BC, Ex parte MIMA & Anor

[2001] HCATrans 185

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S168 of 2000

B e t w e e n -

GARY KENNEDY, ANTHONY BORDIN, ROBERT KRAUSE and STATE OF NEW SOUTH WALES

Applicants

and

JAMES ADAMS

Respondent

Office of the Registry
  Sydney  No S169 of 2000

B e t w e e n -

GARY KENNEDY, ANTHONY BORDIN, ROBERT KRAUSE and STATE OF NEW SOUTH WALES

Applicants

and

SUSAN LEE

Respondent

Applications for special leave to appeal

GLEESON CJ
GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 4 MAY 2001, AT 9.54 AM

Copyright in the High Court of Australia

____________________

MR B.H.K. DONOVAN, QC:  May it please the Court, I appear with, MR C.L. LONERGAN, and I can indicate we appear for each of the applicants.  (instructed by I.V. Knight, Crown Solicitor for New South Wales)

GLEESON CJ:   Yes, they were heard together below and they were heard together here, I gather.

MR DONOVAN:   Yes, at trial and at appeal.

MR W.H. NICHOLAS, QC:  If the Court pleases, I appear with my learned friend, MR B.E. KINSELLA, for the respondents.  (instructed by James Fuggle)

GLEESON CJ:  Yes, Mr Donovan.

MR DONOVAN:   Your Honour, this matter involves a number of issues and errors by the Court of Appeal.  There was, first of all, a leap in the quantum of exemplary damages beyond anything ever given before in these types of matters.

GAUDRON J:   Perhaps this is the first time there has been a matter where what has been in issue is the interference by law enforcement authorities with the liberty of the subject, the unlawful interference by law enforcement authorities with the liberty of the subject.  There could be nothing more fundamental, could there, than that?

MR DONOVAN:   All I can say, your Honour, is, perhaps, but there are a number of other problems.  Second, there was punishment of the State as the basis of primary liability.  That is a breach of this Court’s decision in Gray v The Motor Accident Commission, and I will explain why in a moment.  Third, the primary liability of the State, that is, what its own default was in failure to train, supervise and discipline these officers, was not an issue before the trial court, not an issue before the appeal

court and there was no evidence led at all about that.  Fourth, the Court of Appeal failed to take into account that the real wrongdoers were the police officers and the police officers were those who were the focus, as the court said in Gray, the focus of the source of funds, the focus of the means.

GLEESON CJ:   What was the basis of the State’s liability?

MR DONOVAN:   That the State had failed to supervise, train and discipline police officers.  Your Honour will no doubt recall that in Gray there had to be a consciousness.

GLEESON CJ:   That finding was made, was it?

MR DONOVAN:   That finding was made and this ‑ ‑ ‑

GLEESON CJ:   Well, is the State’s liability vicarious liability or ‑ ‑ ‑

MR DONOVAN:   Vicarious only.  Only ever pleaded as vicarious liability.  That is why I say there could not be primary ‑ ‑ ‑

GAUDRON J:   And never disputed?

MR DONOVAN:   Sorry?

GAUDRON J:   Vicarious liability was never in issue?

MR DONOVAN:   Never in issue, but vicarious liability which then turns into a direct liability ‑ ‑ ‑

GLEESON CJ:   Well, you could say, “It did not dispute a vicarious responsibility”.

MR DONOVAN:   Yes, I put it that way.  Can I, perhaps, develop each of these in a little more detail?  Your Honours will be aware that the amounts awarded were $100,000 and $120,000.  These amounts, we say, are well outside the traditional range for assault and tort-like claims, the traditional range being 5,000 to 30,000 - Lamb v Cotogno was five.  Gray v The Motor Accident Commission, the trial judge there suggested - although damages were not awarded, but the trial judge suggested ten.  The effect of this has been to provide these plaintiffs with an irrational and undeserved windfall.  We accept that exemplary damages will also be a windfall as Gray has indicated but we say that this was an irrational windfall.

The right could only arise secondarily against the State through vicarious liability.  The Court of Appeal laid down a novel and unique principle when it said that quantum of the penalty is to be assessed by reference to means of an employer to pay the liability for the wrongdoing of the employee by way of exemplary damages.  Further, the Court of Appeal laid down a new principle when it used exemplary damage to punish the State, and the Court of Appeal said it was punishing the State by reference to the State’s means to pay, not for its own contemptuous conduct but for an omission, at most, in its failure to prevent servants acting contemptuously of the plaintiff’s rights.

