Federal Court of Australia

Palmer v Shipton [2025] FCA 273

ORDERS

THE COURT ORDERS THAT:

1.    Leave to file the proposed Further Amended Statement of Claim dated 10 February 2025 is refused.

2.    Pursuant to r 16.21(c), (d) and (e) of the Federal Court Rules 2011 (Cth), paragraphs 18A to 26 of the Amended Statement of Claim dated 10 October 2024 be struck out.

3.    The proceeding be summarily dismissed pursuant to r 26.01(1)(a) and (c) of the Rules.

4.    The Applicant pay the Respondent’s costs of the proceeding.

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

ORDERS

THE COURT ORDERS THAT:

1.    Leave to file the proposed Further Amended Statement of Claim dated 10 February 2025 is refused.

2.    Pursuant to r 16.21(c), (d) and (e) of the Federal Court Rules 2011 (Cth), paragraphs 15A to 23 of the Amended Statement of Claim dated 10 October 2024 be struck out.

3.    The proceeding be summarily dismissed pursuant to r 26.01(1)(a) and (c) of the Rules.

4.    The Applicant pay the Respondent’s costs of the proceeding.

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

REASONS FOR JUDGMENT

ANDERSON J:

INTRODUCTION

1    By interlocutory applications dated 16 October 2024, the respondent applies for orders striking out the following paragraphs of the applicants' Amended Statements of Claim (ASOCs):

(a)    in proceeding VID 490/2024, paragraphs 18A to 26 of Mr Clive Palmer's Amended Statement of Claim dated 10 October 2024; and

(b)    in proceeding VID 591/2024, paragraphs 15A to 23 of Palmer Leisure Coolum Pty Ltd's Amended Statement of Claim dated 10 October 2024.

2    The respondent seeks to have the relevant paragraphs struck out on the basis that the paragraphs are evasive or ambiguous, are likely to cause embarrassment in the respective proceedings, and/or fail to disclose a reasonable cause of action, under r 16.21(1)(c), (d) and (e) of the Federal Court Rules 2011 (Cth), respectively. Subject to the relevant paragraphs being struck out, the respondent seeks an order summarily dismissing the proceeding on the basis that no reasonable cause of action would be disclosed, or alternatively, that the applicant has no reasonable prospect of successfully prosecuting the proceeding.

3    The respondent relies upon the affidavit of Kimberly Mackay, the respondent’s solicitor, sworn on 16 October 2024. The applicants rely on two affidavits of Mr Sam Iskander, the applicants’ solicitor, sworn on 11 and 12 February 2025.

background

4    The applicants are defendants in criminal proceedings pending in the Magistrates Court of Queensland (referred to as the PLC Prosecution), commenced by complaints made on behalf of the Australian Securities and Investments Commission in February 2018. The charge against PLC is that, on or about 12 June 2012, PLC contravened s 631(1) of the Corporations Act 2001 (Cth) by not making an offer for securities in The President's Club Ltd (TPC) within two months after publicly proposing to make a takeover bid for securities in that company. The charge against Mr Palmer is that he aided, abetted, counselled or procured that offence by PLC.

5    The Commonwealth Director of Public Prosecutions has carriage of the prosecution.

6    In the present proceeding, the applicants sue the respondent as the former chairperson of ASIC, seeking damages for the tort of misfeasance in public office. The applicants, in their submissions regarding the strike out application, have attached Further Amended Statements of Claim (FASOCs). These reasons will focus on the case put forward in the FASOCs, rather than the ASOCs, noting that the amendments proposed to the FASOCs were an attempt to rectify the deficiencies the respondent sought to identify in the ASOCs.

7    The FASOCs, despite being the applicants’ third attempt to articulate the specific case against the respondent, are difficult to follow. To the extent that the core of the applicants’ claims against the respondent can be distilled cleanly, and without seeking to be exhaustive, they involve the following:

(a)    allegations that officers of TPC improperly influenced ASIC’s assessment of the complaint underlying the PLC prosecution and in ASIC’s decision not to investigate complaints that TPC was operating an unregistered time share scheme. It is also alleged that ASIC staff involved in the investigations held conflicts of interest. The basis for the allegations appears to be primarily:

(i)    a series of correspondence between TPC and ASIC in 2015-16, in which TPC sought for ASIC to take enforcement action against the applicants in relation to the applicants’ failure to make an offer to purchase shares in TPC;

(ii)    that ASIC and TPC were required to pay PLC’s costs in a separate proceeding which were subsequently paid by ASIC without a contribution from TPC;

(iii)    an alleged conversation taking place in February 2016 between TPC and the applicants, in which a representative of TPC said that they “had a mate in ASIC”. The applicants allege that it can be inferred that ASIC was aware of such representations being made by TPC, primarily by reference to the same series of correspondence between TPC and ASIC; and

(iv)    ASIC’s knowledge that the timeshare operated by TPC was effectively valueless, such that it was inappropriate for ASIC to procure the applicants to make an offer for the shares in TPC. ASIC’s knowledge of TPC’s financial position was, in turn, said to be inferred primarily from the same set of correspondence between TPC and ASIC, and other documents lodged with it.

