Chapel Road v Australian Securities and Investments Commission

[2006] NSWSC 1014

Reported Decision: 203 FLR 322

New South Wales

Supreme Court

CITATION:	Chapel Road v ASIC [2006] NSWSC 1014
HEARING DATE(S):	7 June 2006
JUDGMENT DATE :	29 September 2006
JURISDICTION:	Common Law Division
DECISION:	(1) The statement of claim filed 19 January 2006 is dismissed; (2) The plaintiff is to pay the defendant's costs as agreed or assessed.
CATCHWORDS:	Strike out statement of claim - malicious prosecution does it extend to cover administrative decisions - misfeasance in public office
LEGISLATION CITED:	Australian Securities and Investments Commission Act 2001 (Cth) - ss 8, 246, 93AA(1) Commonwealth Crimes Act 1900 (Cth) Corporations Law - ss 836, 837, 786(2)(e), 788(1) Corporations Regulations 2001 (Cth) - 7.3.02 Uniform Civil Procedure Rules 2005 (NSW) - Parts 13.4(1) & 14.28(1)
CASES CITED:	A v State of New South Wales & Ors [2005] NSWCA 292 A v State of New South Wales & Ors [2006] HCATrans 495 (5 September 2006) A v State of New South Wales & Ors [2006] HCATrans 496 (6 September 2006) Beach Club Port Douglas Pty Limited v Page [2005] QCA 475 Beck v Spalla [2005] FCAFC 82 Butler v Simmonds, Crowley & Galvin (Unreported, QSC, 8 October 1998 Commonwealth Life Assurance Society Limited v Brain [1935] HCA 40 Commonwealth Life Assurance Society Ltd v Smith (1938) 59 CLR 527 Commonwealth Life Assurance Society v Smith (1938) 59 CLR 527 Dunlop v Woollahra Municipal Council [1982] AC 158 Elliot v Chief Constable of Wiltshire & Ors, Sir Richard Scott The Times Law Reports 5.12.1996 Gibson v Parkes District Hospital (1991) 26 NSWLR 9 Gregory v Portsmouth City Council (1997) 96 LGR 569 Gregory v Portsmouth City Council [2000] 1 AC 419 Herniman v Smith [1938] AC 305 Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365 Khodaparast v Shad [2000] 1 All ER 545 Little v Law Institute of Victoria & Ors (No 3) [1990] VR 257 Lonrho Plc v Fayed (No 5) [1994] 1 All ER 188, [1993] 1 WLR 1489 Metropolitan Bank Ltd v Pooley (1885) 10 App Cas 210 Northern Territory of Australia v Mengel (1995) 185 CLR 307 Porter v OAMPS Ltd & Ors (2005) 215 ALR 327 Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674 Rich v ASIC [2004] HCA 42 Sanders v Snell (1998) 72 ALJR 1508 Savile v Roberts (1698) 1 Ld Raym 374 Tampion v Anderson [1973] VR 715 at 720 Varawa v Howard Smith & Co Ltd (1911) 13 CLR 35 Wiffin v Bailey & Romford Urban District Council [1915] 1 KB 600 Williams & Ors v Spautz (1992) 174 CLR 509 Clerk & Lindsell on Torts 17th ed (1995) Cockburn and M Thomas, “Personal Liability of Public Officers in the Tort of Misfeasance in Public Office – Part 1” (2001) 9 TLJ 80 at 245 Halsbury, 2nd ed Vol 22 at 26.42 and 4th ed. Vol 54 at 4625.1371 Law of Torts in New Zealand, LBC, Sydney, 1991 at 782 Restatement of the Law, Torts 2d (1977) Balkin and Davis S Kneebone “Misfeasance in Public Office after Mengel’s Case: A Special Tort no More” (1996) 4 TortL Rev 111 at 121-34T Salmond and Heusten on the Law of Torts, 21st ed (1987) Fleming J Text Book of The Law of Tort (1937) at 647-48 The Law of Torts 3rd ed 2004 Butterworths The Law of Torts 9th ed 1998 at 687 The Law of Torts 9th ed at 674
PARTIES:	Chapel Road Pty Limited - Plaintiff The Australian Securities & Investments Commission - Defendant
FILE NUMBER(S):	SC 20014/2006
COUNSEL:	Mr J C Kelly SC - Plaintiff Mr J Clarke - Defendant
SOLICITORS:	Creagh & Creagh - Plaintiff Blake Dawson Waldron - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

ASSOCIATE JUSTICE HARRISON

FRIDAY, 29 SEPTEMBER 2006

20014/2006 - CHAPEL ROAD PTY LIMITED v
AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION
JUDGMENT (Strike out statement of claim - malicious
prosecution does it extend to cover administrative decisions - misfeasance

in public office)

1 HER HONOUR: By notice of motion filed 30 March 2006 the defendant seeks an order that the plaintiff’s statement of claim be struck out for failing to disclose a reasonable cause of action; or alternatively, that the plaintiff’s statement of claim is embarrassing. The plaintiff is Chapel Road Pty Limited (Chapel Road). The defendant is the Australian Securities & Investments Commission (ASIC). Chapel Road relied on the affidavit of Robert Bruce Pearson sworn 20 April 2006. ASIC relied on the affidavit of Felicity Rene Dougherty sworn 29 March 2006.

2 Part 13.4(1) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides that the court may dismiss proceedings generally, or in relation to any claim for relief, in three circumstances. These are if the proceedings are frivolous or vexatious, or no reasonable cause of action is disclosed, or the proceedings are an abuse of the process of the court.

3 Part 14.28(1) of the UCPR provides that the Court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading, firstly, discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, secondly, has a tendency to cause prejudice, embarrassment or delay in the proceedings, or thirdly, is otherwise an abuse of the process of the court. The court may receive evidence on the hearing of an application for an order under Rule 14.28(1).

4 Master Allen (as he then was) in Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365 at 373-374 said:

“…It is not by any means rare in the history of the development of the common law that a high appellate court, in enunciating a novel development in the law, albeit one avowedly based on a miscellany of old cases, has chosen to use general words of imprecise limits in meaning to facilitate the arrival, in later cases, of the final form of the development without the need to overrule what earlier had been stated. That being so I am of the opinion that a court at first instance should be particularly astute not to risk stifling the development of the law by summarily throwing out of court actions in respect of which there is a reasonable possibility that it will be found, in the development of the law, still embryonic, that a cause of action does lie. The risk of injustice to the plaintiff, which summary termination of his claim would entail, is real. One cannot predict, with firm assurance, what the future holds as the final formulation of the new development.”

5 This passage was quoted with approval by Badgery-Parker J in Gibson v Parkes District Hospital (1991) 26 NSWLR 9 at 35. This is the approach that I have adopted here.

