Johnston v ANZ Banking Group Ltd

[2004] NSWSC 1250

CITATION:	Johnston v ANZ Banking Group Ltd & Ors [2004] NSWSC 1250
HEARING DATE(S):	16/12/04
JUDGMENT DATE:	22 December 2004
JUDGMENT OF:	Hoeben J at 1
DECISION:	Application to file further amended statement of claim refused.
CATCHWORDS:	Malicious prosecution - strike out application - instigation of prosecution - pleading of agency and motive - reasonable and probable cause.
LEGISLATION CITED:	Crimes Act 1900 NSW Inclosed Lands Protection Act 1901 (NSW) Farm Debt Mediation Act 1994 (NSW) Real Property Act 1900 (NSW) Supreme Court Rules
CASES CITED:	Brambles Holdings Limited v Carey (1976) 15 SASR 270 Commercial Union Assurance Co of NZ Ltd v Lamont (1989) 3 NZLR 187 at 196 Commonwealth Life Assurance Society Limited v Brain (1935) 53 CLR 343 at 379 Darcey v Pre-Term Foundation Clinic (1983) 2 NSWLR 497 Davis v Gell (1924) 35 CLR 275 Director of Public Prosecutions v Wille & Ors (1999) 47 NSWLR 255 Expo International Pty Limited v Chant [1979] 2 NSWLR 820 Geneva Finance v Cook (1992) 7 ACSR 415 Glinski v McIver (1962) AC 726 Hermiman v Smith (1938) AC 305 Hicks v Faulkner (1878) 8 QBD 167 Holding v Jennings (1979) VR 289 Krakowski v Eurolynx Properties Limited (1995) 183 CLR 563 Minkley v Munro (1986) 8 PSR 3975 Morris v Darby (1936) 53 WN(NSW) 136 Pandit Gaya Pashad Tewari v Sardar Bhagat Singh (1908) 24 TLR 884 Watters v Pacific Delivery Service Ltd (1963) 42 DLR 661 at 669
PARTIES :	Daryl Lindsay Johnston - Plaintiff Australia and New Zealand Banking Group Limited - First Defendant John Edward Star - Second Defendant Stuart Karim Ariff - Third Defendant
FILE NUMBER(S):	SC 20553/2000
COUNSEL:	Mr P Brereton SC/ Mr George - Plaintiff Mr J Stevenson SC/Mr C Wood - First Defendant Mr A Leopold - Second and Third Defendants
SOLICITORS:	Stephen Wawn & Associates - Plaintiff Coudert Brothers - First Defendant Ebsworth & Ebsworth - Second and Third Defendants

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HOEBEN J

Wednesday, 22 December, 2004

20553/00 – Daryl Lindsay JOHNSTON v ANZ BANKING GROUP LIMITED & ORS

JUDGMENT

1 HIS HONOUR:

Nature of application

2 The claim before me is a motion by the plaintiff seeking leave to rely upon a second further amended statement of claim (SFASC), which was filed and served on the defendants on 6 December 2004. I gave leave for the SFASC to be filed to enable the document to come before the Court for consideration.

3 The reason why the plaintiff requires leave to file the SFASC will become clearer when I review the history of the matter. In short, three previous statements of claim have been struck out by Masters and Judges of this Court, the most recent being by Davies AJ on 4 June 2003. When striking out that statement of claim, Davies AJ did not give leave to replead. It has therefore become necessary for the plaintiff to seek the leave of the Court to file and be able to rely upon the SFASC.

4 The three defendants can be divided into two groups – the first defendant which is the Bank and the second and third defendants, whom I will describe as the Receiver and his associate. The defendants oppose leave being given to the plaintiff to rely upon the SFASC.

Background to application

5 The plaintiff was at all material times a director and secretary of three companies known as Hurworth Nominees Pty Limited, Lillyhill Pty Limited and Hiform Feeds Pty Limited (the Hiform Group). Hurworth Nominees Pty Limited was the registered proprietor of the farming property “Lilydale”, Corowa which was also the location of the companies’ registered offices.

6 On 28 July 1994 Hurworth Nominees granted a registered mortgage in favour of the first defendant (the Bank) over Lilydale. On 28 March 1996 following a mediation conducted pursuant to the Farm Debt Mediation Act 1994 (NSW), a deed was entered into between the Bank and the plaintiff, the Hiform Group and others.

7 There was default under the terms and conditions of the deed.

8 On 14 May 1996 the Bank appointed John Edward Star, the second defendant (the Receiver) as receiver and manager of each of the companies in the Hiform Group. This was done pursuant to clause 9 of the mortgage referred to. The third defendant (Mr Ariff) seems to have been an employee of the second defendant, but since this was not pleaded in the SFASC and his relationship to the second defendant is an issue, I will characterise him as an associate of the Receiver.

9 On 16 August 1996 the Bank instituted proceedings in this Court (3089/96) seeking various orders, including an order that Mr Johnston vacate “Lilydale”. On 19 August 1996 Bryson J, sitting in the Equity Division, made orders against Hurworth Nominees and the plaintiff that:

“(1) Upon the plaintiff giving the usual undertaking as to damages, the defendants and each of them by themselves their servants and agents vacate the property referred to in para 1 of the Summons taking with them their personal belongings and no other Property until further order of the Court be restrained from taking any step to retake possession of the Property.
(2) Upon the plaintiff giving the usual undertaking as to damages, that until further order the defendants by themselves their servants and agents be restrained from hindering, preventing or interfering with the exercise of any right of the Bank in relation to the securities identified in the Deed dated 28 March 1996.”

