AGL Energy Ltd v Hammond; Hammond v AGL Energy Ltd

The applicants' notice of motion to strike out the respondents' amended statement of claim and, in the alternative, to seek orders in relation to security for costs

1. I will deal initially with that part of the notice of motion which seeks that the amended statement of claim be struck out. The applicants submitted that the amended statement of claim should be struck out pursuant to r 14.28 of the UCPR.
2. The applicants submitted that the amended statement of claim discloses no reasonable cause of action, has a tendency to cause prejudice, embarrassment or delay in the proceedings, and is an abuse of process. The primary thrust of the submissions was that the amended statement of claim disclosed no reasonable cause of action.
3. I turn then to the amended statement of claim. The respondents allege at paragraph 4 of the statement of claim that the first applicant, AGL Energy Ltd ("AGL"), appointed the second applicant, Midstate Creditcollect Pty Ltd, as its agent to recover monies which AGL alleges is owed to it by the second respondent. The second applicant is pleaded as providing credit related services including debt recovery services. Paragraph 5 of the amended statement of claim pleads that the first applicant is liable for the conduct of the second applicant in relation to the provision of the second applicant's services.
4. Paragraph 6 pleads that the second applicant, in providing services to the first applicant, appointed an agent to locate an address for the second respondent. Paragraph 7 pleads that that agent provides debt recovery services including locating addresses of people who have relocated without providing a forwarding address for creditors. The amended statement of claim refers to such services as "skip tracing".
5. Paragraph 8 pleads that the applicants are liable for the conduct of the agent in the course of "skip tracing".
6. Paragraph 9 is in the following terms: "Each of the defendants owed a duty of care to the general public, being a class of persons which includes the plaintiffs, in the conduct of their business to observe and obey the law."
7. Paragraph 10 pleads that, in breach of the duty referred to in par 9, the agent unlawfully sourced an address for the second respondent/plaintiff from the Australian Electoral Roll. The amended statement of claim further pleads that the agent disclosed the address obtained from the electoral roll to the second applicant and in doing so breached the Commonwealth Electoral Act 1918 (Cth) and "the privacy" of the two respondents. The amended statement of claim further particularised that the agent obtained the address pursuant to s 90B(4) of the Commonwealth Electoral Act.
8. Paragraph 11 pleads that the second applicant, having been provided with the second respondent's address, instructed a field agent to attend the respondents' address and to discuss with the second respondent a debt she allegedly owed the first applicant. The amended statement of claim states, "[b]y instructing an agent to attend the plaintiff's home MCC broke the law and breached the duty of care owed to the plaintiffs." The paragraph also pleads that the first applicant and the second applicant breached the respondents' privacy.
9. Paragraphs 12 - 14 allege that an employee of the second applicant admitted that the respondents' address had been obtained from the electoral roll.
10. In paragraph 16, the respondents plead that the second applicant filed a statement of claim on behalf of the first applicant claiming an amount of $6,117.65. The respondents further plead that by filing that claim the second applicant breached "the duty of care owed" to the respondents and the respondents' privacy. Those assertions are repeated in other paragraphs of the amended statement of claim.
11. Paragraph 19 pleads that the conduct of the applicants breached the respondents' privacy, breached the provisions of the Commonwealth Electoral Act and of the National Privacy Principles. The paragraph pleads that as a consequence of the asserted breaches the respondents have suffered harm and damage. The particulars in the paragraph include the following: It is said that the first respondent had undergone an "oesophagectomy" in January 2004 and that in the latter half of 2013 she began to exhibit symptoms which had been evident in 2003, such as difficulty in swallowing food. The statement of claim particularises that in early 2014 the first respondent had been found to have a non-operable tumour near the oesophagus and underwent radiotherapy in relation to it. The amended statement of claim also sets out that the second respondent in March 2014 was diagnosed with Chronic Lymphocitic Leukaemia. The respondents further plead that they were unable to afford legal representation, and that the first respondent has had to spend time attending to the defence of the claim by the first applicant, and that both respondents have been distressed by the first applicant's claim. They allege that the first applicant's claim has hindered their efforts to cope with and treat their illnesses.
12. In paragraph 20 the respondents make a claim for exemplary damages.
13. In oral argument the unrepresented first respondent, who with leave appeared for his wife, the second respondent, stated that the claim that was brought was for a breach of privacy, or the right to seclusion and in negligence.
14. In essence, in terms of the claim being one in negligence, there is said to be a duty owed by a creditor and anyone it engages as its agent, to any alleged debtor, not to break the law in obtaining the address of an alleged debtor. That duty, on the respondents' argument, also extends to the husband of an alleged debtor.

