New South Wales Supreme Court CITATION : Johnston v ANZ Bank Ltd & 2 Ors [2001] NSWSC 238 CURRENT JURISDICTION: Common Law FILE NUMBER(S) : SC 20553/2000 HEARING DATE(S) : 6 November 2000 JUDGMENT DATE : 6 April 2001 Daryl Lindsay Johnston (Plaintiff) Australian and New Zealand Banking Group Limited (First Defendant) PARTIES : John Edward Star (Second Defendant) Stuart Karim Ariff (Third Defendant) JUDGMENT OF : Master Harrison Mr A T McInnes QC (Plaintiff) COUNSEL : Mr J E Thomson (Defendants) Weatherly & Bartram of Albury (Plaintiff) SOLICITORS : Coudert Brothers (Defendants) CATCHWORDS : Summary judgment - malicious prosecution - abuse of process Supreme Court Rules Supreme Court Act 1970 LEGISLATION CITED : Inclosed Lands Protection Act 1901 Real Property Act 1900 Halbury's Laws of Australia, Volume 26 (1997) Crimes Act Associated Securities Finance Ltd v Harrow Properties Pty Limited (NSWSC Lee J, 26 May 1977, unreported) H 1976 Nominess Pty Limited v Galli Ltd & Quarries Ltd (1979) 30 ALR 181 Little v Law Institute of Victoria (1990) VR 257 Mitchell v John Heine & Son Limited (1938) 38 SR (NSW) 466 Grimwade v State of Victoria (1997) ATR 81-422 CASES CITED : Saville v Roberts (1868) 1 Ld Raym 374; 91 ER 1147 Little v Law Institute of Victoria [1990] VR 257 Commonwealth Life Assurance Society Limited v Smith (1937-38) 59 CLR 527 Williams v Spautz (1991-92) 174 CLR 509 Hanrahan v Ainsworth (1985) 1 NSWLR 370 Goldsmith v Sperrings Ltd [1977] 2 All ER 566 Grainger v Hill (1838) 4 Bing NC 212 DECISION : (1) The statement of claim is struck out; (2) The plaintiff is to file and serve an amended statement of claim within 28 days; (3) The plaintiff is to pay the defendants' costs. 18 THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION MASTER HARRISON FRIDAY, 6 APRIL 2001 20553/2000 - DARYL LINDSAY JOHNSTON v AUSTRALIA & NEW ZEALAND BANK LIMITED & 2 ORS JUDGMENT (Summary judgment; malicious prosecution; abuse of process) 1 MASTER: By motion of motion filed 26 April 2000 the defendants seek firstly, an order pursuant to Part 13 r 5 of the Supreme Court Rules (SCR) that paragraphs 17 to 21 and paragraph (ii) of the statement of claim be dismissed; secondly an order pursuant to Part 15 r 26 of the SCR that paragraphs 1 to 16 and paragraph (i) of the statement of claim be struck out; or alternatively that the proceedings be struck out. The first defendant in the ANZ Bank, the second defendant is John Edward Starr, the receiver and the third defendant is Stuart Kevin Ariff who was an employee of the receiver. The defendants relied on the affidavits of Julie Patricia Engwirda sworn 18 May 2000, Stuart Karim Ariff sworn 15 August 2000, John Edward Star sworn 22 August 2000 and John Trevor Mitchell sworn 30 October 2000. The plaintiff relied on his affidavits sworn 8 August 2000 and 22 August 2000 and the affidavit of Gregory Arthur Petrie sworn 1 June 2000. 2 The plaintiff alleges that he has two causes of action firstly, an action for the tort of malicious prosecution and secondly, an action for the tort of abuse of process arising from him being prosecuted under the Inclosed Lands Protection Act 1901 (the police proceedings) and apprehended violence orders obtained by the second and third defendants. 3 The defendants sought that the proceedings be dismissed pursuant to Part 13. The proceedings for malicious prosecution and abuse of process cannot be summarily dismissed under this Part because of s 88 of the Supreme Court Act 1970 (SCA). 4 Section 88 SCA states: "Proceedings on a common law claim in which there are issues of fact - (a) on a charge of fraud against a party; or (b) on a claim in respect of defamation, malicious prosecution, false imprisonment seduction or breach of promise of marriage, shall be tried with a jury. 5 In Associated Securities Finance Ltd v Harrow Properties Pty Limited (NSWSC Lee J, 26 May 1977, unreported) stated: "Applying the same reasoning to s 88 it follows that when Pt 13 r 1 excludes from the procedure for summary judgment "proceedings within the application of s 88 of the Act" this excludes not only the case when a cause of action in fraud is being asserted but also the case when an issue of fraud arises under a defence of fraud pleaded by a defendant. The English rule dealing with summary judgment, O 14 r 1(2)(b) only excludes from the remedy of summary judgment "an action which includes a claim by the plaintiff based on an allegation of fraud", but r 1 of Pt 13 cannot, in the way it is expressed, be given a similar restrictive meaning. It follows, therefore, that whilstever the statements of defence allege a defence of fraud it is not open to the plaintiff to move for summary judgment, and the plaintiff must look elsewhere in the Rules for a remedy if he claims that the defences filed by the defendant should not be allowed to stand. His remedy then, is to be found in Pt 15 r 26 which entitles the court to strike out pleadings in whole or in part." 6 Under s 88 SCA the authority of Harrow, summary judgment under Part 13 is not permitted. This part of the defendants' claim fails. 