(b)    Following the commencement of the PLC Prosecution in 2018, Mr Palmer sent a letter dated 30 September 2019 to ASIC. The letter was addressed to the respondent, and raised Mr Palmer’s concerns of improper influence over ASIC officers, and the conflicts of interests allegedly held by ASIC officers, particularly in relation to ASIC’s decision not to investigate TPC further regarding the applicants’ complaints that it was operating an unregistered timeshare scheme, and ASIC’s handling of complaints made against the applicants.

(c)    ASIC’s response to Mr Palmer’s letter is what, in essence, gives rise to the conduct which the tort is alleged to attach to, albeit the conduct is characterised in a number of different ways. ASIC’s response, dated 1 November 2019 and signed by ASIC officer Ms Hartmann, stated “I have been asked to consider the matters raised in your letter and provide a response”. The response goes on to state that no evidence of TPC’s influence over ASIC was found, and that ASIC had given due consideration to the applicants’ complaint regarding TPC operating an unregistered timeshare scheme.

(d)    The applicants characterise the letter as having been written by Ms Hartmann on behalf of the respondent and ASIC.

(e)    The applicants, without being in a position to plead what particular role the respondent may have played in relation to the letter from Ms Hartmann, make the generalised allegations that the respondent:

(i)    “caused and/or directed” the investigation into the matters contained in Mr Palmer’s letter (the Investigation);

(ii)    “caused and/or directed” an outcome that no further action was to be taken in relation to Mr Palmer’s letter (the Outcome); and

(iii)    “caused or directed” the letter from Ms Hartmann (the Communication).

(f)    Ultimately, the applicants are unsure of whether there actually was an Investigation at all. The applicants say that because TPC did, as a matter of fact, influence ASIC and that because ASIC did, as a matter of fact, have a relevant conflict of interest, the only explanation for the Communication is that the Investigation was demonstrably deficient, or alternatively, that the Communication was false, or alternatively still, that there was no Investigation at all and that the Communication was false.

(g)    Further, without being able to plead with particularity what the respondent did, or what the respondent actually knew, the applicants then allege that the respondent “must have known” that the matters contained in Mr Palmer’s complaint were true and would be found by a basic investigation. The basis for the respondent’s knowledge is, again, left to be inferred primarily from the same series of correspondence between TPC and ASIC, and ASIC’s knowledge (which is itself based on the inferences noted above).

(h)    The applicants allege that the respondent’s role in relation to the Investigation, the Communication, the Outcome, and in “causing and/or supervising and/or directing” the filing of complaints in the PLC Prosecution, involved various invalid or unauthorised acts. Namely, this includes breaches of duties or values at common law, and breaches under the Australian Securities and Investments Commission Act 2001 (Cth), and the Public Governance, Performance and Accountability Act 2013 (Cth). By reason of such breaches, the applicants allege that the respondent’s actions constituted an invalid and/or unauthorised act, and constituted an improper exercise of power under the ASIC Act.

(i)    The respondent is then further alleged to have acted knowingly in excess of his powers, based on his knowledge of the fact of the matters raised in Mr Palmer’s complaint and his knowledge as to the limitations of his powers. In doing so, the applicants invite a further inference that the respondent acted with malice towards Mr Palmer, and with the intention of causing Mr Palmer harm.

(j)    Ultimately, the respondent is said to therefore be liable to the applicants for the tort of misfeasance in public office which the applicants say sounds in damages, “presently calculated to exceed $3.5 million” for each applicant, apparently including the costs of defending the PLC Prosecution and “other proceedings in relation to TPC”.

8    While the summary above has focused on the application made by Mr Palmer, the application by PLC is substantively similar.

LEGAL PRINCIPLES

Pleading rules and general principles on strike out

9    The pleading rules and general principles to be applied on a strike out were not in dispute between the parties and can be summarised as follows.

