I Cook Foods Pty Ltd v State of Victoria
[2022] VSC 649
•28 October 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S ECI 2020 02728
| I COOK FOODS PTY LTD (ACN 094 392 060) | Plaintiff |
| v | |
| STATE OF VICTORIA (DEPARTMENT OF HEALTH AND HUMAN SERVICES) | First Defendant |
| CITY OF GREATER DANDENONG | Second Defendant |
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JUDGE: | John Dixon J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 3 October 2022 |
DATE OF JUDGMENT: | 28 October 2022 |
CASE MAY BE CITED AS: | I Cook Foods Pty Ltd v State of Victoria & Anor |
MEDIUM NEUTRAL CITATION: | [2022] VSC 649 |
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PRACTICE AND PROCEDURE – Amendment of pleading – Appeal from judicial registrar – Whether tenable cause of action disclosed – Inferential case – Misfeasance in public office – Amendment refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Dr M Sharpe | McKean Park |
| For the First Defendant | Mr C Caleo KC with Mr M McLay | Minter Ellison |
| For the Second Defendant | Mr C Winneke KC with Ms R Kaye | Maddocks |
HIS HONOUR:
A judicial registrar granted the plaintiff leave to file and serve a further amended statement of claim substantially in the form submitted to the court with the exception of paragraphs 70 - 94. The plaintiff now appeals from that decision seeking leave to include those paragraphs in its further amended statement of claim. It will be convenient to refer to these paragraphs as the proposed pleading.
The proposed pleading alleges a new claim of misfeasance in public office against each of the defendants for the acts of their officers (Pauline Maloney and Leanne Johnson respectively), in allegedly interfering with an audit of the plaintiff’s food premises and production process.
Although the plaintiff’s notice of appeal was framed in the format of an appeal against a decision of an associate judge, the appeal is brought pursuant to r 84.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic). Sub-rule 85.05(4) provides that an appeal under this rule shall be conducted by way of hearing de novo.
As Gleeson CJ, Gordon and Hayne JJ observed in Cole and Allied Operations Pty Limited v Australian Industrial Relations Commission,[1] in the case of a hearing de novo, the matter is heard afresh and a decision is given on the evidence presented at that hearing.
[1](2000) 203 CLR 194, 202-3 [11], [13].
Sloss J described what is contemplated on an appeal from a judicial registrar by a hearing de novo in Bendigo and Adelaide Bank Limited v Grahame.[2] As a matter of practice and procedure on the hearing of the appeal, the party who was the applicant before the judicial registrar begins and the appeal is determined on the evidence relied on before the judge and not that relied on before the judicial registrar. The judge determines the appeal unfettered by the decision of the judicial registrar, giving such weight to that decision as appears proper.[3]
[2][2020] VSC 86, [18].
[3]See Southern Motors Pty Ltd v Australian Guarantee Corporation Ltd [1980] VR 187, 190.
It is not necessary to address the submissions that the judicial registrar either did, or did not, fall into error. That said, given the careful and detailed reasons published by the judicial registrar, the parties have drawn on them for their submissions and it will be convenient to make reference to them.[4]
[4]I Cook Foods Pty Ltd v State of Victoria (Department of Health and Human Services) & Anor, 22 July 2022, Judicial Registrar Baker, unreported.
The principles that apply on an application to amend a pleading were uncontroversial. They were most recently summarised by Connock J in Business Service Brokers Pty Ltd v Optus Mobile Pty Ltd,[5] a decision cited by the parties and relied on by the judicial registrar. Rule 13.10(3) requires that any allegation of misrepresentation, fraud, breach of trust or wilful default must be properly particularised.
[5][2022] VSC 283, [22]-[31].
It is well established that an enquiry as to whether a party is proposing a properly pleaded and particularised, tenable cause of action is determined on the assumption that the party can establish those allegations at trial. It is only in circumstances where summary judgment is sought, leave to replead is being opposed if leave to amend is refused, or it is contended that there cannot be a proper basis for the proposed allegation, that enquiry beyond the four corners of the proposed pleading is appropriate.