The test to be applied on an application to strike out a statement of claim under r 14.28 of the UCPR

1. A statement of claim should not be struck out unless it is clear that it shows no reasonably arguable cause of action and if that conclusion cannot be firmly reached the action should be allowed to proceed: Florida Investments Pty Ltd v Milstern (Holdings) Pty Ltd [1972] WAR 148; Transocean Capital Pty Ltd v AFSIG Pty Ltd [2006] NSWSC 806. I note that evidence may disclose that a person has or may have a "reasonable cause of action" yet the pleadings do not disclose this.
2. While there is clearly a distinction between applications to summarily dismiss proceedings under r 13.4 of the UCPR and applications to strike out statements of claim under r 14.28 of the UCPR, in my opinion, the test contained in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; 112 CLR 125 as explained in Spencer v Commonwealth of Australia [2010] HCA 28; 241 CLR 118 is relevant where what is argued is that the statement of claim reveals no reasonable cause of action.
3. The cases show that caution is to be exercised before striking out a statement of claim on this basis. The statement of claim should only be struck out on this basis if it is clearly shown that the plaintiff's case is so clearly untenable that it cannot succeed. There must be demonstrated certainty of outcome: Spencer v Commonwealth of Australia at [55].
4. I have approached the notice of motion in accordance with the above principles.

