SUPREME COURT OF QUEENSLAND CITATION: PARTIES: FILE NO/S: No 60 of 2005 DIVISION: PROCEEDING: ORIGINATING COURT: The Beach Club Port Douglas Pty Ltd v Page [2005] QSC 195 THE BEACH CLUB PORT DOUGLAS PTY LTD ACN 106 632 384 (respondent/plaintiff) v GEORGE PAGE (applicant/defendant) Trial Division Application Supreme Court at Cairns DELIVERED ON: 10 June 2005 DELIVERED AT: Brisbane HEARING DATE: 23 May 2005 JUDGE: ORDER: Muir J The claim be dismissed and that the respondent pay the applicant s costs of and incidental to the proceedings, including reserved costs, if any, to be assessed on the standard basis CATCHWORDS: NEGLIGENCE DUTY OF CARE REASONABLE FORSEEABILITY OF DAMAGE WHERE ECONOMIC OR FINANCIAL LOSS where claim made for damages for negligent commencement of appeal by applicant where respondent asserts applicant owed it a duty of care regarding commencement of appeal - where respondent asserts appeal had no reasonable prospects of success whether duty of care exists between parties contemplating commencement of civil proceedings whether damages recoverable from a party for loss suffered due to commencement of claim where finality in litigation an issue Al-Kandari v J R. Brown & Co [1988] 1 QB 665 Burton v Shire of Bairnsdale (1908) 7 CLR 76 Business Computers International Ltd v Registrar of Companies [1988] 1 Ch 229 Cran v State of New South Wales (2004) Aust Torts Rep 81-737 D Orta-Ekenaike v Victoria Legal Aid (2005) HCA 12
2 Dey v Victorian Railways Commissioners (1948) 78 CLR 62 Donoghue v Stevenson [1932)] AC 562 Elguzouli-Daf v Commissioner of Police of the Metropolis [1995] QB 335 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Gianelli v Wraith (1988) 165 CLR 543 Governors of Peabody Donation Fund v Sir Lindsay Parkinson & Co [1985] AC 201 Gregory v Portsmouth City Council [2000] 1 AC 419 Jamieson v The Queen (1993) 177 CLR 574 Little v Law Institute of Victoria (1990) VR 257 Rondel v Worsley [1969] 1 AC 191 COUNSEL: SOLICITORS: Mr B H Denton SC with R W Short for the respondent/plaintiff Mr S Couper QC for the applicant/respondent Miller Harris Lawyers for the respondent/plaintiff Walker Davis T/A MacDonnells Solicitors for the applicant/respondent [1] The applicant/defendant applies to strike out the respondent/plaintiff s claim on the basis that it discloses no sustainable cause of action. The claim is for damages for negligent commencement of an appeal by the applicant in the Planning and Environment Court against the decision of the Douglas Shire Council to grant a development permit in respect of a property at Port Douglas. [2] In the Statement of Claim it is alleged that:- (a) It was reasonably foreseeable that if the applicant appealed against the Council decision the respondent developer had suffered loss and damage; (b) the respondent has been delayed in commencing its development until the appeal is decided or withdrawn; (c) the applicant owed the respondent a duty of care not to appeal against the Council decision: (i) without reasonably or properly assessing whether or not the development qualified for the permit sought by the respondent; (ii) where the appeal was hopeless untenable and bound to fail ; or (iii) where the appeal had no reasonable prospects of success. The applicant s case [3] Apart from the ground referred to earlier, the applicant attacked the claim on a number of other bases. It was contended that a necessary element of the respondent s case, namely that the appeal was at all times hopeless, untenable and bound to fail, could not be sustained. Another point was that it could not be shown that the conduct of the applicant was causative of the respondent s loss as the development would have been delayed in any event as a result of a dispute between the local authority and the respondent concerning the local authority s gross floor
3 area requirements for the development. The final such additional contention was that the claim should be struck out as an abuse of process. It was submitted that the respondent s predominant purpose instituting the proceedings was to intimidate the applicant into withdrawing his Planning and Environment Court appeal. [4] In view of the conclusion I have reached in relation to the applicant s primary argument, it is unnecessary for me to rule on these other contentions. My limited investigation of them suggests that, in each case, the resolution of the matter depends on the determination of disputed issues of fact. No cross-examination took place and, in the time available, would have been impossible. [5] I now return to the question of whether or not the claim is in respect of a valid cause of action. The applicant s argument [6] That there is no available cause of action for the negligent institution of civil proceedings has been expressively decided in Business Computers International Ltd v Registrar of Companies 1 and approved in Al-Kandari v J R. Brown & Co 2 and Elguzouli-Daf v Commissioner of Police of the Metropolis. 