Zollo v National Australia Bank Ltd
[2009] SASC 38
•23 February 2009
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
ZOLLO v NATIONAL AUSTRALIA BANK LTD & ANOR
[2009] SASC 38
Judgment of The Full Court
(The Honourable Justice Gray, The Honourable Justice White and The Honourable Justice Kelly)
23 February 2009
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - STAY OF PROCEEDINGS
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - JURISDICTION AND GENERALLY
Appeal from a decision of a judge of Supreme Court granting permanent stay of proceedings by way of Information in the Magistrates Court – appellant filed Information in Adelaide Magistrates Court charging respondents with conspiracy and other offences – respondents applied for permanent stay on basis that the Information an abuse of process attempting to impugn earlier decision of Full Court – jurisdiction of State Courts to stay proceedings for abuse of process – exercise of jurisdiction.
Held: Appeal dismissed – Court’s inherent jurisdiction to stay extends to all circumstances where processes and procedures of Court converted into instruments of injustice or unfairness – proceedings unjustifiably oppressive or vexatious where can be seen to be foredoomed to fail, court is inappropriate forum or case disposed of by earlier proceedings.
Bankruptcy Act 1966 (Cth) s 60; Fair Trading Act 1987 (SA); Insurance Contracts Act 1984 (Cth) Part IV; Magistrates Court Act 1991 (SA) s 9; Trade Practices Act 1974 (Cth) , referred to.
Williams v Spautz (1992) 174 CLR 509; Walton v Gardiner (1993) 177 CLR 378; Rogers v The Queen (1994) 181 CLR 251; Hunter v Chief Constable of the West Midlands Police [1982] AC 529; Jago v The District Court of New South Wales (1989) 168 CLR 23; Smith v Linskills [1996] 2 All ER 353; James v Medical Board of South Australia and Keogh [2006] SASC 267; Arthur JS Hall v Simons [2002] 1 AC 615; Secretary of State for Trade and Industry v Bairstow [2004] Ch 1; State Bank of NSW Ltd v Stenhouse Ltd (1997) Aust Torts Reports 81-423; Clayton v Ralphs (1987) 45 SASR 347; Fuller v Field and State of South Australia (1994) 62 SASR 112; National Australia Bank v MacFarlane [2003] VSC 19; Commonwealth Bank of Australia v Heinrich [2003] SASC 322; R v Carroll (2002) 213 CLR 635; Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256; Attorney-General's (UK) Reference (No 1 of 1990) [1992] 1 QB 620 at 644, considered.
ZOLLO v NATIONAL AUSTRALIA BANK LTD & ANOR
[2009] SASC 38Full Court: Gray, White and Kelly JJ
GRAY J.
This is an appeal from a decision of a judge of the Supreme Court granting a permanent stay of proceedings.[1]
[1]National Australia Bank Ltd & Argus v Zollo (2008) 254 LSJS 253; [2008] SASC 93.
On 17 April 2008 the Judge ordered:
On or before Friday 18 April 2008, the defendant perform all actions necessary to effect a discontinuance of the charges brought against both plaintiffs’ [sic] in the Magistrates Court on 13 November 2007 being the charges contained in Adelaide Magistrates Court file number AMC-07-16302.
The charges brought against both plaintiffs be stayed until the charges are discontinued as required by order 1 above.
The defendant be restrained from laying or preferring any charges for any other summary or indictable offences in any court of summary jurisdiction in South Australia relating to the civil actions (2031 of 1990, 1026 of 1993 and 1794 of 1993) to which he was a party and which were determined by the Full Court on 21 March 1997.
The information and summons in Adelaide Magistrates Court file number AMC-07-16302 and issued by the defendant in the Adelaide Magistrates Court on 13 November 2007 constituted an abuse of process.
The defendant pay the plaintiffs’ costs of this action.
In the event that the defendant does not discontinue the charges as required by order 1 above by Friday 18 April 2008, the plaintiffs have liberty to further apply to the court (including, if so advised, to apply to join the Adelaide Magistrates Court as a defendant).
The matter has a long history. During the 1980s, Mr Zollo, in partnership with his wife, carried on business as a builder. After a time they operated at least part of the business through a company owned and controlled by them. Mrs Zollo did not take an active part in the business. The National Australia Bank Ltd provided monies from time to time to Mr and Mrs Zollo, at least partly secured by mortgage. Mr Zollo sought to arrange insurance that would meet the indebtedness to the bank in the event of his being unable to work. In these reasons I propose only to refer to Mr Zollo and not the other parties in the same interest.
On 4 June 1990, Mr Zollo sustained an injury to his back. When he sought to obtain what he thought was the appropriate indemnity under the insurance policy, his claims were rejected. He was advised that the policy only covered payments of instalments secured by mortgage and then only in the event of his total and permanent disablement from carrying out his usual occupation.
Three sets of proceedings were commenced. The National Australia Bank claimed with respect to the indebtedness owing and the possession of the property securing that indebtedness. Mr Zollo claimed against the National Australia Bank and National Australia Financial Management Ltd, an insurer, with respect to the insurance disputes, and Mr and Mrs Zollo claimed damages in respect of the Bank’s refusal to pay monies held in their credit in an account in the Bank. The same Judge heard all three proceedings.
The trial Judge set out the relief sought in proceedings concerning the insurance dispute in the following terms:
I set out the relief sought or pleaded in the Inter Parte Summons and confirmed in the Statement of Claim:- “1. An order for indemnity in respect of a policy or policies of insurance given to the plaintiff by each and all of the defendants in respect of the inability of the plaintiff to maintain payments to the first defendant in respect of banking accommodation secured by mortgages given by the plaintiff to the firstnamed defendant. 2. Further, and in the alternative, damages against each and all of the defendants in respect of a contract or contracts of insurance whereby each of the defendants agreed to indemnify, or procure the agreement of one or more of the other defendants to indemnify, the plaintiff in respect of any liability which the plaintiff may have to make payments to the firstnamed defendant for banking accommodation provided by the firstnamed defendant to the plaintiff as secured by mortgages given by the plaintiff to the firstnamed defendant. 3. Further, and in the alternative, a declaration that each and all of the defendants has engaged in conduct which is deceptive and misleading or likely to deceive and mislead the plaintiff in respect of an agreement to indemnify the plaintiff in respect of his obligations to make payments in respect of banking accommodation given by the first defendant to the plaintiff and secured by mortgages given by the plaintiff to the first defendant in contravention of s52 of the Trade Practices Act 1974 and s56 of the Fair Trading Act 1986. 4. Damages and such further or other relief as the Court deems fit pursuant to the provisions of the Trade Practices Act 1974 and the Fair Trading Act 1986. 5. Damages for breach of contract. 6. Damages for misrepresentation. 7. Damages for negligent misstatement. 8. A declaration that each of the defendants, and all of them is, and are estopped from denying its, and their, obligation to the plaintiff to indemnify him in respect of his liability to make payments to the first defendant in respect of financial accommodation provided by the first defendant and secured by mortgages given by the plaintiff to the first defendant. 9. Such further or other relief at law or in equity as this Honourable Court deems fit.”
In the insurance proceedings Mr Zollo alleged that he asked an officer of the Bank to obtain the defined insurance cover for him, that the Bank officer agreed as a servant of the Bank to do so. It was then alleged that the officer did not arrange the insurance sought, arranged less cover than was sought, and falsely represented to Mr Zollo that he had arranged the defined insurance for Mr Zollo.
On 21 December 1995, judgment was given in the three actions.[2] Mr Zollo was successful in all respects. The trial Judge concluded inter alia that Mr Zollo was entitled to damages against the National Australia Bank for breach of the contract, in failing to arrange the agreed insurance cover, and also for misrepresentation and negligence under the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (SA).
[2] Zollo v National Australia Bank Ltd & Anor (unreported, Supreme Court of South Australia, Bollen J, 21 December 1995, S5408); National Australia Bank Ltd v Zollo & Anor (unreported, Supreme Court of South Australia, Bollen J, 21 December 1995, S5409); Zollo & Anor v National Australia Bank Ltd (unreported, Supreme Court of South Australia, Bollen J, 21 December 1995, S5410).
The National Australia Bank and the insurer appealed. On 20 December 1996, the Full Court gave judgment in the insurance action. It concluded that the only relief to which Mr Zollo was entitled was under a contract of insurance with the insurer. That contract obliged the insurer to indemnify Mr Zollo against liability on the loan facilities granted by the National Australia Bank in the event that he had suffered permanent total disablement as defined in the policy of insurance. The National Australia Bank was found not to be liable in the insurance action at all.
