[81] The expression "proper case for prosecution" is not susceptible of exhaustive definition without obscuring the importance of the burden of proving the absence of reasonable and probable cause, and the variety of factual and forensic circumstances in which the questions may arise. For the reasons given earlier, it will require examination of the prosecutor's state of persuasion about the material considered by the prosecutor. That should not be done by treating the five conditions stated by Jordan CJ in Mitchell v John Heine as a complete and exhaustive catalogue of what will constitute reasonable and probable cause. First, to focus upon what is reasonable and probable cause distracts attention from what it is that the plaintiff must establish - the absence of reasonable and probable cause. And secondly, because those conditions are framed in terms of belief about probable guilt, they are conditions that, for the reasons already given, do not sufficiently encompass cases where the prosecutor acts upon information provided by others. "
104 The absence of reasonable and probable cause is to be determined on the material that the prosecutor had available when deciding whether to commence or maintain the prosecution, not whatever material may subsequently come to light. The majority judgment in A deals with that at par [56] as follows:
" [56] Even if a prosecutor is shown to have initiated or maintained a prosecution maliciously (for example, because of animus towards the person accused) and the prosecution fails, an action for malicious prosecution should not lie where the material before the prosecutor at the time of initiating or maintaining the charge both persuaded the prosecutor that laying a charge was proper, and would have been objectively assessed as warranting the laying of a charge".
105 Belief can be relevant to whether the prosecutor had reasonable and probable cause to prosecute. It is the nature of the belief that is in question. Moreover, the question of reasonable and probable cause is not an abstract or purely objective one. The question is whether the prosecutor had reasonable and probable cause to do what he did, not whether, regardless of the prosecutor's knowledge or belief, there was reasonable and probable cause for a charge to be laid. The question involves both an objective and a subjective aspect: see A's case at par [38].
106 The nature of the belief may differ depending upon the nature of the case. This is explained at par [71] of the joint judgment in A's case:
" [71] . . . If the plaintiff alleges that the defendant prosecutor did not have the requisite subjective state of mind when instituting or maintaining the prosecution, that is an allegation about the defendant prosecutor's state of persuasion. The subject-matter of the relevant state of persuasion in the mind of the prosecutor is the sufficiency of the material then before the prosecutor to warrant setting the processes of the criminal law in motion. If the facts of the particular case are such that the prosecutor may be supposed to know where the truth lies (as was certainly the case in Sharp v Biggs ) the relevant state of persuasion will necessarily entail a conclusion (a belief of the prosecutor) about guilt. If, however, the plaintiff alleges that the prosecutor knew or believed some fact that was inconsistent with guilt (as the plaintiff alleged in Mitchell v John Heine ) the absence of reasonable and probable cause could also be described (in that kind of case) as the absence of a belief in the guilt of the plaintiff."
107 Finally, the two elements of the tort need constantly to be borne in mind as appears from the joint judgment in A's case at par [54]:
" [54] It is on this basis that the tort has hitherto been understood as requiring proof of two distinct elements, one positive (malice) and the other negative (absence of reasonable and probable cause). The two requirements meet the two different kinds of case posited in Johnstone v Sutton - maliciously taking up a prosecution "for real guilt", and proceeding upon apparent guilt from circumstances which the prosecutor "really believes". That is, the positive requirement of malice, and the negative requirement of absence of reasonable and probable cause, each have a separate role to play in the tort. A conclusion about malice does not render irrelevant the inquiries about what the prosecutor did make, and should have made, of the material available when deciding whether to initiate or maintain the prosecution."
108 The first defendant submitted that the plaintiffs had failed to prove either the third or fourth elements of the claim in malicious prosecution.