7 The undisputed facts short facts are follows: (1) The plaintiff, Daryl Lindsay Johnston is a director of three companies known as Hurworth Nominees Pty Ltd, Lillyhill Pty Ltd and Hiform Feeds Pty Ltd (the companies). Hurworth Nominee Pty Ltd was the registered proprietor of the farming property Lilydale, Corowa, which was also the site of the company's registered office and residential rental dwellings, one of which was tenanted by the plaintiff. (2) The Hiform group were customers of the first defendant, the ANZ Bank. (3) On 28 July 1994 Hurworth Nominees Pty Ltd granted a registered mortgage in favour of the bank over the property known as Lilydale Corowa, New South Wales (the property) of which it was the registered proprietor. (4) On 28 March 1996 following a mediation pursuant to the Farm Debt Mediation Act , a deed was entered into between Hiform Group, Mr Johnston and others. (5) There was default under the terms and conditions of the deed. (6) On 14 May 1996 the bank appointed Mr Star as receiver and manager of each of the companies in the Hiform group. (7) On 16 August 1996 the bank commenced Supreme Court proceedings No 3089/96 seeking orders that Mr Johnston be order to leave the property and be restrained from attempting to retake possession of the property. (8) In 19 August 1996 the application came before Bryson J for hearing. In his judgment Bryson J stated that on or by 15 August 1996 Mr Johnston took occupation, changed the locks, remained in the house and that would not remove despite the attendances by a security guard appointed by the receiver and by the police. Mr Johnson's solicitor, Mr DeLucci appeared at the hearing and made submissions. Bryson J ordered firstly, the defendants and each of them by themselves, their servants and agents be restrained from taking and continuing to be in possession of the property known as Lilydale, Corowa, New South Wales (the Property); and secondly that the defendants and each of them by themselves, their servants and agents vacate the property forthwith. These injunctions were to take effect from the next day namely 20 August 1996. 8 From this point onwards some of the events are strongly in dispute. The plaintiff alleges that the taking of legal proceedings against the plaintiff for two breaches of the Inclosed Lands Protection Act 1901 (the police proceedings) and the obtaining of apprehended violence orders (apprehended violence orders) by the second and third defendants constituted the torts of malicious prosecution and abuse of process. 9 I turn now to consider whether the plaintiff's claim should be struck out under Part 15 r 26. 10 Part 15 r 26 provides: (1) Where a pleading— (a) discloses no reasonable cause of action or defence or other cause appropriate to the nature of the pleading; (b) has a tendency to cause prejudice, embarrassment or delay in the proceedings; or (c) is otherwise an abuse of the process of the Court, the Court may at any stage of the proceedings, on terms, order that the whole or any part of the pleading be struck out. (2) The Court may receive evidence on the hearing of an application for an order under subrule (1). …" 11 As stated above, if the defendant's defence based on fraudulent misrepresentation can validly stand it would not be open to the plaintiff in this case to have summary judgment because Pt 13 r 1 denies the remedy in such a case. 12 At the outset, I remind myself that the onus is on the plaintiff in the statement of claim to set out the facts upon which the defendants can become aware of the precise allegations made against them and hence what it is that they have to meet. If a fact is material, it must be pleaded and not merely referred to in particulars - see H 1976 Nominees Pty Limited v Galli Ltd & Quarries Ltd (1979) 30 ALR 181 at 186-187. The police proceedings 13 In paragraphs 6 to 12 of the statement of claim the plaintiff alleges that after the second defendant was in occupation of Lilydale the plaintiff learnt that a notice pursuant to s 57(2) of the Real Property Act 1900 had been served upon Hurworth Nominee Pty Ltd by the bank at the Lilydale property. On 26 October 1996 the plaintiff went to the registered office to collect the notice but was unable to obtain the notice, because he was told the notice was not there. The plaintiff again went to the registered office on 31 October 1996 to collect the notice and was once again told that it was not there by two agents of the first defendant. The first and second defendants allegedly were aware of why the plaintiff went to the office. 