Bhagat v Global Custodians Ltd
[2000] NSWSC 321
•13 April 2000
CITATION: Bhagat v Global Custodians Ltd & Ors [2000] NSWSC 321 CURRENT JURISDICTION: Equity Division FILE NUMBER(S): SC 3398/98 HEARING DATE(S): 17/03/2000 JUDGMENT DATE: 13 April 2000 PARTIES :
Hari Bhagat (P)
Global Custodians Ltd (D1)
Tyndall Funds Management (NSW) Ltd (D2)
Tyndall Funds Management Australia Ltd (D3)
Tyndall Australia Ltd (D4)
David O'Bryen (D5)
Michael Wilkins (D6)
Gary Weiss (D7)
Sir Ron Brierley (D8)
John Murphy (D9)
Cowley Hearne (D10)
Australian Securities & Investments Commission (D11)JUDGMENT OF: Young J
COUNSEL : Plaintiff in person
G C Lindsay SC and R F Margo (D1)
B J Preston SC (D2-9)
D L Williams (D10)
N Hutley SC (D11)SOLICITORS: Holding Redlich (D1)
Mallesons Stephen Jaques (D2-9)
Ebsworth & Ebsworth (D10)
Australian Government Solicitor (D11)CATCHWORDS: Equity [223]- Trusts- Rights of beneficiary- Sub-trust- Beneficiary may have standing to challenge breach of sub-trust Torts [185]- Abuse of process- Scope of tort- What damage is too remote CASES CITED: Bayne v Blake (1909) 9 CLR 347
Bhagat v Royal & Sun Alliance Life Assurance Australia Ltd [2000] NSWSC 159
Bryan v Maloney (1995) 182 CLR 609
Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529
Castlereagh Motels Ltd v Davies-Roe (1966) 67 SR (NSW) 279
General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125
Goldsmith v Sperrings Ltd [1977] 1 WLR 478
Grainger v Hill (1838) 4 Bing NC 212
Gregory v Portsmouth City Council [2000] 2 WLR 306
Hamer-Mathew v Gulabrai (1994) 35 NSWLR 92
Hamer-Mathew v Gulabrai (No 2) [1995] Aust Torts Reports 81-334
Hanrahan v Ainsworth (1990) 22 NSWLR 73
Huggins v Winn-Dixie Greenville Inc 166 SE (2d) 297 (1969) (South Carolina)
Little v Law Institute of Victoria [1990] VR 257
McGann v Allen 134 A 810 (1926) (Conn)
Metall & Rohstoff AG v Donaldson Lufkin & Jenrett Inc [1990] 1 QB 391
Packer v Meagher [1984] 3 NSWLR 486
Penthouse Publications Ltd v McWilliam - C/A 14 March 1991
Savill v Roberts (1698) 12 Mod 208
SCM (United Kingdom) Ltd v WJ Whittall & Son Ltd [1971] 1 QB 337
Spellson v George (1992) 26 NSWLR 666
Varawa v Howard Smith Co Ltd (1911) 13 CLR 35
Williams v Spautz (1992) 174 CLR 509DECISION: See paras 109-115
THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
YOUNG J
Thursday 13 April 2000
3398/98 - BHAGAT v GLOBAL CUSTODIANS LTD & ORS
JUDGMENT
1 HIS HONOUR: The plaintiff, Mr Hari Bhagat, sues a number of defendants for damages for the tort of abuse of process. The proceedings were commenced in 1998. Originally 17 defendants were sued, but, as a result of various rulings I have made during a lengthy case management process, the further amended statement of claim names 12 defendants.
2 On 17 March 2000 I heard four notices of motion:
A. motion of 21 December 1999 by the 11th defendant, the
Australian Securities & Investments Commission;B. notice of motion of 21 January 2000 by the 10th
defendant, Cowley Hearne;C. motion of 4 February 2000 by the first defendant, Global
D. motion of 4 February 2000 by the second to ninth defendants, the people concerned in the managing of various trusts known as the “Meridian Investment Trusts”. These include the Meridian Investment Trust (MIT) and various sub-trusts.
Custodians Limited; and
3 I should note that the only remaining defendant is the 12th defendant, against whom no orders are sought. This defendant is the legal owner of some of the units owned beneficially by the plaintiff.
4 The present version of the statement of claim is, I think, the fourth. In any event, I made orders from May to July 1999 when dealing with various motions to strike out the previous versions of the statement of claim, that I would permit an amendment and I gave some months for the amendment to be filed. I made it clear when the current motions were heard that I regarded the present version of the statement of claim as being the last, and that the motions would be dealt with on that basis. No-one made any submission to the contrary.
5 At about 3.30 pm on 17 March 2000, I gave reasons and made orders in respect of notice of motion A. When considering motions B, C and D, I realised that some remarks I made with respect to the tort of abuse of process were incorrect. I accordingly recalled those reasons and I now reissue part of those reasons as originally delivered, and a fresh version of the reasons with respect to the tort of abuse of process which removes, I hope, the errors. I should indicate that in doing this I have completely reviewed the whole of the material going to the tort of abuse of process which is the subject of notice of motion A, not merely corrected errors. However, for the reasons which appear hereafter, there was no need to recall the order.
6 I will now deal with the motions seriatim.
MOTION A
7 On the hearing of this motion, Mr Bhagat appeared in person and Mr Hutley SC appeared for the 11th defendant, to which I will refer simply as “ASIC”.
8 The plaintiff makes two basic statutory claims against ASIC, viz:
(2) breach of s 1(2)(g) of the Act to take whatever action ASIC can to enforce the laws with respect to the securities industry. It is alleged in para 54 of the further amended statement of claim that ASIC acted with reckless indifference to the plaintiff’s interests, in breach of its statutory duties under that section in the way particularised. Paragraph 56 then alleges that ASIC failed to ensure the protection of the plaintiff as an investor.