10    Rule 16.02 of the Rules governs the content of pleadings, setting out what a pleading must and must not do. The relevant parts of r 16.02 for the purposes of the applications are the following:

16.02    Content of pleadings – general

(1)    A pleading must:

...

(d)    state the material facts on which a party relies that are necessary to give the opposing party fair notice of the case to be made against that party at trial, but not the evidence by which the material facts are to be proved;

…

(2)    A pleading must not:

…

(c)    be evasive or ambiguous;

(d)    be likely to cause prejudice, embarrassment or delay in the proceeding; or

(e)    fail to disclose a reasonable cause of action or defence or other case appropriate to the nature of the pleading;

11    The content of the pleading rules in r 16.02 provides the basis for the rules governing the striking out of pleadings. Rule 16.21(1) relevantly provides:

16.21    Application to strike out pleadings

(1)    A party may apply to the Court for an order that all or part of a pleading be struck out on the ground that the pleading:

…

(c)    is evasive or ambiguous; or

(d)    is likely to cause prejudice, embarrassment or delay in the proceeding; or

(e)    fails to disclose a reasonable cause of action or defence or other case appropriate to the nature of the pleading;

12    Relevantly:

(a)    a pleading will be evasive or ambiguous if it is unintelligible or confusing, including where the pleading is vague as to the material factual allegations underlying the claim;

(b)    similarly, a pleading is likely to cause embarrassment if it is generally vague or if it asserts conclusions of liability or wrongdoing from facts which have not been adequately stated, such that the responding party does not have sufficient certainty as to the case to be met: Dare v Pulham (1982) 148 CLR 658; [1982] HCA 70 at 664 (Murphy, Wilson, Brennan, Deane and Dawson JJ); Fair Work Ombudsman v Eastern Colour Pty Ltd [2011] FCA 803 at [18] (Collier J); Spiteri v Nine Network Australia Pty Ltd [2008] FCA 905 at [23] (Edmonds J); and

(c)    a statement of claim will fail to disclose a reasonable cause of action if it is not apparent that the facts pleaded, even if proved, would establish the cause of action that the plaintiffs allege: Wride v Schulze [2004] FCAFC 216 at [25] (Spender, Tamberlin and Bennett JJ). That is, if the claims have no (or only “fanciful”) prospects of success at hearing, then the pleading will fail to disclose a tenable case: see Alcock v Commonwealth [2012] FCA 870 and Vranic v Secretary, Dept of Education, Employment and Workplace Relations [2009] FCA 672.

13    Most fundamentally, and “[m]ost practically”, a pleading is “required to enable the respondent to know, with sufficient clarity, the case which it is required to meet”: NL Investment Group Pty Ltd v Parc Vue Project Botanic Pty Ltd (Trustee) [2020] FCA 711 at [16] (Anderson J).

Pleading claims of misfeasance in public office

14    The respondent submits that there is a particularly high bar for an applicant pleading the tort of misfeasance in public office. Misfeasance in public office is a serious allegation of dishonesty, and so the allegation must be pleaded precisely and with specificity: Commissioner of Taxation v Futuris Corporation Limited (2008) 237 CLR 146; [2008] HCA 32 at [60] (Gummow, Hayne, Heydon and Crennan JJ); Lock v Australian Securities and Investments Commission (2016) 248 FCR 547; [2016] FCA 31 at [124]–[126] (Gleeson J).

15    The respondent submits that it is not enough for an applicant to plead a general set of facts with a bare conclusion that there has been unfairness or impropriety. As Mullins J outlined in Leinenga v Logan City Council [2006] QSC 294 at [64]:

the tort of misfeasance in public office is not easily established. It depends on the impugned act being committed by the public officer with the requisite state of mind both in committing the act and in holding the requisite intention to cause the loss or damage that is alleged to flow from the impugned act. It is a very serious allegation to be made against a person who holds public office. It cannot be made in a broad brush way. It requires particularity in setting out the facts that can, if proven, establish the cause of action.

16    The respondent submits that an applicant must explain why the specific facts and circumstances alleged lead to the conclusion that the particular respondent has committed the tort, dealing with the elements of the cause of action in a coherent way, anchored to the facts: see Lock at [126] (Gleeson J), referring to Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1 at 291–292 (Lord Millett) and NRMA Insurance v Flanagan [1982] 1 NSWLR 585 at 603 (Hunt J).

