I Cook Foods Pty Ltd v State of Victoria (Department of Health and Human Services)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION

MAJOR TORTS LIST

S ECI 2020 02728

BETWEEN:

I COOK FOODS PTY LTD	Plaintiff
v
STATE OF VICTORIA (DEPARTMENT OF HEALTH AND HUMAN SERVICES)	First Defendant
and
CITY OF GREATER DANDENONG	Second Defendant

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JUDICIAL REGISTRAR:	Baker JR
WHERE HELD:	Melbourne
DATES OF HEARING:	4 and 7 March 2022
DATE OF RULING:	22 July 2022
CASE MAY BE CITED AS:	I Cook Foods Pty Ltd v State of Victoria (Department of Health and Human Services) & Anor
MEDIUM NEUTRAL CITATION:	[2022] VSC 587

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PRACTICE AND PROCEDURE – Amendment of pleadings – Rule 36.01(1) Supreme Court (General Civil Procedure) Rules 2015 (Vic) – Pleading requirements for tort of misfeasance in public office – Three Rivers District Council v Bank of England (No 3) [2003] 2 AC 1 – Requirement for specificity – Amendments where allegations consistent with explanation of honest discharge of public officer’s functions.

PRACTICE AND PROCEDURE – Release from Harman undertaking – Section 27 Civil Procedure Act 2010 (Vic) – Kritsidimas v Dimitrakakis (No 2) [2021] VSC 677 – Overlap between two related proceedings – Requirement for ‘special circumstances’ – Appropriateness of relief from s 27 obligations when alternate and more targeted means are available.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Dr M Sharpe	McKean Park
For the First Defendant	Mr C M Caleo QC with Mr M McLay	Minter Ellison
For the Second Defendant	Mr C Winneke QC	Maddocks

TABLE OF CONTENTS

Background......................................................................................................................................... 2

Previous case-management orders............................................................................................. 3

The application for leave to amend................................................................................................ 4

Background.................................................................................................................................... 4
The plaintiff’s amended statement of claim.................................................................... 4
The proposed amendments................................................................................................ 8

Applicable principles.................................................................................................................. 14
The parties’ submissions............................................................................................................ 21
The plaintiff’s submissions............................................................................................... 21
The State’s submissions.................................................................................................... 23
COGD’s submissions........................................................................................................ 25

The evidence................................................................................................................................ 28
Chronology......................................................................................................................... 28
18 February 2019................................................................................................... 28
19 February 2019................................................................................................... 29
20 February 2019................................................................................................... 29
21 February 2019................................................................................................... 29
22 February 2019................................................................................................... 30
23 February 2019................................................................................................... 30
2 March 2019......................................................................................................... 30
8 March 2019......................................................................................................... 31
12 March 2019....................................................................................................... 34
13 March 2019....................................................................................................... 37
14 March 2019....................................................................................................... 37

The parties’ positions.................................................................................................................. 39
Analysis........................................................................................................................................ 39
The auditor-interference claim: paragraphs 70-94........................................................ 41
The requirement for specificity.......................................................................... 43
Explanation consistent with an honest discharge of powers......................... 47

The knowledge allegations: paragraphs 41A, 65.3 and 66.3....................................... 52
The management overlap allegations: paragraphs 1B, 4, 5, 5A, 5B and 5C.............. 55
Conclusion.......................................................................................................................... 55

The discovery-obligations application........................................................................................ 55

Conclusions and orders.................................................................................................................. 60

JUDICIAL REGISTRAR:

The plaintiff applies for leave to file and serve a further amended statement of claim to plead an additional cause of action and make a series of other amendments, and to be released from its Harman obligations (or more precisely, its obligations under s 27 of the Civil Procedure Act 2010 (Vic) (‘Civil Procedure Act’)) in order to allow it to use discovered documents from this proceeding in a related proceeding that it is pursuing concerning similar subject matter (S ECI 2020 03070 I Cook Foods Pty Ltd v The Gourmet Guardian Pty Ltd, referred to for convenience in the application as the ‘auditor proceeding’).

The application was referred to me for determination by order of John Dixon J dated 28 February 2022. The parties all made oral and written submissions, and referred to the following affidavit material in the course of the hearing:

(a) affidavit of David Michael Brett sworn 18 January 2022;

(b) affidavit of Siobhan Anne Sheppard sworn 28 January 2022;

(c) affidavit of Maxwell Godfrey Curtis sworn 18 February 2022;

(d) affidavit of Philip Andrew Stefanovski sworn 22 February 2022;

(e) affidavit of Maxwell Godfrey Curtis sworn 25 February 2022; and

(f) affidavit of Kaye Griffiths sworn 7 March 2022.

For the reasons that follow, I have concluded that:

(a) the bulk of the proposed amendments to the plaintiff’s statement of claim should be permitted, but the proposed paragraphs adding allegations of misfeasance in public office concerning interference with the auditor process should not be permitted; and

(b) as a consequence, the orders sought concerning the use of discovered documents should not be made in the form proposed in the plaintiff’s summons.

Background

In this proceeding (herein referred to as ‘the government proceeding’) the plaintiff claims damages from the first defendant (referred to for convenience as ‘the State’, for the then-Department of Health and Human Services (‘DHHS’)) and second defendant (referred to as ‘COGD’) in respect of a closure order made concerning the plaintiff’s premises on 21 February 2019 under s 19 of the Food Act 1984 (Vic) (‘Food Act’), as well as a variation to that order made on 23 February 2019. The orders had the effect of preventing the plaintiff from carrying on its business.

The plaintiff alleges that the closure order was invalidly made and that it was made as a consequence of actions taken by officers of the defendants, either maliciously, or with the intention of closing the plaintiff down regardless of whether its food was unsafe or unsuitable, and/or to reduce competition for a rival catering company, known as Community Chef.

In the auditor proceeding, the plaintiff brings a claim against Gourmet Guardian Pty Ltd and Mr Gavin Buckett, in respect of a food safety audit it engaged them to conduct on 26 or 27 February 2019, following the closure order being made. The plaintiff alleges that after conducting the audit, Mr Buckett first provided COGD with a ‘final’ food safety audit report on 2 March 2019, and then a related Food Act notice, and subsequently provided a revised version of those documents on 14 March 2019 that was less favourable to the plaintiff. Between those dates, the plaintiff alleges that it can be inferred that the earlier versions were reviewed by DHHS, that DHHS suggested changes to be made to the documents, and that the auditors incorporated those changes in order to produce the less favourable final versions. The plaintiff alleges that the defendants breached the terms of their engagement with the plaintiff, and the duty of care they owed to it in a number of respects by this conduct.

The defendants in the auditor proceeding admit that they were engaged by the plaintiff but deny that they were engaged to perform a full food safety audit, which they say is only possible to perform when the food premises in question is in operation (the plaintiff’s premises was not in operation at the time of the audit). They dispute that they sought DHHS’s review of the 2 March report as alleged, that they incorporated changes requested by DHHS, and that the report and notice produced on 14 March 2019 were less favourable to the plaintiff than the previous versions. Rather, they say that the changes made in the final documents were introduced in order to reflect the 21 and 23 February 2019 orders made under the Food Act, which had not been provided to them until 8 or 10 March 2019 (after the earlier versions of the documents had been produced).

To avoid repetition, it is useful at the outset to briefly identify the identities of the key individuals referred to in the pleadings and evidence, and their roles at the times relevant to this proceeding. They are:

(a) Mr Gavin Buckett, the auditor referred to above who is a defendant in the auditor proceeding;

(b) Mr Ben Cook, who was the general manager of the plaintiff;

(c) Dr Brett Sutton, who was at the relevant times the Acting Chief Health Officer of the DHHS;

(d) Ms Elizabeth Garlick, who was an Environmental Health Officer for the COGD;

(e) Ms Leanne Johnson, who was an Environmental Health Officer for the COGD;

(f) Ms Pauline Maloney, who was Senior Policy Officer in the Food Safety Unit of the DHHS; and

(g) Mr John Bennie, who was the chief executive officer (‘CEO’) of the COGD and a board member of Community Chef, discussed in more detail below.

Previous case-management orders

The government proceeding was commenced against the State only on 24 June 2020, and originally fixed for trial on 7 February 2022. COGD was joined to the proceeding on 18 February 2021.

On 7 October 2021, the plaintiff applied by summons for orders including that the government proceeding and auditor proceeding be consolidated or heard concurrently. The application was opposed by the defendants in both proceedings. Following the hearing of the application on 15 December 2021, I dismissed the application on 17 December 2021, principally on the basis of the lack of overlap between the two proceedings (the government proceeding being concerned at that stage with events leading up to and causing the February 2019 closure orders, and the auditor proceeding concerning the contract between the plaintiff and the auditors that only commenced after the closure orders had been made).

On 18 January 2022, the plaintiff applied by summons for orders including those described in paragraph 1 above, and to vacate the trial listed on 14 February 2022. On 31 January 2022, orders were made to vacate the trial date on the basis that the matter would not be ready to proceed in February. The balance of the plaintiff’s summons was adjourned for further hearing, and is the application to which these reasons relate.

The application for leave to amend
Background
The plaintiff’s amended statement of claim

The plaintiff’s claim against the defendants is set out in its amended statement of claim (‘ASOC’) filed 18 February 2021.

In it, the plaintiff says that it produced four lines of food products for customers in Victoria at its premises in Dandenong South, and that its main market competitor was Community Chef. The plaintiff pleads that Community Chef was established by several local councils, including COGD, and that Mr Bennie was a member of the Community Chef board.

In January 2019, a patient was infected with listeria monocytogenes at Knox Hospital, for which the plaintiff was one of a number of food suppliers. As a result of this infection, investigations and testing were required to be conducted of the plaintiff’s premises and products. The plaintiff pleads that the testing performed did not identify listeria monocytogenes on kitchen surfaces at its premises, but that it was detected at a level of less than 10 colony-forming units per gram in silverside/corned beef purchased by the plaintiff from a supplier of smallgoods, as well as in several ingredients used by the plaintiff in combination with the silverside/corned beef. The plaintiff says that the patient at Knox Hospital could have been infected from silverside/corned beef produced by the smallgoods producer, or from another high‑risk food, but was not infected by food it had produced.

The ASOC states that on 21 February 2019, a closure order was issued under s 19 of the Food Act, which required that the plaintiff’s premises not be used for the preparation or handling/sale of any food, and that food produced by the plaintiff at the premises since 13 January 2019 be destroyed.

On 23 February 2019 a varied order was issued pursuant to s 41A of the Interpretation of Legislation Act 1984 (Vic), which continued to restrict the use of the plaintiff’s premises in relation to the preparation, handling and sale of food, and also required that a “microbiological test and hold program” be implemented for three of the plaintiff’s product lines before any food product was released.

The plaintiff says that in making those two orders, Dr Sutton relied on or purported to rely on an email sent by an authorised officer at 8:21 pm on 21 February 2019, and documents referred to in that email. The plaintiff alleges that the closure orders were invalid, because:

(a) they were made without the report of an authorised officer as required by the Food Act, because the email correspondence purported to be relied upon referred to a decision having already been made; and/or

(b) Dr Sutton could not have been satisfied that the plaintiff’s premises were unsafe or unsuitable within the meaning of ss 4D or 4E of the Food Act because the email correspondence relied on observations of the premises made by COGD officers when the plaintiff says, to the knowledge of DHHS, COGD was in a position of conflict (due to Mr Bennie’s role on the board of a market competitor, Community Chef); and/or

(c) Dr Sutton breached the rules of natural justice by making the initial closure order without providing the plaintiff with a copy of the email and related documents relied upon, or affording the plaintiff an opportunity to respond to it or to the closure order itself, before issuing the order.

