FEDERAL COURT OF AUSTRALIA
Porter v OAMPS Ltd [2005] FCA 232
PRACTICE AND PROCEDURE – pleadings – application for leave to amend statement of claim – application to strike out, set aside or vary statement of claim – application to dismiss proceedings or claim – whether cause of action is tenable or arguable – whether the statement of claim should be struck out – whether the applicant should be granted leave to amend or re‑plead.
Federal Court Rules: O 11 r 16, O 13, O 20 r 2
Corporations Act 1989 (Vic): ss 205, 615, 737, 1324, 1325A(1)
Corporations Act 2001 (Cth): ss 1324, 1401
Commonwealth Constitution: ss 75, 76
General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125, applied
Spotwire Pty Ltd v Visa International Services Inc (2003) ATPR 41‑949, cited
Dare v Pulham (1982) 148 CLR 658, cited
BanqueCommercialeSAenLiquidationv Akhil Holdings Ltd (1990) 169 CLR 279, referred to
Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334, referred to
Davis v Gell (1924) 35 CLR 275, referred to
Gregory v Portsmouth City Council [2000] 1AC 419, referred to
Pandit Gaya Parshad Tewari v Sardar Bhagat Singh (1908) 24 TLR 884, referred to
Martin v Watson [1996] 1 AC 74, referred to
Commonwealth Life Assurance Society Ltd v Brain (1935) 53 CLR 343, cited
Cabassi v Vila (1940) 64 CLR 130, cited
Darker v Chief Constable of the West Midlands Police [2001] 1 AC 435, referred to
Hillman v Black (1996) 67 SASR 490, referred to
Skrijel v Mengler [2003] VSC 270, referred to
New Zealand Guardian TrustCoLtd v Kenneth Steward Brooks [1995] 1 WLR 96, referred to
Kuwait Asia Bank EC v National Mutual Life Ltd [1991] 1 AC 187, referred to
Little v The Law Institute of Victoria [1990] VR 257, referred to
Speed Seal Products Ltd v Paddington [1985] 1 WLR 1327, referred to
Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391, referred to
Jamieson v The Queen (1993) 177 CLR 574, referred to
Spautz v Gibbs (1990) 21 NSWLR 230, referred to
Williams v Hursey (1959) 103 CLR 30, referred to
Latham v Singleton (1981) 2 NSWLR 843, referred to
McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409, applied
Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405, referred to
Maritime Union of Australia v Geraldton Port Authority (1999) 165 ALR 67, referred to
Executor Trustee Australia Ltd v Deloitte Haskins & Sells (1996) 135 FLR 314;(1996) 22 ACSR 270, applied
Waterhouse v Waterhouse (1999) 46 NSWLR 449, applied
Artistic Builders Pty Ltd v Elliot & Tuthill (Mortgages) Pty Ltd (2002) 10 BPR 19,565; [2002] NSWSC 16, applied
GE Capital Australia v Davis (2002) 180 FLR 250, applied
Maxwell v Murphy (1957) 96 CLR 261, referred to
Australian Securities & Investments Commission v Plymin (2003) 175 FLR 124, referred to
Shum Yip Properties Development Ltd v Chatswood Investment & Development Co Pty Ltd (2002) 166 FLR 451; 40 ACSR 619, referred to
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594, referred to
Barto v GPR Management Services Pty Ltd (1991) 33 FCR 389, referred to
Orison Pty Ltd v Strategic Minerals Corporation NL (1987) 77 ALR 141, referred to
Yorke v Lucas (1985) 158 CLR 661, referred to
Tampion v Anderson [1973] VR 715, referred to
Northern Territory v Mengel (1995) 185 CLR 307, referred to
Sanders v Snell (1998) 196 CLR 329, cited
Racz v Home Office [1994] 2 AC 45, referred to
Kuddus v Chief Constable of Leicestershire [2002] 2 AC 122, referred to
Homestead Award WinningHomesPty Ltd v South Australia(1997) 72 SASR 299, referred to
Byrne v Australian Airlines (1995) 185 CLR 410, referred to
Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1, referred to
Wentworth v Woollahra Municipal Council (1982) 149 CLR 672, referred to
Hill v Chief Constable of West Yorkshire [1989] AC 53, referred to
Calveley v Chief Constable of the Merseyside Police [1989] AC 1228, referred to
Elguzouli‑Daf v Commissioner of Police of the Metropolis [1995] QB 335, referred to
Grimwade v State of Victoria (1997) 90 A Crim R 526, referred to
Wilson v State of New South Wales (2001) 53 NSWLR 407, referred to
Cran v State of New South Wales [2004] NSWCA 92, referred to
Costello v Chief Constable of the Northumbria Police [1999] 1 All ER 550, referred to
Turner v Bulletin Newspaper Company Pty Ltd (1974) 131 CLR 69, referred to
East West Airlines (Operations) Ltd v Commonwealth (1983) 49 ALR 323, referred to
S Kneebone, “Misfeasance in a Public Office after Mengel’s Case: A Special Tort no More” (1996) 4 Tort Law Review 111
T Cockburn & M Thomas, “Personal Liability of Public Officers in the Tort of Misfeasance in Public Office” (2001) 9 Torts Law Journal 80 and 245
P Finn, “Public Officers: Some Personal Liabilities” (1977) 51 Australian Law Journal 313
K Stanton, “New Forms of the Tort of Breach of Statutory Duty” (2004) 120 Law Quarterly Review 324
ROBERT ARTHUR PORTER v OAMPS LTD, KINGSLEY CLIVE LAMONT, BRIAN MARK AUSTIN, MARK GEOFFREY WINDEBANK, DUNCAN WILLIAM SCOTT GLASGOW, CRAIG ALAN HARRIS, PETER FREDRICK SHARKEY, RODNEY STEPHEN ADLER, MICHAEL RICHARD HUGHES and AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
VID 3214 of 2002
GOLDBERG J
MELBOURNE
11 MARCH 2005
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IN THE FEDERAL COURT OF AUSTRALIA |
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VICTORIA DISTRICT REGISTRY |
VID 3214 of 2004 |
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BETWEEN: |
ROBERT ARTHUR PORTER Applicant
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AND: |
OAMPS LTD First Respondent KINGSLEY CLIVE LAMONT Second Respondent BRIAN MARK AUSTIN Third Respondent MARK GEOFFREY WINDEBANK Fourth Respondent DUNCAN WILLIAM SCOTT GLASGOW Fifth Respondent CRAIG ALAN HARRIS Sixth Respondent PETER FREDRICK SHARKEY Seventh Respondent RODNEY STEPHEN ADLER Eighth Respondent MICHAEL RICHARD HUGHES Ninth Respondent AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Tenth Respondent
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JUDGE: |
GOLDBERG J |
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DATE: |
11 MARCH 2005 |
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PLACE: |
MELBOURNE |
REASONS FOR JUDGMENT
INTRODUCTION
1 There are a number of interlocutory applications before the Court seeking various orders. It is unnecessary to discuss the detail of all of the orders sought. Given the number of parties and the number of applications, any such discussion would be confusing and counter‑productive. Suffice it to say that there are a number of attacks on the applicant’s current statement of claim and a proposed amended statement of claim. Some parties want it struck out or dismissed; others want it pleaded properly. There is also an issue as to the appropriate court to hear the applicant’s claims. Given that the applications are interlocutory and that the Court has an inherent jurisdiction to control its own processes, the appropriate course is to reduce the relevant issues to the following:
(a) Should the proceeding brought by the applicant, or any part of it, be dismissed or stayed pursuant to O 20 r 2 of the Federal Court Rules? For the reasons given below, some of the claims made by the applicant against some of the respondents should be dismissed.
(b) If not, should the statement of claim(s) filed by the applicant, or any part of it, be struck out pursuant to O 11 r 16 of the Federal Court Rules? If so, should the applicant be given leave to re‑plead or amend the Statement of Claim or the relevant part of it pursuant to O 13 of the Federal Court Rules? For the reasons given below, the Statement of Claim should be struck out and the applicant should be given leave to re-plead those parts of it that have not been dismissed.
(c) Should the applicant be granted leave to amend his application and statement of claim for the purpose of joining the Australian Prudential Regulation Authority (“APRA”) and Colin Cowden (“Mr Cowden”) as respondents to the proceeding? For the reasons given below, these issues should be adjourned sine die with liberty for the parties and for APRA or Mr Cowden to bring the matter back before the Court.
(d) Does this Court have jurisdiction to hear the proceeding? For the reasons given below, this issue should be adjourned sine die with liberty for the parties to bring the matter back before the Court.
(e) Should the proceeding be transferred to the Supreme Court of Victoria? For the reasons given below, this issue should be adjourned sine die with liberty for the parties to bring the matter back before the Court.
2 On 25 October 2002 the applicant filed in this Court an application with accompanying Statement of Claim (“original Statement of Claim”). It is unnecessary to consider the detail of that claim. Although the applicant was legally represented, on any view the Statement of Claim did not comply with the requirements of O 11 of the Federal Court Rules.
3 On 7 November 2002 the second to seventh respondents filed a Notice of Motion challenging the jurisdiction of the Court to hear the matter and seeking orders that the application be set aside or alternatively that the proceeding be either permanently stayed or dismissed. On the same day, the first respondent, OAMPS Limited (“OAMPS”) sought that the application be set aside as against it pursuant to O 9 r 7 of the Federal Court Rules.
4 On 22 November 2002 the tenth respondent, the Australian Securities and Investments Commission (“ASIC”), filed an Amended Notice of Motion seeking similar orders to those sought by the second to seventh respondents, but also seeking in the alternative that the application be dismissed or transferred to the Supreme Court of Victoria. ASIC also sought to substitute its Notice of Appearance, filed on 30 October 2002, with a Notice of Conditional Appearance on the basis that the Court lacked jurisdiction to hear the claims sought in the application.
5 An amended application and amended Statement of Claim (“the amended Statement of Claim”) were filed by the applicant on 9 December 2002, naming eleven respondents, including APRA. It is noted that as the pleadings were not closed the applicant did not require leave to amend its Statement of Claim: see O 13 r 2 of the Federal Court Rules. However, the applicant did require leave to amend his application so as to add any further parties. In the absence of such leave APRA is presently not properly joined as a party to these proceedings.
6 The applicant subsequently filed a notice of motion on 5 February 2003 seeking leave to join APRA and Mr Cowden to the proceeding and seeking leave to amend his application and statement of claim and naming twelve respondents. A number of versions of the Statement of Claim were put before the Court during the course of the hearing. However, as indicated to the parties at the conclusion of the hearing, this judgment will proceed on the basis of the claim as pleaded in the applicant’s Proposed Further Amended Statement of Claim dated 2 May 2003 (“the draft Statement of Claim”).