17    The respondent, accepting that the precise limits of the tort of misfeasance in public office are unsettled, submits that the essential elements of the cause of action are that:

(a)    the respondent, being the alleged wrongdoer, is a public officer or held a public office at the time of the alleged wrongdoing;

(b)    the respondent engaged in conduct, constituted by either an act or omission, that was invalid, unauthorised or otherwise beyond power;

(c)    the conduct occurred in the exercise or discharge, or purported exercise or discharge. of the respondent’s public functions or duties; and

(d)    critically, that the respondent acted with a particular state of mind — namely, that the respondent acted in bad faith. Bad faith in this context may manifest in two circumstances:

(i)    the first circumstance is “targeted malice”, where the public officer engages in the conduct maliciously with the intention of causing injury or harm to the applicant, or for an improper or ulterior purpose;

(ii)    the second circumstance is where the public officer engages in the conduct with either knowledge of, or reckless indifference about, two things. First, that their conduct was invalid, unauthorised or beyond power and, second, that their conduct would probably cause injury or damage to the applicant;

(e)    lastly, the applicant must suffer injury or damage as a result of the public officer’s conduct:

See Farah Custodians Pty Ltd v Commissioner of Taxation [2018] FCA 1185 at [97]–[103] (Wigney J) and the authorities cited therein.

18    The respondent submits that it is the mental element which is the “gravamen” of the tort — the result being that a claim of misfeasance is a deliberate or intentional tort. An applicant can only succeed where a respondent has acted dishonestly or in bad faith, as opposed to merely carelessly or negligently: see Farah at [104]-[105]; Northern Territory of Australia v Mengel (1995) 185 CLR 307 at 347 (Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ); Sanders v Snell (1998) 196 CLR 329 at 344–5 [38] (Gleeson CJ, Gaudron, Kirby and Hayne JJ); Pyrenees Shire Council v Day (1998) 192 CLR 330; [1998] HCA 3 at [124] (Gummow J).

19    The essence of the tort is a dishonest abuse of power, or bad faith in the exercise of public power: Farah at [104]; Three Rivers at 246G.

20    The respondent submits that the need to demonstrate bad faith is reinforced in the present proceedings by s 246 of the ASIC Act, which provides that ASIC and its officers are not liable to an action or other proceeding for damages for or in relation to an act done or omitted in good faith in performance of their legislative functions.

21    It is also worth noting at this stage that the tort of misfeasance in public office is the tort of an individual public officer, for which the individual is personally liable. The authorities make clear that liability for the tort cannot be established by aggregating the acts and knowledge of various officers, nor can a case be built upon a foundation that is a composite of the conduct of a number of individual officers: Grass v Slattery [2018] FCA 1719 at [149]–[162] (Bromwich J); Farah at [108]; Moder v Commonwealth of Australia; Sochorova v Commonwealth of Australia (2012) 261 FLR 396; [2012] QCA 92 at [73] (Wilson AJA, Muir and Fraser JJA agreeing); MJL v State of Western Australia [2015] WASC 348 at [87] (Allanson J).

Alleged deficiencies in FASOC

22    As noted above, the applicants have proposed further amended statements of claim in each of VID490/2024 and VID591/2024. The applicants rely on the proposed FASOCs which they contend have been prepared in order to address the respondent’s concerns, including to ensure that the issues are well understood by the respondent; put the respondent’s various complaints beyond doubt; ensure that the real questions in controversy between the parties can be decided; and to make efficient use of the Court’s time at the interlocutory hearing.

23    The hearing of the interlocutory applications proceeded with the applicants seeking leave to rely upon the FASOCs in each proceeding. The respondent submitted that, notwithstanding the amendments, the FASOCs in each proceeding are defective such that they do not disclose a tenable cause of action and should be struck out and each proceeding summarily dismissed.

24    The respondent submitted that the amended statements of claim filed by the applicants failed to meet the high bar for pleading a claim of misfeasance of public office for four reasons.

25    First, the respondent contends that the applicants have not pleaded any specific conduct by the respondent capable of constituting the tort. In light of the respondent’s complaints, the FASOCs were prepared in order to more clearly particularise the conduct of the respondent. As noted above, under the FASOCs, the central conduct by which the respondent is said to have committed the tort is by “causing and/or supervising and/or directing” the Investigation, the Outcome, the Communication, and the PLC Prosecution.

26    The respondent submits that the ambulatory nature of the language used is such that there is still no real identification of what the respondent himself has actually done.

27    The respondent submits that particular identification of the impugned conduct is essential in order to maintain a claim against another for liability for the tort of misfeasance in public office. Without identifying that conduct, the respondent contends that it is not possible to consider (for example) whether that conduct was beyond power or whether that conduct occurred in the exercise of public functions.