The police brief
109 It becomes necessary to consider the material contained in the police brief. It is extensive. The plaintiffs tendered it in these proceedings. Exhibits AQ1, AQ2 and AQ3 contain the police brief served on Mr Hamod on 15 September 1995. The brief tendered by him was not complete, although Mr Hamod submitted, "the content of the index of the Police Brief of Evidence is a confirmation of the brief of evidence": plaintiffs' submissions at par 383. The first defendant submitted that the incomplete nature of what was tendered qualified the use that could be made of the brief for any purposes concerning the case against it. The second defendant was also at pains to emphasise the specifically limited purposes for which it was received in evidence. For reasons that will emerge, these concerns do not ultimately achieve any significance.
Detective Day
110 The statement of Det Day is the first document of substance. It is dated 13 February 1995. The statement sets out in a logical and chronological sequence what Det Day did from the point when he received a briefing from two other detectives on 17 January 1995 until the events of 20 January 1995, including the arrest of Mr Hamod and the conduct of the lengthy interview with him. The brief contains a transcript of that interview, to which earlier reference has been made. Mr Hamod suggested that the transcript was inaccurate in part, but the extent of the inaccuracies that he pointed to, accepting that they exist, does not seem to be great or particularly significant.
Phillip Balding
111 The brief also contains a transcript of an interview conducted by Det Day with Phillip Balding at the Nowra Police Station on 10 February 1995. Mr Balding was an accountant and Mr Hamod was one of his clients. Mr Hamod had indicated to Mr Balding that he had a certificate that had been passed on to him by Mr O'Dowd and that he had the full authority of both Mr O'Dowd and the last holders of the certificate to sell it to whoever may wish to buy it. Mr Hamod told Mr Balding that he had personally validated the certificate at the United Nations. Mr Balding said that he became convinced that the certificate was genuine.
112 He told the interviewing detectives that Mr Hamod had sought to set up some form of an account with the Advance Bank for the deposit of an up front payment of $250M prior to validation of the certificate. Mr Hamod was to be the sole signatory on that account. Mr Balding said that Mr Hamod told him that he was concerned that UBS may call the police because they would deny that the certificate was real. Mr Hamod promised Mr Balding a payment of $20M if the negotiations to sell the certificate were successful. He was asked whether the size of that figure caused him concern. He gave the following answer:
"I thought they were a little bit over the top but I - it didn't - how can I put it? It didn't sort of concern me. I just treated it as a comment. If it happened, it happened. If it didn't happen, it didn't happen. I didn't see the - you know, I didn't expect to get. You know, if it happened, it happened. It just didn't sort of - didn't worry me. I hadn't - didn't go out and spend that money and wait for it to come in. It was just one of those things where he suggested but at the same time, I might add, that he was - he offered a lot off [sic] other people a lot of money as well. I'd just accept it as - as what he said and left it at that."
113 Mr Balding was also asked about the validity of the certificate as the following question and answer demonstrate:
"Q84 Right. Did you ever consider the possibilities - possibility that this certificate was forgery prior to Mr Hamod's arrest?
A. No, I asked Mr Hamod to show me the - his authorities, to sell the certificate. He did that and on the face of it at the time, those authorities appear to be in order today. I had no reason to question him. I was under the impression that these sort of things do happen in Europe where they do sell certificates. And as I said, I had no - no need to - to question the - the authenticity of the certificate, nor Mr Hamod's action, so once I seen the authorities, I accepted that - that everything appeared to be in order."
114 Mr Balding was asked finally to say what in hindsight he thought his role had been in the matter. He answered as follows:
"Yes, initially I was under the impression that I was acting as Mr Hamod's accountant. I was under instruction to arrange - to arrange this transaction for him. He gave me instructions. I followed those instructions out as would any professional person acting on instructions. On hindsight, after thinking about this for some time now, it seems to me that I've been used. It seems to me that - that I've - was - you know, from what I've been told, the certificates are forgeries that these certificates effectively don't exist with this particular bank and that it seems to me that I've - I've - I've sort of, to use the slang word, I've been conned."
