Porter v OAMPS Ltd

INTRODUCTION 1 On 16 March 2005 I ordered that a number of claims then made in the applicant's amended statement of claim be dismissed: Porter v OAMPS Ltd [2005] FCA 232. I ordered that the amended statement of claim be struck out and that the applicant be given leave to file and serve a further amended application and a further amended statement of claim consistently with my reasons for judgment delivered on 11 March 2005. On 16 May 2005 the applicant filed and served a further amended statement of claim. 2 The first respondent and the second to sixth respondents have each filed a notice of motion seeking orders pursuant to O 20 r 2 of the Federal Court Rules that the proceeding be dismissed, on the ground that the amended statement of claim does not disclose a reasonable cause of action or is frivolous or vexatious or an abuse of process. The first respondent also seeks relief in the alternative, that the proceeding be struck out pursuant to O 11 r 12 of the Federal Court Rules on the basis that it does not disclose a reasonable cause of action, has a tendency to cause prejudice, embarrassment or delay, or is an abuse of process. The first respondent and the second to sixth respondents also seek costs on an indemnity basis. 3 The principles which I should apply in determining whether the relief should be granted in accordance with the notices of motion are well established. Before a proceeding can be dismissed on the bases sought, the court must be satisfied that the causes of action are unarguable or are so untenable that they cannot possibly succeed, or are manifestly groundless in the sense of those expressions explained by the High Court in General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 at 129 ("General Steel"). The principles were recently summarised and restated in accordance with the General Steel test in Spotwire Pty Ltd v Visa International Services Inc (2003) ATPR 41‑949. 4 In my earlier reasons at par [53] I expressed the view that it could not then be said that it was impossible for the applicant to plead a reasonable cause of action of malicious prosecution against the first respondent and the second to seventh respondents. I also considered that there was, "at least a possibility that the applicant could bring a proper claim against OAMPS based upon a claim that it has vicarious liability for the malicious prosecution of the second to seventh respondents." 5 I also was not satisfied that it would not be possible for the applicant to re-plead a cause of action against the first to seventh respondents based upon a breach of either s 52 or s 75B of the Trade Practices Act 1974 (Cth) ("Trade Practices Act") or the Fair Trading Act 1999 (Vic) ("Fair Trading Act"). I gathered many of the authorities relating to the tort of malicious prosecution in my earlier reasons for judgment, and I do not repeat them again in these reasons, although I have considered them and taken them into account in forming the views which I now express. 6 The amended statement of claim filed and served on 16 May 2005 is deficient in numerous respects, to which I shall refer. However, as I understand it, it alleges the following causes of action: (1) malicious prosecution against the first respondent and against the second to sixth respondents; (2) that the first respondent is vicariously liable for the malicious prosecution of the applicant by the second to sixth respondents; (3) misleading and deceptive conduct by way of representations against the first respondent and against the second to sixth respondents. 7 The pleading is substantially deficient in its pleading of material facts and its particularisation of such facts as it alleges. It is also discursive and rambling and raises a number of allegations or assertions which do not have any relevance to the causes of action sought to be relied upon. For example, I refer to par 3 which alleges that the second respondent was removed from the board of the first respondent and banned from being a director of other companies for three years for breach of the Corporations Law. Those allegations appear to have no relevance to, or bearing upon, the causes of action of malicious prosecution or misleading and deceptive conduct. 8 In my earlier reasons for judgment I observed (at par [40]): "The elements of the tort of malicious prosecution are: '(i) that the defendant was 'actively instrumental' in the commencement or continuation of the proceedings against the plaintiff; (ii) that the proceedings were terminated in the plaintiff's favour; (iii) that there was an absence of reasonable and probable cause in the defendant's institution or continuation of the proceedings; (iv) that there was malice on the part of the defendant in instituting or continuing the proceedings; and (v) that the plaintiff sustained damage as a result.'" I referred to a note in 70 ALJ at 970 and Davis v Gell (1924) 35 CLR 275 at 282 ("Davis v Gell"). I also observed at par [41] that "merely telling lies to the police is not tortious unless it constitutes a defamation" and that "no civil action lies merely for bearing false witness to investigating officers". 