Doyle CJ, with whom Prior and Nyland JJ agreed, concluded that Mr Zollo had entered into a policy of insurance with an insurer. That policy provided cover only in the event of permanent total disability. Doyle CJ further concluded that the National Australia Bank was not party to the contract and was not bound by the contract. Doyle CJ observed:[3]
My conclusion is that any finding as to a contract must be confined to a finding that the insurer, bound by the conduct of Mr Daly, an employee of its agent the Bank, is obliged to indemnify Mr Zollo, in respect of the three liabilities to the Bank already referred to, in the event of him sustaining permanent total disablement as defined. There is no contract with the Bank.
[3] Zollo v National Australia Bank Limited (unreported, Supreme Court of South Australia, Doyle CJ, Prior and Nyland JJ, 20 December 1996).
Doyle CJ rejected the claims in misrepresentation, negligence and breach of statute and in that respect observed:[4]
The trial judge found that the plaintiff was, in the alternative, entitled to damages for misrepresentation, for negligence, and for misleading and deceptive conduct under the Trade Practices Act and the Fair Trading Act.
On my conclusions those claims are not available to the plaintiff. The findings of the judge, as applied by me, lead to the conclusion that the insurer is obliged to indemnify the plaintiff, on terms that he is bound by and accepted (in the sense explained above). He got what he wanted, to put it bluntly, by virtue of the order of the court.
The claim in damages arises only if there was a misrepresentation about the right to indemnity, and on the conclusions reached there was not.
Doyle CJ concluded:[5]
For those reasons, it is my opinion that the only relief to which Mr Zollo is entitled is under a contract of insurance with the [insurer], obliging it to indemnify him against liability on his instalment loan, the overdraft and the bill facility, in respect of permanent total disablement as defined in the policy which is part of exhibit D28. I wish to hear further from the parties on the question whether the facts establish that Mr Zollo is entitled to recover.
The [National Australia Bank] is entitled to judgment in its favour on the claim against it.
[4] Zollo v National Australia Bank Limited (unreported, Supreme Court of South Australia, Doyle CJ, Prior and Nyland JJ, 20 December 1996).
[5] Zollo v National Australia Bank Limited (unreported, Supreme Court of South Australia, Doyle CJ, Prior and Nyland JJ, 20 December 1996).
In a further hearing, the Full Court, constituted by the same members, gave consideration as to whether the trial Judge was correct in finding that Mr Zollo had established that he suffered from a permanent and total disability. Doyle CJ concluded that Mr Zollo had failed to do so:[6]
For the reasons that I have given, Mr Zollo is not entitled to claim under the terms of the insurer’s usual policy, because he cannot establish that the defined event, the permanent total disablement, has occurred.
It is unfortunate that it should have been necessary to resolve these issues upon appeal, but as I have already remarked Zollo did not present at trial a case based upon the insurer’s usual terms, but upon an oral contract. And in my earlier judgment in this appeal I have already explained why, in my opinion, that claim cannot succeed.
It follows that in my opinion the appeal should be allowed, the judgment dated 21 December 1995 in favour of the plaintiff against the [National Australia Bank and the insurer] should be set aside, and for that judgment should be substituted a judgment in favour of the [National Australia Bank and the insurer] against the plaintiff.
[6] Zollo v National Australia Bank Limited (No 2) (unreported, Supreme Court of South Australia, Doyle CJ, Prior and Nyland JJ, 21 March 1997).
Mr Zollo attempted to reopen the matter before the Full Court and sought an order setting aside the Court’s order. On 12 June 1997, the Full Court dismissed this application.[7]
[7] Zollo v National Australia Bank (unreported, Supreme Court of South Australia, Doyle CJ, 12 June 1997).
On 11 December 1997, special leave to appeal to the High Court was refused.
Mr Zollo did not satisfy the judgment and the National Australia Bank issued bankruptcy proceedings in the Federal Court. This occurred at the same time that Mr Zollo was attempting to reopen the Full Court proceedings. An application by Mr Zollo to adjourn the bankruptcy proceedings was rejected. The Court made an order on 27 June 2000 adjudging Mr Zollo to be bankrupt.
The application was dismissed on the ground, inter alia, that the application to set aside the Full Court judgment had no reasonable prospect of success. An application for leave to appeal from the Federal Court’s decision was dismissed. Mr Zollo’s subsequent application for special leave was refused by the High Court.
Following his discharge from bankruptcy Mr Zollo sought again to re‑agitate the same issues by applying on 15 March 2007 for further discovery to enable a challenge to be made with respect to the Full Court decision. This application was dismissed by a Master on 30 March 2007.
Questions relating to the insurance policy and the extent to which the policy provided cover have been determined in this Court. The same questions were further canvassed in an unsuccessful attempt to re-open the proceedings. The merits have been considered in passing by two judges of the Federal Court. The High Court of Australia has refused Mr Zollo a grant of special leave.
The Present Proceeding
On 13 November 2007 Mr Zollo subsequently filed an Information in the Adelaide Magistrates Court charging the National Australia Bank and Mr Argus as follows:
(1) Between the years 1987 and 2005 the defendants jointly and severally by false pretences obtained money from the informant for the procurement of an insurance policy for the informant and failed or refused to obtain any such insurance policy for the informant.
Contrary to section 195 of the Criminal Law Consolidation Act 1935-1975 or alternatively – contrary to sections 139 and 140 of the Criminal Law Consolidation Act as amended to date.
(2)Between the years 1987 and 2005 jointly and severally deceived the informant as to the existence of an insurance policy for the protection of the informant.
Contrary to section 139 of the Criminal Law Consolidation Act 1935 as amended or to the common law.
(3) Between the years 1987 and 2005 conspired between themselves and with other persons unknown to the informant to deceive and defraud the informant with intent to deprive the informant of his property and assets.
Contrary to the common law.
(4)The defendants did pervert the course of justice by agreeing between themselves and others unknown to the informant to give false evidence to the Supreme Court of South Australia relating to the existence or otherwise of an insurance policy to be obtained by them for the informant.
Contrary to common law.
Both the National Australia Bank and Mr Argus applied for a permanent stay on the basis that the Information was an abuse of process. It was said that the Information was issued for an improper collateral purpose. That purpose was particularised as an attempt to impugn the earlier decision of the Full Court of 21 March 1997.
The Jurisdiction To Stay For An Abuse Of Process
In Williams v Spautz[8] the High Court considered the breadth of the jurisdiction of State Courts staying proceedings as an abuse of process. Mason CJ, Dawson, Toohey and McHugh JJ observed:
It is well established that Australian superior courts have inherent jurisdiction to stay proceedings which are an abuse of process. The existence of that jurisdiction has long been recognized by the House of Lords. The jurisdiction extends to both civil and criminal proceedings. As Lord Morris of Borth-y-Gest observed in Connelly v Director of Public Prosecutions:
“[A] court which is endowed with a particular jurisdiction has powers which are necessary to enable it to act effectively within such jurisdiction. ... A court must enjoy such powers in order to enforce its rules of practice and to suppress any abuses of its process and to defeat any attempted thwarting of its process.”
The jurisdiction to grant a stay of a criminal prosecution has a dual purpose, namely, “to prevent an abuse of process or the prosecution of a criminal proceeding ... which will result in a trial which is unfair”. This does not mean that the prosecution of proceedings in such a way as to make them an instrument of oppression which will result in an unfair trial stands outside the concept of abuse of process. That term has been applied on various occasions to describe the situation just mentioned as well as the more traditional case where the prosecution is brought for an improper purpose.
[8] Williams v Spautz (1992) 174 CLR 509 at 518-519.
When dealing with an application to stay a prosecution which has been instituted and maintained for an improper purpose their Honours commented:[9]
If, however, a stay is sought to stop a prosecution which has been instituted and maintained for an improper purpose, it by no means follows that it is necessary, before granting a stay, for the court to satisfy itself in such a case that an unfair trial will ensue unless the prosecution is stopped. There are some policy considerations which support the view that the court should so satisfy itself. It is of fundamental importance that, unless the interests of justice demand it, courts should exercise, rather than refrain from exercising, their jurisdiction, especially their jurisdiction to try persons charged with criminal offences, and that persons charged with such offences should not obtain an immunity from prosecution. It is equally important that freedom of access to the courts should be preserved and that litigation of the principal proceeding, whether it be criminal or civil, should not become a vehicle for abuse of process issues on an application for a stay, unless once again the interests of justice demand it. In the United States, great weight has been given to these factors.
These factors have considerable force. There is a risk that the exercise of the jurisdiction to grant a stay may encourage some defendants to seek a stay on flimsy grounds for tactical reasons. But that risk and the other policy considerations already mentioned are not so substantial as to outweigh countervailing policy considerations and deter the courts from exercising the jurisdiction in appropriate circumstances.
