Ainsworth v Burden [2002] NSWSC 172 | Case summary

(1) Objection to the grant of an application for a gaming-related licence may be taken on one or more of the following grounds: (a) that the applicant is not a fit and proper person to be the holder of a gaming-related licence, (b) except in the case of an application to be licensed as an employee - that a person directly or indirectly interested in the application or in the business, or the profits of the business, to be carried on under the gaming-related licence if the application is granted is not a fit and proper person to be so interested,

(c) that a person who is, was or will be a close associate of the applicant is not a fit and proper person to be a close associate of the holder of a gaming-related licence, and, where any such objection is taken, the onus is on the applicant to rebut the objection…" 12 The plaintiff, as I have said, submits that the decision of the Licensing Court at first instance (and on appeal which was by way of full rehearing) was a judgment in rem good against the world, the applicant being the corporation. I was referred to the decision of the Full Court of the Supreme Court in Washington H Soul, Pattinson & Co. Ltd v Ogilvy (1955) 55 S.R. (NSW) 143 and the statement in the judgment of the Court at 147-8: "By s. 5 of the Liquor Act 1912-1946, Licensing Courts for the purposes of the Act were constituted for different districts. By s. 6 it is provided that "Every Licensing Court shall be a court of record, with full power to make all general and other rules necessary for the conduct of its business, and for the enforcement of its orders, adjudications and convictions," and power was given by s. 7 to punish for certain types of contempt. Section 9 deals with the procedure before Licensing Courts, and specifically provides that the Court is to hear and determine all applications on such evidence as seems to them sufficient, but also such evidence is to be given in the same manner, as nearly as practicable, as in Courts of law. The Court sits as in open court, and parties may be heard in person or by their counsel or attorney. By s. 10 every application for a licence must be heard and determined by a Licensing Court and by s. 29 it is specifically provided that an objection to granting of any licence for any premises may be made, inter alia, by the other of such premises. Section 14 authorizes the Court to grant various types of licence including Australian wine licences, and if an application is granted, then, under the terms of s.31 the Court shall authorize the issue by the clerk of the Court to the applicant of a licence and shall record its decision in the manner and form prescribed. Section 18 directs that Australian wine licences are to be in the form prescribed and shall authorize the licensee to sell certain types of liquor on the premises specified in the licence. The form prescribed in the schedule to the Act is expressed to confer this right on the licensee, but in respect only to the premises for which the licence has been issued. Section 159 and reg. 16 made under the Act, provide for the keeping by the clerk of the Licensing Court of a correct record of all licences granted under the Act. The licence granted in respect of the premises now in question was therefore granted pursuant to an adjudication of a Court of record and no other court or tribunal can call in question the efficacy or correctness of such order or adjudication. In the Licensing Court (S.A.) v White (1918) 24 CLR 318, Griffiths CJ said:- "It has often been pointed out that … a licence for the sale of liquor is granted after consideration of the fitness both of a person and of premises. It is a single licence granted after consideration of both matters. An attempt was made in argument to treat a licence as divisible, so that it should be regarded as a licence to a person and separately as a licence for premises, but there is nothing in the Act to justify such a division". ((1918) 24 CLR at 321) The effect of the making of an order for the grant of a licence is that it operates as a judgment in rem in relation to the premises involved and is conclusive against all the world. "A judgment in rem I concede to be an adjudication pronounced (as indeed its name denotes) upon the status of some particular subject matter by a tribunal having competent authority for that purpose. Such an adjudication, being a most solemn declaration from the proper and accredited quarter that the status of the thing adjudicated upon is as declared, concludes all persons from that the status of the thing adjudicated upon was not such as declared by the adjudication". (Smith's Leading Cases 13th ed. (1929), vol. 2 pp 666, 667.) This definition was cited with approval in Clifford v Timms (1907) 2 Ch. 236, at 244, affirmed on appeal ((1908) A.C. 12). Not only are the owner of the premises and licensee estopped from setting up that the premises were unlicensed, but this attribute of the premises cannot be called in question by any other person. The status of the premises is settled by the order of the Licensing Court, and neither the parties nor their privies nor any other person, can dispute that order. So long as the licence remains in force, untransferred and unremoved, the premises must be taken to be licensed premises for all purposes and in all Courts". 