Application of established principles to the statement of claim

1. It is apparent that one basis of liability pleaded in the statement of claim is said to be breach of both respondents' privacy. This gives rise to the question, is there an actionable right to privacy in the common law in Australia, it not being asserted that any particular statutory provision creates such a right?
2. The current state of the law in relation to whether such a right exists at common law is set out in Basten JA's judgment in Maynes v Casey [2011] NSWCA 156, a case which factually has some limited similarity to the current proceedings. In that case, the applicants for leave to appeal had owned a property in the Cowra Shire. In 2008 the local council alleged that they were in arrears in payment of rates. In October 2008 the council sought to serve the applicants with process to commence proceedings in the Local Court for the recovery of unpaid rates. Service was organised by the council's solicitors. In 2009 the applicants had commenced proceedings in the District Court claiming damages for trespass to land, assault and breach of privacy.
3. In the District Court the claim had been dismissed by Sidis DCJ after hearing and the applicants were seeking leave to appeal from her Honour's decision. In refusing leave, Basten JA, with whom Allsop P agreed, in so far as the case raised a claim for breach of privacy, said as follows: [34] The absence from the common law of an established tort for unjustified invasion of privacy has been noted on more than one occasion. The judgments in the High Court in Victoria Park Racing and Recreation Grounds Co Ltd v Taylor [1937] HCA 45 ; 58 CLR 479 were once thought to stand in the way of the development of such a tort. That view has been held to be wrong: see Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; 208 CLR 199 at [108], Gummow and Hayne JJ, Gaudron J agreeing. The applicants relied on these remarks and on Giller v Procopets [2008] VSCA 236; 24 VR 1 (Maxwell P, Ashley and Neave JJA). Giller was a case in which the Victorian Court of Appeal considered a claim for damages for breach of confidence, arising out of the release of a videotape of sexual activities between a couple, since estranged. In particular, the court considered whether damages could be awarded for emotional distress, falling short of psychiatric injury, caused by the breach of confidence. [35] These cases may well lay the basis for development of liability for unjustified intrusion on personal privacy, whether or not involving breach of confidence: cf John Fairfax Publications Pty Ltd v Hitchcock [2007] NSWCA 364; 70 NSWLR 484 at [124].
4. An application for special leave to appeal to the High Court was refused: Maynes v Casey [2011] HCASL 173. Dicta in the High Court's decision in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; 208 CLR 199 and by Basten JA in Maynes v Casey suggest that there is a real possibility that the common law applicable in this state may well recognise a right to privacy which will give rise to an action for damages. The scope and elements of such a right, if it is found to exist, are not yet known.
5. The current state of the law applicable in NSW is that there is no cause of action for breach of personal privacy. It cannot be said, however, that at some future time the common law will not recognise such a cause of action.
6. I have also had regard the following comments of French CJ and Gummow J in Spencer v Commonwealth of Australia at [25]: Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law.
7. It is important, however, to have regard to how the respondents bring their respective cases in determining whether the amended statement of claim, in so far as a breach of a right to privacy is concerned, reveals a reasonable cause of action.
8. The basic premise underlying the cases brought by the two respondents is that they allege that the address of the second respondent was obtained by an agent engaged by the second applicant, which resulted in a statement of claim alleging that the second respondent owed money to the first applicant in regards to electricity supply. The address of the second respondent is the same as that of the first respondent. The respondents allege that the address was obtained pursuant to s 90B(4) of the Commonwealth Electoral Act and was used for a commercial purpose, which is an offence under s 91B(3).
9. In so far as the first respondent is concerned, the statement of claim was not served on him, nor was he a party to it or alleged to have been liable for the amount claimed in it. I referred earlier to how the particulars of damage are pleaded in the amended statement of claim. In so far as he is concerned, he pleads that because of his wife's illness and their impecuniosity he has had to do what has been necessary on his wife's behalf to defend the claim brought against her. His claim appears to relate to the time he has spent defending the claim brought against his wife, the fact that he says that he is distressed by the claim brought against his wife, and that the claim brought against his wife has hindered his ability to deal with his illnesses.
10. I have approached the strike out application on the assumption that it can be established that the second respondent's address was obtained in the manner alleged and used for a commercial purpose. I note that the applicants dispute that, and say that they lawfully obtained her address. That is a factual matter that will need to be resolved at any trial, and is not a matter which is appropriate to determine on a strike out application. I do not consider that the matter is simply one which can be determined by the construction of the Commonwealth Electoral Act as submitted by the applicants. How the second respondent's address was obtained is clearly a question of fact in my view.
11. In my opinion, given that no right to privacy has yet been acknowledged or defined by the superior courts in Australia, and the fact that the information that was used was not used in any way to take action against the first respondent, the amended statement of claim, in so far as it alleges a breach of the first respondent's privacy does not reveal a reasonable cause of action. If a cause of action for breach of privacy is ultimately recognised at common law, in my opinion, it will at the very least require proof that the breach involved the seeking and obtaining of information concerning the person alleged to have had their right breached and the use of that information in some way to cause damage to that person. Here, on what is alleged in the amended statement of claim, no information was sought concerning the first respondent. The fact that the first respondent's address happened to be the same as that of the second respondent's cannot, in my view, somehow ground some form of relief for the first respondent. Nor is it alleged that the information that was obtained was used in some way against the first respondent.
12. In so far as the claim of the first respondent is said to be based on a breach of his right to privacy, for the above reasons, in my opinion, the amended statement of claim does not disclose a reasonable cause of action.
13. In so far as the second respondent is concerned, essentially her case is that she is an alleged debtor of the first applicant. It is alleged that her address was obtained from the electoral roll and used impermissibly for a commercial purpose. That purpose being that an agent of the second applicant attended her premises and spoke with her concerning a debt she allegedly owed to the first applicant. The second respondent also alleges that by filing a statement of claim against her, her privacy was breached.
14. I note that in relation to the proceedings brought by the first applicant against the second respondent, on the same day that I heard the notices of motion the subject of this judgment, I heard a notice of motion in which the first applicant sought to amend its statement of claim in those proceedings. Ultimately, I was not required to give judgment on that notice of motion as, prior to giving judgment, the first applicant was granted leave to discontinue the whole of those proceedings. I granted leave for the first applicant to file a notice of discontinuance within seven days. It follows that the second respondent's case, that the proceedings brought against her as a consequence of what she says was a breach of her privacy, were discontinued.
15. As I indicated above, the superior courts binding on me have not yet decided that a right to privacy, the breach of which may give rise to a claim for damages, exists at common law and, if it does, what its elements are. An examination of the relevant authorities suggests that there is a real likelihood that the superior courts binding on this Court will acknowledge the existence of a right to privacy, the breach of which can give rise to a claim for damages. Given my opinion about the state of the applicable law, I am unable to come to a firm conclusion that in so far as the second respondent is concerned, the statement of claim does not disclose a reasonable cause of action. In so far as the second respondent's claim is based on an alleged breach of privacy, I decline to strike out the amended statement of claim.

