Sourian v State of NSW
[1999] NSWSC 1173
•9 December 1999
CITATION: Sourian v State of NSW [1999] NSWSC 1173 CURRENT JURISDICTION: NSWSC FILE NUMBER(S): 020124/95; 020125/95 HEARING DATE(S): 08/11/99, 09/11/99, 10/11/99, 11/11/99, 12/11/99, 15/11/99 JUDGMENT DATE:
9 December 1999PARTIES :
Jake Sourian v State of New South Wales & Ors
Gerier Agop Magarditch & Ors v State of New South Wales & OrsJUDGMENT OF: James J
LOWER COURT JURISDICTION: Supreme Court (Master) LOWER COURT FILE NUMBER(S) : LOWER COURT JUDICIAL OFFICER: Master Harrison
COUNSEL : In Person - Plaintiff
K Burke - 1st Defendant
I Mescher - 2nd Defendant
R Horsley - 3rd Defendant
G Lindsay SC - 4th Defendant
J Thomson - 5th DefendantSOLICITORS: Unrepresented - Plaintiff
I V Knight - 1st Defendant
Moray & Agnew - 2nd Defendant
Curwood & Partners - 3rd Defendant
Middleton Moore & Bevins - 4th Defendant
Norton Smith & Co - 5th DefendantCATCHWORDS: Malicious Prosecution - Conspiracy - Supreme Court Rules Pt33 r6 - Pt13 r5 DECISION: 020124/95 - Appeal allowed in part.; 020125/95 - Appeal dismissed
THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISIONJAMES J
Thursday 9 December 1999
020124/95 - Jake Sourian v State of New South Wales & Ors
JUDGMENT
020125/95 - Gerier Agop Magarditch & Ors v State of New South Wales & Ors
1 HIS HONOUR: These are appeals from decisions of Master Harrison given on 18 September 1998 in proceedings No.20124/95 and proceedings No.20125/95.
2 In the appeal in proceedings No.20124/95 the appellant is Mr Jake Sourian, who is the plaintiff in the proceedings, and the respondents are the State of New South Wales, Francis Egan trading as Liability & All Claims, VACC Insurance Co Limited, Caltex Oil (Australia) Pty Limited and the Australia and New Zealand Banking Group Limited. It is convenient to refer to these proceedings as “the Sourian proceedings”.
3 In the appeal in proceedings No.20125/95 the first two appellants are Gerier Agop Magarditch and Sonya Magarditch, who are Mr Sourian’s parents. In the notice of appeal instituting the appeal Magic Australia Pty Limited is named as a third appellant. I will refer to the first two appellants as Mr Magarditch and Mrs Magarditch, to the third named appellant as “Magic” and to the proceedings No.20125/95 as “the Magarditch proceedings”. The respondents to the appeal in the Magarditch proceedings are the same five corporate or natural persons as are respondents to the appeal in the Sourian proceedings.
4 In this judgment I will refer to the first respondent in both appeals as “the State”, to the second respondent as Mr Egan or “the loss assessor”, to the third respondent as “VACC” or “the insurer”, to the fourth respondent as “Caltex” and to the fifth respondent as “ANZ” or “the Bank”.
5 The substantive orders made by Master Harrison in the Sourian proceedings were that a notice of motion filed by Mr Sourian on 29 June 1998 be dismissed and that the proceedings generally be dismissed. In the notice of motion Mr Sourian had sought orders giving leave to join Magic as a plaintiff and ANZ as a fifth defendant.
6 The substantive orders made by Master Harrison in the Magarditch proceedings were that a notice of motion filed on behalf of the plaintiffs Mr and Mrs Magarditch on 15 July 1998 be dismissed and that the proceedings generally be dismissed. In the notice of motion Mr Magarditch had sought orders that:-7 At the hearing before Master Harrison, which took place on 20 August 1998, Mr Sourian appeared for himself and was in effect permitted to appear for his parents. On the hearing of these appeals Mr Sourian appeared for himself and, like the Master, I permitted Mr Sourian to appear for his parents, but not for Magic. Mr Sourian’s father was in Court for most of the hearing but his mother did not come to the Court.
(i) The Sourian proceedings and the Magarditch proceedings be tried at the same time.(ii) The two proceedings be consolidated.
(iii) Leave be granted to join or “reinstate” the loss assessor as a defendant.
(iv) Leave be granted to join ANZ as a defendant.
(v) Leave be granted to join Magic as a plaintiff.
(vi) An extension of time be granted in which to file another statement of claim.
(vii) Leave be granted to join or “reinstate” Caltex as a defendant.
(viii) Leave be granted to Mr Sourian to appear for Magic.
Background Facts
8 In order to understand the issues on these appeals, it is necessary to set out a number of background facts, none of which would appear to be controversial.
9 In about 1984 (the precise date is unclear but is not material) Magic, whose shareholders and directors were then Mr and Mrs Magarditch, purchased a service station business with a workshop at 607 Pacific Highway, Chatswood. Magic entered into a deed of lease with Caltex dated 28 May 1986, whereby Magic leased the premises on which the business was conducted from Caltex. Magic also entered into an agreement with Caltex for the supply by Caltex of petroleum products, which was described as “the supply agreement”. Magic proceeded to carry on the business which it had purchased. Mr Sourian played an important part in carrying on the business of Magic and was sometimes referred to as “the manager”.
10 On or about 13 July 1987 Magic submitted a proposal for insurance to the insurer VACC and on 15 July 1987 the insurer entered into a contract of insurance with Magic, whereby inter alia the buildings and stock on Magic’s business premises were insured against damage or destruction by fire.
11 On 30 September 1987 Magic’s premises at Chatswood were entered and a small fire was lit. A pipebending machine was damaged. Magic made a claim on its insurance policy with the insurer.
12 On the night of 3 February 1988 there was a fire at Magic’s premises. The insurer was notified and a representative of the loss assessor attended at the premises.
13 On 16 March 1988 a claim form or declaration of loss in respect of the fire on 3 February 1988 was lodged by Magic with the insurer. The declaration of loss was signed by Mr Magarditch but was lodged on behalf of Magic by Mr Sourian. Attached to the declaration of loss were a large number of stock sheets purporting to record stock which had been damaged by the fire or by water used by the fire brigade in fighting the fire.
14 The fire was investigated by the police. The police officer in charge of the investigation was Detective Sergeant Peter Thomas, who was assisted by Detective Senior Constable Carl Paget.
15 On 12 May 1988 Detective Sergeant Thomas and Detective Senior Constable Paget went to see Mr Sourian at premises at Gladesville. Detective Sergeant Thomas told Mr Sourian that the police had been making inquiries about the fire on 3 February 1988, that the police were treating the fire as arson and that the police had reason to believe that Mr Sourian was responsible for the fire. Mr Sourian telephoned his solicitor and on advice from his solicitor exercised his right to decline to answer any questions from the police. However, Detective Sergeant Thomas proceeded to outline to Mr Sourian the grounds on which he suspected that Mr Sourian was responsible for the fire. Detective Sergeant Thomas also told Mr Sourian that, apart from arson, he would be charged with other offences.
16 On 12 May 1988 Mr Sourian was charged with the following offences:-
(ii) Publishing a false statement in an insurance proposal with intent to obtain a financial advantage from the insurer VACC ( Crimes Act s178BB).
(i) Maliciously damaging property by fire ( Crimes Act s195(b).
(iii) Publishing a false statement in a letter to the insurer VACC on 10 February 1988, with intent to obtain a financial advantage from the insurer (Crimes Act s 178BB).
(iv) Publishing a false statement in an insurance claim form with intent to obtain a financial advantage from the insurer VACC (Crimes Act s178BB).
(v) Conspiring to assault a man named McGowan, a former employee of Magic, who had assisted the police in their enquiries into the fire on 3 February 1988.
(vi) Assaulting a man named Middleton, an employee of the loss assessor Mr Egan, on 19 April 1988.
17 On 20 June 1988 Caltex, pursuant to s16(3) of the Petroleum Retail Marketing Franchise Act 1980 (Commonwealth) served on Magic, Mr Sourian and Mr and Mrs Magarditch a notice of termination of the lease and the supply agreement between Caltex and Magic, which together constituted a “franchise agreement” for the purposes of the Act. Most, but not all, of the grounds stated in the notice as being grounds for termination depended on allegations that Mr Sourian had committed the offences with which he had been charged on 12 May 1988.
18 On 26 July 1988 solicitors acting for the insurer VACC wrote a letter to the secretary of Magic, avoiding the insurance policy on the grounds of fraudulent non-disclosure, “that one of your company’s directors Jake Magarditch, also known as Jake Sourian, has been convicted of a number of offences, including the import of prohibited goods in the form of machine guns, bullet proof vests and the like, assault and malicious injury, among others”.
19 Mr Sourian was not a director of Magic but, as I have already noted, he played an important part in the carrying on of Magic’s business and was sometimes referred to as being the manager of the business. Mr Sourian had convictions for goods in custody, possessing an unlicensed pistol, assault, breach of a recognisance, malicious injury to property and importing prohibited imports being bullet proof vests. He did not have any conviction for importing machine guns. Mr Sourian’s convictions had resulted in a recognisance and then fines.
20 On or about 29 July 1988 Magic commenced proceedings in the Federal Court against Caltex, seeking a declaration that the notice of termination of the franchise agreement was invalid and consequential relief. A cross-claim was filed by Caltex seeking a declaration that the franchise agreement had been validly terminated and an order giving Caltex possession of the leased premises.
21 The proceedings in the Federal Court came on for hearing on 8 May 1989. Magic was represented by senior counsel. On the fifth day of the hearing the proceedings were settled. Orders were made by consent giving Caltex possession of the leased premises and leave to issue a writ of possession but staying these orders up to 31 May 1989, conditionally upon Magic complying with certain undertakings.
22 Committal proceedings on the charges against Mr Sourian were held in 1989. It would appear that the prosecution did not offer any evidence on the charge of publishing a false statement in the letter of 10 February 1988. On 5 January 1990 all of the charges against Mr Sourian were dismissed by the magistrate, with the exception of the charge under s178BB of the Crimes Act of publishing a false statement in an insurance claim form. Mr Sourian was committed for trial on this charge.
23 On 20 June 1991 Magic was wound up by a court order, Mr I L Struthers being appointed official liquidator.
24 The trial of Mr Sourian on the charge of publishing a false statement in the insurance claim form took place in 1993 before Judge Nader, sitting without a jury, in the District Court. Judge Nader found Mr Sourian not guilty. In a judgment delivered on 2 July 1993 Judge Nader said that on the Crown case he had a reasonable doubt whether the Crown had established the state of mind on the part of Mr Sourian which the Crown was required to establish as an ingredient of the offence charged. Mr Sourian was not required to make any answer to the Crown case.
25 In his judgment of 2 July 1993 Judge Nader went on to say:-
“I do not want to make unfavourable comments to Mr Sourian, but I should tell him that the result may have been different, if it had been simply a matter of deciding the case on a balance of probabilities. He may have had some explaining to do. But he did not have to explain anything in a criminal trial and he may be the beneficiary of some rules of the criminal law that favour accused persons to a considerable extent.
However, I do not want to leave a shadow over him. I find him not guilty and he goes away entitled to the operation of the presumption of innocence and the law must treat him that way. I do not want to hear any evidence from Mr Sourian and in accordance with what was said in Prasad by the South Australian Court, I dismiss the case”.
26 After his acquittal by Judge Nader Mr Sourian made an application for a certificate under s2 of the Costs in Criminal Cases Act 1967. On 8 March 1994 Judge Nader gave judgment on the application, granting Mr Sourian a certificate under the Act.
27 In his judgment of 8 March 1994 Judge Nader considered the question posed by s3(1)(a) of the Costs in Criminal Cases Act, namely whether, if the prosecution had, before the proceedings were instituted, been in possession of evidence of all the relevant facts, it would not have been reasonable to institute the proceedings. His Honour commented that the case against Mr Sourian was a circumstantial case. A circumstance relied on by the Crown was that Mr Sourian had set fire to the premises. His Honour said that, having studied the evidence relating to the charge of arson, he agreed “that the circumstances were such as to do no more than cast a suspicion of guilt on the accused”.
28 Another circumstance relied on by the Crown was that, according to evidence given by Mr McGowan, large quantities of stock had been removed from the Chatswood premises immediately prior to the fire. Judge Nader said that “the evidence taken at committal should have made it clear to the prosecution that Mr McGowan was an unreliable witness, whose testimony was tainted by bias and inconsistency”.
29 Another, related, circumstance sought to be relied on was that the stock at the premises immediately before the fire was at a low level. Judge Nader commented:-30 Another circumstance sought to be relied on by the Crown was that the business of Magic conducted at the premises at Chatswood was in a poor financial position. Judge Nader commented:-
“Evidence intended to prove that stocks at Chatswood were low at the time of the fire was unsatisfactory. It was selective in the sense that some witnesses were called at committal to prove the fact, while other available witnesses including the main suppliers of stock to Chatswood were not called. This presented a distorted picture. It was unreasonable for the crown to have placed reliance on the alleged fact of depleted stocks in deciding to prosecute the accused to trial.