(1) damages for breach of statutory duty being alleged breaches of s 1(2)(b) of the Australian Securities Commission Act 1989 (the “Act”) in that the defendant allegedly failed to maintain the confidence of investors in the securities markets by ensuring adequate protection for investors; and
9 A third claim is for the tort of abuse of process.
10 Dealing with the statutory duty claims, these must be struck out because in my view the Act does not lay on ASIC any statutory duty which can be the subject of a civil action.
11 The part of the Act on which the plaintiff sues is contained under the heading “Objects”. The prefatory words to s 1(2) are:
“In performing its functions and exercising its powers,
Commission must strive to”
then follows (b):
“promote the confident and informed participation of investors and consumers in the financial system”
and (g):
“take whatever action it can take, and is necessary,
in order to enforce and give effect to the laws that confer functions and powers on it.”12 Section 1(3) makes it clear that the provisions of the Act are to be interpreted in the light of its objects and what ASIC must strive to do. However, the Act does not lay upon ASIC a duty to do those things. It must strive to do them, but there is no suggestion in the legislation that if its striving falls short of achieving what is set out in the Act it is under an obligation to anybody. Indeed, even if stronger language had been used I would not have considered that this section was one which gave rise to a civil liability at law for ASIC; cf Castlereagh Motels Ltd v Davies-Roe (1966) 67 SR (NSW) 279.
13 The principal claim, however, is for the tort of abuse of process. There are two matters to consider. First, whether the facts pleaded amount to an abuse of process. Secondly, whether the plaintiff’s claim for damages, that is, for general damages and aggravated damages and exemplary damages for “loss of enjoyment of life, pain and suffering and mental distress caused by the manner in which the wrongful act was done” are not too remote.
14 Because the tort of abuse of process features so prominently in this case, it is necessary to consider its scope.
15 Fleming on Torts, 9th ed (LBC 1998) in Chapter 7 deals with what the learned author calls “abuse of legal procedure”. The first section of that chapter is headed “Malicious Prosecution”. The second section is headed “Abuse of Process”. Fleming notes two completely separate types of case. First, abuses of legal procedure such as malicious arrest on mesne process and malicious execution of which the learned author says “They resemble the parent action too much to warrant separate treatment”. Then there is a second class of which the learned author says “Quite distinct, however, are cases where a legal process, not itself devoid of foundation, has been perverted for some predominant extraneous purpose, such as extortion or oppression. ... Unlike malicious prosecution, the gist of this tort lies not in the wrongful procurement of legal process or in the wrongful launching of criminal proceedings, but in the misuse of process, no matter how properly obtained, predominantly for any purpose other than that which it was designed to serve.”
16 The error made in the oral reasons I gave on 17 March which were recalled was not to distinguish between the two classes of abuse of process, and to assume that the type of abuse of process pleaded by the plaintiff was one which was subject to the same limitations as were inherent in the tort of malicious prosecution.
17 The seminal case is Grainger v Hill (1838) 4 Bing NC 212; 132 ER 769. Essentially, the allegation made in the declaration in that case was that the plaintiff was imprisoned under a ca re by a mortgagee. The plaintiff only obtained release because he yielded to the pressure of the mortgagee to give up a ship’s register and other chattels which were not the subject of the security. On his release, the plaintiff paid off the mortgage in the process selling his ship for an undervalue and then sued for abuse of process. The defendants pleaded the general issue. The plaintiff succeeded at the trial and the defendants applied in arrest of judgment to the Full Court of the Court of Common Pleas. Bosanquet J said at ER 774:18 The Court of Appeal considered the tort in Hanrahan v Ainsworth (1990) 22 NSWLR 73. At 95 Kirby P said of the tort:
“This is not an action for a malicious arrest or prosecution, or for maliciously doing that which the law allows to be done: the process was enforced for an ulterior purpose; to obtain property by duress to which the defendants had no right. The action is not for maliciously putting process in force, but for maliciously abusing the process of the Court.”
19 In Hanrahan’s case Clarke JA analysed the tort at 107 and following. His Honour acknowledged that although the tort of abuse of process and malicious prosecution developed from the writ of conspiracy, it was easy to confuse the two. After discussing Grainger v Hill and other 19th century cases, he said at 112:
“The standard of proof required to establish an abuse of civil process is a very high one. An exceptional case must be made out before such a tort is established.”
The principal case authority relied on for that statement is Packer v Meagher [1984] 3 NSWLR 486, 500.
20 Mr Bhagat directed my attention to the note in the Supreme Court Practice [15.26.2A] which is headed “Abuse of Process - Action in Tort” which says:
“The following propositions can, I think, be deduced from these cases:
(1) an action on the case for abuse of the process of the court will lie where it has been proved that process ancillary to a principal claim for relief has been used to effect an object not within the scope of the process and damage has resulted;
(2) where the action lies it is not necessary to establish that the principal proceedings have terminated;
(3) the action will not lie where the claim is that a party has instituted proceedings, whether principal or ancillary, in order to effect an object within the scope of the proceedings. This is so even if the proceedings had been irregularly or maliciously instituted;
(4) Similarly an action will not lie if it involves an assertion that a pending proceeding is unjust;
(5) Malicious prosecution is the relevant cause of action where the allegation is that a person has maliciously instituted proceedings without reasonable cause to effect a purpose within the object of the proceedings.”
“Where proceedings are pursued for a collateral purpose so as to constitute an abuse of process, the circumstances may entitle the defendant both to a permanent stay and to a claim for damages.”
Four cases are then cited: Williams v Spautz (1992) 174 CLR 509; Varawa v Howard Smith Co Ltd (1911) 13 CLR 35; Metall & Rohstoff AG v Donaldson Lufkin & Jenrett Inc [1990] 1 QB 391; Little v Law Institute of Victoria [1990] VR 257.