7 On 17 April 2003 the ninth respondent, Mr Hughes, filed a notice of motion seeking orders that the claims of malicious prosecution and conspiracy made against him in the amended Statement of Claim be dismissed pursuant to O 20 r 2 of the Federal Court Rules, on the grounds that no reasonable cause of action was disclosed or alternatively that the proceeding was frivolous or vexatious.
8 The general factual basis of the applicant’s claims, as revealed in the draft Statement of Claim, can be summarised as follows:
(a) The applicant was a director of OAMPS from February 1995 to 1 April 1999. From 1 November 1996 to 27 November 1998 he held the position of managing director of the company.
(b) From 14 January 1998, the second respondent (Mr Lamont), sought to obtain control of the company and to remove the applicant as managing director. The applicant claims that Mr Lamont entered into arrangements with the eighth respondent (Mr Adler), the third respondent (Mr Austin) and Mr Cowden, pursuant to which various companies with which they were associated would acquire more shares in OAMPS.
(c) As a result of the success of these arrangements, on 27 November 1998 Mr Lamont, Mr Austin and Mr Cowden were elected to the board of OAMPS and Mr Lamont became the chairman of directors. On the same day the applicant was removed as director and managing director of the company by, it is claimed, Mr Lamont, Mr Austin and Mr Cowden on behalf of the company. Mr Lamont held his position until June 2001 and thereafter he acted as a consultant to the company and maintained involvement in its management. Mr Austin and Mr Cowden remained members of the board at the time of the hearing before this Court.
(d) Since the day of the applicant’s removal as director, Mr Lamont, Mr Austin, Mr Adler, Mr Cowden, the fifth respondent (Mr Glasgow), the sixth respondent (Mr Harris), the seventh respondent (Mr Sharkey) and (at least by inference) the fourth respondent (Mr Windebank) embarked on a course of conduct to maintain control of the board of the company and to remove the applicant from the company’s affairs.
(e) One aspect of that course of conduct was that Mr Windebank caused the legal firm Mallesons Stephen Jacques to provide a letter of advice to him (dated 8 September 1998) which contained false allegations against the applicant. Mr Windebank tendered that letter at a meeting of the OAMPS board.
(f) As one aspect of that course of conduct, the applicant alleges (or, at least, may allege) that on 8 December 1998 OAMPS commenced proceedings against the applicant in the Supreme Court of New South Wales (4939 of 1998) in which OAMPS made allegations that the applicant had caused OAMPS to contravene s 205 of the Corporations Act 1989 (Vic) (“the Corporations Law”) by causing OAMPS to purchase shares in Clifford Corporation Ltd in 1998 for the purpose of the applicant retaining his job as managing director. The applicant claims that evidence given and allegations made by some of the respondents in, or in respect of, those proceedings (or, perhaps, in other proceedings in the NSW Supreme Court) was false.
(g) Also as an aspect of this same course of conduct, the applicant claims that the respondents made allegations and provided information to ASIC to the effect that the applicant had contravened s 205 of the Corporations Law in relation to the purchase of the Clifford shares. The applicant claims that Mr Lamont, Mr Austin, Mr Cowden, Mr Windebank, Mr Glasgow, Mr Harris and Mr Adler made the allegations and provided the information to ASIC with reckless indifference as to the truth of the allegations and/or with knowledge of the falsity of the allegations and with the intention (of at least some of them) of causing ASIC to charge the applicant with breaching s 205 of the Corporations Law. The applicant also claims that Mr Lamont, Mr Austin and Mr Cowden, in making the allegations and providing the relevant information, were acting on behalf of OAMPS.
(h) On 28 March 2000 the applicant was charged by ASIC with breach of ss 205(5), 232(6) and 1309(1) of the Corporations Law, arising out of various share purchases in Clifford Corporation Ltd and the alleged giving of misinformation by the applicant to the Australian Stock Exchange . In July 2000 the applicant was committed for trial by the Melbourne Magistrates’ Court. On 9 August 2001 the Commonwealth Director of Public Prosecutions (“the DPP”) filed an indictment against the applicant charging him with breaches of ss 205(5), 232(6) and 1309(1) of the Corporations Law. In July 2002, the DPP entered a nolle prosequi to the indictment in the County Court of Victoria. The applicant claims that both ASIC and the DPP relied upon false information provided by Mr Lamont, Mr Austin, Mr Cowden, Mr Windebank, Mr Glasgow, Mr Harris and Mr Adler in charging and in the prosecution of the applicant.
(i) On 6 November 1998 Mr Adler made statements to ASIC in an interview, and subsequently made a witness statement, alleging that the applicant had telephoned him (Mr Adler) to convey that a company, Loiterton, (with which the applicant was associated) wished to purchase FAI’s shares in OAMPS. Mr Adler claimed that the applicant said he was acting on behalf of Loiterton. The applicant claimed that in February 1999 Mr Adler admitted to the applicant the falsity of this statement. In March 1999 the applicant claims that Mr Adler asked his solicitor, the ninth respondent (Mr Hughes), whether he should make a correcting statement to ASIC. Mr Hughes advised Mr Adler against giving a correcting statement stating, among other things, “what’s in it for you?” On 31 May 1999 Mr Adler was interviewed once more by ASIC, in the presence of Mr Hughes, and did not correct the false allegation made in his initial statement (although it is not alleged that the purported false statement was repeated). On 20 July 2000 Mr Adler corrected the falsity of his initial statement when giving evidence at the committal hearing.
(j) In April 2000 ReAC Ltd, a company carrying on business as a re-insurer, agreed to employ the applicant as its CEO for a period of five years. At around the same time a company, Hunter Hall Investment Management Ltd (“Hunter Hall”) applied for approval from APRA for an increase in its shareholding in ReAC. APRA was made aware of the charges that had been made against the applicant and the applicant’s employment with ReAC. The applicant claims that at a meeting with representatives of ReAC on 11 April 2000, officers of APRA, Mr Gole and Mr Phelps, informed ReAC that it could not employ the applicant because of the charges, and that unless it undertook not to employ the applicant in any capacity whilst the charges were pending against him, it would not grant or even review the application by Hunter Hall for an increased shareholding. As a result ReAC did not employ the applicant.
9 On the basis of these facts and the further facts detailed below the applicant seeks various orders against the first to tenth respondents including declarations, damages and exemplary damages.
10 The hearing of all the notices of motion came before the Court on 1 May 2003. On that day an order was made adjourning, to a date to be fixed, the applicant’s notice of motion to join APRA to the proceeding. The remaining issues raised in the various notices of motion were heard over three days, 1 May 2003, 2 May 2003 and 13 May 2003. Judgment was reserved.
11 On 26 September 2003, the applicant discontinued his action against Mr Adler.
12 The nature of the notices of motion before the Court fall broadly into two categories: first, the issue of the sufficiency or appropriateness of the applicant’s pleading; and secondly, whether this Court is the appropriate jurisdiction in which to hear the claim.
the PLEADING – general CONSIDERATIONS
13 Not all the respondents made all the same complaints about the pleading. In particular, the second to seventh respondents have not applied to strike out the applicant’s amended Statement of Claim. Rather, they opposed the granting of leave to the applicant to file the draft Statement of Claim. In the event that leave to amend is refused, the applicant would be left with his amended Statement of Claim as filed. In that event the second to seventh respondents seek to stay the application on the basis that the amended Statement of Claim was filed without the requisite leave.
14 Interesting as these procedural imbroglios may be, the submissions made by the second to seventh respondents in relation to the inadequacy of the pleadings (including the draft Statement of Claim) were broadly the same as those of the other respondents. The sensible and appropriate course is to treat them in the same way. Consequently I propose to consider whether the proceeding (or any part of it) based upon the draft Statement of Claim, assuming it had been filed, should be dismissed under O 20 r 2 of the Federal Court Rules. If the answer to that question is “no” I will then consider whether the draft Statement of Claim or any parts of it should be struck out under O 11 r 16 of the Federal Court Rules and whether the applicant should be granted leave to amend or re‑plead the Statement of Claim under O 13 of the Federal Court Rules. What further orders should then be made can then be considered.
15 There are two complaints made against the draft Statement of Claim. The first is that it does not disclose a reasonable cause of action and, indeed, cannot be re‑drafted in order to do so. If so, then the appropriate course is to dismiss the proceeding generally or to dismiss a particular claim: see O 20 r 2 of the Federal Court Rules. Before the proceeding or a claim contained therein can be dismissed on this basis the Court must be satisfied that the causes of action are unarguable, or are so untenable that they cannot possible succeed or are manifestly groundless in the sense explained by the High Court in General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 at 129. Recently, in Spotwire Pty Ltd v Visa International Services Inc (2003) ATPR 41‑949, Bennett J summarised the manner in which the test in General Steel has been applied (at 47,410):
“Such an order would only be made where it is clear that there is no real question to be tried (SmithKlein Beecham (Australia) Pty Ltd v Chipman[2002] FCA 674; Douglas v Tickner (1994) 49 FCR 507) or that it is hopeless and bound to fail (Orchard v Comrie(1998) 80 IR 76) or clearly untenable (Faessler v Neale (1994) 29 IPR 1) or hopeless to the extent that it should not be permitted to go to trial (Bray v F Hoffman‑La Roche (2003) ATPR 41-946; [2003] FCAFC 153 per Carr J). It must be plain and obvious that the impugned portions of a statement of claim are unarguable (Murex Diagnostics Australia Pty Ltd v Chiron Corp (1995) 55 FCR 194) or it must be very clear that there is no issue deserving of a hearing (Anderson v Commonwealth Bank of Australia [1995] FCA 787). However, proceedings will not be dismissed summarily merely on the ground that it appears, at the hearing of the motion, that the claim may fail (Australia Building Industries Pty Ltd v Stramit Corp Ltd [1997] FCA 1318).”
16 Even where the applicant’s pleading is not so “untenable” that it should be dismissed, the applicant may still be required to re-plead or amend it. If the pleading can be corrected so as to re‑plead a reasonable cause of action (see O 11 r 16 of the Federal Court Rules) or so as to comply with the requirements of the Rules (see O 13 r 2 of the Federal Court Rules) then it will usually be appropriate to grant leave to re‑plead or amend the Statement of Claim, subject always to the justice of the particular case, including appropriate orders for costs.
17 The second complaint made about the applicant’s pleading is that it did not properly and clearly plead and particularise the integers of the causes of action, such that the respondents were in the position that they were able to know the case that was stated against them. In Dare v Pulham (1982) 148 CLR 658 at 664 the High Court stated that the function of a pleading is to:
“furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it … define the issues for a decision in the litigation and thereby enable the relevance and admissibility of evidence to be determined at the trial … and … give a defendant an understanding of a plaintiff’s claim …”
See also: Banque Commerciale SA en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286 (per Mason CJ and Gaudron J). A failure properly to plead and particularise the integers of the cause of action may result in the relevant pleading being struck out, although usually leave to amend the pleading would be granted (with appropriate orders as to costs) so as to correct the relevant failure.