The manner in which the stock-take after the fire was done was so grossly disorganised and incompetent that its results could never reasonably have formed the basis of demonstrating fraud on the part of the applicant. It was manifestly clear before the trial that there was no reliable basis for assessing stock lost in the fire. At all material times the applicant expected the results of any stock-take made by him to be checked independently. He even suggested that an independent third party check his stock-take. That offer was never taken up”.
31 Judger Nader continued:-
“There was available evidence, contrary to an underlying assumption of the prosecution, that the Chatswood branch of Magic Mufflers was in a healthy financial position. This fact deprived an already weak Crown case of some evidence of motive”.
“It is abundantly clear to me that a knowledge of all these facts, and others which I felt it not necessary to specify, made it unreasonable to charge and subsequently to continue the prosecution against Mr Sourian for attempting to obtain money by fraud”.
* * *
“I find, therefore, that if the prosecution had been in possession of all the relevant facts, it would have been unreasonable for the prosecution to institute the proceedings. It concerns me somewhat in this case that the prosecution was in fact in possession of many of the relevant facts, which should have deterred it from proceeding. I make no accusation of impropriety, but there seems to have been an unhealthy proximity between the investigators and the insurance company which may have resulted in a loss of objectivity”.
32 Mr and Mrs Magarditch brought proceedings in the Equity Division of this Court against ANZ. On 28 April 1994 Windeyer J directed that an inquiry be held before an Equity master. An inquiry was conducted by Master McLaughlin, who gave judgment on 20 March 1996. An appeal brought from Master McLaughlin’s decision was heard by Santow J, who gave judgment on 17 April 1997, allowing the appeal from Master McLaughlin’s decision. An application for leave to appeal to the Court of Appeal was dismissed on 23 September 1998.
33 According to the Court of Appeal, which gave a detailed judgment, an issue in these Equity proceedings was whether ANZ was entitled to apply monies from the sale of a property at 140 Victoria Road, Gladesville, which had been bought with the assistance of funds in a fully drawn advance account with ANZ known as “FDA2”, first in payment of the amount due on FDA2 and then in payment of monies due to ANZ from Magic. Master McLaughlin found that the liability on FDA2 amounting to $205,000 was not a liability of Magic but a liability of Mr Sourian personally and this finding was not upset on appeal. Santow J held that, even accepting that Mr Sourian, and not Magic, should be taken to have been the borrower of the $205,000 (a matter about which his Honour clearly had doubts), ANZ was entitled to apply the proceeds of sale of the property in the way in which it had and that in any event the parties had agreed that the moneys should be applied in the way the Bank had applied them. The Court of Appeal decided that there was no appellable error in Santow J’s judgment.
34 On 17 February 1995 both the Sourian proceedings and the Magarditch proceedings were commenced. I will defer to a later part of this judgment an account of the various things which have happened in the two proceedings.
35 On 6 September 1996 Mr Sourian and Mr Magarditch commenced further proceedings in the Equity Division of this Court against ANZ and the liquidator of Magic. When the proceedings came before Young J Mr Sourian made allegations of misconduct against the liquidator of Magic, who had been appointed by this Court when the order for the winding-up of Magic was made. Young J thereupon ordered that the proceedings be transferred to the Federal Court. In an amended statement of claim in the Federal Court various allegations were made against ANZ and it was alleged that the liquidator of Magic had failed to perform his duties as liquidator faithfully and had acted negligently in the performance of his duties. A hearing took place before Einfield J in March 1998. Einfield J reserved his decision and it would seem that judgment had not been given by the time Master Harrison conducted the hearing before her on 20 August 1998 or before she gave her judgments on 18 September 1998.
The present proceedings
36 Both the Sourian proceedings and the Magarditch proceedings were commenced by a statement of claim filed on 17 February 1995. In the original statement of claim in the Sourian proceedings Mr Sourian was the sole plaintiff and the defendants were the New South Wales Commissioner for Police, Detective Sergeant Thomas, Detective Senior Constable Paget, the loss assessor Mr Egan, the insurer VACC, Caltex and the New South Wales Director of Public Prosecutions. The claims, or at least the principal claims, made in the statement of claim in the Sourian proceedings were that the second and third defendants had maliciously and without reasonable and probable cause proffered criminal charges against the plaintiff, that the fourth and fifth defendants had maliciously and without reasonable and probable cause counselled and procured the laying of those charges, that the fifth defendant had failed to meet the insurance claim arising from the fire, that the sixth defendant had acted wrongly and unreasonably in ejecting Magic from the premises at Chatswood and that the seventh defendant had prosecuted the plaintiff at his trial in 1993. In the Magarditch proceedings Mr and Mrs Magarditch were the plaintiffs and the same seven persons were the defendants. The same claims or virtually the same claims were made in the statement of claim in the Magarditch proceedings as were made in the statement of claim in the Sourian proceedings.
37 The fourth defendant (the loss assessor Mr Egan) and the sixth defendant (Caltex) brought applications in both the Sourian proceedings and the Magarditch proceedings pursuant to Pt13 r5 and Pt15 r26 of the Supreme Court Rules. The applications came on for hearing before Master Greenwood and Master Greenwood gave judgment on 27 March 1996.
38 In the Sourian proceedings Master Greenwood held that the pleading of the claim in the nature of malicious prosecution against the fourth and the fifth defendants was defective, in that the act or acts of the fourth or fifth defendants by which they allegedly “procured” the laying of the criminal charges were not stated and no particulars were given of the alleged malice. The Master said that the pleading “does not deal with the gap between providing information and participation in the laying of charges… it does not deal with the gravamen of the claim for malicious prosecution, when it is made against a person other than the prosecutor”. Master Greenwood struck out the statement of claim in the Sourian proceedings, insofar as it made a claim of malicious prosecution against the fourth and fifth defendants.
39 In the Magarditch proceedings Master Greenwood held that the claim in the nature of malicious prosecution pleaded in the statement of claim suffered from the same defects as the corresponding claim in the Sourian proceedings and from the additional defect that Mr and Mrs Magarditch, the plaintiffs in the Magarditch proceedings, had not been prosecuted. Master Greenwood dismissed the claim for malicious prosecution against the fourth and fifth defendants.
40 Master Greenwood said that he had great difficulty in seeing how any claim could lie against the sixth defendant Caltex in either proceedings. The Master pointed out that the franchisee from Caltex was the company Magic, and not Mr Sourian or Mr and Mrs Magarditch. Proceedings had been brought in the Federal Court challenging the termination of the franchise agreement and had ended in the making of orders in favour of Caltex. However, rather than summarily dismissing the claims made against Caltex, Master Greenwood simply struck out the parts of the statements of claim which made allegations against Caltex.
41 Appeals by Caltex, in which Caltex asserted that Master Greenwood should not merely have struck out the parts of the statements of claim in which claims were made against Caltex but should have summarily dismissed those claims, were dismissed by Simpson J on 29 July 1996.
42 On 26 September 1996 an amended statement of claim was filed in the Sourian proceedings. The defendants named in the amended statement of claim were the State of New South Wales, the loss assessor Mr Egan, the insurer VACC and Caltex. The first defendant was sued pursuant to the Crown Proceedings Act 1988 and as being liable pursuant to the Law Reform (Vicarious Liabilities) Act 1983 for the actions of its “employed” police officers. The principal claims made in the amended statement of claim were that the second and third defendants or one of them “maliciously and without reasonable and probable cause” either “caused” or were “instrumental in causing” the first defendant to arrest and charge the plaintiff on each of the various charges which had been brought against the plaintiff. It was alleged that the third defendant was liable, not only for its own acts and omissions, but also for the acts and omissions of the second defendant.
43 The second defendant and the third defendant brought applications pursuant to Pt15 r26 and Pt13 r5 of the Supreme Court Rules, in regard to the amended statement of claim.
44 In a judgment given on 5 June 1997 Master Greenwood held that the amended statement of claim in the Sourian proceedings was defective, in that it did not say how it was alleged the third defendant was liable for the acts and omissions of the second defendant, which was an independent contractor; it did not plead the facts by reason of which it was alleged that the second defendant and the third defendant had been “instrumental” in causing the first defendant to arrest and charge the plaintiff; and some of the particulars of damage alleged could only relate to damage sustained by Magic, and not the plaintiff. The Master did not decide that the plaintiff had no case against the second and third defendants. Because there were a number of defects in the pleading, Master Greenwood thought that it would be better to strike out the statement of claim generally (rather than simply striking out parts of it) and he gave leave to the plaintiff to file a further amended statement of claim by 7 July 1997.
45 A further amended statement of claim (the third statement of claim in the Sourian proceedings) was filed on 7 July 1997, that is within the time permitted by Master Greenwood’s order. In the further amended statement of claim Mr and Mrs Magarditch were named as co-plaintiffs with Mr Sourian and ANZ was added as a fifth defendant. No leave had been given by Master Greenwood to join Mr and Mrs Magarditch or ANZ. The principal claims made in the further amended statement of claim were that the defendants had conspired to defraud and injure the plaintiffs in their business being conducted through Magic and that some of the defendants had conspired maliciously and without reasonable and probable cause to have Mr Sourian arrested and charged with certain of the charges which had been brought against him.
46 Applications by all of the defendants in the Sourian proceedings and some of the defendants in the Magarditch proceedings were heard by Master Harrison on 14 November 1997. The applications were based variously on Pt13 r5, Pt15 r26 and Pt33 r6 of the Supreme Court Rules.
47 The applications had originally been fixed for hearing before Master Harrison on 9 October 1997. On 9 October 1997 Mr Sourian appeared for himself and his parents and successfully applied for an adjournment. The applications were adjourned to 14 November 1997. Master Harrison directed that the plaintiffs file any affidavits on which they wished to rely by 30 October 1997. No affidavits were filed. On 14 November 1997 Mr Sourian sought a further adjournment, which was refused by the Master. An appeal to the Common Law Duty Judge against the Master’s refusal to grant an adjournment was dismissed and the hearing of the applications proceeded on 14 November 1997. Apart from the applications by the defendants, Master Harrison also heard an application by Mr Sourian in the Sourian proceedings, seeking leave to join Mr and Mrs Magarditch as co-plaintiffs and ANZ as a defendant in those proceedings.
48 In her reserved judgment in both matters delivered on 23 February 1998 Master Harrison held that Master Greenwood had given leave to file an amended statement of claim only to Mr Sourian, and not to Mr and Mrs Magarditch, and that leave should not be granted to join Mr and Mrs Magarditch as co-plaintiffs in the Sourian proceedings. Master Harrison also held that leave should not be granted to join ANZ as a defendant in the Sourian proceedings. The Master then considered the applications by the defendants. Towards the end of her judgment the Master said:-49 Having decided that the further amended statement of claim was liable to be struck out under Pt15 r26, Master Harrison turned to consider whether either the Sourian proceedings or the Magarditch proceedings should be dismissed for want of prosecution. The Master, apparently drawing on the commentary on Pt33 r6 in Ritchies Supreme Court Procudure NSW said at p22 of her judgment:-
“It is my view that the amended statement of claim as currently pleaded would be liable to be struck out on the basis that pursuant to Part 15 r 26, it discloses no reasonable cause of action. The pleading of conspiracy does not set out each party’s relationship with each other, it does not allege where and when the agreement or agreements were reached. It does not set forth with clarity and precision the overt acts that each person is alleged to have done.
In relation to the claim for malicious prosecution the pleading still does not deal with the gap between providing information and the participation of laying of the charges. The second and third plaintiffs were not the subject of charges, so cannot maintain a claim for malicious prosecution. The damage alleged is that suffered by Magic and not the plaintiffs. The claim against the fourth defendant in relation to the lease still suffers from the deficiencies identified by Master Greenwood. As the amended statement of claim does not properly plead the causes of action relied upon, the defendants do not know the case they have to meet. It is my view that the amended statement of claim as currently pleaded discloses no reasonable cause of action and would be liable to be struck out. To grant leave to the filing of the amended statement of claim would be futile”.
50 The Master also quoted from the decision of the House of Lords in Grovit & Ors v Doctor & Ors (1997) 2 All ER 417 at 424, where Lord Woolf said:-
“The power of the courts to dismiss an action for default or want of prosecution should be exercised only where the plaintiff’s default has been intentional and contumelious or where there has been inordinate and inexcusable delay on his or his lawyer’s part giving rise to a substantial risk that a fair trial would not be possible (or to a risk of) serious prejudice to the defendants: Birkett v James [1977] 2All ER 801; (1978) AC 297 at 318. In each case, a balance must be struck between the plaintiff and the defendant and the court must decide whether or not, in all the circumstances, justice requires that the proceedings should be dismissed: Witten v Lombard Australia Ltd (1968) 88WN (Pt 1) (NSW) 405 at 411; Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1986) 4 NSWLR 491; McKenna v McKenna [1984] VR 665.
51 The Master concluded at p23 of her judgment:-
“The courts exist to enable parties to have their disputes resolved. To commence and to continue litigation which you have no intention to bring to conclusion can amount to an abuse of process. Where this is the situation the party against whom the proceeding is brought is entitled to apply to have the action struck out and if justice so requires (which will frequently be the case) the courts will dismiss the action. The evidence which was relied upon to establish the abuse of process may be the plaintiff’s inactivity. The same evidence will then no doubt be capable of supporting an application to dismiss for want of prosecution. However, if there is an abuse of process, it is not strictly necessary to establish want of prosecution under either of the limbs identified by Lord Diplock in Birkett v James ”.
