(e) A claim for aggravated and exemplary damages (paras 83(c) of the FFASC and particulars dated 25 August 2000).
16 The first to fifth defendants submitted that the plaintiff's claim includes both property and personal claims and that the plaintiff's cause of action in malicious prosecution cannot be divided up. According to the first to fifth defendants it is a single, indivisible cause of action, referable in its substance or essence to property, ie., economic/income, rights and not personal rights. The first to fifth defendant argue that it is not a right to recover damages "for personal injury or wrong" within the meaning of s 116(2) of the Act. The submission that the cause of action is indivisible in this way, is based on a number of authorities including several of those cited in Bryant.
17 In Cox v Journeaux (No 2) (1935) 52 CLR 713 Dixon J said at 721:
The test appears to be whether the damages or part of them are to be estimated by immediate reference to pain felt by the bankrupt in respect of his mind, body or character and without reference to his rights of property."
18 In Bluett (1981) 52 FLR 115 at 119, Lockhart J said:
"where the primary and substantial right of action id direct pecuniary loss to the property or estate of the bankrupt, the right to sue passes to the trustee notwithstanding that it may have produced personal inconvenience to the bankrupt."
19 In Mannigel, Handley JA (with whom Kirby P and Meagher JA agreed) said that the plaintiffs in that case sued on "indivisible causes of action in tort and contract" which "formed part of the property of the plaintiffs which vested in the Official Receiver on their bankruptcy". That case involved a claim for professional negligence by solicitors. The plaintiffs claimed damages for economic loss, but also damages for loss of credit and reputation, for inconvenience, mental distress and strain and for injury to their physical and mental health. However, the latter claims did not save the plaintiffs from the conclusion that the entire, indivisible causes of action in both tort and contract vested in the Official Receiver.
20 In Daemar (No 1), the Industrial Commission had declared a commercial contract void and ordered the claimant (who subsequently became bankrupt) and his company to pay a certain sum to the other party in the proceedings before the Commission. The bankrupt sought the issue of prerogative writs against the Commission and also complained that, in the course of the judgments of the Commission, he had suffered hurt and had been defamed. Looking at s 60(4)(a) of the Act (which is the equivalent of s 116(2)(g), but applicable when proceedings are brought during the bankruptcy), Kirby P said (at 56) that the exemption relating to personal injuries or wrongs was:
"limited to those cases where it has been considered appropriate to sever the personal interest of the person subsequently made bankrupt from his property, and to reserve to him the prosecution of and benefits derived from such litigation as not being legitimately entitlements of the creditors. In the present case the so-called 'wrong' of which the claimant complains is the very source of the financial problems which have led to his bankruptcy. It is therefore to be classified not as a 'wrong' which is exempted from the operation of s 60(2) and the statutory stay provided for, but as of the very essence of the subject matter to which s 60(2) is addressed."
21 In Bryant, Lockhart J at 550B said that it was necessary to "determine the essential character" of the action in order to determine whether or not it vested in the trustee in bankruptcy. The approach of the Full Federal Court was to proceed on an analysis of the pleadings. His Honour said at 554G that the claim for general damages appeared to be "consequential upon the loss or damage which Mr Bryant asserts was sustained by him, and which is referable to the proprietary claims which I have described earlier and which would plainly pass to the trustee upon Mr Bryant's bankruptcy". His Honour said at 554F that the court was "unable to be satisfied" that it was possible to sever the allegations and claims for damages made by Mr Bryant, so as to be able to identify claims for personal injury or wrong which had not vested in the trustee in bankruptcy.
22 In Bryant, O'Loughlin and Merkel JJ delivered a joint judgment in which they said at 563C-D that, as in Daemar (No 1), the wrong of which Mr Bryant complained in his pleadings "appeared to be the very source of the financial problems which led to his bankruptcy". Their Honours said that the remarks of Handley JA in Mannigel were apposite, in that the claims for general damages were merely "consequential" on damages to financial and property interests. Their Honours said that Mr Bryant's claims were "essentially" claims which were referable to his financial and property rights. If the injury that was suffered for the wrong done arose as a "direct result" of the alleged infringements of financial or property rights, then the primary and substantial right of action is pecuniary loss to the property or estate of thew bankrupt and the whole claim vests in the trustee in bankruptcy. The claims are not "without reference to rights of property" within the meaning of the dicta in Cox.
23 In Luyt Master McLaughlin had dismissed the plaintiff's claim under Part 13 r 5 SCR on the basis that it was doomed to fail as the cause of action sued upon had vested in the trustee in bankruptcy. The plaintiff appealed to Windeyer J, who dismissed the appeal. The plaintiff's claim was for estoppel, breach of contract and misleading conduct. A claim for economic loss relating to the loss of properties was made, but in addition there was a claim for "associated stress, infliction of mental and emotional distress". Windeyer J held at para 13 that the claims for general damages were "immediately associated with the claim for loss of property". His Honour said at para 15 that the claim for infliction of mental and emotional distress:
"could only arise as a result of the claimed interference with the rights of the plaintiff to the property which she says should not have been taken from her and could not be thought to have arise independently of that."
24 Referring to Bryant (above), Windeyer J said at para 16 that the question is whether "the damages are consequential upon and immediately consequential or connected with the major claim for loss of property". His Honour said at para 17 that it was clear that the claims in relation to mental distress etc. were "immediately connected [with the major claim for loss of property] and this claim [for emotional distress etc] could not arise without reference to the claimed loss of the property".