18 The first issue requiring consideration is therefore whether the relevant pleading discloses an arguable cause of action. If not, then the relevant cause of action should be dismissed or the relevant pleading should be struck out. The second issue is which of these courses should be followed. This will depend, in large part, on whether an arguable cause of action can be pleaded if leave to re-plead or amend is given. If the answer to that question is yes, then it may be appropriate for the pleading to be struck out (rather than dismissed) and, subject to the justice of the case, leave to re‑plead or to amend the pleading could then be granted. If the answer is no, then usually the action, or the cause of action, would be dismissed. However, none of these consequences is inflexible. The overriding issue is the justice of the particular case. This includes the interests of justice in an applicant having access to the courts to vent his or her grievances and have them judicially resolved, and the interests of justice in a respondent being properly forewarned of, and prepared for, the case that is alleged against him or her and in having cases with no arguable prospects of success quickly resolved.
19 For the purpose of testing the sufficiency of the pleading in the draft statement of claim it is to be assumed that the applicant will be able to make out at trial the factual allegations contained within his or her pleading. Of course, it is appropriate and necessary that the applicant and his legal advisers give close consideration to whether or not the applicant can prove at trial the allegations he makes in his pleadings. For present purposes the Court is entitled to assume that such consideration has been and will continue to be given.
20 Against this background, I turn to consider the various causes of action and relief in the draft Statement of Claim.
CAUSES OF ACTION AGAINST CURRENT RESPONDENTS IN THE DRAFT STATEMENT OF CLAIM
21 In the draft Statement of Claim, the applicant denies that he had contravened s 205 of the Corporations Law (for which he was charged). He seeks a declaration against the first to seventh respondents that he had not contravened s 205.
22 The applicant claims that the first to seventh respondents’ conduct in making false allegations to ASIC constituted the tort of malicious prosecution, as they had acted maliciously and with the intention that the applicant would be charged. The applicant claims that the allegations made by them constituted the ‘moving force’ behind the prosecution. The applicant also claims that the first to seventh respondents were liable for a “perversion of the course of justice”.
23 Further, the applicant claims that the first to seventh respondents entered into an agreement or conspiracy to injure the applicant by knowingly and falsely making allegations against the applicant and giving false information to investigating authorities. The first to seventh respondents allegedly implemented this conspiracy by unlawful conduct, that is by conduct that constituted the tort of malicious prosecution and/or the breach of s 64 of the Australian Securities and Investments Commission Act 1989 (Cth) (“the ASIC Act 1989”) and/or s 64 of the Australian Securities and Investments Commission Act 2001 (Cth) (“the ASIC Act 2001) and/or by their intention to injure the applicant and and/or by misleading and deceptive conduct within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (“Trade Practices Act”).
24 The applicant seeks damages from the first to seventh respondents for conspiracy; damages against the first to seventh respondents for “perversion of the course of justice” and damages against all the respondents for malicious prosecution arising from the making of false allegations to ASIC and the DPP. In each instance the damages sought are the loss of employment income, including the loss of employment with ReAC, damage to reputation and mental anguish. Exemplary damages are sought in respect of malicious prosecution, perversion of the course of justice, conspiracy and the damage to reputation and mental anguish, by reason of the intentional wrongdoing of the first to seventh respondents.
25 The applicant seeks a declaration that the conduct of Mr Lamont, Mr Austin and Mr Cowden in relation to the purchase of shares by various companies so as to take control of the Board of OAMPS, constituted a contravention of s 615 of the Corporations Law. Declarations are also sought that as a result of that conduct Mr Lamont breached his director’s duties to the company Steadfast and that a loan to the company Belgate constituted a secret commission to Mr Lamont and Belgate.
26 The applicant also claims that he is entitled, as a person affected by certain conduct of Mr Lamont, Mr Austin and Mr Cowden (and through them, OAMPS) that contravened s 615 of the Corporations Law, to damages pursuant to s 1324 of the Corporations Law and s 1324 of the Corporations Act 2001(Cth) (“the Corporations Act”) and s 1325A(1) of the Corporations Law, being the loss of his employment from 27 November 1998 to the present day.
27 The applicant also claims that the conduct of Mr Lamont, Mr Austin, Mr Cowden and OAMPS constituted misleading and deceptive conduct in breach of s 52 of the Trade Practices Actand/or s 11 of the Fair Trading Act. The conduct of Mr Windebank, Mr Glasgow, Mr Harris and Mr Sharkey is claimed to constitute aiding and abetting the contravening conduct of Mr Lamont, Mr Austin and Mr Cowden and the company. As such the applicant seeks damages for loss of employment income, “irreparable” damage to reputation and mental anguish.
28 In relation to Mr Hughes, the applicant claims that both Mr Hughes and Mr Adler knew that the initial statement by Mr Adler to ASIC was false, they knew that ASIC intended or proposed to rely upon the initial statement to cause the applicant to be charged and that the subsequent charges were materially based on Mr Adler’s initial statement. As such, the applicant claims that the conduct of Mr Hughes constituted the moving force behind the malicious prosecution.
29 The applicant also claims that Mr Hughes’ conduct was false and misleading within the meaning of s 12 of the Fair Trading Act.
30 The applicant also claims that Mr Adler and Mr Hughes reached an understanding that amounted to a conspiracy to injure the applicant. He claims that the two men reached an understanding not to correct the initial statement made by Mr Adler to ASIC until the committal hearing, with the object of injuring the applicant by having charges laid. The result of the conspiracy was that charges were laid.
31 The applicant seeks damages from Mr Hughes for misleading conduct, malicious prosecution and conspiracy. The measure of the relevant damages was the loss and damage resulting from loss of employment income, including the loss of employment at ReAC, damage to reputation and mental anguish. He also seeks exemplary damages against Mr Hughes.
32 The applicant claims that he informed officers of ASIC that the initial statement made by Mr Adler was false and that despite this information, ASIC took no step to ascertain from Mr Adler whether or not his initial statement was true. According to the applicant, ASIC had no proper evidentiary basis to justify the prosecution of the applicant. ASIC’s conduct, in addition to the conduct of the first to seventh and twelfth respondents, and the conduct of Mr Adler and Mr Hughes, was said to be the moving force behind the prosecution and constituted malicious prosecution of the applicant. The applicant also claims that in failing to carefully investigate the truth of the initial statement made by Mr Adler and by causing the charges to be laid, ASIC breached a private statutory duty it owed to the applicant and engaged in the tort of misfeasance in public office. The applicant claims damages and exemplary damages against ASIC for loss and damage caused by its malicious prosecution, breach of statutory duty and misfeasance in public office, being the loss of employment income, including the ReAC employment, damage to reputation and mental anguish.
The s 205 declaration
33 The applicant seeks a declaration that he had not engaged in conduct causing OAMPS to contravene s 205 of the Corporations Law as has been alleged by OAMPS and certain of its directors and officers. The cause of action for the declaration was expressed in the following terms:
“24. OAMPS has alleged that the applicant caused OAMPS to contravene section 205 of the Law by causing it to make the Clifford share purchase for the purpose of benefiting the applicant by retaining his job as OAMPS’ managing director (“ the s 205 allegation”).
25. The s 205 allegation was made by OAMPS through the following directors and officers of OAMPS and those persons personally as set out below, namely:
(a) Through Windebank to ASIC by an anonymous letter dated 7 September, 1998 accusing the applicant of breaching section 205 of the Law;
…
(b) Through Windebank to the Australian Stock Exchange (“the ASX”) on 4 September 1998;
(c) In the NSW proceeding (as defined in paragraph 52 below) brought on the instruction of Lamont, Austin and Cowden;
(d) Through Lamont, Austin and Cowden in proceeding number 50072 of 2002 in the Equity Division of the Commercial List in the Supreme Court of NSW;
(e) Through Windebank and Glasgow to OAMPS’ solicitors, Corrs Chambers Westgarth on or about 28 August, 1998;
(f) Through Windebank to OAMPS’ auditors on or about 8 September, 1998; to Mallesons Stephen Jacques on or about 8 September, 1998 to the ASX on 9 September, 1998; and,
(g) Through the false evidence as alleged in paragraphs 48 and 49 below.
26. The s 205 allegation was false in that:
(a) the applicant did not cause OAMPS to contravene s 205 of the Law;
(b) on 30 June, 1998 the Clifford share purchase was approved on commercial grounds by all seven members of OAMPS’ investment committee and its board of directors including Windebank;
(c) the applicants’ purpose in participating in OAMPS’ decision to make the Clifford share purchase was not for the purpose of keeping his job as OAMPS’ managing director; and,
(d) there was no proper basis for making the allegation.
27. The applicant is entitled to a declaration as against the first to seventh and twelfth respondents that he did not contravene s 205 of the Law as alleged.”
34 The jurisdiction of this Court is confined to the resolution of “matters”: see ss 75 and 76 of the Commonwealth Constitution. A “matter” requires a real dispute concerning an immediate right or liability. A declaration cannot be sought as a means of obtaining an advisory opinion: see Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at 355‑356.
35 As a necessary element in establishing a “right or liability” the applicant may well be entitled and, indeed required, to establish that he did not breach s 205 of the Corporations Law. So, for example, the applicant may well need to establish that he did not breach s 205 of the Corporations Law as a necessary step in relation to some of the other causes of action he has pleaded. It may also be a relevant fact for the purposes of the proceedings in the NSW Supreme Court. However, this does not mean that he is entitled to seek a declaration that he has not breached the law, where his application is unrelated to establishing any such right or liability.
36 In this case it seems to me that a general declaration that the applicant has not breached s 205 of the Corporations Law does not give rise to a “matter”. In any event, in my view it is entirely inappropriate that a declaration be granted in the terms in which it is sought.
37 In my view the application for such a declaration is untenable. That claim for relief must be dismissed under O 20 r 2 of the Federal Court Rules.
MALICIOUS PROSECUTION – FIRST TO SEVENTH RESPONDENTS
38 The first to seventh respondents are alleged to have provided false information and made false allegations to ASIC which resulted in ASIC prosecuting the applicant and that this constituted the malicious prosecution of the applicant.
39 The paragraphs of the draft Statement of Claim purporting to plead the tort of malicious prosecution against the individual respondents are pars [72]‑[74], which provide:
“Malicious Prosecution
‘72. The first to seventh and twelfth respondents in making the false allegations as alleged in paragraphs 46 to 50 above knowing that such allegations were false and likely to lead to the prosecution of the applicant as alleged in paragraph 51 above.