21 I have looked at all these cases and others. Of the four cited in the note, Williams v Spautz is a case of an application for stay of criminal proceedings on the basis that they were an abuse of process. At 526-7, the majority discussed the boundaries of the tort of abuse of process. It noted that it was insufficient that there was an unworthy or reprehensible motive for bringing the action and that it must appear that the purpose sought to be effected was improper, though fraud did not have to be established. The object sought to be effected by means of the process must be outside the lawful scope of that process. However, “to say that a purpose of a litigant in bringing proceedings which is not within the scope of the proceedings constitutes, without more, an abuse of process might unduly expand the concept. The purpose of a litigant may be to bring the proceedings to a successful conclusion so as to take advantage of an entitlement or benefit which the law gives the litigant in that event” (526). Accordingly, it is permissible to bring proceedings against a political opponent in a local government arena so that after those proceedings are successfully terminated, the opponent will be disqualified from office. The improper purpose must be the predominant purpose; it need not be the sole purpose of the moving party. The onus on the plaintiff is a heavy one: see Goldsmith v Sperrings Ltd [1977] 1 WLR 478, 498.
22 Varawa is a case where the allegation was that the issue of a ca re was an abuse of process. However, the Court, after discussing the tort, held that it had not been committed in that particular case. The Metall case involved an allegation that a false defence constituted the tort. At 469-470 the English Court of Appeal discussed the elements of the tort and held that such an allegation was not within its bounds. Little’s case was not a case of abuse of process under the Grainger v Hill rule at all, but rather a case akin to a malicious prosecution.
23 Prosser and Keeton on Torts, 5th ed (West Publishing Co, St Paul, 1984) pp 897 et seq discuss the ambit of the tort in some detail. The learned authors say at 898:
“The essential elements of abuse of process ... have been stated to be: first, an ulterior purpose, and second, a wilful act in the use of the process not proper in the regular conduct of the proceeding. Some definite act or threat not authorised by the process, or aimed at an objective not legitimate in the use of the process, is required. ... The improper purpose usually takes the form of coercion to obtain a collateral advantage, not properly involved in the proceeding itself, such as the surrender of property or the payment of money, by use of the process as a threat or a club. ...
Some of the decisions have said that there must be an improper act, such as an extortion attempt, after the process has issued and that an act committed beforehand is not enough. Most of these cases probably stand only for the narrower proposition that there must be an overt act and that bad purpose alone is insufficient.”
24 Putting aside for the moment the question of what damages have to be pleaded in order to maintain the cause of action, I should now turn to the allegations in the further amended statement of claim. As Mr Bhagat has submitted, I must decide the matter on the pleadings and assume, for the purpose of this application, that the facts pleaded in the statement of claim will be found to be true, including all necessary ancillary facts that flow from the pleaded facts. As Mr Bhagat put it, relying on the unreported decision of the NSW Court of Appeal on 14 March 1991 in Penthouse Publications Ltd v McWilliam, the applicant for summary disposal must accept the truth of all allegations in the opposing pleading, including the ranges of meaning that the assertions of fact in that pleading are reasonably capable of bearing.
25 The question is thus whether on those assumptions the claim against ASIC should be struck out on the basis that no reasonable cause of action is disclosed.
26 For this purpose it is necessary to analyse what facts are pleaded.
27 Paragraph 46 of the further amended statement of claim is not pleaded against the 11th defendant, but contains an allegation against other defendants that those other defendants induced ASIC to send its paralegal to the plaintiff’s residence on 27 and 28 May 1998 for a collateral purpose, and for the predominant purpose of obstructing, preventing or defeating an interlocutory hearing on 28 May 1998 in which the plaintiff was appearing as a litigant in person so occupying and diverting the plaintiff from that motion. It was put in the allegation against those other defendants that, inter alia, ASIC must have been aware that the plaintiff would be completely preoccupied in the interlocutory hearing of 28 May and should not have been disturbed by process servers in other actions. The particulars to this allegation say that a process server constantly, for a few hours on 27 May 1998 and in the morning of 28 May 1998, kept buzzing on the intercom of the plaintiff’s residence and disturbed the plaintiff when he was preparing for that interlocutory hearing, and simultaneously a paralegal of ASIC buzzed the intercom attempting to serve documents in proceedings 4626 of 1994. These allegations are repeated in various other paragraphs with respect to other defendants.
28 In para 49 of the further amended statement of claim, it is alleged that ASIC, by its employed solicitor, abused the process of the court “for a collateral purpose” to file in collusion with “various other defendants a frivolous and vexatious notice of motion in proceedings 4626 of 1994 with a return date of 28 May 1998” for the “predominant purpose of obstructing, preventing or defeating the course of justice at the interlocutory hearing on 28 May 1998” in proceedings 4984 of 1998 in which the plaintiff was appearing as a litigant in person without legal representation. Further, ASIC arranged for a paralegal to serve documents on 27 and 28 May almost simultaneously with a process server attempting to serve documents on the plaintiff in proceedings 2539 of 1998 on 27 and 28 May 1998. It is put that the 11th defendant knew, or must have known, that proceedings 2539 of 1998 had been commenced, that proceedings 4984 of 1998 were listed for hearing on 28 May 1998 and that a process server would be serving documents on the plaintiff. The motion did not require service by a paralegal, yet that was the method used by ASIC.
29 It is to be noted that no extortion is said to have been involved in the actions of ASIC. There is no damage alleged to either the person or property of the plaintiff.
30 Prosser and Keeton note at pp 898-900 that an ulterior purpose and an overt act are the only elements of the tort as it is usually stated, and there is an implication that there is no requirement of interference with person or property, but that most of the cases do involve that.
31 It is quite clear that when an action is brought for the tort of malicious prosecution, unless the damage falls within the three categories set out by Holt CJ in Savill v Roberts (1698) 12 Mod 208; 88 ER 1267, namely:32 Initially I thought that that rule applied to the present type of abuse of process. However, the textbooks appear to be against that opinion. In Todd & Ors, Law of Torts in New Zealand (LBC, Sydney, 1991) at p 782, the learned authors say of this tort:
(i) damage to the plaintiff’s fame;(ii) damage to his person; or
(iii) damage to his property,
the action cannot be supported. This rule has been stringently applied ever since, both to malicious prosecution cases and also to abuse of civil process where the complaint is that the process was issued maliciously; see for a recent example Gregory v Portsmouth City Council [2000] 2 WLR 306, 312.