The claims framed in terms of the tort of negligence

1. The respondents also put their claims on an alternative basis alleging that they were owed a duty of care by the two applicants, which is alleged to have been breached by the impermissible use of information obtained concerning the second respondent's address. Again, I have approached this aspect of the argument on the basis that I have assumed that the respondents will prove that the address of the second respondent was obtained and used contrary to the provisions of the Commonwealth Electoral Act.
2. In relation to the first respondent, in essence he alleges that he was the husband of the second respondent. The first respondent further alleges the applicants owed him a duty of care not to breach the law in obtaining and using the address of the second applicant, that they in fact did break the law in using the address of the second applicant and that the duty they owed to him was breached. As I read the particulars of damage, he essentially claims damages for the "distress" he has suffered as a consequence of having to deal with the claim brought by the first applicant against the second respondent, and that he has been hindered in "trying to cope" with certain illnesses because of having to deal with the claim.
3. The second respondent's claim brought in negligence is similar to that brought by the first respondent in that she alleges that she has suffered "distress" from the fact that the information concerning her address was obtained and used in breach of a section of the Commonwealth Electoral Act. She also alleges that she was hindered by the actions of the applicants in "trying to cope with" her illnesses.
4. The respondents' claims based in negligence must be assessed through the prism of the Civil Liability Act 2002 (NSW). There are a number of provisions of that Act which result in the conclusion that the statement of claim does not disclose a reasonable cause of action on behalf of either the first or second respondents.
5. In my opinion, the correct characterisation of the damage as pleaded by the first and second respondents is that they claim "distress", by which I take them to mean mental harm. Indeed it is difficult to understand how simply speaking to a person about an alleged debt and commencing proceedings to recover that debt could cause physical harm. Part 3 of the Civil Liability Act (except s 29), applies to any claim for damages for mental harm resulting from negligence.
6. Section 31 of the Civil Liability Act, which is contained in Pt 3, provides: 31 Pure mental harm - liability only for recognised psychiatric illness There is no liability to pay damages for pure mental harm resulting from negligence unless the harm consists of a recognised psychiatric illness.
7. There is nothing in the amended statement of claim which amounts to an allegation that either of the two respondents allege that as a consequence of negligence by the applicants they have suffered a "recognised psychiatric illness". There is no suggestion that physical harm was in some way caused to the two respondents by virtue of the negligence of the applicants.
8. I also note that even if there was an allegation that the respondents had suffered a recognised psychiatric illness, it would be necessary to consider s 32 of the Civil Liability Act which provides: 32 Mental harm - duty of care (1) A person ("the defendant") does not owe a duty of care to another person ("the plaintiff") to take care not to cause the plaintiff mental harm unless the defendant ought to have foreseen that a person of normal fortitude might, in the circumstances of the case, suffer a recognised psychiatric illness if reasonable care were not taken. (2) For the purposes of the application of this section in respect of pure mental harm, the circumstances of the case include the following: (a) whether or not the mental harm was suffered as the result of a sudden shock, (b) whether the plaintiff witnessed, at the scene, a person being killed, injured or put in peril, (c) the nature of the relationship between the plaintiff and any person killed, injured or put in peril, (d) whether or not there was a pre-existing relationship between the plaintiff and the defendant.
9. In relation to the respondents, even if there was an allegation that the two respondents had suffered a recognised psychiatric illness, I consider that no duty of care was owed to them. In my opinion, it is not arguable that the applicants ought to have foreseen that a person of normal fortitude might, in the circumstances of this case, suffer a recognisable psychiatric illness. The second respondent was an alleged debtor of the first applicant where the amount in dispute was less than $6,000. The first respondent was her husband, and was not a party to the proceedings brought by the first applicant. I do not consider that it can be argued that any person in the position of the applicants ought to have foreseen that a person of normal fortitude might suffer a recognised psychiatric illness as a consequence of the address for the second applicant being obtained in the manner alleged.
10. In my opinion, no duty of care was owed to the first and second respondents that would ground claims in negligence.
11. For the above reasons, in my opinion the amended statement of claim does not disclose a reasonable cause of action on behalf of the first respondent. In so far as the first respondent is concerned, the amended statement of claim is therefore struck out.
12. In so far as the second respondent is concerned, in so far as her claim is based in negligence, the amended statement of claim is struck out.