René Schicker
115 The police brief next contains a statement from Mr René Schicker translated from German and dated 19 March 1996. He had at that time worked with UBS since 1993 as a security agent. He was provided with a faxed copy of the certificate. He said that the certificate was a forgery. He said:
"I knew straight away that it was a bogus document: the UBS logo was false. There were a number of spelling mistakes in the certificate . . . and the amount was also much too high (a transaction like that would be beyond the capacity of the UBS and in addition lead to a serious drop on the precious metal market). In addition, the UBS has never issued metal securities. Subsequently I also checked the signatures and found that these persons aren't known within the UBS, let alone authorised to sign."
116 The certificate is in the police brief. Statements of evidence by Det Riddel, Det Scrimgeour, Det Christey, Sgt Dubois, Const Finucci, Const O'Hearn, Det Eastham and Det Biaggi are also in the brief. Mr Hamod did not seek to draw attention to any particular parts of these statements or to suggest that they were inaccurate in some way.
117 The brief also contains an unsigned and incomplete statement made by Mr Hamod. I was not referred to that statement for any purpose. Much of the detail that it contains is in any event replicated in Mr Hamod's principal statement in these proceedings.
Nicholas Wall
118 The second volume of the police brief commences with a long statement given to the police by Mr Nicholas Wall on 22 March 1995. He was then an investment banker employed by Utilis Australia Pty Ltd. His duties included buying and selling in the commodities market and the financial market on behalf of the clients of the company.
119 On 13 October 1994 or thereabouts Mr Wall received a telephone call from Mr Hamod who wanted to arrange a meeting. A meeting was subsequently arranged. Mr I was also present. At that meeting Mr Hamod asked Mr Wall if he had clients who would buy gold or platinum. He said "possibly". Mr Hamod then produced from his briefcase two original bearer certificates, the first issued by the Union Bank of Switzerland for 4590 tonnes of platinum and the second issued by the Central Bank of Stockholm for 6200 tonnes of gold.
120 According to Mr Wall, Mr I asked Mr Hamod how much platinum was for sale. Mr Hamod is said to have replied:
"4590 metric tonnes held by Korea and some gold held by Central Bank of Stockholm…These are genuine certificates bet you have not seen anything like this? I recently returned from Switzerland and I have had the certificates authenticated by UBS Senior Bank Officers in Geneva. I have met with the signatories to the certificates some of them are old people and they have verified their signatures. The certificates are kept in a bank safe deposit box and they are bearer certificates owned by Soekarno of Indonesia. Galaxy Trust was the owner and they have appointed Brendon O'Dowd as their mandate to sell. O'Dowd has messed up in Europe and he had been kidnapped because he carried the certificates. Brendon O'Dowd appointed me the mandate to sell the certificates, we have met with several buyers but O'Dowd messed things up, we had sold one certificate to New York Life Insurance. . ."
121 Mr Wall said that over the following days he spoke to Mr Hamod by phone on a number of occasions. Included in these conversations was the sale of the certificate. Mr Hamod reiterated how he had authenticated the certificate and gave details of what he had done. On 30 November 1994 Mr Wall received from Mr Hamod by facsimile Mr Hamod's proposed buy/sell agreement for the certificate and his appointment as his mandate to sell.
122 Mr Wall's statement is 23 pages long and annexes a wealth of documentary material. Part of that material is a copy of the transcript of the electronically recorded events in the UBS boardroom on 20 January 1995, which culminated in Mr Hamod's arrest. Mr Hamod tendered a recording of that meeting independently of Mr Wall's statement in the police brief. Part of what Mr Hamod said at that meeting is as follows:
"These certificates are registered with the World Bank and with the United Nations and I think you are aware of that fact. And that's why we are satisfied the certificate is genuine; we are satisfied the certificate, ah, is original and, ah, we would ask the buyer to satisfy I before they even are contemplating putting any money. So that's the procedure… that must be adhered to. And step one of the procedure is that the buyer has to identify himself first of all, second the secrecy agreement must be signed by all party present in the room so we can adhere to the original procedure that is connected to these certificates. Obviously your buyer's got a large sum of money also, we have the certificates and so as much as your buyer deserves privacy, we deserve privacy… we will only give the necessary information for the buyer to satisfy himself, but we are not guaranteeing this information…we want the buyer to satisfy himself… and then we exchange the original for the irrevocable bank guarantee and then the money should flow on. But until there's - the buyer is satisfied we should not even be talking about deposit, because it is illegal to talk about deposit before the buyer satisfy himself. Well…if you're happy to proceed we are happy to proceed."