In actual fact, there was not even evidence of that.  There was no evidence that the State had failed to do anything because it was never alleged.  Next, your Honours, we say that this was a leap in quantum, or a quantum leap, in exemplary damages.  The effect of the award has been to disrupt the orderly negotiations of settlement claims against police officers by raising this new benchmark at a level of exemplary damages.  There are many cases which are pending where negotiations have broken down because of this.  Cases have occurred where huge sums ‑ ‑ ‑

GAUDRON J:   Do you mean to say this is a regular occurrence?

MR DONOVAN:   No, I am not saying that at all.

GAUDRON J:   Well, what is the relevance of these many settlement negotiations that have broken down?

MR DONOVAN:   Because, unreasonably and irrationally, plaintiffs are looking for an unreasonable windfall.  That is the answer.

GAUDRON J:   What are the settlement negotiations about?  Police misconduct?

MR DONOVAN:   Trying to settle cases, the negotiation is about.  Could I proceed, your Honour?  Your Honour has made the point, but could I proceed?

GAUDRON J:   But I do not understand your point, then.

MR DONOVAN:   Well, I have said it, your Honour, and I will leave it at that, if I may.  Your Honour, the effect of such a high award is to deprive the police service of valuable funds which should be spent on policing and for the benefit of the whole public rather than just be given to two particular individuals.  That is a principle which is set out in the English authority of Thompson v Commissioner of Police.  The present case raises questions of proper allocation of public funds.  The New South Wales Court of Appeal has raised enormously the level of exemplary damages, as in this case, and no reason for the leap, other than to bring home to the State, was given.

The amounts of exemplary damages here are out of proportion to compensatory damages.  Traditionally, exemplary damages have been a fraction of compensatory damages in Australia.  In the case of the respondent, Lee, the exemplary damages were nearly five times the compensatory damages and in the case of the respondent, Adams, twice the compensatory damages.  We say that the law should avoid idiosyncratic decisions and the decision in this case was such a decision.  It was completely out of step.  If there is to be an increase in exemplary damages, it should not take place by a sudden leap but rather by gradual increases over time with some consideration about the effect of the increases on the public purse.

In Gray, this Court said that exemplary damages should focus on the wrongdoer and, here, the wrongdoers were the police officers.  The State was not the wrongdoer, however, the Court of Appeal focused on the State, the State’s duty and the State’s means.  The matter may be different ‑ ‑ ‑

GLEESON CJ:   You must be implying that there is a lot of this going on if we are to regard this as a threat to the Treasury.

MR DONOVAN:   There is not a lot of it going on, your Honour.  That does not mean there are not claims from time to time.  But whether there are two or three, a dozen, or many dozens, it will still have an effect on the Treasury.  Let me give you one example.  In Curran’s Case, which was recently decided, there was an award of $120,000 and an award of $80,000 for exemplary damages.  There are other minor awards of $5,000 and $10,000, but we are looking at these very large figures that are what we are complaining about, and the fact that they are so out of tune with anything else which has ever occurred before.

In this case, the Court of Appeal made no attempt to examine what each police officer did and did not mention a single fact in relation to the penalty for any particular police officer.  The Court of Appeal made orders against the police officers personally and it failed to discriminate between the wrongdoing of each of the police officers.  At very least, the Court of Appeal should have considered them individually and not made a generalised award against all three of them and the State.  If there was to be a generalised award, it could only be based upon the means of the police officers since they were the individuals who were culpable and had the consciousness that is required by Gray.

Let me just remind your Honours of what the court said in Gray.  First, exemplary damages could not properly be awarded in a case of alleged negligence where there was no conscious wrongdoing by the defendant.  Now, if the court’s principle there is to be upheld, then the Court of Appeal decision must be examined and if this Court wants to vary what it said there, that is one thing, but if this Court wants to abide by what it said there, then the Court of Appeal decision is wrong.

GLEESON CJ:   You mean by that that there can be no exemplary damages in a case of vicarious liability.