The security for costs aspect of the notice of motion

1. As I have determined that the claims brought by the first respondent are to be struck out, it is only necessary to consider the orders sought in the notice of motion concerning security for costs in relation to the second respondent.
2. The UCPR provide a specific rule governing the issue of security for costs, being r 42.21. The rule is limited to certain categories of plaintiff, none of which apply to the second respondent.
3. The applicants submitted, however, that the general power to stay proceedings on terms contained in s 67 of the Civil Procedure Act permits the Court to order a stay conditional upon the provision of security for costs, and that the Court should find that it is reasonably necessary here to do so in order to do justice between the parties.
4. In terms of the power of this Court to order a stay on condition that a plaintiff provide security for costs, the applicants relied upon Philips Electronics Australia Pty Ltd v Matthews [2002] NSWCA 157; 54 NSWLR 598. That case considered this issue in the context of the District Court Act 1973 (NSW) and rules applicable at that time. There seems to be no significant difference between the provisions relied upon by the applicants here and the provisions considered by the Court of Appeal in that case.
5. By majority, Mason P and Hodgson JA, Sheller JA dissenting, the Court of Appeal held that s 156 of the District Court Act empowered the District Court to make an order staying proceedings unless and until security for costs was given, where the District Court considered that such an order was reasonably necessary in order to do justice between parties. At [13], Mason P considered that cases where such a power should be exercised must be found to be "exceptional". Hodgson JA was of the opinion that in considering whether to grant such a conditional stay, a judge should have regard to the common law rule that a natural person who sues will not be required to give security for costs on the ground of poverty: at [48]. Hodgson JA expressed the opinion that a stay conditional upon security for costs being provided should not be ordered unless a strong case was made out that such a course was necessary in the interests of justice: at [53].
6. The prospects of success for the second respondent on her claim for damages for a breach of privacy cannot be said to be high, given, for the reasons I have explained, she is relying upon a cause of action not yet fully recognised and defined by the superior courts. I do not, however, accept the applicant's submission that there are negligible prospects of success. I also do not consider that the evidence before me supports a finding that the second respondent's claim is not made in good faith. I also consider that it is relevant to consider whether such a conditional stay should be ordered which may have the effect of stifling an attempt to develop the law in an area where superior courts have suggested the law may develop.
7. I accept that the evidence shows that the second respondent is of limited means, however, that, as the majority in Philips Electronics Australia Pty Ltd v Matthews make clear, is not a reason on its own to grant the conditional stay which the applicants seek.
8. I do not consider that the applicants have shown that this is an "exceptional" case or a sufficiently "strong case" to justify the granting of a stay unless security for costs is provided by the second respondent.
9. I decline to order that the action by the second respondent based on an alleged breach of privacy should be stayed unless she provides security for costs.