28    Second, the respondent submits that the pleadings reveal that the applicants are attempting to build a case against the respondent by seeking to attribute to him the acts and knowledge of various ASIC officers and employees. The respondent submits that the inclusion of the broad language regarding the respondent’s conduct does not change the fact the applicants still ultimately seek to attribute the respondent with broad-ranging responsibility for the conduct of others, by asserting that the respondent must have “caused”, “supervised” or “directed” the conduct, in effect by virtue of having been ASIC’s chairperson, and so, as a matter of inference, knew the matters giving rise to the applicants’ claim. The respondent contends that the problem is exacerbated by the fact that the conduct complained of is itself vague, and at points, contradictory.

29    The respondent, referring to the authorities noted above, submits that liability for the tort of misfeasance of public office cannot be established by aggregating the acts and knowledge of multiple public officers and attributing them to a single actor. Nor can a case for misfeasance be built upon a foundation that is a composite of the conduct of multiple officers.

30    Third, the respondent submits that to the extent that the applicants have now identified acts by or attributable to the respondent, it remains unclear how those acts are invalid or unauthorised. The respondent submits that the breaches which the applicants allege, even if true, would not render the respondent’s conduct unlawful in the relevant sense required to make out the tort.

31    Fourth, the respondent submits that the applicants have not pleaded the material facts which, if proved, could establish a state of mind necessary to found the tort. The respondent relies upon the observations of Mortimer J (as her Honour then was) in Plaintiff M83/2019 v Morrison (No.2) [2020] FCA 1198 at [118] that “proof a respondent held the requisite state of mind is integral not only to completing the cause of action, but to the nature of the tort of misfeasance itself”. The respondent submits that it is insufficient to assert, as the applicants do, that the Court can draw an “inference” of malice, or of knowledge or recklessness as to the respondent acting beyond power and causing the applicant harm. The respondent submits that to the extent inferences as to state of mind can be drawn, it is only if those inferences are grounded in facts and are reasonably arguable: Webster v Murray Goulburn Co-op Co. Ltd (No 2) [2017] FCA 1260 at [6] (Beach J); FNH United Pty Ltd v United Petroleum Franchise Pty Ltd [2024] VSC 366 at [13] (Nichols J). The respondent submits that that is not the case here.

32    The respondent further submits that even if there were facts to ground an inference of the relevant state of mind, it would also be necessary for the applicants to draw a connection between that state of mind and the conduct said to constitute the unlawful exercise of public power: Plaintiff M83/2019 at [111], [119(e)]. The respondent submits that the pleading must identify what abuse of power the respondent is said to have intentionally engaged in or to have been recklessly indifferent about. The respondent submits that the FASOCs do not attempt to make that connection, instead making bare assertions that the respondent knew or recklessly disregarded the extent of his power.

33    The respondent additionally submits that misfeasance will not be established where there is an alternate hypothesis for the conduct consistent with an honest exercise of power: Plaintiff M83/2019 at [115]; Three Rivers at [186]. The respondent submits that in the present case, the fundamental facts alleged are entirely consistent with the relevant ASIC officers acting with honest motivations in doing what they have alleged to have done – namely, carrying out an investigation at the applicants’ request and separately, laying complaints against the applicants.

Consideration

Complaint 1 and 2: Failure to plead the impugned conduct with sufficient clarity and erroneously seeking to attribute acts and knowledge of various ASIC officers to the respondent

34    In light of the amendments proposed in the FASOCs, it is convenient to discuss the first two complaints together. That is the respondent’s submissions that the FASOCs fail to plead the relevant impugned conduct of the respondent with sufficient clarity, and that to the extent the respondent’s conduct is pleaded, the FASOCs erroneously seek to attribute acts and knowledge of various ASIC officers to the respondent.

35    I am satisfied that the FASOCs do not plead any specific conduct of the respondent capable of constituting the tort of misfeasance in public office. To the extent the applicants have grievances in relation to ASIC’s underlying conduct (namely, in relation to the Investigation, Outcome and Communication), it is clear that the applicants are not in a position to plead what particular role the respondent actually played in the conduct. Nevertheless, the applicants seek to impugn the respondent’s “conduct”, largely by reference to his role as chairperson of ASIC. To the extent the respondent’s conduct is specifically identified by the applicants, the applicants’ claim still seeks to attribute acts and knowledge of various ASIC officers in order to impugn the respondent’s conduct. Without being in a position to plead what particular role the respondent actually played in the underlying conduct, the applicants appear to have little other basis on which to substantiate the serious allegations brought against the respondent.