“Special damage must be shown but it need not fall within the three particular categories of damage which support claims for malicious prosecution.”
They refer to a preliminary bout in Hanrahan v Ainsworth before Hunt J reported in (1985) 1 NSWLR 370. At 374, Hunt J applies what is in the 7th edition of Street on Torts at 406-7 that:
“Damage to fame, person or property need not be proved; any special damage is enough.”
33 In Hamer-Mathew v Gulabrai (1994) 35 NSWLR 92, Brownie J found the defendant guilty of the tort of collateral abuse of process where the defendant had put on false allegations to delay the trial. He referred the question of damages to a Master. In due course the matter of damages was heard by Master McLaughlin whose decision is reported as Hamer-Mathew v Gulabrai (No 2) [1995] Aust Torts Reports 81-334. Before the Master the plaintiff proved damages of $1,613 for profits lost. However, the learned Master also awarded $50,000 general damages for loss of reputation by the allegations in the defence and hurt to his feelings in considerable embarrassment, and a further $50,000 for exemplary damages. Apart from referring to authorities on the question of exemplary damages, the learned Master does not seem to have been referred to any of the decisions governing damages in this area of the law. The Master’s decision seems to have been considered uncontroversial because it is noted in Fleming, op cit at 688.
34 The American authorities seem to take the same line. Prosser and Keeton say at 900:
“Once the plaintiff’s right is established, actual damages proximately caused can be recovered, including indirect losses such as injury to financial standing and intangible losses such as ‘mental injury’.”
35 Authority for this last proposition is said to lie in McGann v Allen 134 A 810 (1926) (Conn) and Huggins v Winn-Dixie Greenville Inc 166 SE (2d) 297 (1969) (South Carolina).
36 The McGann case hardly seems authority for the proposition. In that case a woman was arrested, and instead of being taken to the police station, was first taken to the store of the person from whom she was supposed to have stolen goods in an attempt to get her to come to a cash settlement. This was held to be an abuse of process.
37 The Court said at 813:
“Damages suffered through an abuse of legal process not malicious must be compensatory; that is, compensation for the natural consequences resulting, which would include injury to the feelings because of the humiliation, disgrace or indignity suffered, together with injury to the person and physical suffering as well as special damage incurred in consequence of the wrong, as loss to one’s business or property or expense caused in curing the physical or mental injury, or in protecting one’s person from arrest or confinement.”
The jury might also add exemplary damages. At 815 the Court warned that “Damage for abuse of process must be confined to the damage flowing from such abuse, and be confined to the period of time involved in taking plaintiff, after her arrest, to the store, and the detention there, and to those elements of damage to which we have already referred.”
38 In Huggins the facts are not set out in the report. The judgment merely adopts the statement in an early edition of Prosser and notes that on the facts, at least some damage to reputation was suffered. Neither case seems to be authority for the proposition that without damage to reputation, person or property one can have damages for emotional distress or the like.
39 In Grainger’s case itself the report in Bingham does not set out the amount of damages. However, in the report in (1838) 5 Scots Common Bench Reports 561 at 566, the amount of the verdict, namely £150, is recorded. As the pleadings show, special damage was alleged: (a) imprisonment; (b) injury in credit in circumstances; and (c) prevention from carrying out business affairs. There does not appear to be any element of damage for emotional distress nor would one expect that in 1838.
40 It would thus seem that damage is allowed in abuse of collateral process cases outside the three heads laid down by Holt CJ in Savill v Roberts.
41 I have already referred indirectly to what appears in the 7th edition of Street on Torts at 407. It will be noted that Street makes the statement that “Damage to fame, person or property need not be proved; any special damage is enough.” He does not give any authority for this proposition but says in the footnote “For example if a suit in deceit was instituted for the purpose of damaging the plaintiff’s credit.” With respect, this would seem to be an action which would be against the plaintiff’s fame.
42 It must be remembered that the present action is an action on the case. Up until fairly recently, the rule for damages in actions on the case was that special damages had to be pleaded and proved, and that those special damages must be damages to the person or property and not merely economic loss; see eg SCM (United Kingdom) Ltd v WJ Whittall & Son Ltd [1971] 1 QB 337, 344.
43 In negligence, which, of course, is one of the actions of the case, the High Court has since abrogated that stark rule; see Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529 and Bryan v Maloney (1995) 182 CLR 609. However, the status of the old rule as to other actions on the case has not been the subject of the same clarification.
44 Certainly even under the old rule, if one could show damage to person or property, one could add other economic losses. However, economic loss by itself was insufficient.
45 With respect to this very tort, the High Court made a ruling in Bayne v Blake (1909) 9 CLR 347 that damage being “great loss mental worry anxiety ill health suspense and damage to fair fame and credit” was insufficient. In Bayne’s case it was alleged that a bankruptcy petition had been issued against Bayne as an abuse of process to gag another action. Griffiths CJ said at 355, “Assuming this was an abuse of process of Court and that it is actionable, actual damage is an ingredient of the action, just as it is in an action for fraud.” The Chief Justice then said that there was no damage in connection with the action that was to be gagged, because it has later been held that that action was unsupportable. Barton J took the same view. O’Connor J at 358 said:
“It is in this case clear that no damage has resulted from the wrongful act complained of which the law can appreciate.”
46 It seems to me that the High Court was saying that short of damage to property, the factors of mental worry, anxiety and ill health were insufficient special damage for this cause of action.
47 At first sight this seems inconsistent with the approach taken by Master McLaughlin in Hamer-Matthew. However, in that case the learned Master did in fact find some damage other than general damages. In any event the High Court’s decision in Bayne does not appear to have been cited to the learned Master.