14 According to the plaintiff, it was only when the defendants' solicitor on 5 November 1996 wrote to the police that they took action to prosecute him. These acts are pleaded to be malicious acts. The plaintiff alleges that the letter made accusations or implications which were unfounded, misleading and untrue. The letter contained an assertion that the plaintiff re-entered the property without permission. 15 Particulars of the purported untrue allegations contained in the letter of 5 November 1996 are given in paragraph 13 of the statement of claim. They are firstly, that the bank was entitled to possession of Lilydale; secondly, that the plaintiff changed the locks to the dwelling on Lilydale; thirdly, that the bank had the right to possession and to inform the police that the plaintiff had a lawful excuse to enter the premises pursuant to his obligation under the Corporations Law; and fourthly, that the bank itself, its servants and agents made untrue allegations about the character and actions of the plaintiff. At the time this letter was written the restraining order referred to above was in force. Inclosed Lands Act 16 The proceedings were prosecuted by the police at Corowa Local Court on 13 May 1997. On 6 August 1997 the magistrate dismissed the informations. Gould LCM stated: "It is clear Mr. Johnson is obsessed with this matter and I must say not surprisingly, but of course in respect of the company (receiver's and Bank's) attitude. When one hears it in the light of Mr Morton's evidence, his evidence of the instructions given from the receiver, "No way I was going to give it [the 57(2)(b) notice] to him." That's when he (Mr. Morton) asked him (Defendant) to go to the roadway and he said he would give it to him there, simply to get him to leave and buy time until the Police arrived. The Defendant's rights so much as they pertain to involvement on those premises was not in anyway considered by those instructing the staff on the ground. He only appears to have got the notice in November, but clearly after these matters and under instructions to them to post it and of course Ms. White's evidence was, it was always in the house and that she had put it under the phone, but never endeavoured to look for anything, even after his request, she didn't consider looking for the document even after his approach to her and Mr. Morton on the subsequent occasion. There were no efforts to assist him in obtaining that notice. They (the Bank and receiver) simply can't hide behind a Supreme Court Order and deal without compassion and without involving themselves in the legal interest of the Defendant and that is clearly what they have done. I am satisfied that on both days Mr. Johnston was pursuing his legal right to obtain the document served upon the Company, at the registered office, of the Company of which he was the principal corporate officer, that is the secretary and both informations are therefore dismissed." Malicious prosecution 17 The elements that the plaintiff must plead and prove are firstly, that the proceedings are actionable; secondly, that the proceedings complained of were instituted by the defendants; thirdly, that the defendants instituted the proceedings maliciously; fourthly, that the defendants acted without reasonable and probable cause; and fifthly that the proceedings were termination in the plaintiff's favour. - see Little v Law Institute of Victoria (1990) VR 257 at 262 and 265; Mitchell v John Heine & Son Limited (1938) 38 SR (NSW) 466 at 469 per Sir Frederick Jordan CJ. 18 The defendants submitted that the plaintiff has not properly pleaded a case of malicious prosecution in the police proceedings. The defendants submitted that the plaintiff's claim cannot be sustained because they did not institute proceedings, nor did they have the requisite intent. The police took the proceedings. In relation to the defendants' submission that the claim was not brought by the police, the plaintiff referred to Halsbury's Laws of Australia, Volume 26 (1997) Butterworths at 787. That text states that the defendant needs to be actively instrumental in instituting or continuing the previous proceedings complained of. The other elements cited in Halbury's are essentially the same as those in Little and Mitchell. It is arguable that the defendants were actively instrumental in continuing these proceedings as they provided information upon which the police acted. 