Weatherall v Satellite Receiving Systems

REASONS FOR JUDGMENT 1 This is an application for leave to appeal from orders made by Whitlam J on 12 March 1999 effectively striking out the statement of claim, refusing leave to file an amended statement of claim and summarily dismissing the applicant's action. The ground on which this relief had been sought by all respondents (except one, which had not been served) was that no reasonable cause of action was disclosed by the statement of claim, and that the proceeding was frivolous and vexatious and an abuse of the process of the Court. 2 The first question is whether the judgment is actually an interlocutory judgment from which the applicant needs leave to appeal. Section 24(1A) of the Federal Court of Australia Act 1976 (Cth) provides: "An appeal shall not be brought from a judgment referred to in subsection (1) [which includes "judgments of the Court constituted by a single Judge"] that is an interlocutory judgment unless the Court or a Judge gives leave to appeal." 3 The identification of what is an interlocutory judgment, as distinct from a final judgment, for the purposes of such a provision has been a matter of controversy for over a hundred years. In Salter Rex & Co v Ghosh [1971] 2 QB 597 at 601 Lord Denning MR said: "This question of 'final' or 'interlocutory' is so uncertain that the only thing for practitioners to do is to look up the practice books and see what has been decided on the point. Most orders have now been the subject of decision. If a new case should arise, we must do the best we can with it. There is no other way." This statement was made after an argument in which authorities were canvassed going back into the nineteenth century. A similar view had been expressed in In re Page [1910] 1 Ch 489 at 493-494 by Buckley LJ, who despaired of the logic of the distinction drawn in the cases, saying: "[T]he decisions are so conflicting that I confess I am unable to arrive at any conclusion satisfactory to my own mind as to whether this is an interlocutory or a final order". 4 In the course of his reasons in Salter Rex & Co v Ghosh, Lord Denning said (ubi supra): "On an appeal from an order striking out an action as being frivolous or vexatious, or as disclosing no reasonable cause of action, or dismissing it for want of prosecution - every such order is regarded as interlocutory". One of the early authorities supporting that proposition is the decision of the Court of Appeal in Jones v Insole (1891) 64 LT 703, where Lindley LJ, with reference to "an order striking out the plaintiff's statement of claim and dismissing the action against one of the defendants", held leave to appeal was required, saying it had been laid down "that an order striking out a statement of claim on the ground that it discloses no cause of action is an interlocutory and not a final order". Jones v Insole was cited with approval by Taylor J (with whom Owen J agreed) in Hall v The Nominal Defendant (1966) 117 CLR 423 at 440, where his Honour said: "The same view [ie that the order was interlocutory] was taken of an order striking out a plaintiff's statement of claim on the ground that it disclosed no reasonable cause of action: Jones v Insole and of an order dismissing an action as frivolous and vexatious in In re Page ([1910] 1 Ch 489." In re Page was a decision of the Court of Appeal concerning the striking out of a statement of claim and dismissal of the action as being frivolous and vexatious. Cozens-Hardy MR (with whom Fletcher Moulton and Buckley LJJ agreed) held (at 491) that such an order was "an interlocutory order for the purposes of appeal". 5 In this vexed area, the judgment of Gibbs J (with whom Mason J agreed) in Licul v Corney (1976) 180 CLR 213 at 225, where Hall v The Nominal Defendant was accepted as the guiding authority, has been recognized as stating the law for Australia. Gibbs J said the test was: "Does the judgment or order, as made, finally dispose of the rights of the parties?" It was held that an order refusing an extension of time for service, the effect of which was to prevent an action proceeding, made after the expiry of the limitation period, although, as Barwick CJ put it at 220, the effect might have been to make it "impossible or impracticable to proceed with this action", was an interlocutory order. 6 Licul v Corney was itself followed by the High Court in Carr v Finance Corporation of Australia Limited (1981) 147 CLR 246, where it was held that an order refusing to set aside a default judgment did not finally dispose of the rights of the parties. 7 Licul v Corney was again followed in Port of Melbourne Authority v Anshun Proprietary Limited (1980) 147 CLR 35, where the order was one forever staying an action on the basis of what has since been referred to (see Effem Foods Pty Ltd v Trawl Industries of Australia Pty Limited (1993) 43 FCR 510 at 538) as the "extended principle of res judicata" the limits of which were laid down by the High Court in a later judgment in the same litigation: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. Gibbs J (with whom Mason and Murphy JJ agreed), held (at 38) that the case before the Court, "in which the abuse of process lies in an attempt to litigate an issue which is res judicata", was a case of which it could be said that, "as a matter of reality, the order made does finally dispose of the rights of the parties", and so was final. But, in so saying, his Honour distinguished other cases of abuse of process "in which the action is frivolous or vexatious in the ordinary sense, or in which the proceedings disclose no reasonable cause of action". The distinction is important, and it reflects an observation made by Mason J, arguendo, at 36, plainly accepting the older authorities to which I have referred. Similarly, the judgment of the Full Court of the Federal Court (Beaumont, Burchett and Lindgren JJ) in Lloyd Werft Bremerhaven GmbH v Owners of Ship "Zoya Kosmodemyanskaya" (1997) 79 FCR 71 at 80, where orders made in interlocutory proceedings were described as having "finally disposed of the whole of the