The plaintiff’s claim

6 By statement of claim filed 19 January 2006, Chapel Road seeks damages for malicious prosecution and misfeasance in public office. Chapel Road was the holder of a securities dealer’s licence. Initially, Chapel Road had its dealer’s licence revoked by the defendant. On appeal to the Administrative Appeals Tribunal (the AAT) the licence was restored.

7 Chapel Road claims that as a result of the loss of the licence, its business was decimated. It claims damages consisting of $5,700,000 for the loss of the business and $180,000 for expenses incurred when defending itself before ASIC and the AAT.

The proceedings before the ASIC delegate

8 On 14 October 1996, Chapel Road was issued with a securities dealer’s licence subject to nine conditions.

9 On 29 September 1999, ASIC wrote to Chapel Road regarding Chapel Road’s non-compliance with its securities dealer’s licence, as identified in surveillance of Chapel Road conducted by ASIC in September 1999. Some communications and further surveillance followed.

10 On 27 November 2000, ASIC served a notice of hearing upon Chapel Road pursuant to s 837 of the Corporations Law which stated that ASIC was concerned that the plaintiff:

(a) may have contravened a provision of a Securities Law (referring to section 826(1)(c) of the Act);
(b) may have contravened a condition of the licence (referring to section 826(1)(d));
(c) may not have performed efficiently, honestly and fairly the duties of the holder of a Dealers Licence (section 826(1)(j)); and
(d) will not perform efficiently, honestly and fairly the duties of the holder of a Dealers Licence (section 826(1)(k)). [para 5 S/C]

11 Section 837 also provides that, before ASIC can make an order revoking a licence, it must give the licensee an opportunity to appear at a hearing, give evidence and make submissions.

12 This notice appointed 21 December 2000 as the date upon which Chapel Road would be heard before a decision was made as to what, if any, action should be taken and specifically whether an order should be made revoking the licence. The proceedings were adjourned on the basis that ASIC’s material was to be forwarded to Chapel Road and then arrangements were to be made, either to reconvene the hearing or accept written submissions, whichever “We feel would be most appropriate.” (Delegate’s reasons [32]). It appears there was a misunderstanding (Delegate’s reasons [33] & [34]). Chapel Road understood it was to proceed by way of written submissions. Chapel Road forwarded written submissions to ASIC.

13 On 26 April 2001, the defendant, by its delegate Cyril James Reynolds, revoked Chapel Road’s dealer’s licence. At [168] – [169] the delegate stated:

“I have considered whether instead of issuing a revocation order, it would be more appropriate to issue an order under section 827 of the Law, suspending the licence held by Chapel Road for a specific period. As I understand it, ASIC would issue an order of suspension for a specific period if it had the belief that at the end of that period the licensee would conduct its business efficiently, honestly and fairly. Taking into account my views that Chapel Road will not conduct its business efficiently, honestly and fairly, I am of the view that the issuing of an order under section 827 of the Law is not appropriate in these circumstances if ASIC is to protect the public from Chapel Road.
Taking into account all of the material before me, I am of the view that Chapel Road should be issued an order that revokes the dealers licence held by it.”

14 Chapel Road appealed the delegate’s decision. On 14 July 2003 the appeal was heard by the Administrative Appeals Tribunal.

The decision of the Administrative Appeals Tribunal

15 The Tribunal set out the range of enforcement action that was open to ASIC in the circumstances, which included the imposition of conditions or restrictions on a licence which is in force, pursuant to s 786(1)(b) of the Corporations Law. For example, conditions relating to supervision pursuant to s 786(2)(e); that ASIC may accept a written undertaking by a person in connection with a matter in relation to which ASIC has a function or power under the Act pursuant to s 93AA(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act); and that ASIC can require the lodgement of information or documents from time to time as directed pursuant to s 788(1) of the Corporations Law (at [181]-[184]).

16 The Tribunal reached its decision in paragraphs [194] to [198] where it said:

“ASIC’s power to revoke a dealers licence under s 826(1) is discretionary. As stated above, other enforcement action is open to ASIC. It is clear that the exercise of ASIC’s power should be protective of the public interest and preventative in nature although the Tribunal recognises that deterrence may also be a relevant consideration.
In the case of Chapel Road, there is evidence that by the time of the ASIC delegate’s decision in April 2001, it had made significant improvements in its compliance regime such that there is reason to believe that it would satisfy the required compliance standards and perform its duties as a dealer efficiently, honestly and fairly.
Bearing in mind the protective/preventative nature of ASIC’s power, in the Tribunal’s opinion the appropriate course was not to revoke Chapel Road’s licence but to impose appropriate conditions pursuant to s 786(1). Such conditions might have required regular reviews, perhaps six monthly, of Chapel Road’s compliance regime by an external consultant approved by ASIC, over a period of perhaps two years, on the basis of Chapel Road undertaking to implement reasonable recommendations for change made by the consultant and approved by ASIC considered necessary to achieve the required standard of compliance.
As stated above, while the Tribunal recognises that deterrence may also be a relevant consideration in the exercise of ASIC’s powers, in the case of Chapel Road there has been a sufficient deterrent effect arising from the revocation and present proceedings – and, more particularly, from the effective cessation of Chapel Road’s business in the intervening period.
In conclusion, the Tribunal sets aside the decision under review and remits the matter to the Respondent with the direction that Chapel Road’s securities dealers licence be reinstated subject to appropriate conditions, pursuant to s 786(1), with a view to ensuring effective compliance with condition 1 of its licence and with regulation 7.3.02 of the Corporations Regulations.”

Malicious prosecution

17 Malicious prosecution is an abuse of proceedings. Four elements must be pleaded and proved by the plaintiff. They are:

1. that the proceedings complained of were instituted or continued by the defendants;

2. that the defendants instituted or continued the proceedings maliciously;

3. that the defendants acted without reasonable and probable cause; and,

4. that the proceedings were terminated in the plaintiff’s favour.

(see Halsbury , 2nd ed vol 22 at 26.42 and 4th ed Vol 54 at 4625.1371, Heuston RFV and Buckley RA, Salmond and Heuston on the Law of Torts , 21st ed (1987) at 393).

Damage is a necessary ingredient of the tort. (Fleming J, The Law of Torts , 9th ed 1998)).

18 Damages for malicious prosecution must be founded on actual injury and can include injury to reputation, damage to pecuniary interests such as being put to the expense in defending itself against the charge (Fleming 686-687).

19 There is a New South Wales Court of Appeal case currently under appeal in the High Court. A central issue in that appeal is what the proper test is to apply in resolving a claim for malicious prosecution. The decision has been reserved. (see A v State of New South Wales & Ors [2005] NSWCA 292; A v State of New South Wales & Ors [2006] HCATrans 495 (5 September 2006); A v State of New South Wales & Ors [2006] HCATrans 496 (6 September 2006)).