The plaintiff alleges that Dr Sutton was recklessly indifferent as to whether the closure orders were beyond power, and as to the likelihood of the orders causing harm to the plaintiff. It says that the State is vicariously liable for the acts and omissions of Dr Sutton.

The plaintiff says that it has suffered loss and damage as a result of the closure orders, including from destroyed food products, the costs of carrying out a required testing program, loss of food and pre-bought stock, losses of revenue from contracts with existing customers, and the loss of an opportunity to form a joint venture from which the plaintiff expected to generate income.

The plaintiff’s pleadings place particular significance on the actions of two individuals alleged to have been involved in the processes undertaken in February 2019 concerning the closure orders. Ms Elizabeth Garlick and Ms Leanne Johnson are identified as officers of the COGD, environmental health officers (‘EHOs’) appointed under s 29 of the Public Health and Wellbeing Act 2008 (Vic) and authorised officers under the Food Act. The plaintiff pleads that both Ms Garlick and Ms Johnson were agents of DHHS and/or COGD, and were acting with the authority or implied authority of one or both of those entities at relevant times.

The ASOC contains allegations that on 18 February 2019, Ms Garlick conducted an inspection of the plaintiff’s premises in her capacity as an authorised officer and an agent of DHHS and/or COGD. The plaintiff alleges that during that inspection, Ms Garlick did not wear a body camera and that she planted a live slug on the premises. Ms Garlick is alleged to have provided a written and oral report of her inspection to Ms Johnson, including telling Ms Johnson that she found a slug on the site.

As a result, the plaintiff alleges that Ms Johnson determined that the plaintiff’s premises was not fit for food production, directed that Ms Garlick serve certain orders under the Food Act on the plaintiff, and considered that she would need to inspect the plaintiff’s premises herself. The plaintiff identifies a number of complaints about the appropriateness of these orders and identifies what it says are a series of errors in the orders served on 18 February 2019 in an annexure to the ASOC.

The plaintiff alleges that Ms Garlick and Ms Johnson inspected the premises on 20 and 21 February 2019. On 21 February 2019, Ms Johnson is alleged to have informed the plaintiff that DHHS had issued a request for the plaintiff’s premises to be closed, and that it was COGD’s responsibility to be able to demonstrate that the plaintiff’s food was safe.

Further, the plaintiff alleges that in February 2019 Ms Johnson and/or Ms Garlick gave DHHS copies of certain documents, including a Food Safety Audit Report dated 3 September 2015 (‘2015 Audit Report’). This report identified a number of deficiencies in the plaintiff’s operations. The plaintiff alleges that the use of the 2015 Audit Report was false or misleading in that the deficiencies identified had been remedied subsequently, and a 2017 report found that the plaintiff’s operations were compliant with applicable requirements.

The plaintiff alleges that on 21 February 2019 Ms Johnson informed DHHS that she had attended and inspected the plaintiff’s premises and found a number of identified faults with the plaintiff’s food safety practices. Ms Johnson is alleged to have told DHHS that a closure order should be served on the plaintiff, preventing the production of all food at its premises.

The plaintiff contends that Ms Johnson’s statements on 21 February 2019 were false or misleading, as it says the specific complaints identified were not true, and there was no good reason to completely close the plaintiff’s premises in the circumstances.

The plaintiff alleges that Dr Sutton relied upon or was influenced by the orders issued on 18 February 2019 by COGD, the 2015 Audit Report, and/or Ms Johnson’s statements to DHHS on 21 February 2019, in deciding to issue the orders made on 21 and 23 February 2019.

Ultimately, the plaintiff pleads that in taking these actions both Ms Johnson and Ms Garlick acted maliciously and/or with the intention of closing down the plaintiff’s premises regardless of the safety or suitability of food produced there, and/or with the intention of closing down the plaintiff’s premises to reduce competition in the market for Community Chef. The plaintiff pleads that COGD and/or the DHHS are vicariously liable for the acts and omissions of Ms Johnson and Ms Garlick.

Both defendants deny the plaintiff’s allegations that they have committed any tort and that the plaintiff has suffered loss or damage as a result.

The proposed amendments

The amendments proposed to be made by the plaintiff have undergone several changes over the course of this application, including part-way through the hearing. It is apparent that the proposed further amended statement of claim has by now progressed through a number of iterations and has been the subject of detailed prior correspondence between the parties. The final version of the amendments proposed is contained within a draft pleading exhibited to an affidavit of the plaintiff’s solicitor sworn 7 March 2022.

The proposed pleading contains a number of changes ranging from the minor to the significant. Many of these were not opposed or are not in contention in this application. The amendments that are of particular relevance to the issues required to be determined currently are as follows:

(a) a new paragraph 1B, pleading the identities of COGD’s CEO and members of its Audit Advisory Committee (‘AAC’).

(b) amendments and new paragraphs between 5-5C, pleading (amongst other matters) that:

(i) two members of COGD’s AAC were also members of Community Chef’s AAC;

(ii) Community Chef was a business name registered to RFK Pty Ltd, the directors of which included two members of COGD’s AAG and the shareholders of which included Regional Kitchen Pty Ltd and the Greater Dandenong City Council; and

(iii) Regional Kitchen Pty Ltd’s directors included two members of COGD’s AAC, and its shareholders included the Greater Dandenong City Council;

(c) an addition to the particulars to paragraph 27.3 (in which the plaintiff alleges that to the knowledge of DHHS, COGD was in a position of conflict when the orders were made), alleging that Dr Sutton had a telephone conversation with Mr Bennie in which the latter stated that he was on the boards of RFK Pty Ltd and Community Chef, and that one of these entities was a competitor to the plaintiff;

(d) a new paragraph 41A alleging that at all material times Ms Garlick and Ms Johnson knew “all or some of the matters set out in paragraphs 1B, 4, 5, 5A, 5C and 5D” of the proposed amended statement of claim. Proposed paragraphs 1B, 5A and 5C are summarised above. Paragraphs 4 and 5 allege (amongst other things) that Community Chef was the plaintiff’s main market competitor, that it was established by several local councils including COGD, and that Mr Bennie was a member of its board. The reference to paragraph 5D appears to be an error, as no such paragraph exists in the proposed pleading;

(e) particulars to proposed paragraph 41A as to how Ms Garlick and Ms Johnson are said to have known those matters, being that:

(i)Community Chef operated a receiving kitchen in Keysborough, for which COGD was the registerable authority. As part of her role, Ms Johnson would have signed off on the relevant registration;
(ii)Community Chef manufactured food from premises in Altona, for which the registerable authority was the Hobsons Bay City Council. Mr Gareth Little-Hales was previously employed by that council as an environmental health officer, and he accompanied Ms Garlick on her inspections of the plaintiff’s premises on 19 and 22 February 2019, during which he was recorded speaking with Ms Garlick and comparing the plaintiff to Community Chef;
(iii)Ms Johnson was copied in on an email sent on 20 February 2019 by an employee of COGD to its Chief Executive Officer and others, which included an earlier email from the Chief Executive Officer on 19 February 2019 (which the evidence in this application indicated was not sent to Ms Johnson at the time);
(iv)Ms Johnson was in attendance for the telephone conversation referred to at sub-paragraph (c) above, in which Mr Bennie identified his role in Community Chef and RFK Pty Ltd to Dr Sutton and that Community Chef or RFK Pty Ltd was a competitor to the plaintiff; and
(v)Ms Garlick worked under the supervision of Ms Johnson at all material times;

(f) amendments to allegations of misfeasance in public office made against Ms Johnson and Ms Garlick in paragraphs 65.3(b) and 66.3(b), concerning their provision of the various reports and orders that led to the closure orders being made. In relation to the existing allegation that one of the relevant mental states held by Ms Johnson and Ms Garlick was an intention to close the plaintiff’s premises in order to reduce competition in the market for Community Chef, particulars are proposed to be added that refer to and repeat the matters included in proposed paragraph 41A (which are summarised in the preceding paragraph); and

(g) a new cause of action alleging misfeasance in public office by Ms Johnson and Ms Maloney concerning their alleged interference in the audit process that is the subject of the auditor proceeding. Given its prominence in the present application, and the fact that the amendments in this regard were strongly opposed, it is necessary to describe this in more detail.

The proposed new cause of action is contained within a new section of the pleading, headed ‘Interference with Independent Auditor’s Report’, which contains new paragraphs 70-94. These paragraphs set out the new claim against the defendants, which is broadly aligned with the subject-matter of the auditor proceeding. After identifying the requirement for a full food safety audit arising under the 23 February 2019 orders, and the nature and obligations alleged to have applied to an auditor for this purpose (in particular, an obligation of independence), the plaintiff pleads that:

(a) Mr Buckett carried out a full food safety audit of the plaintiff’s premises and processes on or about 27 February 2019;

(b) in late February 2019, Ms Garlick and/or Ms Johnson contacted Mr Buckett to give him a “heads up” (the contents of which are not described);

(c) on about 27 February 2019, Mr Buckett provided Mr Cook with a ‘draft’ food safety audit report, and on about 2 March 2019 he provided a copy of a ‘final’ food safety audit report;

(d) on about 8 March 2019 Mr Buckett provided the plaintiff with a notice to correct non-conformances;

(e) on about 8 March 2019, Mr Buckett and Ms Maloney discussed the report;

(f) on about 12 March 2019, Ms Maloney sought an update from Mr Buckett about the notice of 8 March 2019 and/or the audit report;

(g) on about 12 March 2019, Mr Buckett provided Ms Johnson and Ms Maloney with copies of draft notices addressed to the plaintiff, and asked Ms Johnson and Ms Maloney whether any changes were required to the documents before they were finalised; and

(h) on 14 March 2019, Mr Buckett provided revised versions of the documents to Ms Johnson and Ms Maloney which were different to and less favourable to the plaintiff than the previous versions.

Based on this sequence of events, the plaintiff pleads that it can be inferred that Ms Maloney and/or Ms Johnson were provided with a copy of the report dated 2 March 2019 and/or the notice dated 8 March 2019, that they undertook a review of one or both documents and suggested that changes be made, and that Mr Buckett incorporated the amendments they suggested into the versions ultimately produced on 14 March 2019.

The plaintiff alleges that in reviewing the documents, Ms Maloney was acting in her capacity as an officer of DHS and Ms Johnson as a COGD officer and/or as an agent for DHHS, and that both were acting in the purported discharge of their public duties. Further, it is alleged that the review they undertook was an invalid exercise of their power or position, because an audit conducted by an approved auditor such as Mr Buckett must be independent.

Ultimately, the plaintiff alleges that in conducting their review of the documents, Ms Maloney and/or Ms Johnson acted maliciously and/or with the intention of keeping the plaintiff’s premises closed regardless of the safety or suitability of its food. In respect of Ms Johnson, the plaintiff also includes the alternative allegation that she intended to keep ICF’s premises closed in order to reduce competition for Community Chef. The particulars to these allegations refer to the paragraphs describing the events and email correspondence summarised in paragraph 32 above, and a file note alleged to have been prepared by Ms Johnson of a telephone conversation she had with Ms Maloney on 8 March 2019 in which they are alleged to have “agreed that they needed to protect Buckett”. In addition, concerning the allegation that Ms Johnson acted to reduce competition for Community Chef, the particulars also include reference to the ‘knowledge’ matters proposed to be included at paragraph 41A.