10 In observations leading up to the making of those interlocutory orders, Bryson J said, inter alia:

“The Bank has a clear prima facie case that it was in possession after a long series of events including a mediation on the subject of the Bank’s entitlement under its mortgage, defaults and possession was taken by a receiver and manager purportedly in exercise of powers under the mortgage and the deed which emerged from the mediation.
Then the position changed on or by 15 August in the simple form that Mr Johnston took occupation, changed the locks, remained in the house and would not remove in the face of attendances by a security guard appointed by the receiver and by the police.
…
Mr Johnston wishes to contend that he has a right to remain in the property under a tenancy, that he has lodged an application with the Residential Tenancy Tribunal in relation to his alleged tenant’s rights, that there is a live issue about whether or not he has tenant’s rights and that he has sought re-entry because the Receiver left the homestead unattended and he wishes to recover a list of items which he claims are his personal property.
…
Mr Johnston has conferred on himself an opportunity to remove any goods of his own by taking possession of the property and holding it for several days since last Thursday if not earlier.
…
In the circumstances I am not prepared to give an extension even of a few days and I propose to make a mandatory order requiring him to leave tomorrow.
…
The order is as follows:
The plaintiff’s amended notice of motion is filed in Court. I make orders 1 and 2 as claimed in the amended notice of motion. I note and accept the undertakings there set out. The injunctions have effect on and from Tuesday 20 August 1996.
The defendants have leave to file a cross-claim. I direct that any cross-claim be filed and served within twenty one days.”

11 No cross-claim was ever filed by the defendants, nor did either defendant ever apply to vary the orders made by Bryson J on 19 August 1996. Those orders were still effective at the time of the events referred to in the SFASC. Proceedings No 3089/96 were closed as an inactive file on 29 April 1999.

12 On 12 September 1996 the Receiver commenced Supreme Court proceedings No 3338/96 seeking orders for the removal of caveats against the property, which the plaintiff had lodged. After abandoning an application for leave to cross-claim in those proceedings, the plaintiff on 15 November 1996 instituted proceedings No 4031/96 in which he sought an order that the Bank and the Receiver be restrained from proceeding with the proposed auction sale. That order was not made, the auction of plant equipment and moveables proceeded on 21 November 1996 and the auction of the property “Lilydale” itself proceeded on 11 December 1996. The property was passed in at the auction but was subsequently sold.

13 In proceedings No 50141/99 three companies with which the plaintiff was associated sought, inter alia, an order that an account be taken of moneys received and disbursed by the Bank and declarations that the Bank and the Receiver had adopted a course of conduct to deprive the companies of income and to depreciate assets upon the sale. They sought, alternatively, damages for negligence and the mismanagement of the sale of assets including the property “Lilydale”. On 26 April 2001 Hunter J ordered that those proceedings be stayed, pending satisfaction of the companies’ obligations to pay costs in proceedings No 1706/1998, which were proceedings in which the companies and the plaintiff’s mother had joined in suing the Bank and the Receiver but which were discontinued in part because of the plaintiff’s mother’s state of health.

14 These proceedings (previously R4000R6/99) were commenced by way of the statement of claim dated 16 November 1999 (the first statement of claim). The first statement of claim sought damages for malicious prosecution and abuse of process.

15 The malicious prosecution relied upon comprised two charges brought by the police against the plaintiff pursuant to s4 of the Inclosed Lands Protection Act 1901 (NSW). The first charge alleged that on 26 October 1996 the plaintiff without lawful excuse remained on enclosed lands without the consent of the owner, occupier or person apparently in charge of those lands after being requested by a person apparently in charge of those lands to leave those lands – Ms White.

The second charge alleged that on 31 October 1996 the plaintiff without lawful excuse had entered into enclosed lands without the consent of the owner, occupier or person apparently in charge of those lands.

16 On 6 August 1998 after seven days of hearing in the Local Court at Corowa and at Albury, the two charges against the plaintiff were dismissed. The property to which the charges related was “Lilydale”.

17 The abuse of process allegation in the first Statement of Claim arose from the fact that the Receiver and Mr Ariff had sought and obtained AVO’s under Part 15A of the Crimes Act 1900 (NSW) against the plaintiff.

18 In the SFASC, which is the subject of the application before me, the abuse of process allegations have not been pursued and accordingly, in reviewing the history of the matter I will not say anything further about the fate of the pleadings relating to those allegations.

19 In the first statement of claim, the plaintiff alleged he went to “Lilydale” in 1996 to collect a notice under s57(2)(b) of the Real Property Act 1900 that had been served on one of his companies, Hurworth Nominees Pty Limited, by the Bank. It was alleged that the Bank and the Receiver lodged complaints with the police that the plaintiff was guilty of entering enclosed lands without permission. It was alleged that the police did not intend to take any action on the complaints until the Bank, by its solicitors, sent a letter to the police on 5 November 1996 making accusations or implications that were unfounded, misleading and untrue.

