New South Wales Court of Appeal CITATION: Johnston v. Australia and New Zealand Banking Group Ltd. & Ors. [2005] NSWCA 383 HEARING DATE(S): 29 September 2005 JUDGMENT DATE: 7 November 2005 JUDGMENT OF: Hodgson JA at 1; Ipp JA at 51 DECISION: 1. Leave to appeal granted, limited to the question of whether the primary judge erred in determining that the pleading disclosed no reasonable cause of action and the defect was incapable of correction, on condition that the issues to be argued are limited to those identified in pars.[37] to [48] of this judgment. 2. Direct that, apart from arranging material already filed in appropriate appeal books, the claimant file no additional documentation or submissions except by leave or in response to additional submissions filed by the opponents. 3. Costs of the leave application to be costs in the appeal. CATCHWORDS: PROCEDURE - Leave to appeal - Grant subject to conditions - TORTS - Malicious prosecution - Whether arguable that reasonable cause of action disclosed. Commonwealth Life Assurance Society Ltd. v. Brain (1935) 53 CLR 343 Darcey v. Pre-Term Foundation Clinic (1983) 2 NSWLR 497 Davis v. Gill (1924) 35 CLR 275 Director of Public Prosecutions v. Wille (1999) 47 NSWLR 255 CASES CITED: Holding v. Jennings [1979] VR 289 Minkley v. Munro (1986) 8 PSR 3975 Morris v. Darby (1936) 53 WN(NSW) 136 Re Geneva Finance Ltd; Quigley v. Cook (1992) 7 ACSR 415 Wickstead v. Browne (1992) 30 NSWLR 1 Daryl Lindsay Johnston - claimant Australian & New Zealand Banking Group Ltd. - 1st opponent PARTIES: John Edward Star - 2nd opponent Stuart Karim Ariff - 3rd opponent FILE NUMBER(S): CA 40046/05 The claimant was self-represented Mr. C.D. Wood for 1st opponent COUNSEL: Mr. A. Leopold with Mr. D. Altoun for 2nd & 3rd opponents Coudert Brothers, Sydney for 1st opponent SOLICITORS: Ebsworth & Ebsworth, Sydney for 2nd & 3rd opponents LOWER COURT JURISDICTION: Supreme Court - Common Law Division LOWER COURT FILE NUMBER(S): SC20553/00 LOWER COURT JUDICIAL OFFICER: Hoeben J IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40046/05 SC 20553/00 HODGSON JA IPP JA Monday 7 November 2005 JOHNSTON V. AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED & ORS. Judgment 1 HODGSON JA: On 22 December 2004, Hoeben J refused an application to file a Further Amended Statement of Claim in proceedings brought by the claimant against the first opponent (the Bank), the second opponent (Mr. Star) and the third opponent (Mr. Ariff), and dismissed the proceedings. 2 On 22 February 2005, Hoeben J ordered the claimant to pay the opponents' costs of the proceedings. 3 The claimant seeks leave to appeal from the order dismissing the proceedings and the order awarding the costs of the proceedings to the opponents. 4 Two broad grounds were advanced: 1. Denial of procedural fairness, because of shortness of time allowed to the claimant, and because the order dismissing the proceedings was made when the primary judge was dealing only with an application to file an Amended Statement of Claim. 2. The primary judge dismissed the proceedings on the basis that the pleading disclosed no reasonable cause of action and the defect was incapable of correction, and erred in reaching that conclusion. 5 The proceedings were commenced in 2000, and prior to the decision of the primary judge three versions of the Statement of Claim had been struck out, most recently by Davies AJ ([2003] NSWSC 454) who did not give leave for the claimant to file a further Statement of Claim, and who at [56] expressed the view that leave should not be granted unless the proposed Statement of Claim disclosed on its face a reasonably arguable cause of action. It appears that the proposed Statement of Claim dealt with by Hoeben J was the fourth served by the claimant since then. The matter was also delayed by an application by the opponents to have the claimant declared a vexatious litigant, which application failed. 6 If the order dismissing the proceedings stands, this will as a practical matter put an end to the claimant's claim, because it relates to events in 1996 and so would almost certainly be statute barred. The claim is for malicious prosecution, and if successful could possibly result in substantial damages, including aggravated and even exemplary damages. 7 On the other hand, the opponents have been put to considerable expense by numerous proposed Statements of Claim, all of which have been disallowed (and there is no appeal from that part of Hoeben J's decision), and there have been serious allegations against them pending since 2000. 8 Accordingly, the Court permitted both parties more latitude than usual in presentation of a leave application, and I will give more extensive reasons than usual in such a case. 9 I will deal in turn with the question of procedural fairness and the question of disclosure of a cause of action. PROCEDURAL FAIRNESS 10 The proceedings were mentioned before the primary judge on 13 October 2004, on which occasion the claimant was unrepresented. However, he indicated that he had arranged for Counsel to represent him (Mr. Meek and Mr. Brereton SC) and that he understood neither of them could consider the brief until the first week of November. The primary judge said he would give as much time as he could for preparation of a further Statement of Claim, because this one had to be right, and there had to be an end, and the claimant would not get leave to file another. The claimant said he understood. The primary judge said he was prepared to direct that the claimant serve the proposed Amended Statement of Claim by 17 November, and the claimant said he did not see a problem with that. The primary judge made that direction, fixed the hearing of the application for leave for 16 and 17 December 2004; and also said that, if there was a problem with those directions, he wanted the matter listed before him that week. 11 During this mention, Mr. Young for the Bank referred to a Notice of Motion seeking that, if the amendment was disallowed, the proceedings be dismissed; to which the primary judge responded "I can assure you if I dismiss the Statement of Claim this time it will have to go to the Court of Appeal to come back". 