48 Thus, in my view, even if the textbooks are right and Lord Holt’s three heads of damage are not the only damage which is able to be claimed in an action for abuse of collateral process, in the present case the damages claimed are too remote.
49 Were this the only defect, I might have desisted from striking out the proceedings because I am fully aware of the strictures laid down by the authorities such as General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 and Spellson v George (1992) 26 NSWLR 666 that striking out proceedings or causes of action is only to be done in very clear cases.
50 However, this is not the only problem in the case.
51 As I have said, the key paragraph against ASIC in the statement of claim is para 49. Essentially the allegation is that in collusion with the 5th and 10th defendants, ASIC:52 Following those allegations are the words “given that” and then four sub-paragraphs follow, viz:
(a) filed a frivolous and vexatious notice of motion on 20 May 1998 in proceedings 4626 of 1994;(b) obtained a return date of 28 May 1998;
(c) had the predominant purpose of “obstructing, preventing or defeating the course of justice at the interlocutory hearing on 28 May 1998 in proceedings 4984 of 1998; and
(d) arranged for a paralegal to serve documents in 4626 of 1994 on 27 and 28 May almost simultaneously with a process server attempting to serve documents on those days in proceedings 2539 of 1998.
53 There then follows particulars (i) to (viii). As orally amended, (vii) is:
(a) ASIC failed to fax advice of the listing of the motion;(b) ASIC knew or must have known that the first defendant was commencing proceedings 2539 of 1998 and would be attempting to serve process on the plaintiff’s wife on 27 and 28 May;
(c) the documents which ASIC was trying to serve did not require service by a paralegal;
(d) ASIC’s notice of motion was dismissed.
54 The particulars also seem to indicate that the essential nature of the plaintiff’s complaint is that:
“As a result of the actions of the 2nd, 5th, 6th, 7th, 8th and 11th defendants, the plaintiff suffered loss of enjoyment of life, pain and suffering and mental distress caused by the manner in which the wrongful act was done.”
(b) that there was repeated buzzing of the intercom in his residence while he was preparing for the interlocutory hearing.
(a) the notice of motion was in his view unnecessary; and
55 The way in which para 49 of the statement of claim is phrased is nowhere near what would be expected from a professional pleader. One makes some allowance for the consideration that the plaintiff is a litigant in person, but one has also got to remember that this is, I think, the fourth attempt at pleading and the defendants are entitled to have the matter pleaded in such a way that they can answer the claim. The “given that” method of pleading and putting some facts in particulars is difficult for defendants to deal with.
56 However, basically accepting the facts as made out, the plaintiff says that the notice of motion was issued not for the purpose of having the proceedings struck out, but for the predominant purpose of defeating the course of justice. The overt acts are alleged as:
(b) persistently pressing the buzzer of his intercom when attempting to serve it at the same time someone else was doing the same thing in other litigation, and the plaintiff was trying to prepare his case for the hearing on 28 May in a third piece of litigation.
(a) issuing the notice of motion with the same return date as the other proceedings in which the plaintiff was involved; and
57 The obvious answer to this is that if the plaintiff had accepted the documents when the buzzer first sounded he would not have been troubled by further buzzing. If one will not open the door to process servers trying to serve process as would appear to be the case, that failure to act rather than the attempt to serve process is the causa causans of the buzzing. Furthermore, the notice of motion was not in fact heard on 28 May according to the statement of claim, it was apparently heard later and judgment was given on 23 July.
58 There was no attempt to extort anything from the plaintiff. There is no material to show that ASIC was ever a party to the proceedings that the plaintiff was preparing to deal with on 28 May.
59 In so far as the plaintiff’s case is that a litigant in person has some entitlement not to be disturbed whilst preparing a case, or is entitled if he or she is involved in a dozen or so pieces of litigation to prepare those cases at respectable intervals, no such right should be conceded. It may be that when fixing cases for hearing in which a litigant in person is involved judges will take such matters into consideration in exercising a discretion, but that is as far as the matter goes. If a person sues a number of people in different pieces of litigation then that person has no right to expect that the defendants will not all wish their case against the plaintiff to be disposed of as soon as possible even though that might cause the plaintiff some logistical problems.
60 The present allegations of course, go further. They are that is that there was some collusion and deliberate attempt to issue a motion and to have it served in a situation where the plaintiff would be prejudiced in preparation for other litigation. I do not consider that the matters pleaded, even if true, amount to an abuse of process as the tort is defined. There has been no extortion. I acknowledge that cases where the extortion failed are still within the bounds of the tort (see Prosser and Keeton at 900) but there needs to be some attempt to get an advantage illegitimately for the defendant. It may just be that the tort extends to cases where the defendant has not thought to obtain an advantage for itself, but rather to intend a detriment to the plaintiff. However, in such cases there must be more than mere trifling disturbance to a person’s peace or serenity.
61 The mere fact that a motion is made returnable on a certain day, or that there is an attempt to serve the motion is to my mind insufficient. This is so even if it was known that the person served had other process to consider on the same day. Often it is convenient for a series of motions to be returnable on the same day. As to repeated attempts to serve, as I have said, the real cause of any disturbance here is through the failure to accept process at the first attempt rather than any action on behalf of the defendant. In any event, there is no allegation (nor would one expect it) that the defendants knew that the plaintiff would not accept service and accordingly would be continually interrupted by process servers.
62 The pleading generally is very infelicitously stated. I have endeavoured to overlook as many defects as I can, even defects which might cause the defendant some embarrassment. However, it seems to me that stripping away these matters, the statement of claim against the 11th defendant is so defective that the relevant paragraph should be struck out.
63 As I have said earlier, because there have been so many previous attempts, it is not appropriate to grant any further leave to amend.
64 Mr Hutley SC asked for indemnity costs. The plaintiff’s answer to this was that he was a litigant in person doing the best he could representing a group of people who had a very real commercial claim.