20 On 6 April 2001 Master Harrison struck out the first statement of claim. She did so pursuant to Pt 15 r 26 of the Supreme Court Rules.

21 That rule provides:

“(1) Where a pleading -

(a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading;

(b) has a tendency to cause prejudice embarrassment or delay in the proceedings, or

(c) is otherwise an abuse of the process of the Court,

the Court may at any stage of the proceedings, on terms, order that the whole or any part of the proceedings be struck out.
(2) The Court may receive evidence on the hearing of an application for an order under subrule (1).”

22 Having reviewed the first statement of claim and considered the legal requirements as to pleading, Master Harrison concluded that as to the alleged malicious prosecution, the pleading was defective in that it did not adequately plead how the police were misled and how that was relevant to the institution or continuation of proceedings. It did not particularise in as much detail as possible the alleged untrue allegations, it did not properly plead or provide particulars in relation to whether the defendants had acted without “reasonable or proper cause”. Leave was granted to the plaintiff to amend the statement of claim accordingly.

23 An amended statement of claim (the second statement of claim) was filed on 1 May 2001. The second statement of claim was lengthier and somewhat reordered, but in substance contained no more precision as to the allegations of malicious prosecution than the first statement of claim.

24 On 17 July 2001 Master Malpass heard an application by the defendants, pursuant to Pt 15 r 26 of the Supreme Court Rules to have the second statement of claim struck out.

25 In paras [10] - [12] of his judgment the learned Master carried out a brief analysis of the second statement of claim and concluded in paras [13] – [15] that the second statement of claim did not comply with the rules of Court and seemed to have numerous pleading deficiencies. The Master characterised it as a confusing document which had pleading inconsistencies and lacked precision. He considered it was embarrassing, failed to plead all the elements of the causes of action and failed to plead the real questions to be determined in deciding the proceedings. The Master struck the second statement of claim out.

26 The plaintiff appealed from the decision of Master Malpass. The appeal came before Ireland AJ on 11 September 2001 and was decided on 19 December 2001. His Honour dismissed the appeal and granted leave to file a further amended statement of claim within twenty-eight days.

27 Ireland AJ made a careful analysis of the second statement of claim. His Honour agreed with the approach taken by the Master. His Honour pointed out that receivers and managers are not ordinarily agents of the person who appoints them (Expo International Pty Limited v Chant [1979] 2 NSWLR 820). His Honour said that if there were facts which demonstrated that the Receiver and Mr Ariff acted as agents for the Bank those facts were material facts and should be pleaded.

28 His Honour then turned specific attention to the letter of 5 November 1996 which Mr Mitchell as an employee of Norton Smith and Co., the solicitors for the Bank and the Receiver, had written to the police. His Honour considered each of the particulars given as to why statements made in this letter were unfounded, misleading or untrue. His Honour considered that all the grounds of attack upon the letter were misconceived. His Honour held that, insofar as the statement of claim relied upon the contents of that letter, the pleading disclosed no reasonable cause of action.

29 A further amended statement of claim (the third statement of claim) was filed on 16 January 2002. As before, the defendants brought a motion pursuant to Pt 15 r 26 to strike out the third statement of claim. That matter came on for hearing before Davies AJ on 30 April and 1 May 2003 and was decided by him on 4 June 2003.

30 His Honour noted (para [14]):

“Pleadings should define a material fact so that the issues are clear and the parties will understand to what questions they must direct their evidence. The present statement of claim has become so abstruse that I gain the impression that it may be the intention of Mr Johnston’s counsel at the trial to present unstructured evidence, such as that which appears in the many affidavits of Mr Johnston, so as to present the case of a person who was evicted from his property by a major bank and its receiver and to ask the jury to infer that institutionalised malice was directed by the ANZ and its receiver against Mr Johnston. I have used the word “institutionalised” for there is still no clear statement of fact in the statement of claim which points to any particular officer of the ANZ who had any malice or ill will towards Mr Johnston.”

31 His Honour noted that the statement of claim was replete with irrelevancies which served only to cloud the issues as to malicious prosecution. Like the second statement of claim, the third statement of claim still failed to deal in an appropriate way with the point made by Ireland AJ that a receiver is not ordinarily an agent of the party that appointed him (para [22]). Although the third statement of claim sought to overcome this point by expressly alleging agency, no particulars were given of the allegation of agency. If the actions of the Receiver and Mr Ariff were to be attributed to the Bank, the statement of claim should make it clear on what basis that attribution was made.

32 His Honour also had regard to the allegations of malice (paras [26]-[30]). His Honour noted that such allegations were analogous to allegations of fraud and required the same precision in pleading. The allegations against the Bank were of such generality that they breached the rule that where states of mind are attributed to a company, particulars of relevant persons within the company must be given so that the company can turn its defence to the state of mind of those specified persons (Krakowski v Eurolynx Properties Limited (1995) 183 CLR 563 and Brambles Holdings Limited v Carey (1976) 15 SASR 270). His Honour found that where it was alleged that the Bank had acted with malice or with an improper purpose or procured false evidence with a view to harming the plaintiff, particulars should be given of the actual circumstances that constitute that conduct. A failure to do so would invite error, particularly where the matter was being heard by a jury.