13 For the defendant it was contended that insofar as the fitness of Mr Ainsworth personally was an issue in common, that is, an issue in the Licensing Court proceedings and will be an issue in the defence case in the defamation action, the findings of the Licensing Court were as-it-were "in personam" and thus collateral to the decision to issue the relevant licence to the applicant corporation. I reject this submission. The granting of the licence is a judgment in rem in which, in my view, it can be taken there to have merged the findings in favour of that person to whom objection was taken under the Registered Clubs Act as a basis for the rejection of the licence, a fortiori when the "person" whose connection with the corporation which would ultimately be granted the licence bore the onus of proving personal fitness. 14 A perusal of the particulars of truth delivered on 5 February 2001, that is, 2 years and five months after the successful ruling by Magistrate Collins on 17 August 1998 (but before the unsuccessful appeal by the objectors) gives the clear impression of the overall commonality of issues concerning the plaintiff's fitness. In my view no other characterisation can fairly be made. 15 It was also argued for the defendant that the decision of the Licensing Court is not "final" in the sense that the question of fitness can be raised again. This may technically be so, but it is not in fact the case. This Court must give recognition to the finality of those proceedings represented by the judgment at first instance and by the Full Bench of the Licensing Court. Any proceedings based upon allegations of unfitness in Mr Ainsworth to preclude the corporation holding that licence would no doubt involve Mr Ainsworth again having to discharge the onus to prove to the contrary and would have to be considered fresh proceedings. 16 I am persuaded by the arguments for the plaintiff on the first basis to make the orders sought. 17 The second basis of the plaintiff's attack was under SCR Pt 15 r 26(1)(b) on the basis that the pleading and its particularisation has a tendency to cause prejudice, embarrassment or delay in proceedings. It is to be noted that the publication complained of having taken place in 1993, this will be an all issues jury trial. 18 As the argument developed it was also apparent that the plaintiff was relying upon subrule (1)(c) that the litigation or attempted litigation of the defences of truth and comment being based upon this same material was an abuse of process. Both parties relied upon the decision of Hunt CJ at CL in Haines v Australian Broadcasting Corporation (1995) 43 NSWLR 404. The plaintiff relied upon the following passages at 410-414: "The Australian Film Finance Corporation is not, of course, entitled to the benefit of the ruling by Levine J upon the basis of any principle of either res judicata or issue estoppel, as the causes of action are not the same, and that determination was not one between the same parties or their privies: Blair v Curran (1939) 62 CLR 464 at 531. There is nevertheless a line of authority to which I have been referred which demonstrates that, notwithstanding the absence of any issue estoppel, a party's attempt to re-litigate against another party an issue which he has already lost may amount to an abuse of process" (at 410B). 19 His Honour examined the evolution of authorities commencing with Reichel v The Bishop of Oxford (1889) 14 App Cas 259 citing from Reichel v McGrath (1889) 14 App Cas 665 at 668-669 Lord Halsbury LC statement: "… a scandal to the administration of justice if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceeding to set up the same case again. … it surely must be in the jurisdiction of the Court of Justice to prevent the defeated litigant raising the very same question which the Court has decided in a separate action" (at 410F). 20 His Honour referred to McIlkenny v Chief constable of the West Midlands [1980] QB 283 and the appeal to the House of Lords sub. nom Hunter v Chief of the West Midlands [1982] AC 529 and said as follows: "The speech of Lord Diplock, with which the other members of the House of Lords agreed, made it clear that issue estoppel was inappropriate where the proceedings were not between the same parties or their privies (at 540-541), but the decision of the Court of Appeal to strike out the plaintiff's statements of claim was upheld upon the basis that it was an abuse of process, being no more than a collateral attack in civil proceedings upon the decision of a criminal court of competent jurisdiction, and thus against public policy (at 542). Reichel v Magrath was again accepted as stating the correct principle (at 542), as was the judgment of AL Smith LJ in Stephenson v Garnett [1898] 1 QB 677 at 680- 681: "… the court ought to be slow to strike out a statement of claim or defence, and to dismiss an action as frivolous and vexatious, yet it ought to do so when, as here, it has been shown that the identical question sought to be raised has already been decided by a competent court." Agreement was expressed with Goff LJ that evidence which had not been given in the earlier case could be considered in a collateral attack upon the finding of a court of co-ordinate jurisdiction only if it was such as "entirely changes the aspect of the case". The relevant principle relating to abuse of process was stated by Lord Diplock in this way (at 536): "My Lords, this is a case about abuse of the process of the High Court. It concerns the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people." His Lordship went on to make it clear that the categories of circumstances in which the court has a duty (not merely a discretion) to exercise "this salutary power" were not fixed". 