MR DONOVAN:   I am not going as far as that.  What I am saying is there cannot be exemplary damages by looking at a default by the employer and then assessing the damages by reference to the means of the employer.

GLEESON CJ:   The body corporate of Caltex, or the board of directors of Caltex, did not have anything to do with going out and spiking those petrol tanks.

MR DONOVAN:   Well, your Honour, let me put it – return it to you in this way.  I thought about what your Honour has said.  We would say that in that case what was done, was done for the benefit of Caltex.  I know it is arguable, but let me say that is how we would distinguish it, whereas, here, what was done was not in any way for the benefit of the police service.

GAUDRON J:   Well, that may point up questions as to the reasonableness of vicarious liability being imputed to the State in relation to individual police.  But you did not challenge that and I think, in any event, there is a statutory basis for vicarious liability, is there not?

MR DONOVAN:   There is a statutory basis.  The statutory basis ‑ ‑ ‑

GAUDRON J:   Well, it may be that that is a matter for the Parliament to consider.

MR DONOVAN:   How you interpret that statutory basis is, of course, another matter.  We have been able to find no case where an employer has been - possibly from the Caltex Case, where there have been individual awards against individual people where there has automatically been vicarious liability.

GAUDRON J:   Yes, but there seems to be a statutory basis here or at least it was not disputed.

MR DONOVAN:   That is why I am not able to bring it forward at this point.  I accept that.  But, nevertheless, that would be a factor - let me suppose, your Honour, that, in fact, there should be no vicarious liability for exemplary damages.  If that principle is correct ‑ ‑ ‑

GAUDRON J:   Not for exemplary damages, at all.  The query whether exemplary damage would extend to police officers acting in breach of the law and in dereliction of their duty.

MR DONOVAN:   I see what your Honour says.  That point was not taken, yes.

GAUDRON J:   Also one has to face the fact that, ordinarily, it would - well, one would expect, that damages would only ever be awarded in cases of acting outside the law and in dereliction of duty.  So the real issue, it seems to me, is not exemplary damages, as such, but vicarious liability, an issue which does not arise in this case because no point was taken and because, in any event, there is a statutory provision providing for it.

MR DONOVAN:   It would still be relevant as to how the court should approach the quantum of exemplary damages and what your Honour says, as I would interpret it, would mean it would not be appropriate to award exemplary damages against the employer unless there was a claim in the pleadings and evidence brought of direct liability.  That was never done here.  Let me just remind the Court of this.  First, the question of primary liability of the State was not an issue in the pleadings; was not an issue at trial - it was never litigated; it was never an issue in the notice of appeal; there was no evidence led before the trial court or before the Court of Appeal of any default by the State in relation to the State’s actions or omissions.

In assessing the damages on the basis of some default by the State, the Court of Appeal was, in effect, attempting to adopt some sort of res ipsa loquitur principle.  Just what, is unknown.  Such an approach, we say, was completely wrong.  The State never had any opportunity to present evidence to establish what it had done to prevent the assaults occurring.  The Court of Appeal should have taken judicial notice of the steps being taken by the State to remove police abuses through the Royal Commission, the establishment of the Police Integrity Commission and the expansion of the Ombudsman’s powers, and that was all through legislation.  The State had no notice that the Court of Appeal was going to make findings against it personally and assess a penalty against it on the basis of primary liability.

It is true that Mr Justice Sheller made comments in argument that it was necessary to bring home to the State that exemplary damages requires a very substantial amount.  But that passage, your Honours, was in the context of an expression of outrage, and perhaps understandable outrage - I am not going to debate that - in that Socratic dialogue which takes place in appeal situations, and it was, because the issue was never one before the court, it was never one which the court could take up in the way that it attempted to do.

The next issue, your Honour, is the question of the punishment of the police officers.  The court failed to consider the quantum on the police officers.  There is a provision in the Employee’s Act 1991 which allows an employer to recover against an employee the quantum of damages, or some proportion of it, where there has been serious misconduct.  These police officers have been exposed to that possibility and they had awarded against them these huge amounts, and I can only call them huge amounts.  It was some $220,000 which each of these police officers, on the basis of this serious misconduct, could be liable for, and the Court of Appeal never considered that.