33 Finally, his Honour dealt with the letter of 5 November 1996. His Honour set the letter out in full ([para 41]). His Honour noted that the letter was crucial to the allegations of malicious prosecution. Senior counsel for the plaintiff did not assert that any statement in the letter was incorrect. What was alleged was that there were errors of omission in the letter. His Honour concluded that the information in the letter was correct and that there was no obligation on its author (Mr Mitchell) to include any further information. His Honour assessed the letter as “precise and accurate and, so far as I can judge, entirely fair”. His Honour summarised his conclusions as follows:

“[54] It would not be a difficult task to plead the allegations of abuse of process and malicious prosecution correctly, if the allegations had any substance behind them. All that is required in such circumstances is a relatively straightforward statement of claim. However, there were always problems with Mr Johnston’s statements of claim. One was that the ANZ was joined as a party yet no significant facts showing its relationship to the subject events was pleaded. Other problems were that facts demonstrating malice and improper purpose were not stated or not stated clearly. Another was that matters extraneous to the claims of malicious prosecutions and abuse of process were raised in the statement of claim.
[55] Since the first statement of claim matters have become worse. The existence of a factual basis for the claims of malicious prosecution and abuse of process has not been clarified. Mere wordy allegations have been added as if they gave support for what, if it were a genuine claim, should have been the subject of a simple pleading. Extraneous events have been added and magnified. At the present time, the statement of claim presents as one pursuant to which the plaintiff wishes to litigate all those matters which have already been raised in the proceedings which are dormant … I am left with the impression that these matters are the real concern of the proceedings and that the allegations of abuse of process and malicious prosecution are simply a platform for their litigation.”

34 His Honour struck the statement of claim out and did not grant leave for any further statement of claim to be filed.

Present application

35 As indicated, the SFASC (which is the fourth statement of claim) no longer seeks to raise the abuse of process claims and is restricted to those relating to malicious prosecution. The defendants oppose leave being granted to the plaintiff to file the SFASC on the basis that to do so would be a futile exercise since the SFASC was as defective as the earlier statements of claim and was also liable to be struck out pursuant to Pt 15 r 26 of the Supreme Court Rules. In effect, therefore, the application has proceeded before me as a strike out application by the defendants under that part.

36 The following evidence was placed before me by the Bank without objection(exhibit 1(D)(1)):

Tab 1 – COPS entry 1 November 1996 including entries made after 5 November 1996.
Tab 2 – Mortgage debenture dated 28 July 1994.
Tab 3 – Mortgage registered number 2052064C.
Tab 5 – Instrument of Appointment of Mr Star as Receiver of Hurworth Nominees.

Some argument took place as to the relevance and admissibility of documents under Tabs 4 and 5 being a letter from Coudert Brothers dated 26 February 2002 requesting particulars and the response thereto of 8 March 2002 by Wertherly Bartrum, the plaintiff’s then solicitors. Since the particulars supplied related to a different statement of claim, I rejected the tender of those documents.

37 On behalf of the Receiver and Mr Ariff, the following documents were tendered without objection (exhibit 2(D)(1)).

Tab 1 – letter 5 November 1996, Norton Smith & Co to Senior Constable Howes, signed by John Mitchell with attachments comprising observations and orders of Bryson J in proceedings 3089/96, letter Norton Smith & Co to Messrs. Deluchi & Co, dated 30 July 1993; COPS entry dated 31 July 1999.
Tab 2 – Further amended statement of claim (the third statement of claim which was considered by Davies AJ).
Tab 3 – Transcript of submissions and judgment of magistrate in Local Court prosecution.

Submissions by Bank

38 Mr Stevenson SC, senior counsel for the Bank, submitted that the agency problem as between the Receiver and Mr Ariff on the one hand and the Bank, identified by Ireland AJ and Davies AJ had still not been dealt with, ie facts had not been pleaded which established how any agency relationship existed between the Receiver and the Bank.

39 This proposition was answered by Mr Brereton SC, senior counsel for the plaintiff, on the basis that in a Part 15 r 26 application, the Court was obliged to accept the allegations in the statement of claim as established and accordingly, there being an allegation of agency, any analysis of the statement of claim had to proceed on the basis that such a relationship did in fact exist between the Bank and the Receiver.

40 That submission if accepted would involve not only an exercise in artificiality and unreality, but would be contrary to the established facts. In the judgments of Master Harrison, Master Malpass, Ireland AJ and Davies AJ it was accepted as an undisputed fact that the Receiver had been appointed pursuant to the mortgage debenture. If there was any doubt about that, it is resolved by the certificate of appointment in exhibit 1D(1), tab 6. Clause 9(2) of the mortgage debenture clearly specifies that the Receiver is the agent of the mortgagor.

41 I accept the submission made by the Bank that this fundamental difficulty remains in the SFASC, ie that no facts have been pleaded nor particulars provided in the SFASC which would establish that either the Receiver or Mr Ariff were agents of the Bank. That has far reaching consequences for the SFASC (paras 9, 10, 11, 21(i), 21(ii), 21(iii), 21(iv), 24, 25, 27(i-viii), 28(v)-(viii), 28(xi), 28(xii), 28(xvi), 28(xviii), 28(xix).