The notice of motion to set aside the subpoena issued to the second applicant

1. The respondents have issued a subpoena seeking the production of certain documents from the second applicant. Apparently the initial subpoena did not comply with the requirements of the Service and Execution of Process Act 1992 (Cth). The respondents caused to be issued a further subpoena for production which did comply with that legislation. It is that subpoena which the applicants seek to have set aside.
2. The applicants submitted that the subpoena could only have relevance if the Court determined not to strike out the respondents' statement of claim. No application was made before me that I defer hearing the motion to set aside the subpoena until after I had determined the application to strike out the amended statement of claim.
3. The applicants submitted that the subpoena was an abuse of process as the Court had declined on 25 May 2015 to make any order requiring compliance with a notice to produce in identical terms. The parties before me were in disagreement with what had occurred on 25 May 2015 in that regard, and I indicated I would listen to the sound recording for that day as I was not the presiding magistrate.
4. Having listened to the sound recording, it appears to me that the presiding magistrate declined to make any order in relation to the notice to produce because that issue was not properly before her Honour, and suggested that a subpoena could be issued returnable on 23 June 2015. That is what the respondents did. In those circumstances, I do not consider that it can be said that the issue of the subpoena is an abuse of process.
5. A legal practitioner associated with the second applicant, Dean Bosman, asserted in an affidavit dated 12 June 2015 that the document sought in paragraph 1 of the schedule to the subpoena is a "commercial in confidence document". No information apart from that bold assertion is contained in the affidavit in support of the claim. In my opinion, that provides no basis for setting aside that paragraph in the schedule to the subpoena.
6. In relation to paragraph 2 of the schedule to the subpoena, it was asserted in the legal practitioner's affidavit that those documents "are open to be discovered if the plaintiffs' claim proceeds". I have determined that one aspect of the second respondent's claim is to proceed. The documents sought clearly have some relevance to the proceedings. There is no basis upon which the second paragraph of the schedule to the subpoena should be set aside.
7. In paragraph 3 of the schedule to the subpoena the respondents have sought the production of "A copy of the Commercial Agents License under which MCC carries on its business". The second applicant submits that the document is not relevant. Given the nature of the claim, the business of the second applicant and the document sought, I do not think it can be said that the document is irrelevant. This is particularly so when one has regard to the wide definition of relevance in the Evidence Act 1995 (NSW).
8. In my opinion, no proper basis for setting aside the subpoena in whole or in part has been established and I therefore decline to do so.

Orders

1. The formal orders I make are as follows: 1. In so far as the first respondent is concerned, the amended statement of claim is struck out; 2. In so far as the second respondent is concerned, in so far as her claim is brought in negligence, the amended statement of claim is struck out; and 3. In so far as the notice motion to strike out the amended statement of claim is concerned, there is to be an order that the first respondent is to pay one half of the applicants' costs on the ordinary basis. In so far as between the applicants and the second respondent, there is no order as to costs. The applicants succeeded completely against the first respondent and partially against the second respondent. I consider in these circumstances that a proper exercise of the costs discretion results in the above costs order.
2. As the respondents are unrepresented, I make no order in relation to the costs concerning the notice of motion to set aside the subpoena.
3. The proceedings, including the return of the subpoena, are stood over for mention on a date to be set by the registrar or the presiding magistrate so that the parties may consider their respective positions as a consequence of this judgment. Magistrate M Buscombe Downing Centre Local Court 8 July 2015

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 November 2015