123 The police brief also contained a copy of the electronically recorded transcript of the meeting at the offices of the National Australia Bank on 20 January 1995. Messrs Hamod, Muhlbauer, Lees, I and Wall were in attendance. It is unnecessary to refer to the content of that document for present purposes.
Philip Ludowici
124 The police brief also contained a statement dated 7 March 1995 from Mr Philip Ludowici. He was then employed by UBS Australia Ltd as the Executive Director, Logistics. He met Mr Wall who produced to him what appeared to be photocopies of a bearer platinum certificate as well as other documents including a mandate for Mr Hamod to negotiate the sale of the certificate. There were other documents as well. Mr Ludowici said that he faxed a copy of the certificate to UBS Security Services in Zurich. The next morning, which was 8 December 1994, he received a document sent by facsimile from René Schicker informing him that the Union Bank of Switzerland never issued such documents and that the document was a forgery and a complete fantasy.
125 Mr Ludowici wrote to Mr Wall at Utilis Australia Pty Ltd the following day and told him that the certificate was bogus. That letter is in the police brief. He also indicated that UBS was willing to provide support for a police investigation. On 12 December 1994 Mr Ludowici telephoned Det Henderson at the Fraud Enforcement Agency.
Phillip Muhlbauer
126 A statement by Mr Muhlbauer dated 27 February 1995 is in the police brief. He was the Chief of Staff of UBS Australia Ltd. Mr Muhlbauer's statement deals with what occurred at times leading up to and during the meeting in the UBS boardroom on 20 January 1995 in terms that are uncontroversial and unnecessary to repeat.
Gary Lees
127 Gary Ernest Lees gave a statement to the police dated 3 March 1995 that was also in the police brief. Mr Lees was a solicitor. He said that he had originally been asked by Mr Balding to come to the Sydney meetings on 20 January 1995 and "hold a clients [sic] hand on settlement". He was shown a document that he came to understand was an agreement "in relation to the sale of the Platinum Certificate" apparently to a value of $60 billion.
128 Mr Lees' statement gives details of meetings and preparations in Nowra in the days before the events in Sydney on 20 January 1995. He was present at the meetings at the UBS boardroom and at the National Australia Bank in Sydney on that day and describes what occurred. Among other things he said that he looked at the buy/sell agreement that seemed to him to be a normal commercial agreement. The police subsequently interviewed him on the same day and an 86-page transcript of the electronically recorded interview is in the police brief. Although the plaintiffs tendered that document, Mr Hamod did not refer me to any portion of it for any purpose and he made no submissions about it.
Peter Done
129 The police brief also contains a statement by Peter Done dated 20 January 1995. He was the Business and Lending Manager of the Advance Bank in Nowra. Among other things Mr Done said that on 9 January 1995 Mr Balding told him that Mr Hamod had received a commission to sell platinum certificates. Mr Hamod said to him that Mr O'Dowd had the authority to sell the certificates from the current owner and that he had passed the authority on to Mr Hamod to sell because Mr O'Dowd did not have the connections to sell them himself. Mr Hamod said to him, "When I find a buyer I am to receive a fee and that fee I will deposit into the Advance Bank Nowra". Mr Balding said that the transaction would be "in the billion dollars, so much so there are not enough zeros on my calculator". An account with the bank was subsequently opened in the name of the second plaintiff.