36    The FASOCs plead at a high level of generality that ASIC or its officers did not adequately investigate matters raised in Mr Palmer’s letter to ASIC dated 30 September 2019, or alternatively, made a false communication regarding the investigation. The FASOCs do not identify with any precision, or at all, what it is that the respondent has done personally either by an act or omission that was invalid, unauthorised, or beyond power.

37    Again, it is helpful to outline the rather complex chain through which the applicants seek to impugn the respondent’s conduct. As best it can be discerned from the FASOCs, the applicants’ underlying grievance is that ASIC’s complaints against the applicants are unmeritorious, and that ASIC was unduly influenced by TPC in filing the complaints against the applicants and in its decision to not investigate TPC further in relation to the complaints made by the applicants. Again, the key basis for the claim brought against the respondent is the letter written by Mr Palmer on 30 September 2019, which was addressed to the respondent, and contained allegations that ASIC had been unduly influenced by TPC. It is important to note that Mr Palmer addressing the letter to the respondent is, in truth, the only substantive hook by which the applicants seek to implicate the respondent in ASIC’s handling of Mr Palmer’s letter.

38    ASIC wrote back to Mr Palmer stating that, having considered the matters contained in Mr Palmer’s letter, there was no evidence of any improper influence over ASIC by TPC, and that ASIC had given due consideration to the complaints made regarding TPC’s operations. As noted above, without being in a position to plead what particular role the respondent may have played in relation to ASIC’s response, the applicants make the generalised allegations that the respondent “caused and/or directed” the Investigation, the Outcome, and the Communication. The applicants allege that the respondent did so in circumstances where it can be inferred that ASIC was, in fact, influenced by members of TPC, and where the respondent must have known that the most basic investigation would reveal that to be the case (where the respondent’s knowledge is premised primarily on an inference of knowledge of ASIC).

39    As noted above, it is apparent from the FASOCs that the applicants are unsure of whether there was in fact an investigation into the matters raised by Mr Palmer’s letter. Given the applicants’ claim that ASIC was in fact influenced by TPC, and that this would have been revealed by the most basic investigation, the applicants plead alternative possibilities based on inference: that the Investigation was deficient; that the Investigation was sufficient, but that ASIC lied about the findings; or that there was no Investigation conducted at all.

40    Again, it is apparent from the way in which the FASOCs are pleaded that the applicants are not in a position to plead what specific role the respondent himself played in any of the conduct alleged. The only circumstance by which the applicants can seek to impugn the respondent’s conduct is due to Mr Palmer’s letter having been addressed to him, which, in effect, is to plead that the respondent’s only involvement is by circumstances of his role as chairperson of ASIC for some time overlapping with the conduct alleged.

41    The applicants in the FASOCs attempted to address the complaint that there is a failure to identify the impugned conduct of the respondent with any clarity by pleading that the respondent has committed the tort of misfeasance by “causing and/or supervising and/or directing” the Investigation, the Outcome, the Communication and the filing of complaints in the Resort Prosecution.

42    The ambulatory nature of these descriptive terms “cause”, “supervise”, “direct”, and the conjunctive “and/or” form in which they are pleaded do not result in any identification of what the respondent himself has actually done.

43    The applicants sought to rely on the reasons of Bathurst CJ in Obeid v Lockley [2018] NSWCA 71 (with whom both Beazley P and Leeming JA agreed) in submitting that causing or directing another person to exercise a power is sufficient to establish an exercise of power. Obeid concerned a claim for the tort of misfeasance in public office brought against two investigators employed by the Independent Commission Against Corruption who, in the course of executing a search warrant, caused a video recording to be made of documents which they knew were outside the scope of the warrant.

44    In particular, the applicants sought to rely on Bathurst CJ’s reasons at [194] of Obeid:

Both Mr Lockley and Mr Grainger contended that causing Mr Curd to record the contents of the documents on video was not an exercise of public power. This argument has no merit to the extent that it is based on the proposition that directing Mr Curd to record the material on video, as distinct from doing it themselves, meant there was no exercise of public power. If, as I have concluded at [119] above, the respondents were public officers, then the fact that they exercise a power by directing or causing someone else to exercise the power, particularly when it is clear that they could have exercised the power themselves, does not mean that they did not exercise the power.