72A. The seventh respondent (Sharkey) with the authority of Mr Lamont, Mr Austin, Mr Cowden and OAMPS communicated with ASIC and the DPP in 1999 enquired when the applicant was to be charged and proffered further evidence to encourage the laying of such charges. He urged such charges be laid quickly and discussed ways of mutual co‑operation in the provision of evidence relating to the Clifford Share Purchase.
72B. By the matters alleged in paragraphs 72 and 72A above the first to seventh and twelfth respondents thereby acted maliciously and with the intention of the applicant being charged in respect of the Clifford Share purchase.
73. The false allegations made by the first to seventh and twelfth respondents by themselves and/or in conjunction with the conduct of Adler and Hughes referred to in paragraph 94 below, was the moving force that led to the prosecution.
74. The conduct of the first to seventh and twelfth respondents in making false allegations to ASIC constituted the malicious prosecution of the applicant (‘the malicious prosecution’) and a perversion of the course of justice (‘perversion of the course of justice’).”
40 The elements of the tort of malicious prosecution are:
“(i) that the defendant was ‘actively instrumental’ in the commencement or continuation of the proceedings against the plaintiff;
(ii) that the proceedings were terminated in the plaintiff's favour;
(iii) that there was an absence of reasonable and probable cause in the defendant’s institution or continuation of the proceedings;
(iv) that there was malice on the part of the defendant in instituting or continuing the proceedings; and
(v) that the plaintiff sustained damage as a result.”
See note in 70 ALJ at 970 and see Davis v Gell (1924) 35 CLR 275 at 282.
41 A number of issues arise in relation to whether this cause of action can be or has been properly pleaded in this case. The first is whether a claim for malicious prosecution can be made where the first to seventh respondents were not the official prosecuting party. The legal answer would appear to be that they can, but only if the respondents are “actively instrumental” in the institution or continuation of the prosecution. Merely telling lies to the police is not tortious unless it constitutes a defamation, which is not alleged in this claim. No civil action lies merely for bearing false witnessto investigating officers: Gregory v Portsmouth City Council [2000] 1AC 419 at 426.
42 It is clear from the authorities that where a respondent gives investigatory authorities certain information, even where that information amounts to damning evidence, that does not necessarily result in the respondent being labelled a “prosecutor”. A distinction is drawn between the mere giving of information and circumstances in which the respondent provides information in such a way that the investigating body is effectively rendered unable to exercise an independent discretion whether to set the prosecution in motion. An action for malicious prosecution is more likely to be successful in circumstances where, for example, a respondent has supported false information with fraudulent witnesses (Pandit Gaya Parshad Tewari v Sardar Bhagat Singh (1908) 24 TLR 884 at 884) or where the respondent has procured the institution of criminal proceedings (Martin v Watson [1996] 1 AC 74 at 76‑77). In effect, it may be necessary to establish that the prosecutorial discretion has been overborne by the malicious acts of those that have provided information and evidence to the prosecutor. As it was put by Dixon J in Commonwealth Life Assurance Society Ltd v Brain (1935) 53 CLR 343 at 379:
“It is clear that no responsibility is incurred by one who confines himself to bringing before some proper authority information which he does not disbelieve, even although in the hope that a prosecution will be instituted, if it is actually instituted as the result of an independent discretion on the part of that authority (Danby v Beardsley; Fanzelow v Kerr). But if the discretion is misled by false information, or is otherwise practised upon in order to procure the laying of the charge, those who thus brought about the prosecution are responsible (Pandit Gaya Parshad Tewari v Sardar Bhagat Sing; Black v Mackenzie) …The rule appears to be that those who counsel and persuade the actual prosecutor to institute proceedings or procure him to do so by dishonestly prejudicing his judgment are vicariously responsible for the proceedings
…
The expression ‘instigate’ is not altogether free of ambiguity but it is used by Sir John Salmond (Law of Torts, 7th ed (1928) p 618) whence the learned Judge seems to have taken the language of the questions put to the jury. In his charge his Honour said:- “When I use the word instigated in that question, I mean really do you come to the conclusion that the police were not acting in the ordinary course of their duties and on information received in arriving at a decision but were in effect the agents of the defendant company as has been suggested. In other words, was the position dominated by the defendant company, and was the police action really action through that of the defendant company.” [Footnotes omitted]
43 Plainly the current pleading is completely inadequate for the purpose of pleading that the first to seventh respondents were the “moving force” behind the prosecution. Indeed, the current pleading goes no further than to allege that they knew that the information was false or were recklessly indifferent to its truth or otherwise.
44 However, it may be that the applicant can amend the pleading to overcome this particular deficiency. In his submissions the applicant asserted that each of the individual respondents made up evidence, made false allegations, sought to support the false allegation with false evidence and then urged ASIC “at length and over a period of time” to lay charges. In particular the applicant referred to Mr Windebank, Mr Glasgow, Mr Harris, and Mr Sharkey “getting together” in September 1998 to create the false allegation that the applicant contravened s 205. The applicant claimed that this allegation was concocted and that it was then supported by statements made by Mr Harris and Mr Sharkey in which they falsely claimed they had made contemporaneous notes of admissions made to them by the applicant. The applicant claimed that such notes were not actually made contemporaneously, but well after the event. Consequently the applicant said that Mr Glasgow, Mr Harris, Mr Sharkey and Mr Windebank knowingly created false evidence and that Mr Lamont, Mr Adler and Mr Cowden procured others at OAMPS to make allegations against the applicant in respect of the contravention of s 205. Assuming that these allegations were properly and adequately pleaded then in my view it would be at least arguable that the second to seventh respondents were the “moving force” behind the prosecution. They are not so pleaded in the draft Statement of Claim.
45 The respondents argue that even if the actions of the respondents were the ‘moving force’ behind the prosecution, the relevant acts were no more than the mere giving of evidence, in respect of which the respondents enjoy an immunity from liability. As such the respondents state that the applicant’s case must fail in any event.
46 The general rule was stated by Starke J in Cabassi v Vila (1940) 64 CLR 130 at 141:
“…the rule of law is that no action lies against witnesses in respect of evidence prepared, (Watson v McEwan), given, adduced or procured by them in the course of legal proceedings. The law protects witnesses and others, not for their benefit, but for a higher interest, namely, the advancement of public justice…” [footnotes omitted]
47 The question is whether this immunity has application to statements made to investigating authorities. There is some authority that it does: see Darker v Chief Constable of the West Midlands Police [2001] 1 AC 435 at 447; Hillman v Black (1996) 67 SASR 490 at 503‑504 contrast 511‑512. On the other hand, there is also authority limiting the immunity in these circumstances: see Martin v Watson (supra) at 88‑89. The distinction may be between “reporting” alleged criminal conduct to an investigator on the one hand and making a statement for the purpose of, or in the expectation of, giving evidence on the other: see Darker v Chief Constable of the West Midlands Police (supra) at 448‑449.
48 Again the current pleading is deficient in identifying just which acts are said to constitute the relevant cause of action. At least some of them could fall within the immunity and probably do so: see, for example, some of the allegations in respect of the proceedings in the New South Wales Supreme Court which expressly refer to affidavit evidence. The draft Statement of Claim does not distinguish between criminal reports preparatory to giving “evidence” and “evidence” falling within the immunity. Nevertheless, I am not satisfied that the applicant is unable to plead a cause of action which does not breach the witness immunity.
49 The respondents also argued that even though the prosecution was terminated by the entry of a nolle prosequi the applicant is nevertheless required to prove his innocence: see Skrijel v Mengler [2003] VSC 270 at [223]‑[227] and see Davis v Gell (supra)at 280‑281. Accepting that this is so, the current pleading is deficient in that the applicant has not pleaded that he is innocent in respect of the charges brought against him. Again, the pleading could be amended to meet this deficiency.
50 The respondents also argued that the draft Statement of Claim is deficient in failing to identify the relevant judicial proceeding (the possibilities being the committal hearing or the County Court proceeding or both), or the relevant prosecutor (the possibilities being ASIC and the DPP). Plainly these are important omissions, particularly in a case where the applicant has to argue that the respondents are the “moving force” behind the prosecution. The effect of that “moving force” may be different in relation to ASIC and the DPP, particularly given that the DPP entered a nolle prosequi.
51 The problems that the applicant may face in seeking to show that the relevant prosecutor’s discretion was “overborne” may prove insuperable. However, I do not think that it can currently be said that it is impossible for the applicant to plead a reasonable cause of action, even if he has not yet done so.
MALICIOUS PROSECUTION – FIRST RESPONDENT
52 The applicant claims that OAMPS is vicariously responsible for the malicious prosecution by the second to seventh respondents.
53 Assuming that OAMPS can be vicariously liable for malicious prosecution (see New Zealand Guardian Trust Co Ltd v Kenneth Steward Brooks [1995] 1 WLR 96, but see Kuwait Asia Bank EC v National Mutual Life Ltd [1991] 1 AC 187), it is clear that the pleading as to the scope of the agency or course of employment of the second to seventh respondents is insufficient to establish a requisite connection between the company and the conduct of the individuals for the purpose of vicarious liability. Even if vicarious liability can no longer be explained on the basis of “master’s tort” or of scope of authority, there still must be some connection between the claimed tortious act of the servant or agent and the “employer”. The pleading does not disclose that connection. Given the nature of the tort it cannot simply be inferred. The relevant pleading must be struck out. However, just as it is possible that the applicant might be able to draft a reasonable and sustainable claim against the second to seventh respondents for malicious prosecution so also, in my view, is there at least a possibility that the applicant could bring a proper claim against OAMPS based upon a claim that it has vicarious liability for the malicious prosecution of the second to seventh respondents.
MALICIOUS PROSECUTION – NINTH RESPONDENT
54 In relation to the role of Mr Hughes, the applicant contended that Mr Hughes “effectively fired the gun”, in that he knew of the falsity of Mr Adler’s evidence but advised Mr Adler not to correct that evidence until the applicant was charged. The substance of Mr Adler’s alleged false evidence was that the applicant had come to him as a representative of Loiterton. The applicant says that this was false. It went to the heart of the s 205 case againstthe applicant. The applicant claims that Mr Hughes had knowledge and power as legal adviser to Mr Adler to cause the false evidence to be corrected. The applicant contended Mr Hughes had abused his power and duty.
55 The applicant does not allege that Mr Hughes made any statement to ASIC or to the DPP. The allegation seems to be entirely related to advice given by Mr Hughes to Mr Adler in relation to statements made by Mr Adler apparently for the purpose of giving evidence in the criminal proceedings. No facts are alleged that would support the allegation that Mr Hughes was the “moving force” for the prosecution. Nor, on the submissions made on behalf of the applicant, can any such argument be pleaded. In any event, the advice given by Mr Hughes would seem to relate to statements which would be protected by the witness immunity.
56 In contrast to the position in relation to the second to seventh respondents, I am satisfied that the claim for malicious prosecution against Mr Hughes is untenable and cannot be re‑pleaded so as to overcome the problems. That claim must be dismissed pursuant to O 20 r 2 of the Federal Court Rules.