130 A further statement of Peter Done dated 6 April 1995 is in the police brief. He refers again to the meeting at the Advance Bank offices at Liverpool at which he and Mr Hamod, Mr Balding, Mr Lees, Mr El Teres, Mr Lymbery, Mr Sturgess and Mr Titcombe were present. He said that Mr Hamod took documents out of a briefcase and said, "These are Platinum Certificates". He continued saying, "If the transaction takes place today a sum of two hundred and fifty million dollars will be forthcoming and I would like to lodge it with the Advance Bank". Mr Hamod was told that the bank would not accept the transaction.
Brian Titcombe
131 The third volume of the police brief commences with a statement by Brian Titcombe dated 6 February 1995 that also refers this meeting. He recalled Mr Balding saying, "We are all going into the city to attend a settlement for the transfer of these platinum certificates" and he recalled a reference to some weight of platinum between three and four thousand tonnes. Mr Balding said to him, "The purchasers are going to offer a cheque for two hundred and fifty million as a holding deposit on these certificates which are worth sixty seven point four billion dollars". Mr Titcombe said in his statement that on hearing this proposition he felt it was all quite difficult to believe. In 30 years of banking experience that was what he described as "well out [of] the realms of the ordinary".
Paul Sturgess
132 A statement by Paul Sturgess, the Area Manager, Branch Operations of the Advance Bank for the Liverpool area dated 6 February 1995 is also in the police brief. It is to a similar effect as the statement of Mr Titcombe.
Jeffrey Melville
133 A statement by Jeffrey Melville, the manager of the National Australia Bank in Nowra, dated 2 March 1995 is in the police brief. It refers to a request by Mr Balding on behalf of Mr Hamod to open a safe custody facility at his branch.
Samir Hamod
134 Mr Hamod's brother Samir Hamod gave a statement to the police dated 16 February 1995. Most of what it contains is of little apparent relevance and difficult to understand. It refers to his dealings with Ivan Clarke and Mr O'Dowd and a request for money to pay Mr Hamod's hotel bill in Switzerland. It is unnecessary to refer to it in detail. However, at some point an argument developed between Samir Hamod and Mr Clarke and Mr Clarke said to him, "I don't want to deal with your brother because my [sic: 'your'] brother is a crook". Samir Hamod replied, "Now you say my brother is a crook after you send him to Switzerland to set up the deal, you say you have the real gold." Mr Clarke started swearing and said, "Look you tell your brother I want the certificate or we will send some people to kill him, I have people who lives [sic] two hours from him". Samir Hamod called Mr Hamod and told him what Mr Clarke had said. Mr Hamod replied, "I am not going to give them the certificate until I get my commission from the other deal we had in Switzerland. If they pay me my commission I will send them the certificate."
Michael Teh
135 The next statement in the police brief is that of Michael Teh dated 22 March 1995. He was a commercial banker. On 14 October 1994 he attended the meeting arranged by Mr Wall. Paragraph 6 of his statement is partly as follows:
"Towards the end of the meeting [Mr Hamod] said "Do you have a client for Platinum or Gold?" [Mr Wall] said "Yes it is possible". I said, "Yes We can help you". Then I saw [Mr Hamod] reach into his brief case and remove three pieces of paper which he handed to me. They appeared to be photo copies of Platinum and Gold certificates. The first piece of paper that I saw was a certificate of guarantee for 4590 metric tonnes of platinum issued by the Union Bank of Switzerland. I think the second piece of paper that I saw was part of the first certificate. The third piece of paper was a Certificate of Guarantee for about 7000 metric Tonnes of Gold issued by the Bank of Stockholm. . . I said "Do you have the originals?" Hamod said, "Yes I've got it in my briefcase. These are bearer certificates of platinum." I said, "Can you prove up under Swiss procedure?" Hamod said, "Yes on a bank to bank basis."
136 Mr Teh said that he had seen such certificates in his dealings in Europe for amounts of five to ten tonnes of gold or platinum but he had never seen a certificate for anywhere near the amounts of Mr Hamod's certificates. The certificate he inspected appeared to be similar to the original certificates he had seen in Europe. Mr Hamod told him that the police, MOSSAD and the CIA, were protecting him. Mr Teh had doubts about the authenticity of the certificates.