“I am not satisfied that the plaintiffs have no intention to bring their case to trial but rather they have not been able to properly articulate their claim. Accordingly, it is my view that neither the Sourian or the Magarditch proceedings should be struck out for want of prosecution”.
52 As regards Pt13 r5 of the Supreme Court Rules Master Harrison referred to the judgment of Judge Nader of 8 March 1994 and the judgment of Master McLaughlin of 20 March 1996 as possibly lending some support to the plaintiffs in the two proceedings. The Master concluded “it is my view that the plaintiffs may have a cause of action and I emphasise the word ‘may’. Accordingly they should be given one further opportunity to amend their respective statements of claim”. In each proceeding the Master granted leave to file a further amended statement of claim on or before 20 April 1998.
53 No further amended statement of claim was filed in either proceeding by 20 April 1998. On 27 April 1998 a notice of motion was filed by Mr Sourian in the Sourian proceedings, seeking a further extension of time in which to file an amended statement of claim and an order that the Sourian proceedings be transferred to the Federal Court to be heard with the proceedings in the Federal Court which had come before Einfield J. ANZ, the fifth named defendant in the further amended statement of claim which had been considered by Master Harrison, filed a notice of motion, seeking a declaration that it had not been validly joined as a defendant. The other defendants in the Sourian proceedings made applications seeking summary dismissal of the Sourian proceedings.
54 On 5 May 1998 Sperling J directed that any affidavit in support of Mr Sourian’s notice of motion be filed by 7 May 1998. A long affidavit by Mr Sourian was filed on 7 May 1998 but Studdert J, before whom the various applications came on 11 May, considered that the affidavit did not give any reason why an amended statement of claim had not been filed by 20 April 1998, as directed by Master Harrison.
55 Although the application by Mr Sourian had been filed only in the Sourian proceedings, Studdert J treated that application as also being an application in the Magarditch proceedings for an extension of time in which to file an amended statement of claim in those proceedings.
56 Studdert J in his judgment of 12 May 1998 said that, although Mr Sourian had not adduced any evidence to explain why he had not complied with Master Harrison’s direction, Mr Sourian had informed Studdert J that he had been waiting for Einfield J to give his reserved decision in the part of the Federal Court proceedings which Justice Einfield had heard. If that part of the proceedings in the Federal Court was successful, Mr Sourian would seek to join Magic as a plaintiff in the further amended statement of claim to be filed in the Sourian proceedings. Studdert J commented:-57 Studdert J declined to transfer the Sourian proceedings to the Federal Court, for the reason that there was not yet any properly pleaded statement of claim in the Sourian proceedings. His Honour said that he was “troubled by the relief sought in paragraph 1” of Mr Sourian’s notice of motion, that is the application for a further extension of time in which to file a further amended statement of claim. After weighing various competing considerations, his Honour said:
“It is regrettable that Mr Sourian is not legally represented in these proceedings. He appears to have a misconception as to the need to comply with the requirements of court orders, and he has a further misconception as to the requirements of appropriate pleadings in this court”.
“I have decided to give the plaintiffs one further opportunity to put the pleadings in order. It seems to me that I should afford an extension of sufficient length to enable a realistic opportunity for any available cause or causes of action to be properly pleaded. With this in mind, I am going to grant an extension of time until 29 June 1998. Any cause of action to be pleaded against the first, second, third and/or fourth defendants in matter 20124/95 is to be pleaded in a duly amended statement of claim by 29 June 1998. Mr Sourian need not expect that if an amended statement of claim has not been filed and served by that date this court would grant any further adjournment, because there are proceedings pending against Magic in the Federal Court or for any other reason Mr Sourian might later advance. I am granting this adjournment, setting its length with a view to it being a final opportunity for Mr Sourian to properly plead any available cause of action”.
58 Studdert J granted a similar extension of time to Mr and Mrs Magarditch in the Magarditch proceedings.
59 As regards ANZ, Studdert J said in his judgment:-
“The Master ruled that the plaintiffs had not shown the need to join the bank and that the pleading against the bank was defective. Hence the bank’s position was that since there had been no order made for its joinder, it was not an appropriate party to the plaintiff’s notice of motion. That much seems clear from the judgment of Master Harrison. However, I am presently unpersuaded that I should make any order on the bank’s notice of motion”.
60 On 29 June 1998 Mr Sourian filed a notice of motion in the Sourian proceedings, in which he sought orders giving leave to join Magic as a second plaintiff and ANZ as a fifth defendant. On 29 June 1998 Mr Sourian filed an affidavit in support of the notice of motion, to which he annexed a copy of a “second further amended statement of claim” in the Sourian proceedings. The second further amended statement of claim was verified by an affidavit sworn by Mr Sourian on 29 June 1998. It would appear that the notice of motion and the affidavit in support with its annexure were served on the defendants on 29 June 1998. Certainly, the defendants were aware of the notice of motion, when it was mentioned before Abadee J on 6 July 1998.
61 On 15 July 1998 a document in the same form as the document annexed to Mr Sourian’s affidavit, verified by an affidavit sworn by Mr Sourian on 15 July 1998, was filed as an independent document.
62 No document was filed in the Magarditch proceedings, apart from the notice of motion filed on 15 July 1998, which I referred to near the beginning of this judgment. However, a document described as an amended statement of claim, verified by an affidavit sworn on 15 July 1998 by Mr and Mrs Magarditch, was prepared.
63 On 29 June 1998 Carruthers AJ made a declaration that ANZ had not been joined as a defendant in the Sourian proceedings.
64 Mr Sourian’s notice of motion and a number of applications by the defendants in the Sourian proceedings came before Master Harrison on 20 August 1998. The applications by the defendants were based on one or more of Pt13 r5, Pt15 r26 and Pt33 r 6 of the Supreme Court Rules. On the hearing of the applications the Master had before her a number of voluminous affidavits by Mr Sourian and much other evidence.
65 The Master delivered a reserved judgment on 18 September 1998. In her reserved judgment the Master recounted the history of the Sourian proceedings in a series of numbered paragraphs. Paragraph (14) dealt with Studdert J’s judgment of 12 May 1998. Paragraphs (15), (16) and (17) of this history were in the following terms:-
“(15) On 29 June 1998, the fourth amended statement of claim was not filed in accordance with the orders of Studdert J.
(16) On 29 June 1998, Carruthers AJ declared that Australia and New Zealand Banking Group Limited had not been joined as a defendant in the proceedings.
(17) On 15 July 1998, the plaintiff filed the fourth amended statement of claim. It was called ‘second further amended statement of claim.’”
66 The Master did not include in her history of the proceedings the filing on 29 June 1998 of the notice of motion and the affidavit by Mr Sourian, with its annexure.
67 Master Harrison said in her judgment that Mr Sourian had not offered any explanation for the failure to file a statement of claim within the time limited by Studdert J. She noted that Mr Sourian had been given numerous opportunities to file a further amended statement of claim. The Master continued:-68 On 20 August 1998 there also came before Master Harrison a number of applications in the Magarditch proceedings, including the application by the plaintiffs of 15 July 1998 and applications by the first defendant and the sixth defendant (Caltex) based on one or more of Pt13 r5, Pt15 r26 and Pt33 r6 of the Supreme Court Rules. On 18 September 1998 Master Harrison delivered a separate reserved judgment in the Magarditch proceedings, much of which was in the same terms as the reserved judgment the Master delivered on the same day in the Sourian proceedings. As in her judgment in the Sourian proceedings, the Master gave an account of the history of the proceedings in a series of numbered paragraphs. Paragraphs (14) and (16) were in the following terms:-
“The plaintiff did not seek a further extension of time but filed the further amended statement of claim in the registry. This statement of claim was filed irregularly. He still has not sought that he be granted an extension of Studdert J’s order. This may be because he was aware that the court would be most unlikely to grant a further extension of time. I am conscious that the plaintiff is unrepresented but in the recent past history of this matter, he has been treated leniently by the court because of his lack of legal representation. It has always been taken into account that to dismiss the plaintiff’s proceedings depriving the plaintiff of the opportunity of a hearing on its merits is a drastic step. This is an important consideration which I have taken into account. The defendants have been awarded costs against the plaintiff on several occasions. On 23 February 1998 I ordered that the plaintiff pay the defendants’ costs forthwith. The plaintiff has not paid these outstanding costs. The prejudice that the defendants have suffered by the plaintiff’s delays and non-compliance with court orders cannot be overcome by a further order for costs.
As there is no explanation for the delay and non-compliance with the court’s direction, particularly in the light of Studdert J’s comments, and the plaintiff has not paid the defendants outstanding costs, it is my view that justice demands that the statement of claim and the proceedings should be dismissed with costs.
As the proceedings have been dismissed, I dismiss the plaintiff’s notice of motion filed 29 June 1998”.
69 After giving her account of the history of the Magarditch proceedings, the Master noted that the proposed statement of claim had not yet been filed. The Master continued:-
“(14) On 29 June 1998, the further amended statement of claim was not filed in accordance with the orders of Studdert J.
(Paragraph (15) related to interlocutory orders made by Abadee J on 6 July 1998)
(16) On 20 August 1998, the plaintiffs tendered a copy of their proposed amended statement of claim (Ex A)”.
“The plaintiffs have been given numerous opportunities to file their further amended statement of claim. On 23 February 1998 I gave the plaintiffs ‘one further opportunity’ to file their further amended statement of claim and allowed two months for them to do so. On 12 May 1998 when the plaintiffs had not taken advantage of that ‘one further opportunity’ Justice Studdert granted the plaintiffs one further opportunity for them to file their further amended statement of claim and specifically stated that ‘if the amended statement of claim is not filed and served by 29 June 1998, Mr Sourian need not expect that the court would grant any further adjournment’.
I am conscious that the plaintiffs are unrepresented but in the recent past history of this matter, they have been treated leniently by the court because of their lack of legal representation. It has always been taken into account that to dismiss the plaintiffs’ proceedings is a drastic step. It is an important consideration which I have taken into account. The defendants have been awarded costs against the plaintiffs on several occasions and on 23 February 1998 I ordered that the plaintiffs pay the defendants’ costs forthwith. The plaintiffs have not paid outstanding costs. The prejudice that the defendants have suffered by the plaintiffs’ delays and non-compliance with court orders cannot be overcome by a further order for costs.
As there is no explanation for the delay and non-compliance with the court’s direction, particularly in the light of Studdert J’s comments, and the plaintiffs have not paid the defendants outstanding costs, it is my view that justice demands that the proceedings should be dismissed with costs.
As the proceedings have been dismissed, I dismiss the plaintiffs’ notice of motion filed 15 July 1998”.
70 The present appeals have been brought from the decisions of Master Harrison of 18 September 1998. It is apparent from Master Harrison’s judgments that she dismissed both proceedings pursuant to Pt33 r 6(2) of the Supreme Court Rules, on the ground that the plaintiff or plaintiffs had made default in complying with Studdert J’s orders made on 12 May 1998, that any amended or further amended statement of claim be filed by 29 June 1998. In her judgments of 18 September 1998 the Master did not give any consideration (and, having regard to her decisions under Pt33 r6, it was unnecessary for her to give any consideration) to whether either the Sourian proceedings or the Magarditch proceedings should be dismissed pursuant to Pt13 r5. In particular, there is not any consideration of whether a reasonable cause of action was disclosed in the second further amended statement of claim in the Sourian proceedings or in the proposed amended statement of claim in the Magarditch proceedings. At the hearing of the appeals before me I gave leave to each of the respondents to each appeal to file a notice of contention to the effect that Master Harrison’s decision should be affirmed on the grounds that each of the proceedings should be dismissed pursuant to Pt13 r 5. Each of the respondents availed itself of this leave and filed a notice of contention.
71 Although it was not necessary for Master Harrison to refer to the contents of the second further amended statement of claim in the Sourian proceedings or the proposed amended statement of claim in the Magarditch proceedings, I will now outline the contents of the two documents. Later in this judgment it will be necessary to refer to some parts of the documents in more detail.
72 The second further amended statement of claim in the Sourian proceedings names ANZ as a fifth defendant. The first thirteen paragraphs make allegations about individual defendants. Paragraphs 14-20 are under the heading “Malicious Prosecution Case”. Paragraphs 14 is in the following terms:-73 Paragraphs 15, 16 and 17 state the charges which were brought against Mr Sourian and the history of the criminal proceedings against him in the Local Court and the District Court. Paragraph 18 is in the following terms:-
“14. Between 1988 and 1993 the Defendants and each of them by their servants or agents wrongfully and maliciously prosecuted the Plaintiff in the Local Court and the District Court of New South Wales, whereby the Plaintiff suffered substantial loss and damage, as particularised more fully below”.
“18. The proceedings and each of them were brought against the Plaintiff without reasonable and probable cause at the instigation of the Defendants and each of them, their servants and agents, as more particularly stated herein”.
74 Particulars of the allegations in paragraph 18 are furnished in relation to each of the six charges brought against Mr Sourian.
75 In paragraph 19 it is alleged that each of the prosecutions was brought against the plaintiff for an improper purpose. Particulars of this allegation are furnished. In paragraph 20 it is alleged that the plaintiff has suffered loss and damage and particulars of the loss and damage are given.