65 The answer to most of those submissions is that if a group of people choose to have an unqualified person present a very complex case, then they must wear the consequences. Further, as Hodgson CJ in Eq said in Bhagat v Royal & Sun Alliance Life Assurance Australia Ltd [2000] NSWSC 159 at 13:
“I accept that a court does have to make allowances for the position of litigants in person, and to try to ensure that such a litigant does not lose out because of lack of expertise; although there is a limit to what the Court can do in that regard, while still remaining an impartial determinant of a dispute. The Court may in those circumstances refrain from making orders against litigants in person for conduct that might be considered as justifying orders for costs against represented litigants. By the same token, litigants in person can cause great hardship and expense to other parties through making allegations and claims that lawyers would recognise as allegations and claims that could not reasonably or even properly be made and through making proceedings much longer and much more expensive than they otherwise would be, by not focusing accurately on the real issues in the case. Conduct of that nature by legally represented parties would often lead to orders for indemnity costs. Litigants in person may escape the consequence of indemnity costs, but I do not think that the circumstance that a party is a litigant in person is a ground for displacing the ordinary result that costs follow the event.”
66 I respectfully agree. The Chief Judge is not, however, saying that litigants in person always escape the consequence of indemnity costs. It seems to me that where, as here, ample opportunity has been given to the plaintiff to amend so that there is a proper statement of claim, particularly in a case such as the present where it appears that Mr Bhagat has a substantial fighting fund, some of which may be available to obtain expert legal advice, where after a long period of time the defendants are still embarrassed by pleadings which do not show a proper case, it seems to me that it is appropriate, after taking all these matters into account, to make an order for indemnity costs.
67 Accordingly, I confirm the orders that I made on 17 March 2000 and order that the costs be paid on the indemnity basis.
MOTION B
68 I now turn to the motion of the 10th defendant, Cowley Hearne.
69 Cowley Hearne is a firm of solicitors. According to the statement of claim, Cowley Hearne were at all material times solicitors for the 2nd, 3rd, 6th, 7th and 8th defendants.
70 Cowley Hearne previously made a motion to strike out, which was filed on 23 October 1998. I considered it, along with other motions on 25 June 1999. Because this motion was dealt with after a motion involving a solicitor for ASIC raising similar problems, Mr Bhagat acknowledged that his pleadings may be defective and sought to amend.
71 Para 26 of the statement of claim, apart from describing the 10th defendant, pleads that the solicitors owed a duty to the Court to act with candour, fairness, frankness and honesty and also owed a tortious duty to the plaintiff.
72 Para 46 of the statement of claim makes some allegations against the first to 8th defendants, and in the particulars on page 41, mentions the activities of the 10th defendant and its employed solicitor. However, the principal allegation against the 10th defendant is in para 48. The plaintiff there says that the 10th defendant’s employed solicitor colluded with the 5th defendant and ASIC to commence proceedings prior to the interlocutory hearing in which the plaintiff was involved on 28 May 1998, when she must have been aware that the plaintiff would be fully engrossed in preparing the matter and colluded with ASIC that she would simultaneously serve documents on the plaintiff and had her process server continually buzz the plaintiff’s intercom. The paragraph also alleges that the solicitor failed to act as an officer of the Court with candour, frankness, fairness and honesty. There are also some allegations of perjury.
73 Para 58 pleads as a result of various defendants’ actions including those of the 10th defendant, the plaintiff has suffered damage.
74 Mr D L Williams appeared for Cowley Hearne: Mr Bhagat appeared for himself.
75 Mr Williams’ written submissions contain a series of allegations that there are a large number of false statements of fact in Mr Bhagat’s pleadings. Mr Williams alleges that some of the falsity can be seen merely by looking at the Court documents in other proceedings filed by Mr Bhagat. Mr Williams also points out that it is not really true to say that the plaintiff was involved in the interlocutory motion in the other proceedings on 28 May as he was not actually named as a defendant and did not become a defendant until 9 June 1998. I will merely note this and pass over it. Mr Bhagat merely says that on a motion to strike out of this nature he is entitled to have the Court assume that his allegations can be proved. I will proceed on this basis.
76 Mr Williams then says that the allegations of a duty in tort based on a solicitor’s duty of candour to the Court have already been dealt with by previous judgments of mine in litigation relating to Mr Bhagat, and were held not to be sustainable. I agree with this submission. Indeed I ruled in these very proceedings on 16 July 1999 in an application by Messrs Everett & Kemp, solicitors, that this was so.
77 The remainder of the pleading involves similar issues to those dealt with in Motion A.
78 In my view the case made against the 10th defendant has the same flaws as that against ASIC.
79 The proper order is that the 10th defendant be dismissed from the suit and the plaintiff pay their costs on the indemnity basis.
MOTION C
80 A notice of motion by the first defendant was filed on 4 February 2000 to strike out parts of the statement of claim or dismiss the first defendant from the proceedings. On this motion, Mr G C Lindsay SC and Mr R F Margo appeared for the first defendant: Mr Bhagat the plaintiff, appeared in person.
81 The paragraphs of the statement of claim which appear to relate to the first defendant are 2, 31-37, 43, 44, 46, 50, 52, 55, 57, 58. Some other paragraphs also mention the first defendant in passing.
82 Mr Lindsay SC put in written submissions which he developed orally that the high point in the statement of claim is para 2(d) which merely asserts that the first defendant owed a tortious duty to the plaintiff. Although it is not explicitly pleaded, and although para 46 of the statement of claim appears at first blush to be an allegation against officers of the first defendant rather than the first defendant itself, parts of the statement of claim such as 3(a) claim that those officers “embodied the mind and will of the first defendant”. There is, of course, a problem in reading meaning into those words, but I will put that aside for the moment because they will need to be considered in Motion D.