As Lord Scarman said in Reg v Sang, every court is “in duty bound to protect itself” against an abuse of its process. In this respect there are two fundamental policy considerations which must be taken into account in dealing with abuse of process in the context of criminal proceedings. Richardson J referred to them in Moevao v Department of Labour in a passage which Mason CJ quoted in Jago. The first is that the public interest in the administration of justice requires that the court protect its ability to function as a court of law by ensuring that its processes are used fairly by State and citizen alike. The second is that, unless the court protects its ability so to function in that way, its failure will lead to an erosion of public confidence by reason of concern that the court’s processes may lend themselves to oppression and injustice. As Richardson J observed, the court grants a permanent stay:
“in order to prevent the criminal processes from being used for purposes alien to the administration of criminal justice under law. It may intervene in this way if it concludes ... that the Court processes are being employed for ulterior purposes or in such a way ... as to cause improper vexation and oppression.”
[9] Williams v Spautz (1992) 174 CLR 509 at 519-520.
Their Honours also made it clear that proceedings can be stayed notwithstanding that the moving party can make out a prima facie case:[10]
In our view, the power must extend to the prevention of an abuse of process resulting in oppression, even if the moving party has a prima facie case or must be assumed to have a prima facie case. Take, for example, a situation in which the moving party commences criminal proceedings. He or she can establish a prima facie case against the defendant but has no intention of prosecuting the proceedings to a conclusion because he or she wishes to use them only as a means of extorting a pecuniary benefit from the defendant. It would be extraordinary if the court lacked power to prevent the abuse of process in these circumstances.
[10] Williams v Spautz (1992) 174 CLR 509 at 522.
In Walton v Gardiner[11], Mason CJ, Deane and Dawson JJ discussed the inherent jurisdiction of a superior court as encompassing the following:
The inherent jurisdiction of a superior court to stay its proceedings on grounds of abuse of process extends to all those categories of cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness. Thus, it has long been established that, regardless of the propriety of the purpose of the person responsible for their institution and maintenance, proceedings will constitute an abuse of process if they can be clearly seen to be foredoomed to fail. Again, proceedings within the jurisdiction of a court will be unjustifiably oppressive and vexatious of an objecting defendant, and will constitute an abuse of process, if that court is, in all the circumstances of the particular case, a clearly inappropriate forum to entertain them. Yet again, proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings. The jurisdiction of a superior court in such a case was correctly described by Lord Diplock in Hunter v Chief Constable of the West Midlands Police as “the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people”.
[11] Walton v Gardiner (1993) 177 CLR 378 at 392-393.
In Rogers v The Queen[12], the High Court referred to the House of Lords decision in Hunter v Chief Constable of the West Midlands Police[13] and in particular the House of Lords’ treatment of a stay of proceedings that amount to a collateral attack in civil proceedings on an earlier decision of the Court. Mason CJ commented:
[12] Rogers v The Queen (1994) 181 CLR 251 at 255-256.
[13] Hunter v Chief Constable of the West Midlands Police [1982] AC 529.
The concept of abuse of process is not confined to cases in which the purpose of the moving party is to achieve some foreign or ulterior object, in that it is not that party's genuine purpose to obtain the relief sought in the second proceedings. The circumstances in which abuse of process may arise are extremely varied and it would be unwise to limit those circumstances to fixed categories. Likewise, it would be a mistake to treat the discussion in judgments of particular circumstances as necessarily confining the concept of abuse of process.
Williams v Spautz is a case in point. Although the majority judgment concluded that there was, in that case, an abuse of process consisting in the initiation of proceedings for an ulterior and improper purpose, the majority recognized that the concept extends beyond use of court processes for ulterior purposes to the use of such processes so as to cause vexation or oppression. In Walton v Gardiner it was pointed out that the majority judgment contained nothing which supported the proposition that a permanent stay of proceedings can only be ordered on the ground of either improper purpose or no possibility of a fair hearing. In that case, Mason CJ, Deane and Dawson JJ stated that the inherent jurisdiction of a superior court to stay its proceedings for abuse of process:
“extends to all those categories of cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness.”
Their Honours went on to say:
“[P]roceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which had already been disposed of by earlier proceedings.”
Statements to the same effect have been made by the House of Lords and the New Zealand Court of Appeal. These statements indicate that there are two aspects to abuse of process: first, the aspect of vexation, oppression and unfairness to the other party to the litigation and, secondly, the fact that the matter complained of will bring the administration of justice into disrepute.
In Williams v Spautz it was made clear that the improper purpose need not be the sole purpose of the moving party so long as it is his predominant purpose. The Court emphasised the heavy burden resting on the party seeking a stay to make out its case of an abuse of process.
These authorities set out the legal principles against which this appeal is to be considered. For the purposes of the present proceedings, several relevant general principles can be distilled from the authorities.
Australian superior courts have inherent jurisdiction to stay both civil and criminal proceedings which are an abuse of process.[14] The basis of this inherent jurisdiction is that a court must have the power necessary to enable it to act effectively within its jurisdiction.[15]
[14] Williams v Spautz (1992) 174 CLR 509.
[15] Williams v Spautz (1992) 174 CLR 509.
The circumstances where a court can stay proceedings for abuse of process cannot be limited to fixed categories.[16] It has been said that the jurisdiction to stay extends to all circumstances where the processes and procedures of the court may be converted into instruments of injustice or unfairness.[17] The key aspects to abuse of process are the vexation, oppression and unfairness caused to the other party to the litigation, and the fact that the matter will bring the administration of justice into disrepute.[18]
[16] Rogers v The Queen (1994) 181 CLR 251.
[17] Walton v Gardiner (1993) 177 CLR 378, affirmed in Rogers v The Queen (1994) 181 CLR 251.
[18] Rogers v The Queen (1994) 181 CLR 251.
Despite the fact that the circumstances cannot be limited to fixed categories, there are two primary categories of criminal proceedings which have been identified as constituting an abuse of process: proceedings which will result in an unfair trial and proceedings which are brought for an improper purpose.[19]
[19] Williams v Spautz (1992) 174 CLR 509.
A court can stay criminal proceedings on the ground that they are brought for an improper purpose, even without satisfying itself that the proceedings, if not stayed, would result in an unfair trial.[20] This is because although the interests of justice demand that courts exercise, rather than refrain from exercising, their jurisdiction and preserve freedom of access to the courts, these policy considerations are outweighed by the public interest in protecting the court’s ability to function as a court of law by ensuring that its processes are used fairly, and avoiding the resultant erosion of public confidence that would arise if the court’s processes appeared to lend themselves to oppression and injustice.[21] This jurisdiction extends even to the situation where the moving party can establish, or is assumed to have, a prima facie case against the defendant.[22]
[20] Williams v Spautz (1992) 174 CLR 509.
[21] Williams v Spautz (1992) 174 CLR 509.
[22] Williams v Spautz (1992) 174 CLR 509.
Examples of situations where proceedings would be unjustifiably oppressive and vexatious, and so would constitute an abuse of process, are where the proceedings can be clearly seen to be foredoomed to fail, where the particular court is a clearly inappropriate forum to entertain the proceedings, and where the moving party seeks to litigate anew a case which has already been disposed of by earlier proceedings.[23]
[23] Walton v Gardiner (1993) 177 CLR 378.
The Grant of a Stay
The learned Judge granting the stay concluded that the Information was an abuse of process that should in the circumstances be permanently stayed. The Judge considered that the issues raised in the Magistrates Court were either identical to or closely related to the issues finally determined by the Full Court. The Judge found that Mr Zollo was engaging in a process of collateral attack on the findings of the earlier Full Court decision. The Judge then set out the matters which allowed him to reach his conclusions:[24]
[24] National Australia Bank Ltd & Argus v Zollo (2008) 254 LSJS 253; [2008] SASC 93 at [42].
-the offences detailed in the summons contain allegations relating to a policy of insurance;
-the policy and all background matters relating to it are the subject of detailed analysis by both the trial judge and the Full Court in action number 1026 of 1993;
-the Full Court made findings as to the obligation of the Bank to indemnify in certain circumstances which it found did not apply to the facts of Mr Zollo’s case. In other words on the facts, as found by the Full Court, the policy did not respond;
-the offences detailed seek to re-agitate the issues surrounding the insurance policy in a number of ways
-in addition to the Full Court decision referred to, Mr Zollo sought to raise the issues again by applying to reopen his case. This application was refused by the Full Court;
-in that application it is apparent that Mr Zollo was raising, or attempting to raise, the very issues relevant to his assertions of false pretences, deceit, conspiracy to defraud and perverting the course of justice, which had been earlier disposed of;
-there is no justification at all for joining Mr Argus in these proceedings as he had no dealings with Mr Zollo;
-Mr Zollo filed an affidavit sworn by him on 11 March 2008 as part of his submissions opposing the orders sought by the Bank. In it he describes the basic elements of the charges he has laid in the Magistrates Court as follows:
That I applied to the NAB for insurance to cover the payments of my various accounts with the plaintiff bank on the terms of the Hindmarsh Building Society Insurance (a copy of which is now produced ‘AZ1”). This document was handed by [sic] me by the then manager Daley of the plaintiff bank, Port Lincoln branch.