76 The paragraphs in the second further amended statement of claim from paragraph 21 onwards are under the heading “Conspiracy”. In paragraphs 21-25 it is alleged that the first three defendants by named individuals conspired to defeat Magic’s claim against the insurer VACC in relation to the fires at the service station “and to damage and injure the plaintiff’s commercial standing and in his business”. Particulars of alleged overt acts done in furtherance of the conspiracy and particulars of the damage allegedly suffered by the plaintiff are given.
77 In paragraphs 26-29 of the second further amended statement of claim it is alleged that Caltex by named agents conspired with the first defendant by its named agents to provide false information to the prosecution authorities “to defraud and injure Magic in its business and the plaintiff in his business as its manager”. Particulars of alleged overt acts done in furtherance of the conspiracy and particulars of the damage allegedly suffered by the plaintiff are given.
78 In another series of paragraphs, which are confusingly numbered 24-28, it is alleged that the first and the fifth defendants by named agents conspired to provide false information to the prosecution authorities with respect to the financial position of Magic and the business standing of the plaintiff to defraud and injure the plaintiff. Particulars of alleged overt acts done in furtherance of the conspiracy and particulars of the damage allegedly suffered by the plaintiff are given.
79 The proposed amended statement of claim in the Magarditch proceedings names Magic as a co-plaintiff and also names ANZ as the fifth defendant. The first eleven paragraphs make allegations against individual defendants. Paragraph 10 is in the following terms:-80 Paragraph 12 is in the following terms:-
“After the above was effected, (that is, the insurance claim was submitted,) on or about 12 May 1998, the Second Defendant by his servant or agents as particularised herein (and/or the Third Defendant and/or the Fourth and/or the Fifth Defendant) secured the intervention of the First Defendant in the prosecution of Jake Sourian in respect of certain conduct whilst he was acting on behalf of Magic”.
“After 03.02.88 and on or before 02.07.93 at a date and time which the Plaintiffs are presently unable to specify more particularly, the said Thomas and Paget for whose conduct the First Defendant is liable, Edwin Middleton and Frances Egan for whose conduct the Second Defendant is liable and Greg Frost for whose conduct the Third Defendant was liable, amongst themselves wrongfully and maliciously conspired and combined to defraud and injure the Plaintiffs”.
81 Particulars of alleged overt acts done in furtherance of the conspiracy and particulars of the damage allegedly suffered by the plaintiffs are given.
82 Paragraph 16 of the proposed amended statement of claim is in the following terms:-
“Further, the Fourth Defendant by its servants or agents Nelson Chad and Richard Lund agreed with the First Defendant by Thomas and Paget and with each other maliciously and wrongfully to conspire and combine to provide false information to the prosecution authorities in New South Wales and to the Police Service in order to injure Magic in its business and the First and Second Plaintiffs in their interests in the business”.
83 Particulars of alleged overt acts done in furtherance of the conspiracy and particulars of the damage allegedly suffered by the plaintiffs are given.
84 Paragraph 21 is in the following terms:-
“Between 1988 and 1993 the First and Fifth Defendants by the said Thomas and Paget and the said Kelly wrongfully and maliciously conspired amongst themselves and combined to injure the Plaintiffs”.
85 Particulars of alleged overt acts done in furtherance of the conspiracy and particulars of the damage allegedly suffered by the plaintiffs are given.
86 The concluding paragraphs in the proposed amended statement of claim, which are numbered 25-29, are each in similar terms. It is alleged successively against each defendant that between 1988 and 1991 by its servants or agents Thomas and Paget and the Director of Public Prosecutions it caused loss to the plaintiffs by unlawful means, the unlawful means being the malicious prosecution of Mr Sourian and the conspiracy to injure Magic and the plaintiffs, alleged earlier in the statement of claim87 As stated earlier in this judgment, the order Master Harrison made dismissing each proceedings was made pursuant to Pt33 r6 of the Supreme Court Rules. Pt33 r6(2), which is the relevant part of Pt33 r6, provides:-
The Procedural Law Governing the Appeals
“Where a plaintiff makes default in complying with any order or direction as to the conduct of the proceedings, or does not prosecute the proceedings with due despatch, the Court may, on application by any party or of its own motion, stay or dismiss the proceedings”.
88 The most important principles governing the application of Pt33 r6, as stated in Ritchie’s Supreme Court Procedure, were set out by the Master in her judgment of 23 February 1998.
89 The present appeals have been brought pursuant to Pt60 r10 of the Supreme Court Rules. It is well settled that an appeal from a master to a single judge pursuant to Pt60 r10 is governed by the same principles as an appeal from a judge of the Court to the Court of Appeal. See Do Carmo v Ford Excavations Pty Limited (1981) 1 NSWLR 409 and the commentary at par60.10.1 of Ritchie’s Supreme Court Procedure. Accordingly, where, as here, an appeal is from a decision depending on an exercise of a discretion by the judicial officer of first instance, the appeal court must apply the principles governing an appeal from a discretionary decision, which were stated in the classic passage in the judgment of Dixon, Evatt and McTiernan JJ in House v the King (1936) 55 CLR 499 at 504-505 as follows:-
“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his, if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.”
90 In the present case, it was naturally submitted on behalf of the respondents to both appeals that no error in the exercise of the Master’s discretion had been established and accordingly the appeals should be dismissed, even if it were the position that, had I been the primary judge, I would have taken a different course to that taken by the Master.
91 The Master did not base her decision in either proceedings on Pt13 r5 of the Supreme Court Rules. However, as some of the respondents’ applications before the Master were based on Pt13 r5, as well as Pt33 r6, and as notices of contention relying on Pt13 r5 were filed on behalf of all respondents in the appeals, it is appropriate, at this stage of my judgment, that I refer to Pt13 r5. Pt13 r 5 provides as follows:-
“(1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings:-
(a) no reasonable cause of action is disclosed;
(b) the proceedings are frivolous or vexatious; or
(c) the proceedings are an abuse of the process of the Court,
the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.
(2) The Court may receive evidence on the hearing of any application for an order under subrule(1)”.
92 It was accepted by the respondents to the appeals that, as the Master had not based either decision dismissing the proceedings on Pt13 r5, I was not, so far as Pt13 r5 was concerned, reviewing any exercise of discretion by the Master and, insofar as I considered whether any order should be made under Pt13 r5, I would be making an original exercise of the discretion conferred by Pt13 r5 and hence the onus would be on the respondents to persuade me that I should exercise my discretion in their favour.
93 The principles which should be applied in deciding whether proceedings, or any particular claim in any proceedings, should be dismissed pursuant to Pt13 r5 are stated in pars13.5.1-13.5.5 of Ritchie’s Supreme Court Procedure. The judicial pronouncement which is most frequently quoted in this connection is part of the judgment of Barwick CJ in General Steel Industries Inc v Commissioner for Railways (New South Wales) (1964) 112 CLR 125 at 129-130, where Barwick CJ said inter alia:-94 As is apparent from subrule (2) of Pt13 r5, the Court on an application under Pt13 r5 is not confined to an examination of the pleadings and may have regard to the evidence which has been adduced. This is of some significance in the present case, where several very large affidavits by Mr Sourian have been filed over an extended period of time and it can be inferred that Mr Sourian has already adduced all, or virtually all, of the evidence available to him.
“It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; ‘so obviously untenable that it cannot possibly succeed’; ‘manifestly groundless’; ‘so manifestly faulty that it does not admit of argument’; ‘discloses a case which the Court is satisfied cannot succeed’; ‘under no possibility can there be a good cause of action’; ‘be manifest that to allow them’ (the pleadings) ‘to stand would involve useless expense’”.
* * *
“As I have said, some of these expressions occur in cases in which the inherent jurisdiction was invoked and others in cases founded on statutory rules of court but although the material available to the court in either type of case may be different the need for exceptional caution in exercising the power whether it be inherent or under statutory rules is the same. Dixon J (as he then was) sums up a number of authorities in Dey v Victorian Railways Commissioners where he says: ‘A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process’. Although I can agree with Latham CJ in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff’s claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed”.
The Appeal in the Magarditch Proceedings
95 It is convenient to deal first with the appeal in the Magarditch proceedings.
96 In the Magarditch proceedings I consider that the submissions by the respondents based on the present appeal being an appeal from a discretionary decision by the Master should be upheld and that the appeal should be dismissed. I do not consider that any error has been established in the exercise of the Master’s discretion. Although in her judgment of 18 September 1998 the Master did not explicitly state the principles she was applying in regard to Pt33 r6, I infer that the Master applied the principles which she had set out in her earlier judgment of 23 February 1998. These were correct principles to apply.
97 In deciding to dismiss the proceedings pursuant to Pt33 r6, the Master particularly took into account the terms of the order made by her on 23 February 1998 and the terms of the order made by Studdert J on 12 May 1998, the failure to comply with those orders and particularly the order made by Studdert J, the absence of any explanation for the failure to comply with Studdert J’s order and the fact that prejudice to the respondents could not be overcome by the making of costs orders which would be effective. All of these matters were matters which could properly be taken into account. There was no material consideration which the Master failed to take into account. The order made by the Master dismissing the proceedings was not so unreasonable or so plainly unjust as to give rise to an inference that the exercise of discretion by the Master had somehow miscarried.
98 As I have held that the appeal against the Master’s decision dismissing the Magarditch proceedings pursuant to Pt33 r6 should be dismissed, it is strictly unnecessary for me to consider whether the Magarditch proceedings should be dismissed pursuant to Pt13 r5. However, in case I am wrong in my primary holding, I should consider this further question. In my opinion, the Magarditch proceedings, if they were not properly dismissed pursuant to Pt33 r6, should be dismissed pursuant to Pt13 r5, on the grounds that they cannot possibly succeed.
99 Anyone attempting to draw a statement of claim or an amended statement of claim in the Magarditch proceedings would be confronted by two formidable obstacles.
100 The first obstacle is that Mr and Mrs Magarditch, unlike Mr Sourian, were not prosecuted by anybody and hence could have no claim for malicious prosecution.
101 The second obstacle is that it was the company Magic, and not Mr and Mrs Magarditch, which was the lessee and franchisee from Caltex, which carried on the service station business, which entered into the contract of insurance with the insurer and which was the customer, or at least the relevant customer, of the Bank. The separate corporate personality of Magic has to be respected and Mr and Mrs Magarditch cannot arrogate to themselves a cause of action which belongs only to Magic. Their attempts to do so are readily understandable. Magic has been wound up and hence control of Magic has passed to the liquidator, to the exclusion of Mr and Mrs Magarditch, and the liquidator is unwilling to have any proceedings brought by Magic.
102 It is one or other or both of the two obstacles I have identified, which would seem to have been mainly responsible for the contorted nature of the pleading in the original statement of claim and in the proposed amended statement of claim in the Magarditch proceedings.
103 Without mentioning all of the reasons why I consider that the Magarditch proceedings cannot possibly succeed, I will mention some of my reasons.
104 Magic should not have been named as a plaintiff and cannot be joined as a plaintiff, on an application by Mr and Mrs Magarditch. The attempt to join Magic seems to be a tacit recognition that the claims pleaded, if they exist, are claims properly belonging to Magic. That Mr and Mrs Magarditch derived income from the business of Magic does not give them standing to sue on causes of action, which, if they exist, belong to Magic.
105 The overt acts alleged, even if they could be proved, are incapable, in my opinion, of establishing any of the conspiracies alleged. Any conspiracy to defraud or injure, even if it existed, was directed at Magic, and not at Mr and Mrs Magarditch.
106 The overt acts alleged, even if they could be established, occurred in 1988 and any cause of action in conspiracy would have become statute-barred by the time the Magarditch proceedings were commenced on 17 February 1995. I note, as regards the particular overt acts alleged:-
107 (i) VACC refused to meet the insurance claim and avoided the insurance policy by its letter of 26 July 1988.
108 (ii) Caltex made any decision not to repair the burnt out premises “or otherwise to support Magic” and to terminate the franchise agreement, by the time it gave its notice of termination of 20 June 1988.
109 (iii) Mr Kelly, the officer of ANZ, who was alleged, in his capacity as manager of the West Ryde Branch of the Bank, to have conspired on behalf of the Bank, ceased to be the manager of the West Ryde Branch, and to have any connection with the West Ryde Branch, on 20 June 1988. The statement Mr Kelly made to the police in the prosecution of Mr Sourian is before me and it is not true that Mr Kelly did not in the statement he made to the police disclose that Magic and Mr and Mrs Magarditch owned a number of properties.
110 As regards the claims made against individual defendants in the latter part of the proposed amended statement of claim, the claims do not, in my opinion, plead any sustainable cause of action. There is no basis in the evidence before me for arguing that Thomas, Paget and the Director of Public Prosecutions were agents of any defendant, other than (possibly) the first defendant, the State.
The Appeal in the Sourian Proceedings
111 In my opinion, the appeal in the Sourian proceedings against the order of the Master dismissing the proceedings pursuant to Pt33 r6 of the Supreme Court Rules should be upheld.
112 The histories of the two proceedings, the Sourian proceedings and the Magarditch proceedings, are generally rather similar and in each proceeding Studdert J made an order on 12 May 1998, extending the time for the filing of an amended or further amended statement of claim to 29 June 1998. In each proceedings Master Harrison relied largely on what she found to be the unexplained failure to comply with this order by Studdert J, in deciding that the proceedings should be dismissed.
