FORD v NAGLE & ORS

The appellant brought an application for summary dismissal of the District Court proceedings.

The application was dismissed by Walmsley DCJ. The Judge held that, although Mr Nagle's case was weak, the principle in Wickstead v Brown (1992) 30 NSWLR 1 required that his Honour assume that Mr Nagle might remedy his evidentiary deficiencies by reason that one or both of the first and second defendants might go into evidence at the hearing. The Judge rejected the appellant's submission that Clyne v New South Wales Bar Association (1960) 104 CLR 186 created a relevant exception to the Wickstead principle.

HELD: per Mason P dismissing the appeal (Handley and McColl JJA agreeing):

(1) The primary judge was correct to apply the Wickstead principle.

(2) Clyne v New South Wales Bar Association is distinguishable. The principle in Clyne is a principle of professional conduct for barristers speaking in court and not a restraint on litigants when they institute proceedings by filing a statement of claim.

(3) Although Mr Nagle's case will not be easy of proof it remains a civil claim for damages. Fraud is not a necessary element in a civil conspiracy or the tort of abuse of process: Williams v Spautz (1992) 174 CLR 509 (referred)

(4) No fraud has been alleged in the present case. However, the appellant's position cannot rise higher than that of a defendant against whom fraud is alleged. Solicitors and barristers must have an evidentiary foundation to plead fraud, but such foundation may be inferred: Minister Administering the Crown Lands (Consolidation) Act and Western Lands Act v Tweed Byron Aboriginal Land Council (1990) 71 LGRA 201 (referred).

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40110/03 DC 6487/99

MASON P HANDLEY JA McCOLL JA

Thursday 26 February 2003 Christopher FORD v Peter Richard NAGLE JUDGMENT

1 MASON P: The appellant is a solicitor. With the second and third respondents, he has been sued in the District Court for damages for conspiracy to injure the first respondent. His application for summary dismissal was itself dismissed and it is from that order that he appeals by leave previously granted. The second and third respondents have adopted a submitting stance. 2 The first respondent, Mr Nagle, was a member of the Legislative Assembly of New South Wales representing the seat of Auburn. The second respondent, Ms Frost, worked for him as his electorate secretary between 1988 and 28 September 1998. She was formally employed or engaged by the Speaker of the Legislative Assembly and had been appointed by him to assist Mr Nagle. 3 On 16 February 1999 Ms Frost commenced proceedings in the Industrial Relations Commission of New South Wales seeking relief pursuant to s106 of the Industrial Relations Act 1996. The Respondent to those proceedings was the Speaker. Ms Frost claimed that her employment contract was or had become harsh, unconscionable and contrary to the public interest with the result that it should be varied retrospectively. She sought the addition of a clause that she be paid overtime at stipulated rates. She also sought a variation to the effect that she be paid a salary equivalent to three-quarters of that earned by a Member of the Legislative Assembly. Her claim for monetary compensation totalling $1,265,735 included claims for overtime and higher wages calculated in accordance with these proposed amendments. There were also global claims for compensation for stress, impairment of employment prospects and reduction in quality of life, as well as a claim for payment in lieu of notice. 4 There was a lengthy supporting affidavit sworn by Ms Frost dated 16 February 1999. Undoubtedly, much of it is arguably relevant to the exercise of the broad jurisdiction conferred on the Industrial Relations Commission by s106. There are details about the commencement and termination of the employment. The long hours and stressful tasks of the particular job are described in graphic detail. 5 The affidavit also contained material, the publication of which, would have been an undoubted embarrassment to Mr Nagle as a sitting member of Parliament. The relevance of this material to the Industrial Relations proceedings is not immediately apparent. Among the headings within the affidavit were: • " I was required to do work for Mr Nagle's private practice as a barrister";

• "Mr Nagle's drinking and personal problems and their effect on my working environment";