45    While Obeid provides that directing or causing someone to do something can constitute an exercise of public power generally, I am not satisfied that it provides support to the applicants’ argument. The conduct pleaded in Obeid was specifically identified; namely, that Mr Lockley and Mr Grainger examined the relevant document, formed the opinion that it fell outside the scope of the warrant and could not be lawfully seized, but notwithstanding, instructed Mr Curd to record the contents of the document on video. Mr Lockley, Mr Grainger and Mr Curd were all authorised to execute the search warrant, and all participated in its execution. In Obeid, the “causing or directing” was specifically pleaded as an instruction to Mr Curd, at the time of executing the search warrant, to record the contents of documents understood to be outside the scope of the search warrant.

46    The applicants use of the ambulatory language in their FASOCs is not equivalent. In contrast, there is no pleading of how the respondent is said to have “caused and/or directed” the Investigation, the Communication, or the Outcome. The language used seeks to obfuscate from the fact that the applicants are not in a position to plead what specific role the respondent actually played in the underlying conduct, and the fact that no such specific conduct is pleaded.

47    As outlined above, misfeasance in public office is a serious allegation, and one that appropriately requires an applicant to plead their case with particularity, rather than in a broad brush manner. Specific identification of the respondent’s conduct is critical to ascertaining whether the alleged conduct was invalid, unauthorised or beyond power. I am therefore not satisfied that the applicants have pleaded the respondent’s impugned conduct with sufficient clarity.

48    Additionally, the insertion of the above terms in the FASOCs does not change the fact that the applicants still seek to attribute the respondent with broad ranging responsibility for the conduct of other officers of ASIC by asserting that the respondent must have “caused”, “supervised” or “directed” the conduct. For example, a key allegation in the FASOCs is that the respondent “must have known” that ASIC was, in fact, influenced by TPC on the basis of knowledge which the FASOCs allege are to be inferred to ASIC. There is no basis provided as to how the knowledge to be inferred to ASIC (if it can be established) is to then be extended to the respondent personally. Again, this is not surprising. The applicants are unable to plead specifically what the respondent did personally, nor what the respondent personally knew.

49    The applicants have not pleaded or particularised in the FASOCs any facts demonstrating the respondent’s involvement in the underlying conduct. In substance, the FASOCs plead allegations of conduct undertaken by ASIC or certain ASIC officers, which the applicants then seek to attribute to the respondent through the use of the generalised language discussed above, by reference primarily to the fact that Mr Palmer’s letter was addressed to him as the ASIC chair at the relevant time. Such a pleading cannot be properly understood as constituting misfeasance in public office against the respondent personally.

50    It is clear on the authorities noted above that liability for the tort of misfeasance cannot be established by aggregating the acts and knowledge of multiple public officers and attributing them to a single actor.

Complaint 3: Failure to plead how the conduct alleged is said to be invalid, unauthorised or beyond power

51    The applicants have sought to address the third complaint by the amendments made to the FASOCs which attempt to articulate why the applicants say the respondent has breached various statutory duties or requirements. It is a necessary element of the liability of the tort of misfeasance in public office that the purported exercise of power by the public officer be “invalid” in the sense that either there is no power to be exercised or the exercise of the power has miscarried in such a way that it would warrant the setting aside of the administrative action upon judicial review: Mengel at 356 (Brennan J).

52    As noted above, the FASOCs plead breaches of various duties and values under the ASIC Act and the PGPA Act. While breaches of the Acts, if made out, may render particular conduct unlawful, a breach by itself is insufficient to constitute the tort. The authorities make clear that misfeasance in public office 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: Mengel at 345 (Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ), 356 Brennan J and 370 (Deane J). This is considered in further detail below in relation to the fourth complaint.

Complaint 4: Failure to plead facts that could establish that the respondent held a state of mind necessary to found the tort of misfeasance in public office

53    Misfeasance in public office is an intentional tort. The element of malicious intent is integral to and has been described as the very gravamen of the tort. In Plaintiff M83/2019, Mortimer J (as her Honour then was) made the following observations:

[89]    There can be no doubt that this cause of action [misfeasance in public office] requires a high degree of specificity about the alleged state of mind of each of the individual respondents. As the authorities above reveal, in modern case management the Court looks to the substance of the party’s complaints about a proceeding, measured against the basic functions the pleading is intended to serve, and considered the context of the nature and gravity of the allegations made.

…

[115]    Finally, in terms of flaws in the applicants’ case on the critical state of mind element in misfeasance, the authorities are clear that misfeasance will not be established where there is an alternate hypothesis consistent with an honest exercise of power. As the extract at [57] above indicates, and as might be expected for a tort dependent on establishing a deliberate state of mind in a respondent, there is no difficulty in framing a case in misfeasance by reference to inferences, provided a sufficient factual basis for the inferences is pleaded. While in Three Rivers Lord Millett described what is necessary for the tort to be proved at trial, he also made the point that the pleading must identify the primary facts to be proved. This basic level of symmetry between pleading and proof is fundamental. Without it, there is nothing but baseless speculation.