There are five elements to be pleaded to allege the tort of misfeasance in public office:
(a) An invalid or unauthorised act;
(b) The act must be done maliciously;
(c) The act must be done by a public officer;
(d) The act must be done in the purported discharge of the public officer’s public duties; and
(e) The act must cause loss or harm to the plaintiff.[6]
[6]Northern Territory v Mengel (1995) 185 CLR 307, 370; Sanders v Snell(No 2) (2003) 130 FCR 149, 160-1 [45]; Cornwall v Rowan (2004) 90 SASR 269, 323 [209]; Chapel Road Pty Ltd v Australian Securities and Investments Commission (2014) 307 ALR 428, 440 [54]; Brett Cattle v Ludwig (2020) 383 ALR 58, 123 [269].
The relevant state of mind, malice, that is critical to any determination that a public officer misused a public office is:
(a) An intention to cause injury, where the injury intended is something that the plaintiff would not or might not have suffered if the power available to the public officer had been validly exercised; or
(b) Knowledge of the invalidity of the act and knowledge that the act would cause, or be likely to cause, injury or was otherwise recklessly indifferent to that possibility.[7]
[7]Mengel, 347 (n 6); Sanders, 158-9 [38] (n 6); Brett Cattle, 123-7 [270]-[283] (n 6).
It is well established that a claim for misfeasance in public office is a serious allegation that should be pleaded with particular detail. A discussion of how this tort is properly pleaded begins with the leading decision of the House of Lords in Three Rivers District Council v Bank of England.[8]
[8][2001] UKHL 16, [186].
Lord Millett identified two particular principles relevant when pleading this cause of action. First, serious allegations, such as allegations of misfeasance in public office must be distinctly alleged and distinctly proved. It is not sufficient if the facts pleaded are consistent with innocence. Put another way, where the plaintiff alleges dishonesty, the material allegations pleaded must show that the defendant was dishonest and not merely negligent. If the allegations are consistent with negligence the pleading is inadequate. Because the function of pleadings is to give the opposing parties sufficient notice of the case, equivocal language will never be adequate.
The second principle is that an allegation of this sort must be sufficiently particularised. Dishonesty is usually a matter of inference from primary facts, so the pleader must set out the primary facts which will be relied on at trial to justify the inference of the alleged state of mind. It is not open to the court to infer dishonesty from facts which have not been pleaded or from facts which have been pleaded but are consistent with honesty. Lord Millett observed that ‘there must be some fact which tilts the balance and justifies an inference of dishonesty, and this fact must be both pleaded and proved’.[9]
[9]Ibid.
This reasoning has been followed in Australia. Pharm-A-Care Laboratories Pty Ltd v Commonwealth,[10] concerned the adequacy of the pleading of a claim of misfeasance in public office. In that case, Flick J, following the reasoning in Three Rivers, held that the pleading was adequate.
[10](2010) 267 ALR 494.
In Polar Aviation Pty Ltd v Civil Aviation Safety Authority (No 4),[11] Kenny J considered a pleading that approached the mental element of a misfeasance claim by alleging inferences as to state of mind from a sequence of instances of conduct allegedly beyond power. The particulars were considered deficient because the allegations were consistent with the defendant and its officers being honestly motivated. The particulars were capable of justifying an inference of deficient administrative process but incapable of supporting an inference that the respondents acted with knowledge that their conduct was beyond power and, even less so, that they acted intending to cause harm to the applicants or with reckless indifference.
[11](2011) 203 FCR 293.