• "Corrupt and illegal activities by Mr Nagle" (These included "travel rorts", "misuse of parliamentary postage allowance", "Mr Nagle's theft of money raised at LP fundraising functions, or from raffles", "Mr Nagle's theft of money from campaign accounts", "failure to declare income for taxation purposes", "false declarations in his income taxation return in relation to overseas travel" ). 6 In the District Court proceedings, Mr Nagle pleaded that the commencement and early prosecution of this claim in the Industrial Commission were overt acts in a conspiracy to injure him and his political ambitions, including his ambitions to become the Speaker of the Legislative Assembly following the 1999 State election. The parties to the conspiracy were said to be Ms Frost, her barrister Mr Patch and her solicitor Mr Ford, the appellant. 7 It is common ground that the statement of claim pleads genuine causes of action. In short, it pleads that:

• the conspiratorial agreement was formed at a conference attended by client, barrister and solicitor on 16 February 1999;

• the agreement included terms that the lawyers would represent the client in the preparation and filing of an affidavit that would include scandalous, irrelevant and oppressive material;

• the affidavit would be "created" by Ms Frost, "revised...edited and subsequently formatted" by Mr Patch and filed by the appellant;

• the document would be produced before the State election that was to take place on 27 March 1999 so that the threat of its filing and publishing could be used to extract a favourable settlement offer. 8 The pleaded overt acts include steps taken by the three defendants in the preparation of the summons and affidavit that were filed and served on 16 February 1999 by the barrister and solicitor on behalf of their client Ms Frost. It is further pleaded that Mr Patch met a senior representative of the Australian Labor Party in late February and discussed the terms upon which the proceedings might be settled before the imminent election. 9 The pleading asserts that the three defendants thereby conspired by unlawful means to injure the plaintiff. The unlawful acts included engaging in abuse of process in the Industrial Relations Commission proceedings and contravention of obligations imposed on the legal practitioners by the Legal Profession Act 1987 (NSW). The pleading further asserts that the defendants acted with the ulterior motive and improper purpose of humiliating and embarrassing the plaintiff and with the predominant purpose of injuring him. 10 It is not disputed that the Industrial Relations Commission proceedings were instituted, as alleged, or that the three defendants participated in their institution. The facts as pleaded treat the client and barrister as assuming the predominant roles, but neither the pleading nor the evidence presently at hand suggests that the solicitor was a mere "mailbox" (cf Blue 345, 825-6, 828, 842). 11 Defences have been filed disputing the principal allegations of conspiracy. Further and better particulars of those allegations have been sought on behalf of the appellant. The District Court proceedings were stayed for a time pending the determination of the Industrial Relations Commission proceedings. Those proceedings have now been settled, although on terms that are presently unknown. The dispute about outstanding particulars was resolved on the basis that the plaintiff was required to file statements of the witnesses whom he proposed to call in his case. 12 The appellant's application for summary dismissal was initiated by notice of motion. Among other relief, he sought to have the proceedings against him dismissed or stayed pursuant to Pt 11A r3 of the District Court Rules. It was submitted that the proceedings amounted to an abuse of process of the District Court because, though properly pleaded, they were doomed to fail. 13 The applicant for summary dismissal bore the onus of proof that there was no triable issue. He tendered the witness statements that had been filed in the District Court, being statements by Mr Nagle and by Mr Roozendaal, the General Secretary of the Australian Labor Party. The former statement included as annexures copies of the summons and affidavit filed in the Industrial Relations Commission when Ms Frost initiated her claim in that tribunal. 