42 As was submitted on behalf of the Bank, unless the basis for the agency relationship between the second and third defendants on the one hand, and the Bank on the other is pleaded, the plaintiff’s reliance against the Bank upon the first four complaints falls away and the plaintiff can only rely upon the letter of 5 November 1996 as constituting the procurement of the police to bring the prosecutions. It goes without saying that if the pleadings do not establish an agency relationship between the Bank and the first and second defendants, they also entirely fail to do so in relation to Ms White and Mr Morton. The effect of the letter of 5 November 1996 has already been extensively dealt with by both Ireland AJ and Davies AJ. Although this is a new interlocutory application, I agree with the Bank’s submission that nothing has been submitted that would lead me to come to a different conclusion in relation to the letter of 5 November 1996 to that arrived at by Ireland AJ and Davies AJ.

43 A second submission, made on behalf of the Bank, is that even accepting the assertions as to complaint (paras 21-27) at face value, they do not and could not as a matter of law establish that the first defendant had instigated the prosecution. In support of that argument the first defendant again relies upon the agency question insofar as the first four complaints are concerned. Unless agency can be established, those first four complaints had nothing to do with the Bank and to the extent that those complaints persuaded the police to bring the prosecution, they are irrelevant to any liability of the Bank.

44 By way of further elaboration of that argument, the Bank submits that none of the five complaints relied upon have anything to say to the first charge, ie that the plaintiff remained on the enclosed lands after being requested to leave. All the complaints are relevant only to the second charge. The other matters referred to in the complaints were irrelevant to the charges brought and consequently could have played no part in persuading the police to bring either charge. To the extent that the word “trespass” is used in the first three complaints, it was clearly not used as a conclusion of law but to indicate that in the opinion of the complainant the plaintiff had entered the enclosed lands without consent.

45 I agree.

46 On this question I was referred to the following statements of principle.

“If therefore a complainant did not go beyond giving what he believed to be correct information to the police and the police without further interference on his part (except giving such honest assistance as they might require), thought fit to prosecute, it would be improper to make him responsible in damages for the failure of the prosecution. But, if the charge was false to the knowledge of the complainant, if he misled the police by bringing suborned witnesses to support it, if it influenced the police to assist him in sending an innocent man to trial before the magistrate, it would be equally improper to allow him to escape liability because the prosecution had not technically been conducted by him.” (Pandit Gaya Pashad Tewari v Sardar Bhagat Singh (1908) 24 TLR 884)
“It is clear that no responsibility is incurred by one who confines himself to bringing before some proper authority information which he does not disbelieve, even although in the hope that a prosecution will be instituted, if it is actually instituted as the result of an independent discretion on the part of that authority ( Danby v Beardsley (1980) 43 LTR 603). But, if the discretion is misled by false information, or is otherwise practised upon in order to procure the laying of the charge, those who thus brought about the prosecution are responsible … The rule appears to be that those who counsel and persuade the actual prosecutor to institute proceedings or procure him to do so by dishonestly prejudicing his judgment are vicariously responsible for the proceedings.” ( Commonwealth Life Assurance Society Limited v Brain (1935) 53 CLR 343 at 379).
“This is not a case of a person truthfully reporting the facts to a police officer and leaving the latter to determine whether or not such facts warranted prosecution. The bad faith of the defendant in deliberately deceiving Detective Cotter distinguishes this case from those cases relied upon by counsel.” (Watters v Pacific Delivery Service Ltd (1963) 42 DLR 661 at 669).
“A defendant who has procured the institution of criminal proceedings by the police is regarded as responsible in law for the initiation of the prosecution. Expressions such as “instigate”, “set in motion” and “actively instrumental in putting the law in force”, while evocative do not provide an immediate touchstone for the decision of individual cases. That requires close analysis of the particular circumstances. In the difficult area where the defendant has given false information to the Police that in itself is not a sufficient basis in law for treating the defendant as prosecutor. That conduct must at least have influenced the police decision to prosecute.” ( Commercial Union Assurance Co of NZ Ltd v Lamont (1989) 3 NZLR 187 at 196 and
“It does not follow that there is any call for modifying the test which has been developed in the decisions of this Court for determining whether a third party is responsible in an action for malicious prosecution for criminal proceedings instituted by the police. What is required is a cautious application of that test where the police have conducted an investigation and decided to prosecute. The core requirement is that the defendant actually procured the use of the power of the State to hurt the plaintiff. One should never assume that tainted evidence persuaded the police to prosecute. In some very special cases, however, the prosecutor may in practical terms have been obliged to act on apparently reliable and damning evidence supplied to the police. The onus properly rests on the plaintiff to establish that it was the false evidence tendered by a third party which led the police to prosecute before that party may be characterised as having procured the prosecution.” ( Commercial Union Assurance Co of NZ Ltd v Lamont at 199).
“A person may be regarded as the prosecutor if, inter alia, he puts the police in possession of information which virtually compels an officer to lay an information; if he deliberately deceives the police by supplying false information in the absence of which the police would not have proceeded; or if he withholds information in the knowledge of which the police would not prosecute”. (Commercial Union Assurance Co of NZ Ltd v Lamont at 207).
“For the purposes of this form of action, the law looks beyond theory and regards the person in fact instrumental in prosecuting the accused as the real prosecutor. It enables the person innocently accused to treat his virtual accuser as party to the criminal charge, a circumstance bearing directly on the question of the effect in the civil action of the judicial determination of the criminal proceedings. The substance and not the legal form must in all cases govern, and while, on the other hand, a person giving information to the police is not necessarily the prosecutor yet, on the other, the mere fact that the police conduct the prosecution does not exclude him from that position”. (Davis v Gell (1924) 35 CLR 275).
“When a private person gives to a prosecuting officer information that he believes to be true, and the officer in the exercise of his uncontrolled discretion initiates criminal proceedings based upon that information, the informer is not liable under the rules stated in this section even though the information proves to be false and his belief was one that a reasonable man would not entertain. The exercise of the officer’s discretion makes the initiation of the prosecution his own and protects from liability the person whose information or accusation has led the officer to initiate the proceedings. If, however, the information is known by the giver to be false, an intelligent exercise of the officer’s discretion becomes impossible, and a prosecution based upon it is procured by the person giving false information.” (American Law Institute re: statement of the law, Torts, 2nd ed (1977) section 653).

