Stanizzo v Badarne [2018] NSWSC 1908 | Case summary

The evidence

The application is supported by the plaintiff's affidavit of 10 April 2018 which was read, subject to objections which attracted a ruling in the course of the hearing. He also read the affidavit of Rowan Badarne filed by the second respondent (as to which see later). The plaintiff also tendered his evidentiary statement of 8 March 2018 (a document extending over 52 pages) filed in the substantive proceedings originally commenced by Statement of Claim on 27 March 2014 and to be prosecuted by an Amended Statement of Claim filed on 28 August 2014 in which he seeks an award of damages against Mr Badarne for malicious prosecution. Those proceedings, which were commenced in the District Court, were transferred to this Court on the application of the Crown Solicitor consequent upon the plaintiff also commencing separate proceedings for malicious prosecution against Ms Karina Fregnan (nee Valvano) and the State of New South Wales (for which the Crown Solicitor acts). The three sets of what are described as "related proceedings" are listed for hearing in this Court on 4 February 2019.
The context in which the plaintiff seeks a freezing order needs to be set out in summary detail in order that an informed assessment might be made as to whether the plaintiff's evidence is capable of satisfying the test that the case as pleaded in the Amended Statement of Claim of 28 August 2014 may properly be characterised as a "good arguable case" as required by r 25.14(1)(b) of the UCPR.
The plaintiff advanced the submission, which is plainly correct, that the assessment as to whether the case for substantive relief is a "good arguable case" is different from the test to be applied when an interlocutory injunction is sought, namely whether it can be shown that there is a serious question to be tried. In the plaintiff's submission (a submission with which the defendant does not take issue), the test of a "good arguable case" is a case which is reasonably arguable, or one that has sufficient (or reasonable) prospects of success.
The substantive proceedings in which Mr Badarne is the sole defendant must not be confused with the proceedings in which the plaintiff seeks damages for malicious prosecution against the State of New South Wales and Ms Fregnan, despite the fact that the allegations of criminal conduct which grounded the laying of criminal charges against the plaintiff arose in the context of a professional relationship between the plaintiff and Mr Badarne as solicitors, and Mrs Fregnan as a client of the firm in which they both practised.
The criminal proceedings, foundational to the plaintiff's claim that he was maliciously prosecuted, were initiated by NSW Police when the plaintiff was arrested and charged with a range of criminal offences on 4 November 2010. Those charges were then prosecuted through the Local Court and eventually on indictment to the District Court. Ultimately the plaintiff was prosecuted on two separate indictments in the District Court, each of which was resolved in his favour by the Director of Public Prosecutions entering a nolle prosequi during the course of the trial. Significantly, the plaintiff's application for freezing orders relates only to the allegation that Mr Badarne prosecuted him maliciously and without reasonable and probable cause, and principally in respect of one of those indictments.
The first indictment (laid first in time), annexed as annexure "B" to the Amended Statement of Claim, charges that on four occasions between 14 December 2009 and 21 December 2010, the plaintiff intimidated Mr Badarne with the intention of causing him to fear physical or mental harm contrary to s 13(1) of the Crimes (Domestic and Personal Violence) Act 2007 (NSW). The second indictment, annexed as annexure "C" to the Amended Statement of Claim, charges that the plaintiff, on 19 November 2008, had sexual intercourse or attempted to have sexual intercourse with Ms Fregnan without her consent, knowing that she was not consenting, contrary to s 61I of the Crimes Act 1900 (NSW). The plaintiff was further charged that on 19 November 2008 he threatened to cause physical injury and financial detriment to Ms Fregnan with intent to influence her not to disclose the conduct the subject of the preceding count contrary to s 315A(1) of the Crimes Act. Two additional offences, allegedly committed on 25 May 2009, were laid contrary to s 61L of the Crimes Act, together with a further charge of intimidation involving Ms Fregnan as a victim contrary to s 13(1) of the Crimes (Domestic and Personal Violence) Act, and finally, a charge that the plaintiff attempted to have Mr Badarne knowingly make a false statutory declaration with intent to pervert the course of justice. It is only that charge that is implicated in the substantive proceedings against Mr Badarne for malicious prosecution.
Without descending into the detail of the case the plaintiff brings against Mr Badarne for malicious prosecution, it is fundamental to the plaintiff's case that he establishes that Mr Badarne is a prosecutor for him to be liable for the tort of malicious prosecution. That in turn obliges him to prove to the requisite standard of proof that Mr Badarne instigated and was actively instrumental in the commencement and continuation of his prosecution on the indictment and that he is liable, as a prosecutor, for the tort of malicious prosecution for that reason (A v State of New South Wales (2007) 230 CLR 500).