MALICIOUS PROSECUTION – ASIC
“103. The prosecution was materially based on the statements and the witness statement.
104. Prior to the applicant being charged Cook and Speed of ASIC were informed by the applicant that on the advice of his solicitor, Mr Tony Hartnell, the statements and the witness statements were false.
Particulars
The information was oral. The particulars to paragraph 86 are repeated.
105. Prior to the laying of the charges Cook and Speed of ASIC, notwithstanding the matters alleged in paragraphs 86 and 104 above, took no step to ascertain from Adler whether the statements were false.
106. ASIC laid the charges and/or caused the charges to be laid against the applicant with reckless indifference to whether the statements and the witness statement were false.
Particulars
The matters alleged in paragraphs 103 to 105, 107 and 108 hereof are relied upon.
107. ASIC had no proper evidentiary basis to justify the prosecution of the applicant in that, as Cook and Speed of ASIC knew:
(a) on 19 July 2002 a nolle prosequi/Notice of discontinuance was entered in respect of the charges because there was no evidence or insufficient evidence to warrant the charges proceeding;
…
(e) the evidence or proposed evidence of OAMPS’ officers and employees and past officers and employees referred to in paragraphs 42 to 44 above, was unreliable in that it was from persons with an apparent animus against the applicant and who had been involved in a bitter boardroom battle between them and the applicant between about August and 27 November 1998 (the board room stoush) so as to render in [sic] their evidence inherently unreliable;
…
108. Before the prosecution ASIC notwithstanding its knowledge that the applicant claimed that Adler’s statements and witness statement were false and the pivotal nature of his evidence to the charges:
(a) failed to ask Adler whether the statements and his witness statements were false despite the opportunity to do so referred to in paragraph 88 above;
(b) failed to take steps to ascertain the identity of the author of the anonymous complaint sent to ASIC on or about 7 September 1998; and
(c) failed to ascertain or take account of the motives of the Lamont associates in giving the evidence,
and thereby turned a blind eye to the veracity of that evidence.
109. ASIC’s conduct as alleged in paragraph 108 above was malicious.
Particulars of malice
(i) ASIC’s malice was that of Cook and Speed;
(ii) The malice is to be inferred from:
(a) The matters alleged in paragraphs 103‑108 above;
(aa) the matters in paragraph 2.2 of the particulars to paragraph 75 above;
(b) causing the charges against the applicant to be heard in Melbourne rather than Sydney notwithstanding that:
(w) the applicant resides in Sydney;
(x) the alleged offences were committed in Sydney;
(y) many of the witnesses in respect of the charges resided in Sydney; and,
(z) the applicant objected to the charges being heard in Melbourne;
(c) instructing or advising the DPP to obtain an adjournment of the applicant’s summons to stay the charges in Victoria to consider arguments raised on behalf of the applicant when the real reason for seeking time was to allow legislation which would make the charges against the applicant charged under Federal rather than State (Victorian) legislation thereby being able to rely on the alleged retrospective provisions of the ASIC Act of 15 July 2001.
(d) Cook voluntarily providing an affidavit on behalf of GIO Insurance in proceedings in the NSW Supreme Court brought by the applicant to enforce and [sic] Directors and Officers Insurance policy which provided for advanced legal defence costs to the applicant.”
110. ASIC’s conduct in addition to the conduct of the first to seventh and twelfth respondents as alleged in paragraphs 41 above, the conduct of Adler and Hughes as alleged in paragraphs 80 to 101 above was the moving force behind the prosecution and constituted a malicious prosecution of the applicant.”
The applicant submitted that ASIC did not have reasonable cause to believe that the prosecution would succeed: see Little v The Law Institute of Victoria [1990] VR 257 at 262‑263 and 276.
58 ASIC submitted that the applicant’s pleading was generally confusing and unsatisfactory. This is plainly correct. It is not clear whether the liability claimed against ASIC is primary or vicarious liability. If it is vicarious liability the pleading as to the primary liability of its officers is wholly deficient. For example, the facts upon which the applicant relies to support an inference of malice would not seem to be capable of giving rise to the relevant inference. There are also apparent inconsistencies in the relevant pleading. If the liability is primary liability it has not been pleaded at all. Plainly the relevant paragraphs of the draft Statement of Claim must be struck out. However, I am unable to say that the applicant cannot plead an action against ASIC, although obviously he faces significant problems in doing so.
PERVERSION OF THE COURSE OF JUSTICE
59 One of the bases upon which the applicant seeks damages is an alleged “perversion of the course of justice”. It may be that the retention of this alleged cause of action was inadvertent in that some other references to the perversion of the course of justice in the original Statement of Claim seem to have been deleted from the draft Statement of Claim. To the extent that some cause of action may be relied upon, it may be that the applicant relies upon the tort of abuse of the process of the court. That tort has been recognised in the United Kingdom: see Speed Seal Products Ltd v Paddington [1985] 1 WLR 1327; Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391. See also Jamieson v The Queen (1993) 177 CLR 574 at 595; Spautz v Gibbs (1990) 21 NSWLR 230 at 270‑280. For present purposes it is sufficient to say that if the applicant intended to plead such a tort, the current pleading is entirely inadequate for the purpose and must be struck out. Given the limited information available, and the fact that the issue was not addressed in submissions, I cannot be satisfied that a cause of action could not be pleaded if the applicant intended to do so.
Conspiracy – FIRST to SEVENTH RESPONDENTS
60 The applicant’s pleading of the claim of conspiracy is contained in par [75] of the draft Statement of Claim and alleges:
“CONSPIRACY
“75. Further, in or about September 1998 to April 1999 the first to seventh respondents agreed or reached an understanding that they would injure the applicant by knowingly falsely alleging that the applicant:-
(a) had stated in effect at the Investment Committee Board Meeting of OAMPS held on 30 June, 1998 that the purpose of the Clifford Share Purchase was to secure his position in the company;
(b) had agreed with Mr Barry Loiterton on or prior to 30 June, 1998 that OAMPS would directly or indirectly finance the purchase by Blenheim and Leisuremark of the OAMPS stake;
(c) on 30 June, 1998 in the presence of Ms Vibovic and Mr Harris had impliedly admitted his knowing involvement in the breach of section 205 by stating that he would go to jail for what he had done; and,
(d) had knowingly mislead [sic] the ASX by forcing Mr Glasgow to delete the reference to interests associated with Mr Loiterton from the letter sent on behalf of OAMPS to the ASX on or about 2 July 1998.
(“the false allegations”)”
61 The applicant then provides lengthy particulars of the alleged conspiracy as it relates to the various respondents. The draft Statement of Claim then makes allegations as to the implementation of the conspiracy, the unlawfulness of the conduct and its effect:
“75A. The first to seventh respondents implemented the conspiracy by:-
(a) Messrs Windebank, Glasgow, Harris and Sharkey and thereby OAMPS causing Mallesons to write the 8 September 1998 letter to Mr Windebank;
(b) Stating to ASIC the matters alleged against them respectively in paragraphs 46 to 49 above;
(c) Giving evidence against the applicant in respect of those matters at the committal hearing;
(d) Giving evidence against the applicant as to those matters in the current proceeding before the Supreme Court of New South Wales;
(e) Mr Harris and Mr Sharkey falsely stating to ASIC and subsequently giving evidence against the applicant in the New South Wales proceedings and the current proceeding before the Supreme Court in New South Wales as to their alleged contemporaneous notes referred to in paragraphs 49(c) and (d) above respectively when in fact no such notes existed;
(f) By Mr Glasgow falsely stating to ASIC and giving evidence to that effect in the New South Wales proceedings and in the current proceeding in the Supreme Court of New South Wales as to the matters alleged in 48(e) and (f) above;
(g) By Mr Lamont, Mr Austin and Mr Windebank and thereby OAMPS acting as alleged in paragraph 50 above.
76. The conduct of the first to seventh respondents as alleged in paragraphs 75 and 75A above was unlawful in that:-
(a) as alleged in paragraph 72 to 74 above it constituted the tort of malicious prosecution;
(b) as alleged in paragraph 60 above it breached section 64 of the ASIC Act 1989 and/or section 64 of the ASIC Act 2001;
(c) it intended to injure the applicant as alleged in paragraph 75 above;
(d) it constituted misleading and deceptive conduct within the meaning of section 52 of the Trade Practices Act by OAMPS, Mr Lamont, Mr Austin, and Cowden as alleged in paragraphs 58 to 61 above.
77. Pursuant to the conspiracy the first to seventh respondents engaged in the conduct alleged in paragraphs 46 to 51 above which caused the prosecution.”
62 In his submissions the applicant characterised the claim against the respondents as a conspiracy to injure the applicant by making false allegations to ASIC, by making false allegations in a letter of demand from Mallesons and by making false allegations in the various proceedings in the Supreme Court of New South Wales proceedings.
63 On the current authorities, the civil tort of conspiracy has two forms; conspiracy by lawful means and conspiracy by non‑lawful means.
64 It would appear that the applicant pleads that the respondents entered into a conspiracy by unlawful means. This involves an agreement or combination between two or more persons to commit an unlawful act with the intention to injure the plaintiff, where acts are done in furtherance of the agreement and the plaintiff suffers consequent injury or damage: see Williams v Hursey (1959) 103 CLR 30 at 122.
65 The applicant submitted that the relevant “unlawful activity” may be a tort or other unlawful act: see Williams v Hursey (supra)at 122 and see the discussion in Latham v Singleton (1981) 2 NSWLR 843 at 861‑864. For present purposes I am prepared to assume that this can include a breach of statute (see Williams v Hursey (supra) at 76‑79 per Fullagar J and 104‑108 per Taylor J). In this case the relevant unlawful acts are pleaded as malicious prosecution, breach of s 64 of the ASIC Act, and misleading and deceptive conduct in breach of s 52 of the Trade Practices Act. The alleged conspiracy to commit unlawful acts in this case raises several interesting issues: whether OAMPS is capable of entering into a conspiracy with its own directors for the purpose of committing unlawful acts; whether it is possible to plead a common law conspiracy where there is a statutory liability imposed upon an aider and abetter (see McKellar v Container Terminal Management Services (1999) 165 ALR 409at 467); whether it is possible to plead a conspiracy to do an act that is tortious and also plead the act itself naming the same respondents as joint tortfeasors (see Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405 at 411) and whether claims for damage to reputation and mental anguish are available in an action for conspiracy, which is primarily directed to remedying financial loss: (see Gregory v Portsmouth City Council (supra) at 432).
66 These issues need not detain me in relation to issues of the adequacy (or otherwise) of the pleading. Except for the alleged breach of s 64 of the ASIC Act, the relevant unlawful acts are all dealt with elsewhere in these reasons. As there noted, the pleading in relation to those unlawful acts is inadequate. The same is true of the alleged breach of s 64 of the ASIC Act. The pleading must be struck out.