A $220,000 fine is a huge fine.  You would never have that in ordinary criminal law, and it has been imposed individually on these officers because they were parties to this and so that an execution can take place against them individually.  Further, the State may be vicariously liable but it has the right to recover through this section.  Now, those matters should be taken into account.  It would just be wrong to leave these officers exposed in that way.  The Court of Appeal should have taken into account next, your Honour, the question of likely disciplinary proceedings.  There had, in fact, been some disciplinary proceedings against Mr Kennedy, but there had been no disciplinary proceedings taken against Mr Brodin or Mr Krause.

In Gray, this Court looked at the question of where punishment had already been extended and said, where it has already been extended, then there would be no exemplary damages.  It also looked at the question of where there was likely to be punishment in the future and the Court considered that was a difficult issue but did not have to decide it in that case.  In this case, we say that, allowing for the facts as they have been found against these individual officers, it follows, as night the day, that there will be disciplinary proceedings against them.  Therefore, the Court of Appeal should have considered that and not simply leapt to this punishment of the State in the way that it did.  If your Honours just excuse me, I think that probably completes what I wanted to put to the Court.  Yes, thank you, your Honours.

GLEESON CJ:   I just want to be clear about one thing; you appear for all applicants?

MR DONOVAN:   I do, yes.

GLEESON CJ:   Yes, Mr Nicholas.

MR NICHOLAS:   If your Honours please.  Your Honours obviously appreciate the situation as far as vicarious liability was concerned.  It was not an issue at the trial.  It was not an issue before their Honours.  In light of what my friend has put to your Honours, may I remind the Court of just exactly how the Court of Appeal did put the basis upon which they came to the award that they did and the matters that they took into account in so far as the purse of the award was concerned.  It is, with respect to my friend, not correct to suggest that the Court of Appeal made a finding that there had been a failure to train or discipline.

One needs to go back, with respect, and see just how it was that the court did express the approach to the award that they did.  Can I take your Honours to page 45 of the book where Mr Justice Priestley, on behalf of the court, is dealing with the Adams matter first?  At line 36, he commences this aspect of the matter and can I bring you down, perhaps, to line 40:

That figure should indicate my view that the conduct of the defendants was reprehensible, mark the court’s disapproval of it.  The amount should also be such as to bring home to those officials of the State who are responsible for the overseeing of the police force that police officers must be trained and disciplined so that abuses of the kind that occurred in the present case do not happen.

Then, if I can take the Court to the way in which the matter was dealt with concerning Miss Lee and that is, perhaps, to be found at page 58.  Now, I will say something about that in a moment, but just to bring the Court to the way in which it was dealt with, at page 58 at line 10, the court reminds itself of the factual findings and the summary of the trial judge, none of which were challenged before the court, and the introduction to it is:

and his description of what happened to the plaintiff as “a disgraceful episode”, a description with which, on his findings, I agree.

I also agree with the way it was described by Sheller JA in the course of argument in the appeal.  At the same time Sheller JA also succinctly stated some considerations about exemplary damages, with which I also agree, which deserve to be reproduced:

“[this was] an extraordinarily serious breach of, if you like, fundamental rights.  If this power to award exemplary damages is to mean anything, it must mean that the damages are imposed in a way which brings it home to these particular defendants, including this State, that this conduct is not accepted and that it shouldn’t happen again, to put it one way.  To bring that home to the State probably requires, particularly as it’s pointed out that the State is apparently picking the bill up for this as you say in your submission -

and your Honours appreciate this was in the course of argument -

that requires a very substantial amount doesn’t it?  It means that somebody has to sit up and say that this simply has to stop, that the taxpayers shouldn’t be paying for this sort of behaviour.”

When counsel replied that an award of exemplary damages against the State would make the taxpayers pay for the wrongdoing Sheller JA said, and again I agree with him:

“I know that’s as it happens, but I mean how else but a very substantial amount can bring home to the powers that be the seriousness of this?”

His Honour then went ‑ ‑ ‑

GLEESON CJ:   They do not suppose it is part of the point of calling these “exemplary” rather than “punitive”.