19 The defendant further submitted that the statement of claim does not plead or does not adequately plead the nature of the police proceedings so that the defendants can determine how the allegations made against them could be said to constitute them instituting the proceedings. According to the defendant there is no allegation as to how the allegedly untrue complaints alleged in paragraph 11 or the untrue allegations in paragraph 13 were material to the proceedings being instituted by the police, except to say they were misled (para 14 of the statement of claim). 20 The defendants further submitted that the police are experienced at investigations and are trained to test the reliability of complaints. If it is alleged that the defendants misled the police, it should be properly pleaded by specifying exactly how the police were misled and how that being misled was material to the proceedings being instituted. It is my view the statement of claim does not adequately plead how the police were misled and how this is relevant. In the plaintiff's statement of claim he alleges at paragraph (13) the particulars of the untrue allegations and specifically at (d) claims that the bank made untrue allegations about the plaintiff's character and actions. In making these claims the plaintiff had laid the foundation for the allegations. However, the amendments must particularise, in as much detail as possible, the allegedly untrue allegations made to the police by the bank and its servants or agents about the plaintiff's character and actions. 21 The defendants also claimed that it was not pleaded how the above alleged untruths were material to the institution of proceedings. In paragraph (14) of the statement of claim the plaintiff claims that as a result of the statements made to the police by the defendants the plaintiff was prosecuted. Again this would require amendments to the statement of claim but it would appear that prima facie, there is an issue of law to be decided as to whether the defendants were actively instrumental in instigating proceedings against the plaintiff. 22 Halsbury's Laws of Australia Volume 26 at 787,479 states that a person who knowingly misleads the police may be considered to be actively instrumental in the prosecution. The determination as to whether untrue allegations were made by the defendants to the police is an issue of fact to be decided at trial. The plaintiff again will have leave to amend his statement of claim to particularise what untrue allegations were made to the police and how such allegations led to charges being laid. 23 The defendants submitted that the statement of claim does not plead an essential element of the tort namely that the defendants acted without reasonable and probable cause. In Mitchell at 469-470, Sir Frederick Jordan CJ outlined the requirements of what has to be proved by a plaintiff to show that the defendants lacked reasonable and probable cause. "in order that one person may have reasonable and probable cause for prosecuting another for an offence, it is necessary that the following conditions should exist: 1. The prosecutor must believe that the accused is probably guilty of the offence. 2. This belief must be founded upon information in the possession of the prosecutor pointing to such guilt, not upon mere imagination or surmise. 3. The information, whether it consisted of things observed by the prosecutor himself, or things told to him by others, must be believed by him to be true. 4. This belief must be based upon reasonable grounds. 5. The information possessed by the prosecutor and reasonably believed by him to be true, must be such as would justify a man of ordinary prudence and caution in believing that the accused is probably guilty." 