12 The matter was again before the primary judge on 2 December 2004. On that day the claimant was represented by Mr. George. No Amended Statement of Claim had been served, because of various problems. The primary judge extended the time for filing and serving of the proposed Statement of Claim to 10am on 6 December 2004. He was not prepared to vacate the hearing on 16 and 17 December 2004, in circumstances where Counsel for the opponents were not available for a considerable period in the New Year. The legal representative for Mr. Star and Mr. Ariff indicated that he would seek dismissal of the proceedings if leave to amend was refused. 13 On 16 December 2004, at the commencement of the proceedings, Mr. Stevenson for the Bank put to the primary judge that if he did not give leave, it "will be to your Honour to dismiss the proceedings in a formal way". The primary judge indicated that he had been proceeding on the basis that if he refused leave that would bring matters to an end, but he invited submissions to the contrary. The primary judge went on to say that he would not decide a motion for summary dismissal. There was then the following exchange: STEVENSON: The only other issue I seek to foreshadow is if your Honour is persuaded that merely refusing leave does not dispose of the proceedings we would be asking your Honour to do whatever it turns out to be necessary to do that. Our submission is this must be the end of the day or not. HIS HONOUR: I made that very clear I hope when it looked like we were not going to get a statement of claim, that had that not occurred I would take whatever steps I had to to finally dispose of the matter. If I was persuaded that this statement of claim can't stand-- STEVENSON: Your Honour said it was the last chance. 14 At that time, Mr. Brereton, Senior Counsel for the claimant, was not present. He arrived shortly afterwards, and there was then a short adjournment. It appears that Mr. Brereton was first able to look at the matter on the previous night. Submissions were made by Counsel for the opponents. Mr. Leopold for Mr. Star and Mr. Ariff submitted that to refuse leave to amend was insufficient to put an end to the proceedings, and this was supported by Mr. Stevenson for the Bank, who referred to Holding v. Jennings [1979] VR 289, and submitted that, if leave be refused, the primary judge should dismiss the proceedings. There was no response to this from Mr. Brereton. 15 Although the time limited for service of the proposed Statement of Claim on 2 December 2004 was very short, and although Mr. Brereton was unable to look at the matter until the night before 16 December, in my opinion there is minimal chance of success on appeal on the basis of the shortness of time allowed or the refusal to adjourn the matter from 16 December. In the light of the long history of the matter and the exchange that occurred on 13 October 2004, it seems to me that the chance of the Court of Appeal intervening in such a discretionary matter is minimal to say the least. 16 On the other point, consistently with Holding v. Jennings, I think that to strike out a Statement of Claim and to refuse leave to file an Amended Statement of Claim does not of itself put an end to proceedings. I also think that generally an order dismissing proceedings, without a hearing of them, should only be made in response to an application for such an order, or at least after clear advance notice to the plaintiff that such an order is under contemplation. 17 In this case, I think that the circumstances I have outlined did amount to such a notice; and in my opinion the chance of a successful appeal on the ground of denial of procedural fairness because there was insufficient notice that such an order was being considered is insufficient to justify the grant of leave to appeal on that ground. REASONABLE CAUSE OF ACTION 18 As regards the question whether the claimant had a reasonable cause of action, the following background facts seem to be common ground or clearly shown. 19 At material times, the claimant was secretary and a director of Hurworth Nominees Pty. Limited (Hurworth) and associated companies. Hurworth owned a farm property at Corowa, and its registered office was a room in the homestead on the farm with a separate entrance. 20 In 1994, Hurworth gave a charge to the Bank over all its assets to secure previous advances to associated companies; and it also gave a mortgage to the Bank over the farm property. 