The plaintiff pleads in the alternative that in carrying out their review of the documents Ms Maloney and/or Ms Johnson were recklessly indifferent as to whether their actions were beyond power and/or conducted for an improper purpose, and as to the likelihood that their review would cause harm to the plaintiff.

As a result of the notices issued on 14 March 2019, the plaintiff says that its business was closed down for longer than two weeks (which it appears would have been the time over which the premises would have been shut down had the previous version of the notice prepared by Mr Buckett been operative). The plaintiff alleges that Ms Johnson and/or Ms Maloney thereby caused loss and damage to the plaintiff by undertaking their review of Mr Buckett’s documents, being the loss and damage arising beyond two weeks after the service of a notice by Mr Buckett, and that the defendants are vicariously liable for their conduct.

By the conclusion of the parties’ submissions at the hearing of the application, there are broadly three categories of amendments proposed by the plaintiff that were still opposed, and which are to be determined by this application:

(a) the addition of the new cause of action alleging misfeasance in public office by Ms Johnson and Ms Maloney in relation to the audit conducted by Mr Buckett (which for convenience I will refer to as the ‘auditor interference claim’);

(b) the new paragraph 41A, and its particulars, alleging knowledge of the overlap in management between COGD and Community Chef, and the addition of particulars to paragraphs 65.3(b) and 66.3(b) (alleging that Ms Johnson and Ms Garlick acted with an intention to reduce competition in the market for Community Chef) referring to that paragraph; and

(c) changes and additions in paragraphs 1B and 5-5C, setting out details of the alleged relationship, and overlap in management between, COGD and Community Chef (which for convenience I will refer to as the ‘management overlap allegations’).

Applicable principles

The parties were not in substantial disagreement as to the legal principles applicable to the plaintiff’s application.

The application is made pursuant to r 36.01(1) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’), which provides that:

(1) For the purpose of—
(a)determining the real question in controversy between the parties to any proceeding; or
(b) correcting any defect or error in any proceeding; or
(c) avoiding multiplicity of proceedings—

the Court may, at any stage order that any document in the proceeding be amended or that any party have leave to amend any document in the proceeding.

The principles identified by the parties of relevance to the present application, which were not relevantly in dispute, include those referred to by Connock J in Allmine Group v Walkem (‘Allmine Group’)[1] including that:
[1][2021] VSC 125, [32]-[33] (‘Allmine Group’).

(a) the Court is required to “consider whether the proposed amendments facilitate the identification of the real issues in dispute and the just resolution of the proceeding”;[2]
[2]Cargill Australia Ltd v Viterra Malt Pty Ltd (No 18) [2018] VSC 722 [32].

(b) an amendment that is futile because it is obviously bad in law, or which would be liable to be struck out because it is defective if it had been contained in an original pleading, will not be permitted;[3]

(c) a relevant consideration in exercising the discretion to grant leave to amend is whether the proposed amendment would have no real prospect of success at trial, within the meaning of s 63 of the Civil Procedure Act.

(d) the Court must have regard to the provisions of the Civil Procedure Act, and the factors identified in the decision in Aon Risk Services Australia v Australian National University.[4]

[3]ABL Nominees Pty Ltd v Mackenzie (No 2) [2014] VSC 529 [17]-[22], citing Commonwealth v Verwayen (1990) 170 CLR 394 and Hordon v Jones (No 2) (1939) 39 SR NSW 305.

[4](2009) 239 CLR 175 (‘Aon Risk’).

The plaintiff placed emphasis on the statement of Connock J in Allmine Group that “absent extraordinary circumstances, leave to amend will be granted” and that after the Aon Risk decision, “the primary question still remains: what do the interests of justice dictate?”

Much of the application turned on the question of whether the disputed aspects of the plaintiff’s proposed amendments had been properly pleaded. The requirements and functions of pleadings have been identified in detail by John Dixon J in Wheelahan v City of Casey (No 12).[5] In the context of the present application, the following of his Honour’s comments are of particular relevance:
[5][2013] VSC 316 [25].

(b) the function of a pleading in civil proceedings is to alert the other party to the case they need to meet (and hence satisfy basic requirements of procedural fairness) and further, to define the precise issues for determination so that the court may conduct a fair trial;
(c) the cardinal rule is that a pleading must state all the material facts to establish a reasonable cause of action (or defence). The expression ‘material facts’ is not synonymous with providing all the circumstances. Material facts are only those relied on to establish the essential elements of the cause of action;
(d) as a corollary, the pleading must be presented in an intelligible form – it must not be vague or ambiguous or inconsistent. Thus a pleading is ‘embarrassing’ within the meaning of r 23.02 when it places the opposite party in the position of not knowing what is alleged;
(e) the fact that a proceeding arises from a complex factual matrix does not detract from the pleading requirements. To the contrary, the requirements become more poignant;
(f) pleadings, when well-drawn, serve the overarching purpose of the Civil Procedure Act 2010 (Vic);

…
(h) it is not sufficient to simply plead a conclusion from unstated facts. In this instance, the pleading is embarrassing;
(i) every pleading must contain in a summary form a statement of all material facts upon which the party relies, but not the evidence by which the facts are to be proved (r 13.02(1)(a));

…
(k) particulars are not intended to fill gaps in a deficient pleading. Rather, they are intended to meet a separate requirement – namely, to fill in the picture of the plaintiff’s cause of action (or defendant’s defence) with information sufficiently detailed to put the other party on guard as to the case that must be met. An object and function of particulars is to limit the generality of a pleading and thereby limit and define the issues to be tried.

In relation to the specific pleading requirements for a claim alleging a misfeasance in public office, submissions focused on the line of reasoning originating from the reasons of Lord Millett in Three Rivers District Council v Bank of England (No 3):[6]

It is well established that fraud or dishonesty (and the same must go for the present tort [misfeasance in public office]) must be distinctly alleged and as distinctly proved; that it must be sufficiently particularised; and that it is not sufficiently particularised if the facts pleaded are consistent with innocence [citations omitted]. This means that a plaintiff who alleges dishonesty must plead the facts, matters and circumstances relied on to show that the defendant was dishonest and not merely negligent, and that facts, matters and circumstances which are consistent with negligence do not do so.
It is important to appreciate that there are two principles in play. The first is a matter of pleading. The function of pleadings is to give the party opposite sufficient notice of the case which is being made against him. If the pleader means “dishonestly” or “fraudulently”, it may not be enough to say “wilfully” or “recklessly”. Such language is equivocal. A similar requirement applies, in my opinion, in a case like the present, but the requirement is satisfied by the present pleadings. It is perfectly clear that the depositor are alleging an intentional tort.
The second principle, which is quite distinct, is that an allegation of fraud or dishonestly must be sufficiently particularised, and that particulars of facts which are consistent with honesty are not sufficient. This is only partly a matter of pleading. It is also a matter of substance. As I have said, the defendant is entitled to know the case he has to meet. But since dishonesty is usually a matter of inference from primary facts, this involves knowing not only that he is alleged to have acted dishonestly, but also the primary facts which will be relied upon at trial to justify the inference. At trial the court will not normally allow proof of primary facts which have not been pleaded, and will not do so in a case of fraud. 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. There must be some fact which tilts the balance and justifies an inference of dishonesty, and this fact must be both pleaded and proved.[7]

[6][2003] 2 AC 1 (‘Three Rivers’).

[7]Ibid [184]-[186].

Lord Millett’s reasons emphasise that the requirement for specific and sufficient particularisation of allegations of dishonesty complements the requirement of pleadings more generally to ensure parties know the case they have to meet. Following discussion of two proceedings in which fraud or dishonesty were alleged (albeit in one case equivocally), but where the particulars pleaded by the plaintiffs had been consistent with innocence or honest incompetence, Lord Millett further stated:

“It is not, therefore, correct to say that if there is no specific allegation of dishonesty it is not open to the court to make a finding of dishonesty if the facts pleaded are consistent with honesty. If the particulars of dishonesty are insufficient, the defect cannot be cured by an unequivocal allegation of dishonesty.”[8]

[8]Ibid [189].

Lord Millett’s reasoning approach has been cited in a number of more recent authorities. In Pharm-A-Care Laboratories Pty Ltd v Commonwealth & Ors, Flick J stated:[9]

The allegation that a public officer has so abused his office that his conduct constitutes the tort of misfeasance is, self-evidently, a serious allegation. It is an allegation which should be pleaded with sufficient detail that the public officer knows the case being mounted against him.
…
A pleading which alleges a particularly serious matter needs to be pleaded specifically. The example frequently given is that of fraud. Such an allegation must be pleaded precisely: Rajski v Bainton (1990) 22 NSWLR 125 at 135 (Rajski) per Mahoney JA. The reasons for this are obvious — if a person is to be charged with doing or writing something which will involve serious consequences, the person is not to be condemned casually or by “inexact proofs, indefinite testimony, or indirect inferences”: Rajski at 135 per Mahoney JA (citing Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; [1938] ALR 334). And charges of this kind are not to be made unless the person who makes them, in a pleading or otherwise, is satisfied that there is expected to be available the evidence to prove them.

The same approach in respect to the need for specificity in pleadings has been applied in the context of misfeasance: Three Rivers District Council v Bank of England (No 3) [2003] 2 AC 1; [2001] 2 All ER 513; [2001] UKHL 16 (Three Rivers).[10]

[9][2010] FCA 361.

[10]Ibid [66]-[69].

In relation to the manner in which misfeasance allegations are set out, Flick J stated that:

In so far as the submission is made on behalf of the individual respondents that the amended statement of claim impermissibly pleads conclusions rather than material facts, it may be accepted that a pleading which does no more than plead a conclusion and which does not put a respondent in a position where he knows the case he has to meet may be struck out: Charlie Carter Pty Ltd v Shop, Distributive and Allied Employees’ Association (WA) (1987) 13 FCR 413.[11]

[11]Ibid [98].

His Honour concluded that, despite deficiencies in the pleading in question, the document adequately informed the respondents to the proceeding as to the allegations they would need to meet.[12] In doing so, the approach taken by Flick J was to consider the specific allegations in the context of the pleading as a whole, rather than considering them in isolation.[13] Having identified that the pleading satisfied the requirements identified, his Honour also noted the interest in having such serious allegations as misfeasance in public office able to proceed to be determined at trial:

The seriousness of the allegations of misfeasance made against each of the individual respondents must constantly be borne in mind — it is the very seriousness of those allegations which dictates that the respondents must be properly informed of the case they have to meet. But once a conclusion has been reached that the allegations sufficiently identify the claims being advanced, it is the very seriousness of the allegations which dictates that those allegations must be allowed to proceed to a final and public hearing.[14]

[12]Ibid; see, eg, [129].

[13]Ibid; see, eg, [100].

[14]Ibid [131].

Soon after that decision, Kenny J determined an application concerning the adequacy of pleadings in Polar Aviation Pty Ltd v Civil Aviation Safety Authority (No 4).[15] Her Honour similarly considered the relevant sections of the pleading in this matter within the context of the pleading as a whole.[16]
[15][2011] FCA 1126 (‘Polar Aviation’).
[16]Ibid see, eg, [42], [114].