In meeting that legal and evidential challenge, the plaintiff seeks to make the case that Mr Badarne provided deliberately false information to the prosecuting authorities, as a result of which the charges the subject of the first indictment were laid. It is also the plaintiff's case that Mr Badarne gave deliberately false information to police as a witness in respect of the evidence that he provided in support of one of the counts of sexual assault in which Ms Fregnan was a victim, and false evidence in support of the last count on the second indictment which attracted a charge contrary to s 319 of the Crimes Act.
The plaintiff acknowledges that in circumstances where each of the offences prosecuted on the indictment were initially the subject of a charge laid by investigating police, his case against Mr Badarne as a prosecutor depends upon his establishing that responsibility for setting the criminal process in train can properly be attributed to him, in the sense that the discretion of the prosecuting authorities was actively misled by the provision by Mr Badarne of deliberately false information, thereby causing them to initiate and maintain the criminal proceedings. Put more directly, it is the plaintiff's case that I would be satisfied that there is a "good arguable case" that the decision making process of the charging police and the prosecuting authority was materially tainted by the provision of false evidence by Mr Badarne, or by misleading conduct on his part, such as to overwhelm their discretion consistently with Johnston v Australia & New Zealand Banking Group Ltd [2006] NSWCA 218.
In Johnston v Australia & New Zealand Banking Group Ltd, a bank and two other parties (the creditor and his employee) were sued for malicious prosecution. The bank had issued a notice to the appellant and then sought to have him prosecuted for trespass when he entered the land to obtain the notice; the bank, as secured creditor, having taken possession of the land. Basten JA (Giles and Santow JJA agreeing) stated the principles that apply when a private person is sued as a prosecutor at [41]-[43]: [41] The limits to the circumstances in which private citizens will be liable for malicious prosecution, where they have reported possible unlawful activity to the police, will vary, depending upon the particular circumstances of a case. There are conflicting policy considerations: on the one hand, people should be discouraged from using the criminal courts for settling civil disputes or simply as places where old scores may be settled … On the other hand, responsible citizens should not be discouraged from reporting possible unlawful behaviour to the authorities responsible for investigating and prosecuting offences and crimes, by the fear of civil action if a complaint proves to be unfounded. The tension between these policy considerations was helpfully expressed in the American Law Institute, Restatement of the Law, Torts (2nd ed, 1977) at s 653(g): Influencing a public prosecutor. A private person who gives to a public official information of another's supposed criminal misconduct, of which the official is ignorant, obviously causes the institution of such subsequent proceedings as the official may begin on his own initiative, but giving the information or even making an accusation of criminal misconduct does not constitute a procurement of the proceedings initiated by the officer if it is left entirely to this discretion to initiate the proceedings or not. When a private person gives to a prosecuting officer information that he believes to be true, and the officer in the exercise of his uncontrolled discretion initiates criminal proceedings based upon that information, the informer is not liable under the rule stated in this Section even though the information proves to be false and his belief was one that a reasonable man would not entertain. The exercise of the officer's discretion makes the initiation of the prosecution his own and protects from liability the person whose information or accusation has led the officer to initiate the proceedings. If however, the information is known by the giver to be false, an intelligent exercise of the officer's discretion becomes impossible, and a prosecution based upon it is procured by the person with responsibility for the initiation of proceedings by a public official, it must therefore appear that his desire to have proceedings initiated, expressed by direction, request or pressure of any kind, was the determining factor in the official's decision to commence the prosecution, or that the information furnished by him upon which the official acted was known to be false. … [42] In circumstances where there is little by way of investigation of the facts to be undertaken by the police, the provision of false evidence by the complainant will readily support an action for malicious prosecution, even though the police may make the necessary inquiries, obtain a denial from the prospective defendant, and are then faced with conflicting stories. … [43] It follows that whether or not a complainant will be found liable in circumstances where a charge was laid and proceedings undertaken by the police, will depend upon the extent to which responsibility for setting the criminal process in train can properly be sheeted home to the complainant. But an independent exercise of discretion by the police could only be relied on as a defence where it is shown that the decision-making process was not materially tainted by false evidence provided by, or misleading conduct on the part of, the complainant.