20 ASIC submitted there are two fatal flaws in the pleading of malicious prosecution that cannot be cured by amendment. The perceived flaws are that firstly, the tort of malicious prosecution does not apply to administrative decisions and secondly, the proceedings were not terminated in Chapel Road’s favour.

(1) Is it arguable that the tort of malicious prosecution applies to administrative decisions?

21 In Australia the tort has never been considered to apply beyond criminal and certain civil proceedings and there is no current authority for the extension of the tort of malicious prosecution to cover administrative decisions.

22 However the position in Australia in relation to the tort of malicious prosecution so far as civil actions is concerned is not so clear. In Little v Law Institute of Victoria & Ors (No 3) [1990] VR 257 the Victorian Court of Appeal permitted a claim of malicious prosecution, in relation to civil proceedings, to proceed to trial. However the Queensland Court of Appeal in Beach Club Port Douglas Pty Limited v Page [2005] QCA 475, relying upon the latter English decision of Gregory v Portsmouth City Council [2000] 1 AC 419, commented that an action for damage for malicious prosecution is restricted to criminal proceedings only. Additionally, there has been academic criticism as to the confinement of the tort of malicious prosecution to criminal proceedings and certain civil proceedings. The tort of malicious prosecution in the United States has a much wider application. I shall examine, firstly, the academic criticism, secondly, the position in the United States and United Kingdom and thirdly, the Australian position in Little, in order to reach a conclusion as to whether Chapel Road has an arguable case of malicious prosecution.

Academic criticism

23 There has been a wealth of academic criticism of this limited approach towards the tort of malicious prosecution. Fleming (at 675) states that “…there is nothing in the history of the action nor any pronouncement of binding authority to suggest that the action is confined to criminal proceedings”.

24 More relevantly in Salmond & Heuston (at 393) the learned authors opined:

“…there seems to be no reason why an action should not lie for the institution of unfounded and malicious proceedings before…some administrative or domestic tribunal. The adverse decision of such a body may cause serious damage to the reputation or livelihood of the party accused.”

25 The tort of malicious prosecution attempts to balance two countervailing policy issues. They are, on one hand the safeguarding of the individual from being harassed by unjustifiable litigation and on the other, the encouragement of citizens to aid law enforcement – see Fleming at 673.

The position in the United States

26 Unlike the position in Australia and the United Kingdom, in the United States the tort of malicious prosecution extends to all civil proceedings and proceedings before administrative boards. The development of the tort of malicious prosecution in the United States is described in the American Law Institute, Restatement of the Law, Torts 2d (1977). Section 674 of the Restatement extends the tort to apply to all civil proceedings and s 674 at 452 extends the tort to proceedings before administrative boards (s 680 at 468).

27 Section 680 reads:

“One who takes an active part in the initiation, continuation or procurement of civil proceedings against another before an administrative board that has power to take action adversely affecting the legally protected interests of the other, is subject to liability for any special harm caused thereby, if (a) he acts without probable cause to believe that the charge or claim on which the proceedings are based may be well founded, and primarily for a purpose other than that of securing appropriate action by the board, and (b) except where they are ex parte, the proceedings have terminated in favor of the person against whom they are brought.”

28 The reference to “…acts without probable cause to believe that the charge or claim on which the proceedings are based may be well founded…” picks up an element of what is known here as the tort of abuse of process – see Williams & Ors v Spautz (1992) 174 CLR 509. I shall refer to the tort of abuse of process in more detail later in this judgment.

29 There are two decisions which considered the boundaries of the tort of malicious prosecution, namely the Australian decision of Little and the United Kingdom decision of Gregory. I shall start with Little as the House of Lords in Gregory considered the Victorian Court of Appeal’s approach in Little. Little was a solicitor who practised in Victoria and was the subject of an injunction restraining him from acting or practicing in his profession. Little alleged that the Law Institute of Victoria (the Law Institute) had been guilty of malicious use of civil proceedings, misfeasance of public office, conspiracy to extort money from him and to injure him in the practice of his profession and breaches of the provisions of ss 11, 12 and 17 of the Fair Trading Act 1985. The Judge granted a permanent stay of these proceedings. Little appealed to the Court of Appeal.

30 The Victorian Court of Appeal referred to the cause of action that Little pleaded as being “malicious abuse of civil proceedings”. Even though this description differs slightly from “malicious prosecution” the Court specifically referred to the four elements that constitute the tort of malicious prosecution which have been outlined at the beginning this judgment. There were some differences in approach between Kaye and Beach JJA (who wrote a joint judgment) and Ormiston JA. Their Honours were in agreement on what constituted the first two elements of the tort but differed in relation to the last two elements. It is not necessary to consider this here. The focus in this judgment is upon the Judges’ reasoning as to whether the tort of malicious prosecution should be extended to civil actions. Their Honours’ reasoning centred upon Little’s claim for damage which arose from the poison/antidote rationale, which will be explained shortly.

31 The starting point for the analysis by Kaye and Beach JJA was that it was settled law that no action will lie for malicious legal prosecution unless the plaintiff has suffered damage of a form within the three heads of damage laid down by Holt CJ in Savile v Roberts (1698) 1 Ld Raym 374 and repeated by Brett MR in Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674 at 682. The three heads of damage were authoritatively stated in the joint judgment of Rich, Dixon, Evatt and McTiernan JJ in Commonwealth Life Assurance Society Ltd v Smith (1938) 59 CLR 527 at 544. For the purpose of determining whether an action will lie for maliciously putting the law in motion and of distinguishing in that respect one legal process from another, the kind of damage which must appear before an action can be maintained is divided into: damage to a person’s fame, as where the matter of which he or she is accused is scandalous; damage to his or her person, as where his or her liberty is restrained, or his or her life, limb or liberty endangered; and damage to his or her property, as where he or she is put to expense in defending himself or herself.

32 The formulation in Smith is derived from Savile and Quartz Hill. In Quartz Hill Brett MR referred to Holt CJ’s decision in Savile, where he defined three types of damage as:

(1) The damage to a persons fame, as if the matter that he or she is accused be scandalous.

(2) The second sort of damages, which would support such an action, are such as are done to the person; as where a person is put in danger to lose his life, or limb, or liberty, which has been always allowed a good foundation of such an action.

(3) The third sort of damages, which will support such an action, is damage to a person’s property, as where he or she is forced to expend his or her money in necessary charges, to acquit himself/herself of the crime of which he or she is accused, which is the present charge. That a person in such case is put to expenses, is without doubt, which is an injury to his or her property, and if that injury is done to him or her maliciously, it is reasonable that he shall have an action to repair himself or herself.

33 The reason why the tort of malicious prosecution had only applied to certain civil proceedings was explained by Buckley LJ in Wiffin v Bailey & Romford Urban District Council [1915] 1 KB 600 at 607 where it was said:

"So the exception of civil proceedings, so far as they are excepted, depends, not upon any essential difference between civil and criminal proceedings, but upon the fact that in civil proceedings the poison and the antidote are presented simultaneously. The publicity of the proceedings is accompanied by the refutation of the unfounded charge, if it be unfounded, which was made. If there be no scandal, if there be no danger of loss of life, limb, or liberty, if there be no pecuniary damage, the action will not lie."