In this proceeding, the approach taken by the pleading was considered to be that the mental element of the tort could be “inferred from the sequence of instances of conduct allegedly beyond power”.[17] Her Honour considered that the particulars relied upon were deficient, as they failed to satisfy the second element identified by Lord Millet in Three Rivers:

assuming that the particulars give the respondents sufficient notice of the case that the applicants seek to make against them, nonetheless the particulars are consistent with an honest motivation on CASA’s and its officers’ part. The particulars in question might be relied on to justify an inference of a deficient administrative process (compare: Polar (No 2) at [87], [90]), but they do not support an inference that the respondents did any particular act with knowledge that it was beyond power and, even less, that the respondents did any such act intending to cause harm to the applicants or with reckless indifference.
I accept that, as senior counsel for the respondents submitted at the hearing, the FASC contemplates that the intention to bring about harm to the respondents, or reckless indifference, is to be inferred from the respondents’ knowledge of the limits of their powers and of the likely consequences of their conduct, irrespective of their motivation. I further accept that, as senior counsel for the respondents submitted, this is too great a leap. It is too great a leap because the challenged conduct was done pursuant to statutory powers and functions; and, in this context, without more, the conduct (and therefore the particulars) are consistent with an honest, good faith (though possibly deficient) exercise of power. As CASA put it in its written submissions, “[t]he critical element of intention is instead alleged to rest only upon an inference drawn from the position and experience of the respondents and the ubiquitous ‘pattern of conduct’”.[18]

[17]Ibid [114].

[18]Ibid [116]-[117].

Her Honour ultimately concluded that in this matter:

The deficiency in the applicants’ pleading of misfeasance in public office is not so much a failure to put the respondents on notice as to the manner in which they are said to have abused their public office, but rather a failure to particularise states of mind that would allow the applicants to prove at trial actionable misfeasance in public office.[19]

[19]Ibid [120].

More recently, Mortimer J considered pleading requirements in a misfeasance in public office claim in Plaintiff M83A/2019 v Morrison (No 2).[20]
[20][2020] FCA 1198 (‘Plaintiff M83A’).

In the course of these reasons, Mortimer J addressed the potential tension that exists between the stringent pleading requirements for claims alleging misfeasance in public office and the undesirability of applying a near-impossibly high barrier to claims alleging governmental misconduct from being pursued:

“The gravity of the foundational allegations in this proceeding should be recognised, but not to the point where an impression of some kind of presumptive immunity from such allegations is created. The rule of law in Australia applies to the conduct of officers of the Commonwealth, including Ministers, as it applies to every other person subject to it. That said, the rule of law also requires a properly articulated factual basis for contraventions of the law, especially contraventions involving lack of honesty.”[21]

[21]Ibid [68].

As to the pleading requirements applicable to this cause of action, Mortimer J observed that modern case management approaches do not detract from the requirement to ensure that pleadings serve their essential function:

“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 [1999] FCA 499; [1999] ATPR 41-691 at 42,827-42,829, and von Doussa J in Beach Petroleum NL v Johnson [1991] FCA 839; 105 ALR 456 at 466. Flexibility in the Court’s approach does not equate to tolerance of pleadings which fail to fulfil those basic functions.”[22]

[22]Ibid [89].

Of particular relevance to the present application is the principle identified in this line of authority that the tort will not be made out where the allegations are consistent with an honest attempt by the public officer in question to discharge their functions.[23] The approach taken to the pleading in Plaintiff M83A was similar to that discussed in Polar Aviation, and her Honour reached a similar conclusion to Kenny J:

“Finally, in terms of flaws in the applicants’ case on the critical state of mind element in misfeasance, the authorities are clear that misfeasance will not be established where there is an alternate hypothesis consistent with an honest exercise of power. As the extract … above indicates, and as might be expected for a tort dependent on establishing a deliberate state of mind in a respondent, there is no difficulty in framing a case in misfeasance by reference to inferences, provided a sufficient factual basis for the inferences is pleaded. While in Three Rivers Lord Millett described what is necessary for the tort to be proved at trial, he also made the point that the pleading must identify the primary facts to be proved. This basic level of symmetry between pleading and proof is fundamental. Without it, there is nothing but baseless speculation.
The same point was made by the Full Court in Fernando at [126]. As the stepping through of the FASOC example … above indicates, and not unlike the situation in Polar Aviation (No 4) (see [114]) it appears that the highest the applicants can put their case of misfeasance is that the requisite state of mind for each of the individual respondents can be inferred from the fact (assuming it to be proved) that the conduct of the Commonwealth officers was beyond power. That falls far short of what must be pleaded and proved. At this level, the allegations are also consistent with an honest motivation on behalf of the individual respondents: see Polar Aviation (No 4) at [116]. There is nothing pleaded which, to use Lord Millett’s phrase, “tilts the balance” towards dishonesty.”[24]

[23]C.f. Northern Territory & Ors v Mengel & Ors (1995) 185 CLR 307 per Brennan J at [10].

[24]Plaintiff M83A/2019 v Morrison (No 2) [2020] FCA 1198 [115]-[116].

Noting again the tension between the pleading requirements and the risk of an unreasonable onus being placed on applicants seeking to bring claims alleging misfeasance, given the imbalance in information that may exist between an individual plaintiff and a government respondent, Mortimer J concluded:

“… If this had been a judicial review proceeding, or even perhaps a negligence proceeding, the imbalance may well have explained some omissions of specific factual allegations in a pleading, or levels of generality which might appear at first glance impermissible.
The difficulty in applying such an argument to the FASOC as it stands lies in the seriousness of an allegation of misfeasance in public office, and in the elements which must be proven (and therefore alleged) to establish the tort. As I have attempted to explain, the absence of any information capable of providing a probative basis for alleging the requisite state(s) of mind for misfeasance in each of the individual respondents is a flaw which cannot be answered by the aspirational contention that something may emerge during discovery.”[25]
[25]Ibid [125]-[126].

The parties’ submissions
The plaintiff’s submissions

The plaintiff noted the principles identified by Connock J in Allmine Group identified above, observing his Honour’s comments that “absent extraordinary circumstances, leave to amend will be granted” and submitting that even after the decision in Aon Risk the primary question remains what the interests of justice dictate.

The plaintiff submitted that the amendments proposed will facilitate the identification of the real issues in dispute. The plaintiff’s position is that the events in the weeks following the issue of the February 2019 closure orders, including the events that are the subject matter of the auditor proceeding, are relevant to establishing the mental state element of its misfeasance in public office claim.

Further, the plaintiff submitted that the amendments proposed would not cause any prejudice to the defendants that could not be cured by a costs order, and that they would be unlikely to add to the volume of discovery required, or witnesses to be called, in the proceeding. It says that the issues covered by the proposed amendments were only made plain after receipt of the defendants’ discovery.

The plaintiff submitted that the proposed amended pleading has a proper basis and is not defective or liable to be struck out. In the circumstances, the plaintiff contends that a grant of leave to file and serve the amended pleading is consistent with the overarching purpose of the Civil Procedure Act, in that the amendments assist in elucidating the real issues in dispute, and that allowing full scope of the dispute (that is, the issues arising from events both up to and including, and after, the issue of the February notices) to be dealt with at once will facilitate the timely and cost-effective resolution of the dispute by avoiding multiplicity.

In response to submissions made in opposition to its application, the plaintiff contended that the requisite state of mind of Ms Garlick and Ms Johnson (in relation to the auditor interference claim) had been properly particularised. It says that those individuals’ awareness of Community Chef’s role and relationship has been adequately particularised in the particulars to proposed paragraph 41A (summarised at paragraph 31(e) above).

In relation to the allegations of those individuals’ intention to reduce competition for Community Chef, the plaintiff noted that it had been accepted in the authorities that dishonesty is ordinarily established as a matter of inference, and that it is unsurprising that there is no specific piece of evidence available in which Ms Garlick or Ms Johnson state directly that this was their goal. The plaintiff submits that such an intention is nonetheless able to be inferred from a number of facts which it seeks to plead in its proposed further amended statement of claim, and that a similar position arises in relation to the allegations concerning interference with the audit in March 2019.

The plaintiff contended that the issues that had arisen in this application are properly matters for trial, and should be determined by the trial judge in that setting rather than in the course of this application. It says that the proposed pleading is not defective and should therefore be allowed to proceed, so that this can occur.

The State’s submissions

The State submitted that the requirements for pleading a cause of action of misfeasance in public office have not been met, and that as a result the proposed amendments concerning the auditor interference claim should not be allowed. Its position was that the allegations raised by the plaintiff are serious, and accordingly must be pleaded with sufficient specificity that the individuals concerned know the case being put against them.

In relation to the proposed amendments concerning Ms Maloney, the State submitted that the plaintiff’s reliance on the file note of 8 March 2019 (referred to above at paragraph 35, and discussed further below) was insufficient. It is a document alleged to have been made by another person, and makes no reference to the closure of the plaintiff’s premises or anything else consistent with the mental state alleged (being malice or an intention to keep the premises closed regardless of whether food produced there was unsafe or unsuitable).

The State further noted that the conduct complained of, defined in the proposed pleading as ‘the Review’ by Ms Maloney and Ms Johnson of the auditor’s 2 and 8 March 2019 documents, amounted effectively to those individuals reading the two documents. The State noted that no power to impact the closure order made in February was alleged by this pleading, and that the closure order itself defines when it ceases to be operative.

In reply to the plaintiff’s submissions, the State observed that the plaintiff’s proposed ‘auditor interference’ pleading depends on a series of inferences:

(a) that the 2 and 8 March 2019 versions of documents were provided to Ms Maloney;

(b) that Ms Maloney reviewed those documents;

(c) that Ms Maloney suggested alterations to those documents to Mr Buckett, and that he in fact made those changes in the 14 March 2019 versions; and

(d) that Ms Maloney undertook those actions with the malicious intention of keeping the plaintiff’s premises closed.

The State submitted that the facts and particulars relied upon by the plaintiff are not capable of supporting those inferences, and that the underlying documents referred to by the parties in fact provide a clear explanation for what occurred that is inconsistent with the plaintiff’s case.

Ultimately, it was submitted that it is not sufficient for the plaintiff to raise only a ‘vague inference’, in circumstances where the underlying documents not only fail to support the plaintiff’s propositions but in fact provide an explanation of events that is inconsistent with the misfeasance alleged. In such circumstances, the State submitted that the authorities make clear that the pleading is impermissible.

The State further suggested that the plaintiff’s proposed amendments were only formulated after its previous application for a consolidated or concurrent trial with the auditor proceeding was dismissed, with an apparent intention to renew that application once it had established a greater degree of overlap between the two claims. It disputed the plaintiff’s contention that the new matters sought to be raised had only become clear following discovery. In note that in light of the conclusions I have reached about the substance of the proposed pleading, it has not been necessary for me to draw any conclusions about this issue.

COGD’s submissions

COGD opposed leave being granted in relation to the categories of amendments identified in paragraph 38 above (the auditor interference claim, the ‘knowledge’ paragraph and particulars, and management-overlap allegations).

Consistently with the approach taken by the State, COGD submitted that allegations alleging serious matters such as dishonesty or misfeasance in public office are not to be lightly made, and must be pleaded with precision and sufficient supporting particulars.

In particular, relying on the reasoning emanating from the decision of Lord Millet in Three Rivers, COGD submitted that a pleading that asserts particulars of facts that are consistent with a honest discharge of the public officer’s functions will not be sufficient to support an allegation of misfeasance in public office.

In relation to the allegations of knowledge proposed by the plaintiff in paragraph 41A, COGD submitted that despite the grave nature of the allegations raised against Ms Johnson and Ms Garlick, the insufficiency of the pleadings was ‘remarkable.’ COGD considered that it was not apparent that the particulars proposed in relation to Ms Garlick’s knowledge are borne out by the evidence referred to (a recording of body-worn camera footage), and that in any event, it is apparent that the particulars to proposed paragraph 41A do not support the assertion made in that paragraph that both Ms Garlick and Ms Johnson knew some or all of the facts pleaded concerning the management-overlap allegations.