3 [7] A prosecution owes no duty of care to an accused person. See Cran v State of New South Wales. 4 [8] The basis for such immunity was explained by Gaudron J in Jamieson v The Queen 5 in the following terms: Resort to the courts for the orderly resolution of disputes between citizens, or between citizens and government, would be greatly put at risk if witnesses were to be subject to restraints with respect to their evidence, other than those which serve to protect the integrity of the judicial process. It would be put at even greater risk if litigants were not similarly privileged in respect of the instigation of proceedings. Of course, there are also restraints in that regard. [9] There is debate about whether the tort of malicious prosecution is available in respect of the malicious prosecution of civil proceedings. 6 That debate would be unnecessary if a cause of action existed for negligent commencement of proceedings. [10] The principle discussed in D Orta-Ekenaike v Victoria Legal Aid 7 concerning the somewhat analogous immunity of barristers identified as the central and pervading tenet of the judicial system, that controversies, once resolved, are not to be reopened except in a few, narrowly defined, circumstances has application to the question under consideration. The existence of the cause of action asserted by the respondent conflicts with this principle. 1 2 3 4 5 6 7 [1988] 1 Ch 229. [1988] 1 QB 665 at 672. [1995] QB 335 at 348. (2004) Aust Torts Rep 81-737 at 65,594-65,597, 60,598-60,599. (1993) 177 CLR 574 at 595. Little v Law Institute of Victoria (1990) VR 257 and Gregory v Portsmouth City Council [2000] 1 AC 419. (2005) HCA 12.
4 The respondent s contentions [11] The area of law dealing with negligence for recovery of economic loss is complex, novel and developing. Whether or not the alleged duty exists will very much depend on the findings made on the trial. [12] There is no binding Australian authority against the existence of the duty of care alleged by the respondent. In that case the authorities show that it would be a wrongful exercise of discretion to prevent the matter going to trial. In support of this last proposition the respondent relied on a number of authorities including General Steel Industries Inc v Commissioner for Railways (NSW) 8, Dey v Victorian Railways Commissioners 9 and Burton v Shire of Bairnsdale. 10 Consideration of the English authorities relied on by the applicant [13] It is arguable that none of the English decisions relied on by the applicant expressly decide the issue under consideration, at least as the ratio decidendi of the decision. The plaintiff s contention in Business Computers International was that the second defendant acted negligently in failing to serve a winding up petition on it with the result that the plaintiff did not appear on the hearing of the petition and a winding up order was made. The trial judge, Scott J, concluded that despite the proximity between the parties, the alleged duty of care was not owed by the party presenting and serving the petition. He pointed out that Lord Atkins famous enunciation of principle in Donoghue v Stevenson 11 is not a comprehensive definition of all the circumstances in which a duty of care may arise and cited the following dictum of Lord Keith in Governors of Peabody Donation Fund v Sir Lindsay Parkinson & Co Ltd 12 : in determining whether or not a duty of care of particular scope was incumbent upon a defendant it is material to take into consideration whether it is just and reasonable that it should be so. [14] Scott J proceeded: Is it just and reasonable that a plaintiff should owe a duty of care to a defendant in regard to service of the originating process? I do not think that it is. The plaintiff and the defendant, the petitioner and the respondent, are antagonists. The plaintiff, or the petitioner, is seeking a legal remedy in an adversarial system. The system stipulates the rules and requirements that must be observed by the two parties. The plaintiff must issue his process and must serve it on the defendant. If there is default in service the process may be struck out. If an order is obtained without the prescribed rules or regulations having been observed, the order may be discharged or set aside, sometimes by an application at first instance, sometimes on appeal. The prosecution of the action or of the petition is subject throughout its career from institution to final judgment to judicial control. Service of process is a step, and usually an essential step, in the prosecution. 8 9 10 11 12 (1964) 112 CLR 125. (1948) 78 CLR 62. (1908) 7 CLR 76. [1932)] AC 562, 580. [1985] AC 201 at 241.