34 In bankruptcy and winding up proceedings (the two main civil proceedings which will ground an action for malicious prosecution referred to earlier) there is (and still is) a statutory requirement to advertise the petition before it was heard and determined. Because a public advertisement appeared in the newspapers prior to the proceedings being heard, the poison and antidote may not be presented simultaneously (the poison/antidote rationale) and as a consequence the plaintiff may suffer damage of the type referred to earlier.

35 Kaye and Beach JJ said in Little:

“…However, in our view, it does not follow that at the present time proceedings, tainted with malice and brought without reasonable cause, might not affect adversely the reputation of a defendant or respondent to the proceedings for the reasons stated by their Lordships. In modern society the quick and wide dissemination of publicity relating to litigation, both pending and current, by radio, television and news print might injure the fair fame of an accused person who subsequently was found to be not guilty, or of a defendant who later has had judgment entered against him set aside on appeal. At the present time it is rare that the poison of and antidote to malicious proceedings are simultaneous.”

36 Their Honours observed that while, in former times, the hearing of an action followed shortly after the issue of process commencing proceedings, this is not a characteristic of all present day proceedings, still less the final determination after appeal of such proceedings. Kaye and Beach JJ concluded that there was “…no longer justification for confining to a bankruptcy petition and an application to wind up a company the remedy for malicious abuse of civil proceedings where the damages claimed is to the plaintiff’s reputation”. According to their Honours, the damage to reputation suffered as a result of malicious prosecution fell within the first form of damage identified in Saville and they further considered that the suffering of loss by the plaintiff in the practice of his profession could constitute loss of property under the third category. That meant that the solicitor could not recover damages under the second category, being personal injury or his liberty being endangered. As these were civil proceedings the solicitor’s liberty was not in jeopardy.

37 Ormiston JA did not accept that the rules as stated and applied constrain the Court to hold that a party to civil proceedings, once vindicated cannot maintain an action for malicious use of process unless that process be bankruptcy or winding up proceedings. His Honour stated (at 280) that the reason for the apparent trend depended entirely upon an analysis of the elements of damage suffered by the plaintiff. After examining and contrasting firstly, the method of filing court process and its availability to the public and the press; secondly, the law of contempt; and thirdly, the scope of qualified privilege in the law of libel as it applied to the publication of matters connected with judicial proceedings at the time the pronouncement of the types of damage that gave rise to a claim for malicious prosecution between Wiffin’s case and now, Ormiston JA concluded that the policy of the law would no longer deny a party the right to assert that he had suffered damage to his reputation by reason of the wrongful and malicious institution or continuation of civil proceedings. According to Ormiston JA, the risk that maliciously made allegations in civil proceedings may cause perceptible harm to a person’s reputation is now a real risk under current law and procedures which is evidenced in practice by a reading of the daily newspapers, to say nothing of the other source of news. His Honour continued:

“Although in some cases there has been reference to a need in this action to prove “special” damage, sufficient has been said so far to show that the nature of damage which may be proved may encompass both special damage and general damages arising from harm to reputation or danger to life, limb or liberty.”

38 Ormiston JA agreed that the tort of malicious prosecution should be extended to civil proceedings and held the view that the three types of damage referred to in Smith could be claimed.

39 Thus, the simultaneous poison/antidote rationale is no longer applicable to civil proceedings and in Victoria at least, the tort of malicious prosecution applies to civil proceedings. The damages recoverable are restricted to damages to his or her fame and to his or her property, being the costs of defending himself or herself in the earlier proceedings (for more discussion of damages - see Balkin and Davis, The Law of Torts 3rd ed 2004 Butterworths.

Gregory v Portsmouth City Council

40 In Gregory the House of Lords considered whether the tort of malicious prosecution should be extended beyond criminal proceedings. It is necessary to examine the analysis by the Court of Appeal and the House of Lords in some detail. Ultimately, the House of Lords decided that the tort of malicious prosecution should not be extended.

41 The facts in Gregory are as follows. Gregory had been elected to the defendant local council. The council received complaints that Gregory had abused his position by using confidential information about local properties for personal advantage. A sub-committee of the council investigated the allegations and found some of them proved. It recommended that Gregory be removed from various committees and that he be suspended from membership of those committees for the remainder of his term as councillor. A special committee appointed by the sub-committee to approve, reject, vary or amend the sub-committee's findings found that Gregory had committed a number of breaches of the National Code of Local Government Conduct and ordered his removal from the committees. Gregory applied for judicial review and the decision was quashed. The council resolved to institute the same disciplinary proceedings before another tribunal. The proceedings were eventually abandoned as Gregory had ceased to be a councillor and had been convicted of offences of dishonesty not related to the disciplinary proceedings.

42 Gregory claimed damages for malicious prosecution against the council. The council applied for an order that the claim be struck out as disclosing no reasonable cause of action. The district judge allowed the application. This decision was upheld on appeals to the High Court, the Court of Appeal and the House of Lords, which held that disciplinary proceedings fell outside the scope of the tort.

Gregory in the Court of Appeal

43 The Court of Appeal, by majority (Simon Brown and Robert Walker LJJ, Schiemann LJ dissenting) dismissed the appeal (Gregory v Portsmouth City Council (1997) 96 LGR 569). Brown LJ gave the leading judgment. His Lordship pointed out that on existing authority most but not all criminal proceedings and certain specific civil processes, will ground the tort. Those certain civil processes are traditionally limited to bankruptcy, winding up and mesne profits associated with proceedings (see Buckley LJ in Wiffin v Bailey & Romford Urban District Council [1915] 1 KB 600 at 607). The argument in Gregory that the law should be developed beyond these categories to extend the tort to disciplinary proceedings was rejected. Simon Brown LJ concluded (at 578) “…that the tort of malicious prosecution probably does not extend beyond the already established categories of civil and criminal proceedings, and certainly not as far as the proceedings of bodies like the council who are not merely not courts of law but are not even tribunals exercising functions equivalent to courts.”

44 Simon Brown LJ acknowledged that there is perhaps a public policy argument for extending the tort to embrace proceedings in tribunals as they are covered by absolute immunity. However His Lordship was not persuaded even of that, let alone of the desirability of a further extension still to cover this case (the historical approach). In a separate judgment Robert Walker LJ expressed agreement with the reasons of Simon Brown LJ. His Lordship also accepted that the present boundaries of the tort of malicious prosecution are not easy to justify but as the proposed extension would be likely to lead to numerous practical difficulties, it was a matter for Parliament (at 595).