MR NICHOLAS:   Precisely, your Honour, and I will come to what this Court had to say in Lamb v Cotogno and about this in a moment, if I may.  Your Honours, the reference to XL is on the next page and his Honour then, at line 19, sums it up this way:

For the reasons given by the trial judge, and to mark the extreme seriousness of what was done by the second and third defendants, it seems to me that a substantial award for exemplary damages is required in the present case.  Again, as in Mr Adam’s case, I see no point -

et cetera, and he assessed one aggregate sum to cover them.  Your Honours, just deal with Miss Lee’s case first.  What the court was confronted with, the unchallenged findings of a flagrant abuse of the State’s powers through its police officers.  The State was responsible for it and that was never an issue.  To use the language of one of the cases referred to by Justice Taylor in Uren, and he was referring to an 1850 US case, but it is most apt in this case, it was the atrocity of this conduct which properly founded the award and the express purpose of it, we suggest, was abundantly clear from what his Honour had to say, was to deter and restrain, and he was entirely correct in reaching the award that he did.

Take Ms Lee:  the facts were, one might think, rather temporally described as “disgraceful”.  That was the situation where this woman had her top stripped off.  She was handcuffed with her arms behind her back and for several hours, topless, to put it tenderly, she was manhandled, taken to the police station, left in that condition until some hours later, I think it was Mr Adams, afforded her a jumper or some means of covering herself - thank you, the solicitor, I gather.  Now, one of the cases that Mr Justice Windeyer referred to in Uren was the case of Merest. Uren, 117 CLR 18, your Honours, it begins, but at152 and 153, if I could take your Honours to it, Mr Justice Windeyer says this. It is at the foot of 152. It begins, the last few lines on the page:

However, like any attempt to trace the lineage of an idea, much depends on how far you wish to go back and how much certainty you demand in the connecting links.  Exemplary damages, so described, have been said to be given for assaults because of the insult involved.  The relationship between the words “insult” and “assault” may perhaps have contributed to this, one meaning of insult being attack.

Then he went on to refer to Merest v Harvey, which your Honour sees is an 1814 case and Justice Heath saying:

I remember a case where a jury gave £500 damages for merely knocking a man’s hat off . . . It goes to prevent the practice of duelling, if juries are permitted to punish insult by exemplary damages.

Well, your Honours, I need not take your Honours’ time on that, but if there is to be a comment to be made about quantum of damages in this case, we would suggest that the award was far too small.  Now, one thing that Lamb v Cotogno, that XL, and confirmed in Gray, make very plain, that when one is dealing with exemplary damages the court, on behalf of the public, amongst other things, is marking its revulsion of the conduct and a clearer case than that involving Miss Lee, we would suggest, is very difficult to imagine.

That then lets me ask the Court to go to Lamb v Cotogno 164 CLR 1. There are a couple of matters that I can refer to from page 9 to deal with some of the matters put by my friend and I am, perhaps, going to take them a little out of order but it is convenient, if I may. Your Honours see, at the top of page 9, the passage from Justice Brennan’s judgment in XL and if I could take the Court to - your Honours are obviously well familiar with the preliminary lines of that paragraph.  Halfway down it, your Honours see the passage:

There is no necessary proportionality between the assessment of the two categories.

Because we understand it, your Honours, something was made of the point that there was a marked, I think it was put, disproportion, in this case, between the compensatory award and the exemplary award.  Then this Court went on to say this:

It was argued on behalf of the defendant that, since the object of exemplary damages is to punish and deter, it is inappropriate that they should be awarded where the wrongdoer is insured under a scheme of compulsory insurance against liability to pay them.  Clearly there is strength in that submission, but in our view it cannot succeed.  The object, or at least the effect, of exemplary damages is not wholly punishment and the deterrence which is intended extends beyond the actual wrongdoer and the exact nature of his wrongdoing.

If I could bring the Court over to the top of page 10, the paragraph three lines down:

So far as the object of deterrence is concerned, not only does it extend beyond the defendant himself to other like-minded persons, but it also extends generally to conduct of the same reprehensible kind.

Now, we take your Honours to that, not because, obviously, there is anything new about it, but what we understand my friend’s argument is this, some way or another, that reading what Mr Justice Priestley had to say, you would discern from that that he was turning on the State as, if you like, a separate component or a separate factor in assessing quantum by inferentially inferring that there had been a failure to discipline or train these police officers and, therefore, that provided a ground, not otherwise dealt with at the trial or in the Court of Appeal, separate and distinct from the conduct of the police officers.