25 The first to fifth defendants submitted that the nature of the plaintiff's claim is that it is one of financial interests and the damages are consequential upon the infringement of those financial rights. However, in none of the cases cited was there a claim for malicious prosecution nor false imprisonment.
26 There are exceptions to the proposition that rights of action generally pass to the trustee of a bankrupt's estate. These exceptions have been created by decisions of the courts. Lockhart J listed some of them in Faulkner. They included the followings, a right of action for slander, Ex parte Vine; Re Wilson (1878) 8 ChD 364; for seduction of a servant, Howard v Crowther (1841) 8 M & W 601; 151 ER 1179; for trespass to land or goods in the plaintiff's actual possession, at least where the only substantial damage if for the annoyance and persona inconvenience to him, Clark v Calvert (1891) 8 Taunt 742; 129 ER 573 and Rose v Buckett [1901] 2 KB 449; for breach after bankruptcy of a contract for personal service made before bankruptcy, Bailey v Thurston & Co Ltd [1903] 1 KB 173; for personal injuries arise out of certain breaches of contract such as a contract of marriage, Drake v Beckham (1843) 11 M & W 315; 152 ER 823. Malicious prosecution and false imprisonment were not specifically mentioned in Faulkner.
27 In McDonald, the Court of Appeal stated that:
"The principal heads of damage to which regard have conventionally been had in relation to a claim for malicious prosecution are injury to the plaintiff's reputation, injury to his feelings, ie., for the indignity, humiliation and disgrace caused him by the fact of the charge being preferred against him, pecuniary loss - as, for example, as a result of his being dismissed from his employment - and the expenses incurred in defending himself against the prosecution or, where he has been awarded costs against the prosecutor, the amount by which the costs incurred exceeded the costs awarded. In addition, if the facts warrant it, an award of aggravated compensatory damages may be made."
28 The tort of false imprisonment is derived from trespass, a plaintiff need not prove actual damage, although any pecuniary loss which is not too remote is recoverable (see, for example, Childs v Lewis (1924) 40 TLR 870). The principle heads of damage to which, in the past, regard appears to have been paid are, the injury to liberty, the injury to the plaintiff's feelings, ie., the indignity , mental suffering, disgrace and humiliation, with any attended loss of social status, and, where it can be demonstrated that the imprisonment has had a deleterious effect on the plaintiff's health, any resultant physical injury, illness or discomfort (Lowden v Goodrick (1791) PEAKE 64, Pettit v Addington (1791) PEAKE 87). In addition to damages falling under one or other of the heads to which I have just referred, the manner in which the imprisonment is effected may lead to an award of aggravated compensatory damages, as also may the subsequent conduct of the defendant, if it tends to show that the defendant is persevering in the charge.
29 In my view it is arguable that the plaintiff's rights are personal rights which do not vest in the trustee in bankruptcy. It is arguable that the principle cited in Bluett, Daemar, Mannigel, Bryan and Luyt does not apply to the causes of action of malicious prosecution and false imprisonment. Damages for the loss of reputation and those claimed by the plaintiff are the legitimate heads of damage for the tort of malicious prosecution. It is my view that those damages arise independently from the plaintiff's property rights. Hence, the statement of claim should not be struck out on this basis of the bankruptcy argument.
30 The sixth to ninth defendants adopted the first to fifth defendants' argument in relation to the Bankruptcy Act. For the reasons given previously this argument fails. They also submitted that the plaintiff has failed to plead motive or improper purpose. According to the sixth to ninth defendants, the FFASC pleads the element of malicious prosecution "without reasonable and probable cause" as being to mere negligence and recklessness, and this in itself does not give rise to a claim for malicious prosecution - see Grimwade v State of Victoria 90 (1996-1997) Aust Crim. Reports 541.
31 In Commonwealth Life Assurance Society Limited v Brain (1935) 53 CLR 343 Dixon J said at 379:
"The legal standard of liability for a prosecution which is instituted neither by the defendant nor by his servant is open to criticism on the ground of indefiniteness. It is clear that no responsibility is incurred by one who confines himself to bringing before some proper authority information which he does not disbelieve, even although in the hope that a prosecution will be instituted, if it is actually instituted as the result of an independent discretion on the part of that authority … But, if the discretion is mislead by false information, or is otherwise practised upon in order to procure the laying of the charge, those who thus brought about the prosecution are responsible…".
"The rule appears to be that those who counsel and persuade the actual prosecutor to institute proceedings or procure him to do so by dishonestly prejudicing his judgment are vicariously responsible for the proceedings. If the actual prosecutor acts maliciously and without reasonable and probable cause, those who aid and abet him in doing so are joint wrongdoers with him".
32 The sixth to ninth defendants submitted that the plaintiff had not properly pleaded malice. Malice is defined by Street CJ in Rapley v Rapley (1930) SR(NSW) 94 at 99 as:
"some wrong or sinister motive, some other motive or desire .. than to do what the moving party bona fide believed to be right in the interest of justice."
33 In relation to "without reasonable and probable cause", in para 34 of the FFASC the plaintiff alleges that prior to charging him the seventh defendant:
"(a) did not investigate TNT's complaint;
(b) did not make impartial and independent assessment of the IU and TNT actions and allegations towards and against the Plaintiff;
(c) did not consider whether the statements provided to him as described in paragraph 19 above was evidence or sufficient to constitute evidence likely to establish the Plaintiff's guilt if charged under S. 185A of the Crimes Act 1900 .
(d) determined to charge the Plaintiff before interviewing him;