47 The Bank submits that applying those statements of principle to the facts of this case it cannot be said that the Bank procured the prosecution of the plaintiff in the necessary sense. That must be so in relation to the charge based on 26 October 1996 for the reasons already stated. It also, in my opinion, must be correct in relation to the charge relating to the events of 31 October 1996.

48 In exhibit 1(D)1, tab 1 the COPS entry for 1 November 1996 is set out. Included in that entry is the following:

“The POI was interviewed by way of ERISP on the 1.11.96 in relation to his attendance at the property, copies of court orders have been obtained which indicated that he was not committing an offence from attending the property. In the interview he has stated that it was to collect papers that were served on his company office at the premises by a process server. This has been confirmed with contacting the process server. Security staff at the farm also stated that this had occurred.”

A further entry which was clearly made after 5 November 1996 was as follows:

“The brief was completed and forwarded to the prosecutor for adjudication, reply was suitable for prosecution and summons recommended.”

49 Those entries make it clear that the police were well aware as of 1 November 1996 of what the plaintiff was saying as to his intention in entering the enclosed lands. It is also clear that after receiving the letter from the Bank’s solicitors, dated 5 November 1996, a brief including that letter and (one assumes) the other information referred to in the COPS entry, was forwarded to the prosecutor for him to consider the material in order to decide whether to bring charges. It is difficult to imagine a clearer or more explicit instance of an independent exercise of discretion by a police officer.

50 When senior counsel for the plaintiff was asked to identify in what respect anything in the letter of 5 November 1996 was misleading or false, his response was that the letter painted the plaintiff in a poor light and did not put the plaintiff’s side, ie that he had entered the enclosed lands for the purpose of removing a document to which he was entitled. I agree that some of the matters in the letter did put the plaintiff in a bad light, but they were factually accurate. They were also irrelevant to the charges which were eventually brought against him. There was no need to put the plaintiff’s side of the case since the police already had that information at the time of the letter, as the COPS entry makes clear. There was no untrue or misleading information given by the Bank to the police.

51 I do not propose to analyse each particular in para 27 of the SFASC. It is sufficient to say that as of 5 November 1996 the police were well aware that there was a dispute as to whether the plaintiff had a lawful excuse to be on the enclosed lands. The word “trespass” if it was used by anyone was clearly used in a non-technical sense to refer to the plaintiff’s presence without the consent of the person in possession. References to breach of court orders were irrelevant to the matters with which the plaintiff was charged. They could have played no part in persuading the police to bring the prosecutions.

52 In my opinion, this argument by the Bank succeeds. This means that as against the Bank the SFASC does not disclose a reasonable cause of action in that an essential ingredient of a malicious prosecution claim has not and cannot be made out, ie that the Bank in fact prosecuted the plaintiff.

53 Although this argument was not relied upon by the Receiver and Mr Ariff, it is equally effective in their favour. To the extent that complaints were made by Ms White or Mr Morton, facts have not been pleaded which would establish the relationship of those persons to either the Receiver or Mr Ariff. Even if such a connection were established by proper pleading, for the reasons set out above the matters which formed the subject of the alleged complaints, including the letter of 5 November 1996, were not capable of bringing about the legal conclusion that in accordance with the authorities either the Receiver or Mr Ariff, or both of them, were to be regarded as the prosecutor of the plaintiff in relation to the events of 26 and 31 October 1996. There was a clear and independent exercise of discretion by the police as the COPS entry makes clear and this essential element of the malicious prosecution claim in the SFASC is not made out as a matter of pleading, nor can it be made out as a matter of law against the Receiver and Mr Ariff.

54 That in effect is the end of the matter and I need not go further. Nevertheless, in deference to the detailed and meticulous arguments addressed to me by both sides, I propose to deal albeit briefly with the remaining arguments raised.

55 The last argument put forward on behalf of the Bank was that the particulars of malice were as a matter of law embarrassing and should be for that reason alone struck out. In addition, the defect identified by Davies AJ had still not been remedied, ie generalised allegations of malice were made against the Bank without any officer of the Bank being identified. As Davies AJ pointed out ([para 27]) companies do not harbour feelings of malice, individuals within those companies do. Senior counsel for the plaintiff accepted that this latter defect existed in the SFASC in relation to the pleading of malice against the Bank.