Concerning the use of paragraph 41A in proposed particulars to paragraphs 65.3(b) and 66.3(b) (which allege that the relevant mental state of Ms Garlick and Ms Johnson was an intention to close the plaintiff down in order to reduce competition for Community Chef). COGD submitted that the particulars and the reference to paragraph 41A are insufficient to support the allegations made, as:

(a) first, paragraph 41A alleges that Ms Garlick and Ms Johnson knew “some or all” of the facts relating to the management-overlap allegations, but does not identify which;

(b) the particulars to paragraph 41A do not in fact establish that Ms Garlick knew any of those matters: at most could be said that she was aware that the plaintiff and Community Chef were commercial competitors at 19 February 2019, after she had already commenced the conduct alleged by the plaintiff with the intention of closing the plaintiff’s premises; and

(c) in relation to Ms Johnson, the particulars to paragraph 41A similarly do not establish that she knew of those matters, beyond establishing that on 21 February 2019 she was aware that the plaintiff and Community Chef were in commercial competition, and that COGD’s CEO was involved in Community Chef.

COGD submitted that without appropriate particularisation, the allegations in paragraphs 65.3(b) and 66.3(b) are scandalous and without foundation, and would be liable to be struck out.

In relation to the auditor-interference claim, COGD also submitted that the allegations made are very serious and they do not withstand scrutiny. Similarly to the State’s submissions, it said that the facts relied upon by the plaintiff did not arise following discovery, and referred to media articles indicating that the plaintiff was aware of at least some such matters considerably earlier.

Concerning the inferences that the plaintiff says could be drawn, COGD noted that while it is alleged that Ms Johnson undertook a review of the earlier version of the audit report, there are no facts pleaded in support of the precursor allegation that Ms Johnson was in fact provided with that document. The only particularised allegation concerning the provision of documents by Mr Buckett is found several paragraphs earlier in the proposed pleading, to the effect that on 12 March 2019 Mr Buckett sent “draft notices” to Ms Johnson and Ms Maloney asking whether any changes were required to the documents before they were finalised. COGD submitted that the documents that were forwarded by Mr Buckett on 12 March 2019 did not include the 8 March 2019 notice, and did not include the matters identified by the plaintiff as making the document less favourable to it.

Moreover, COGD contended that it was apparent on the face of the documents referred to that the 8 March 2019 version of the notice was amended after the receipt of new information on 8 and 10 March 2019, and there is no allegation in the proposed pleading that there was any communication between Mr Buckett and Ms Johnson between 8-12 March 2019.

In relation to the particulars of the mental state alleged by the plaintiff, COGD submitted that the only matters raised by the plaintiff in support of its case are the file note of 8 March 2019 containing the phrase “need to protect G. Bucket [sic]” and the allegation of Ms Johnson’s knowledge of the overlap in executives/management between COGS and Community Chef. COGD submitted that this was an inadequate basis to support the serious allegation made.

Further, COGD submitted that it is apparent from the proposed pleading that the plaintiff has no evidence to support the allegation that Ms Johnson reviewed and suggested amendments to the 8 March 2019 documents. The plaintiff’s claim is dependent on an inference that this occurred, however no evidence in support of this allegation is present in the second defendant’s discovery, and no factual matters to support this inference are pleaded.

Similarly, COGD submitted that no adequate particulars are provided to support the assertion contained within the proposed pleading that Ms Johnson was recklessly indifferent as to whether the review of the 8 March 2019 documents was beyond her power, and/or conducted for an improper purpose, and as to the likelihood that the review would cause harm to the plaintiff. COGD notes that the particulars provided to this allegation repeat the particulars to the ‘knowledge’ allegation in proposed paragraph 41A, and to the mental state allegation concerning the alleged interference with Mr Buckett’s audit, including the 8 March 2019 file note.

COGD also submitted that the paragraphs setting out the management-overlap allegations are unnecessary and irrelevant if the plaintiff is not granted leave to make the other amendments discussed, and therefore they also should not be permitted.

The evidence

As the parties’ arguments concerning the appropriateness of the ’auditor interference’ cause of action relied heavily on the documentary evidence said to found, or undermine, the inferences that the plaintiff says should be drawn, it is necessary to consider this material in some detail. Regrettably the evidence relevant to this application was spread across a number of affidavits, so it is helpful to consider the consolidated chronology that these materials form, as below.[26]
[26]Where text is quoted it is taken from the source documents exhibited to affidavit material relied upon in this application, with the omission of some line-breaks in longer email passages where these do not appear to be material to the interpretation of the email.

Chronology
18 February 2019

The ASOC identifies that Ms Garlick attended an inspection of the plaintiff’s premises on this date. [27]
[27]ASOC at [42].

The plaintiff identified a file note alleged to have been prepared by Ms Garlick on or around this date.[28] At least some aspects of the document appear likely to have been prepared on or after 19 February 2019 given the record of emails and communications on that date. It does not appear that the precise date is of significance to the present application, however. The document appears to record certain events occurring around that time following the identification of the potential link to the Knox Hospital food poisoning. It appears to contain handwritten notes on its second page referring to checking a previous audit, notifying the council and the auditor, and then contains several statements at the bottom of the page preceded by asterisks, which appear to read:
[28]Affidavit of Maxwell Godfrey Curtis sworn 25 February 2022, 11-12.

“* include discussion in statement about the flooding outside that came in and went beneath the slab – check if this is already in there
* Audit Report -> does this support the ‘knowingly’ component of section 8 of Act?
* Can we get a closure order enforced by magistrate?
Under Public Health + Wellbeing Act
Prohibition Notice?
Anything from Planning Compliance to stop them operating?”

19 February 2019

The ASOC identifies that on this date Ms Garlick attended the plaintiff’s premises to serve Food Act orders.[29]
[29]ASOC at [47].

A transcript of body camera footage taken on this date is said to record a conversation between Ms Garlick, Mr Cook and Mr Little-Hales. The discussion apparently contains a reference to Community Chef as another entity producing food that “took business off” ICF.[30] The submissions made in this application indicate that the content of this recording is likely to be in dispute at the trial of the proceeding.

20 February 2019

[30]Affidavit of Maxwell Godfrey Curtis sworn 18 February 2022, [7].

The ASOC identifies that Ms Garlick and Ms Johnson attended the premises on this date for a further inspection.[31]

21 February 2019

[31]ASOC at [54]-[55].

The ASOC identifies that Ms Johnson and Ms Garlick undertook a further inspection of the plaintiff’s premises.[32]
[32]ASOC at [56].

The original closure order was signed by Dr Sutton,[33] and provided to the plaintiff on this date. The order requires that the plaintiff’s premises not be kept or used for the sale, or for the handling for sale, of any food, and that the premises must not be kept or used for the preparation of food. It specifies seven steps that must be taken to ensure that food prepared, sold or otherwise handled at the premises is safe and suitable, including the destruction of certain food and the provision of proof that certain steps concerning cleaning and sampling/testing have occurred. The order states that it will remain in force until revoked by Dr Sutton, which will occur when he is satisfied that the conditions it specifies have been complied with.

22 February 2019

[33]Affidavit of Philip Andrew Stefanovski sworn 22 February 2022, 5-6.

Ms Garlick allegedly prepares a note headed ‘catch up team’.[34] Although the text in the document exhibited in the solicitor’s affidavit is barely legible, the plaintiff’s proposed pleading notes that the document contains the item “call premises auditor to give a heads up”.

23 February 2019

[34]Affidavit of David Michael Brett sworn 18 January 2022, 9.

The varied closure order was signed by Dr Sutton.[35] The revised order contains additional steps that are required to be completed concerning three categories of food products produced by the plaintiff, including relevantly:

i. A food safety auditor approved under Division 6, Part IIIB of the Food Act 1984, conducting an initial gap audit, within 72 hours of the serving of this notice, of the premises and production process with specific reference to food safety risk assessment, hygiene controls and the prevention of microbiological cross contamination, and that written confirmation that such an audit has been conducted is provided to the Food Safety Unit, Department of Health and Human Services; an
ii. A food safety auditor approved under Division 6, Part IIIB of the Food Act 1984, conducting a full food safety audit (post the initial gap audit) of the premises and production process and that written confirmation that such an audit has been conducted is provided to the Food Safety Unit, Department of Health and Human Services; …

2 March 2019

[35]Affidavit of Maxwell Godfrey Curtis sworn 18 February 2022, 7-12.

At 8:17am, Mr Buckett emails Mr Cook with the subject line “Food Safety Audit Report”, attaching two files titled “2019 02 27 ICF Summary of Food Safety Audit (Final)” and “2019 02 27 ICF Food Safety Program Audit Report (Final)”.[36] Mr Buckett states, relevantly “I have removed the “draft” and amended a couple of formatting inconsistencies and reattach for your record. As per the SMS messages yesterday afternoon, I was asking if you accepted the recommendations and summary that I included in the Summary of Food Safety Audit Report, however you didn’t answer so i assume you are OK with what I have proposed to the council.” Mr Buckett otherwise states he will be offline for that day and expresses his hope that what he sent is what Mr Cook needed.

8 March 2019

[36]Affidavit of David Michael Brett sworn 18 January 2022, 10.

At 7:09am Mr Buckett emails Ms Maloney, copying Mr Cook, with the subject line “I Cook Foods Audit Report”. He asks “When are you free this morning to discuss the I Cook Foods Audit report on their Food Safety Program? Please give me a couple of options, as I am in a clients HACCP Audit in Brisbane all day today, but will try and step out to explain the audit that was conducted and the recommendations that I have made.”[37]
[37]Affidavit Philip Andrew Stefanovski sworn 22 February 2022, 13.

At 7:11am Mr Buckett emails Mr Cook and another individual with the subject line “Certificate for council and DHHS”.[38] The email reads “Hi Ben and Steven, please read the attached certificate and let me know your thoughts. I am not in the office so cannot tick the boxes properly or sign, however the temporary measures I have used should be sufficient for today. I can rectify properly tomorrow when I am back in Melbourne. As per phone calls and emails, the audit summary should have been submitted to Pauline.”
[38]Affidavit of David Michael Brett sworn 18 January 2022, 26.

The email attached a version of a ‘Form 4’ “Notice to proprietor to correct non-conformances” signed by Mr Buckett and dated 8 March 2022.[39] Under the heading “Details of non-conformances” the document contains the following text:

“PLEASE NOTE: A full food safety audit was not conducted on I Cook Foods. The scope of the audit that I was asked to conduct was solely on the adequacy and suitability of the I Cook Foods Food Safety Program. I was advised that:
•That there was one alleged food poisoning case that may be linked to I Cook Foods;
•I Cook Foods has been closed by the Department of Health and Human Services (DHHS) and that there was no food manufacturing currently permitted;
•Environmental Health Officers from the City of Greater Dandenong (COGD) and employees from the DHHS have been onsite on multiple occasions during February 2019;
•In order to reopen, I Cook Foods were required to have an external third party food safety auditor conduct a thorough audit on the I Cook Foods Food Safety Program and the Food Safety program was to be reviewed in detail to identify any gaps or inconsistencies;
•I Cook Foods has ISO 22000 Certification from an external third party.
[39]Affidavit of David Michael Brett sworn 18 January 2022, 27-28.