The plaintiff contends that the evidence relied upon to make out his case that Mr Badarne is a prosecutor for present purposes to a "prima facie" standard is contained within his evidentiary statement. I have read and considered that document. I am unpersuaded that it carries the evidentiary force contended for by the plaintiff. His evidentiary statement consists largely of a series of accusations and contentions unsupported by independent evidence and in some respects contradicted by other evidence. That is not to foreclose upon the way in which the plaintiff might ultimately advance his case in the substantive proceedings. For present purposes I am also obliged to take into account, and I do, the submission advanced by the defendant that it is clear on the evidence upon which the defendant relies, inclusive of a statement from the Crown Prosecutor who prosecuted the plaintiff on the indictment (prior to the entering of the nolle prosequi in the course of the trial), that Mr Badarne's statements to police were not the only evidence available to the them (and it might be inferred upon which they relied) before they charged the plaintiff. Neither was his evidence the only evidence available to the Crown Prosecutor in determining that the proceedings should be prosecuted to trial by the presentation of an indictment in the District Court. Without detailing that evidence, suffice to note that three of the four charges the subject of the first indictment were supported by independent witness statements to the effect that each witness heard the subject threats issued, one of whom was a receptionist at a law firm who heard the threats made on a telephone call when the call was on speakerphone. I also note that the fourth offence was apparently supported by a sound recording. While the plaintiff makes the bare and unsubstantiated allegation in his evidentiary statement that the recording was "cut, pasted, edited and doctored" to create a deliberately false impression sufficient to support an allegation of intimidation, this is unsupported on the evidence before me by independent evidence that the sound recording was constructed or manipulated. The defendant also emphasised that in respect of the count on the second indictment which alleges the sexual offence in which Ms Fregnan is the named complainant (and as to which it is said the defendant was a witness) that incident was recorded pursuant to a listening device warrant issued to the NSW Police.
The circumstances in which the Director of Public Prosecutions determined that there be no further prosecution of the indictment in which the plaintiff was charged with multiple counts of intimidating Mr Badarne are not entirely clear. What is clear is that the decision was preceded by a decision that there be no further prosecution in the proceedings in which Ms Fregnan was the complainant. Whatever may have been the ultimate basis for the entering of the nolle prosequi, it appears, again on the evidence before me, that the decision not to proceed to seeking verdicts on either indictment was a considered decision made by the Director of Public Prosecutions, taking into consideration a variety of matters bearing on the discretion reposed in him by the Director of Public Prosecutions Act 1986 (NSW).
Not insignificantly, in the substantive proceedings the defendants also forecast their intention to tender a statement of facts signed by the plaintiff which were at one time intended to accompany his sentence proceedings in respect of some or all of the charges ultimately prosecuted on indictment. The fact that the plaintiff successfully persuaded a judge of the District Court that in the exercise of his discretion, the pleas of guilty accompanied by signed admissions of guilt should be withdrawn allowing for a trial on all issues does not necessarily derogate from the evidentiary weight attaching to the signed admissions on the question whether, assuming Mr Badarne is a prosecutor (a matter as to which I have some grave doubt), it can be established that he prosecuted the plaintiff in the absence of reasonable and probable cause, and maliciously - as separate elements of the tort of malicious prosecution as to which the plaintiff bears the onus of proof. For that additional reason, I am not persuaded that the plaintiff has a "good arguable case" to justify the relief he seeks.
Were my assessment of the insufficiency of the evidence to establish the foundation for the making of a freezing order in error, it is appropriate that I also consider whether I am satisfied that there is a good arguable case for relief under s 37A of the Conveyancing Act. I do so despite the plaintiff having not initiated proceedings in the Equity Division of this Court for relief of that kind. The plaintiff seeks to invoke reliance on s 37A of the Conveyancing Act 1919 (NSW) in these proceedings, it being contended that the transfer of the property from the plaintiff to his wife, the second respondent, on trust for their children, was a transaction entered into with the intention of frustrating, defeating, hindering, delaying or preventing the plaintiff from recovering damages, in the form of a judgment debt, on the successful resolution of his claim for damages for malicious prosecution.