21 In about May 1996, the Bank appointed Mr. Star to be receiver and manager of the property of Hurworth subject to the charge; and on about 6 June 1996, the Bank appointed itself controller of the farm and took possession of it. A Ms. White and a Mr. Morton were engaged as caretakers of the property, and were given instructions by Mr. Ariff, an employee of Mr. Star's firm. 22 On 30 July 1996, the Bank's solicitors Norton Smith & Co. wrote to the claimant's solicitors advising inter alia that the Bank had chosen not to allow the claimant to re-enter the property. 23 However, in about August 1996 the claimant did re-enter; and on 19 August 1996 Bryson J made orders that Hurworth and the claimant vacate the farm and not take any steps to re-take possession of it, and also that they not interfere with the exercise of any right of the Bank in relation to its securities. The claimant did vacate the property. 24 On 4 October 1996, Norton Smith addressed a letter to the secretary of Hurworth enclosing a notice to Hurworth pursuant to s.57(2)(b) of the Real Property Act; and subsequently, on the instructions of Mr. Mitchell of that firm, that letter and notice was placed under the door of the registered office of Hurworth on the farm. A copy of this notice was sent by facsimile to solicitors acting for Hurworth and the claimant. 25 On 26 October 1996, the claimant went to the farm and spoke to Ms. White, and subsequently left. 26 On 31 October 1996, the claimant went again to the farm and spoke to Mr. Morton and Ms. White. He said to them that he wanted the s.57 notice, and although at one stage Mr. Morton said that if the claimant went to the road he would bring it out, ultimately Ms. White told him that the notice was not there and Mr. Morton did not dissent from that. 27 The police were called and the claimant was interviewed. Senior Constable Hawes concluded there were no grounds to prosecute the claimant for unlawful entry, and that the documents produced did not indicate any offence committed by him. 28 However, following a telephone conversation between Senior Constable Hawes and Mr. Mitchell, on 5 December 1996 Mr. Mitchell wrote a letter to the police providing information on the question whether the claimant was entitled to enter the property. Then Senior Constable Hawes sent a brief including this letter and other material to the Prosecutor's office at Albury, which recommended prosecution. The claimant was charged with two offences under s.4(1) of the Inclosed Lands Protection Act 1901, which at relevant times was in the following terms: 4 Penalty for unlawful entry. (1) Any person who, without lawful excuse, enters into the inclosed lands of any other person, without the consent of the owner or occupier thereof, or the person apparently in charge of the same or remains upon the inclosed lands of another person after being requested by the owner or occupier or person apparently in charge of those lands to leave those lands, shall be liable to a penalty not exceeding $500, and the proof of such lawful excuse shall be upon the defendant in any such case. Without prejudice to the generality of the expression "lawful excuse" a drover or person in charge of stock being driven upon a road lawfully inclosed with the lands of any person shall be deemed to have lawful excuse for entering such lands for the purpose of preventing the stock from straying or regaining control of stock which have strayed from such road. In this subsection "stock" includes horses, cattle, sheep, goats, pigs and camels. 29 The charges were that the claimant on 26 October 1996 did remain on the inclosed lands of another person after being requested by a person apparently in charge of those lands to leave; and that the claimant on 31 October 1996, without lawful excuse, did enter into the inclosed lands of another person without the consent of the person apparently in charge of the same. 30 These charges were heard in the Local Court at Corowa in 1997 and 1998, and were dismissed. 31 The following additional facts were alleged by the claimant in the Statement of Claim, and (to a small extent) in other material before the primary judge. 1. On about 21 October 1996, the claimant spoke by telephone to Mr. Mitchell and requested permission to enter the farm to collect the s.57 notice. Mr. Mitchell did not answer that request, either by refusal of permission or otherwise. 2. When the claimant attended the property on 26 October 1996, he asked Ms. White for the notice; and although Ms. White knew the notice was there, she did not give it to him. 3. On 28 October 1996, the claimant spoke by telephone to Mr. Ariff and requested consent to enter the farm to collect the notice, and on 29 October 1996 he spoke by telephone to Mr. Star and requested consent to enter the farm to collect the notice. Neither of them informed him that he could not have access to collect the notice, and both implied he could do so. 4. Mr. Star and Mr. Ariff both falsely told Mr. Morton that the claimant could be dangerous and could have a gun; and Mr. Ariff told Mr. Morton that the claimant was not to take anything from the property. After the claimant attended the property and asked for the s.57 notice, and was told it was not there, Mr. Ariff told Mr. Morton to send the notice to the claimant, which Mr. Morton then did. 5. On 4 November 1996, Mr. Morton on the instructions of Mr. Star alleged to police that the claimant had disobeyed court orders, when this was untrue. 6. The 5 November 1996 letter sent by Mr. Mitchell was false in that Mr. Star and Mr. Ariff had given implied consent to the claimant entering on the farm; and Mr. Mitchell intentionally omitted from it all reference to his sending the s.57 notice to the farm under cover of a letter addressed to the claimant, the claimant's request for permission to enter to retrieve it, and Mr. Mitchell's lack of response to that request. 