That money was taken from my account at the Port Lincoln branch of NAB to pay for a policy with the same terms and conditions as the Hindmarsh Building Society policy.
That no such policy was ever issued by the bank or its insurers to cover my borrowings.
That I was informed by Mr Grant Bailey that the bank had an insurance policy covering the same position as the Hindmarsh Building Society policy.
That no policy of any kind was ever issued in fact by the plaintiff bank or its insurer. That as a result thereof, as a consequence of the facts I was deceived and defrauded.
I have set out this passage from Mr Zollo’s affidavit because it illustrates how the issues he seeks to raise in the criminal proceedings are the same issues which have been heard and finally determined by the Full Court. He also illustrates his fundamental misunderstanding of what findings were made in the Full Court and the effect of those findings.
The Judge then concluded:[25]
Mr Zollo in both his written and oral submissions to me is continuing the theme of his unsuccessful civil action. He has not attempted to address the issue of why this is not a collateral attack on the Full Court judgment nor is there any hint of any new evidence which could support the charges he has laid. He merely repeats the issues and allegations he made unsuccessfully in the civil court. There is a lack of anything substantive or material in the submissions which have been made.
It is for these reasons that I will make an order granting a permanent stay of the proceedings issued in the Magistrates Court. I will hear the parties on the formal orders I should make.
[25] National Australia Bank Ltd & Argus v Zollo (2008) 254 LSJS 253; [2008] SASC 93 at [43].
Grounds Of Appeal
Mr Zollo advanced nine grounds of appeal. They are as follows:
[The Judge] failed to use the correct tests as set out by the High Court of Australia for deciding whether the complaint laid in the Magistrates Court by [Mr Zollo] against the respondents.
[The Judge] relied on the civil tests of the balance of probabilities other than the heavier onus set out as the onus of the persons claiming an abuse or process.
[The Judge] failed to oblige the respondents to carry the heavy onus of proof required of them to show [Mr Zollo’s] complaint in the Magistrates Court was an abuse of process in any way.
[The Judge] failed or neglected to call or to refer to any evidence of [Mr Zollo] supporting [National Australia Bank and Mr Argus’] application that [Mr Zollo’s] complaint to the Magistrates Court was an abuse of process.
[The Judge] failed to find or refused to take into account that on the same set of facts there are different rules considerations in civil law and criminal law and that the differences applied in this case.
[The Judge] erred in finding that the criminal complaint laid by [Mr Zollo] against [National Australia Bank and Mr Argus] in the Magistrates Court was an abuse of process of law.
[The Judge] decided incorrectly that [Mr Zollo’s] correspondence with the directors of the respondent National Australia Bank was a threat to them and each of them.
In finding that the complaint issued in the Magistrates Court by [Mr Zollo] against [National Australia Bank and Mr Argus] was a collateral attack on a final decision of the Full Court of the Supreme Court of South Australia in civil proceedings.
In depriving [Mr Zollo] of his lawful right to prosecute a criminal action to the extent of having the Magistrates Court decide whether there is a case to answer on the complaint of the appellant against [National Australia Bank and Mr Argus].
Mr Zollo provided written submissions that were said to support the above grounds. The substance of complaint behind the first three grounds was that the Judge erred in that, although identifying the correct test, as set out in Williams v Spautz,[26] he applied the wrong onus. It was said that the Judge should only have proceeded to order a stay if he had reached the inescapable conclusion that Mr Zollo acted with an improper purpose.
[26] Williams v Spautz (1992) 174 CLR 509.
With respect to the fourth ground, Mr Zollo argued that the Judge was obliged to consider the strength of the criminal allegations made against the National Australia Bank and Mr Argus and to decide whether there was a case to answer before he could continue and consider whether it would be appropriate to make an order staying the proceedings.
The seventh ground related to the Judge’s conclusions with respect to correspondence from Mr Zollo to the National Australia Bank and its directors. Mr Zollo complained that the Judge’s construction of the correspondence was incorrect and that the correspondence did not contain a threat as suggested.
The fifth, sixth and eighth grounds merely asserted conclusions that errors occurred. These grounds were not further advanced by Mr Zollo’s submissions. The ninth ground, as developed, disclosed no further basis of complaint.
Finally, Mr Zollo made further complaint by an additional tenth ground of appeal:
The court of Justice Anderson was deceived by the improper addition to exhibit D28 of what was deemed to be a policy of insurance in the appellant’s favour. No such document was ever before Bollen J. The Full Court of the Supreme Court of South Australia in hearing the appeal by the respondents was also deceived by the same improperly added document, believing that that document was before Bollen J. This led to a wrong decision by The Honourable Justice Anderson.
Consideration Of The Grounds Of Appeal
A review of the Full Court decisions confirms that Mr Zollo’s claims against the National Australia Bank were rejected on the basis that there was no contract between the National Australia Bank and Mr Zollo, that there was no misrepresentation made to the National Australia Bank, no negligence on the part of the National Australia Bank and no misleading conduct by the National Australia Bank in breach of the Trade Practices Act or Fair Trading Act. Mr Zollo’s attempts to reopen those proceedings have been rejected. The Information laid in the Magistrates Court makes assertions of misconduct that have in substance been rejected by the Full Court. Mr Zollo again seeks to reopen the same matters on which the Full Court made findings in the earlier proceedings.
The Judge, when granting a stay, concluded that it was apparent that Mr Zollo was raising or attempting to raise the very issues which were earlier disposed of. These findings of fact were open to the Judge. As the Judge observed, Mr Zollo’s affidavit, filed in opposition to the making of a stay order, confirmed these findings.
It was open to the Judge to conclude that the purpose or at least the predominant purpose, of Mr Zollo in laying the Information was to collaterally attack the findings and decision of the Full Court. The discretion to grant a permanent stay was enlivened. No error in the exercise of that discretion has been identified. It was open to the Judge to exercise his discretion to grant a permanent stay and I add that in my view this was the appropriate order.
Mr Zollo’s oral submissions to this Court confirmed that the criminal proceedings involved a challenge to the earlier Full Court decisions and attempted to pursue an enquiry into what Mr Zollo misguidedly perceived as improper conduct in the process of arriving at that decision.
The further complaint made by the amended ground of appeal raises an assertion that both the Full Court and the Judge granting the permanent stay were induced to act on a false state of fact. This was said to have arisen through an additional page being added after the conclusion of the trial to an exhibit tendered at trial. This is a serious allegation and, it must be said immediately, is one made without any foundation.
The assertion appears to have arisen from a misunderstanding by Mr Zollo of what occurred at the trial. Mr Zollo, in his submission, made reference to passages in the trial transcript which, with hindsight, contain some possible ambiguity in the description of an exhibit – in particular, the insurance policy in question. The trial took place more than a decade ago and it is apparent that Mr Zollo misunderstands what occurred. Counsel for the respondents undertook a careful analysis of the transcript and the exhibited document from which it is plain that the document tendered, the exhibit, included the alleged additional page. Nothing was added or inserted. There is no basis to conclude that there had been an additional page added to the exhibit following the trial and before the appeal hearing. Since preparing these reasons I have had the opportunity to read the reasons of White J. I agree with his more detailed observations with respect to this ground of appeal. There is no substance to the amended ground of appeal.
Conclusion
Having regard to the foregoing I would dismiss this appeal.
WHITE J: By an information presented in the Magistrates Court on 13 November 2007, the appellant charged each of the respondents with four indictable offences, and caused a summons to be issued which required them to appear to answer the charges. The presentation of the information was a private prosecution.
On the application of the respondents, a Judge of this Court found that the information and summons were an abuse of the process of the Magistrates Court because they amounted to a collateral attack on the conclusion of the Full Court of this Court in earlier proceedings between the appellant and the first respondent.[27] The Judge made orders requiring the appellant to discontinue the charges and staying them until he had done so.
[27] National Australia Bank Ltd and Argus v Zollo [2008] SASC 93.
The appellant appeals against that decision. In the proceedings at first instance and on appeal, the appellant has been unrepresented.
Background Circumstances
The appellant formerly worked as a builder in Port Lincoln. He was a customer of the first respondent (the Bank) and borrowed monies from it. On 4 June 1990 he suffered an injury to his back which caused some continuing incapacity and disability. Since that time he has been in dispute with the Bank about insurance which he considers should have provided an indemnity to him in respect of his liability to it. The second respondent was the Managing Director of the Bank between 1988 and 1999.
The charges laid against the respondents by the appellant are:
1Between the years 1987 and 2005 the defendants jointly and severally by false pretences obtained money from the informant for the procurement of an insurance policy for the informant and failed or refused to obtain any such insurance policy for the informant.
Contrary to Section 195 of the Criminal Law Consolidation Act 1935 – 1975 or
ALTERNATIVELY:-
Contrary to Sections 139 and 140 of the Criminal Law Consolidation Act as amended to date.
2Between the years 1987 and 2005 jointly and severally deceived the informant as to the existence of an insurance policy for the protection of the informant.