113 However, there is this difference between the two proceedings, that in the Sourian proceedings, but not in the Magarditch proceedings, the plaintiff on 29 June 1998, that is within the time permitted by Studdert J’s order, filed a notice of motion and an affidavit to which a form of statement of claim was annexed. This document was headed “Second Further Amended Statement of Claim”, set out the terms of the second further amended statement of claim on which Mr Sourian wished to rely (it is in the same terms as the second further amended statement of claim filed as an independent document on 15 July 1998), was verified by an affidavit sworn by Mr Sourian on 29 June 1998 and was promptly served on the defendants. It is to be borne in mind that Mr Sourian was a lay person acting without legal representation.
114 The filing of this document, even as an annexure to another document, within the time limited by Studdert J’s order, was, in my opinion, a material factor, which should have been taken into account by Master Harrison in making her discretionary decision whether to dismiss the Sourian proceedings pursuant to Pt33 r6. However, the fact of the filing of this document is not included in the Master’s account of the history of the proceedings (or elsewhere in her judgment). The Master simply stated in par(15) of her account of the history of the proceedings:-
“On 29 June 1998 the fourth amended statement of claim was not filed in accordance with the orders of Studdert J”.
115 I consider that I should hold that the exercise of the Master’s discretion miscarried and should be set aside, for the reason that she did not take into account a material consideration, which she was bound to take into account in making her discretionary decision.
116 As I have set aside the exercise of discretion by the Master and as there is sufficient material before me for me to exercise the discretion, I should proceed to exercise the discretion myself. Applying the principles stated by Master Harrison in her judgment of 23 February 1998 which were taken from Ritchie’s Supreme Court Procedure and taking into account the filing of the verified second further amended statement of claim on 29 June 1998 as an annexure to Mr Sourian’s affidavit, I do not consider that the Sourian proceedings should be dismissed pursuant to Pt33 r6. Even taking into account all the matters adverse to Mr Sourian relied on by the Master, I do not consider that any default by Mr Sourian was intentional or contumelious or that there was an inordinate and inexcusable delay giving rise to a substantial risk that a fair trial would not be possible or to a risk of serious prejudice to the defendants. In striking the balance between the parties and deciding whether justice requires that the proceedings be dismissed, I take into account that, as I will subsequently explain, Mr Sourian would appear to have some arguable causes of action. It cannot be said of Mr Sourian that he has no intention of bringing his case to trial.
117 As I have declined to dismiss the Sourian proceedings pursuant to Pt33 r6, it is necessary for me to consider the other applications by the respondents and in particular their applications pursuant to Pt13 r5. In order for me to do so, it is necessary to make some examination of the tort of malicious prosecution.
The Tort of Malicious Prosecution -
118 The element of the tort of malicious prosecution on which argument focused on the present appeals is the element that the defendant in an action for malicious prosecution should have instituted or maintained the prior prosecution of the plaintiff.
119 There is no doubt that a person who laid the information which set in motion the criminal prosecution of the person who is the plaintiff in the subsequent proceedings for malicious prosecution “instituted” the prosecution of the plaintiff. In the present case, it can be inferred, with a high degree of confidence, that each information was laid by a police officer (probably Detective Sergeant Thomas) and hence there is clearly an arguable case that this element of the tort of malicious prosecution can be established against the first defendant, the State. However, the question arises whether this element of the tort of malicious prosecution is capable of being established against any of the other defendants.
120 In Commonwealth Life Assurance Society Limited v Brain (1935) 53 CLR 343 Dixon J said at 379:-
“The legal standard of liability for a prosecution which is instituted neither by the defendant nor by his servant is open to criticism on the ground of indefiniteness. 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… 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. If the actual prosecutor acts maliciously and without reasonable and probable cause, those who aid and abet him in doing so are joint wrongdoers with him”.
121 The actual facts in Commonwealth Life Assurance v Brain were unusual. Although the charge of conspiring to defraud brought against Brain, which was the foundation of his later claim for malicious prosecution, had been laid by a police officer, the information which led to the laying of the charge was supplied to the police by an officer of Commonwealth Life Assurance and the prosecution was conducted by counsel and solicitors engaged by Commonwealth Life Assurance, which agreed to pay all costs, charges and expenses of the prosecution.
122 The facts in the New Zealand case of Commercial Union Assurance Co of New Zealand Limited v Lamont (1989) 3 NZLR 187 (New Zealand Court of Appeal) bear some resemblance to the facts of the present case. A building and its contents belonging to Lamont were destroyed by fire and Lamont made a claim on an insurance policy with Commercial Union. As a result of suspicions expressed by a fire safety officer that the fire had been deliberately lit, police made enquiries of Commercial Union, which supplied some material from its files and that material was used in a prosecution of Lamont on a charge laid by police of attempting to obtain money from Commercial Union by false pretences.
123 At 196 Richardson J said:-124 Richardson J then considered authorities in other jurisdictions, including Commonwealth Life Assurance v Brain, and said inter alia at 199:-
“To summarise the New Zealand authorities. 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”.
125 In the same case McMullin J said at 207-208:-
“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”.
“But in some cases the person who supplied the information to the police may be regarded as the prosecutor even though the information was not laid by him. 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”.
126 In Martin v Watson (1996) 1 AC 74 the defendant in an action for malicious prosecution had made a complaint to the police that the plaintiff had indecently exposed himself to her, whereupon the plaintiff had been charged by the police. The House of Lords held that the defendant was liable to be sued for malicious prosecution on the grounds that where a complainant has falsely and maliciously given a police officer information indicating that a person is guilty of an offence and the facts relating to the alleged offence were solely within the complainant’s knowledge, so that the police officer could not have exercised any independent discretion, then the complainant could properly be said to have been instrumental in setting the prosecution in motion.
127 Fleming the Law of Torts (9th ed 1998) says at pp676-677:-
“The defendant must have been ‘actively instrumental’ in setting the law in motion. Merely supplying information, however incriminating, to the police on which they eventually decide to prosecute is not the equivalent of launching a prosecution; the critical decision not being his, ‘[the stone set rolling] is simply a stone of suspicion.’ These days one should hesitate to credit an informant with having overcome the scepticism of a police trained to test the reliability of complaints. On the other hand, an informant may be regarded as a prosecutor if his information virtually compels the police to prosecute, even more where he deliberately deceives the police by supplying false information without which they would not have proceeded”.
128 One reason for confining liability for malicious prosecution in the case of persons who did not formally institute the criminal proceedings but who provided information to the police for the purpose of the criminal proceedings, is the need to preserve the immunity conferred by law on witnesses who give evidence in court, an immunity which extends to statements made by prospective witnesses in preparation for pending court proceedings. Watson v M’Ewan, (1905) AC 480. A person who provides information to the police of any materiality will usually make a statement to the police and also give evidence at the trial of the accused.
129 In Cabassi v Vila (1940) 64 CLR 130 Starke J said at 141 in a passage which has been frequently cited:-130 The element of the tort of malicious prosecution that the defendant should have instigated the prior criminal prosecution of the plaintiff was discussed by Levine J in Cumberland v Clark (1996) 39 NSWLR 514. In Cumberland v Clark the plaintiff had reported an alleged assault to the police and had given the police the name of the particular defendant (who I will refer to simply as “the defendant”) as a witness. The defendant gave a statement to a police officer and after interviews with other persons the plaintiff himself was charged with assault. The criminal proceedings against the plaintiff were dismissed. Levine J granted an application by the defendant for summary dismissal of the proceedings for malicious prosecution. In his judgment Levine J said at 529 that he “essentially” agreed with submissions made on behalf of the defendant, including a submission that “it would only be in exceptional circumstances that a court would not strike out a claim for malicious prosecution against a witness in court proceedings. There would have to be evidence that the witness had gone beyond the mere giving of evidence, had sought to prevail upon other witnesses to give false evidence or had otherwise taken some step to procure the bringing about of the prosecution”.
“But it does not matter whether the action is framed as an action for defamation or as an action analogous to an action for malicious prosecution or for deceit or, as in this instance, for combining or conspiring together for the purpose of injuring another; the rule of law is that no action lies against witnesses in respect of evidence prepared, given, adduced or procured by them in the course of legal proceedings. The law protects witnesses and others, not for their benefit, but for a higher interest, namely, the advancement of public justice. The remedy against a witness who has given or procured false evidence is by means of the criminal law or by the punitive process of contempt of court.
Whether the Claims for Malicious Prosecution in the Sourian Proceedings should be Summarily Dismissed against the Defendants other than the State
131 It was submitted on behalf of each of the loss assessor, VACC and Caltex that the claims for malicious prosecution made against each of them in the second further amended statement of claim should be summarily dismissed, on the grounds that on examination of the second further amended statement of claim including the particulars furnished in it, or if not on examination of the second further amended statement of claim then by reference to incontrovertible evidence, it could be seen that Mr Sourian had no chance of establishing that the particular defendant had instituted or maintained any of the criminal prosecutions against Mr Sourian.
132 It was further submitted that the second further amended statement of claim represented a fourth attempt by Mr Sourian or his legal advisers to formulate claims for malicious prosecution and it should be inferred that the particulars furnished in the second further amended statement of claim were the best particulars that could be supplied and could not be improved upon, so that it would be futile to grant leave to Mr Sourian to file yet another statement of claim. It was also submitted that it should be inferred that in the voluminous affidavits Mr Sourian had made, with their many annexures, he had assembled all of the evidence available to him to establish his claims for malicious prosecution. There is considerable force in these further submissions.
133 So far as ANZ is concerned, it was submitted on behalf of ANZ that it had not been joined as a defendant in the original statement of claim, that leave had never been given to join it as a defendant, that on 29 June 1998 Carruthers AJ had made a declaration that ANZ had not been joined as a defendant in the proceedings and that on 18 September 1998 Master Harrison had dismissed Mr Sourian’s notice of motion of 29 June 1998, in which he had sought an order giving leave to join ANZ as a defendant. Accordingly, although ANZ had been named as a defendant in the second further amended statement of claim filed by Mr Sourian, it had never been validly joined as a defendant. Consequently, the first question to be determined, so far as ANZ was concerned, was not whether the claims made against ANZ in the second further amended statement of claim should be summarily dismissed but whether any error had been shown in the ’s discretionary decision to dismiss Mr Sourian’s application of 29 June 1998 that leave be given to join ANZ as a defendant.
134 I accept all of these submissions made on behalf of ANZ. I also hold that no error has been established affecting the Master’s discretionary decision not to give leave to join ANZ as a defendant in the proceedings. It is accordingly unnecessary for me to consider whether the claims for malicious prosecution made against ANZ should be summarily dismissed. However, out of more abundant caution I will consider this question.
135 I have already quoted pars14 and 18 of the second further amended statement of claim, in which it is alleged that all of the defendants “prosecuted” Mr Sourian and that all of the criminal proceedings against Mr Sourian were brought “at the instigation” of all of the defendants. However, it is not sufficient in a statement of claim alleging malicious prosecution for the plaintiff simply to allege that a defendant had “prosecuted” the plaintiff or that criminal proceedings had been brought “at the instigation” of the defendant. It is necessary, at least in the case of a defendant who did not formally institute the criminal proceedings against the plaintiff by laying an information, to plead the facts by reason of which it is alleged that the defendant had “prosecuted” the plaintiff or had “instigated” the prosecution of the plaintiff.
136 Certain particulars are appended to paragraph 18 of the second further amended statement of claim (which made the two allegations that the criminal proceedings against Mr Sourian were brought “without reasonable and probable cause” and “at the instigation” of the defendants or their agents) and it is desirable to set out these particulars in full. Separate particulars are furnished in relation to each of the six charges against the plaintiff.
“ Particulars
(A) First Offence - Arson
(i) Information relevant to the innocence of the Plaintiff was withheld from the Court and Prosecutor by the First Defendant's police officers Peter Thomas and Carl Paget with the knowledge and encouragement by words and deeds of the Second Defendant and his servant or agent Edwin Middleton, and the Third Defendant by its servants or agents, the Second Defendant and also one Greg Frost and the Fourth Defendant by its servant or agent Nelson Chad (hereinafter the said persons are referred to as the said Defendants, their servants or agents), namely the evidence of a witness from MSS Alarms whose testimony would have shown that the Plaintiff was at home asleep when the fire alarm sounded at the Chatswood premises of Magic on 3 February 1988.
(ii) Information relevant to the innocence to the Plaintiff was withheld from the Court and the Prosecutor by the said Defendants, their servants or agents, or covered up by the said persons, namely evidence of forced entry by a typical burglar’s lever or jemmy, in contravention of the Prosecution case that there was no forced entry to the premises, thereby pointing to the Plaintiff as the arsonist.
(iii) A report dated 16 February 1988 of Jeffrey Gudmann of Forensic Services Australia (NSW) Pty Limited in the possession of the said Defendants, their servants or agents consistent with the innocence of the Plaintiff was withheld from the Court or the Prosecutor by the said Defendants, their servants or agent.
(iv) Evidence was manufactured by the First and Fifth Defendants in that the indebtedness of Magic and the Plaintiff was inflated at the instigation of and to the knowledge of the said Peter Thomas and Carl Paget by one Paul Kelly, manager of the West Ryde branch of the Fifth Defendant, which branch was the branch of the Plaintiff and of the company Magic. In particular Kelly falsely and without authority of the Plaintiff or Magic opened a fully drawn advance account in the name of Magic stating its indebtedness at $205,000 with a view to suggesting the company was in financial trouble, when that was not the case, and by making that evidence available to the Court or to the Prosecutor.
(v) The said Defendants, their servants or agents withheld evidence of the value of the assets of Magic, namely real estate at 136-138 Victoria Road, Gladesville and 140 Victoria Road, Gladesville, and did not disclose or make available to the Court or to the Prosecutor at the hearing the material knowing it was relevant and helpful to the Plaintiff or did not take any reasonable steps to examine or check or investigate prices offered for the land shortly before the fire in November 1987, in contradiction of the Prosecution case.
(vi) The said Defendants, their servants or agents provided information to the Court or Prosecutor, whereby to the knowledge of the said Defendants, their servants or agents, it was suggested that premises owned or operated by the Plaintiff or Magic were open for business one day after the fire thereby assisting in giving a false impression that the Plaintiff had evil or suspicious motives, when it was known or suspected by the said persons that that was not the case, and when by checking with available witnesses the falseness of the aforesaid assertion and impression could have been made abundantly clear.
(vii) The First and Fifth Defendants made available to the Prosecutor and the Court a statement prepared by officers Thomas and Paget which statement was signed by the Fifth Defendant by its servant or agent Paul Kelly stating falsely that Magic owed the Fifth Defendant $700,000 when Kelly, Thomas and Paget knew that to be untrue and in making further statements therein regarding the bank records and ledgers of Magic to falsely represent an unfair and inaccurate financial picture of the company knowing that such statement would be used or likely to be used in the prosecution of the Plaintiff.
(viii) The said Defendants, their servant and agents falsely prepared evidence of financial difficulty of Magic through Edwin Middleton and through Nelson Chad knowing that the material would be used in the prosecution of the Plaintiff.
(B) Second Offence - Claim Form Matter
(i) The said Defendants, their servants or agents, knowing that the Prosecution case against the Plaintiff was that the claim of Magic prepared by or for him upon the Third Defendant for an indemnity in respect of the fire was fraudulent, and/or for an inflated amount withheld or arranged to be withheld stock sheets of Magic of a stock-take done shortly after the fire by Mr Bill Knock and Mr Campbell Anderson servants or agents of the Second Defendant, which stock sheets and stock-take report confirmed the accuracy of the figures assessed by the Plaintiff with respect to loss in the claim form.
(ii) Subsequent to the said charge being laid and maintained, in May 1989 to the knowledge of the said Defendants, their servants or agents, evidence became available for tender at the hearing to the knowledge of the Defendant, their servants or agents that the main witness for the Prosecution, one Valerie Bowden had stated on oath in related Federal Court proceedings that in addition to herself Mr Bill Knock had prepared spread sheets of the stock of Magic Australia Pty Limited, the effect of which was contrary to her evidence in the said Local Court, and whereby the Defendants by their servants or agents and in addition by Mr Bill Knock and Mr Campbell Anderson and Mr Frank Egan on behalf of the Second Defendant by omission did not draw such evidence to the attention of the Court and in so doing knowing of the relevance and of their duty to make the evidence available to the Court or the Prosecutor acted so as to maintain the prosecution against the Plaintiff.
(iii) Failure of the said Defendants, their servants or agents to investigate properly or at all the signature of the Plaintiff on the claim form so that the plaintiff was arrested and charged wrongfully.
(C) Third Offence - The Insurance Proposal Matter
(i) The First, Second and Third Defendants, by their servants or agents Messrs Paget, Thomas, Middleton, Frost by their conduct prior to the prosecution of the Plaintiff urged prosecution of the Plaintiff for failing to disclose certain information to the Third Defendant knowing that there was no obligation upon the Plaintiff under the policy or at all to the Third Defendant to disclose the said information, or alternatively knowing that there was no reasonable basis for the assertion of such obligation.
(ii) The Plaintiff repeats sub-paragraph A(i) to (iii), (v), (vi) and (viii).
(D) Fourth Offence - Misrepresentation Matter
(i) The proceedings were withdrawn against the Plaintiff before the Local Court for lack of evidence when the Defendants by their servants or agents knew or should have known before the prosecution commenced that there was no reasonable or probable cause for the prosecution.
(ii) The Plaintiff repeats sub-paragraph A(i) to (iii), (v), (vi) and (viii).
(E) Fifth Offence - Assault Matter
(i) To the knowledge of Thomas and Paget the insurance investigator employed by the Second Defendant namely Edwin Middleton requested the Plaintiff upon threat of prosecution to withdraw the insurance claim of Magic Australia upon the Third Defendant and presented a release of the Third Defendant.
After the Plaintiff refused to withdraw the claim or sign the release the said Edwin Middleton falsely alleged that the Plaintiff had assaulted him, whereby the Plaintiff was charged with assault when no such assault had been committed by him.
(iii) The plaintiff repeats sub-paragraph A(i), to (iii), (v), (vi) and (viii).
(F) Sixth Offence - Conspiracy Matter
(i) The First Defendant by police officers Thomas and Paget and the Second Defendant by one Edwin Middleton arranged for a statement to be prepared by one John McGowan a former employee of Magic to the effect that the Plaintiff had assaulted Mr McGowan when each of the said persons knew that that was not the case and thereafter made such a statement available to the Prosecution for prosecution and maintenance of a charge against the Plaintiff.
(ii) The Plaintiff repeats sub-paragraph A(i) to (iii), (v), (vi) and (viii)”.
137 Before considering these particulars, it is desirable to set out parts of the statement of Detective Sergeant Thomas of 12 May 1988, parts of the report of Jeffrey C. Gudmann of Forensic Services Australia (NSW) Pty Limited of 16 February 1988 and parts of the statement of Mr Paul Kelly of 15 August 1988.
138 As I stated earlier in this judgment, on 12 May 1988 Detective Sergeant Thomas outlined to Mr Sourian the grounds on which he suspected that Mr Sourian was responsible for the fire at the Chatswood premises and also told Mr Sourian that, apart from a charge of arson, he would be charged with other offences. These parts of Detective Sergeant Thomas’ statement were in the following terms:-
“16. I said, ‘Firstly this fire is Arson. There is multiple seats of fire - flammable liquid was used to fuel the fire and there is no sign of forced entry. Do you care to say anything about that’. He said, ‘Nothing’.
17. I said, ‘Secondly you have a motive for the fire - you are heavily mortgaged, around $700,000.00 - and the Muffler Shop was not doing well. I am told you were taking about $2500.00 a week NOT the $13,000.00 you claim. Do you care to say anything about that.’ He said, ‘Nothing’.
18. I said, ‘Thirdly you have the perfect opportunity to set the fire without being detected. I am told that you were at the Muffler Shop as late as 10.30pm this night. Do you care to say anything about that.’
He said, ‘Nothing’.
19. I said, ‘There are quite a number of further grounds - There is no forced entry - you activated the alarm when you depart the premises yet it is not set off until the fire is discovered. You would expect it would go off if an intruder entered the shop and set this fire. Do you care to say anything about that.’
He said, ‘Nothing’.
20. I said, ‘After your staff finishes for the day you shift a customers car - out of the Muffler Shop into the Service Station. When the staff leave they lock it in the Muffler Shop, they say where it should have been. Do you care to say anything about that’.
He said, ‘Nothing’.
21. I said, ‘I am informed that you have or had moved the majority of your stock and equipment from Chatswood to Gladesville Shop, immediately prior to the fire. Do you care to say anything about that.’
He said, ‘Nothing’.
22. I said, ‘It was convenient for you that your Gladesville Shop commenced trading the same day or the day after this fire. You could re-direct your customers to Gladesville. Do you care to say anything about that.’
He said, ‘Nothing.’
23. I said, ‘It will be my allegation that you set this fire with the intention of grossly defrauding your Insurance Co. The value of the stock allegedly lost by you and the damage occasioned has been grossly overstated. You say it amounts to $300,000.00, there-about. I am informed that $50,000.00 would pull it all up. That you wouldn’t have more than about $20,000.00 stock all up. Do you care to say anything about that.’
He said, ‘Nothing’.
24. I said ‘I am told that you prepared your list of stock allegedly lost in this fire while you were seated in your office at Gladesville and while making reference to a suppliers manual. Do you care to say anything about that.’
He said, ‘No but I have heard enough of this shit.’
25. I said, ‘There is a number of other matters that I want to put to you concerning other allegations. I want you to understand that you don’t have to say anything to me unless you want to about any of the matters but whatever you do say may later be used in evidence in court’.
26. I said, ‘I intend to charge you with attempting to defraud your Insurance Company by submitting a false Declaration of Loss, in respect of this fire. Do you care to say anything about that.’.
He said, ‘Do it’.
27. I said, ‘I also intend to charge you with attempting to defraud the same Insurance Company in respect of a Claim made by you, for damage allegedly sustained or occasioned to a bending machine, owned by you. Do you know the one I mean.’
He said, ‘I don’t believe this, we will see about all this fucking shit.’
I said, ‘Do you care to say anything about the bending machine.’
He said, ‘No’.
28. I said, ‘I also allege and I intend to charge you with a Fraud committed on the same Insurance Company when you completed your application for Insurance on the Muffler Shop on the 13 July, 1987 when you failed to disclose your criminal history and your driving record. Do you care to say anything about that.'
He said, ‘I don’t fucking believe this.’
I said, ‘Do you care to say anything’.
He said, ‘No’.
29. I said, ‘I also intend to charge you with Assaulting Insurance Investigator Mr Ted Middleton, in your office on the 19 April, 1988 when you said the words to him ‘when this is all over I will bury you.’ Do you care to say anything about that.’
He said, ‘No’.
30. I said, ‘I also intend to charge you with arranging to have your former employee, John McGowan assaulted. He alleges that the assault happened at a time and place and with words said to him that can only mean that you were involved. Do you care to say anything about that.’
He said, ‘Nothing to say at all - we will see about all this at a later time’”.139 It is apparent from Detective Sergeant Thomas’ statement that, at least on the principal charge of arson, the present case is a very different case from Commonwealth Life Assurance v Brain and Martin v Watson. The grounds relied on by Detective Sergeant Thomas for deciding to charge Mr Sourian with arson depended on a number of pieces of information obviously supplied by a variety of informants and included inferences drawn by Detective Sergeant Thomas from information he had been supplied with, for example his inference that Mr Sourian had had a “perfect opportunity” to set the fire without being detected. The present case was not a case in which a single complainant provided information which constituted the whole of the prosecution case or which the police had no opportunity of checking or which virtually compelled the police to commence a prosecution. Nor was it a case in which Detective Sergeant Thomas, an experienced arson investigator, had no opportunity to exercise an independent discretion in deciding whether to bring a charge of arson.
140 Mr Gudmann conducted an examination of the premises on 10 and 11 February 1988. Mr Gudmann was not an employee of the insurer or of the loss assessor. He was the “manager” of a company Forensic Services Australia (NSW) Pty Limited, which had been engaged by the loss assessor to investigate and report on the fire. Parts of the report of 16 February 1988 were as follows:-
“1. A major seat of fire was located on the workshop side of the partition wall of a storage room in the north-western corner of the premises…
* * *
2. Further examination however, revealed the presence of at least four additional seats of ignition at independent locations within the western section of the premises…
* * *
3. A detailed examination of the debris at each of the identified seats of fire revealed no evidence of any natural or accidental sources of ignition, and similarly no evidence of incendiary or ignition devices.
* * *
4. ….These analyses revealed that the debris at Seats B and C contained gasoline residues, whereas kerosene residues were detected in the debris at Seats A and E, and in the paper products recovered from the office.
4. (the second paragraph numbered 4). The only evidence of forced entry damage detected was in association with the timber access door. However, the nature of this damage was considered consistent with forced entry by the fire brigade. This point, together with the security status of the premises at the time of their arrival, should be checked with the attending fire brigade members…”
141 In his submissions to me Mr Sourian did not dispute the accuracy of any part of Mr Gudmann’s report. Mr Sourian did not dispute that the fire had been deliberately lit; he denied only that he was the person who had lit the fire. Mr Sourian did not dispute, and sought to take advantage of, Mr Gudmann’s finding that there was no evidence of incendiary or ignition devices and his finding that there was some evidence of forced entry damage on the timber access door to the premises. It is true that Mr Gudmann considered that this damage was consistent with a forced entry by the fire brigade but he added that this matter should be checked with the fire brigade personnel who had attended the premises.
142 Pars4, 7 and 12 of Mr Kelly’s statement were in the following terms:-
“4. From records held with the bank, I am able to state that as at 3 February 1988, Magic Australia Pty Limited maintained three accounts with the ANZ Bank, West Ryde.
1. Working Account - with an overdraft limit of $65,000
2. Loan Account - with a limit of $430,000
3. Loan Account - with a limit of $205,000
* * *
7. These borrowings totalling $700,000 were secured by:-
1. Second mortgage over Mr Jake Sourian’s home at Artarmon (the First mortgage being to ANZ Savings Bank).
2. A First mortgage over vacant land at Thornleigh
3. A First mortgage over Magic Mufflers and adjoining property at 136-138 Victoria Road, Gladesville
4. A First mortgage over Mr Sourian’s (Snr) home at Willoughby
5. An unlimited guarantee of Directors.
* * *
12. From time to time, the account (the working account) exceeded the arranged limit, however, we had adequate security and the Balance Sheet indicated the company was trading well. Consequently, we permitted these excesses and at no time contemplated returning cheques”.