More recently, in M83A/2019 v Morrison (No 2),[12] Mortimer J considered requirements for a proper pleading of a misfeasance in public office claim. After reviewing the authorities, her Honour concluded:
Those drafting pleadings can also be expected to know and understand the importance of rules such as r 16.42, reflecting the gravity of allegations such as misfeasance. While r 16.42 does not expressly refer to misfeasance in public office, the conduct to which it does refer bears the same character. There can be no doubt that this cause of action requires a high degree of specificity about the alleged state of mind of each of the individual respondents. As the authorities above reveal, in modern case management the Court looks to the substance of a party’s complaints about a pleading, measured against the basic functions the pleading is intended to serve, and considered in the context of the nature and gravity of the allegations made. Those approaches are reflected in the observations of Drummond J in Queensland v Pioneer Concrete (Qld) Pty Ltd, and von Doussa J in Beach Petroleum NL v Johnson. Flexibility in the Court’s approach does not equate to tolerance of pleadings which fail to fulfil those basic functions.[13]
[12][2020] FCA 1198.
[13]Ibid [89] (citations omitted).
By the proposed pleading the plaintiff claims there was misfeasance in public office by the defendants’ respective employees, Ms Maloney (Department of Health and Human Services) and Ms Johnson (City of Greater Dandenong) in the circumstances of the engagement of a food safety auditor (Gavin Buckett) who conducted an audit of the plaintiff’s food preparation premises and production processes. In particular, the claim focusses on the interaction between the auditor and Ms Maloney and Ms Johnson.
The issue is whether the material allegations made by the proposed pleading, which may be assumed as capable of being proved at trial and bearing in mind that the plaintiff advances an inferential case, support or permit the necessary inferences to allege the elements of the cause of action.
Specifically, argument focussed on:
(a) whether the factual circumstances had been alleged with a sufficiently high degree of specificity as to the conduct engaged in; and
(b) whether the pleading establishes a sufficient foundation for the plaintiff’s assertion that each of Ms Johnson and Ms Maloney had the necessary malicious state of mind.
After alleging that on or about 27 February 2019, Mr Buckett carried out a full food safety audit of the plaintiff’s premises and production processes, the material allegations that are made by the proposed pleading are:
(a) In or around late February 2019, Ms Garlick and/or Ms Johnson contacted Mr Buckett to give Mr Buckett ‘a heads up’. This colloquial expression is derived from a diary note prepared by Ms Garlick. There is no allegation of what information was or might have been conveyed to Mr Buckett when he received, if he did, ‘a heads up’. If it is to be alleged that there was a communication, the content of which is to be inferred from this expression, that is a primary fact relevant to drawing an inference of either an invalid or unauthorised act done by a public officer in the purported discharge of the public officer’s public duties (the impugned conduct) or an inference of malice, the allegation falls short of conveying what was the substance of that communication.
(b) On 27 February 2019, Mr Buckett provided a draft of his report to the plaintiff, following up with the final report on 2 March 2019.
(c) On 8 March 2019, Mr Buckett gave the plaintiff a Form 4 – ‘Notice to Proprietor to Correct Non‑Conformances’;
(d) On the same day, 8 March 2019, Mr Buckett and Ms Maloney discussed the final report. The particulars of this allegation simply identify that a meeting was set up and there is no material allegation as to what was discussed. Again, and critically, if it is to be alleged that this discussion is a primary fact relevant to drawing an inference of either the impugned conduct or of malice, the allegation falls short of conveying what the substance of that discussion was.
(e) On 12 March 2019, Ms Maloney sought an update from Mr Buckett and on that same day Mr Buckett provided Ms Johnson and Ms Maloney with draft notices to the plaintiff and asked them whether any changes were required to the documents before they were finalised.
(f) On 14 March 2019, Mr Buckett provided to Ms Johnson and Ms Maloney a further amended food safety audit report and a further amended Form 4. The plaintiff alleges that the revised final report and the revised notice varied from, and were less favourable to the plaintiff than, the original versions.