Contrary to Section 139 of the Criminal Law Consolidation Act 1935 as amended or to the Common Law.
3Between the years 1987 and 2005 conspired between themselves and with other persons unknown to the informant to deceive and defraud the informant with intent to deprive the informant of his property and assets.
Contrary to the Common Law.
4The defendants did pervert the course of justice by agreeing between themselves and others unknown to the informant to give false evidence to the Supreme Court of South Australia relating to the existence or otherwise of an insurance policy to be obtained by them for the informant.
Contrary to the Common Law.
To date, the charges have not been particularised properly. However, the appellant did swear an affidavit, which was before the Judge, in which he deposed to the “basic elements” of the charges. Reference will be made to this affidavit later. An understanding of the charges laid and of the Judge’s decision requires consideration of the appellant’s claims which have been determined by previous decisions of this Court.
In September 1987, the appellant had three kinds of borrowings from the Bank; an instalment loan of about $150,000 secured by a mortgage; an overdraft facility of about $50,000; and a bill finance facility of about $70,000. In September or October of 1987 he spoke to a Bank employee (Mr Daly) about insurance. The appellant claims that Mr Daly later communicated to him that he had arranged insurance in respect of his liability to the Bank on all three borrowings in the event of his suffering sickness, accident or death. However, after his back injury in June 1990, he found that he did not have such insurance. That gave rise to three actions against the Bank and others, described as “the Insurance Action”, “the Possession Action” and “the Damages Case”.
The Insurance Action and the Possession Action were heard by Bollen J in 1995.[28] It is the Insurance Action which is relevant presently. Originally there were three defendants to that action: the Bank, National and General Insurance Company Ltd (National and General) and National Australia Financial Management Ltd (NAFM). However, the appellant settled his claim against National and General and so did not pursue the claim against it.
[28] Zollo v National Australia Bank Ltd & Anor (Unreported, Supreme Court of South Australia, Bollen J, 21 December 1995, Judgment No S5408) (the Insurance Action); Zollo v National Bank Ltd & Anor (Unreported, Supreme Court of South Australia, Bollen J, 21 December 1995, Judgment No S5409) (the Possession Action).
Bollen J made a number of factual findings which were favourable to the appellant. These were that in October 1987 the appellant had spoken to Mr Daly about obtaining insurance in respect of his liabilities to the Bank and, at Mr Daly’s request, had signed three blank insurance proposal forms and an authority permitting the deduction of premiums from his account.[29] He had not read the proposal forms and relied upon Mr Daly to obtain the insurance which he wanted, namely, indemnity in the event that he was unable by reason of death, sickness or accident to meet his liabilities to the Bank on the three loan facilities.[30] Approximately two weeks later, Mr Daly had said words to the appellant to the effect that “it’s all fixed up” which the appellant had understood to mean that the insurance which he had been seeking had been made available.[31] In the subsequent appeal, the findings just summarised were referred to as the factual findings.
[29] Zollo v National Australia Bank Ltd & Anor (Unreported, Supreme Court of South Australia, Bollen J, 21 December 1995, Judgment No S5408) at 10.
[30] Ibid at 11.
[31] Ibid at 18.
Bollen J then found that Mr Daly’s indication that it was “all fixed up” amounted to a material misrepresentation of the position to the appellant because, in fact, Mr Daly had obtained one policy only.[32] This policy was issued by NAFM and was entitled “Mortgagesafe Policy”.[33] It was Exhibit D28 at the trial (but was mistakenly described by Bollen J in his judgment as Exhibit D27). Bollen J found that the Bank was vicariously liable for Mr Daly’s misrepresentation.[34]
[32] Ibid at 20.
[33] Ibid at 2.
[34] Ibid at 20.
Bollen J also found that the Bank (through Mr Daly) had entered into a contract with the appellant that it would “procure or provide protection by insurance indemnifying the [appellant] against inability to pay money to the Bank “on all lending in the name of the Plaintiff” (see Exhibit P8 again) which the [appellant] could not pay through inability to work at his usual work by reason of death, sickness or accident.”[35] He accepted that the appellant had the requisite inability to work. On the findings of Bollen J, it was not necessary to consider whether the appellant came within the definition of “total disablement” for the purpose of the Mortgagesafe insurance policy.
[35] Ibid at 20.
Finally, Bollen J found that both Mr Daly and the Bank were acting as agents for NAFM at relevant times so that NAFM was bound by the same contract which bound the Bank.[36] Bollen J then ordered that the Bank and NAFM indemnify the appellant in respect of the inability of him or his wife to pay monies otherwise due to the Bank in respect of all lending in their names which was the subject of the Possession Action. He declined to award damages for the misrepresentation which he had found had been made by Mr Daly, as he considered that the order for indemnity provided an adequate remedy.[37]
[36] Ibid at 29.
[37] Ibid at 29.
The Bank and NAFM appealed. The Full Court (Doyle CJ, with Prior and Nyland JJ concurring) upheld the factual findings of Bollen J concerning the appellant’s discussions with Mr Daly.[38] However, the Full Court allowed the appeal. It held that the Bank had not entered into any contract concerning insurance with the appellant at all. It was NAFM which was bound by the conduct of Mr Daly.[39] The Full Court set aside the finding that Mr Daly had agreed to obtain insurance on the terms found by Bollen J. Doyle CJ considered that the appellant must have understood at the time of his discussions with Mr Daly that he was submitting only a formal proposal for insurance and that further steps would be required before the contract of insurance was complete.. Doyle CJ said:
But on Mr Zollo’s own evidence, on the day of the first discussion he completed three proposal forms in blank, one of which he identified as the document P9. As his experience with Hindmarsh showed, and as he must have realised from his own experience, a proposal is intended as the preliminary to the issue of a policy. He must, to my mind, have understood that at least two further steps were required before the contract of insurance was complete. First, as Mr Daly had said, that the insurer’s confirmation be obtained. Secondly, that a policy be issued.
Granted, as the judge found, that he completed three proposals and thought he was obtaining cover for three facilities, and treating Mr Daly as the insurer’s agent in completing the proposal (cf s 11 of the Insurance (Agents and Brokers) Act 1984 (Cth)), Mr Zollo must have understood that he was and must be taken to have been, submitting a formal proposal to the Bank or to the insurer. (It is clear that Mr Zollo did not distinguish between them).
In the light of his evidence, I do not consider that it can be said that he could reasonably have believed, or in fact believed, that the terms of the contract were completely determined when Mr Daly spoke to him about two weeks later and said it was “fixed up”. The failure (as the judge found) of either defendant to provide to Mr Zollo a copy of the policy in respect of the instalment loan means that he can maintain that all three proposals were in fact accepted, having regarding to the assurance which Mr Daly gave him, after (as it would have appeared to Mr Zollo) making appropriate enquiries.[40]
[38] Zollo v National Australia Bank Ltd & Anor (Unreported, Supreme Court of South Australia, Full Court, Doyle CJ, Prior and Nyland JJ, 20 December 1996, Judgment No S5940).
[39] Ibid at 11.
[40] Ibid at 8.
Doyle CJ also found that the appellant must have expected that the insurer would issue a standard form policy. That is to say, he must have assumed, when told by Mr Daly that everything was “fixed up”, that the insurer had issued a policy containing its usual terms,[41] ie, that he had a contract of insurance on the insurer’s usual terms, rather than on the terms found by Bollen J.
[41] Ibid at 8-9.
Doyle CJ found that the usual terms of the policy (contained in Exhibit D28) provided for indemnity only when the insured had suffered permanent total disablement (as defined), namely, an inability by reason of accidental injury, sickness or disease to carry out the insured’s normal duties and, in the opinion of the insurer, such as to be unlikely ever to be able to follow the insured’s usual occupation or any gainful occupation for which the insured is fitted by training, knowledge or experience.[42] Doyle CJ also considered that the evidence established that insurance of the kind found by Bollen J, ie, providing indemnity in respect of borrowings which fluctuated from time to time, such as the overdraft and bill finance facility in the event of an inability by reason of death, sickness or accident to meet the borrower’s liabilities,[43] was not available at all in the insurance market at the relevant time.
[42] Ibid at 9-10.
[43] Ibid at 12-14.
Next (and importantly for present purposes), Doyle CJ considered that the appellant’s alternative claim against the Bank for damages for misrepresentation, negligence or misleading and deceptive conduct should be dismissed. This was because there was not, on the findings of Doyle CJ, a misrepresentation made by Mr Daly to the appellant about his right to indemnity, nor was there any misleading or deceptive conduct. In this respect Doyle CJ said:
The trial judge found that the plaintiff was, in the alternative, entitled to damages for misrepresentation, for negligence, and for misleading and deceptive conduct under the Trade Practices Act and the Fair Trading Act.