45 Robert Walker LJ agreed with the reasons of Simon Brown LJ. Robert Walker LJ accepted that whilst the apparent boundaries of the tort of malicious prosecution are not easy to justify, to recognise the plaintiff’s claim as viable would set the boundaries in a way which, while meeting some of the difficulties of principle, would lead to numerous practical difficulties. Robert Walker LJ concluded:

“If that fairly momentous step is to be taken I think that it is for Parliament, and not for this court to take it. The legislative process, with appropriate consultation, is generally to be preferred to judicial creativity.”

46 Of more interest in the debate as to the boundaries of the tort of malicious prosecution is the dissenting view of Schiemann LJ. His Lordship referred to academic criticism of the current boundaries of the tort and considered the approach adopted by Kaye and Beach JJA in Little.

47 Schiemann LJ agreed with Simon Brown LJ that there is at best an imperfect logic in confining the tort to the already established categories of proceedings and that the present apparent boundaries of the tort of malicious prosecution are not easy to justify, either as a matter of principle or in their practical results.

48 Schiemann LJ was critical of the current approach when he said:

“I can see no reason in principle why we should draw the line at the point at which it has currently reached. None was advanced in argument. Attempts in judgments to justify it in terms of principle I do not find persuasive... Nor have courts in other jurisdictions.

Such rationale as there was for the various fine distinctions which we find in this branch of the law sprang from history and historical circumstances which no longer appertain. I see no advantage in retaining them. It is a commonplace of legal history that a rule is established for perfectly sensible reasons and yet is adhered to for years after the underlying reasons no longer apply … While of course I accept that the Common Law judge will look at how the law has developed from its origins, I myself find the concept of “true scope” of a particular tort conceptually unhelpful in the sort of exercise upon which the court is currently engaged. As I have indicated, I prefer to start from the other end, as it were. In my judgment, if the facts are as pleaded in the Statement of Claim, it is consonant with the general approach of our law as it now stands that the Plaintiff has a remedy. I can see no policy reason for not giving him one … I prefer to be guided by principle than by dicta echoing down the generations.”

49 Schiemann LJ joined with others in considering it dangerous to compartmentalise different torts and quoted from Professor Brazier in Clerk & Lindsell on Torts 17th ed (1995) where he states at paragraph 1.01:

“In modern times a cause of action derives simply from the factual situation justifying redress. Classification between... different categories of tort, for example trespass and negligence, will only be required when statute or rules of procedure impose some practical distinction dependent on the form of the plaintiff’s redress.” See Lonhro v Fayed (No 5) [1993] 1 WLR 1489 per Evans LJ

50 Schiemann LJ posed the question “What are the possible ways forward?” His starting point was to consider the position of the individual who has suffered damage by being maliciously subjected to proceedings brought without any justification. According to Schiemann LJ, such an individual ought to be compensated unless there are overriding reasons to the contrary. The types of damage for which the individual should be compensated are physical or mental injury or suffering, loss of standing and reputation in the world, and financial loss. But His Lordship acknowledged that there may be policy reasons for departing from such a broad approach to damages. His Lordship was critical of the approach in Little where damages were restricted to exclude damages for mental and bodily anguish. The reason for the criticism was because this type of damage is recoverable for breach of contract and negligence. No distinction should be drawn between these causes of action.

51 Schiemann LJ did not perceive that, by allowing this appeal, the Court was taking a momentous step forward. In his opinion the Court was not indulging in judicial creativity, as this decision would not be overriding any authority that decided no remedy was available for the tort of malicious prosecution and at worst the Court would be failing to follow dicta which has not commended itself anywhere in the common law or to most academics.

52 Schiemann LJ concluded that he could see no reason why, if the same damage is inflicted deliberately and maliciously it should not also give rise to a cause of action. In this present day context, it seemed to him to fall within the second of Holt CJ’s headings “damages such as are done to the person; as where a man is put in danger to lose his life or limb.” His Lordship also acknowledged that there may be policy reasons in some circumstances for preventing the recovery of costs incurred in an earlier civil action where no order was made that the claimant was entitled to recover those costs. Thus, in Schiemann LJ’s view the tort of malicious prosecution should not be limited to criminal proceedings. It should be available to any proceedings where an individual has suffered damage by being maliciously subjected to proceedings brought without any justification and the type of damages that are compensable are physical or mental injury, loss of standing and reputation in the world and financial loss (the consonant approach).

Gregory in the House of Lords

53 In the House of Lords, the statement of facts and issues and the questions arising for decision were refined to read:

“[1] Do the following agreed and assumed facts give rise to a cause of action in malicious prosecution, namely: [i] the agreed fact that disciplinary proceedings were instituted by a local authority against Mr Gregory, a councillor; and [ii] the assumed facts that the proceedings were instituted maliciously and without reasonable and proper cause, and that Mr Gregory thereby suffered loss of reputation, injury to health, mental anguish and legal costs?
[2] Is there a general tort of maliciously instituted civil proceedings?
[3] Does the tort of malicious prosecution extend to the malicious institution of domestic disciplinary proceedings by a local authority against a councillor?”

54 Lord Steyn wrote the leading judgment (with whom Lord Brown-Wilkinson, Lord Nicholls of Birkenhead, Lord Hobhouse of Wood-borough and Lord Millett agreed). His Lordship referred to the United States Restatements and pointed out that there were differences in the approach between the United States and Britain due to structural differences between the two legal systems. In the United Kingdom, costs orders are an important weapon in deterring groundless actions but in the United States there is an absence of a general judicial power to award costs in respect of a groundless claim. Hence, in the United States in a claim for malicious prosecution the claimant will seek an order to be reimbursed for the costs incurred in defending the groundless claim. But Lord Steyn said that even though there is material divergence between the two legal systems it did not follow that a similar development is not justified to meet the needs and circumstances of the English legal system.

55 Next Lord Steyn considered the respondent’s argument of symmetry. That is, that the tort of malicious prosecution is not available where immunity which characterises legal proceedings is absent. Lord Steyn accepted that a coherent development of the law, taking into account the limits of the tort of malicious prosecution as well as the recognised categories of immunity is desirable. He held that the argument of symmetry, while a relevant factor, was far from a decisive one against the development of this tort.