14 The appellant tendered fee and diary notes and memoranda that confirmed his involvement as instructing solicitor in early 1999, although suggesting that the barrister Mr Patch played the more substantial role in drafting the affidavit. There was however, no denial that the appellant had been involved in the filing and serving of the summons and affidavit. Nor was any affidavit filed by the appellant disputing the essential allegations or rebutting inferences that were possibly open from the timing of the events and the contents of Ms Frost's affidavit filed in the Commission (cf Wickstead v Browne (1992) 30 NSWLR 1 at 11F). 15 The application was heard by Judge Walmsley SC. 16 Mr Nagle was represented by Mr Baran of counsel. He indicated that the evidence of the plaintiff was not complete and that the plaintiff would be seeking discovery and interrogatories before being in a position to indicate that no further statements would be served. It was foreshadowed that there were likely to be disputes as to the availability of client legal privilege in the circumstances. 17 Mr Ford was represented by Ms Adamson. She submitted that the evidence in chief contained in the witness statements did not support the allegations of conspiracy and abuse of process. She submitted, as she did in this Court, that the plaintiff and his legal advisers had failed to meet the strictures in Clyne v New South Wales Bar Association (1960) 104 CLR 186 which were said to require the plaintiff to have the evidentiary foundation for making the allegations he did before those allegations were raised. It was not open to the plaintiff to supplement any absence of necessary evidence by resort to processes such as discovery and interrogatories. 18 The written and oral submissions scarcely touched the question whether the plaintiff's evidence was capable of raising an arguable case that the appellant was a party to the conspiracy as alleged. At its highest, this was implicit in Ms Adamson's submissions that the material that had been filed did not satisfy Clyne. Mr Baran's response was to submit that Clyne did not apply and that it was open for his client to use the interlocutory processes of the District Court before disclosing the totality of his client's evidence on the central issue. 19 The primary judge reserved his decision. His researches led him to Wickstead v Browne and Breheny v Cairncross [2002] NSWCA 69 and he invited counsel to make supplementary submissions in writing on the application of those authorities. Wickstead establishes that one of several defendants cannot obtain summary dismissal because of evidentiary deficiencies in the plaintiff's case against the moving defendant. Handley JA and Cripps JA explained why this is so (at 12): At the close of the plaintiff's case there may be evidence against some defendants but not against others. The court will not entertain a motion for judgment by some only of the defendants because any gaps in the plaintiff's case against those defendants may be filled when the other defendants going into evidence may seek to exculpate themselves by inculpating defendants against whom the plaintiff had no admissible evidence at the close of his case. If the respondent would not be entitled to succeed on a no evidence point at the trial until all the evidence has been called, including that from other defendants, it is clear that there can be no such entitlement on an application by one of several defendants for summary dismissal.