67 The applicant also submitted that an intention to injure may be inferred from conduct directed towards an individual that results in damage to that individual: Maritime Union of Australia v Geraldton Port Authority (1999) 165 ALR 67 at 137. The applicant submitted that the conclusion that the predominant purpose of the respondents’ agreement was to injure the plaintiff could be derived from the overt acts themselves. Whether or not this is true in an evidentiary sense, this does not absolve the applicant from the requirement to plead the alleged cause of action in proper form. The current pleading does not do so and must be struck out for this reason also.
68 Some aspects of the current pleading are clearly untenable. For example, the reference to the institution of the proceedings in the Supreme Court of New South Wales and the allegations made in those proceedings as an aspect or element or consequence of the alleged conspiracy is contrary to the general principle (to which there are limited exceptions) that the instigation of legal proceedings, and the allegations made in those proceedings, cannot found a cause of action: see Jamieson v The Queen (supra) at 594‑597.
69 Plainly some elements of the current pleadings should not be repeated in any new pleading. On the other hand, given the allegations that the applicant makes I am not satisfied that a reasonable cause of action in conspiracy could not be pleaded.
CONSPIRACY – NINTH RESPONDENT
70 Paragraph 87 of the draft Statement of Claim states:
“87. On about 1 March, 1999 Adler asked his solicitor Hughes whether he should make the correcting statement to ASIC and Hughes advised him [orally and]in writing by letter dated 1 March, 1999 that he should not do so, stating, inter alia – ‘what’s in it for you?’ (‘the Hughes advice’)”
71 The applicant submitted that Mr Hughes and Mr Adler had an agreement to injure the applicant by unlawful means causing the applicant to be wrongly charged and indicted and that the agreement was a separate conspiracy to the conspiracy alleged against the first to seventh respondents.
72 The relevant alleged unlawful act was that Mr Hughes and Mr Adler conspired to breach s 64 of the ASIC Act 1989 or the ASIC Act 2001. Mr Hughes argued that this allegation was unsustainable on the pleading. The advice given by Mr Hughes on which the applicant seeks to rely as the source of the agreement was given on 1 March 1999, but on any view any breach of the ASIC Act by Mr Adler occurred well before that date. It is not a breach of s 64 to fail to cause someone to correct a false statement. No such conduct is alleged in this case. There is no allegation that false evidence was given by Mr Hughes or even by Mr Adler after Mr Hughes gave his advice.
73 In any event, Mr Hughes’ advice to Mr Adler dated 1 March 1999 is advice and cannot constitute an agreement. The words “What’s in it for you?” were not given any context in the pleading and on their own cannot constitute something malicious towards the applicant or indicate an intention to harm the applicant.
74 To the extent that the unlawful act involved the alleged malicious prosecution by Mr Hughes, I have dealt with that issue elsewhere in these reasons.
75 In my view, the allegation of conspiracy against Mr Hughes is not tenable. Nor on the submissions put to me do I think that any claim could properly be brought by amending the pleading. In my view that claim must be dismissed.
CLAIMS BASED ON ASIC Act s 615 – SECOND AND THIRD RESPONDENTS
76 The applicant sought declarations and damages for contravention of s 615 of the Corporations Law (s 615) by Mr Lamont, Mr Austin and Mr Cowden. The cause of action was pleaded in the following terms:
“44. The applicant is entitled to a declaration that:
(a) the conduct referred to in paragraphs 28 to 41 above by Lamont, Austin and Cowden (“the conduct”) contravened section 615 of the Law because of their related party loans, shareholdings and commercial objectives in OAMPS;
(b) the conduct was in breach of Lamont’s duties owed to Steadfast as its managing director; and
(c) the conduct referred to in paragraphs 31 and 32 above constituted a secret commission to Lamont and Belgate,
(“the conduct”).
44A. The conduct enabled Lamont, Austin and Cowden and through them OAMPS to act as alleged in paragraph 40 above.
45. As a result, pursuant to section 1324(10) of the Law and/or 1324(10) of the Corporations Act 2001 and section 1325A(1) of the Law, the applicant is entitled as a person affected by the conduct to damages, being his loss of employment from 27 November 1998 until the present day.”
77 (Paragraph 40 states that Mr Lamont, Mr Austin and Mr Cowden, acting on behalf of the company, removed the applicant from his positions as managing director and director of the company).
78 Section 615 of the Corporations Law prohibited acquisitions of shares in companies by certain persons and corporations where the acquisition would result in a shareholding above a prescribed amount.
79 An issue arises as to whether the applicant is entitled to damages as a result of any breach of s 615 by the two respondents as alleged. The applicant contends that he is entitled to damages under either the provisions of s 1324 of the Corporations Law or the Corporations Act or pursuant to s 1325(A) of the Corporations Law.
80 The relevant parts of s 1324 of the Corporations Law and s 1324 of the Corporations Act are in substantially identical terms. Section 1324 of the Corporations Act provides, relevantly:
“(1) Where a person has engaged, is engaging or is proposing to engage in conduct that constituted, constitutes or would constitute:
(a) a contravention of this Act; or
(b) attempting to contravene this Act; or
(c) aiding, abetting, counselling or procuring a person to contravene this Act; or
(d) inducing or attempting to induce, whether by threats, promises or otherwise, a person to contravene this Act; or
(e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of this Act; or
(f) conspiring with others to contravene this Act;
the Court may, on the application of ASIC, or of a person whose interests have been, are or would be affected by the conduct, grant an injunction, on such terms as the Court thinks appropriate, restraining the first-mentioned person from engaging in the conduct and, if in the opinion of the Court it is desirable to do so, requiring that person to do any act or thing.
…
(10) Where the Court has power under this section to grant an injunction restraining a person from engaging in particular conduct, or requiring a person to do a particular act or thing, the Court may, either in addition to or in substitution for the grant of the injunction, order that person to pay damages to any other person.”
81 It is clearly within the Court’s power to grant an injunction for breach of s 615 of the CorporationsLaw. The applicant submitted that in order to show that a person is entitled to damages under s 1324(10), that person need only show that the Court has power to grant an injunction under s 1324(1). However, the authorities clearly establish that the power to award damages under s 1324(10) does not stand alone, but is contingent upon the making of an application for injunction under s 1324(1). In the absence of a claim for an injunction the Court has no power to award damages: Executor Trustee Australia Ltd v Deloitte Haskins & Sells (1996) 135 FLR 314 at 323 to 324;(1996) 22 ACSR 270 at 278‑279; Waterhouse v Waterhouse (1999) 46 NSWLR 449 at 488-491; Artistic Builders Pty Ltd v Elliot & Tuthill (Mortgages) Pty Ltd (2002) 10 BPR 19,565 at 19,593; [2002] NSWSC 16 at [132]; GE Capital Australia v Davis (2002) 180 FLR 250 at 268. In my view the applicant’s claim for damages based upon s 1324(1) of the Corporations Law and/or the Corporations Act is unarguable on the basis that he did not make a claim for an injunction pursuant to s 1324(1). The applicant could not now sensibly make such a claim for an injunction.
82 In the alternative the applicant argues that he is entitled to damages under s 1325A of the Corporations Law for breach of s 615. Section 1325A provided, relevantly:
“(1) The Court may make any order or orders (including a remedial order) that it considers appropriate if a person:
(a) contravenes a provision of Chapter 6, 6A, 6B or 6C; or …
…
(3) An order under this section may be made on application by the following:
(a) ASIC
(b) the company, or the responsible entity of the registered scheme, whose securities are involved in the contravention
(c) a member or former member of that company or scheme
(d) a person from whom the relevant interest in the securities were acquired
(e) a person whose interests are affected by the contravention.”
83 The applicant submitted that he has standing under s 1325A(3)(e) as a “person whose interests are affected by the contravention” on the basis that he suffered damage, namely his loss of employment, as a direct result of the contravening conduct.
84 The alleged contravening conduct of Mr Lamont, Mr Austin and Mr Cowden occurred in 1998. The applicant’s removal from the board of OAMPS (being the source of the damage that he claims) occurred in November 1998. Section 1325A was inserted into the Corporations Law in March 2000. It created a new right of action for damages. Prior to its enactment the applicant did not have a right of action in damages (contrast s 737 of the Corporations Law as applicable at the relevant times which made no provision for a person in the position of the applicant to bring an action for damages). In my view it is clear that s 1325A was a substantive provision which did not have a retrospective operation: see Maxwell v Murphy (1957) 96 CLR 261.
85 The applicant sought to avoid this consequence by referring in his submissions to the transitional provision in s 1401 of the Corporations Act, as creating an entitlement to remedies under the Act, such as s 1325A(1), in respect of rights or liabilities created under the Corporations Law. However, in my view it is clear that s 1401 only has application to rights and liabilities in existence at the commencement of the Corporations Act as at 15 July 2001: see Australian Securities & Investments Commission v Plymin (2003) 175 FLR 124 at 196‑199; Shum Yip Properties Development Ltd v Chatswood Investment & Development Co Pty Ltd (2002) 166 FLR 451 at 452: 40 ACSR 619 at 622. It did not have the effect of “creating” new rights where none existed as at the date.
86 The claim by the applicant for damages based on an alleged breach of s 615 of the Corporations Law in 1998 is not arguable. I do not consider that the applicant is able to re-plead this aspect of the claim so as to show a reasonable cause of action. The claim for damages for breach of s 615 of the Corporations Law must be dismissed.
87 The applicant also seeks a declaration that the second and third respondents breached s 615 of the Corporations Law. Once the claim for damages has been dismissed, it is not clear what standing (if any) the applicant might have to seek such a declaration. It may even be that the issue does not give rise to a “matter”. However, it may be possible that the applicant could re-plead his claim for a declaration so as to reveal that there is a “real” dispute relating to it and that he has standing to pursue a declaration. Given this possibility the appropriate course is to strike out the current pleading insofar as it seeks a declaration.
Misleading and deceptive conduct – FIRST TO SEVENTH RESPONDENTS
88 The applicant claims that OAMPS has engaged in misleading and deceptive conduct in breach of s 52 of the Trade Practices Actand that the second to seventh respondents aided and abetted the conduct of OAMPS. In the alternative, the applicant claims that the second to seventh respondents are liable for misleading and deceptive conduct under the Fair Trading Act. The draft Statement of Claim provides:
“Misleading Conduct
58. OAMPS’ conduct as alleged in paragraph 50 above was in trade and commerce within the meaning of section 52 of the Trade Practices Act because of the matters alleged in paragraph 42 above.
59. Lamont, Austin and Cowden’s and OAMPS’ conduct in procuring the giving of false evidence by the respondents constituted misleading and deceptive conduct within section 11 of the Fair Trading Act and section 52 of the Trade Practices Act.