83 The gravamen of para 46 is to the same effect as para 48 that I dealt with in Motion A. It is alleged, in addition, that various people induced the first defendant to commence proceedings 2539 of 1998 for a collateral purpose. It is not, however, alleged that the predominant purpose of the commencement of those proceedings was to interrupt the plaintiff’s preparation for 28 May. Those proceedings were in fact proceedings to obtain accounts for the trust of the fighting fund which Mr Bhagat represents.
84 The case of abuse of process against the first defendant is not even as strong as that mounted against ASIC. However, for similar reasons it should be dismissed.
85 Accordingly there should be dismissal of the proceedings against the first defendant, and the plaintiff should pay the first defendant’s costs on the indemnity basis.
MOTION D
86 This is a motion to strike out or dismiss by the 2nd to 9th defendants. This motion, which was filed on 4 February 2000, seeks to strike out the balance of the statement of claim, or dismissal of the proceedings against the moving defendants. Mr Preston SC appeared for this defendants: Mr Bhagat appeared for himself.
87 Unlike the other moving defendants, Mr Preston SC made oral submissions as to why each part of the statement of claim was bad against his clients.
88 Essentially, the 2nd, 3rd and 4th defendants were corporations which were involved with the Meridian Investment Trusts to one degree or another. The 2nd defendant was their manager. The 5th to 8th defendants were officers of one or more of those corporations. The 9th defendant was for some time trustee of the trusts. The statement of claim alleges that proceedings 2539 of 1998 were commenced one week prior to the hearing of interlocutory matters in other proceedings involving the parties on 29 May 1998. In order to achieve standing to commence and proceed with 2539 of 1998, the defendants brought about a deed of assignment from Mr and Mrs Speight and Mr and Mrs Greenlees of their interests under the trust being administered by those friendly with Mr Bhagat. It is then alleged that the defendants incited beneficiaries of Mr Bhagat’s trust with deceptive remarks. The 5th to 8th defendants then reignited certain defamation proceedings against the plaintiff on 11 August 1995 in order to occupy the plaintiff and prevent him from exercising his legitimate rights as a unit holder in MIT. The various defendants misused their position and the funds of the unit holders in the Meridian Investment Trusts to fund spiteful actions against the plaintiff.
89 Para 44 alleges that officers of the first four defendants, namely the 5th to 8th defendants, induced the 2nd and 9th defendants to fraudulently insert in a trust deed certain clauses. Para 45 alleges that those officers induced the 2nd and 9th defendants not to distribute proceeds of a certain action. Para 46 alleges abuse of process along the lines discussed under other motions. Para 50 alleges that the 5th to 8th defendants, as officers of the 1st to 4th defendants, induced the 2nd and 9th defendants to fraudulently issue bonus units in the Meridian sub-trusts and MIT. Para 52 alleges that those defendants induced a dishonest report for the 2nd and 9th defendants about the plaintiff to be made to unit holders. Para 55 alleges that the 5th and 6th defendants as officers of the 1st to 4th defendants induced the 2nd and 9th defendants to fraudulently repeal the 4th schedule of the Meridian Investment Trust Deed. Para 57 alleges a further abuse of process in November 1999 including bulk faxing to the plaintiff of documentation. Para 58 is a general allegation of damage.
90 Paragraphs 10(e), 13(e), 16(e), 19(e) alleged that the relevant individual defendant either alone or with others “embodied the mind and will of” the relevant corporate defendant. This allegation was obviously made for the purpose of identifying the acts of the 5th to 8th defendants with the relevant corporate defendant. However, as an allegation of fact it is vague and uncertain. This factor is exacerbated by the combining of some of the individual defendants as the “mind and will”. Furthermore, the purpose of the allegation is not followed up as key provisions such as para 46 alleges that it was officers of the corporate defendants who committed the tort not the corporate defendants.
91 Mr Preston SC further criticises the statement of claim on the basis that there are various general statements alleging a tortious duty, but there never appear to be allegations of concrete facts, a pleading as to the content of the duty or the breach, or any facts indicating a sufficiently proximate relationship. There is no correlation between the duties and the breaches.
92 This is certainly true and the style of the whole pleading is very awkward to say the least, but one can, when one looks at paragraphs such as 46, see the general flavour of the allegation and that the tort mainly relied on is abuse of collateral process.
93 Mr Preston SC then submits that the statement of claim shows that the plaintiff was at all material times a unit holder of MIT. However, he has never pleaded that he has any holding in the sub- trusts. It is submitted, accordingly, that Mr Bhagat has no standing to challenge anything that happened in the sub-trusts. Para 22, however, merges allegations with respect to the 9th defendant as trustee of MIT and his duties as trustee of the sub-trusts. Although para 22 sets out provisions of the trust deed, there is no correlation between the provisions quoted in any breach. Para 23 is in the same plight.
94 Paragraphs 22-25 of the further amended statement of claim against the 9th defendant gets close to making legal sense. Mr Preston SC submits that there are insufficient facts supporting the allegation of the existence of a fiduciary duty. However it is put that the 9th defendant was a trustee of MIT and the sub-trusts and that is enough. However Mr Preston SC rightly puts that no breach is alleged of the stated covenants or fiduciary duty. Further, sub-paragraphs (viii)-(xi) need to be struck out. Paragraph 23 also does not allege a breach.
95 Paragraphs 24 and 25 merely submit that the 9th defendant must have been aware of certain matters without going further and relating that fact to a fiduciary or contractual duty and stating the breach.
96 Para 38 of the statement of claim alleges that the 5th to 8th defendants, as officers of the 2nd to 4th defendants “infringed the rights of the Plaintiff as a Meridian Unitholder in inducing the 2nd defendant ... to fraudulently send a letter dated 14 July 1995, signed by the 6th defendant, to the MIT Unitholders ... with the deceptive remarks ... with the intention of injuring the plaintiff in deceiving MIT Unitholders and inciting them against the plaintiff ...”.