Therefore, I think that seems to be the basis for this concept of the primary liability of the State.  I have to confess to the Court, with respect, it is not altogether clear to us on this side of the record but that is how we understand it.  So, it would seem to us that if that really is the way it is put, then the object and purpose that underlay the Court of Appeal’s assessment, is manifestly plain, bearing in mind that the State was, unchallenged, vicariously responsible for the conduct of its officers.  It seems to us, with respect, that the effect of deterrence, apart from marking the revulsion of the court, goes to make plain to others that similar conduct simply will not be tolerated, ought not to be repeated, and steps ought to be taken by, in this case, the employer, to ensure that it does not happen again and it does not need to be stated, one might have thought, that some members of the police force might need to be reminded of their responsibilities, their discipline and their training.

One can come at it the other way, of course, that if one was looking at the conduct of these individuals only, as my friend seems to be inviting the Court to do, then one might say, “Well, it may never have happened unless they were totally disregarded, whatever it was, that they were trained or disciplined to do, and the State, these officers being its representatives, is responsible for that”.  Your Honours, again, if I can focus on the Lee matter just very briefly, it really reduces to a challenge of quantum.  That is made manifest from two matters in the papers filed on behalf of the applicant. 

First of all, at page 96 of the book, it will be seen that the applicant’s consent to an award of exemplary damages in the sum fixed by the trial judge “or such other amount (if any) as may be appropriate”.  If one reads that with the statement at page 109, which appears in the course of the argument, paragraph 10, where it is said:

In all events the trial judge’s discretion to award $15,000 by way of aggravated or exemplary damages ought not to be disturbed.

So, with respect, we must confess that we do not understand, in relation to the Lee matter, what is the point put if it is accepted that - if a verdict of exemplary damages against the State is to be accepted and one is now debating whether it ought to be $15,000 or the amount that the Court of Appeal accepted.  Perhaps it is said that the Court of Appeal erred in its discretion by taking into account an irrelevant factor, namely, the training factor.  But for the matters that we have taken you to in the judgment, your Honours, it seems perfectly plain that that just simply is not so.

So, your Honours, in summary, we submit, in respect of each of the applications, there is no warrant for special leave to be granted.  The Court is not being asked to reopen any of the recent cases of matters considered in Gray, going back, Lamb v Cotogno and XL.  The matters then, with the greatest respect, reduce to an exercise in quantum.  I suppose, finally, and if I may respectfully say so, you might think it is a trite proposition to put, that concepts of setting benchmarks and criteria really have no place, we would submit, in matters of this kind.  The task for awarding exemplary damages, assuming the occasion warrants such an award in the first place, will plainly vary from case to case, and nothing more need be said about that.

In our submissions, each of the applications should be refused.  We would ask this, your Honours, if the Court was minded to grant leave, we would ask that it be conditional upon the applicants paying the respondents’ costs of this application and of the appeal, whatever the outcome, because if it is to test, in some way, questions of the limits of vicarious liability, or questions as to whether it is right and proper that large sums of money should be awarded against police officers in circumstances where there is a

flagrant abuse of their powers, then, your Honours, my clients, with respect, ought not to have to be in jeopardy in relation to costs as to the outcome of any appeal that might ensue.  Those are our submissions.

GLEESON CJ:   Thank you, Mr Nicholas.  Yes, Mr Donovan.

MR DONOVAN:   Yes, I just wanted to clarify a couple of things if I might.  These damages were said to be awarded to bring home to the State, who oversee the police, certain things.  That is, to have an effect on the State, to punish the State.  If they are going to be exemplary damages, they have to be based on some sort of wrongdoing.  You cannot just do it as a kind of future deterrent without a wrongdoing to base it on.  They are the passages which my learned friend read to the Court.  We say that you cannot use exemplary damages, or assess them, against the State where there are no findings of independent wrongdoing by the State, where there is no evidence and where there is not an issue.  Further, we say that to assess exemplary damages on the basis ‑ ‑ ‑

GAUDRON J:   I am sorry, but does this mean that you are happy to have the exemplary damages left against the police officers?