On my conclusions those claims are not available to the plaintiff. The findings of the judge, as applied by me, lead to the conclusion that the insurer is obliged to indemnify the plaintiff, on terms that he is bound by and accepted (in the sense explained above). He got what he wanted, to put it bluntly, by virtue of the order of the court.
The claim in damages arises only if there was a misrepresentation about the right to indemnity, and on the conclusions reached there was not.[44]
[44] Ibid at 12.
Further, applying Gates v City Mutual Life Assurance Society Ltd,[45] Doyle CJ found that in any event the appellant had not established that insurance in respect of overdraft and bill facilities, of the kind which he claimed, was available elsewhere. That meant that he had not established a relevant loss, because even if he had been misled into obtaining insurance through Mr Daly and the Bank, he had not established that a superior form of indemnity was available elsewhere.
[45] (1986) 160 CLR 1.
The effect of the Full Court decision was that, in addition to entering into the Mortgagesafe policy with NAFM in October 1987, the appellant had entered into a contract of insurance with NAFM in respect of his liability on the instalment loan, the overdraft and the bill facility but only on the usual terms of NAFM (and not on the terms found by Bollen J). Those usual terms were contained in Exhibit D28. That meant that the appellant was entitled to relief under the contract with NAFM only if he could establish permanent total disablement as defined in the policy which formed part of Exhibit D28.
After giving the parties an opportunity to present further submissions, the Full Court found, in a second decision delivered on 21 March 1997,[46] that the evidence did not establish that the appellant was permanently and totally disabled within the meaning of NAFM’s usual policy. Accordingly, the Full Court allowed the appeal and set aside the judgment which Bollen J had entered in favour of the appellant against the Bank and NAFM.
[46] Zollo v National Australia Bank & Anor (No 2) (Unreported, Supreme Court of South Australia, Full Court, Doyle CJ, Prior and Nyland JJ, 21 March 1997, Judgment No S6060).
An application by the appellant for special leave to appeal to the High Court against that decision was refused on 11 December 1997.
Later Proceedings
Just over two years later, on 24 January 2000, the appellant brought an application in this Court seeking to have the decision of the Full Court of 21 March 1997 set aside. He also brought a “supplementary application” on 26 May 2000 seeking the setting aside of the same decision. However, the applications were not determined before the appellant was declared bankrupt by Mansfield J in the Federal Court on 27 June 2000. At the same time, Mansfield J refused an application by the appellant to adjourn the hearing of the bankruptcy petition brought by the Bank so that he could pursue the applications in this Court to have the decision of the Full Court re-opened. Mansfield J refused the adjournment because he considered that the applications to have the Full Court judgment set aside had no reasonable prospect of success.
The appellant then sought to appeal against the judgment of Mansfield J. However, on 19 December 2000 Kiefel J dismissed the appellant’s application for an extension of time within which to appeal. Subsequently, on 14 August 2002, the High Court dismissed an application for special leave to appeal against the decision of Kiefel J.
The appellant was not discharged from bankruptcy until 20 August 2006. The applications of 24 January 2000 and 26 May 2000 were heard by the Full Court (Doyle CJ and Nyland J) on 1 September 2004. Each application was dismissed. First, the Court noted that as the trustee in bankruptcy had not elected to prosecute or discontinue the applications despite having been notified on them, they were deemed to have been abandoned.[47] Secondly, and in any event, the Court considered that neither application had any reasonable prospect of success on the merits.
[47] Bankruptcy Act 1966 (Cth) s 60.
Shortly after the dismissal of the applications, the appellant sought to make further written submissions to the Full Court. However, the Court declined to consider the submissions as the applications had already been dismissed.
After his discharge from bankruptcy on 20 August 2006, the appellant again sought to agitate in this Court his claim to insurance indemnity against the Bank. On 15 March 2007 he filed a document entitled “Interlocutory Application” by which he sought an order that this Court direct the Bank to provide him with evidence concerning the entity which had received the premiums which had been deducted from his bank account in connection with the Mortgagesafe insurance policy. That application was dismissed by a Master on 30 March 2007.
As can be seen, the appellant presented the information charging the two respondents in the Magistrates Court just over seven months after the dismissal of that application. Furthermore, the appellant did not take any action to allege criminal conduct by either respondent until after the finalisation of his civil proceedings.
In summary, the appellant’s claims to an entitlement to indemnity against the Bank were canvassed fully in the proceedings before Bollen J in 1995 and before the Full Court in 1996 and 1997. Similar issues were canvassed in the course of his unsuccessful applications to re-open the appeal and as incidents to the proceedings in the Federal Court.
Relevant Principles
As noted earlier, the Judge considered the information laid in the Magistrates Court and the summons to the respondents to be an abuse of process because they amounted to a collateral attack on the decision of the Full Court in 1996. The Judge referred to the inherent jurisdiction of this Court to stay proceedings which are an abuse of its own processes. The existence of that jurisdiction cannot be doubted. In Williams v Spautz[48] Mason CJ, Dawson, Toohey and McHugh JJ said:
It is well established that Australian superior courts have inherent jurisdiction to stay proceedings which are an abuse of process. The existence of that jurisdiction has long been recognised by the House of Lords. The jurisdiction extends to both civil and criminal proceedings.[49] [Citations omitted]
[48] (1992) 174 CLR 509.
[49] Ibid at 518.
The nature of a superior court’s power to stay its own proceedings was addressed by Mason CJ, Deane and Dawson JJ in Walton v Gardiner:[50]
The inherent jurisdiction of a superior court to stay its proceedings on grounds of abuse of process extends to all those categories of cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness. Thus, it has long been established that, regardless of the propriety of the purpose of the person responsible for their institution and maintenance, proceedings will constitute an abuse of process if they can be clearly seen to be foredoomed to fail. Again, proceedings within the jurisdiction of a court will be unjustifiably oppressive and vexatious of an objecting defendant, and will constitute an abuse of process, if that court is, in all the circumstances of the particular case, a clearly inappropriate forum to entertain them. Yet again, proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings.[51] [Citations omitted]
[50] (1993) 177 CLR 378.
[51] Ibid at 392-393. See also Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27 at [9] – [16]; (2006) 226 CLR 256 at 265-268.
The authorities also recognise that an abuse of a court’s process may take a variety of forms. In Rogers v The Queen[52] Mason CJ said:
The concept of abuse of process is not confined to cases in which the purpose of the moving party is to achieve some foreign or ulterior object, in that it is not that party’s genuine purpose to obtain the relief sought in the second proceedings. The circumstances in which abuse of process may arise are extremely varied and it would be unwise to limit those circumstances to fixed categories. Likewise, it would be a mistake to treat the discussion in judgements of particular circumstances as necessarily confining the concept of abuse of process.
Williams v Spautz is a case in point. Although the majority judgement concluded that there was, in that case, an abuse of process consisting in the initiation of proceedings for an ulterior and improper purpose, the majority recognised that the concept extends beyond use of court processes for ulterior purposes to the use of such processes so as to cause vexation or oppression.[53] [Citations omitted]
[52] (1994) 181 CLR 251.
[53] Ibid at 255.
The cases in which a permanent stay of criminal proceedings will be appropriate are likely to be rare. In Jago v The District Court of New South Wales[54] Mason CJ said:
In any event, a permanent stay should be ordered only in an extreme case and the making of such an order on the basis of delay alone will accordingly be very rare….
To justify a permanent stay of criminal proceedings, there must be a fundamental defect which goes to the root of the trial “of such a nature that nothing that a trial judge can do in the conduct of the trial can relieve against its unfair consequences”….[55] [Citations omitted]
[54] (1989) 168 CLR 23.
[55] Ibid at 34.
The commencement of proceedings for the purpose of mounting a collateral attack on a final decision made in earlier proceedings in which the intending plaintiff participated is a recognised form of abuse of process. In Hunter v Chief Constable of West Midlands Police[56] Lord Diplock said:
The abuse of process which the instant case exemplifies is the initiation of proceedings in a court of justice for the purpose of mounting a collateral attack upon a final decision against the intending plaintiff which has been made by another court of competent jurisdiction in previous proceedings in which the intending plaintiff had a full opportunity of contesting the decision in the court by which it was made.[57]
[56] [1982] AC 529.
[57] Ibid at 541.
In short, the commencement of proceedings (other than by way of appeal or review) for the purpose of impugning a previous adverse decision to which a plaintiff or applicant was a party is inappropriate and may be stayed as an abuse of the process of the court. It is the purpose of the proceedings which constitutes the abuse.[58] However, the authorities also indicate that the court is not primarily concerned with the subjective purpose of the plaintiff or prosecutor in commencing the proceedings. Rather, the court looks to the effect which determination of the later proceedings may have upon a decision in the earlier proceedings. I understand this to be the effect of the decision of the English Court of Appeal in Smith v Linskills[59] which was applied by the Full Court in James v Medical Board of South Australia and Keogh.[60] The existence of a subjective purpose by a plaintiff or prosecutor may provide strong evidence that the later proceedings are an abuse, but it is not, of itself, decisive. In this regard the English Court of Appeal said in Arthur J S Hall and Co. v Simons:[61]
In deciding whether, in any given case, the later proceedings constitute an abusive collateral challenge to the earlier judgement of the court it is always necessary to consider (a) the nature and effect of the earlier judgment, (b) the nature and basis of the claim made in the later proceedings, and (c) any grounds relied on to justify the collateral challenge (if it is found to be such).[62]
[58] Saffron v Commissioner of Taxation [1991] FCA 363 at [14]; (1991) 30 FCR 578 at 583.