54    The element of malicious intent requires the applicants to demonstrate that the respondent acted with the intention to cause the applicants harm; or had actual knowledge that his conduct was in excess of power, and of the likelihood of harm to the applicants, or at the very least, that he acted with subjective recklessness as to the unlawfulness of his conduct. Whichever element is pleaded, there must be specific facts pleaded to support it. That is because of the serious nature of the allegation.

55    Where the mental element is pleaded as a matter of inference, it is particularly important that the pleadings clearly plead the facts which support the inference: Plaintiff M83/2019 at [42]. As Lord Millett said in Three Rivers at [186]:

[A]n allegation of fraud or dishonesty must be sufficiently particularised, and [] particulars of facts which are consistent with honesty are not sufficient. This is only partly a matter of pleading. It is also a matter of substance. As I have said, the defendant is entitled to know the case he has to meet. But since dishonesty is usually a matter of inference from primary facts, this involves knowledge not only that he is alleged to have acted dishonestly, but also the primary facts which will be relied upon at trial to justify the inference. At trial the court will not normally allow proof of primary facts which have not been pleaded, and will not do so in a case of fraud. It is not open to the court to infer dishonesty from facts which have not been pleaded, or from facts which have been pleaded but are consistent with honesty. There must be some fact which tilts the balance and justifies an inference of dishonesty, and this fact must be both pleaded and proved.

(Original emphasis.)

56    The FASOCs have been amended to plead that the respondent knowingly acted in excess of power; intended to cause the applicant harm; and acted with malice towards the applicants. But for each element, the allegation as to mental state is supported only by inferences, drawn in turn from further inferences (including as to ASIC’s knowledge rather than any personal knowledge of the respondent), assertions and speculation. The facts as pleaded, in my view, do not support an allegation of dishonesty. The inferences upon which the applicants rely to support an allegation of dishonesty are based on a generalised allegation of wrongdoing untethered from any pleaded act, omission or conduct of the respondent and are not particularised in any way which would allow the applicants to prove misfeasance in public office at trial: see Polar Aviation Pty Ltd v Civil Aviation Safety Authority (No. 4) (2011) 203 FCR 293 at [120] (Kenny J).

Strike out and leave to re-plead

57    The amendments to the FASOC in each proceeding do not remedy the defects which exist in pleading the intentional tort of misfeasance in public office against the respondent. For these reasons, leave to amend in the form of the proposed FASOCs is refused. The applicants have, on three occasions, sought to plead their case. The applicants were put on notice as to the deficiencies in their pleadings by letter dated 16 August 2024. Since then, the applicants have made two attempts to re-plead. The fundamental defects in the pleadings remain. Because of the applicants’ failure to identify any act, omission, or conduct of the respondent that could provide a foundation of a tenable claim of misfeasance in public office against the respondent, leave to re plead is refused.

58    Whilst summary orders which prevent a party from pursuing a claim should only be made in a “very clear case”, I am of the opinion that this is such a case: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 (Dixon J). I propose to strike out each of the paragraphs pleading misfeasance in public office identified in the interlocutory applications in each proceeding and dated 16 October 2024. As a consequence, the pleadings in each proceeding will disclose no arguable cause of action and much less one that the applicants have any real prospect of successfully prosecuting. This is not a case where a reasonable cause of action may yet exist on the facts alleged. Rather, the facts alleged by the applicants in each proceeding do not disclose a reasonable cause of action, however they may be pleaded: White Industries Australia Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298 at [47] (Lindgren J).

DISPOSITION

59    Leave to file the proposed FASOCs will be refused.

60    Pursuant to r 16.21(1)(c), (d) and (e) of the Rules:

(a)    in VID 490/2024, paragraphs 18A to 26 of the Amended Statement of Claim dated 10 October 2024 will be struck out; and

(b)    in VID 591/2024, paragraphs 15A to 23 of the Amended Statement of Claim will be struck out.

61    VID 490/2024 and VID 591/2024 will be summarily dismissed pursuant to r 26.01(1)(a) and (c) of the Rules, on the basis that the applicant has no reasonable prospect of successfully prosecuting the proceeding and that no reasonable cause of action is disclosed.

62    The applicants will pay the respondent’s costs of each proceeding.

Associate:

Dated:    28 March 2025