9 I also observed in my earlier reasons that a distinction is to be drawn between the mere giving or passing of information and circumstances in which the respondent provides information in such a way that the investigating body is effectively rendered unable to exercise an independent discretion whether to set the prosecution in motion. 10 Paragraph 8 of the amended statement of claim is in the following terms: "In or about the period from January 1998 to December 1998, OAMPS Ltd through the second to sixth Respondents its officers and directors maliciously and without reasonable or probable cause proffered false, misleading and deceptive information to the Australian Securities and Investments Commission ('ASIC') that was actively instrumental in the Applicant being wrongly charged for breaches of the Corporations Law (the 'Prosecution')." No particulars are given under that paragraph of the manner in which the first respondent, through the second to sixth respondents, was "actively instrumental" as alleged. 11 In the course of oral submissions, counsel for the applicant also relied on pars 12 and 13 as containing what he called "the constitutive facts necessary to raise the cause of action in malicious prosecution". Paragraphs 12 and 13 are in the following terms: "12. From in or about early September 1998, all the Respondents, acting with knowledge of the Takeover and as part of the Course of Conduct made certain false, misleading and deceptive representations (herein referred to as the 'Representations'), knowing them to be false, to the ASIC. 13. The Representations were that the Applicant had caused OAMPS Ltd to contravene section 205 of the Corporations Law by causing OAMPS Ltd to purchase shares in Clifford Corporation Ltd on 30 June 1998 (herein referred to as the 'Clifford Share Purchase') for the purpose of the Applicant retaining his job as managing director." 12 Particulars are given under par 13 of the amended statement of claim which as I have noted alleges that all the respondents made certain false, misleading and deceptive representations. Even if those particulars were relied upon as particulars of the manner in which the respondents were "actively instrumental in the applicant being wrongly charged with breaches of the Corporations Law" the particulars do not support such an allegation. They go no further than the supply of information to the Australian Securities and Investments Commission ("ASIC") and the Commonwealth Director of Public Prosecutions. 13 The cause of action alleged in malicious prosecution is taken no further by par 17 which alleges: "Also unbeknown to the Applicant, and while he was negotiating the NSW Deed with OAMPS Ltd, the other Respondents were maintaining the Prosecution by secretly continuing to fabricate a criminal case against the Applicant that would activate the disciplinary processes of the ASIC by supporting the Representations with suspect evidence. PARTICULARS a) The second to sixth Respondents told the ASIC that the Applicant had said in their presence on 30 June 1998 that the Clifford share purchase would 'save his job'. b) Ms Maria Vibovic, an employee suborned by Lamont, falsely said in her 15 January 1999 statement to the ASIC that on 30 June 1998 she heard the Applicant say words to the effect 'he had just saved his job, but he/I may go to jail for it'. c) Kevin Tehan, another suborned witness, falsely said in his 15 January 1999 statement to the ASIC that on 30 June 1998 he heard the Applicant say the words 'we had sold to the good guys and that he/I would probably go to jail for it'. d) The First NSW proceedings provided the outline of the Prosecution and it was largely adopted verbatim by ASIC and the Commonwealth Director of Public Prosecutions. A copy of the OAMPS Ltd pleadings, defence and supporting bundles in the First NSW proceeding and the Prosecution Hand Up Brief are available for inspection and comparison." 14 It is apparent from pars 19 and 22 that the prosecution that founds the claim for the allegation of malicious prosecution is the prosecution that was commenced by the Commonwealth Director of Public Prosecutions and which concluded in a nolle prosequi being filed on 19 July 2002. 15 I do not consider that a cause of action alleging malicious prosecution against the first or the second to sixth respondents has been made out in the amended statement of claim. In particular, there are no material facts alleged which demonstrate that any of the respondents were the "moving force" behind the prosecution. 