7. The claimant had made allegations of misconduct against the Bank, had contested the Bank's possession of the farm, and was pursuing claims of various kinds against the Bank. 32 Before the primary judge, Mr. Brereton submitted that it was fairly arguable that the opponents had instituted the proceedings against the claimant, that they did so without reasonable cause, and that they did so maliciously. On the question of lack of reasonable cause, Mr. Brereton conceded that the claimant did not have consent to enter the property, but submitted that he had a lawful excuse to do so in order to collect the notice, this being a lawful excuse analogous to, though not precisely within, recaption of chattels. 33 The primary judge held that no facts were pleaded or particulars given that could establish that either Mr. Star or Mr. Ariff was the agent of the Bank; and that no untrue or misleading information had been given by the Bank to the police. 34 He also held that the allegations made could not support a conclusion that any of the opponents were to be regarded as the prosecutor of the claimant, where there had been a clear and independent exercise of discretion by the police, who had information concerning the claimant's allegation that he had entered the land to obtain the s.57 notice. 35 The primary judge also held that the allegations made by the claimant could not support a conclusion that the prosecution was brought without reasonable and probable cause. After referring to a submission that the receiver and not the secretary was responsible for Hurworth (Re Geneva Finance Ltd; Quigley v. Cook (1992) 7 ACSR 415 at 426 and 432), and to the cases of Director of Public Prosecutions v. Wille (1999) 47 NSWLR 255, Darcey v. Pre-Term Foundation Clinic (1983) 2 NSWLR 497, Morris v. Darby (1936) 53 WN(NSW) 136, and Minkley v. Munro (1986) 8 PSR 3975, the primary judge said he was inclined to the view that the magistrate was in error in deciding that the claimant had a lawful excuse, but that it was not necessary for him to decide this: because there was an arguable case that the claimant did not have a lawful excuse, the claimant could not succeed in his malicious prosecution claim. 36 The primary judge also held that the allegations of malice were so flawed as to be liable to be struck out in their entirety. 37 The question on an appeal would be whether there was a material error in one or more of these findings which vitiated the primary judge's decision to dismiss the proceedings; and if so, whether the appropriate decision would be in effect to give the claimant yet another chance to produce a satisfactory Statement of Claim. 38 On the issue of whether any or all of the opponents were prosecutors, the most authoritative statements of the law in Australia appear to be those of Isaacs ACJ in Davis v. Gill (1924) 35 CLR 275 at 282-3 and Dixon J in Commonwealth Life Assurance Society Ltd. v. Brain (1935) 53 CLR 343 at 378-80. 39 The question on appeal would be whether the primary judge erred in holding that there had been a clear and independent exercise of discretion by the police to prosecute, and in treating this consideration as conclusive; and in not taking into account the alleged conduct of Mr. Mitchell in not responding to the claimant's request for permission to enter the farm to collect the s.57 notice that Mr. Mitchell had caused to be delivered, under cover of a letter addressed to the claimant, to the registered office of Hurworth on the farm; of Mr. Star and Mr. Ariff in responding to a similar request by not informing him that he could not have access to collect the notice and implying that he could do so; of Ms. White and Mr. Morton, apparently under instructions from Mr. Ariff, in denying to the claimant that the notice was at the farm (when Ms. White at least knew that it was) and in not giving it to him; of Mr. Ariff in then instructing Mr. Morton to send the notice to the claimant; and of Mr. Mitchell in omitting all reference to the s.57 notice and these circumstances in his letter to the police. 40 It could be argued that, if those facts were proved and not otherwise explained, a possible inference was that Mr. Mitchell (the Bank's solicitor), Mr. Star and/or Mr. Ariff intended that an opportunity be created for the claimant to be charged by the police and thereby deterred from doing what could be seen as disruptive to the realisation of the Bank's security. Further the omission by Mr. Mitchell of reference to the s.57 notice and to the claimant's unanswered requests for consent to go onto the property to get it, in his letter to the police, could be argued to be significant to the exercise of discretion to prosecute, in relation to which the police had only the claimant's unsupported assertions as to his reason for going onto the property. 41 It could be argued that the discretion to prosecute would have been exercised differently if the letter had advised the police that Mr. Mitchell had caused to be delivered to the registered office of Hurworth on the property an important notice, under cover of a letter addressed to the secretary of Hurworth, that is the claimant, that the claimant had spoken to Mr. Mitchell asking for permission to go on to the property to collect the letter, and that while not giving such permission Mr. Mitchell had not refused it. It could also be argued that, if the alleged facts were proved, the inference could be drawn (at least in the absence of evidence to the contrary) that the omission of these matters from the letter was a deliberate decision made with the intention of making prosecution more likely, so that the allegation that the omission was intentional could properly be made in the Statement of Claim. 