143 I will now examine the particulars appended to par18 of the second further amended statement of claim to determine whether Mr Sourian has any arguable case against any defendant (apart from the first defendant) that that defendant instituted or maintained any of the criminal prosecutions of Mr Sourian.
144 In a number of the particulars it is alleged that information was withheld from “the court and the prosecutor”. I take “the court” to be a reference to the Local Court in which the committal proceedings were held or the District Court in which Mr Sourian was tried and I take “the prosecutor” to be a reference to the person who appeared for the prosecution in the Local Court or in the District Court. In my opinion, if information which may be relevant to the guilt or innocence of a criminal accused has been put in the possession of the police having the conduct of the prosecution, it is the responsibility of those police, and not of any person who provided the information to the police or anyone else, to ensure that the information is disclosed to the prosecutor. It then becomes the responsibility of the prosecutor to determine whether the evidence should be adduced in the court proceedings.
145 A - First Offence - Arson
146 (i) It is alleged that evidence of a witness from MSS Alarms that the plaintiff was at home asleep, when the fire alarm sounded, was withheld from the court and the prosecutor. It is alleged that this information was withheld by the police officers Thomas and Paget, who, as the pleading accepts, were in possession of the information. It is not alleged that the information was withheld by any of the second defendant, the third defendant, the fourth defendant or the fifth defendant. The only allegation made against these defendants is that the police officers withheld the information from the court and the prosecutor with the “encouragement” by words and deeds of the nominated servants and agents of these defendants. No particulars of the alleged words or deeds are furnished and I was not referred to any evidence of the alleged words or deeds. As stated above, it would be the responsibility of the police officer or officers having the conduct of the prosecution to bring possibly relevant evidence which was in their possession to the notice of the prosecutor.
147 (ii) It is alleged that evidence of forced entry by a lever was withheld from the court and the prosecutor by the defendants or covered up by the defendants. No further particulars are furnished in the second further amended statement of claim.
148 In his oral submissions at the hearing Mr Sourian pointed to the report from Mr Gudmann as containing evidence of forced entry to the premises.
149 It is not alleged in the second further amended statement of claim that the evidence of forced entry (identified by Mr Sourian as being Mr Gudmann’s report) was withheld by the loss assessor or any of the other defendants from the police who were conducting the criminal investigation. On the contrary, the pleading implicitly accepts that the police were put in possession of the evidence of forced entry. It would have been the responsibility of the police having the conduct of the investigation, and not any of the second to fifth defendants, to ensure that Mr Gudmann’s evidence was presented to the prosecutor.
150 In any event, Mr Gudmann’s information that he had found some evidence of a forced entry to the premises was not withheld from the court at the committal proceedings. It would appear to be true that Mr Gudmann’s report was not admitted into evidence at the committal proceedings. However, a copy of the report had been supplied to Mr Sourian’s legal representatives (committal proceedings 4 April 1989 p3). At the committal hearing counsel for Mr Sourian objected to the report being tendered and objected to Mr Gudmann refreshing his memory by referring to the report, as distinct from his contemporaneous notes (committal proceedings 4 April 1989 pp3-4). When Mr Gudmann gave his oral evidence at the committal proceedings he gave evidence of observing damage to the timber door of the premises which could have been caused by a lever.
151 It became apparent in the course of Mr Sourian’s submissions that his real complaints were:-
152 (a) That Detective Sergeant Thomas had not pursued, or had not pursued diligently enough, an enquiry to the fire brigade as to whether the damage consistent with a forced entry had been caused by members of the fire brigade.
(c) When Detective Sergeant Thomas spoke to Mr Sourian on 12 May 1988 he alleged that there was no sign of forced entry.
(b) A police physical evidence officer who had examined the premises had not in his report included any mention of the signs of a forced entry, which had been detected by Mr Gudmann.
153 None of the defendants other than the first defendant have any responsibility for any of these matters.
154 (iii) It is alleged that Mr Gudmann’s report was withheld from the court and the prosecutor by the defendants.
155 Much of what I said in relation to particular (ii) is equally applicable here. A copy of Mr Gudmann’s report was provided to Mr Sourian’s legal representatives. Mr Gudmann’s report was not admitted into evidence at the committal proceedings, because of the position adopted by Mr Sourian’s own counsel. Mr Gudmann gave oral evidence at the committal proceedings of finding evidence of forced entry to the premises. He also gave oral evidence of not finding any delayed ignition or incendiary devices (committal proceedings 4 April 1989 p29).
156 (iv) It is alleged that evidence of the indebtedness of Magic and Mr Sourian was falsely inflated by Mr Kelly of the Bank, at the instigation of Detective Sergeant Thomas and Detective Senior Constable Paget. No allegation is made against any other defendant.
157 The only particular furnished is that Mr Kelly falsely opened a fully drawn advance account in the name of Magic showing an indebtedness of $205,000.
158 In his oral submissions Mr Sourian pointed to the finding by Master McLaughlin that the liability on the fully drawn advance account FDA2 was a liability, not of Magic, but of Mr Sourian. As stated earlier in this judgment, this finding was not upset on appeal, although Santow J expressed some reservations about it.
159 However, even if the indebtedness on the fully drawn advance account was not an indebtedness of Magic, it was an indebtedness of Mr Sourian and in my opinion it could not be regarded as making any material difference to whether there was evidence of motive for Mr Sourian to set fire to the premises, that the sum of $205,000 was owed to the Bank, not by Magic, but by Mr Sourian himself, who was the son of the directors of Magic, who was the manager of Magic and who was the person actually being accused of arson.
160 According to paragraph 17 of his statement, Detective Sergeant Thomas in speaking to Mr Sourian on 12 May 1988 did not distinguish between Mr Sourian and Magic, so far as financial liabilities were concerned. Detective Sergeant Thomas simply said to Mr Sourian “secondly, you (my emphasis) have a motive for a fire- you are heavily mortgaged, around $700,000”.
161 (v) It is alleged that the defendants withheld evidence of the value of Magic’s assets consisting of real estate at 136-138 and 140 Victoria Road, Gladesville and did not take any reasonable steps to investigate prices for the land shortly before the fire in “November” 1987. No further particulars are furnished of these allegations.
162 In his statement of 15 August 1988 made to the police Mr Kelly disclosed that the liabilities to the Bank including the sum of $205,000 were secured by securities over properties owned by Mr Sourian or Magic, including the two properties in Victoria Road, Gladesville. In his statement Mr Kelly did not assert that the securities which the Bank held were inadequate to secure the amount of the indebtedness to the Bank.
163 I was not directed to any evidence which would support an allegation that any of the defendants withheld any evidence it had of the values of Magic’s properties. Evidence of the value of the properties would have been within the knowledge of Magic itself.
164 There was no obligation on any of the second to the fifth defendants to carry out some kind of investigation into what prices had been offered for the land at Gladesville before the fire in 1987.
165 (vi) It is alleged that the defendants provided information whereby it was “suggested” that Magic’s premises at Gladesville were open for business one day after the fire, when it was “known or suspected” that that was not the case, and when, “if” the defendants had checked with available witnesses, the falseness of the assertion “could have been made abundantly clear”.
166 The words which I have put in quotation marks show that this allegation falls significantly short of an allegation that any of the defendants provided information containing an outright assertion by the defendant which the defendant knew to be false.
167 The information, as pleaded in particular (vi), is that the other premises (that is the premises at Gladesville) were “open” for business one day after the fire. However, in paragraph 22 of his statement Detective Sergeant Thomas said that he had said to Mr Sourian on 12 May 1988:-
“It was convenient for you that your Gladesville premises commenced trading the same day or the day after this fire”.
168 Mr Sourian did not dispute that the premises at Gladesville were open for business one day after the fire; he disputed that the premises were opened for business, for the first time, one day after the fire.
169 However, whether the information was that the premises at Gladesville were opened for business for the first time the day of the fire or the day after the fire or merely continued to be open for business, it is apparent from evidence given at the committal proceedings that the source of this information was not any of the defendants but Mr McGowan, the former employee of Magic.
170 (vii) It is alleged that a statement was provided to the prosecutor and the court in which Mr Kelly said that Magic owed ANZ $700,000 and made further statements giving an unfair and inaccurate financial picture of Magic.
171 The first allegation is really a repetition of the allegation made in particular (iv) that Mr Kelly falsely asserted that the indebtedness of $205,000 on the fully drawn advance account was a liability of Magic and not Mr Sourian. If the liability on the fully drawn advance account was a liability of Magic, then Magic’s indebtedness to the Bank did exceed $700,000. If the liability on the fully drawn advance account was a liability of Mr Sourian, then the combined liabilities of Mr Sourian and of Magic exceeded $700,000.
172 The second allegation in this particular is completely lacking in specificity and no further particulars of it are provided.
173 (viii) It is alleged that the defendants falsely prepared evidence that Magic was in financial difficulties through Mr Middleton on behalf of the loss assessor and Mr Chad on behalf of Caltex. No particulars are furnished of this allegation and I was not directed to any evidence which would support it.
174 My conclusion from this examination of the particulars furnished in the second further amended statement of claim is that the allegation that the proceedings charging Mr Sourian with arson were instituted or maintained by the defendants is incapable of being established against any of the second defendant, the third defendant, the fourth defendant or the fifth defendant and the proceedings for malicious prosecution against those defendants in relation to that charge would necessarily fail. It follows that the claims for malicious prosecution for this offence against the second, third and fourth defendants should be summarily dismissed and that, were it necessary to consider the fifth defendant, the claim for malicious prosecution for this offence against the fifth defendant should also be summarily dismissed.
B - Second Offence - Claim form Matter
175 (i) It is alleged that stock sheets of a stock take of Magic done shortly after the fire by nominated servants or agents of the loss assessor, Mr Knock and Mr Anderson, which confirmed the accuracy of the figures supplied by Mr Sourian in the claim form, were withheld or arranged to be withheld. No particulars of the arrangement or of the withholding are furnished. Nevertheless, although no particulars are furnished, it seems to me that what is alleged might be capable of satisfying, as against the second defendant the loss assessor, the requirement that the prosecution of Mr Sourian for publishing a false statement in the claim form should have been instituted or maintained by the loss assessor. The servants or agents of the loss assessor are identified. The false statement allegedly made by Mr Sourian in the claim form on which the prosecution was based related to the claim for the value of stock allegedly lost or damaged by the fire.
176 I do not, however, consider that particular (i) is capable of showing that the prosecution of Mr Sourian for this offence was instituted or maintained by any of the third defendant, the fourth defendant or the fifth defendant. As was pointed out by Master Greenwood in his judgment of 5 June 1997, the loss assessor is an independent contractor and the insurer is not vicariously liable for the acts of the loss assessor.
177 (ii) It is alleged that one Valerie Bowden gave evidence in proceedings in the Federal Court that Mr Knock, a servant or agent of the loss assessor, had prepared stock sheets, which were inconsistent with the evidence Ms Bowden herself had given in the Local Court in the committal proceedings and that subsequently the defendants by their servants or agents did not draw this evidence by Ms Bowden “to the attention of the court”. I do not consider that an omission by a person, who is not the person having the conduct of a criminal prosecution, to draw to the attention of the court hearing the criminal proceeding that a witness in the criminal proceeding has said in evidence in other proceedings that some other person had prepared documents the effect of which was contrary to evidence given by the witness at an earlier stage in the criminal proceedings, could render the first mentioned person liable to be sued for malicious prosecution.
178 (iii) In his oral submissions Mr Sourian said that the point of this particular was that the signature on the claim form is Mr Magarditch’s and not Mr Sourian’s. However, this particular misses the point of the charge against Mr Sourian under s178BB of the Crimes Act. Mr Sourian was charged, not with signing the claim form, but with having published it.
179 I conclude that Mr Sourian’s claim for malicious prosecution in respect of the insurance claim form matter should be summarily dismissed as against the third defendant, the fourth defendant and the fifth defendant but should not be summarily dismissed as against the second defendant, the loss assessor.180 Urging that a prosecution be brought is conduct of such a character as can support an allegation in a subsequent action for malicious prosecution that the person who did the urging instituted or maintained the prosecution. However, the particulars which the plaintiff has furnished in relation to this charge are merely some of the particulars which have already been supplied in relation to the first charge. I have already held that these particulars are incapable of establishing that the prosecution of Mr Sourian for arson was instituted or maintained by any of the defendants (apart from the first defendant) and these particulars are equally incapable, and indeed even less capable, of establishing that the prosecution of Mr Sourian for having made a false statement in the insurance proposal was instituted or maintained by any of the defendants (apart from the first defendant). I conclude that Mr Sourian’s claims for malicious prosecution in respect of the insurance proposal matter should be summarily dismissed as against the second defendant, the third defendant, the fourth defendant and the fifth defendant.
C - Third Offence - the Insurance Proposal Matter
181 Particular (i) is not a particular of the allegation that the defendants instituted or maintained the prosecution for this alleged offence. The only other particulars furnished are particulars which have already been furnished in relation to the charge of arson. These particulars are even less capable of establishing that any of the defendants (apart from the first defendant) instituted or maintained the prosecution for this alleged offence than they are of establishing that any of those defendants instituted or maintained the prosecution for the offence of arson. I conclude that Mr Sourian’s claims for malicious prosecution in respect of the “misrepresentation” matter should be summarily dismissed against all of the second defendant, the third defendant, the fourth defendant and the fifth defendant.