16 Further, although par 8 alleges that false, misleading and deceptive information was proffered to ASIC "that was actively instrumental in the Applicant being wrongly charged for breaches of the Corporations Law", that allegation expresses or pleads a conclusion and one is left in the dark as to what exactly is being relied upon. The allegation is curious because it alleges that the "information" was actively instrumental in the applicant being wrongly charged. Even if one could distil out of that allegation that it was the first respondent or the second to sixth respondents who were actively instrumental in the applicant being wrongly charged, one is left in the dark as to how they achieved this, other than by simply supplying information to ASIC. 17 Counsel for the applicant relied upon the following submissions. (1) "The pleadings assert the basic and constitutive facts necessary to demonstrate that the respondents procured the use of the power of the government regulator to hurt the applicant". As I have already noted, I do not accept that submission because there is an absence of relevant material facts and also confusion in relation to the prosecuting authority, which ultimately, in terms of the Presentment, was the Commonwealth Director of Public Prosecutions. (2) "The conduct influenced the ASIC (and in turn the DPP) decision to prosecute. The respondents thus qualify as the prosecutor". I do not accept this submission. It is not supported by the allegations of material facts in the amended statement of claim. (3) "A prosecutor can be sued for damages when the prosecutor acted maliciously and without reasonable or probable cause. The 'in court' immunity does not extinguish the tort of malicious prosecution". He relied upon the decision in D'Orta‑Ekenaike v Victorian Legal Aid (2005) 214 ALR 92, and in particular on the observations of McHugh J in par [99] at 115‑116. What in fact McHugh J said was: "A prosecutor can be sued for the damage to the liberty and reputation of the defendant only when the prosecutor acted maliciously and without reasonable and probable cause." His Honour cited as authority in a footnote for that proposition Davis v Gell, Sharp v Biggs (1932) 48 CLR 81 and Commonwealth Life Assurance Society Ltd v Smith (1938) 59 CLR 527. So one has to read his Honour's observations in the light of Davis v Gell which is still good law. (4) "A nolle prosequi is enough. The applicant need not plead material facts establishing innocence". I am not so sure that that proposition accurately records, or states the law as it is presently today. Counsel relied upon Commonwealth Life Assurance Society Ltd v Smith (supra) but more recent authority casts doubt on that proposition (see Skrijel v Mengler [2003] VSC 270 at [223]‑[227] and see Davis v Gell at 280‑281). (5) "The pleadings assert the basic and constitutive facts necessary to demonstrate that the respondents mislead and deceived the applicant by terminating his insurance cover, thus aggravating the prosecution". That fact may have occurred but it is not an integer in the cause of action for malicious prosecution. (6) "Further particulars and affidavit material may be provided prior to trial". However, on the present motions I am limited to the allegations made in the statement of claim. I am so assuming that such facts as are pleaded can be established. The issue then is - has a cause of action been established. As I have indicated earlier, and as I will further elaborate, the answer is in the negative. 18 The applicant is required to plead more than the simple supply of false information to the prosecuting authority. In substance the applicant must plead facts which demonstrate that the relevant prosecuting authority's discretion was overborne by the respondents. The applicant is required in substance, where there has been an independent prosecuting authority which initiates the prosecution, to establish that such independent discretion was overborne by the respondents and that, in substance, the prosecuting authority did not exercise any independent discretion in bringing the prosecution: McDonald v Coles Myer Ltd (t/as "K‑Mart Chatswood") (1995) Aust Torts Reports 81‑361, Commonwealth Life Assurance Society Ltd v Brain (1935) 53 CLR 343, Martin v Watson (1996) 1 AC 74. 19 The observation I made in par [42] of my earlier reasons bears repeating: "It is clear from the authorities that where a respondent gives investigatory authorities certain information, even where that information amounts to damning evidence, that does not necessarily result in the respondent being labelled a 'prosecutor'. A distinction is drawn between the mere giving of information and circumstances in which the respondent provides information in such a way that the investigating body is effectively rendered unable to exercise an independent discretion whether to set the prosecution in motion. An action for malicious prosecution is more likely to be successful in circumstances where, for example, a respondent has supported false information with fraudulent witnesses (Pandit Gaya Parshad Tewari v Sardar Bhagat Singh (1908) 24 TLR 884 at 884) or where the respondent has procured the institution of criminal proceedings (Martin v Watson [1996] 1 AC 74 at 76‑77). In effect, it may be necessary to establish that the prosecutorial discretion has been overborne by the malicious acts of those that have provided information and evidence to the prosecutor. As it was put by Dixon J in Commonwealth Life Assurance Society Ltd v Brain (1935) 53 CLR 343 at 379: '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 (Danby v Beardsley; Fanzelow v Kerr). But if the discretion is misled 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 (Pandit Gaya Parshad Tewari v Sardar Bhagat Sing; Black v Mackenzie) …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 … The expression 'instigate' is not altogether free of ambiguity but it is used by Sir John Salmond (Law of Torts, 7th ed (1928) p 618) whence the learned Judge seems to have taken the language of the questions put to the jury. In his charge his Honour said:- 'When I use the word instigated in that question, I mean really do you come to the conclusion that the police were not acting in the ordinary course of their duties and on information received in arriving at a decision but were in effect the agents of the defendant company as has been suggested. In other words, was the position dominated by the defendant company, and was the police action really action through that of the defendant company.' [Footnotes omitted]" 20 In short, the allegations travel no further than alleging that the respondents made false, misleading and deceptive representations to ASIC, knowing them to be false, and that they supported the representations with suspect evidence (par 12 and 17 of the amended statement of claim). 21 The applicant relied upon the observations of Lord Keith in Martin v Watson (1996) 1 AC 74 at 89, where his Lordship said: "Similar considerations apply to statements made to the police under circumstances where the maker falls to be regarded as having in substance procured the prosecution." 22 It was submitted by counsel for the applicant, relying upon that observation of Lord Keith, that what his Lordship was in effect saying was that he was meaning something similar to obtaining the fiat of the attorney-general in private prosecutions or becoming a prosecutor or, in the words of an academic writer, looking behind the veil of the technicality of the prosecution. However, Lord Keith's observation must be understood in the context of the facts which were present in the case before him. It is still good law that supplying information in the terms alleged in the amended statement of claim is not a sufficient allegation of material facts to satisfy the requirements of the integers of the cause of action of malicious prosecution. 23 So far as material allegations are concerned, the pleading goes no further than alleging the knowing supply of false information. That is an insufficient basis on which to mount a cause of action of malicious prosecution against the first respondent and the second to sixth respondents. 24 In D'Orta‑Ekenaike v Victoria Legal Aid (supra), the majority of the High Court, Gleeson CJ, Gummow, Hayne and Heydon JJ, said at par [39]: "From as early as the sixteenth century, a disappointed litigant could not sue those who had given evidence in the case. That is, the disappointed litigant could not seek to demonstrate that witnesses had given, or parties had suborned, perjured evidence or that witnesses or parties had conspired together to injure that litigant. Nor could the disappointed litigant seek to demonstrate that what was said by the witnesses had defamed that litigant. All such actions were precluded or answered by an absolute privilege. It mattered not how the action was framed. And it mattered not whether the disappointed litigant alleged that the witness had acted deliberately or maliciously. No action lay, or now lies, against a witness for what is said or done in court. It does not matter whether what is done is alleged to have been done negligently or even done deliberately and maliciously with the intention that it harm the person who would complain of it. The witness is immune from suit and the immunity extends to preparatory steps." 25 The cause of action based upon s 52 of the Trade Practices Act for the making of false and misleading and deceptive representations is similarly flawed, as is any reliance upon the Fair Trading Act. Paragraphs 12, 13 and 16 allege representations of misleading and deceptive conduct, but an actionable cause of action under s 52 of the Trade Practices Act for misleading and deceptive conduct and under the Fair Trading Act, is not made out. For example, there is no allegation of reliance on the misleading and deceptive conduct by any person. Further, there is no connection between the alleged misleading and deceptive conduct and the loss and damage claimed. 26 I am satisfied that the amended statement of claim should be struck out on the ground that it does not disclose any reasonable cause or causes of action. Further, having regard to the matters I raised in my earlier reasons for judgment and the pleading now filed, as a consequence of that I am satisfied that the proper inference to be drawn is that the applicant is unable to plead causes of action against the first respondent and the second to sixth respondents based upon malicious prosecution and misleading and deceptive conduct pursuant to s 52 of the Trade Practices Act or s 11 of the Fair Trading Act. 27 In those circumstances, I am of the opinion that the proper course of action to take is to dismiss the proceeding. It will be dismissed with costs. I certify that the preceding twenty‑seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg.