Palmer v Shipton

Case [2025] FCA 273

FEDERAL COURT OF AUSTRALIA

Palmer v Shipton [2025] FCA 273

File number(s):

VID 490 of 2024

VID 591 of 2024
Judgment of: ANDERSON J
Date of judgment: 28 March 2025
Catchwords: PRACTICE AND PROCEDURE – allegation of misfeasance in public office brought against chair of ASIC in relation to handling of complaints submitted by applicants – applications for strike out and summary judgment – where allegation made that the respondent “caused and/or directed” the underlying conduct – where respondent submitted that (i) the applicant failed to sufficiently identify the impugned conduct of the respondent; (ii) sought to attribute conduct and knowledge of other ASIC officers to the respondent; (iii) failed to plead material facts to establish mental elements of the tort –consideration of pleading requirements of the tort – application allowed
Legislation: Federal Court Rules 2011 (Cth)
Cases cited:

Commissioner of Taxation v Futuris Corporation Limited (2008) 237 CLR 146; [2008] HCA 32

Dare v Pulham (1982) 148 CLR 658; [1982] HCA 70

Dey v Victorian Railways Commissioners (1949) 78 CLR 62

Farah Custodians Pty Ltd v Commissioner of Taxation [2018] FCA 1185

Grass v Slattery [2018] FCA 1719

Leinenga v Logan City Council [2006] QSC 294

Lock v Australian Securities and Investments Commission (2016) 248 FCR 547; [2016] FCA 31

Moder v Commonwealth of Australia; Sochorova v Commonwealth of Australia (2012) 261 FLR 396; [2012] QCA 92

Northern Territory of Australia v Mengel (1995) 185 CLR 307

Obeid v Lockley [2018] NSWCA 71

PlaintiffM83/2019 v Morrison (No.2) [2020] FCA 1198

Polar Aviation Pty Ltd v Civil Aviation Safety Authority (No. 4) (2011) 203 FCR 293

Sanders v Snell (1998) 196 CLR 329

Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1

White Industries Australia Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298

Wride v Schulze [2004] FCAFC 216
Division: General Division
Registry: Victoria
National Practice Area: Other Federal Jurisdiction
Number of paragraphs: 62
Date of hearing: 18 February 2025
Counsel for the Applicants: Mr P Dunning KC, Mr K Byrne and Ms S Gaussen
Solicitor for the Applicants: Alexander Law
Counsel for the Respondent: Ms K Foley SC and Mr A Petridis
Solicitor for the Respondent: Norton Rose Fulbright

ORDERS

VID 490 of 2024
BETWEEN:

CLIVE FREDERICK PALMER

Applicant
AND:

JAMES SHIPTON

Respondent

ORDER MADE BY:

ANDERSON J

DATE OF ORDER:

28 MARCH 2025

THE COURT ORDERS THAT:

1.Leave to file the proposed Further Amended Statement of Claim dated 10 February 2025 is refused.

2.Pursuant to r 16.21(c), (d) and (e) of the Federal Court Rules 2011 (Cth), paragraphs 18A to 26 of the Amended Statement of Claim dated 10 October 2024 be struck out.

3.The proceeding be summarily dismissed pursuant to r 26.01(1)(a) and (c) of the Rules.

4.The Applicant pay the Respondent’s costs of the proceeding.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


ORDERS

VID 591 of 2024
BETWEEN:

PALMER…

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AGLC
Palmer v Shipton [2025] FCA 273
Case
[2025] FCA 273
Decision Date

CaseChat Overview and Summary

In the case of Palmer v Shipton, the applicants, who are defendants in criminal proceedings, sued the former chairperson of the Australian Securities and Investments Commission (ASIC) for the tort of misfeasance in public office. The applicants alleged that the respondent mishandled complaints against them, leading to the criminal proceedings. The respondent sought to strike out the applicants' claims and for a summary judgment dismissing the proceeding. The applicants, in their submissions, attached Further Amended Statements of Claim (FASOCs) which the court considered.

The court had to determine whether the applicants' claims against the respondent were adequately pleaded. The applicants alleged that the respondent had mishandled complaints against them, which led to the criminal proceedings. However, the court found that the applicants had not pleaded any specific conduct of the respondent that could constitute the tort of misfeasance in public office. The applicants had sought to attribute acts and knowledge of various ASIC officers to the respondent. The court found that the applicants had little other basis on which to substantiate the serious allegations brought against the respondent.

The court held that the applicants' claims were not adequately pleaded and were struck out. The court held that the applicants had failed to identify with any precision what it was that the respondent had done personally either by an act or omission that was invalid, unauthorised, or beyond power. The court held that the proceeding be summarily dismissed and that the applicants pay the respondent's costs of the proceeding. The court's decision was based on the applicants' failure to adequately plead their claims against the respondent. The court found that the applicants had not identified any specific conduct of the respondent that could constitute the tort of misfeasance in public office. The court held that the proceeding be summarily dismissed and that the applicants pay the respondent's costs of the proceeding.