24 The Court of Appeal decision in Mitchell was cited with approval in Grimwade v State of Victoria (1997) ATR 81-422. Harper J stated: "[the plaintiff must, if he is to have any hope of ultimate success in his claim to have been maliciously prosecuted, call evidence of the kind described by Sir Frederick Jordan. The defendant is entitled to be provided, by way of particulars, with an outline of that evidence. [Unless those particulars are provided] [t]he Court should accordingly refuse to allow the claim in malicious prosecution to go ahead,…" 25 The statement of claim does not properly plead nor provide particulars in relation to whether the defendants acted without "reasonable or probable cause". The fact that any statements made by the defendant were untrue (which is denied) is not sufficient. The plaintiff must plead that the defendants did not believe the statements to be untrue, or alternatively the defendants' belief was based on insufficient grounds, and provide particulars of a nature specified by Sir Frederick Jordan in Mitchell of the evidence in support of that. 26 Lastly, the defendants submitted that the first defendant is somehow vicariously liable for the acts of its solicitor and that the statement of claim does not allege any basis for the first defendant being vicariously liable for the action of its solicitor. The solicitor either acted on instructions from the first defendant or he did not. If he acted on instructions then it is arguable that he is the agent of the first defendant. Apprehended violence 27 The statement of claim alleges that the second defendant on his own behalf and at the behest of the first defendant obtained an ex parte interim apprehended violence order pursuant to s 562BB of the Crimes Act 1900 (as amended) against the plaintiff. The third defendant, then a manager for the second defendant, also obtained an ex parte interim apprehended violence order. The plaintiff alleges that the orders were obtained by the second and third defendants giving false evidence to the local court at Hornsby and North Sydney. The second defendant claimed that the plaintiff had intimidated him on 6 December 1997 at 100 Kenneth Street Longueville. The third defendant said that he had required police escorts to avoid the plaintiff's violent overtones. The plaintiff says that these allegations are false. The plaintiff says that as a result of these allegations the defendants have caused frustration, detriment and injury to him. The plaintiff alleges that as a result of the defendants' actions he has suffered humiliation, rejection, anxiety and upset and has been put to expense and suffered a loss of income earning capacity due to the inconvenience and lost time in defending himself. 28 The plaintiff also alleges that the defendants' purpose in relation to both the police proceedings and the apprehended violence orders was to prevent him gaining knowledge in relation to the management of the farming properties. 29 The defendants submitted that because the apprehended violence orders were not terminated in his favour, the claim for malicious prosecution cannot be sustained. It is common ground that although the tort of malicious prosecution usually arises out of criminal proceedings, it can arise out of civil proceedings. According to the defendants for a proceeding to be actionable, it must have resulted in one of three forms of damage. It must either tend to involve the accused in scandal, or expose him to the jeopardy of imprisonment or other corporeal punishment or pecuniary loss. See Saville v Roberts (1868) 1 Ld Raym 374; 91 ER 1147. This test was quoted with approval in the joint judgment of Kaye and Beach JJ in Little v Law Institute of Victoria [1990] VR 257 at 265. The Victorian Supreme Court has extended the circumstances when a civil proceedings might be actionable to proceedings where the damages claimed are damages to the plaintiff's reputation. (see Little at 267). 30 The plaintiff's counsel referred to Commonwealth Life Assurance Society Limited v Smith (1937-38) 59 CLR 527. In Smith, the High Court held that the guilt or innocence of the plaintiff was not an issue going to his cause of action in malicious prosecution. According to paragraphs 17 and 18 of the statement of claim the second and third defendants obtained apprehended violence orders pursuant to s 562BB of the Crimes Act. The plaintiff gave undertakings to the court and the informations were dismissed. It is arguable that the proceedings were terminated in favour of the plaintiff. The argument may be weak but it cannot be said that it is hopeless. 