5 [15] The case was concerned with steps taken in the course of litigation rather than with the commencement of the litigation and its resolution depends on Scott J s conclusion:...that control of litigation and of the various steps taken in prosecuting litigation lies in the court and the rules and procedures that govern litigation and cannot be sought via a tortious duty of care imposed on one party for the benefit of the other. [16] Al-Kandari v J.R. Brown & Co was a case by a plaintiff against her husband s solicitor in circumstances in which the solicitor, acting for the plaintiff s husband in a matrimonial matter, voluntarily agreed to hold the husband s passport but relinquished it enabling his client to use it to the plaintiff s disadvantage. The plaintiff s husband had consented to an order that he surrender his passport to the solicitors. The factual situation addressed by that case is thus far removed from the issue of whether a defendant can sue a plaintiff for negligently commencing or continuing proceedings. [17] Elguzouli-Daf v Commissioner of Police of the Metropolis concerned the question of whether the Crown Prosecution service owed a general duty of care to a defendant in the conduct of its prosecution of that defendant. Whether such a duty is owed depends upon matters which have no application to the general run of civil proceedings. As Lord Stein observed in the course of his reasons, whether there should be a duty of care imposed in such circumstances depended on the existence of other protections and remedies available to a defendant such as the accountability of the Attorney-General to Parliament and the general role of the Attorney-General in relation to prosecutions as well as the possibility of judicial review. Stein LJ also referred, in this context, to the tort of malicious prosecution and the tort of misfeasance in public office. His Lordship considered it relevant that the prosecution had an interest adverse to that of the person being prosecuted. In that regard he observed: In the absence of a specific assumption of responsibility lawyers engaged in hostile civil litigation are not liable in negligence to the opposing party: Al Kandari v J.R. Brown & Co [1988] QB 665; Business Computers International Ltd v Registrar of Companies [1988] Ch. 299. but I do not wish to take this analogy too far since a prosecutor in criminal proceedings is also a minister of justice. Nevertheless the reality is that a defendant in criminal proceedings must rely on the justices or the judge, and his own lawyers, to protect his interests. [18] Despite not being directly on point, or distinguishable on their facts, the cases just discussed provide support for the applicant s contentions. They suggest the unlikelihood of a duty of care arising in consequence of litigation between persons whose interests are antithetical. The normal and expected consequence of the commencement of proceedings by a plaintiff against a defendant is that success by the plaintiff in the proceedings will cause injury to the defendant or to the interests which the defendant seeks to uphold. [19] In Al-Kandari Bingham LJ explained the competing interests of litigants and their respective advisors and the consequences of such conflicting interests as follows: In the ordinary course of adversarial litigation a solicitor does not owe a duty of care to his client s adversary. The theory underlying
6 such litigation is that justice is best done if each party, separately and independently advised, attempts within the limits of the law and propriety and good practice to achieve the best result for himself that he reasonably can without regard to the interests of the other party. The duty of the solicitor, within the same limits, is to assist his client in that endeavour, although the wise solicitor may often advise that the best result will involve an element of compromise or give and take or horse trading. Ordinarily, however, in contested civil litigation a solicitor s proper concern is to do what is best for his client without regard to the interests of his opponent. [20] In Rondel v Worsley, 13 which concerned a claim arising out of conduct of a trial, Lord Pearce, in dicta, made the following observations in which it was implicit that no cause of action exists for the negligent institution of proceedings: It is a hardship that a man who has done no wrong should be subjected by a plaintiff to a baseless charge, in meeting which he will incur large expense. The charge may be reported largely in the newspapers and injure his reputation.but the basic hardship is inevitable and will always remain, namely, that any plaintiff can use the legal machine as a sounding board for untruthful allegations and cause harm, trouble and expense to an innocent defendant, and yet the law holds him (and the press who report the case) immune from paying damages for their untruth. Yet to remove this immunity would create a great injury to justice. Without it, the honest litigant might not dare to bring an honest claim for fear that if he fails he might be sued for damages. [21] Underlying his Lordship s reasons was the imperative of preserving freedom of access to the courts. [22] Gaudron J, in Jamieson v The Queen, 14 in the passage from her reasons quoted earlier, also referred to the undesirability of imposing restraints which might deter persons from having access to courts other than those which serve to protect the integrity of the judicial process. She then contrasted the position of litigants with witnesses in the following terms: The somewhat different position of litigants, vis-a-vis witnesses, can be seen from the nature of the restraints which affect them. Litigants are affected not only by the restraints effected by the laws relating to perjury, contempt and perverting the course of justice which ensure the integrity of the judicial process but, as well, by those designed to ensure that proceedings serve the ends of justice. Thus, liability attaches to them for malicious prosecution and for abuse of process; and they are subject to restraints which may be imposed by the courts with respect to proceedings which are vexatious or oppressive; or, those which may be imposed on litigants who habitually instigate proceedings of that kind. The different position of litigants, vis-a-vis witnesses, explains the fact that civil liability attaches to them for instigating proceedings which amount to malicious prosecution or abuse of process. 13 14 [1969] 1 AC 191 at 268. (1993) 177 CLR 574 at 595.