[59] [1996] 2 All ER 353 at 359.
[60] [2006] SASC 267 at [40]–[42]; (2006) 95 SASR 445 at 454.
[61] [2002] 1 AC 615.
[62] Ibid at 647.
A number of the authorities concerning an abuse of process by a collateral attack on a previous judicial decision were reviewed by the English Court of Appeal in Secretary of State for Trade and Industry v Bairstow.[63] Morritt V-C drew the following propositions (relevant to the present case) from the authorities:
(a) A collateral attack on an earlier decision of a court of competent jurisdiction may be but is not necessarily an abuse of the process of the court.
(b) …
(c)If the earlier decision is that of a court exercising a civil jurisdiction then it is binding on the parties to that action and their privies in any later civil proceedings.
(d) If the parties to the later civil proceedings were not parties to or privies of those who were parties to the earlier proceedings then it will only be an abuse of the process of the court to challenge the factual findings and conclusions of the judge or jury in the earlier action if (i) it would be manifestly unfair to a party to the later proceedings that the same issues should be relitigated or (ii) to permit such relitigation would bring the administration of justice into disrepute.[64]
[63] [2003] EWCA Civ 321; [2004] Ch 1.
[64] Ibid at [38], 16-17.
This statement of approach was approved by a Young CJ in Eq in Cleary v Jeans[65] and by Newnes J in Donnellan v The Public Trustee.[66]
[65] [2006] NSWCA 9 at [62] – [63].
[66] [2007] WASC 213 at [40] – [42].
In considering whether later proceedings amount to a collateral attack on a previous judicial decision involving the same parties, a number of circumstances should be considered. In State Bank of NSW Ltd v Stenhouse Ltd[67] Giles J identified the following matters as being relevant:
[67] (1997) Aust Torts Reports 81-423.
(a) the importance of the issue in and to the earlier proceedings, including whether it is an evidentiary issue or an ultimate issue;
(b) the opportunity available and taken to fully litigate the issue;
(c) the terms and finality of the finding as to the issue;
(d) the identity between the relevant issues in the two proceedings;
(e)any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceedings;…
(f)the extent of the oppression and unfairness to the other party if the issue is relitigated and the impact of the relitigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and
(g)an overall balancing of justice to the alleged abuser against the matters supportive of abuse of process.[68]
[68] Ibid at 64,089. See also Abriel v Levitt [2003] NSWSC 1235 at [11] – [13].
Those considerations are apposite in the present case.
The Jurisdiction of this Court to Stay Proceedings in the Magistrates Court
Each of the offences alleged against the respondents appears to be a major indictable offence and, if not stayed, would be subject to the process of preliminary examination and committal provided for in the Summary Procedure Act 1921 (SA). The Magistrates Court has jurisdiction to conduct such preliminary examinations.[69]
[69] Magistrates Court Act 1991 (SA) s 9.
This Court held (by majority) in Clayton v Ralphs[70] that it has an inherent jurisdiction to stay committal proceedings for abuse of process. In Fuller v Field and State of South Australia,[71] the Full Court proceeded on the assumption that this Court had an inherent jurisdiction in circumstances similar to the present to stay proceedings in the Magistrates Court.[72] The appellant did not address any submission to the contrary and I think it appropriate to proceed as did the Full Court in Fuller v Field and State of South Australia. As the Judge at first instance noted, recent examples of the exercise of this inherent jurisdiction by a superior court include National Australia Bank v McFarlane,[73] National Australia Bank v McFarlane[74] and Commonwealth Bank of Australia v Heinrich.[75]
[70] (1987) 45 SASR 347.
[71] (1994) 62 SASR 112.
[72] Ibid at 116.
[73] [2003] VSC 19.
[74] [2005] VSC 438.
[75] [2003] SASC 322.
The Decision of the Single Judge
The Judge was satisfied that the issues raised by the information and summons were “either identical or so clearly related to the issues finally determined in the civil action” that the appellant was “engaging in a process to collaterally attack the findings of the Full Court.”[76] In particular, the Judge was satisfied that the appellant was seeking to agitate the same issues which had previously been determined adversely to him in this Court. In addition, the Judge was satisfied that there was no justification for the proceedings against Mr Argus, as he had not had any dealings at all with the appellant.[77]
[76] National Australia Bank Ltd & Argus v Zollo [2008] SASC 93 at [41].
[77] Ibid at [42].
The Function of this Court on Appeal
The appellant’s notice of appeal sets out a number of grounds of appeal. Some are general and do no more, in effect, than to assert that the decision of the Judge was wrong without identifying any particular error. Others however, allege that the Judge failed to apply the correct tests, failed to have regard to the whole of the evidence, and failed to have regard to the different onuses of proof applicable in criminal and civil proceedings. The appellant also alleges that the Judge had, like the Full Court in 1996, been “deceived by the improper addition to Exhibit D28 of what was deemed to be a policy of insurance in the appellant’s favour.”
In R v Carroll[78] Gaudron and Gummow JJ said of the courts’ discretion to stay proceedings to prevent abuse of process:
It does not indicate that there is a discretion to refuse a stay if proceedings are an abuse of process or to grant one if they are not. However, as with discretionary decisions, properly so called, appellate review of its exercise looks to whether the primary judge acted upon a wrong principle, was guided or affected by extraneous or irrelevant matters, mistook the facts, or failed to take into account some material consideration.[79]
[78] [2002] HCA 55; (2002) 213 CLR 635.
[79] Ibid at 657; [73].
This passage was cited, with apparent approval, by Gleeson CJ, Gummow, Hayne and Crennan JJ in Batistatos v Roads and Traffic Authority of New South Wales.[80]
[80] [2006] HCA 27 at [7]; (2006) 226 CLR 256 at 264.
Although the appellant’s grounds of appeal are somewhat generally expressed, I will treat them as raising complaints that the Judge acted on wrong principle and failed to have regard to relevant matters.
Exhibit D28 and the Alleged Deception
It will be recalled that Exhibit D28 in the trial before Bollen J was the Mortgagesafe policy issued by NAFM. The copy of Exhibit D28 which was before the Full Court in 1996 and 1997 comprised two pages. The first page is headed “Mortgagesafe” and underneath that “Mortgage Repayment Insurance”. The body of the first page appears under a subheading “Statutory Notices” and contains, in print form, the statutory notices required by Division 1 of Part IV of the Insurance Contracts Act 1984 (Cth). The second page contains the printed terms of the “Mortgagesafe Life and Permanent Total Disability Insurance Policy”.
The appellant’s contention is that, when originally tendered, Exhibit D28 comprised the first page only. He submitted that the second page had been inserted into the version of the exhibit which was before the Full Court in 1996 and 1997. The appellant submitted:
The blank pro-forma insurance policy relied on by the Full Court was not before Bollen J. In fact Bollen J found on the evidence before him that there had been and there was no policy of insurance ever obtained by or issued by the National Australia Bank, notwithstanding its taking money from my account to pay for such a policy.
The appellant makes the particularly serious allegation that the insertion had been made deliberately and for the purpose of deceiving the Full Court. His submission was that, contrary to the conclusion of the Full Court, the Bank had never obtained any insurance for him at all and, accordingly, that the premiums which had been deducted from his account had been done so improperly. Alternatively, the suggestion seemed to be that the premiums had been deducted for some other policy altogether which the Bank or NAFM had kept secret from the Court. As I understand it, it was this conduct which, in various ways, is said to underpin each of the offences now alleged against the two respondents.
A submission as to the authenticity of the version of Exhibit D28 which was before the Full Court in 1996 and 1997 had not been made by the appellant to the Judge at first instance. It was raised for the first time by an amendment to the appellant’s present notice of appeal. However, the Court permitted the point to be agitated. It formed the basis of the appellant’s submission that this Court should direct a Master to conduct some form of inquiry into the insurance policies which had, or which may have been, procured by the Bank in 1987 and which should have been available to the appellant when he suffered his injury in 1990.
The seriousness of the allegation which the appellant makes indicates that clear and powerful evidence would be required to support it. Such evidence is lacking. The original of Exhibit D28 was long ago returned to the parties and cannot now be located. It is no longer possible for the copy of the Exhibit contained in the appeal books before the Full Court in 1996 and 1997 to be checked against the original.