137 On 2 November 1994 Mr Wall provided him with a document that was a contract for the sale of the platinum. On 12 November 1994 Mr Hamod telephoned him and said, "If I present the original documents to the buyer I request a KTT payment from the buyer to my account for fifty million US". Mr Teh said that he did not think that was possible. He said he was surprised at the request for an up front fee of that amount.
138 Mr Teh later asked him if the certificates were genuine. Mr Hamod replied, "Yes it is authenticated by myself." Mr Teh asked, "Does the contract you are sending contain the certificate of authority to sell signed by you?" Mr Hamod said, "No it does not require one because the offer is genuine and the certificates are real".
139 On 18 January 1995 Mr Teh went to Mr Wall's home. While he was there the telephone rang. It was Mr Balding. He listened to the conversation at Mr Wall's request. Mr Balding asked, "How long will it take to authenticate the certificates?" Mr Wall replied, "It will take about one week." Mr Balding said, "How are you going to pay the two hundred and fifty million dollars?" Mr Wall said, "By bank draft through Chase Manhattan Bank."
140 Mr Teh's statement also deals with the meetings on 20 January 1995 at the UBS boardroom and at the National Australia Bank up until the moment when the police enter the room. He confirms that the transcription of the meetings appears to him to be accurate.
141 Mr Balding's statement dated 3 March 1995 is in the police brief. He said that some time around the middle of 1994 Mr Hamod telephoned him from Europe. He told Mr Hamod that he had been declared bankrupt. Mr Hamod said to him that he would come home soon and said, "I have brought back from overseas some platinum certificates." He also said, "I will sell them eventually." Early in January 1995 Mr Hamod contacted Mr Balding and said that Mr Wall had spoken to him and said that he had a buyer for the certificates and wanted to sell them on Mr Hamod's behalf. On 9 January 1995 Mr Hamod asked him to open the account at the Advance Bank at Nowra as previously mentioned. The statement also refers to Mr Hamod asking Mr Balding whether or not he could contact the Advance Bank to find out if Mr Done could accompany Mr Hamod to Sydney for the sale of the certificate and to ensure that the bank guarantee was irrevocable. Without attempting to summarise the whole of the statement, which is 22 pages long, it is sufficient to note that it is replete with references to Mr Hamod speaking of the sale of the certificate, the buy/sell agreement, the up front fee from the buyers, commissions or fees calculated as a percentage of the contract price, the need to inform the Reserve Bank of large sums coming into Australia and several other terms and formulations specifically or contextually predicated upon the sale of the certificate by Mr Hamod.
Other documents contained in the police brief
142 The police brief contains many other documents. They include what appears to be the transcript of intercepted telephone conversations between many of the people whose statements and records of interview have been referred to already. There is also a copy of a Buy/Sell Agreement describing Mr Hamod "for and on behalf of Hamock Investments Pty Ltd" as the seller of the certificate. The document appears conspicuously inadequate for the transaction that is anticipated by its terms. The name of the buyer is blank. The seller and the buyer will agree to negotiate and fix a schedule or the payment of the principal amount owed on the certificate. It speaks of authentication and due diligence. A sum of $600M is referred to as the first tranche but the sale price is not specified. Instead the seller "warrants to sell the certificate for a cash price valued at sixty percent (60%) of the calculated value of the certificate and agrees to grant a forty percent (40%) gross discount for commissions". The agreement is effectively meaningless and it is difficult to see how it could ever have been performed or enforced if it had been executed.
143 The plaintiffs' written outline of submissions was some 225 pages long. Reference to this document from time to time in the context of all of the plaintiffs' pleaded causes of action against both defendants is obviously critical. However, as a general proposition the document never comes to terms with or addresses the matters that the plaintiffs are required to establish to prove their claims. This will need in due course to be explored with respect to all of the pleaded causes of action.