56 Lord Steyn rejected the submission that the tort should be extended to quasi-judicial disciplinary proceedings, firstly by using the historical approach but acknowledging that in civil proceedings the simultaneous poison/antidote is no longer plausible and secondly, deciding that there was protection afforded by other related torts, or that it was capable of being addressed by any necessary or desirable extension of other torts. His Lordship reasoned:

“Given that the tort has never in England been held to extend beyond legal proceedings the proposed development would be a radical reform. Moreover, it is significant that counsel have been unable to find any decided cases in Australia, Canada and New Zealand which extend the tort to disciplinary proceedings. While the modern tort books published in these countries almost universally criticise the rule, or apparent rule, precluding actions for malicious prosecution in civil proceedings, there is no hint of any development of the boundaries of the tort beyond legal proceedings , or any call for such a development: see Fleming pp 673–688, Balkin Law of Torts (2nd edn, 1996) pp 709–723 (Australia), Klar Tort Law (2nd edn, 1996) pp 55–61 (Canada) and Todd The Law of Torts in New Zealand (2nd edn, 1997) pp 980–1002.” [my emphasis added]

57 The House of Lords’ decision not to extend the tort to disciplinary proceedings was reached because protection was afforded by other related torts, in particular defamation, malicious falsehood, conspiracy and misfeasance in public office. For the same reasons the House of Lords rejected the general extension of the tort of malicious prosecution to civil proceedings.

58 Recently in Australia the Gregory approach was followed in Beach Club. The Queensland Court of Appeal in Beach Club stated at [14]:

“[14] It is different if you are prosecuted without reasonable and probable cause. Then you may have an action for damages for malicious prosecution against your tormentor; but only if the proceedings brought against you are criminal and terminate in your acquittal, and not if they are simply penal, administrative or disciplinary: see Gregory v Portsmouth CityCouncil [2000] 1 AC 419….” [my emphasis added]

59 Little does not appear in the list of cases cited or considered by the Court of Appeal but that can be explained because the claim before the Court of Appeal was not one of malicious prosecution. The Court of Appeal in Beach Club can be considered obiter dicta.

60 There are two other Australian cases that are worthy of mention. In Butler v Simmonds, Crowley & Galvin (Unreported, QSC, 8 October 1998 at 3-8) Chesterman J stated that Little “may, with respect, confuse the tort of abuse of process with that of malicious prosecution.” I respectfully disagree. Chesterman J stated that it was to be noted that the description of the cause of action given by Their Honours is not malicious prosecution but malicious abuse of civil proceedings. It seems to me that Little did not confuse the torts of malicious prosecution and abuse of process. The reference to “malicious abuse of civil proceedings” draws attention to a wider application of the principles traditionally viewed as applying almost exclusively to “prosecutions”.

61 In Beck v Spalla [2005] FCAFC 82 Beck made a claim against ASIC for malicious prosecution. ASIC filed a defence claiming immunity from suit, relying on s 246 of the ASIC Act. In that case the respondents claimed to have been the victims of a malicious prosecution of offences under the Commonwealth Crimes Act 1900 (Cth). They alleged that ASIC were not aware of evidence that justified the respondents being charged, there was an unsuccessful prosecution and an acquittal was directed. The matter settled before the appeal was heard.

Alternative remedies approach

62 The types of alternative remedies available in their current or expanded form that were referred to by Lord Steyn in Gregory are defamation, malicious falsehood, conspiracy and misfeasance in public office. In Gregory, Lord Steyn did not consider that abuse of process constituted a separate tort to that of malicious prosecution. Rather, His Lordship accepted Fleming’s notion that the tort of abuse of process resembled “…the parent action too much to warrant separate treatment.” (The Law of Torts 9th ed 1998 at 687). However, as those torts are treated separately by the courts in Australia, I would add the tort of abuse of process as an additional possible remedy. I shall begin with the tort of abuse of process.

63 Abuse of process proceedings have been characterised as “…merely a stalking horse to coerce the defendant in a way entirely outside the ambit of the legal claim…” (Varawa v Howard Smith & Co Ltd (1911) 13 CLR 35 at 91 per Isaccs J). Fleming notes at 687-88 that the limitations on damages in malicious prosecution in particular to ‘fame’ seem not to apply in abusive process (see also Todd, Law of Torts in New Zealand, 2nd ed (1997)); and that unlike malicious prosecution, the gist of abuse of process:

“…lies not in the wrongful procurement of legal process or 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.”

- see Fleming at 687, also Williams v Spautz

64 In cases of groundless proceedings the victim's main complaint will often be about the injury done to his reputation by the publicity given to the proceedings. The tort of defamation in as alternative cause of action which serves to protect the reputation of individuals. The tort of malicious falsehood or intentional falsehood is broader than defamation in the sense that recovery of damages including actual economic loss is permitted even where there is no loss of reputation. But recovery of damages for injury to reputation is not recoverable under this tort. The United Kingdom Court of Appeal has held that aggravated damages are recoverable in an action for malicious falsehood – see Khodaparast v Shad [2000] 1 All ER 545.

65 The tort of conspiracy does not allow for recovery for injury to reputation or injury to feelings. It is primarily designed to provide for the recovery of financial loss – see Lonrho Plc v Fayed (No 5) [1994] 1 All ER 188, [1993] 1 WLR 1489.

66 The fourth alternate remedy is misfeasance in public office which Chapel Road pleaded as a separate cause of action in these proceedings and is referred to in more detail later in this judgment.

An overview of the different approaches

67 As previously stated there is much criticism in respect of the current boundaries of the tort of malicious prosecution and this is one area where the development of the law should not be stifled at an interlocutory stage.

68 In the United Kingdom courts there were three approaches to the tort of malicious prosecution, the historical approach, the consonant approach and the alternative remedies approach. The alternative remedies approach does not affect the viability of the plaintiff’s claim for malicious prosecution. The historical approach can be shortly dealt with because any change to the tort of malicious prosecution is not the province of the Court. It has to be done by Parliament. That leaves the consonant approach to be considered.

69 The symmetry argument was briefly considered in Gregory and that can be easily dealt with here. In these current proceedings the delegate is not liable for any act done in good faith in the exercise or purported exercise of any power conferred by or under the corporations legislation (s 246 ASIC Act). On the basis there is no symmetry, there is no bar to denying the plaintiff a cliam of malicious prosecution against ASIC.

70 On the widest reading of Schiemann LJ’s judgment, if the consonant approach is applied then the plaintiff, if it was an individual, could maintain a claim for malicious prosecution in respect of financial loss. If the essential feature of the tort of malicious prosecution is an abuse of process of the Court, that indirectly causes damage to the plaintiff. If the publicity generated by the proceedings causes damage to the plaintiff’s reputation which results in a loss of business, it is logically difficult to see why these damages should not be allowed.

71 The Victorian Supreme Court approached the issue of the boundaries of the tort of malicious prosecution by examining the poison/antidote rationale as giving rise to damages. In Little a claim for malicious prosecution of civil proceedings was allowed to be maintained. If the same rationale is applied to proceedings before the ASIC delegate, so far as I can tell, there was no requirement for an advertisement in the newspaper prior to the hearing nor was the hearing open to the public. Even if it could be argued that malicious prosecution should be available to proceedings before a delegate, the rationale for doing away with the poison/antidote approach to damages does not apply. As it appears that there is no publicity relating to these proceedings there is no poison. No antidote is required. There is no damage.