The plaintiff alleges that it can be inferred from these primary facts that Ms Maloney and Ms Johnson were provided with copies of the final report and the Form 4 notice, which they reviewed, and to which they suggested that changes be made. Stopping there, the pleader does not set out how it is to be inferred from the particularised diary note that Ms Maloney received the documents and was discussing the content of them.
The pleader does not commit to alleging the material facts constituting ‘the review’ that seems to be the first part of the impugned conduct. The pleader invited the reader to infer that Mr Buckett then incorporated amendments as suggested by Ms Maloney and Ms Johnson resulting in the changes evident in the revised final report and revised notice. The pleading does not commit to identifying what amendments were suggested to Mr Buckett, nor does it allege that any communication between Mr Buckett and Ms Moloney or Ms Johnson caused any amendment, or any particular amendment, by Mr Buckett of the final report or the Form 4 notice. More generally, the pleader invites the inference from the fact of a ‘review’ and a subsequent communication that the features of these revised documents that were detrimental to the plaintiff were orchestrated for a purpose by Ms Moloney or Ms Johnson, which is the second part of the impugned conduct.
On the basis of this pleaded substratum of fact, the plaintiff alleges that it may be inferred that each of Ms Maloney and Ms Johnson was acting as a public officer in the purported discharge of public duties when reviewing the final report and the 8 March notice and that the review was an invalid exercise of power.
In my view, the pleader fails to commit to allegations of the material facts that they contend for, by specifically and clearly alleging what was received, what was reviewed, what was then said, and what was the purpose or intention of each of Ms Maloney and Ms Johnson. How did they prevail upon Mr Buckett to make what changes for what improper or ulterior purpose? By not identifying in specific detail what inferences are to be drawn on what basis, the pleading does not rise above encouraging speculation as to the impugned conduct.
Next, because the allegations of the impugned conduct are speculative, the pleader’s task in identifying how the necessary element of malice is to be inferred becomes impossible.
The plaintiff alleges that the mental state of each of Ms Maloney and Ms Johnson was that they acted maliciously in one or more of the senses defined above because they intended to keep the plaintiff’s premises and business closed irrespective of whether food produced at its premises was unsafe or unsuitable. However, the particulars of this allegation of the mental state of two persons refer back to and repeat the allegations that I have just set out of the impugned conduct, adding that in a telephone discussion on or about 8 March 2019, Ms Maloney and Ms Johnson had agreed that they needed to ‘protect Buckett’. The particulars of the allegation that Maloney and Johnson agreed that they needed to protect Buckett is a file note, prepared by Johnson, of that discussion. The particulars make no allegations of material facts that identify the ‘need’, the nature of the ‘protection’, or the relationship between or purpose of protecting Buckett and the purported discharge of public duties. The particulars do not identify how it might be inferred that Ms Maloney and Ms Johnson, by needing to protect Buckett, intended to cause injury to the plaintiff or were reckless as to that consequence.
Further, in the case of Ms Johnson, an additional allegation, relevant to the inference to be drawn as to her malicious mental state, is that she intended to reduce competition by the plaintiff for the benefit of Community Chef. Community Chef is an entity established by several local councils that is alleged to be a competing business partially owned and/or operated by the second defendant, which was the plaintiff’s main market competitor. This last allegation is particularised by reference to allegations set out elsewhere in the pleading; that Ms Johnson knew some or all of the circumstances surrounding the operation of Community Chef.
The plaintiff then alleges that Ms Maloney and/or Ms Johnson were recklessly indifferent to whether the review was beyond their power or conducted for an improper purpose and the likelihood of harm their review would cause to the plaintiff. The particulars of this allegation are a repetition of the particulars of the allegation that each of those persons acted intentionally.
As the defendants submitted, the plaintiff uses the particulars of matters from which the impugned conduct is to be inferred, to do the work of identifying the matters from which the mental state to be attributed to different defendants is to be inferred. For example, allegations about Community Chef and its relationship to the second defendant and what Ms Johnson knew of that cannot rationally affect the proof of the mental state of Ms Maloney. Nothing in the pleading suggests that Ms Maloney, when having a conversation with an auditor conducting an audit of premises that are the subject of an existing closure order served by the first defendant, was acting maliciously.