The appellant’s submission drew some support from the fact that, when tendered in the trial before Bollen J, Exhibit D28 was described as “Statutory Notices” and not as a policy of insurance. Further, Bollen J made some remarks at the time of the tender suggesting that he did not appreciate at that time that the document comprised a policy of insurance.
However, I am satisfied that the appellant’s submission about the authenticity of Exhibit D28 should not be upheld. Contrary to his submission, Bollen J did find that Mr Daly had procured the Mortgagesafe policy for him. Bollen J said:
There is, in my opinion, no doubt that in the end Daly got but one insurance cover or policy for the plaintiff. That is the “Mortgagesafe” policy issued by the third defendant which I have mentioned. It became Exhibit D27. That policy should be read in conjunction with these reasons.[81]
[81] Zollo v National Australia Bank Ltd & Anor (Unreported, Supreme Court of South Australia, Bollen J, 21 December 1995, Judgment No S5408) at 2.
The reference by Bollen J to Exhibit D27 is plainly an error. Exhibit D27 comprised the proposal for the Mortgagesafe policy. Bollen J must have had regard to the policy contained in Exhibit D28. He would not otherwise have said “that policy should be read in conjunction with these reasons”. There was no other Mortgagesafe policy which could be read in conjunction with his reasons.
Next, a witness (Ms Leyson) said in her oral evidence that the statutory notices “are part of the actual policy document and they are a standard form”.
Further, the appellant was represented in the appeal by both senior and junior counsel. Given the importance of the Mortgagesafe policy to the issues being debated on the appeal, it is quite improbable that counsel would not have identified that the inclusion of a second page to Exhibit D28 was erroneous, if in fact that was the case.
It is also pertinent to note that in the proceedings before Bollen J, the appellant himself discovered a document described as “copy Mortgagesafe proposed policy number 032172 dated 15/10/87”. Other evidence established that the Mortgagesafe policy did have the number 032172. In other words, the appellant himself appears to have discovered the Mortgagesafe policy which was tendered before Bollen J.
Finally, I note that this is not the first occasion on which the appellant has, since 1997, sought an examination of the insurance policies procured for him by the Bank in 1987. Admittedly, the precise deception now alleged by the appellant does not appear to have been previously raised, but the appellant has previously alleged that the Bank has failed to reveal all the policies which it procured for him and has sought orders from this Court for an examination of that question. I refer to the appellant’s application filed on 24 January 2000 seeking a re-opening of the appeal. That reopening was rejected by the Full Court.
In all these circumstances, I am not only not satisfied that there is sufficient uncertainty about the matter to warrant the Court ordering some form of further investigation, I am satisfied that Exhibit D28 comprised the two pages which were before the Full Court in 1996 and 1997 and that there was no deception of the Full Court. Accordingly, this ground of appeal fails.
A Collateral Attack on Previous Decisions
As noted earlier, the appellant’s affidavit of 11 March 2008, sworn as part of his defence to the respondents’ application for a stay, provides some particularity of the offences which he alleges. In paragraph 5, the appellant deposed:
5. The basic elements of the charges I have laid are
1. That I applied to the NAB for insurance to cover the payments of my various accounts with the plaintiff bank on the terms of the Hindmarsh Building Society Insurance (a copy of which is now produced “AZ1”). This document was handed by me to the then manager Daley of the plaintiff bank, Port Lincoln branch.
2. That money was taken from my account at the Port Lincoln branch of NAB to pay for a policy with the same terms and conditions as the Hindmarsh Building Society policy.
3. That no such policy was ever issued by the bank or its insurers to cover my borrowings.
4. That I was informed by Mr. Grant Bailey that the bank had an insurance policy covering the same position as the Hindmarsh Building Society policy.
5. That no policy of any kind was ever issued in fact by the plaintiff bank or its insurer. That as a result thereof, as a consequence of the facts I was deceived and defrauded.
These passages indicate that it is the conduct of the Bank, and in particular of Mr Daly, in 1987 which the appellant wishes to agitate in the criminal prosecution. In paragraph 14 of the same affidavit, the appellant deposed:
Every communication between myself and the NAB and Mr Argus lead me to the belief, firstly, that I was fully covered by insurance over all my borrowings and subsequently that I had no policy of any kind.
These affidavit passages, when read in conjunction with the charges, indicate in my opinion that the Judge was correct in concluding that the prosecution instituted by the appellant involves a collateral attack on previous decisions of this Court. I say that for the following reasons:
The gravamen of the first three charges is an allegation of deception of the appellant by the Bank in 1987 and continuing at least until the time of his back injury in June 1990. Although Bollen J found that the Bank, through Mr Daly, had misrepresented the position to the appellant, that finding was set aside by the Full Court. I have set out earlier the relevant passages from the judgment of the Chief Justice. Doyle CJ found explicitly that the claims of misrepresentation, negligence and misleading or deceptive conduct were not available to the appellant. A continuance of the prosecution would involve the controverting of that finding.
It is implicit in the conclusions of the Full Court (and for that matter in the findings of Bollen J) that the premiums deducted from the appellant’s bank account between 1987 and 1990 were applied to the Mortgagesafe insurance policy. Even though that policy did not respond to the appellant’s circumstances following his back injury in June 1990, there was no defrauding of the appellant, nor any obtaining of money by false pretences. Indeed, if the additional policies had in fact been obtained, it is likely that additional premiums would have been payable. The prosecution seeks to controvert these implicit conclusions.
By asserting that the Bank had led false evidence at the trial before Bollen J (as alleged in count 4), the appellant seeks to challenge directly the conclusion of the Full Court which depended on that evidence. The circumstances are analogous to those considered by the High Court in R v Carroll.[82]
[82] [2002] HCA 55; (2002) 213 CLR 635.
The character of the representations made by the Bank to the appellant and his understanding of them were matters which were central to the determination of the appeal by the Full Court in 1996. It was not a peripheral or incidental issue.
The appellant had the opportunity to litigate fully the issue of the representations made by the Bank in the proceedings before Bollen J.
There is no injustice to the appellant in regarding the question of misrepresentation (or as he would have it, of false pretences or of deception) as having been finally determined by the Full Court decision in 1996.
In my opinion, the appellant has not satisfied the onus on him of establishing an error of the kind to which Gaudron and Gummow JJ referred in R v Carroll.[83] The findings of the Judge were not only open to him but were, in my respectful opinion, correct.
[83] Ibid at [73]; 657.
As noted earlier, the existence or otherwise of a collateral attack on a previous decision is to be determined objectively, and not by reference to the subjective purpose of the appellant. That subjective purpose may however be relevant. In the present case, a number of matters indicate that the appellant’s subjective intention in the criminal proceedings is in fact to impugn the decisions of the Full Court.
First, I refer to a document entitled “Interlocutory Application” brought by the appellant in relation to the appeal filed on 15 September 2008. By paragraphs 1 and 2 of that application, the appellant sought orders as follows:
1.That this Honourable Court examine certain aspects of the evidence in each case, that is, Action 1026 of 1993 in the Supreme Court of South Australia and that of Action 73 of 2008 in the Supreme Court of South Australia and also The Full Court of the Supreme Court of South Australia, to assess where the evidence is in conflict with each other and differs one action from the other.
2.Upon adjudication of the above, the applicant asks that this Honourable Court make the necessary ruling where it may be necessary and to order any further directions.
That application was misconceived in that it sought orders which were not interlocutory to the appeal at all. What it indicates however is the appellant’s continuing attempts to have the decisions of the Full Court in 1996 and 1997 revisited.
Secondly, the addition of the ground of appeal by which the appellant alleged a deliberate deception of the previous Full Court also illustrates in my opinion the appellant’s continuing intention to challenge the previous decision of the Full Court.
Thirdly, the oral submissions of the appellant on the hearing of the appeal, and in particular those submissions made in support of his request that this Court order an investigation into the insurance policies procured by the Bank, indicate that the appellant does not accept that the matters were resolved by the Full Court decisions of 1996 and 1997.
Other Matters
The appellant also submitted that the Judge at first instance had misapplied the onus of proof. His submission was to the effect that the respondents should have been required to satisfy the criminal onus of proof before the Court ordered a stay. That submission cannot be accepted. The standard of proof of factual matters on an application for a stay on the grounds of abuse of process is proof on the balance of probabilities.[84] The exercise of the Court’s jurisdiction to stay proceedings on the grounds of abuse of process may have a different emphasis in criminal proceedings,[85] but it cannot be said that that different emphasis required a more stringent onus of proof of underlying facts than would have been the case in proceedings which were wholly civil in nature.
[84] Attorney-General’s (UK) Reference (No 1 of 1990) [1992] 1 QB 630 at 644.
[85] Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27 at [8]; (2006) 226 CLR 256 at 264.
Conclusion
For the reasons given above, my opinion is that the appeal should be dismissed.
KELLY J: I agree that this appeal should be dismissed for the reasons given by both Gray and White JJ.
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