72 Additionally, Chapel Road submitted that due to the recent approach of the High Court in Rich v ASIC [2004] HCA 42, it is no longer correct to assume that there is a meaningful distinction to be drawn between legal proceedings and administrative proceedings, especially where a penalty may be imposed.

73 In Rich the High Court considered the availability of the privilege against exposure to penalties and in that context, held that a distinction between punitive and protective proceedings was not possible or useful. Relevantly, one of the reasons the High Court gave for rejecting that distinction, in the context of the cases in which it has been said that the purpose of disqualification orders against directors or other officers of a company is to protect the public rather than to punish, was that:

“[35] …to begin the inquiry from an a priori classification of proceedings as either protective or penal invites error. It invites error primarily because the classification adopted assumes mutual exclusivity of the categories chosen when they are not, and because the classification is itself unstable. To assume mutual exclusivity of the categories is to fall into the same kind of error as was identified in the constitutional context in Actors and Announcers Equity Assn v Fontana Films Pty Ltd . Just as a law may bear several characters, a proceeding may seek relief which, if granted, would protect the public but would also penalise the person against whom it is granted. That a proceeding may bear several characters does not deny that it bears each of those characters. Moreover, as Hayne J emphasised in Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd , those who seek the "essential character" of statutory provisions do not proffer explanations of that process of distillation.” [footnotes omitted]

74 Even if I held that the consonant approach was at least arguable, the analysis does not end there because Chapel Road Pty Limited is a company, a corporate entity. There does not appear to be any authority to extend the tort of malicious prosecution to a corporate entity. Further, is a company entitled to the type of damages available in the tort of malicious prosecution?

75 Chapel Road’s claim for damages is:

“9. …the plaintiff was injured in its reputation and business and was put to considerable trouble, inconvenience and expense in defending itself and thereby suffered loss and damage.
Particulars of Special Damage
(a) Revocation of the licence harmed the reputation of the plaintiff in the financial planning industry, caused the property authority holders to leave the plaintiff and destroyed the business. The plaintiff estimates that the value of the business as at 26 April 2001 was $5,700,000.00 and says that the whole of that value was lost to the plaintiff as a consequence of the conduct of the defendant…
(b) The plaintiff incurred expense totalling approximately $180,000.00 in defending itself against the revocation of the licence in the proceedings before the defendant and in the Administrative Appeals Tribunal….”
[S/C para 9]

76 On the analysis of Kay and Beach JJA in Little, Chapel Road would have been entitled to two types of damages only, namely, damages to the company’s fame as if the matter it is accused of is scandalous and/or the damage to the property where it was put to the expense of defending itself. However, Chapel Road has claimed the costs of $180,000 being the costs of defending itself before the delegate and the Tribunal, and this type of damage is one recognised in the tort of malicious prosecution.

77 It is my view that, while it may have been arguable that the tort of malicious prosecution could be applied to administrative proceedings, it is clear that a company cannot maintain a claim for malicious prosecution.

(ii) Was there a termination of proceedings in the plaintiff’s favour?

78 The plaintiff bears the onus of establishing this element - see Metropolitan Bank Ltd v Pooley (1885) 10 App Cas 210. Proceedings are terminated in the plaintiff’s favour “…if from their nature they were capable of so terminating" – Commonwealth Life Assurance Society Limited v Brain [1935] HCA 40. Termination of proceedings in the plaintiff’s favour includes quashing on appeal - Herniman v Smith [1938] AC 305. Following favourable termination, a defendant is not entitled to show that the plaintiff was in fact guilty - Brain.

79 In Commonwealth Life Assurance Society v Smith the High Court quoted with approval, from Professor Winfield’s Text Book of The Law of Tort (1937) at 647-48, in relation to favourable termination in criminal proceedings where he said:

“But if proceedings did end in his favour, it is of no moment how they did so, whether by a verdict of acquittal, or by discontinuance of the prosecution by leave of the Court, or by quashing of the indictment for a defect in it…the broad interpretation put upon favourable termination of the prosecution…signifies, not that the accused has been acquitted, but that he has not been convicted."

80 The Tribunal concluded that ASIC’s decision was ‘not appropriate’ and remitted the matter to ASIC, directing that Chapel Road’s license be reinstated subject to appropriate conditions pursuant to s 786(1) with a view to ensuring effective compliance with condition 1 of its licence and regulation 7.3.02 of the Corporations Regulations. An alternate view is that the “conviction” no longer stands, as the Tribunal’s decision signifies that the grounds of the ASIC conviction may have justified the imposition of conditions but not a complete revocation of the licence. This may be considered a “favourable termination of the prosecution” and that being so, it is my view that the issue of favourable termination is arguable.

(2) Misfeasance in public office

81 The elements of the tort of misfeasance in public office have been referred to earlier in this judgment.

82 ASIC submitted that there are two fatal flaws which cannot be cured by amendment. They are firstly, that ASIC does not hold “public office” and secondly, there was no act that was illegal or beyond power. The boundaries of this cause of action have not been precisely defined.

83 In Sanders v Snell (1998) 72 ALJR 1508 at 1517, the High Court observed that the precise limits of this tort are still undefined. In Elliot v Chief Constable of Wiltshire & Ors, Sir Richard Scott The Times Law Reports 5.12.1996, similarly stated that the boundaries of this cause of action had not yet been precisely defined.

84 The elements of the tort of misfeasance in public office are:

1. there is a public officer;

2. who owes a public duty (including to the plaintiff as a member of the public);

3. which the public officer has breached;

4. the breach of duty has caused loss or damage to the plaintiff; and

5. the public officer breached the duty with the intention of causing harm to the plaintiff or with the knowledge that he or she was acting in excess of his or her powers.

(see - Tampion v Anderson [1973] VR 715 at 720; Northern Territory of Australia v Mengel (1995) 185 CLR 307 at 345-8; 129 ALR 1 at 17-20; Kneebone S “ Misfeasance in Public Office after Mengel’s Case: A Special Tort no More” (1996) 4 TortL Rev 111 at 121-34; Cockburn T and Thomas M, “ Personal Liability of Public Officers in the Tort of Misfeasance in Public Office – Part 1 ” (2001) 9 TLJ 80 at 245; and Sanders v Snell (1998) 196 CLR 329 at 346-7; 157 ALR 491 at 504; [1998] HCA 64.)

85 In Mengel the High Court stated (at 345):

“…the weight of authority here and in the United Kingdom is clearly to the effect that it is a deliberate tort in the sense that there is no liability unless either there is an intention to cause harm or the officer concerned knowingly acts in excess of his or her power.”