56 I agree with the submission. The allegations of malice are embarrassing, imprecise and in some respects scandalous. They also lack the precision with which such allegations should be made. A good example is the way in which allegations of malice are traditionally framed in defamation actions. That methodology was not followed here.

57 In my opinion the allegations of malice, not only against the Bank but against all of the defendants, are so flawed as to be liable to be struck out in their entirety.

Submissions of Receiver and Mr Ariff

58 It was submitted by Mr Leopold, counsel for the Receiver and Mr Ariff, that it was impermissible for the plaintiff to rely upon the letter of 5 November 1996 in that this letter had already been considered by Ireland AJ and Davies AJ and was found by those Judges to be accurate and not misleading. It was submitted that the plaintiff’s attempt to rely for a third time on that letter to ground his claim for malicious prosecution amounts to an abuse of process.

59 In this regard I accept the submissions of senior counsel for the plaintiff. These are interlocutory proceedings. The use of the letter of 5 November 1996 was somewhat different (albeit not very much) in the SFASC when compared with the third statement of claim. Accordingly, it became necessary for me to consider that letter for myself. Having done so, I reached the same conclusions as Ireland AJ and Davies AJ, as indicated earlier in these reasons (para [42]). Accordingly, although I do not accept in terms the submission of Mr Leopold, the result I have come to is the same. I accept the submissions of Mr Leopold, in part D of his written submissions, that neither the oral complaints nor the letter provide a proper basis for a cause of action based on malicious prosecution.

60 A further complaint by Mr Leopold was that there was an illegitimate “rolling up” of allegations against the three defendants without any attempt to differentiate the separate part played by each of them or as between the Receiver and Mr Ariff on the one hand, and the Bank on the other. I agree. This was part of the general imprecision which infected much of the SFASC and which rendered it defective as a pleading.

61 There was a further problem for the plaintiff in relation to the Receiver and Mr Ariff in that it was never pleaded that Mr Ariff was an employee of the Receiver. Accordingly, it is difficult to see how the Receiver could be vicariously liable for the actions of Mr Ariff. The relationship between them was pleaded as follows. “The third defendant was a chartered accountant supervised by the second defendant and agent of the first defendant”. The factual basis for those bald assertions was never pleaded.

62 That problem was exacerbated by the failure to properly plead the relationship between Ms White and Mr Morton to the Receiver and Mr Ariff, or either of them. There was no basis pleaded for why either the Receiver or Mr Ariff would be responsible for some or all of the actions of Ms White and/or Mr Morton.

63 It follows that I agree with the submission of Mr Leopold that the SFASC was affected by impermissible rolling up of allegations against all of the defendants without properly pleading how each defendant was responsible in law to the plaintiff.

64 In the course of argument Mr Leopold developed the proposition in part G of his written submissions concerning the failure of the plaintiff to properly plead or establish as a matter of law another fundamental ingredient of an action for malicious prosecution, ie that the prosecution was brought without reasonable and probable cause.

65 Mr Leopold accepted the definition of “reasonable and probable cause” given by Hawkins J in Hicks v Faulkner (1878) 8 QBD 167 at 171 approved in Hermiman v Smith (1938) AC 305 at 316 as follows:

“An honest belief in the guilt of the accused based upon a full conviction, founded upon reasonable grounds, of the existence of a state of circumstances which assuming them to be true, would reasonably lead any ordinarily prudent and cautious man, placed in the position of the accuser, to the conclusion that the person charged was probably guilty of the crime imputed.”

66 Mr Leopold also relied upon that which was said in Glinski v McIver (1962) AC 726 at 768 by Lord Devlin when expanding upon the six settled points concerning the question of reasonable and probable cause:

“First, the question is a double one: Did the prosecutor actually believe and did he reasonably believe that he had cause for prosecution? Secondly, provided that the defendant has made sufficient inquiry, the facts on the basis of which the question has to be answered are those, and only those, known to the defendant at the material time. Thirdly, though a question of fact, it is one that in the end has to be determined by the Judge and so is to be treated in the same way as if it were a question of law . Fourthly, if, in the course of the Judge’s inquiry, he finds that it is necessary to resolve some disputed question of incidental fact, that question is a jury question. But fifthly, like any other jury question, it is to be left to the jury only if there is some evidence put forward by the party on whom the onus lies; and that, in the case of malicious prosecution, means the plaintiff since it is he who has to show want of cause . Sixthly, a question whether the defendant in fact believed that there was a cause for prosecution is, if in dispute and if there is some evidence to support a conclusion that he did not, a question to be left to the jury.” (my emphasis)

67 It was submitted by Mr Leopold that the basic facts of the prosecution were undisputed. In relation to the only charge to which the SFASC can apply, ie that of 31 October 1996 the crucial ingredients were entering onto enclosed lands without the consent of the owner without lawful excuse. The SFASC made it clear (para 20) that the plaintiff had so entered. Senior counsel for the plaintiff conceded that the premises were enclosed lands and also conceded that the entry was without consent. The only issue before the learned magistrate was whether such entry had been “without lawful excuse”. The learned magistrate found that entering upon the enclosed land without consent to obtain a document which had been served on a company of which he was a director and secretary constituted “lawful excuse” as envisaged by s4 of the Inclosed Lands Protection Act 1901 (NSW).