proceedings for want of jurisdiction", is clearly distinguishable from a case of the present kind. 8 Although the modern English decisions have turned to a different statement of the principle upon which the distinction between final and interlocutory orders is made, the case of an order based on the failure of a pleading to disclose a reasonable cause of action, or based on a finding that the proceeding is frivolous or vexatious, is still regarded as exemplifying an interlocutory order: Hunt v Allied Bakeries, Ltd [1956] 3 All ER 513, where the Court of Appeal, in a judgment delivered by Lord Evershed MR, stated (at 514): "[O]rders dismissing actions - either because they are frivolous and vexatious, or on the ground of disclosure of no reasonable cause of action - have for a very long time been treated as interlocutory." The authority of this statement was accepted by the Privy Council in Strathmore Group Ltd v A. M. Fraser [1992] 2 AC 172 at 180, where their Lordships commented: "In each of the cited authorities the Court had come to the conclusion that there was no issue proper to be determined. To allow a litigant to appeal would only encourage an unnecessary expenditure of time and money. If there was nothing to determine, there was nothing to appeal." 9 In my opinion, this survey of the authorities makes it clear that the applicant does need leave in order to appeal. 10 I turn to the discretion to grant leave. It is unnecessary to restate the general principles, which are well known, and were set out in some detail in the Full Court judgment in Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397. I stated them, with particular reference to the situation of a single judge dealing with the question of leave, in Sharp v Deputy Federal Commissioner of Taxation (1988) 88 ATC 4184. In cases such as the present, where the practical effect of the interlocutory order may be to determine, once and for all, the fate of the action, it is necessary to bear this aspect of the matter in mind, as it may strongly favour a grant of leave: Lloyd Werft Bremerhaven at 80-81, where the Full Court said: "In any event, having regard to the effective finality of his Honour's disposition of the matter, if leave to appeal were required, it would be appropriate to grant it, provided we find substance in the appellant's arguments." The proposition was authoritatively laid down in Ex parte Bucknell (1936) 56 CLR 221 at 225, in the joint judgment of the High Court (Latham CJ , Rich, Dixon, Evatt and McTiernan JJ): "There is one class of case which raises little difficulty. If the interlocutory order … has the practical effect of finally determining the rights of the parties, though it is interlocutory in form, a prima facie case exists for granting leave to appeal." 11 In the present case, the statement of claim is so vague and unfocussed as to demand the ruling which has been made, that it fails to disclose a reasonable cause of action. The only question, it seems to me, capable of being debated upon appeal is whether the applicant should have been given an opportunity to re-plead rather than have the action dismissed. It had proceeded some considerable distance, and an affidavit, described as lengthy, had been filed. Should the facts disclosed in the affidavit be capable of formulation in an appropriate statement of claim (and perhaps in any event), it may be (and I emphasize I have no view about this matter at all) that the applicant should have an opportunity to put his claim in order. The unusually lengthy time which expired before any application was made to strike out the statement of claim may have resulted unfairly in the creation of a time bar if the applicant is now required to start again. I do not think these are questions on which a single Judge should draw conclusions, or even tentative conclusions, but, provided the prejudice in costs to the respondents can be reasonably neutralised, I think the applicant should have the opportunity to seek to persuade the Full Court that the effective determination of the action ought to be reversed. 12 I note that the reasons delivered in this case include the statement: "The applicant must be assumed to have pleaded his best case. Indeed, that is what counsel expressly claims that Mr Weatherall does in his proposed amended statement of claim. He eschews any other case and adduced no evidence of facts upon which it could be shown that Mr Weatherall might have a case, however slim." Having perused the transcript of argument, it seems to me the applicant ought to be entitled to dispute the applicability of this reasoning to the particular circumstances. I say nothing at all as to whether another view ought actually to be taken. 13 In my opinion, the obvious deficiencies of the original pleading, and also of the proposed pleading put before his Honour, are such that, if the applicant is to be permitted to seek to persuade a Full Court that he should have a further opportunity, he must first comply with two prerequisites: (1), he must pay the costs of the two proceedings before Whitlam J, if they have been taxed, together with an appropriate security for the costs of the appeal; and (2) he must produce, within an appropriate period, the form of statement of claim he now seeks leave to file. On the assumption that the costs have not yet been taxed, I would fix a total amount of security of $10,000-00. 14 On the basis I have adumbrated, I would grant leave to appeal, limited to the question whether the applicant should have had leave to re-plead in lieu of the dismissal of the action which was ordered. The leave should be conditional upon provision of the security within an appropriate time and, in this regard, I draw attention to the power of the Court to rescind a grant of leave to appeal; Sanofi v Parke Davis Proprietary Limited (1982) 149 CLR 147 at 153; Malouf v Malouf [1999] FCA 284. The only order I make at this stage is that the applicant bring in, on a date to be fixed, short minutes of orders to give effect to these reasons. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Burchett.