31 Reasonable and probable cause as defined earlier in this judgment with reference to Mitchell has at its centre an honest belief on behalf of the defendant that the plaintiff is guilty. The plaintiff at paragraph (21) of his statement of claim alleges that the defendants, in particular the first defendant, made untrue statements to the police which led to the police prosecuting the plaintiff. This pleading in inadequate. 32 In Little Ormiston J at 276 stated: "Whatever views one may have formed as to the likelihood of these allegations being established, the issue here is whether it has been demonstrated that the plaintiff could not prove at trial that the defendants had no genuine belief that they had reasonable and probable cause of their actions. There was no evidence upon which the court could have reached a conclusion at present, nor was it incumbent on the plaintiff to prove the allegations at this stage of the proceedings." 33 In light of the decision of Little this is a matter to be determined at trial. The plaintiff will have had the opportunity to administer interrogatories which may establish the defendants' state of mind. In the exercise of my discretion the plaintiff's claim should not be dismissed. The plaintiff should be given a further opportunity to replead his claim for malicious prosecution. Abuse of process 34 A person alleging abuse of process must show that the predominant purpose of the other person using the legal process has been other than that for which it was designed and there is a heavy onus placed upon the party alleging it - (see Williams v Spautz (1991-92) 174 CLR 509, joint judgment of Mason CJ, Toohey and McHugh JJ at 529). The weight of the burden of proof is such that, particularly in civil actions, it is rare for an action in abuse of process to be successful. 35 As stated in Hanrahan v Ainsworth (1985) 1 NSWLR 370 an action for the tort of abuse of process rests on the ability of the injured party to prove that the predominant purpose of the proceedings initiated against it were to accomplish an end ulterior to that which is the proper aim of the legal claim. However as per Goldsmith v Sperrings Ltd [1977] 2 All ER 566 there is no requirement that the abuse be the sole purpose of the action but rather the predominate purpose. 36 In a claim for abuse of process it is not a requirement that the plaintiff prove the prior proceedings were terminated in its favour nor that the proceedings were initiated without reasonable cause nor that damages fall under one of the three heads of reputation, liberty or property: Grainger v Hill (1838) 4 Bing NC 212. However the plaintiff must plead and prove that the defendant has initiated and continued a legal process in order to obtain an advantage beyond the ambit of the legal remedy procured. The plaintiff's pleadings, specifically the particulars, are deficient in this regard. 37 While the statement of claim is deficient it does raise, in part, a basis for an action in abuse of process. The plaintiff alleges that the defendants' conduct in both the police proceedings and the apprehended violence orders was aimed at preventing him from gaining knowledge of the management of the properties in question. This would appear to be, if the allegations were true, a prima facie case for abuse of process. 38 The common law suggests that in an action for abuse of process there is a great deal of ambiguity in determining what is a predominantly genuine action to obtain a legal remedy and what is an abuse of process, due in part to the complexity of the issues involved - see Goldsmith. As such this is a matter that should be determined at trial were the court can determine the issue with the appropriate evidence before it. Overall, while the plaintiff's claims could not be described as being strong they cannot be said to be hopeless. Therefore, it is my view the plaintiff's claim should not be dismissed. However, the claims for malicious prosecution and abuse of process as currently pleaded are deficient. In the exercise of my discretion the plaintiff should be given a further opportunity to replead his claim for abuse of process. 39 Costs are discretionary. Costs normally follow the event. The plaintiff should pay the defendants' costs. 40 I make the following orders: (1) The statement of claim is struck out. (2) The plaintiff is to file and serve an amended statement of claim within 28 days. (3) The plaintiff is to pay the defendants' costs. ********** Last Modified: 04/09/2001 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.