It is the plaintiff's case that a freezing order over the property will preserve the asset to facilitate the making of an application pursuant to s 37A of the Conveyancing Act to set aside orders made in the Local Court under the Family Law Act by claiming standing as a person in the category of a potentially defrauded creditor. That section provides as follows: 37A Voluntary alienation to defraud creditors voidable (1) Save as provided in this section, every alienation of property, made whether before or after the commencement of the Conveyancing (Amendment) Act 1930, with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced. (2) This section does not affect the law of bankruptcy for the time being in force. (3) This section does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors.
It is not necessary to refer at length to the way in which s 37A operates as a matter of principle. I note, in that connection, Chan v Acres [2015] NSWSC 1885 and B v U [2012] NSWSC 1416 are authorities to which both parties referred in the course of submissions. What the plaintiff is confronted with in the proceedings before me is the uncontested evidence of both Mr and Ms Badarne as respondents to the motion to the effect that the consent orders entered in the Local Court which altered the legal and equitable interests in the matrimonial property were sought by them as applicant and respondent to proceedings pursuant to the Family Law Act. On their evidence, those consent orders reflected their strained marital relations as at February 2015 and the events that preceded the date of the orders, including a course of litigation initiated by the plaintiff in the Equity Division of this Court - litigation that resolved in Mr Badarne's favour by the plaintiff filing a Notice of Discontinuance with an accompanying order for costs.
The plaintiff elected to read in his case the affidavit of Ms Badarne as the second respondent to the Notice of Motion. Unsurprisingly, there was no objection to that course. In her affidavit she states, categorically, that as a consequence of her concern at the potential dissolution of her marriage she sought independent legal advice, with her motivation in doing so being driven by a desire to have the matrimonial property transferred to her on trust for the benefit of her children to ensure her husband did not "feel the need to borrow against the property" in order to meet what she perceived her husband thought was the need to be represented by senior and junior counsel in proceedings then pending in the Equity Division. She makes clear in her affidavit that that decision was made in the context of the plaintiff having brought other unmeritorious proceedings against her husband, and in the context of his compromised physical and mental health as a result of the stress of being embroiled in a persistent course of litigation. Mrs Badarne made clear that it was that set of circumstances and those circumstances only that led, in July 2014, to her and her husband agreeing to live under the same roof with their three children, although separated. She deposed to the following: At the time of the making of the orders, relations between us were so poor that we thought our separation was to be permanent or we might even divorce.
She went on to say that although the relationship reverted to a "much better footing" after the successful resolution of the Equity proceedings, at the time the orders under the Family Law Act 1975 (Cth) were sought and entered she denied, absolutely, that she or her husband had any intention to defraud creditors by the property settlement (including for present purposes a potential for the plaintiff to be a judgment creditor). She further deposed to the following: My motivation was solely about protecting my children and to a much lesser extent myself. I have no intention of depriving any potential creditor of anything… I will continue in the foreseeable future to hold the property as a trustee for my children. I have no intention to sell the property and, fortunately, with my ability to earn income [as a university accredited teacher at Amity College, an independent non-denominational school in Shellharbour] we do not need to borrow against the property, however I strongly resist any suggestion that the property should be frozen on the basis that I am in some way involved with abusing the process of the Court or abusing anyone.