21 Hunt CJ at CL cited from the judgment of French J in Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275 at 279: "The possible varieties of abuse of process are only limited by human ingenuity and the categories are not closed. … An attempt to litigate in the court a dispute or issue which has been resolved in earlier litigation in this or another court or tribunal may also, according to the circumstances, constitute an abuse of process even if not attracting the doctrines of res judicata or issue estoppel. Underlying the power that courts have assumed to stay or dismiss proceedings for abuse of process is a policy of preventing waste of judicial resources and their use for purposes unrelated to the determination of genuine disputes. There is, in my opinion, another element to be considered and that is the necessity to maintain confidence in and respect for the authority of the courts." 22 His Honour considered Re Thomas Christy Ltd (In Liq) [1994] 2 BCLC 527 as follows: "… the managing director of that company (a man named Manson) sought to prove in the liquidation for a sum representing his claim for wrongful dismissal. Mr Manson had previously been the respondent to an application by the Secretary of State for his disqualification as a director by reason of his conduct as such. A finding had been made against him that he was unfit to be concerned in the management of a company, having acted dishonestly or improperly in various respects. Such findings were held in this action to have both individually and collectively given rise to the right to dismiss him summarily as the managing director (at 530). The liquidator was not a privy of the Secretary of State (at 531). Mr Manson's attempt to re-litigate that issue in his wrongful dismissal claim was held to be an abuse of process, Jacob J saying this (at 537): "… I formed the clear view that to allow re-litigation of the service contract issue would be an abuse of process. It would in the words of Lord Diplock 'bring the administration of justice into disrepute amongst right- thinking people'. The Companies Court of the Chancery Division of the High Court has found, after a full trial, Mr Manson guilty of the five wrongful acts specified above. To allow re-litigation of those before the self-same court would seem absurd to Joe Citizen who through his taxes pays for the courts and whose own access to justice is impeded by court congestion. Doing a case twice over would make no sense to him: all the more so if he was told that the costs of this would in all likelihood be borne by innocent creditors of the company which Mr Manson ran. During the hearing I therefore ruled that such re-litigation should not be permitted…" (at 413D-F). 23 His Honour then went on to say (at 414A-D): "There are obviously limitations to striking out pleadings or causes of action as an abuse of process upon the basis stated in Reichel v Magrath and elaborated in the cases to which I have referred. The issue determined in the earlier case which is sought to be litigated in the later case must be one which the party propounding it in the latter lost in the former. The principle does not work in reverse to enable the party who won the issue in the earlier case to prevent it being litigated in the later proceedings by someone who was not a party in the former . It must be an issue which was necessarily determined in the earlier case, and one of importance to the final result. It must have been properly argued - by which I mean that it is readily apparent from whatever records there are of the earlier case that the tribunal which decided it was an appropriate one to do so, that the parties were appropriate contradictors and that the issue was regarded by them as one of importance in that case. In normal circumstances, the decision disposing of the issue must have been a final one - by which I mean that it is not subject to appeal. (The filing of a notice of appeal may clearly be seen in some circumstances as merely seeking to delay the inevitable.) There may also be circumstances in which, notwithstanding the absence of an appeal, it is clear that the earlier decision has overlooked some binding authority, or that it has caused the unsuccessful party a manifest injustice. As most of the cases have emphasised, all the circumstances of the determination in the earlier case may be considered, and there can be no definitive statement of the circumstances which will inevitably lead to a finding of abuse of process" (emphasis added). 24 Reliance is especially placed by the defendant on that part of his Honour's judgment cited above which states "the principle does not work in reverse order to enable the party who won the issue in the earlier case to prevent it being litigated in the later proceedings by someone who was not a party in the former". To re-word it to suit the circumstances of this application, "the principle does not work in reverse" to enable Mr Ainsworth who won the issue in the Licensing Court to prevent it being litigated in the defamation proceedings by Mr Burden who was not a party in the Licensing Court proceedings. The principle as I understand to which his Honour is referring as evolving from Reichel v Magrath is that a party's attempt to re-litigate against another party an issue which he has already lost may amount to an abuse of process. 