bankruptcy and satisfy certain obligations. It could be that that would be forthcoming here. Let us make a balanced and economical attempt to see if that’s so”.

35    The primary judge rejected the abuse of process argument. Her Honour concluded at [46] that:

On the material before the Court there is nothing to suggest that at the present time the Receivers seek to institute and prosecute the proceedings for an improper purpose or, if instituted, would arguably constitute an abuse of process.

36    Her Honour reasoned at [47]:

In that context, a number of facts and matters are worth restating. First, the history of the proceedings. They are recorded in the various judgments published over the last four years. The circumstances giving rise to those various judgments record the involvement of Mr Letten and, to a lesser extent, Mr Lane. Second, consistent with the authorities, the Receivers provided the Court with the Draft SoC (together with the advice of Counsel) which addressed the substance and the merits of the claims. Third, there is a clear public interest in the due and beneficial administration of the estates of the Companies for the benefit of investors. Where, as here, the Receivers provide formulated claims to the Court against the defendants, it is not the Court’s role to adjudicate on those claims. It is sufficient to record, as was and is the fact, that the conduct of Mr Letten in relation to the Schemes has resulted in him pleading guilty to 21 charges of operating unregistered managed investment schemes, five charges of breaching directors’ duties and one charge of carrying on a financial services business without an Australian Financial Services licence. Fourth, as Counsel for the Receivers submitted, Mr Letten’s submission that the Proposed Proceeding is an abuse or improper is somewhat “odd”. There is nothing other than Mr Letten’s word that he has no money or assets to satisfy any judgment obtained against him. He has not provided sworn evidence to the Court of his financial position or responded positively to the proposal put to him by the Receivers: see [13] above. In those circumstances it is difficult to assess that contention especially in light of the fact that Mr Letten appears to have had access to funds in relation to earlier and related proceedings: see [9] and [10] above. Moreover, he did not seek leave to cross examine Mr Templeton about these issues. In the end, as the Receivers submitted, the Court is entitled to, and should, give weight to Mr Templeton’s considered belief in making his determination (with the assistance of legal advice) as to whether or not the Proposed Proceeding should be commenced. Of course, the position may change. If it does, then the defendants may make appropriate application to the appropriate court on proper material.

37    It was submitted for Mr Letten that the primary judge erred in finding that deploying funds from the Common Fund in the institution and prosecution of the proposed proceeding was not an abuse of process having regard to:

(a)    the absence of evidence about the possibility of financial recovery from Mr Letten himself;

(b)    the Receivers’ reliance on evidence that suggested that third parties had in the past been willing to provide funds to keep Mr Letten out of bankruptcy and satisfy certain obligations; and

(c)    the Receivers’ submission that the purpose of the proposed proceeding was not to seek recovery from Mr Letten himself but from those supporting him.

38    There is no substance in those submissions. The criterion for abuse of process is whether the predominant purpose of bringing the proceedings is improper: Williams v Spautz (1992) 174 CLR 509. Central to the concept of abuse of process is the requirement that a party is using court proceedings and procedures for a purpose unrelated to the objectives which the Court process is designed to achieve or some collateral advantage beyond what the law offers: Williams v Spautz (1992) 174 CLR 509 at 523. However, it is not an abuse of process where the purpose is to take advantage of an entitlement or benefit which the law gives the litigant in that event. As the majority explained at 526-7:

To say that a purpose of a litigant in bringing proceedings which is not within the scope of the proceedings constitutes, without more, an abuse of process might unduly expand the concept. The purpose of a litigant may be to bring the proceedings to a successful conclusion so as to take advantage of an entitlement or benefit which the law gives the litigant in that event.

Thus, to take an example mentioned in argument, an alderman prosecutes another alderman who is a political opponent for failure to disclose a relevant pecuniary interest when voting to approve a contract, intending to secure the opponent’s conviction so that he or she will then be disqualified from office as an alderman by reason of that conviction, pursuant to local government legislation regulating the holding of such offices. The ultimate purpose of bringing about disqualification is not within the scope of the criminal process instituted by the prosecutor. But the immediate purpose of the prosecutor is within that scope. And the existence of the ultimate purpose cannot constitute an abuse of process when that purpose is to bring about a result for which the law provides in the event that the proceedings terminate in the prosecutor’s favour.