In addition to the above, as I Cook Foods has been closed by the DHHS, a full food safety audit could not be conducted as there was no production being conducted and no food being stored on site.
AUDIT FINDINGS:
MAJOR NON CONFORMANCE: The I Cook Foods Pty Ltd Food Safety Program is not compliant with the Food Act 1984 (Victoria), Codex HACCP Principles and Standard 3.2.1 of the FSANZ Food Standards Code, however the monitoring and production controls that are in place, as well as the knowledge of Ian Cook and Ben Cook are appropriate for the products that are being prepared. It appears that the practices are undertaken are compliant, however the Food Safety Program does not fully document the controls that are in place.
For further details on the findings and recommendations, please refer to reports below and read in the order in which they are listed:
•2019 02 27 ICF Summary of Food Safety Audit (Final)
•2019 02 27 ICF Food Safety Program Audit Report (Final)

It is recommended that I Cook Foods be permitted to manufacture cook chilled foods and that additional surveillance controls be implemented between reopening and when the revised Food Safety Program is developed.
Time to rectify Major Non Conformance: One month from the date in which production recommences.”

At 10:22am, Ms Maloney replies to Mr Buckett’s 7:09am email, copying in Mr Cook and another DHHS officer, saying she is “happy to chat, to hear your options” and provides a response as to how they can coordinate a call.[40]
[40]Affidavit Philip Andrew Stefanovski sworn 22 February 2022, 13.

At 12:08pm, Mr Buckett replies (copying in Mr Cook) saying “Thanks Pauline, I will call you just after 13:00”.[41]
[41]Affidavit of Kaye Griffiths affirmed 7 March 2022, 6.

At 1:11pm, Ms Maloney sends an email with the subject “Re: I Cook Foods Audit Report”, to Mr Buckett, copying in Mr Cook and another DHHS officer, saying “Hi Gavin, I am at my desk now – if you want to call”.[42]
[42]Affidavit of Kaye Griffiths affirmed 7 March 2022, 9.

At 1:14pm: Mr Buckett replies to Ms Maloney (copying Mr Cook) saying “I’ll call in 2 minutes”.[43]
[43]Affidavit of Kaye Griffiths affirmed 7 March 2022, 10.

At 2:07pm: Mr Buckett emails Mr Cook, copying in Ms Maloney, as follows: “Hi Ben, I have spoken with Pauline this afternoon and she has indicated that you were issued with a Food Act Order. Pauline has indicated that I was meant to have been shown the order as the most recent inspection conducted, and that it also included directions that I was meant to have followed as part of my audit. So that I can finalise the report in the format required by the DHHS, can you please send me a copy of the Food Act Order issued?”.[44]
[44]Affidavit of Kaye Griffiths affirmed 7 March 2022, 12.

Of particular significance to the plaintiff’s argument, on this date a file note was prepared by Ms Johnson with the heading “Pauline 6:07pm phone call to me”.[45] It appears uncontroversial that this heading is a reference to a phone call with Ms Maloney. The text of the file note appears to read as follows (with crossed-out text omitted, and noting that this is a transcription of a handwritten document where there may be basis for disagreement about the interpretation of some words):
[45]Affidavit of Philip Andrew Stefanovski sworn 22 February 2022, 15.

“documents received 130pm today by DHHS – some good.
“Gavin Buckett called – Company lied to the auditor, told he was there for a gap audit he had given the company a full audit report they didn’t show him the notice.
“[Unclear word] quickly from car park. Gavin ushered into building didn’t get [unclear] to see Closure Order.
“Pauline explained to Gavin – finalise the report, he had done it
“2 options – corrective action rectified
“Audit perspective -named on HAACP [unclear word] not adequate – is a critical n/c and DHHS needs notification from G. Buckett
“Closing off audit needs full audit in production – DHHS would be satisfied if this was done when [unclear word] is reopened.
“Need to protect G. Bucket.”
“[Gavin] Bucket will get in touch with office (his) and send Food Act forms to DHHS. Gavin then [unclear word] site – raise Food Act forms and [unclear word] copy of order from DHHS”

12 March 2019

At 4:40pm, Ms Maloney emails Mr Buckett in reply to her email of 1:11pm on 8 March 2019 (apparently not copying in others), with the subject “Food Act audit icook”, saying “Hi Gavin, Any updates?”[46]
[46]Affidavit of Kaye Griffiths sworn 7 March 2022, 14.

At 5:59pm, Mr Buckett emails Ms Johnson and Ms Maloney, stating: “Hi Leanne, I hope you are well. I have spoken to Pauline Maloney at DHHS this afternoon and indicated to her that I will be raising a Critical Non-Conformance against the I Cook Foods Food Safety Program. I will forward a copy of the certificate later this evening. Please call me on the mobile if you need to discuss.”[47]
[47]Affidavit of Philip Andrew Stefanovski sworn 22 February 2022, 17.

At 6:22pm or 6:23pm (depending on the version of the email used), Ms Johnson replies to Mr Buckett’s email of 5:59pm, copying in Ms Maloney, saying “Thanks Gavin”.[48]
[48]Affidavit of Philip Andrew Stefanovski sworn 22 February 2022, 18.

Also at 6:23pm: Ms Johnson forwards Mr Buckett’s 5:59pm email to Ms Garlick with the comment “FYI”.[49]
[49]Affidavit of Kaye Griffiths sworn 7 March 2022, 16.

At 9:22pm: Mr Buckett sends an email to Ms Johnson and Ms Maloney attaching draft notices of that date and stating “Please read the attached the draft Critical N/C Certificates and let me know if there is anything else I need to add, or parts that I need to remove. I will print and sign a copy and through to you as soon as you have reviewed.”[50]
[50]Affidavit of Maxwell Godfrey Curtis sworn 18 February 2022, 14.

An unsigned copy of a ‘Form 2’ “Notice to proprietor to correct critical non-conformances” is attached to this email, dated 12 March 2019.[51] Under the heading “Details of non-conformance” the document contains two dot-points, reading “This food premises has been audited by me to the requirements of the Food Act1984” and “I am of the opinion that the I Cook Foods Pty Ltd Food Safety Program is not compliant with the Food Act 1984 (Victoria) and Standard 3.2.1 of the FSANZ Food Standards Code”. In a text box under the heading “The critical non-conformance/s with timeframe to correct each deficiency: (Advise if non-conformance has been corrected on the spot or no longer can be remedied)” the notice reads as follows:
[51]Affidavit of Kaye Griffiths sworn 7 March 2022, 28-29; Affidavit of Maxwell Godfrey Curtis sworn 18 February 2022, 15-16.

“CRITICAL NON-CONFORMANCE: As communicated to Ben Cook, the I Cook Foods Pty Ltd Food Safety Program is not compliant with the Food Act 1984 (Victoria) and Standard 3.2.1 of the FSANZ Food Standards Code. Following discussions with Steven Kons on 08.03.2019 and Ben Cook on 09.03.2019, I was advised that corrective actions had been undertaken. I requested details of the corrective actions that had been taken, further planned corrective actions and scheduled close out dates, however they were not provided to me as promised.
NOTIFICATIONS: Pauline Maloney from the Department of Health and Human Services (DHHS) was notified at 17:45 on 12th March 2019 and Leanne Johnson from the City of Greater Dandenong was notified on 12th March 2019 at 17:59.
BACK GROUND: Ben Cook from I Cook Foods Pty Ltd contacted me on Tuesday 26th February 2019 and requested that an urgent audit be conducted on their Food Safety Program following an enforced closure by the DHHS. I was asked by Ben Cook if I could conduct the audit on Thursday 28th February 2019, however I was not available, so the audit was conducted on the day before (Wednesday 27th February 2019). The scope of the audit that I was asked to conduct was solely on the adequacy and suitability of the I Cook Foods Food Safety Program. I was advised that a full audit was not required.

The paragraphs supporting the inferences (being paragraphs 77 and 81 to 86 of the proposed pleading) cover the following matters:

(a) the “heads up” alleged to have been given to Mr Buckett by Ms Garlick and/or Ms Johnson in late February 2019;

(b) the discussion between Mr Buckett and Ms Maloney that occurred on 8 March 2019;

(c) the email sent by Ms Maloney to Mr Buckett on 12 March 2019 asking for an update;

(d) the email from Mr Buckett to Ms Maloney and Ms Johnson on 12 March 2019 attaching draft notices and asking whether any changes were required before they could be finalised;

(e) the revised versions of the documents sent by Mr Buckett to Ms Maloney and Ms Johnson on 14 March 2019; and

(f) the assertion that the 14 March 2019 versions of the documents were less favourable to the plaintiff than the 2 and 8 March 2019 versions.

None of those matters appear to address, or support, the alleged mental states of Ms Johnson or Ms Maloney. Rather, these particulars appear more directed to the plaintiff’s proposed inference that the ‘Review’ occurred. The “heads up” reference arose before the first versions of the documents were even produced by Mr Buckett, and the email correspondence will presumably establish that certain communications occurred. However no connection is identified, or apparent, with the alleged malice or intention to keep the plaintiff’s premises closed regardless of its suitability. If the plaintiff’s case is that these serious mental states are discernible from the facts it has identified, then in accordance with the authorities discussed, the matters it relies upon for that argument need to be identified with sufficient specificity to enable the other parties to understand them. I accept that the proposed pleading does not do this.

I note again that at this stage of the proceeding, in the context of an application for leave to amend, I am not seeking to draw conclusions about any of the documents referred to or what might ultimately be made of the evidence in the proceeding. That is a matter for trial. Presently I am required to assess whether the proposed pleading satisfies the requirements discussed above. However, as a matter of pleading, even if the facts and particulars referred to are assumed to be interpreted in the manner most favourable to the plaintiff, I do not see how they can provide support for an allegation that Ms Maloney or Ms Johnson acted maliciously or with an improper intention to keep the plaintiff’s premises closed. Something more would be needed in the pleading to properly make that link.

Beyond the matters identified above, the apparent high point of the plaintiff’s argument as to Ms Johnson and Ms Maloney’s mental states is the 8 March 2019 file note containing the phrase “need to protect G. Bucket [sic]”. The particulars proposed by the plaintiff allege that Ms Johnson and Ms Maloney agreed on a need to protect him. Even if that is assumed to be true for the purposes of the present application, this also does not seem to equate to or indicate malice, nor that Ms Johnson or Ms Maloney intended to keep the plaintiff’s premises closed regardless of the facts, or in Ms Johnson’s case to keep the premises closed in order to reduce competition for Community Chef. Particularly in the context of the balance of that document (referred to further below) and the other facts and documents that the plaintiff seeks to rely upon concerning the alleged mental states, the allegations lack the level of specificity required to identify how the plaintiff would seek to make good this case at trial.

A similar position exists in relation to the allegation that Ms Johnson intended to reduce competition for Community Chef (an allegation which is not made against Ms Maloney). The plaintiff identifies how it says Ms Johnson knew that the overlap in management between COGD and Community Chef existed, but says nothing more beyond that. I am not satisfied that such a general proposition provides an adequate connection between the conduct complained of and the mental state alleged. Once again, the pleading is insufficiently specific.

Overall, I consider that the proposed pleading in its present form does not adequately satisfy the requirements of Order 13 of the Rules in this regard. Serious allegations are proposed to be raised by this section of the statement of claim. However, the material facts and particulars identified do not appear to be sufficient to fairly inform the defendants (and Ms Maloney and Ms Johnson) of the case the plaintiff seeks to pursue. It would not therefore be clear to those parties how the plaintiff will establish that the misconduct it alleges occurred or, significantly, how it will establish the mental states alleged to have been held by Ms Maloney and Ms Johnson.