97 Mr Preston SC submits that this is the sort of pot into which all the allegations have been thrown without really setting out the facts on which the plaintiff relies. He puts that no basis is shown for the duty. It appears that it is the plaintiff’s rights as a unit holder that were infringed. There is no claim of fraud made against the 2nd defendant. So this is a good example of a defect throughout the pleadings, namely a primary claim which is never actually made is wrapped up in a secondary claim. To add to it all, there is then reference to various parts of the Corporations Law and Regulations before a statement that the actions caused the plaintiff loss of enjoyment of life, pain and suffering and mental distress. However, these damages are alleged to have flowed, not from anything pleaded but rather “by the manner in which the wrongful act was done”.
98 Para 42 alleges that the 5th to 8th defendants “fraudulently secured the services of ... Dibbs Crowther & Osborne and paid for such services to deceptively or unfairly purport to become a beneficiary” of the plaintiff’s trust “in order to injure the plaintiff and occupy the plaintiff and obstruct and prevent him from exercising his rights as a unit holder of MIT in breach of the 2nd defendant’s covenants pursuant to clause 22 of the holding trust deed and in breach” of s 1069 and certain Regulations of the Corporations Law. Mr Preston SC says it is difficult to see who is being sued here. The alleged breaches are said to be by the 2nd defendant under the trust deed or the Corporations Law. The allegation is fraud against the 5th to 8th defendants and probably against the corporate defendants as well, yet no facts are pleaded as to what are the acts and circumstances which constitute that fraud.
99 Para 45 is against the 5th to 8th defendants as officers and probably against the corporate defendants as well in that they induced the 2nd and 9th defendants as manager and trustee respectively of the sub-trusts to fraudulently not distribute proceeds of an action. Again, this is an example where the primary allegation against X is buried in a secondary allegation against Y. There is a separate allegation made in para 45 against the 9th defendant that he acted fraudulently in breach of trust in not distributing the relevant amount. However again, there are no facts pleaded as to fraud and all that really appears from the document is that the 9th defendant as trustee did not make the distribution and that was said to be contrary to what he was required to do by the documentation.
100 The allegations as to abuse of process here are in the same plight as those considered under Motion A.
101 Mr Bhagat’s answer to Mr Preston SC was that he was a unit holder in MIT. The assets of the sub-trusts belong to MIT; therefore the sub-trusts were an integral part of the investment trust and he has standing to pursue any misconduct in relation to the sub-trusts.
102 It may be in this day and age that a court would find that Mr Bhagat had standing in respect of the sub-trusts. A problem is that although they are identified, the true nature of the sub-trusts is not identified by the pleadings. In some cases a beneficiary of a head trust may be able to challenge what happens in a sub-trust, particularly where the same trustee is involved. Certainly it would be difficult to dismiss a claim under Part 13 rule 5 if this were the only defect and I would not do so in this case.
103 However, the defects in the statement of claim as pointed out by Mr Preston SC are so obviously there and are so obviously embarrassing that the claim as a whole should not be able to stand.
104 There has been plenty of time and opportunity for Mr Bhagat to get legal advice. I have made allowance for the fact that he is a litigant in person who is not a lawyer, but there has to be a limit. This is now at least the fourth attempt to put the pleadings in order and they are still in what might compendiously be described as a hopeless mess.
105 I realise that striking out proceedings without them going to trial is a serious step. I realise Mr Bhagat is a litigant in person. I have made allowances for this, but as the Chief Judge said in the case that I have cited, there must be a limit as to how far litigants in person can file demurrable pleadings and cause expense to a series of other people.
106 I am reluctant to dismiss the entire proceedings as there appears to be a glimmer of a case disclosed amidst the mire of irrelevancies and non-sequiturs, and the allegations of collateral abuse of process.
107 I wonder if the plaintiff is really saying:
(a) clause 19.2.2 of the six sub-trust deeds requires a distribution as soon as possible after 1 January 1998;(b) that did not occur;
(c) there was an invalid issue of bonus units in the sub-trusts;
(d) the alterations to the trust deeds by the insertion of cl 22.3(c) and 1.3(d) and 1.3(e) of the Fourth Schedule were invalid for want of full disclosure;
(e) there was an issue of 28,000,000 new units under Prospectus dated 27 June 1998 with misleading statements as to entitlements to the detriment of existing unit holders;
(f) the remuneration received by the 2nd defendant has been inflated by the foregoing;
(g) the plaintiff’s units have diminished in value as a result of the foregoing;
(h) the plaintiff seeks damages or equitable compensation.
108 If he is saying this and pleads it properly, probably he should be given one last chance to do so. This basically involves the remoulding of paras 22-25 of the statement of claim. These claims are only against the 9th defendant. However, it is possible that the 2nd defendant might be concerned as well. However, any allegation of fraud or breach of statutory duty or tort must cease.
109 The order thus must be that the further amended statement of claim must be struck out. All defendants other than the 2nd, 9th and 12th are dismissed from the proceedings.
110 The plaintiff must pay the costs of the defendants other than the 2nd, 9th and 12th on the indemnity basis.
111 The plaintiff has leave to amend further the statement of claim as against the 2nd and 9th defendants only on condition:
(b) that the claim is restricted to the matters referred to in paragraphs 107 and 108 of these reasons.
(a) that the further amended statement of claim is filed and served no later than 4 pm on 3 July 2000;
112 Any motion to strike out any amended statement of claim may be made returnable before me on 4 August 2000 for hearing that day.
113 The plaintiff must pay the costs of the 2nd and 9th defendants to date on the indemnity basis.
114 I should just add that the leave given to amend is the absolutely final chance for the plaintiff to get his pleadings in order. In view of previous failures to do so despite his own personal best efforts, he may feel that it would be necessary to have a senior junior member of the equity bar take responsibility for the final version.
115 It may be that the plaintiff would prefer me merely to dismiss the proceedings so he may have the right to appeal. If he wishes to do this, he should notify my Associate and the solicitors for the 2nd and 9th defendants. If those solicitors have no objection, such an order can be made in chambers.
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