It is otherwise when the purpose of bringing the proceedings is not to prosecute them to a conclusion but to use them as a means of obtaining some advantage for which they are not designed or some collateral advantage beyond what the law offers.

Brennan J said at 565:

There is no impropriety of purpose (whatever may be said of motive) when a plaintiff commences or maintains a proceeding desiring to obtain a result within the scope of the remedy, even though the plaintiff has an ulterior purpose - or motive - which will be fulfilled in consequence of obtaining the legal remedy which the proceeding is intended to produce. To amount to an abuse of process, the commencement or maintenance of the proceeding must be for a purpose which does not include - at least to any substantial extent - the obtaining of relief within the scope of the remedy.

As the decision makes clear, the onus of satisfying the Court that there is an abuse of process is a “heavy one”.

39    The reasons of the primary judge in rejecting the abuse of process claim do not disclose any legal error in either the identification or application of the relevant principles. The question was whether the proposed proceedings are to be brought for a purpose other than to prosecute them to a conclusion. The fact, if it be the case that, the Receivers may hope that payment may be forthcoming from some third party if the claim is successful against Mr Letten does not make the proceeding an abuse of process. In any event it was plainly open on the evidence before the Court for the primary judge to consider that such intent was not the predominant purpose of the Receivers in bringing the claim.

Conclusion

40    For these reasons, the application for leave should be dismissed.

Whether there would be substantial injustice

41    For the sake of completeness, this ground is also not established.

42    It was submitted for Mr Letten that the orders and directions sought should not have been made and that substantial injustice will result if leave is refused by reason that Mr Letten:

(a)    has been unfairly exposed to the hardship of onerous legal proceedings;

(b)    cannot simply ignore the proceedings as they raise serious allegations of fraud against him; and

(c)    will likely be incarcerated, thus hampering his ability to defend himself in the proceedings.

43    It was also submitted that substantial injustice will be done because the Receivers are officers of the Court and it is a matter of public interest that the Receivers’ application be made with sufficient proper material to allow the Court properly to perform its functions and for a proper purpose. This submission can be rejected for the reason that I am of the view that the decision was correct.

44    I otherwise do not consider that it can be said that any substantial injustice would result from the decision if leave were not granted, assuming the decision to be wrong.

45    First and foremost, the orders and directions made did not determine any substantive rights as between the Receivers and Mr Letten. There has been no resolution by the primary judge of any issue arising in that proceeding and the primary judge was careful to eschew making any finding that would be binding on Mr Letten in the substantive proceedings.

46    Secondly, all that has occurred is consideration by the Court as to whether it would be proper for the Receivers to commence those proceedings in the circumstance that the causes of action sued upon exist independently of the orders and directions of the primary judge. Whether Mr Letten defends the proceeding or does not is a matter for him and the need to make that decision is not an injustice. Mr Letten’s incarceration is no doubt a matter that will need to be taken into account to the management of the proceedings, but is not a fact which of itself is productive of injustice by the granting of a direction to the Receivers that they are justified in commencing those proceedings.

ORDERS

47    For the reasons given, both the Receivers’ objection to competency and Mr Letten’s application for leave should be dismissed. I would make the following orders:

(1)    The applicant’s application for leave to appeal dated 10 July 2014 be dismissed.

(2)    The respondents’ notice of objection to competency dated 7 August 2014 be dismissed.

(3)    The respondents’ interlocutory application dated 7 August 2014 be dismissed with no order as to costs.

48    That leaves the question of costs. Given that the respondents successfully opposed the application but were unsuccessful on their notice of objection to competency, it seems to me that it would be appropriate to make an order that the applicant pay seventy-five per cent of the respondents’ costs, reflecting the issues on which the respondents failed. However, as no submissions have been received on the question of costs, I would hear the parties before making such an order.

Associate:

Dated:    3 October 2014

REASONS FOR JUDGMENT

white J:

49    I agree with the orders proposed by Davies J and with her reasons.

Associate:

Dated:    3 October 2014