MR DONOVAN:   We are content to have exemplary damages assessed on the basis of the wrongdoing of the individual police officers and the police officers’ means, but not assessed on the basis of the State’s means.  That was the issue on which the Court of Appeal made this decision of these huge amounts.

GLEESON CJ:   Was there joint representation in the Court of Appeal and at first instance, of all defendants?

MR DONOVAN:   Yes, there was.

GAUDRON J:   That is because, as Justice Sheller observed, the State is picking up the bill.

MR DONOVAN:   Yes.

GAUDRON J:   So the State was defending these people when the action was brought.

MR DONOVAN:   The State was defending these people when the action commences; the State was defending these people during the Court of Appeal.

GLEESON CJ:   If the State was not picking up the bill, they really could not properly have been jointly represented, could they?

MR DONOVAN:   That is right.  Well, there could be - if the State was saying there was no vicarious liability, then there would have to be separate representation.

GLEESON CJ:   But if the State was saying the measure of damages against the individuals might be different from the proper measure of damages against the State, in terms of exemplary damages, there would be a conflict of interest.

MR DONOVAN:   Yes, that is right.

GAUDRON J:   But the way it is put to me, it looks as though, whether by reason of legislation or policy, or the like, the State is almost condoning this.  Now, whatever might have been the way in which it was put in the Court of Appeal, it does look as though, at least right up until today, you have been condoning it.

MR DONOVAN:   That is not so, your Honour, that is not so.

GAUDRON J:   Well, you are picking up the bill.

MR DONOVAN:   There is vicarious liability alleged against us.

GAUDRON J:   Not challenged?

MR DONOVAN:   It was not challenged initially and ‑ ‑ ‑

GAUDRON J:   Not now challenged?

MR DONOVAN:   Yes, that is correct.

GAUDRON J:   And accepted by the State that every time a policeman goes out in dereliction of his duty and engages in unlawful conduct in breach of the citizen’s freedom, you will, apparently, just pick up the bill.

MR DONOVAN:   No, let me reply to it this way.  Where people are injured, it is an appropriate policy for the State to pay for those injuries where it is carried out by one of their employees.  If we go to exemplary damages, you move into a different area.  There is a right for the State to recover for serious and wilful misconduct.  That would cover exemplary damages.  Whether the State does it is another matter and that will depend on the circumstances of each case, but by paying it in the first place, there is no condoning of the action of the police, rather, it is a public duty response to the injuries of the individual.

GLEESON CJ:   But there is an inconsistency, is there not, between having joint representation at the trial and on the appeal, acknowledging vicarious responsibility and then coming along to us and saying, “The measure of the exemplary damages is excessive because these are poor men”.

MR DONOVAN:   No, it is not a question of saying they are poor men.  It is really the other way around.  I hear what your Honour says, but the real argument is that the Court of Appeal took into account the wrong means by specific reference to the means of the State.  Now, your Honour, you can turn it around the other way but I would prefer to put it in the way that I put it rather than the reverse.  I appreciate, your Honour, there are some inconsistencies but the problem is this:  the State was not the wrongdoer yet it is the means of the State which has been used to assess the exemplary damages for everybody.

GLEESON CJ:   Thank you, Mr Donovan.

The Court of Appeal of New South Wales awarded the respondents $100,000 and $120,000 respectively by way of exemplary damages for false arrest, trespass to the person and trespass to property.  The award was made against three police officers and the State of New South Wales.  The State did not dispute its vicarious responsibility and at trial and on appeal the three police officers and the State were jointly represented. 

Given the facts of the cases and the State’s failure to dispute vicarious responsibility, the Court is of the view that these cases are not suitable vehicles for elucidation of the law with respect to exemplary damages.  In each case, special leave to appeal should be refused with costs.

MR NICHOLAS:   Your Honour, I am instructed to ask for costs on an indemnity basis.  The Court of Appeal ordered that to be the case.

GLEESON CJ:   I will not alter the order that has been announced.

MR NICHOLAS:   Did your Honour make an order?  I did not hear your Honour - not on my application, but I would ask for an order for costs.

GLEESON CJ:   There is an order for costs.

MR NICHOLAS:   Thank you, I did not hear that.

GLEESON CJ:   Yes.  The application for special leave to appeal is refused with costs.

AT 10.38 AM THE MATTER WAS CONCLUDED