Mrs Badarne's evidence aligns with the evidence of Mr Badarne in his affidavit of 26 April 2018. Relevantly, he said as follows: 22. In the year 2014, the plaintiff brought various actions against me in the Supreme Court. These actions were brought notwithstanding that the plaintiff and I had entered into a deed of settlement on 30 July 2010. Both proceedings before Robb J and Rein J in 2014 were dismissed and what remained was discontinued by the plaintiff. 23. The issues before Rein J, in particular were somewhat complex and I felt the need to be represented by senior counsel and junior counsel in relation to that matter which had hearing dates of 3, 9 and 18 September 2014 and decision was given on 19 September 2014. In those proceedings, I was completely successful but the proceedings caused me great strain. I felt that the proceedings were being unnecessary [sic] prolonged by the other side. The proceedings affected me in my employment, in my home life and I had to discontinue the studies for the PhD in Economics (mathematic modelling) which I was undertaking at the University of Wollongong. My wife had had to endure the effects of almost 6 years of conflict I had had with the Plaintiff. I had been a witness in the criminal proceedings against the plaintiff in 2013 and this had also caused us great strain. Since the time that we had first come to Australia, my wife had become more independent in outlook and felt that the House being solely owned by me was unfair particularly to the children and in circumstances where she expressed to me often that I may need to borrow money for the payment of my own legal fees as she felt that there was no end in sight in relation to the legal proceedings with which I would be involved with the Plaintiff. 24. She could see that these proceedings were affecting my health and she said that she was not prepared to continue with such an arrangement. Over the course of 2014, relations between us became increasingly strained. By August 2014, they were at a breaking point. 25. Initially, my male pride was wounded and I felt that as the husband and father I could carry the load and protect both my wife and my children. As time went on however, I realised that it was a matter of such importance to my wife that she was going to leave me if I did not change the arrangement. It had always been my intention that everything I earned would ultimately be for the benefit of my children. However, I came to realise that circumstances had changed considerably since we had first arrived in Australia in 2004. She had obtained high proficiency in the English language. She had a distinguished academic record. She was in a very large part responsible for the very high academic performance of my 2 daughters. By early 2015, I had come to 2 conclusions about our relationship. Firstly, that my wife was serious about ending out marriage if I did not change the arrangements. Secondly, I wanted to both preserve my marriage and to protect my children. 26. From early August 2014 while we both continued to live at the House, we were separated. Reference is made in paragraph 16 to the plaintiff's affidavit to the fact that I did not mention this separation or the property settlement in my evidentiary statement in the main proceedings. As far as I am concerned, they are entirely personal to us and have no relevance to the main proceedings.
Finally, Mr Badarne deposed to the fact that he does not consider himself to be at risk in the substantive proceedings. Doubtless on the basis of advice as to the relevant legal principles which will determine the viability of the plaintiff's claim for malicious prosecution, the defendant said in his affidavit "while I accept that there is often a measure of uncertainty in the prediction of legal proceedings, I do not regard these proceedings as being proceedings where I am at risk". I note that the plaintiff is represented by Mr Macaulay of counsel in the substantive proceedings. Mr Macaulay appeared as junior to Mr Pritchard SC on the application for freezing orders.
The further significance that attaches to the judgement of Bellew J is, according to the respondents, that his Honour determined that the evidence before him for interim orders failed to establish the following: 1. that the plaintiff had a "good arguable case" against Mr Badarne as a prosecutor for the purposes of the tort of malicious prosecution as required by r 25.14(1)(b) of the UCPR. 2. that either Mr Badarne or his wife, as the second respondent to the motion, were likely to abscond from the jurisdiction, or that there was any appreciable risk if an order were not made that assets would be removed from the jurisdiction, disposed of within the jurisdiction, or otherwise dealt with in some fashion which would frustrate the plaintiff's entitlement to a judgment debt on the successful prosecution of his tortious claim. 3. that there was any risk that the property might be dealt with in a way that would see its value diminish.
The defendant submitted that in pursuing his application for a freezing order where no additional evidence of any materiality has been served to address the deficiencies in the evidence on the application before Bellew J or to alter or add weight to the evidence before his Honour, the Notice of Motion should be dismissed with costs ordered to be paid on an indemnity basis. Having regard to the evidence before me, including in particular the additional evidence illuminating the circumstances in which the property was transferred, I am not persuaded that that order should be made. A further order was sought that since Mrs Badarne is not a party to the substantive proceedings, her costs in responding to the Notice of Motion should be ordered to be paid forthwith. I accept that submission.

Stanizzo v Badarne

At a glance

Court

Decision date

Before

Source

Judgment (4 paragraphs)

Parties

Legislation Cited (7)

Cases Cited (9)