The authorities make plain that a high degree of specificity is required as to the mental states involved in a tort such as misfeasance in public office. I do not consider that standard has been met by the plaintiff’s proposed pleading. If it were permitted to proceed, the defendants and the individuals identified would be left uncertain as to the case that would be brought against them, and may quite likely be taken by surprise at trial. In this regard, the proposed amendments do not fulfil the essential requirements of pleadings. I am not satisfied that allowing the amendments in this regard would be consistent with the overarching purpose in s 7 of the Civil Procedure Act, as the pleading in its proposed form would not help facilitate the just or efficient resolution of the real issues in dispute.

Explanation consistent with an honest discharge of powers

Second, as the defendants submitted, the particulars and underlying evidence relied upon also provide (and the affidavit evidence relied upon in this application further supports) an account of what occurred that is not consistent with the allegations raised by the plaintiff. That explanation is that Mr Buckett was not aware of the closure orders when the earlier versions of his documents were prepared, that he was subsequently provided with those orders and then changed his documents in response to receiving those materials. On this interpretation, if the changes to Mr Buckett’s documents did not originate from suggested or requested changes from Ms Maloney or Ms Johnson, there would be no conduct by those officers that was beyond their powers, on the plaintiff’s pleading.

The email from Mr Buckett to Mr Cook at 2:07pm on 8 March 2019 indicates directly that Mr Buckett was informed on that day by Ms Maloney of the Food Act orders, and that he asked Mr Cook to provide a copy of those documents to him. The ‘Form 4’ notice had already been sent by Mr Buckett earlier that morning, prior to the time the emails suggest that he and Ms Maloney spoke.

Although perhaps less certain given the uncertainties involved in interpreting handwriting, the file note recorded that evening of the call between Ms Johnson and Ms Maloney also appears to contain language consistent with an interpretation that Mr Buckett was not aware of the orders at the time of conducting his audit, and that he learned of the specific orders that day. In particular, the file note appears to state in part “Gavin Buckett called – Company lied to the auditor, told he was there for a gap audit he had given the company a full audit report they didn’t show him the notice. … quickly from car park. Gavin ushered into building didn’t get … to see Closure Order.”

Similarly, Mr Buckett’s draft notice sent on 12 March 2019 contains a specific statement that he was not aware of those orders previously and that he was provided with copies on 8 and 10 March 2019 after he requested them on 8 March 2019.

Subsequently, the correspondence surrounding the revised versions of the documents contains language that is consistent with an interpretation that the changes to the notice were made at Mr Buckett’s instigation upon learning of the existence of the closure orders, rather than being requested or solicited by Ms Maloney and/or Ms Johnson. The 5:59pm email from Mr Buckett to Ms Johnson on 12 March 2019 identifies that Mr Buckett had spoken to Ms Maloney that day and that he “indicated to her that I will be raising a Critical Non-Conformance against the I Cook Foods Food Safety Program”. Further, Mr Buckett’s email of 8:12am on 14 March 2019 to Ms Maloney, Ms Johnson and Mr Cook, attaching the revised documents, contains the statement, “I have amended the Form 4 from the version completed on the 08.03.2019 as I was not made aware of the Section 19 Food Act Orders (they were provided to me in the afternoon of 08.03.2019 and 10.03.2019).”

Although the materials suggest that there was some communication between Ms Maloney and Mr Buckett on 8, 12 and 14 March 2019, there does not appear to be any material identified to support the assertion that Ms Maloney and/or Ms Johnson suggested changes to Mr Buckett’s documents, or that Mr Buckett made any changes suggested to him. That assertion seems to be the product of an inference or speculation based on the facts that there was some communication between those individuals, and that the ultimate versions of the documents were different to the versions sent in early March. No material is identified to support the assertion that those changes were the result of suggestions by the defendants’ officers, however. The language from Mr Buckett’s emails would appear to be consistent with the changes having emanated from him, rather than others.

Moreover, as above, the correspondence relied upon do not appear to specifically indicate any improper state of mind on the part of Ms Johnson and Ms Maloney. While as a matter of logic it might be accepted that the interpretation proposed by the plaintiff cannot be excluded on the basis of the particulars and documents identified, it is not the only interpretation available. It would seem to be just as open to interpret that the communications with Ms Maloney and Ms Johnson simply occurred in the ordinary course of their work. Overall, the correspondence identified does not appear to contradict or depart from the characterisation identified in the defendants’ submissions, being an explanation consistent with an honest or good-faith discharge of Ms Maloney and Ms Johnson’s functions.

If the pleading was to be interpreted on the basis of these documents alone, the plaintiff’s proposed claim would seem to be in a somewhat similar position to the pleadings in Plaintiff M83A and Polar Aviation, where the mental state required was sought to be inferred from the fact of the public officers’ presumed knowledge that their conduct exceeded their powers (in this case, it seems, their assumed knowledge of the obligation of independence applying to Mr Buckett). As noted, in those cases such an approach was not permitted, as without more, the conduct identified was consistent with an alternate explanation of an honest or good-faith exercise of the officers’ powers.

The other matter relied upon in support of the alleged mental state for both Ms Maloney and Ms Johnson is the file note from 8 March 2019 containing the statement “Need to protect G. Bucket [sic].” While it was accepted that this might be considered unusual language, the question to be assessed is whether this document takes the plaintiff’s proposed amendments beyond the situation identified in Plaintiff M83A and Polar Aviation, to one that is not consistent with honesty.

I do not think that it does. The language of needing to “protect” Mr Buckett is not loaded with meaning sufficient to enable a conclusion that Ms Maloney and/or Ms Johnson were acting beyond their powers, or maliciously or with an intention to keep the plaintiff’s premises shut regardless of its condition. Read in the context of the full file note, there may be any number of possibilities, particularly in light of the other statements on the document apparently referring to the company having “lied to” the auditor or to the prospect of a full audit in production being conducted after the site “is reopened”. Such language clearly leaves open the interpretation advanced by the defendants (of an explanation consistent with an honest discharge of the officers’ powers), and may speak against an interpretation of an intention to keep the plaintiff’s premises shut regardless of its suitability. Read in the context of the other particulars and documents relied upon by the plaintiff, the paragraphs in this section of the proposed pleadings do not dislodge or exclude the alternate explanation identified, which does not involve an improper motivation on the part of Ms Maloney and Ms Johnson for the conduct identified in the particulars and documents. I do not think the file note, either in isolation or in concert with the other facts relied upon by the plaintiff, provides strong enough support for the weight of the serious allegations raised here.

The other additional particular relied upon in respect of Ms Johnson is her alleged knowledge of the overlap in management between COGD and Community Chef (no such allegation is made in respect of Ms Maloney). Assuming that knowledge is to be proven by the plaintiff, as noted above, no detail is provided as to how this knowledge supports or relates to the allegation that Ms Johnson acted maliciously, with an intention to keep the plaintiff’s premises closed regardless of their suitability, or with an intention to reduce competition for Community Chef. Given the difficulties raised by the proposed pleadings concerning Ms Johnson’s conduct and her mental state otherwise, I do not consider that the particulars alleging her knowledge of this management overlap would alter the position. Even if it is accepted that it will be established that she held this knowledge, the consistency with the honest explanation of the conduct identified would not be changed, given the way the pleading is set out. More is needed to satisfy the pleading requirements if the plaintiff is to pursue this claim.

To adopt the terminology used in Three Rivers, I do not think that any of the particulars identified ‘tilt the balance towards dishonesty’. The plaintiff’s interpretation as to the malice or intention to keep the premises shut alleged against Ms Johnson and Ms Maloney (or of the intention to reduce competition for Community Chef, in respect of Ms Johnson) might well be a possibility, however the particulars and documents relied upon do not exclude an honest or good-faith exercise of those individuals’ functions. The ‘something more’ required in order to properly plead a claim of misfeasance in public office is not present.

In this regard, Mortimer J’s comments in Plaintiff M83A bear repeating:

“the authorities are clear that misfeasance will not be established where there is an alternate hypothesis consistent with an honest exercise of power. … [T]here is no difficulty in framing a case in misfeasance by reference to inferences, provided a sufficient factual basis for the inferences is pleaded. While in Three Rivers Lord Millett described what is necessary for the tort to be proved at trial, he also made the point that the pleading must identify the primary facts to be proved. This basic level of symmetry between pleading and proof is fundamental. ….”[61]

[61]At [115].

In this case, I accept the defendants’ submissions that there is an explanation apparent on the face of the pleading and the underlying documents that is consistent with a good-faith exercise of Ms Maloney Ms Johnson’s positions. Equally, I accept that the proposed pleading in its current form does not provide an adequate factual basis for the inferences that the plaintiff says should be drawn. In respect of both aspects of the requirements for pleading the tort identified by Lord Millett in Three Rivers, I consider that the proposed further amended statement of claim contains deficiencies.

Having formed that view, in light of the approach taken in Australian authorities to such pleadings, I am bound to conclude that the plaintiff’s proposed ‘auditor interference’ pleadings are improper. Leave therefore ought not be granted for those amendments to be made.

The knowledge allegations: paragraphs 41A, 65.3 and 66.3

Objection was also taken to the plaintiff’s proposed amendments concerning the proposed new paragraph at 41A, alleging that at all material times Ms Garlick and Ms Johnson knew some or all of the matters proposed to be included at the commencement of the pleading, concerning the alleged overlap between the management of COGD and Community Chef. The paragraph includes a series of particulars summarised at paragraph 31(e) above.

COGD submitted that it is not clear that the conversation between Ms Garlick and Mr Little-Hales referred to in the particulars to paragraph 41A is actually borne out by the recorded body-camera footage identified. Moreover, it submits that it is clear that the particulars identified by the plaintiff do not support the allegation that Ms Garlick and Ms Johnson were aware of any of the matters sought to be pleaded concerning the management overlap, much less all of them. In the absence of a basis for the allegation of knowledge made at paragraph 41A, COGD says the paragraph should not be permitted.

Further, at paragraph 65.3(b) and 66.3(b) of the proposed pleading, the plaintiff seeks to introduce particulars to the existing misfeasance allegations (concerning the reports that led to the February 2019 closure orders being made) that Ms Garlick and Ms Johnson respectively acted with the intention of closing the plaintiff’s premises to reduce competition for Community Chef, referring to the matters at proposed paragraph 41A.

The plaintiff relies upon the authorities identified above concerning the principles applicable to applications for leave to amend, and submitted that the amendments in the proposed amended pleading had a proper basis and that a grant of leave would be consistent with the provisions of the Civil Procedure Act.

COGD opposed the amendments concerning allegations of its officers’ knowledge, noting that the allegation in paragraph 41A is that Ms Garlick and Ms Johnson knew some or all of the matters identified by the plaintiff concerning the overlap in management between COGD and Community Chef, but does not identify which matters. Further, COGD says that the particulars to proposed paragraph 41A do not in fact establish that they knew any of those matters, and that the most they establish is that Ms Garlick and Ms Johnson were aware of a limited subset of these matters as at 19 and 21 February 2019, respectively.

COGD submitted that the particulars concerning knowledge do not support the very serious allegations made in paragraphs 65.3 and 66.3 (concerning Ms Johnson and Ms Garlick’s alleged intention to close down the plaintiff’s premises to reduce competition for Community Chef). In the absence of adequate particularisation, it says the allegations would be liable to be struck out.