Orders

Orders of the court

1. Leave to file the proposed Further Amended Statement of Claim dated 10 February 2025 is refused.

2. Pursuant to r 16.21(c), (d) and (e) of the Federal Court Rules 2011 (Cth), paragraphs 15A to 23 of the Amended Statement of Claim dated 10 October 2024 be struck out.

3. The proceeding be summarily dismissed pursuant to r 26.01(1)(a) and (c) of the Rules.

4. The Applicant pay the Respondent’s costs of the proceeding.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The respondent relies upon the affidavit of Kimberly Mackay, the respondent’s solicitor, sworn on 16 October 2024. The applicants rely on two affidavits of Mr Sam Iskander, the applicants’ solicitor, sworn on 11 and 12 February 2025. BACKGROUND The applicants are defendants in criminal proceedings pending in the Magistrates Court of Queensland (referred to as the PLC Prosecution), commenced by complaints made on behalf of the Australian Securities and Investments Commission in February 2018. The charge against PLC is that, on or about 12 June 2012, PLC contravened s 631(1) of the Corporations Act 2001 (Cth) by not making an offer for securities in The President's Club Ltd (TPC) within two months after publicly proposing to make a takeover bid for securities in that company. The charge against Mr Palmer is that he aided, abetted, counselled or procured that offence by PLC. The Commonwealth Director of Public Prosecutions has carriage of the prosecution. In the present proceeding, the applicants sue the respondent as the former chairperson of ASIC, seeking damages for the tort of misfeasance in public office. The applicants, in their submissions regarding the strike out application, have attached Further Amended Statements of Claim (FASOCs). These reasons will focus on the case put forward in the FASOCs, rather than the ASOCs, noting that the amendments proposed to the FASOCs were an attempt to rectify the deficiencies the respondent sought to identify in the ASOCs. The FASOCs, despite being the applicants’ third attempt to articulate the specific case against the respondent, are difficult to follow. To the extent that the core of the applicants’ claims against the respondent can be distilled cleanly, and without seeking to be exhaustive, they involve the following: (a)allegations that officers of TPC improperly influenced ASIC’s assessment of the complaint underlying the PLC prosecution and in ASIC’s decision not to investigate complaints that TPC was operating an unregistered time share scheme. It is also alleged that ASIC staff involved in the investigations held conflicts of interest. The basis for the allegations appears to be primarily:(i)a series of correspondence between TPC and ASIC in 2015-16, in which TPC sought for ASIC to take enforcement action against the applicants in relation to the applicants’ failure to make an offer to purchase shares in TPC;(ii)that ASIC and TPC were required to pay PLC’s costs in a separate proceeding which were subsequently paid by ASIC without a contribution from TPC;(iii)an alleged conversation taking place in February 2016 between TPC and the applicants, in which a representative of TPC said that they “had a mate in ASIC”. The applicants allege that it can be inferred that ASIC was aware of such representations being made by TPC, primarily by reference to the same series of correspondence between TPC and ASIC; and(iv)ASIC’s knowledge that the timeshare operated by TPC was effectively valueless, such that it was inappropriate for ASIC to procure the applicants to make an offer for the shares in TPC. ASIC’s knowledge of TPC’s financial position was, in turn, said to be inferred primarily from the same set of correspondence between TPC and ASIC, and other documents lodged with it.(b)Following the commencement of the PLC Prosecution in 2018, Mr Palmer sent a letter dated 30 September 2019 to ASIC. The letter was addressed to the respondent, and raised Mr Palmer’s concerns of improper influence over ASIC officers, and the conflicts of interests allegedly held by ASIC officers, particularly in relation to ASIC’s decision not to investigate TPC further regarding the applicants’ complaints that it was operating an unregistered timeshare scheme, and ASIC’s handling of complaints made against the applicants. (c)ASIC’s response to Mr Palmer’s letter is what, in essence, gives rise to the conduct which the tort is alleged to attach to, albeit the conduct is characterised in a number of different ways. ASIC’s response, dated 1 November 2019 and signed by ASIC officer Ms Hartmann, stated “I have been asked to consider the matters raised in your letter and provide a response”. The response goes on to state that no evidence of TPC’s influence over ASIC was found, and that ASIC had given due consideration to the applicants’ complaint regarding TPC operating an unregistered timeshare scheme.(d)The applicants characterise the letter as having been written by Ms Hartmann on behalf of the respondent and ASIC.(e)The applicants, without being in a position to plead what particular role the respondent may have played in relation to the letter from Ms Hartmann, make the generalised allegations that the respondent:(i)“caused and/or directed” the investigation into the matters contained in Mr Palmer’s letter (the Investigation);(ii)“caused and/or directed” an outcome that no further action was to be taken in relation to Mr Palmer’s letter (the Outcome); and(iii)“caused or directed” the letter from Ms Hartmann (the Communication).(f)Ultimately, the applicants are unsure of whether there actually was an Investigation at all. The applicants say that because TPC did, as a matter of fact, influence ASIC and that because ASIC did, as a matter of fact, have a relevant conflict of interest, the only explanation for the Communication is that the Investigation was demonstrably deficient, or alternatively, that the Communication was false, or alternatively still, that there was no Investigation at all and that the Communication was false.