25 The stark reality of course is that neither Mr Ainsworth nor Mr Burden were parties in the Licensing Court. Mr Ainsworth's company was the applicant for the licence. However it was fundamental to that litigant (the company) that Mr Ainsworth as the person associated with it establish that he was a fit person and thereby that the company was entitled to the grant of the licence. Further, the issue which is being sought to be litigated in the libel action is one being propounded by Mr Burden who did not "lose it" in the former proceedings before the Licensing Court. 26 Be that as it may the issue, namely Mr Ainsworth's fitness, was an issue necessarily determined in the Licensing Court proceedings and was one of importance to the final result. It is, in my view, readily apparent from the judgments of the proceedings in the Licensing Court that the tribunal which decided that issue was an appropriate one to do so. It is the more apparent by reason of the statutes and the parties namely the applicant corporation and Mr Ainsworth's special role under the statute bearing the onus of proving his fitness, the police and the Director were appropriate contradictors and the issue was obviously regarded by them as one of importance in that litigation. 27 The circumstances here compared to the line of authorities reviewed by Hunt CJ at CL are to say the least different as well as curious. One observation fairly can be made is that Mr Ainsworth cannot be described as a party seeking to propound in a later proceedings an issue successfully propounded by him (as he was required by law) in earlier proceedings. The issue is being "propounded" by the defendant Mr Burden. 28 The statement by his Honour "the principle … in the former" if given the meaning the defendant here submits it should be given, would with respect, operate in a way no excepted by the principle to which his Honour was referring but quite contrary to it. 29 Of the authorities cited by his Honour perhaps Re Thomas Christy (In Liq) [1994] 2 BCLC 527 bears the closest but still possibly faint resemblance to the curious situation here. 30 It seems to me that the evolution of the notion of abuse of process in the re-litigation of an issue of the kind with which I am concerned here does permit and indeed should as a matter of principle permit, and indeed, as a matter of policy prevent, a litigant in the position of Mr Burden, whilst a stranger to the proceedings in the Licensing Court, litigating by his forensic stance in these proceedings an issue namely Mr Ainsworth's fitness, which has been decided in the Licensing Court with all those attendant characteristics I have catalogued above. To permit him to do so would "bring the administration of justice into disrepute amongst right thinking people". Thus it is I do hold that as a matter of principle the notion of abuse of process can embrace the situation which arises here: by the operation of an Act of Parliament namely, the Licensed Clubs Act, Mr Ainsworth, although not the party to the licence application, had to prove to the satisfaction of the Licensing Court that he was a fit and proper person in the required sense to enable the company to get the licence. The issue as joined on the defences of justification and insofar as it can be ascertained constituting the basis of the plea of comment, is identical but it has been determined by a Court of record and finally. For a person in the position of Mr Burden, namely a stranger as I have described him, by his forensic stance (not the plaintiff's) to seek to litigate again a matter with a view to obtaining a contrary finding from another tribunal in the circumstances amounts to an abuse of process. 31 Insofar as the defendant has sought to argue that in this Court the question would be whether in 1993 Mr Ainsworth was a fit person in terms of the imputations pleaded is not to the point where the material founding the finding in favour of Mr Ainsworth embraced that time. 32 Further, as I understood it, a submission was sought to be made on behalf of the defendant that the operation of the Licensing Court under the respective statutes reflects and is in fact in pursuance of matters of policy; that policy shortly stated being that relevant licences should not be given to people who are not fit and proper to hold them. If the operation of the Licensing Court as a court of record is to give effect to that social or State policy, the effect relevantly is to reinforce, in my view, the status of that Court's judgments in the context with which I am concerned. To that extent only is such a consideration relevant in my view. 33 The possibility of "conflicting" decisions on exactly the same issues in different tribunals is one that causes some concern as a matter of policy, the defendant rightly submits. The present structure of this defamation action requires the litigation of the issue of the fitness of Mr Ainsworth. This has been successfully determined after the most thorough examination, twice, in that Court the very existence of which is to examine and determine of a person, fitness, or to put it another way, to determine that a licence is not granted to any entity by reason of the unfitness of a person associated with it. 34 Thus, I am persuaded that on both bases the plaintiff is entitled to have struck out the defences of justification, contextual justification and the particulars in mitigation of damages founded thereon. 