Viewed in the context of the principles set out above, the inadequacy in the plaintiff’s pleading of this claim becomes clear. The conduct alleged against Ms Maloney and Ms Johnson is vague when greater specificity is plainly required. Simply asserting an intention to give the auditor a ‘heads up’, discussing a need to protect the auditor or inviting the conclusion that there was a review of the auditor’s work from the fact that a copy of it was provided and the auditor later made changes, fails to specify the material facts that would put the defendants on notice as to the manner in which they are said to have abused their public office.
The impugned conduct is not alleged with sufficient particularity to identify for the benefit of the defendants, and the court, the material facts capable of supporting an inference that Ms Maloney and Ms Johnson acted, each as a public officer, and each purporting to discharge their public duties, with knowledge that, or reckless indifference to whether, their conduct was beyond power.
While that deficiency is sufficient to conclude that the pleading is inadequate, that inadequacy is compounded by the plaintiff employing the same allegations to particularise the states of mind of each of Ms Maloney and Ms Johnson. The particulars cannot achieve this dual purpose and neither can they achieve another dual purpose of particularising the states of mind of two different public officers. But the work of the particulars doesn’t end there. The particulars also provide the basis for the allegation that Ms Maloney and Ms Johnson acted intending to cause harm to the plaintiffs as well as the alternative allegation that Ms Maloney and Ms Johnson acted with reckless indifference. Rolling the allegations together, as the pleader does, obfuscates how the claim is advanced against each defendant and introduces a circularity into the allegations that is the enemy of the requisite clarity.
In my view, it is not possible to conclude that, on these limited allegations being established, it would be open to a court to infer that the critical state of mind element could be proved. The ambiguity of the use of colloquial expressions, references to review without identifying the nature and conduct of that review, or to conversations where there is no allegation as to the material substance of any aspect of the communication, merely an allegation that a communication occurred, cannot exclude alternative hypothesises consistent with an honest exercise of power, or that there was no more than a want of care on the part of Ms Maloney and Ms Johnson, short of reckless indifference.
The key ingredient missing from this pleading, was the allegation that, to use Lord Millett’s phrase, ‘tilts the balance’ toward malice, dishonest intention or recklessness.
The judicial registrar was invited to, and did, consider various documents that reinforced the conclusion that the pleading was inadequate. While it was unnecessary for that exercise to be undertaken on a pleading summons, as I earlier explained, the pleading does not make any material allegation that would warrant a different conclusion to that reached by the judicial registrar. The careful reasoning of the judicial registrar raises the issue of whether the plaintiff presently has a proper basis to allege the tort against the defendants in respect of what it calls the audit interference claim.
The crux of the apparently asserted claim is a conclusion that the invalid exercise by Ms Maloney and Ms Johnson of their powers was a review and their communication following that review with Mr Buckett. Not only is there no factual foundation to understand the nature of the review, but the content of the communication with Mr Buckett is not alleged and the suggestion that Mr Buckett, effectively under direction by this communication, altered or revised his report in a manner that inflicted loss on the plaintiffs as Ms Maloney and Ms Johnson intended (or as to which they were reckless) is not a matter for inference but a matter of speculation. The pleading falls well short in identifying specific facts that might reasonably permit an inference that there was conduct amounting to an improper exercise of power and the material allegations from which an inference as to the requisite mental state can be drawn.
The pleading fails in its basic function of putting the defendants fairly on notice of the plaintiff’s case against them. The proposed pleading falls short of compliance with rr 13.07 and 13.10 and, if permitted, would fail to satisfy the requirements of r 23.02 of the Rules.
I refuse leave for the plaintiff to file a further amended statement of claim incorporating paragraphs 70–94.
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