D - Fourth Offence - Misrepresentation Matter
(E) Fifth Offence - Assault Matter
182 The particulars furnished are incapable of establishing against any of the third defendant, the fourth defendant or the fifth defendant that it instituted or maintained the prosecution of Mr Sourian for this offence.
183 However, notwithstanding obvious deficiencies in the particulars, it seems to me that it is not possible to say that the substance of what is alleged would be incapable of establishing that the second defendant the loss assessor instituted or maintained the prosecution of Mr Sourian for this offence. It is alleged that an insurance investigator employed by the second defendant falsely alleged that he had been assaulted by Mr Sourian and that this false allegation led to Mr Sourian being charged with assault.
184 I conclude that Mr Sourian’s claims for malicious prosecution in respect of the assault matter should be summarily dismissed as against the third defendant, the fourth defendant and the fifth defendant but should not be summarily dismissed as against the second defendant.
(F) Sixth Offence - Conspiracy Matter
185 It is alleged that the first defendant and the second defendant arranged for a statement to be prepared by Mr McGowan that the plaintiff Mr Sourian had assaulted Mr McGowan “knowing that this was not the case”.
186 The statement was made by Mr McGowan and would have been made to the police. No particulars are furnished of how the loss assessor allegedly “arranged” for the statement to be prepared or of how the loss assessor knew that the allegation made by Mr McGowan that Mr Sourian had assaulted Mr McGowan was untrue. I was not referred to any evidence which would support the allegations that the loss assessor had arranged for the statement to be prepared or that the loss assessor knew that what was alleged in the statement was false.
187 I note that no allegation is made against any of the third defendant the fourth defendant and the fifth defendant.
188 I consider that Mr Sourian’s claims for malicious prosecution in respect of the conspiracy matter should be summarily dismissed as against all of the second defendant, the third defendant, the fourth defendant and the fifth defendant.
189 I have held that the claims for malicious prosecution against the State for the prosecution of Mr Sourian on each of the six charges set out in paragraph 15 of the second further amended statement of claim should not be summarily dismissed on the grounds that Mr Sourian could not possibly succeed in establishing the element of the tort of malicious prosecution that the defendant should have instituted or maintained the previous prosecution of the plaintiff. I have also held that the claims for malicious prosecution against the loss assessor for the prosecution of Mr Sourian on the second and fifth charges set out in paragraph 15 of the second further amended statement of claim should not be summarily dismissed on the grounds that Mr Sourian could not possibly succeed in establishing that the loss assessor instituted or maintained the prosecution of Mr Sourian on those two charges.
190 That the defendant should have instituted or maintained the prior criminal prosecution of the plaintiff is not, of course, the only element of the tort of malicious prosecution. Of the other elements it is clear that each of the prosecutions of Mr Sourian ended in his favour. The remaining elements of the tort are that the prosecution of the plaintiff should have been instituted or maintained without reasonable and probable cause and maliciously. See Fleming at 674.
191 At the hearing comparatively little attention was paid to these last two elements of the tort of malicious prosecution and they are, in any event, elements of such a character that it is intrinsically difficult to demonstrate on a pre-trial application that a plaintiff has no chance of establishing them. In the present case, as Judge Nader noted in his judgment of 8 March 1994, there is material which might be capable of establishing the absence of reasonable and probable cause for the prosecutions and the absence of reasonable and probable cause may of itself afford some evidence of malice. I would not summarily dismiss any of the claims for malicious prosecution against the first defendant or either the second or the fifth claim for malicious prosecution against the loss assessor on the grounds that the plaintiff has no chance of establishing the elements of the tort of malicious prosecution that the prosecution should have been brought without reasonable and probable cause and maliciously. I also consider that none of the claims should be summarily dismissed on the grounds that they are frivolous or vexatious or an abuse of process.
192 At the hearing counsel for the respondents and particularly counsel for the first respondent drew my attention to a number of defects in the pleading of the claims for malicious prosecution in the second further amended statement of claim. There are, undoubtedly, a number of defects in the pleading but they are not such as would, at least at this stage, warrant the claims for malicious prosecution being summarily dismissed.
193 I have held that the six claims for malicious prosecution against the State and two of the claims for malicious prosecution against the loss assessor should not be summarily dismissed. However, as the pleading of these claims in the second further amended statement of claim is not free from defects and as the pleading of these claims is closely intertwined with the pleading of claims which I have decided should be summarily dismissed, I consider that, rather than attempting to dissect the second further amended statement of claim into parts which should be dismissed and parts which should be permitted to survive, I should strike out the second further amended statement of claim and give the plaintiff leave to file another further amended statement of claim, limited to pleading the claims for malicious prosecution against the State and the two claims for malicious prosecution against the loss assessor which I have identified.
194 I have not summarily dismissed the six claims for malicious prosecution against the State or two of the claims for malicious prosecution against the loss assessor. However, as I have remarked, the pleading of these claims in the second further amended statement of claim is not free from defects and I would not wish to be taken as expressing any view on what approach should be taken by another judicial officer, if the defects in the second further amended statement of claim remain in any further amended statement of claim and an application is made by one or both of the defendants in relation to that further amended statement of claim.
Whether the Claims for Conspiracy in the Sourian Proceedings should be Summarily Dismissed
195 I turn to the claims for conspiracy in the second further amended statement of claim. Three separate conspiracies are alleged, a conspiracy between the first three defendants, a conspiracy between the first defendant and the fourth defendant and a conspiracy between the first defendant and the fifth defendant. It is necessary to examine separately each of these claims of conspiracy.
196 (i) Alleged conspiracy between the first three defendants.
197 The object of the conspiracy, as alleged in paragraph 22 of the second further amended statement of claim, was “to defeat the claim of Magic against the third defendant in respect of fires occurring at the Caltex Service Station at 607 Pacific Highway, Chatswood on 30 September 1987 and 3 February 1988 and to damage and injure the plaintiff’s commercial standing and in his business”.
198 The overt acts alleged are:-
“(i) Providing false information and statements to the police and withholding information regarding the conduct of the Plaintiff causing him to be prosecuted.
(ii) Causing the Plaintiff to be prosecuted for six offences he did not commit.
(iii) Falsely asserting by letter dated 26 July 1988 on letterhead of solicitors Messrs Curwood & Derkenne that the Plaintiff had been convicted of importing machine guns, bullet proof vests and the like and malicious injury, asserting fraudulent non-disclosure in respect of these matters in relation to the insurance police number PACO 5215 from inception.
(iv) Wrongfully avoiding Police PACO 5215.
(v) Wrongfully terminating the lease of Magic’s premises.
(vi) Misrepresenting the Plaintiff’s business standing and reputation”.
199 Of these overt acts overt act (iv) does not really add anything to overt act (iii). Overt act (v) refers to an act, not of any of the alleged conspirators, but of the fourth defendant Caltex. Overt act (vi) is so vague that it should be disregarded.
200 Overt act (iii), while it might be capable of being regarded as an act done in furtherance of a conspiracy to defeat the claim of Magic on its insurance policy, in which case the proper plaintiff in an action for conspiracy would be Magic and not the plaintiff, is not, in my opinion, capable of being regarded as an act done in furtherance of a conspiracy “to damage and injure the plaintiff’s commercial standing and in his business”.
201 The attempt to rely on overt acts (i) and (ii) involves a contravention of the principles stated in Cabassi v Vila. A person who provides information and a statement to the police for the purposes of a prosecution or who withholds information from the police is immune from being sued civilly, otherwise than for the tort of malicious prosecution.
202 The claims of conspiracy against the first three defendants should be summarily dismissed.
203 (ii) Alleged conspiracy between the first defendant and the fourth defendant.
204 The object of the conspiracy as alleged in paragraph 26 of the second further amended statement of claim was “to provide false information to the prosecution authorities and to the police to defraud and injure Magic in its business and the plaintiff in his business as its manager”.
205 The overt acts alleged are:-
“(i) Chad and Lund agreed with Thomas and Paget not to provide profitability figures for throughput of sales at the Caltex Service Station available to them.
(ii) Chad, Thomas and Paget prepared a statement by Chad to the effect that the company was in financial trouble because it had recently put other assets being properties to auction and representing that the company was thereby in financial difficulty when that was not the case.
(iii) Chad and other diverse persons employed by the Fourth Defendant in 1988 and 1989 but unknown to the Plaintiff made a decision not to repair the premises that had been burnt in the fires or otherwise to support the Plaintiff and the business he managed in any way whatsoever with a view to defeat the interests in the business and terminating the lease between Magic Australia Pty Limited and the Fourth Defendant in respect of the premises.
(iv) The said Defendants caused the Plaintiff to be prosecuted for six offences of which he was innocent.”.
206 I consider that this claim for conspiracy should be summarily dismissed. My reasons include:-
207 Overt act (i) alleges an agreement not to provide certain information and cannot be an overt act done in furtherance of the conspiracy alleged, which is to provide false information to the police. Overt act (ii) could only be an overt act done in furtherance of a conspiracy to defraud or injure Magic, and not Mr Sourian. Overt act (iii) alleging a decision made on behalf of Caltex not to repair the burnt out premises, “or otherwise to give support” and to terminate the lease could not be an overt act or acts done in furtherance of a conspiracy to provide false information. As to overt act (iv), I have already summarily dismissed all claims for malicious prosecution against Caltex. The conspiracy alleged, to provide false information to the prosecution authorities and to the police, involves a contravention of the principle of immunity from civil proceedings, apart from malicious prosecution, of witnesses and persons who make statements to the police.
208 (iii) Alleged conspiracy between the first defendant and the fifth defendant.
209 The object of the conspiracy, as alleged in paragraph 24 (the second paragraph 24) of the second further amended statement of claim was “to provide false information to the prosecution authorities with respect to the financial position of Magic and the business standing of the plaintiff to defraud and injure the plaintiff”.
210 The overt acts alleged are:-
“(i) Arranging without authority of the Plaintiff or Magic the opening of a fully drawn advance account at the West Ryde branch of the Fifth Defendant with a fully drawn advance showing $205,000 in the name of the company inaccurately.
(ii) Stating that the company owed monies in excess of $700,000 when that was not the case.
(iii) Knowing that properties belonging to the company were of significant value not disclosing those properties in evidence made available to the prosecution authorities.
(iv) Failing to disclose the property of the Plaintiff to the prosecution authority of significant value at Gladesville and Artarmon”.
211 It is to be kept in mind that any appeal by Mr Sourian in relation to ANZ is, in the first instance, an appeal against the Master’s decision dismissing Mr Sourian’s notice of motion of 29 June 1998, in which he sought an order giving leave to join ANZ as a defendant, and I have held that the Master made no error in dismissing the notice of motion. However, I would summarily dismiss the claim for conspiracy against the first and the fifth defendants. My reasons include:-
212 As to overt act (i) the only error which ANZ arguably made was to show the indebtedness on the fully drawn advance account as an indebtedness of Magic rather than of Mr Sourian. Overt act (ii) is simply a restatement in different words of overt act (i). Overt acts (iii) and (iv) are untrue. In his statement made to the police Mr Kelly did disclose the properties of Magic and of Mr Sourian. Generally, the overt acts alleged are incapable of establishing the conspiracy alleged, the proper plaintiff in a claim for conspiracy, if any claim existed, would be Magic and the conspiracy alleged, to provide false information to the prosecution authorities, involves a contravention of the principle of immunity from civil proceedings, apart from malicious prosecution, of witnesses and persons who makes statements.
Conclusion
213 In the Sourian proceedings I have held that all the claims made by Mr Sourian should be summarily dismissed, except the claims for malicious prosecution made against the first defendant and two of the claims for malicious prosecution made against the second defendant. I consider that Mr Sourian should be given a further opportunity properly to plead the claims which I have not summarily dismissed. The long vacation will commence shortly and Mr Sourian should be allowed a sufficient time in which to have a properly drawn statement of claim prepared.
214 I make the following orders.
Sourian Proceedings
215 1. I dismiss the appeal against the order of Master Harrison of 18 September 1998 that the plaintiff’s notice of motion of 29 June 1998 be dismissed.
216 2. I allow the appeal against the order of Master Harrison of 18 September 1998 that the proceedings generally be dismissed.
217 3. I order that the proceedings be summarily dismissed, with the exception of:-
218 (i) The claims for malicious prosecution against the first defendant in respect of the six alleged offences particularised in par15 of the second further amended statement of claim.
219 (ii) The claims for malicious prosecution against the second defendant in respect of the alleged offences (ii) and (v) particularised in par15 of the second further amended statement of claim.
220 4. I strike out the second further amended statement of claim.
221 5. I grant leave to the plaintiff to file a further amended statement of claim, limited to the claims for malicious prosecution against the first defendant and the second defendant referred to in order (3) above.
222 6. I order that any further amended statement of claim pursuant to the leave granted in order 5 be filed and served on or before 25 February 2000.
223 7. I reserve all questions of costs.
Magarditch Proceedings
224 1. I dismiss the appeal against the orders made by Master Harrison on 18 September 1998.
225 2. I order that the appellants pay the respondents’ costs of the appeal.
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