86 The majority went on to hold (at 347):

“The cases do not establish that misfeasance in public office is constituted simply by an act of a public officer which he or she knows is beyond power and which results in damage. Nor is that required by policy or by principle. Policy and principle both suggest that liability should be more closely confined. So far as policy is concerned, it is to be borne in mind that, although the tort is the tort of a public officer, he or she is liable personally and, unless there is de facto authority, there will ordinarily only be personal liability. And principle suggests that misfeasance in public office is a counterpart to, and should be confined in the same way as, those torts which impose liability on private individuals for the intentional infliction of harm. For present purposes, we include in that concept acts which are calculated in the ordinary course to cause harm, as in Wilkinson v Downton , or which are done with reckless indifference to the harm that is likely to ensue, as is the case where a person, having recklessly ignored the means of ascertaining the existence of a contract, acts in a way that procures its breach.”

87 This principle was reaffirmed in Sanders.

(i) Whether ASIC holds public office

88 Chapel Road submitted that Porter v OAMPS Ltd & Ors (2005) 215 ALR 327 was not authority for an unqualified general assertion that ASIC does not hold a public office. It submitted that Porter did not decide anything other than, if a plaintiff cannot point to an office held by ASIC, in the sense of a statutory responsibility or governmental function exercised by ASIC, it cannot be regarded as a public officer. Chapel Road further submitted that if Potter is properly read and understood as authority for an unqualified general assertion that ASIC does not hold a public office, it is inconsistent with the decision of the Privy Council in Dunlop v Woollahra Municipal Council [1982] AC 158 at 172 and to the extent that Dunlop was referred to with approval, the decision of the High Court in Mengel (1996) 185 CLR 307 at 345 and does not represent the law. It submitted that, as a decision of the Privy Council, in contrast to a decision of a single judge of the Federal Court of Australia, the Court is obliged to follow Dunlop.

89 ASIC relied upon Porter where at [106] Goldberg J stated:

“The fundamental difficulty with the current pleading of the cause of action is that the applicant appears to allege that ASIC’s liability is primary liability. However, ASIC does not hold a “public office” (as to which, see P Finn, “Public Officers: Some Personal Liabilities” (1977) 51 Australian Law Journal 313 at 314-15). To the extent that there are particulars given of the elements of the tort those particulars appear to relate to particular officers of ASIC, rather than ASIC itself.”

90 In Porter Goldberg J further stated at [108]:

“On the other hand, it appears to be possible for an employer to be vicariously liable for the misfeasance in public office of its employees: see Racz v Home Office [1994] 2 AC 45 ; Kuddus v Chief Constable of Leicestershire [2002] 2 AC 122; [2001] 3 All ER 193. Consequently it may be possible for the applicant to plead an action in misfeasance in public office against one or more employees of ASIC and then to plead that ASIC is vicariously liable for that tort. Given that possibility I am not satisfied that it is appropriate to dismiss the claim based on misfeasance in public office…”

91 Thus in Porter, Goldberg J does not say that an action for misfeasance in public office cannot be maintained against ASIC. Rather, it may be possible to plead the action against an employee and then to plead that ASIC is vicariously liable for that tort.

92 In any event, there is a Privy Council decision that decided that a Local Council, as a statutory corporation exercising local government functions was a public officer for the purposes of this tort. In Dunlop the Privy Council said (at 172):

“In pleading in para 15A of the statement of claim that the council abused their public office and public duty (the plaintiff) was relying on the well established tort of misfeasance by a public officer in the discharge of his public duties. Yeldham J rightly accepted that the council as a statutory corporation exercising local government functions was a public officer for the purposes of this tort…”

93 ASIC is a body corporate (s 8 ASIC Act). ASIC was purporting to exercise a function under s 837 of the Corporations Law when it served a notice on Chapel Road. It is arguable that ASIC was a statutory corporation carrying out statutory functions when it conducted the hearing. In the light of Dunlop it is my view that it is arguable that ASIC holds public office and this part of the pleading should not be struck out.

(ii) Act beyond power or invalid act

94 Chapel Road pleaded that it suffered loss and damage as a result of the act of ASIC, as a public officer, in revoking the licence, when ASIC was actuated by an intention to cause harm to Chapel Road and /or knew or ought to have known that revoking the licence was an invalid or unauthorised act which involved a foreseeable risk of harm to Chapel Road. (S/C [11]).

95 ASIC submitted that Chapel Road supported the assertion that it could be inferred that ASIC had knowledge that it was performing an unauthorised or invalid act because firstly, ASIC “was aware that it was no part of the role or responsibility of the defendant…to punish the plaintiff” and secondly, that no ordinary person would have drawn a connection between the conduct of Chapel Road and the perception of a “threat to the public”.

96 ASIC submitted that even if the intention of ASIC was to punish Chapel Road, such an intention is not improper. ASIC’s powers are punitive as well as protective and preventative in nature and can quite properly be exercised accordingly – see Rich. ASIC further submitted that even if an ordinary person would not have drawn the relevant connection, Chapel Road must prove that the relevant persons did not draw such a connection. In essence, Chapel Road would have to establish not that an ordinary person would not draw the connection, but that no ordinary person would draw that connection.

97 Section 837 of the Corporations Law provided:

“Opportunity for hearing
(1)
The Commission shall not:

(a) refuse, otherwise than by virtue of section 836 or subsection 839(1), an application for a licence;

(b) impose conditions on a licence;

(c) vary the conditions of a licence;

(d) revoke or suspend a licence otherwise than by virtue of section 824, 825 or 825A or paragraph 827(1)(a);

(e) make, otherwise than by virtue of paragraph 828(a) or (d) or 829(a), (b) or (c), an order under section 830 against a person;

(f) make under section 831(2) an order varying a banning order against a person; or

(g) refuse an application by a person under section 832;
unless the Commission complies with subsection (2) of this section.
(2) The Commission shall give the applicant, licensee or person, as the case may be, an opportunity:

(a) to appear at a hearing before the Commission that takes place in private; and

(b) to make submissions and give evidence to the Commission in relation to the matter.”

98 Chapel Road appeared before the delegate, led evidence in answer to the concerns the subject of the notice and made submissions to the effect that an order should not be made revoking the licence. On 26 April 2001, the delegate rejected Chapel Road’s submissions and made an order revoking the licence [paras 6 & 7 S/C]. Chapel Road was given an opportunity to be heard in accordance with s 837(2) and Chapel Road availed itself of that opportunity.

99 Section 836 of the Corporations Law empowered a delegate to revoke a licence after the licensee had an opportunity to appear at the hearing, give evidence and make submissions. There is nothing to suggest that the delegate’s action involved an invalid or unauthorised act. As essential element of the tort is absent. Hence, it is my view that the claim for an abuse of process is untenable and should not be permitted to go to trial.

100 The result is that the plaintiff’s claims for malicious prosecution and abuse of process are hopeless and should be dismissed. The statement of claim is dismissed.

101 Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant’s costs as agreed or assessed.

The Court orders:

(1) The statement of claim filed 19 January 2006 is dismissed.

(2) The plaintiff is to pay the defendant’s costs as agreed or assessed.
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