Breheny followed and applied Wickstead . 20 These principles were apparently engaged in the present context because neither the appellant's co-defendants nor the appellant himself suggested that the conspiracy and abuse of process allegations pleaded against Ms Frost and Mr Patch were doomed to fail against the latter two defendants. However, counsel for the appellant argued that the principle in Wickstead (whose correctness she accepted) did not apply in a case where an allegation of fraud or akin to fraud was made. She submitted that a party making such allegations must have the evidentiary foundation to make them and that it was not open to seek to remedy such a deficiency by the cross-examination of a co-defendant, or the interlocutory processes of discovery and interrogatories. 21 Judge Walmsley rejected Ms Adamson's submission and dismissed the motion because: "... I do not see fraud or actions akin to fraud (assuming what the plaintiff pleads may be included in that description) as necessarily outside the operation of the Wickstead principle. So, notwithstanding my view that the plaintiff's case is weak, I see Wickstead as requiring that I assume the plaintiff may remedy his evidentiary deficiencies by reason that one or both of the first and second defendants goes into evidence at the hearing. Accordingly, I find the applicant has not discharged his onus of proof that there is no triable issue."

22 Earlier in his reasons, the judge expressed views as to the likely success of the proceedings in the light of the evidence that had been filed (see pars 17, 18 and 23). There is, I think, some ambiguity in the judge's remarks. In this Court, the appellant has interpreted them as findings that no triable issue against the appellant had been disclosed in the evidence filed to date. My tentative view is that the judge was merely expressing his views as to the likelihood of ultimate success, or perhaps his views about whether the material contained "direct" evidence of the unlawful conduct that had been pleaded. This tentative view is reinforced by consideration of the arguments put to His Honour and the absence of any serious joinder of issue on the question whether the plaintiff's evidence (especially the Frost affidavit) was capable of establishing an arguable prima facie case against each defendant. 23 In this Court, senior counsel for the appellant effectively repeated her submission below that Clyne carved out a presently relevant exception to the Wickstead principle. The proposition, as refined, was that the proceedings should be summarily dismissed as against the appellant because the evidence filed to date disclosed that when the proceedings were instituted the plaintiff was not in a position to call evidence that established a prima facie case as to the central allegations. Clyne was cited as authority for the proposition that it is an abuse of process to make or maintain an allegation of serious misconduct, fraud or akin to fraud, or which may have ruinous consequences for the person against whom the allegation is made, if the person making the allegation does not have the evidentiary foundation for the allegation at the time it is made. 24 The respondent has argued that the material at hand supports the pleaded case against the solicitor. However it is unnecessary to decide this question. 25 The primary judge was correct to apply the Wickstead principle. 26 The present case is relevantly indistinguishable from Wickstead. The plaintiff's claim will not be easy of proof (cf Evidence Act 1995, s140(2)) especially as regards the abuse of process allegations (cf Van Der Lee v State of New South Wales [2002] NSWCA 286), but it remains a civil claim for damages. Fraud is not a necessary element in a civil conspiracy or the tort of abuse of process (see Williams v Spautz (1992) 174 CLR 509 at 525 as to the latter proposition). 27 Clyne is distinguishable on several fronts. 28 The case relates to the professional duty of a barrister. Clyne, a barrister advised a client (Jacombe) to launch a criminal prosecution (for the common law misdemeanour of maintenance) against a solicitor, Mr Mann. This was admittedly as a means of intimidating the solicitor into ceasing to act for Jacombe's wife in the "orgy of [civil] litigation" (at 190) that had broken out between the couple. In opening the committal proceedings before a magistrate, Clyne made a savage public attack on the professional character of the solicitor, alleging fraud, perjury and blackmail. He knew that he had no evidence to substantiate such allegations. 29 Part of Clyne's verbal assault involved a submission as to the solicitor's motive and this in turn was said to be based upon the contention that he was in financial difficulties. In the High Court, Clyne sought to excuse this conduct by arguing that he was entitled to open the case in this way because he had subpoenaed the solicitor to produce his financial records and he hoped that such records would disclose the requisite evidence. But Mann was not a compellable witness in his own prosecution and the "excuse" really amounted to no more than a confession by Clyne that he was not in position to prove the grave allegations he was making (at 193). 30 The High Court recounted several other instances of insupportable accusations made by Clyne in his opening address (at 194-8). It then moved to a general discussion about the duties of barristers. One such duty is the obligation not to make opening statements which may have ruinous consequences to the person attacked that the barrister cannot substantiate or justify by available evidence. (See also New South Wales Barristers' Rules, r37.) That obligation applies equally to civil proceedings (see Clyne at 202), but it is a principle of professional conduct for barristers speaking in court, not a restraint on litigants when they institute proceedings by filing a statement of claim. 31 Of course, the filing of a statement of claim may be an abuse of process because of its contents, its untenability or for other reasons. And legal practitioners have a range of professional obligations touching their role in the preparation of court process. If, for example, they assist in the preparation of a pleading raising fraud they must take care to have a presently available appropriate evidentiary foundation, for alleging and pleading fraud. The foundation will usually be inferred, because fraud is often perpetrated covertly and its perpetrators will often take pains to cover their tracks (Minister Administering the Crown Lands (Consolidation) Act and Western Lands Act v Tweed Byron Aboriginal Land Council (1990) 71 LGRA 201 at 203-4). See also New South Wales Barristers' Rules, r36 which prohibits a barrister from alleging any matter of fact unless the barrister believes on reasonable grounds that the factual material already available provides a proper basis to do so. 32 I reiterate that fraud has not been alleged in the present case, but the Tweed Byron case just cited was invoked by the appellant. The appellant's position cannot however, rise higher than that of a defendant against whom fraud is alleged. 33 The appeal should be dismissed with costs. 34 HANDLEY JA: I agree with Mason P. 35 McCOLL JA: I agree with Mason P. **********

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