7 [23] The existence of the alleged duty of care would also tend to contravene the strongly entrenched preference of the law for finality in litigation. [24] In D Orta-Ekenaike v Victoria Legal Aid, 15 Gleeson CJ, after referring to Mason CJ s upholding barristers immunity on the grounds of public policy based in part on the adverse consequence for the administration of justice which would flow from the re-litigation in collateral proceedings for negligence of issues determined in the principal proceedings, 16 said: 34. A central and pervading tenet of the judicial system is that controversies, once resolved, are not to be reopened except in a few narrowly defined, circumstances. That tenet finds reflection in the restriction upon the reopening of final orders after entry and in the rules concerning the bringing of an action to set aside a final judgment on the ground that it was procured by fraud. The tenet also finds reflection in the doctrines of res judicata and issues estoppel. Those doctrines prevent a party to a proceeding raising, in a new proceeding against a party to the original proceeding, a cause of action or issue that was finally decided in the original proceeding. It is a tenet that underpins the extension of principles of preclusion to some circumstances where the issues raised in the later proceeding could have been raised in an earlier proceeding. 35. The principal qualification to the general principle that controversies, once quelled, may not be reopened is provided by the appellate system. But even there, the importance of finality pervades the law. Restraints on the nature and availability of appeals, rules about what points may be taken on appeal and rules about when further evidence may be called in an appeal (in particular, the so-called fresh evidence rule are all rules based on the need for finality. As was said in the joint reasons in Coulton v Holcombe: [i]t is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. 45. Rather, the central justification for the advocate s immunity is the principle that controversies, once resolved, are not to be reopened except in a few narrowly defined circumstances. This is a fundamental and pervading tenet of the judicial system, reflecting the role played by the judicial process in the government of society. If an exception to that tenet were to be created by abolishing that immunity, a peculiar type of relitigation would arise. There would be relitigation of a controversy (already determined) as a result of what had happened during, or in preparation for, the hearing that had been designed to quell that controversy. Moreover, it would be relitigation of a skewed and limited kind. 15 16 (2005) HCA 12. In Gianelli v Wraith (1988) 165 CLR 543 at 555.
8 Conclusion [25] As may be seen from the above account of the respondent s argument, no authority for the existence of the respondent s cause of action was offered. Instead, the thrust of the respondent s argument was to rely on the alleged harm which might befall if the issue under consideration, albeit novel, were to be decided in the absence of findings of fact after a trial. The fact that no authority can be found which offers direct, or even indirect, support for the respondent s argument in my view is telling. But an even more decisive consideration is that to conclude in favour of the respondent would be to ignore or give insufficient recognition to those principles which seek to bring about finality in litigation and maintain unimpeded access to the courts. To conclude for the respondent would also give rise to the unlikely result that parties with opposed interests pursuing them through an adversarial system which, in a general sense, presupposes that success by one party will cause injury to the other nevertheless have reciprocal duties of care. [26] The respondent s case reveals no demonstrable gap in the common law of negligence which cries out for closure by judicial or legislative intervention. Apart from the considerations discussed already, the tort of abuse of process provides a remedy where proceedings are brought for an improper purpose. And, where it can be demonstrated that there is no sustainable cause of action, no issue to be tried or a threadbare case, courts are increasingly ready to entertain applications for a summary determination of some or all of the issues raised by the proceedings. [27] Even if, contrary to my conclusions, a plaintiff in the normal run of civil proceedings can owe a duty of care to the defendant along the lines of that asserted by the respondent, it would not follow, necessarily, that an appellant in a proceeding under the Integrated Planning Act 1997 ( the Act ) would owe such a duty. The Act contemplates, and even encourages, members of the community to participate in its process. 17 [28] Consistently with this approach, the normal rule in proceedings under the Act is that parties bear their own costs of Planning & Environment Court proceedings. 18 Consequently, in the case of proceedings under the Act the public interest or policy considerations for denying a cause of action for negligent commencement or prosecution of proceedings is, if anything, stronger than in the case of general civil litigation. [29] I conclude that the respondent s claim does not meet the tests propounded in cases such as General Steel Industries v Commissioner for Railways (NSW) and Dey v Victorian Railways Commission and I propose to order that the claim be dismissed and that the respondent pay the applicant s costs of and incidental to the proceedings, including reserved costs, if any, to be assessed on the standard basis. 17 18 See eg s 1.2.3. s 4.1.23.