59A. Further, the conduct of Windebank, Glasgow and Sharkey in causing Malleson Stephen Jacques to write the letter of 8 September 1998 referred to in paragraph 3.3 of the particulars to paragraph 75 below was for Mr Windebank’s commercial purposes, that is to force the applicant’s removal from the office of managing director of the company and to prevent having to resign as chairman and/or of the company as alleged in paragraph 3 of the particulars to paragraph 75 below and thus was in trade and commerce within the meaning of s 52 of the Trade Practices Act.
59B. Further, the conduct of Windebank, Glasgow, Harris [and] Sharkey as alleged in paragraphs 46 to 49 above and in paragraphs 75 and 75A below knowingly aided and abetted Lamont, Austin, Cowden and OAMPS [sic] conduct as alleged in paragraphs 58 and 59 above.
60. Further false and misleading statements were made to ASIC by the second to seventh respondents respectively as alleged in paragraphs 48 and 49 above, in contravention of section 64 of the ASIC Act 1989 and/or section 64 of the ASIC Act 2001.
61. As a result of the matters alleged in paragraphs 58 to 60 above the applicant has suffered loss and damage, being loss of employment income, including the APRA loss (as defined in paragraph 71 below), irreparable damage to reputation, and mental anguish.”
89 There are a number of interesting issues raised by these claims. It is unclear, for example, whether certain conduct, in this case board discussions and statements to investigatory bodies, can be considered to be conduct in “trade or commerce”: see the general discussion in Orison Pty Ltd v Strategic Minerals Corporation NL (1987) 77 ALR 141 at 155‑158; Little v Law Institute of Victoria (supra) at 273; Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 604‑605; and Barto v GPR Management Services Pty Ltd (1991) 33 FCR 389 at 394‑395.
90 It is also unclear whether the conduct of the relevant individuals can be treated as conduct of OAMPS for the purpose of s 52.
91 To the extent that these issues involve questions of material fact, the current pleading is inadequate to identify what case the applicant seeks to make. At the very least it is necessary for the applicant to specify in his pleadings what behaviour is said to constitute the misleading or deceptive conduct, in what way that conduct is said to arise in the course of trade or commerce and in what way the conduct was misleading or deceptive and (perhaps) who was misled or deceived.
92 The pleading is also inadequate because it does not expressly plead that the liability (if any) of the second to seventh respondents is based upon s 75B of the Trade Practices Act, rather than s 52, and does not plead the state of mind of the second to seventh respondents, being knowledge of the essential acts that constitute the breach: Yorke v Lucas (1985) 158 CLR 661 at 667.
93 The pleading is also inadequate because the action under the relevant Fair Trading Act (discussed below) must be for conduct in relation to services, but the pleading does not stipulate which services are alleged to have been provided or to whom. It is also unclear whether the sections of the Fair Trading Act have been correctly identified, but this may be the result of the failure to identify which State’s Act is said to have been breached.
94 Plainly the current pleading does not disclose any cause of action and should be struck out. However, I am not satisfied that it would not be possible for the applicant to re-plead a cause of action against the first to seventh respondents based upon breach of either s 52 or s 75B of the Trade Practices Act or the Fair Trading Act.
FALSE AND MISLEADING CONDUCT – THE NINTH RESPONDENT
95 The pleading against Mr Hughes in respect of false and misleading conduct is as follows:
“95. Further, Adler’s section 19 interview and Adler’s witness statement which contained false and misleading statements as alleged in paragraph 84 above was also in contravention of section 64 of the ASIC Act 1989 and/or section 64 of the ASIC Act 2001.
96. Further, Hughes’ conduct as alleged in paragraphs 80 to 95 above was part of his practice as a solicitor and member of the firm, Minter Ellison and thus was in trade and commerce.
97. Hughes’ failure to advise as alleged in paragraph 90 above caused Adler not to correct the witness statements and the witness statement which were false as alleged in paragraph 84 above so as to make Hughes’ conduct false and misleading within section 12 of the Fair Trading Act.”
96 In his submissions the applicant contended that the misleading and deceptive conduct was Mr Hughes’ oral and written advice to Mr Adler that Mr Adler did not need to correct the previous statement made by him to ASIC and Mr Hughes’ inaction in not correcting the information himself. The applicant submitted that in the circumstances Mr Hughes had effectively made the statement or was liable for it, as he knew that Mr Adler was looking to him for advice as to whether the false statement ought to be corrected, but still advised Mr Adler not to correct it. Further, the misleading conduct was pivotal in the laying of charges against the applicant, which in turn caused the applicant to suffer loss.
97 Plainly these submissions are not reflected in the current pleading. At the very least the pleading is inadequate. In relation to Mr Hughes’ alleged inaction, it is not alleged who was misled by it or in what manner his inaction was misleading or how such conduct caused the prosecution. Nor does the pleading reveal in what way that inaction could constitute “trade and commerce” or “conduct” for the purposes of the relevant provisions. Even if the pleading can be read as suggesting that the positive advice given by Mr Hughes was such that he had effectively made the statement himself or was liable for it, the pleading does not reveal who was misled, how the conduct was misleading and how it caused damage.
98 However, more fundamentally, the reference to s 12 of the Fair Trading Act must be in error. The pleading does not give any hint as to which Fair Trading Act is meant. Presumably, the relevant Act is the Victorian Fair Trading Act, but if that is so then there is the obvious difficulty that the relevant acts (or omissions) would seem to have occurred in New South Wales. The relevant provision of the Fair Trading Act 1987(NSW) is s 42.
99 No claim is made against Mr Hughes under the Trade Practices Act. Nor does it appear that a claim could be made under that Act.
100 Finally the pleading does not seek any remedy in relation to the alleged false and misleading conduct claim against Mr Hughes.
101 No cause of action is disclosed and the pleading must be struck out. However, I am not satisfied that no cause of action could be pleaded. Part of the reason for that is that the current pleading (and the submissions in support of it) is so inadequate that it is not possible to ascertain what claim the applicant seeks to make against Mr Hughes for misleading or deceptive conduct. Nevertheless, I am not currently satisfied that it is appropriate to dismiss the claim.
misfeasance in public office - ASIC
“111. Further, in conducting an investigation into the affairs of OAMPS, specifically in respect of the Clifford share purchase, and in recommending to the DPP that charges be laid against the applicant ASIC owed the applicant as a person under investigation by ASIC, a duty:
(a) to carefully investigate the facts;
(b) to only lay charges or cause charges to be laid against him after making all reasonable and proper inquiries; and,
(c) not to lay charges or cause charges to be laid if there was no proper evidentiary basis to justify the institution of the charges.
(“ASIC’s duties”).
112. ASIC, through Cook and Speed, failed to carefully investigate the facts as alleged in paragraph 108 above and charged the applicant and/or caused the charges against the applicant to be laid:
(a) knowing that the applicant and Mr Hartnell had expressed the view that the statements and witness statements were false;
(b) with reckless indifference to the truth of the statements and witness statements; and,
(c) with no proper evidentiary basis for doing so.
Particulars
The reckless indifference is to be inferred from the particulars to paragraph 105 hereof which are repeated.
113. Further, ASIC breached ASIC’s duties as alleged in paragraph 111 above in that:
(a) it failed to carefully investigate the facts as alleged in paragraph 108 above;
(b) as alleged in paragraph 108 above did not make all reasonable and proper inquiries; and,
(c) as alleged in paragraph 108 above there was no proper evidentiary basis to justify the institution of the charges.”
103 The elements of the tort of misfeasance in public office are:
· there is a public officer;
· who owes a public duty (including to the plaintiff as a member of the public);
· which the public officer has breached;
· the breach of duty has caused loss or damage to the plaintiff; and
· the public officer breached the duty with the intention of causing harm to the plaintiff or with the knowledge that he or she was acting in excess of his or her powers.
(Tampion v Anderson [1973] VR 715 at 720; Northern Territory v Mengel (1995) 185 CLR 307 at 345‑348; see generally S Kneebone, “Misfeasance in a Public Office after Mengel’s Case: A Special Tort no More” (1996) 4 Tort Law Review 111 at 121‑134; T Cockburn & M Thomas, “Personal Liability of Public Officers in the Tort of Misfeasance in Public Office” (2001) 9 Torts Law Journal 80 and 245).
104 However, as was observed in Sanders v Snell (1998) 196 CLR 329 at 346‑347:
“…[It] must be accepted that the precise limits of this tort are still undefined. It is an intentional tort. As was said in Mengel: [Northern Territory v Mengel (1995) 185 CLR 307 at 345]
‘ ... 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.’” [footnotes omitted]
105 The applicant submitted that his pleading contained the following allegations which were sufficient for the purpose of identifying liability for the tort:
· Mr Cook and Mr Speed of ASIC are public officers;
· the acts amounting to an abuse of that office were that Mr Cook and Mr Speed knew of the falsity of Mr Adler’s statement, did not contact Mr Adler as to the falsity of the statement and laid charges against the applicant with reckless indifference as to the truth of Mr Adler’s statement and without proper evidence; and
· the applicant suffered loss and damage being loss of employment income, damage to his reputation and mental anguish.
106 The fundamental difficulty with the current pleading of the cause of action is that the applicant appears to allege that ASIC’s liability is primary liability. However, ASIC does not hold a “public office” (as to which, see P Finn, “Public Officers: Some Personal Liabilities” (1977) 51 Australian Law Journal 313 at 314‑315). To the extent that there are particulars given of the elements of the tort those particulars appear to relate to particular officers of ASIC, rather than ASIC itself.
107 On any view the current pleading is totally inadequate. It does not provide any particulars to support the pleading of “malice” as understood in accordance with the authorities. It does not identify the relevant breach of duty. It does not disclose a cause of action. The current pleading must be struck out.
108 On the other hand, it appears to be possible for an employer to be vicariously liable for the misfeasance in public office of its employees: see Racz v Home Office [1994] 2 AC 45; Kuddus v Chief Constable of Leicestershire [2002] 2 AC 122. Consequently it may be possible for the applicant to plead an action in misfeasance in public office against one or more employees of ASIC and then to plead that ASIC is vicariously liable for that tort. Given that possibility I am not satisfied that it is appropriate to dismiss the claim based on misfeasance in public office. However there are significant problems in pleading such an action. Certainly, it is not sufficient merely to assert that the relevant officers did not carry out adequate investigations or that they had inadequate regard to the applicant’s complaints: see Homestead Award Winning Homes Pty Ltd v South Australia (1997) 72 SASR 299 at 315‑316. However, in part due to the inadequacy of the current pleading, I am not satisfied that an arguable case may not be able to be pleaded. I do not think it is appropriate to dismiss the cause of action at this stage.