In reply, the plaintiff contended that its allegations as to Ms Johnson and Ms Garlick’s mental state were unsurprisingly required to be established as a matter of inference from primary facts. It says that the mental state is capable of being inferred from the facts it pleads concerning those individuals’ actions in the period around 18–21 February 2019.

The allegation that there was a conflict of interest arising from the interactions between COGD and Community Chef had already been raised in the ASOC, albeit briefly, in the existing amended statement of claim (at paragraph 27). Further, the allegations that Ms Johnson and Ms Garlick acted with an intention to reduce competition for Community Chef, in relation to the reports leading to the closure orders, are similarly already in place in the existing pleading (albeit currently without particulars). This seems to give rise to a different set of considerations to those in relation to paragraphs 70-94 discussed above.

These ‘conflict’ allegations have already been pleaded, and will remain in place regardless of the outcome of this application. No application has been made to challenge or strike out these paragraphs. At present, they will fall to be determined at trial. The allegation and particulars at paragraphs 41A, 65.3(b) and 66.3(b) will serve to provide greater detail as to how the plaintiff will seek to make good its case in this regard at trial. Whether they are sufficient to do so remains to be seen, however given the function they serve and the fact that the more substantive allegations they connect to already exist and will not be altered by this application, I do not think a basis arises to disallow these amendments in the manner that arose for paragraphs 70-94.

In addition, as there is apparently a dispute as to the content or interpretation of at least one matter in the particulars (the body-camera footage), it is preferable that such an issue be resolved at trial. This puts such evidence in a somewhat different category to material such as email correspondence, where at least the text of the document will be ascertainable on its face at this stage.

This is not a strike-out application concerning the existing conflict and knowledge allegations, and the parties did not argue it on the basis that the existing aspects of the pleading would or could be removed by the outcome of the plaintiff’s summons. If the particulars proposed by the plaintiff better elucidate the manner in which it will seek to prove the allegations it has made in those paragraphs, and do not otherwise contravene the principles identified above as summarised by Connock J, it appears preferable that they be permitted, so that the parties are dealing with the pleading containing the clearest articulation of the plaintiff’s case that it can provide. What might flow from the criticism levelled against the plaintiff’s allegations in this regard is a question for another day. I would therefore grant leave for these amendments to be made.

The management overlap allegations: paragraphs 1B, 4, 5, 5A, 5B and 5C

COGD also suggested that amendments proposed at the beginning of the statement of claim, identifying details of the overlap in management personnel between COD and Community Chef, served no purpose if the amendments discussed above were not permitted, and therefore also ought not be allowed.

The plaintiff submitted that these paragraphs are necessary and relevant, and that leave ought to be granted in relation to them as they will avoid parties being taken by surprise as to the extent of the conflict it alleges existed between COGD and Community Chef, and as to an aspect of the knowledge that it seeks to allege Ms Garlick and Ms Johnson had about the management overlap between those two entities.

For similar reasons, as the issue of a potential conflict arising from the overlap between the management of COGD and Community Chef was already pleaded in the existing ASOC, I agree with the plaintiff’s position that it is appropriate for leave to be granted to make these amendments. If the conflict issue is to be advanced by the plaintiff at trial, it is desirable that all parties be on notice as to how that will be put. These amendments should also be allowed.

Conclusion

The balance of the amendments proposed by the plaintiff were not objected to, or are otherwise comparatively minor. It is appropriate that they should be allowed.

As such, leave should be granted to the plaintiff to file and serve a further amended statement of claim substantially in the form of the final version relied upon in this application (annexed to the affidavit of Kaye Griffiths sworn 7 March 2022), with the exception of paragraphs 70-94 of that document (being the ‘auditor interference’ cause of action).

The discovery-obligations application

The other aspect of the plaintiff’s application was its request for relief from its Harman obligations. Having formed the conclusion that the proposed amendments to introduce the ‘auditor interference’ cause of action should not be permitted, this issue is able to be addressed relatively expeditiously.

The plaintiff seeks an order that would effectively relieve it of its obligations to use discovered documents solely for within and for the purposes of the litigation in which they were produced by another party.

The applicable legal principles were again not in dispute. In Kritsidimas v Dimitrakakis (No 2), Irving AsJ identified that:[62]
[62][2021] VSC 677.

(a) as per Ubertas Funds Management Pty Ltd v PwC (release from implied undertaking)[63] and Hearne v Street,[64] the discretion to modify or provide relief from the relevant obligations concerning the use of discovered documents is not freely exercised and will only be exercised in special circumstances;

(b) as per Australian Securities & Investments Commission v Marshall Bell Hawkins Limited,[65] in general a party who applies for a modification or release of the undertaking should specify the documents in respect of which the release/modification is sought, specify the purpose for which it is sought, and satisfy the Court that the special circumstances identified warrant or justify the modification or release. The modification or release should be “no greater than is necessary or appropriate to meet the interests of justice or the public interest”.[66] In considering an application for such an order, “it will usually be necessary for the Court to identify with precision the documents to be released and the purpose of that release”;[67] and

(c) as per Springfield Nominees Pty Ltd v Bridgelands Securities Ltd,[68] “For ‘special circumstances’ to exist it is enough that there is a special feature of the case which affords a reason for modifying or releasing the undertaking and is not usually present”.[69] In Ambridge Investments Pty Ltd v Baker & Ors (No 3)[70], Vickery J preferred the inclusion of an additional criterion in this test, so that the ‘special circumstances’ must also be “circumstances which are of sufficient gravity to override the private and public interest in protection of the confidentiality of a person’s private documents which are required by law to be produced to a court”.[71]

[63][2017] VSC 735.

[64](2008) 235 CLR 125.

[65][2003] FCA 833.

[66]Ibid at [13].

[67]Ibid.

[68](1992) 38 FCR 217.

[69]Ibid at [225].

[70][2010] VSC 545.

[71]Ibid [33].

In support of the application, the plaintiff submitted that there are special circumstances in this matter that warrant the relief from the obligations being granted. First, there would have been a direct overlap between the government proceeding and the auditor proceeding if leave had been granted to make the amendments concerning the ‘auditor interference’ cause of action. Given this, the plaintiff contended that it was in the interests of justice, in the public interest and consistent with the overarching purpose of the Civil Procedure Act to make the orders sought, since otherwise the plaintiff would be required to undertake the costly and time-consuming process of issuing subpoenas in the auditor proceeding to obtain documents that it already has access to in the government proceeding that would be relevant to both proceedings.

Second, the plaintiff submitted that a joint mediation of the two proceedings would be “plainly unworkable” if the plaintiff was not released from the relevant obligations and free to refer to all evidence produced in both proceedings in any negotiations that occur.

The State’s position was that the orders should not be made, as the plaintiff had not identified a cogent reason why the obligations should not apply, nor the specific documents that the release is sought to apply to. It considered that the overlap between the two claims on the current pleadings is limited, and that the interests of justice were not made out merely by the fact that there would be a joint mediation.

COGD submitted that the plaintiff’s application in this regard would only become relevant if leave was granted to the plaintiff to make the amendments proposed concerning the ‘auditor interference’ claim. If those amendments were allowed, COGD’s position was that it was a matter for the Court as to whether ‘special circumstances sufficient to justify the relief sought exist here.

In reply, the plaintiff submitted that scope of documents covered by the order it proposed “can be easily identified as being those documents that pertain to the audit carried out by the plaintiffs in the Audit Proceeding”. It said that special circumstances arise here due to the overlap of the two proceedings, and that “the administration of justice would be hindered if a release of the undertaking is not given in respect of a small category of documents”. Further, the plaintiff observed that neither defendant had explained how a joint mediation could be held between the two proceedings without the release sought. It said that without the release, a joint mediation would “simply be unworkable, even farcical”.

The short answer to this aspect of the application is that, as the defendants submitted, if the ‘auditor interference’ claim is not to be introduced into the statement of claim, then the asserted factual overlap between the government proceeding and the auditor proceeding does not arise (or at least is substantially reduced), and therefore the purpose to which such an order might be directed largely falls away. There are therefore no special circumstances warranting the release from the obligations that the plaintiff seeks.

Beyond that, however, I am not satisfied that the order sought by the plaintiff would have been appropriate even if the overlap between the two proceedings was greater. The breadth of the order sought meant that it would effectively merge the two discovery exercises in the proceedings, permitting the use of documents from one proceeding in the other. The plaintiff’s amended position in its reply submissions, that the documents in question could be identified more narrowly as “those documents that pertain to the audit carried out by the plaintiffs in the Audit Proceeding”, still suffers from the deficiency of failing to identify the documents affected by its proposal with specificity.

The nature, scope and pleadings of each proceeding is different, and it is not at all clear that a document that would be discoverable from the defendants in this proceeding would necessarily be discoverable in the auditor proceeding, which relies upon a much more narrow or focused cause of action. Significantly, the defendants in both proceedings are different, meaning that the orders would have the effect of disclosing confidential materials to non-parties which they were compelled to produce in their own proceedings. The difficulty with the plaintiff’s approach is that that the broad and relatively untargeted nature of the order proposed, even with the refined category descriptor proposed by the plaintiff in its reply submissions, would have that effect without regard to whether those documents are in fact relevant to the specific issues in contention in that proceeding as defined by the pleadings.

The defendants in this proceeding can be taken to have completed discovery on the basis that s 27 of the Civil Procedure Act governs the use of their documents. They are entitled to expect that documents they have been required to produce will be treated confidentially unless and until they lose that character (by their use at trial, for example). The public interest in the protection of the use of documents produced by way of discovery is significant, and in my view is not outweighed by the practical considerations identified by the plaintiff, being the complications involved in conducting a joint mediation where the plaintiff has initiated two separate proceedings with two sets of legal representation.

The orders sought appear to also be potentially unnecessary, since the parties have indicated that a process of obtaining access to relevant documents from non-parties through the use of subpoenas has been underway. In my view, that is a preferable way for the issue to be approached: the terms of each subpoena will be able to be considered against the pleadings in each proceeding, and the addressees will have the opportunity to object to the production of documents on that basis, so the exercise will be inherently much better targeted to the issues in dispute in the proceeding, and will not require any modification of the obligations in s 27 of the Civil Procedure Act.

As an alternative, in oral submissions counsel for the plaintiff identified that it may be possible for orders to be sought for relief from the obligations in relation to a specific list of identified documents, rather than the broad-based order sought in the plaintiff’s summons. This approach appears to also have some attractive features, as it would address the specificity requirements identified in the authorities, and better accommodate the requirement that relief from the obligations in s 27 of the Civil Procedure Act should be no greater than is necessary in the circumstances. If the parties are able to agree on a specific list of documents that they consider should be permitted to be used across both proceedings, I expect that orders could be made by consent to that effect.

In relation to the order sought in the plaintiff’s summons, however, for the reasons set out above that paragraph of the summons should be dismissed.

Conclusions and orders

I will therefore make the following orders:

(a) The plaintiff is granted leave to file and serve a further amended statement of claim substantially in the form annexed to the affidavit of Kaye Griffiths affirmed 7 March 2022, excluding paragraphs 70-94 of that document.

(b) Paragraph 3 of the plaintiff’s summons, seeking a release from its obligations in relation to the use of documents obtained by compulsory process in this proceeding, is dismissed.

The parties did not address the matter of costs at any great length in their submissions. As the effect of these orders is that the plaintiff and defendants have all been at least partially successful in relation to the proposed amendments, if orders as to costs are unable to be agreed between the parties, I will provide an opportunity for the parties to provide any brief written submissions concerning the costs of the application before that question is resolved.

[2022] VSC 587

22 July 2022