35 As to the defence of comment the plaintiff is confronted with a case the particularisation of which, in my respectful view, is hopeless. Insofar as the letter from Messrs Hunt & Hunt, to which I have referred above, purports to particularise matters, again the overall impression (and I insist on using this expression as detail was not descended into by either party in the course of submissions which were oral only and quite brief), it is patent that the matter complained of makes no reference to the body of that material nor to any matters which are otherwise notorious save for public decisions of Courts of justice. I do not see anything in the material provided by the defendant that satisfies the requirement of identifying the material for comment let alone specifying the basis upon which it is said that that material is "proper" material for comment. And accordingly, the defence of comment will be struck out. 36 By reason of my striking out the defences under ss 15 and 16, there is no need formally to consider the contextual imputations pleaded by the defendant. They are: "(1) the plaintiff so conducted himself as to warrant Mr John Hatton raising in Parliament the issue of his suitability to be involved in a licensed company; (2) the plaintiff paid Sergeant Hanrahan substantial financial damages rather than continue contesting Sergeant Hanrahan's claim against him for defamation and abuse of legal process; (3) the plaintiff's association with his co-defendant Mr E. P. Vibert should be investigated by the police to determine whether the plaintiff was a party to payment of a bribe by Mr Vibert to Mr Rex Jackson MLA, in that the bribe was aid in exchange for Mr Jackson having proceedings against the plaintiff and Mr Vibert dropped" 37 Were the issue alive I can presently indicate a view that as a matter of law the letter complained of is incapable of carrying contextual imputation (3). I would hold the second contextual imputation to be defective in form and that there is raised a serious question as to whether it is capable of being defamatory of the plaintiff. Similar observations as to form could be made in relation to the first contextual imputation. 38 I turn now to the cross-claim. The first basis for striking out the cross-claim is that whatever precisely the defendant is pleading, he relies upon the particulars of truth and the defence under ss 15 and 16 of the Defamation Act 1974 in the plaintiff's action. 39 Paragraph 1 of the cross-claim is in the following terms: "1. From 1987 onwards the cross-defendant has wrongly caused complaints and legal proceedings to be brought in the Supreme Court of New South Wales on his behalf and on behalf of Ainsworth Consolidated Industries Pty Limited claiming damages from the cross-claimant, and further has made frivolous and vexatious complaints against the cross-claimant by lodging these with the New South Wales Ombudsman". 40 The cross-claimant then purports to particularise certain steps taken by the cross-defendant/plaintiff in making complaints to the Ombudsman, the relevance of which to an abuse of process of the Supreme Court of New South Wales escapes me entirely. Similar observations can be made to what should be understood to be particulars (b) and (c) appended to paragraph 1 of the document. Particular (d) is a rhetorical charge and should be dismissed for that reason. 41 The second matter of substance to which the cross-claimant appears to be referring is the present action for defamation and the pleadings therein. I am not persuaded that anything as alleged in that paragraph constitutes an abuse of process of any Court; if there some defect in the pleadings then, of course, it would be open to the defendant to take the same step in relation to the pleadings under the same set of rules as the plaintiff has taken in relation to the defences. 42 That there is a cause of action for abuse of process is indisputable and, not surprisingly, the leading New South Wales authority in relation thereto involves one of the litigants in the present action: Hanrahan v Ainsworth (1990) 22 NSWLR 73. 43 On my analysis of the cross-claim, if one eliminates what I hold to be the irrelevant references to "frivolous and vexatious" complaints made to the Ombudsman and the reference to the corporation, Ainsworth Consolidated Industries Pty Limited, one is simply left, so it appears to me, with a discontinued set of proceedings by the personal plaintiff in this action and this very action itself. 44 The difficulty with the cross-claim as pleaded is that it is impossible to determine what material allegations are being made for the purposes of the cause of action as discussed by Clarke JA in Hanrahan v Ainsworth (at 107 and following). It is thus embarrassing and I strike it out. This does not preclude the defendant from formally moving by a Notice of Motion for leave (as I think it would be appropriate in this extraordinarily protracted litigation) to file an amended cross-claim. 45 The formal orders are:

Ainsworth v Burden

At a glance

Court

Decision date

Before

Source

Judgment (23 paragraphs)

Parties

Cases Cited (6)

Cited By (1)