BREACH OF STATUTORY DUTY
109 The applicant submitted that ASIC is liable to him for breach of its statutory duty. The draft Statement of Claim contains a pleading against ASIC for breach of statutory duty in paragraphs [111]‑[113] extracted at par [102] above, then states:
115. As a result of ASIC’s:
(a) malicious prosecution;
(b) misfeasance in public office; and,
(c) breach of duties,
the applicant suffered loss and damage, being the loss of employment income, including the APRA loss, damage to his reputation and mental anguish.”
110 The tort of breach of public duty is based upon identifying the intention of the legislation to create a private right of action for breach of the relevant statutory duty: see Byrne v Australian Airlines (1995) 185 CLR 410 per Brennan CJ, Dawson & Toohey JJ at 424‑425. It will be relatively rare for such an intention to be inferred: Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 58. Indeed, some Justices of the High Court have suggested that, at least with federal legislation, it might be expected that any conferral of a private right of action would be done expressly: Byrne v Australian Airlines (supra) per McHugh & Gummow JJ at 461‑462; Crimmins v Stevedoring Finance Committee (supra) at 58. Attempts to extend the reach of the tort have proven unsuccessful: see K Stanton, “New Forms of the Tort of Breach of Statutory Duty” (2004) 120 Law Quarterly Review 324; Wentworth v Woollahra Municipal Council (1982) 149 CLR 672.
111 The applicant referred to the statutory power conferred on ASIC to investigate and prosecute breaches of the Corporations Law. The applicant argued that there was to be inferred from that power that ASIC had a duty to perform that power fairly and competently. The applicant submitted that ASIC’s duties were to be found in a presumed statutory intent. The applicant contended that s 246 of the ASIC Act(conferring an immunity on ASIC and its officers for acts done in good faith) indicated that the Parliament intended that ASIC and its officers should be liable if it could be shown that an ASIC member or officer did not act in good faith. The applicant submitted that where an Act does not impose a sanction for a duty imposed for the benefit of the public, and no means of enforcing the duty is laid down, the presumption should be that a civil remedy was intended.
112 The applicant accepted that its argument in relation to breach of statutory duty would be difficult to sustain at trial, but nevertheless submitted that it was arguable.
113 ASIC submitted that any action against it for negligence in investigating and charging the applicant was untenable on two bases: first, s 246 of the ASIC Act confers an immunity for acts done in good faith; and, secondly as a matter of law the tort of negligence is not usually available for the negligent investigation of a criminal act: see Hill v Chief Constable of West Yorkshire [1989] AC 53 at 63; Calveley v Chief Constable of the Merseyside Police [1989] AC 1228 at 1238‑1239; Elguzouli‑Daf v Commissioner of Police of the Metropolis [1995] QB 335 at 347‑348 and Grimwade v State of Victoria (1997) 90 A Crim R 526 at 545‑546. ASIC submitted that where liability would not be imposed for negligence it was unlikely that the Act would be construed as imposing a strict liability for failure to perform a statutory duty (albeit a duty to investigate “fairly and competently”).
114 In my opinion the submissions by ASIC should be accepted. In any event I do not think that it is arguable that an enforceable public statutory duty upon ASIC to investigate fairly and competently can be distilled from the ASIC Act,much less a private duty to do so (see Wilson v State of New South Wales (2001) 53 NSWLR 407 at 422‑423; Cran v State of New South Wales [2004] NSWCA 92 at [50]‑[51]) at least in the absence of some special relationship between the applicant and ASIC (see, for example Costello v Chief Constable of the Northumbria Police [1999] 1 All ER 550 at 563‑564). No such special relationship has been pleaded or is otherwise identified.
115 I am satisfied that the claim for breach of statutory duty is not arguable. It cannot be re-pleaded to disclose a cause of action. The claim based upon the alleged breach should be dismissed.
DECLARATION OF PAYMENT OF A SECRET COMMISSION – SECOND RESPONDENT
116 The applicant seeks a declaration that the conduct of Mr Lamont and Belgate Pty Ltd gave rise to a secret commission. Belgate Pty Ltd is not a party to the proceeding. The applicant’s standing to seek such a declaration is not pleaded. The current pleading must be struck out. I am unable to reach any view as to whether a cause of action could be re‑pleaded, given the inadequacy of the current pleadings.
SUMMARY AND CONCLUSIONS ON PLEADING ISSUES
117 There are other objections made to some other aspects of the pleading, such as the claim for exemplary damages. Given the conclusions that I have reached in considering the various objections it is unnecessary to consider those other objections at this stage.
118 For the reasons given above I consider that the following claims are untenable and cannot be cured by re‑pleading:
· The claim for a declaration that the applicant did not breach s 205 of the Corporations Law.
· The claim for malicious prosecution against the ninth respondent.
· The claim for conspiracy against the ninth respondent.
· The claim for damages against the second and third respondents based on contravention of s 615 of the Corporations Law.
· The claim against ASIC for breach of statutory duty.
These claims should be dismissed pursuant to O 20 r 2 of the Federal Court Rules.
119 The draft Statement of Claim does not otherwise disclose any reasonable cause of action. As discussed, the appropriate course is to strike out the relevant parts of the draft Statement of Claim: see O 11 r 16 of the Federal Court Rules. It is well established that it is not the function of the Court to assist in the redrafting of a defective Statement of Claim and that where a pleading is defective a Court has the power to strike it out in its entirety: Turner v Bulletin Newspaper Company Pty Ltd (1974) 131 CLR 69 at 97; McKellar v Container Terminal Management Services Ltd (supra) at 466. The respondents submitted that the defects in the draft Statement of Claim are so pervasive that it should be struck out entirely: see East West Airlines (Operations) Ltd v Commonwealth (1983) 49 ALR 323 at 327 and McKellar v Container Terminal Management Services Ltd (supra) at 466. I agree. That is the appropriate course in this case.
120 The current Statement of Claim is so inadequate that attempting to amend it paragraph by paragraph is probably futile, but, in any event, is unlikely to result in the clarity that starting afresh may (hopefully) provide. The decision that the Statement of Claim should be struck out then leads to the question whether the applicant should be given leave to re‑plead. In East West Airlines (Operations) Ltd v Commonwealth (supra) Dawson J struck out most of the Statement of Claim, but gave the plaintiff leave to re-plead. I have come to the same conclusion in this case. Notwithstanding the inadequacy of the attempts made to date to plead an appropriate case, I consider that the applicant should be permitted another opportunity to do so. In this regard I note that the allegations that he makes are very serious. Assuming that those allegations are properly pleaded with appropriate particularity then it is for the Court to consider them.
121 The form of any order must reflect the fact that the Statement of Claim currently on file is the amended Statement of Claim. The applicant is seeking leave to amend that amended Statement of Claim in the terms of the draft Statement of Claim (which is the Statement of Claim that I have considered in these reasons). Consequently, the appropriate orders are that leave to amend the amended Statement of Claim be refused, the amended Statement of Claim be struck out and the applicant be given leave to file a further Statement of Claim. Of course those orders are subject to the previous orders dismissing particular causes of action.
122 I will hear the parties as to the time for filing of a further Statement of Claim and as to costs.
123 The applicant should appreciate, however, that this will be the fourth formal attempt to file a Statement of Claim. This does not include the various attempts made, but not ultimately pursued, during the course of the hearing of these interlocutory applications. The time is rapidly approaching where the only inference that can be drawn from the applicant’s failure properly to plead causes of action against the respondents is that he is unable to do so and that further pursuit of his claims is vexatious.
JURISDICTION
124 Although a number of respondents objected to this Court’s jurisdiction to hear the various claims, that issue can only sensibly be resolved once it is clear what claims are actually made and still pursued. The first to eighth respondents submitted that the Court should deal first with any question of amendment of the Statement of Claim in order to confine the claim to tenable causes of action and then address the issue of jurisdiction, if the argument that the Court lacks jurisdiction is still pursued. That seems to be the appropriate manner in which to deal with the multiple applications before the Court.
125 At the end of the hearing I indicated to the parties that I intended to give judgment on what causes of action (if any) were arguable and that I would leave for a later stage the question of jurisdiction. That remains my view. The issue of whether the Court has jurisdiction to hear these claims and the related question of whether the proceeding should be transferred to the Supreme Court of Victoria (and what jurisdiction this Court has to do so) should be adjourned sine die pending the filing of an amended Statement of Claim with liberty for any party to apply.
JOINDER OF APRA
126 The applicant claimed that APRA’s conduct in threatening not to approve the increased shareholding in ReAC if ReAC were to employ the applicant constituted the torts of misfeasance in public office and breach of statutory duty, in respect of which the applicant claims damages.
127 The application by the applicant that APRA be joined was adjourned on the morning of 1 May 2003, on the first day of the hearing, on the basis that the jurisdictional matter must be determined before any application to join APRA is considered (the only claim in the draft Statement of Claim against APRA being in the Court’s accrued jurisdiction) and on the basis of the delivery that morning of the draft Statement of Claim that alleged further matters against APRA. Costs were reserved and the matter adjourned sine die following this judgment and these reasons. For the reasons given above it is clear that the application to join APRA may have substantial difficulties. Nevertheless, the parties and APRA should be given liberty to apply to bring that application (or the question of costs) back on before the Court.
JOINDER OF MR COWDEN
128 The applicant has also applied to join Mr Cowden as a respondent. At the hearing, counsel for the second to seventh respondents were instructed to act on behalf of Mr Cowden and contended that the applicant had failed to establish a basis for his joinder. Given that the second Statement of Claim has been struck out in its entirety with leave given to re‑plead, the appropriate course is to adjourn the application that Mr Cowden be joined sine die (including any question of costs to date) with liberty to the parties and Mr Cowden to bring that application (or the question of costs) back on before the Court.
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I certify that the preceding one hundred and twenty-eight (128) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. |
Associate:
Dated: 11 March 2005
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Counsel for the Applicant: |
P R Hayes QC with R N Cameron |
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Solicitor for the Applicant: |
Madgwicks |
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Counsel for the First Respondent: |
M R Scott |
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Solicitor for the First Respondent: |
Blake Dawson Waldron |
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Counsel for the Second to Seventh Respondents: |
J L Sher QC with I G Waller |
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Solicitor for the Second to Seventh Respondent: |
Clayton Utz |
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Counsel for the Eighth Respondent: |
M W Wise |
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Solicitor for the Eighth Respondent: |
Home Wilkinson Lowry |
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Counsel for the Ninth Respondent: |
F G A Beaumont QC with C C Macaulay |
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Solicitor for the Ninth Respondent: |
Ebsworth & Ebsworth |
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Counsel for the Tenth Respondent: |
P Faris QC with M Wheelahan |
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Solicitor for the Tenth Respondent: |
Australian Government Solicitor |
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Date of Hearing: |
1, 2 & 13 May 2003 |
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Date of Judgment: |
11 March 2005 |