(g)Further, without being able to plead with particularity what the respondent did, or what the respondent actually knew, the applicants then allege that the respondent “must have known” that the matters contained in Mr Palmer’s complaint were true and would be found by a basic investigation. The basis for the respondent’s knowledge is, again, left to be inferred primarily from the same series of correspondence between TPC and ASIC, and ASIC’s knowledge (which is itself based on the inferences noted above).(h)The applicants allege that the respondent’s role in relation to the Investigation, the Communication, the Outcome, and in “causing and/or supervising and/or directing” the filing of complaints in the PLC Prosecution, involved various invalid or unauthorised acts. Namely, this includes breaches of duties or values at common law, and breaches under the Australian Securities and Investments Commission Act 2001 (Cth), and the Public Governance, Performance and Accountability Act 2013 (Cth). By reason of such breaches, the applicants allege that the respondent’s actions constituted an invalid and/or unauthorised act, and constituted an improper exercise of power under the ASIC Act. (i)The respondent is then further alleged to have acted knowingly in excess of his powers, based on his knowledge of the fact of the matters raised in Mr Palmer’s complaint and his knowledge as to the limitations of his powers. In doing so, the applicants invite a further inference that the respondent acted with malice towards Mr Palmer, and with the intention of causing Mr Palmer harm.(j)Ultimately, the respondent is said to therefore be liable to the applicants for the tort of misfeasance in public office which the applicants say sounds in damages, “presently calculated to exceed $3.5 million” for each applicant, apparently including the costs of defending the PLC Prosecution and “other proceedings in relation to TPC”.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The respondent additionally submits that misfeasance will not be established where there is an alternate hypothesis for the conduct consistent with an honest exercise of power: Plaintiff M83/2019 at [115]; Three Rivers at [186]. The respondent submits that in the present case, the fundamental facts alleged are entirely consistent with the relevant ASIC officers acting with honest motivations in doing what they have alleged to have done – namely, carrying out an investigation at the applicants’ request and separately, laying complaints against the applicants. CONSIDERATIONComplaint 1 and 2: Failure to plead the impugned conduct with sufficient clarity and erroneously seeking to attribute acts and knowledge of various ASIC officers to the respondent In light of the amendments proposed in the FASOCs, it is convenient to discuss the first two complaints together. That is the respondent’s submissions that the FASOCs fail to plead the relevant impugned conduct of the respondent with sufficient clarity, and that to the extent the respondent’s conduct is pleaded, the FASOCs erroneously seek to attribute acts and knowledge of various ASIC officers to the respondent. I am satisfied that the FASOCs do not plead any specific conduct of the respondent capable of constituting the tort of misfeasance in public office. To the extent the applicants have grievances in relation to ASIC’s underlying conduct (namely, in relation to the Investigation, Outcome and Communication), it is clear that the applicants are not in a position to plead what particular role the respondent actually played in the conduct. Nevertheless, the applicants seek to impugn the respondent’s “conduct”, largely by reference to his role as chairperson of ASIC. To the extent the respondent’s conduct is specifically identified by the applicants, the applicants’ claim still seeks to attribute acts and knowledge of various ASIC officers in order to impugn the respondent’s conduct. Without being in a position to plead what particular role the respondent actually played in the underlying conduct, the applicants appear to have little other basis on which to substantiate the serious allegations brought against the respondent. The FASOCs plead at a high level of generality that ASIC or its officers did not adequately investigate matters raised in Mr Palmer’s letter to ASIC dated 30 September 2019, or alternatively, made a false communication regarding the investigation. The FASOCs do not identify with any precision, or at all, what it is that the respondent has done personally either by an act or omission that was invalid, unauthorised, or beyond power. Again, it is helpful to outline the rather complex chain through which the applicants seek to impugn the respondent’s conduct. As best it can be discerned from the FASOCs, the applicants’ underlying grievance is that ASIC’s complaints against the applicants are unmeritorious, and that ASIC was unduly influenced by TPC in filing the complaints against the applicants and in its decision to not investigate TPC further in relation to the complaints made by the applicants. Again, the key basis for the claim brought against the respondent is the letter written by Mr Palmer on 30 September 2019, which was addressed to the respondent, and contained allegations that ASIC had been unduly influenced by TPC. It is important to note that Mr Palmer addressing the letter to the respondent is, in truth, the only substantive hook by which the applicants seek to implicate the respondent in ASIC’s handling of Mr Palmer’s letter.