42 This combination of circumstances could be argued to be sufficient to bring the case within the statements of principle in Davis and Brain. 43 On the issue of lack of reasonable and probable cause, the question would be whether the primary judge erred in treating the issue as being whether a belief that there were grounds to prosecute the claimant, if held, would have been reasonable; whereas the true issue was whether the prosecutor actually and bona fide held such a belief, on reasonable grounds: see Commonwealth Life Assurance Society Ltd. v. Brain (1935) 53 CLR 343. It could be argued that the primary judge did not consider whether it could be inferred that the opponents did not bona fide address the question of whether or not reasonable grounds existed for prosecution of the claimant, and in particular did not bona fide address the question whether or not the purpose of collection of a letter addressed to him sent by Mr. Mitchell to the farm, in circumstances where his requests for permission addressed to Mr. Mitchell, Mr. Star and Mr. Ariff had not been refused, constituted lawful excuse. 44 It was submitted for the opponents that, on the issue of reasonable and probable cause, it was not necessary for a prosecutor to consider possible defences; but it is arguable that lack of lawful excuse, albeit a matter on which a defendant bears the onus, is an element of the offences in question here that a prosecutor should consider. 45 On the issue of agency for the Bank, if an inference were drawn that Mr. Mitchell, Mr. Star and Mr. Ariff were co-operating with a view to having the claimant charged, the question would be whether an inference could be drawn that this was on the instructions of the Bank. On this question, the decision of Wickstead v. Browne (1992) 30 NSWLR 1 could be of relevance. 46 There has been some discussion in submissions of the question whether the claimant was in any event a proper recipient of the s.57 notice, where Mr. Star had been appointed receiver and manager of all Hurworth's assets and was Hurworth's agent in respect of them. There could be a question whether s.57 of the Real Property Act, apparently intended to protect an owner's equity of redemption, is satisfied by the giving of notice to a receiver appointed by the mortgagee. This question, however, might be academic in circumstances where the notice was sent to Hurworth's registered office, under cover of a letter addressed to the secretary of Hurworth, that is, to the claimant. 47 I have given consideration to the question of whether the only lawful excuse that the circumstances could possibly support is in substance consent, which was not relied on by Mr. Brereton. However, that position was indicated by Mr. Brereton during the final address of Mr. Leopold for Mr. Star and Mr. Ariff, and had the effect that Counsel for the opponents did not address orally on some parts of their written submissions. It would not seem to have otherwise affected how the case was conducted; so even if the only conceivable lawful excuse were consent or belief in consent, the claimant might not be precluded from relying on it on appeal. 48 On malice, it could be argued that the circumstances support an inference that the opponents were motivated by a wish to stop activity of the claimant that they considered to be a nuisance, rather than genuine belief that prosecution was justified; and that this was sufficient for malice. 49 On the whole, in my opinion there is sufficient doubt about the decision to justify the grant of leave to appeal, limited to the question whether the primary judge erred in determining that the pleading disclosed no reasonable cause of action and the defect was incapable of correction, with the issues to be argued limited to those identified in pars.[37] to [48] above. This limitation is appropriate, because the claimant has sought to advance other untenable grounds and should not be permitted to do so. Further, because the material provided by the claimant on the leave application has been so extensive and comprehensive, to minimise oppression I would direct that no additional documentation or submissions be filed by him on the appeal without leave, unless in response to additional submissions filed by the opponents. 50 I propose the following orders: 1. Leave to appeal granted, limited to the question of whether the primary judge erred in determining that the pleading disclosed no reasonable cause of action and the defect was incapable of correction, on condition that the issues to be argued are limited to those identified in pars.[37] to [48] of this judgment. 2. Direct that, apart from arranging material already filed in appropriate appeal books, the claimant file no additional documentation or submissions except by leave or in response to additional submissions filed by the opponents. 3. Costs of the leave application to be costs in the appeal. 51 IPP JA: I agree with Hodgson JA. ********** 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.