68 Mr Leopold submitted that the learned magistrate was wrong in that finding in that decisions such as Director of Public Prosecutions v Wille & Ors (1999) 47 NSWLR 255, Darcey v Pre-Term Foundation Clinic (1983) 2 NSWLR 497, Morris v Darby (1936) 53 WN (NSW) 136, Minkley v Munro (1986) 8 PSR 3975 were to contrary effect and clearly so. Those cases made it clear that there was a distinction between lawful excuse and reasonable excuse and that one did not look at the purpose of the entry, but rather the circumstances of the entry when determining whether or not a breach of the section had occurred.

69 In answer it was submitted by senior counsel for the plaintiff, that the lawful excuse of the plaintiff was entry onto the enclosed lands to retrieve a chattel of his. The situation, it was submitted, was analogous to that where fruit had fallen onto another’s property and the owner of the fruit tree went onto that property to retrieve the fruit, such as was described by Flemming Law of Torts 9th ed pp 101-102.

70 In answer to that submission, Mr Leopold referred to the fact that a Receiver had been appointed and was responsible for the company not the plaintiff, this being made clear by such cases as Geneva Finance v Cook (1992) 7 ACSR 415 at 426 and 432.

71 Although I incline to the view that the learned magistrate was in error in his decision (it should be noted that he was not referred to any of the relevant cases) it is not necessary for the purposes of the argument to determine whether or not the learned magistrate was correct, but rather whether there was a properly arguable question of law to be decided. There clearly was.

72 This situation was considered by the High Court in Commonwealth Life Assurance Society Ltd v Smith (1937-38) 59 CLR 527 at 542 where their Honours said:

“The cause of action in malicious prosecution does not depend upon the actual innocence of the plaintiff. The plaintiff must prove that the prosecution terminated in his favour. He must prove there was no reasonable and probable cause for the prosecution. But he need not prove that in truth he was innocent of the charge, and it is not open to the defendant to attempt to prove as an answer to the action that in truth he was guilty, notwithstanding the termination of the criminal proceedings in his favour. In proving the existence of reasonable and probable cause the defendant is confined to information of which he was aware at the time of the prosecution. He cannot justify a prosecution that failed by showing that facts of which he did not know made it reasonable. In the course of proving facts on which he based the prosecution, a defendant may sometimes succeed in raising a doubt of the plaintiff’s innocence. When this happens an absence of reasonable probable cause is hardly likely to be found. ” (my emphasis)

73 Mr Leopold in his analysis of the elements required to prove a breach of s4(1) in relation to the events of 31 October 1996 has clearly raised a doubt of the plaintiff’s innocence based on material which was available at the time of the prosecution. In those circumstances I do not see how as a matter of law the plaintiff could possibly establish an absence of reasonable and probable cause in the police prosecuting him in relation to the events of 31 October 1996.

74 I am of the opinion that this additional element of the tort of malicious prosecution is unable to be made out against any of the defendants and for this further reason the SFASC does not disclose a reasonable cause of action against them.

Conclusion

75 For the above reasons I am of the opinion that it would be futile to allow the plaintiff to file the SFASC since it would inevitably be struck out at the behest of the defendants pursuant to Pt 15 r26. Accordingly, I refuse the plaintiff’s application for leave to file the SFASC.

76 It was submitted to me by the defendants that should I refuse leave to the plaintiff to file the SFASC, I should not simply dismiss the motion. This would mean that the plaintiff could seek to file another statement of claim so that the defendants would again be put to considerable expense and inconvenience (keeping in mind that the second and third defendants are individuals) in meeting that additional application. I agree.

77 It seems to me that the approach of Anderson J in Holding v Jennings (1979) VR 289 at 293 is appropriate where his Honour said:

“In the circumstances as they appear to me order 25 rule 4 of the Supreme Court Rules is applicable, and the Statement of Claim could be struck out as disclosing no reasonable cause of action; furthermore since the claim is one which in my opinion manifestly could not succeed, it may fairly be said that the proceeding is frivolous or vexatious, and so under the second limb of order 25 rule 4 as well as under the inherent jurisdiction of the court the action should be brought to an end. Merely to strike out the statement of claim would leave the action still on foot. Since the plaintiff’s claim is one which in my opinion cannot succeed, I think the proper course is to dismiss the action.”

78 As I have indicated, apart from the significant defects in the SFASC as a pleading, it is also apparent that in two essential respects the pleading discloses no reasonable cause of action and the defect is of such a kind as to be incapable of correction by further pleading. In those circumstances I am of the opinion that the appropriate course is to dismiss the action and I do so.

79 There was before me on16 December 2004 a further motion by the defendants in relation to costs. I stood that motion over, pending the outcome of this application by the plaintiff. The costs of the plaintiff’s application will form part of that overall costs argument and accordingly, I reserve the question of costs.

80 I refuse the plaintiff’s application to file the SFASC. I grant leave to the parties to restore the matter to the list on 7 days’ notice for the purpose of dealing with the defendants’ motion in relation to costs and of dealing with the costs of this application.

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Last Modified: 07/16/2007