Johnston v ANZ [2004] NSWSC 1250

The claim was a motion by the plaintiff seeking leave to rely upon a second further amended statement of claim (SFASC).

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

The plaintiff was at all material times a director and secretary of three companies known as Hurworth Nominees, Lillyhill and Hiform Feeds.

Hurworth Nominees Pty Limited was the registered proprietor of the farming property “Lilydale”.

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

There was default under the terms and conditions of the deed.
In 1996 the Bank instituted proceedings seeking various orders, including an order that Johnston vacate “Lilydale”. The plaintiff was ordered to leave the property.

The property was sold in 1996. Three companies with which the plaintiff was associated sought, an order that an account be taken of moneys received and disbursed by the Bank and declarations that the Bank and the Receiver had adopted a course of conduct to deprive the companies of income and to depreciate assets upon the sale. They sought, alternatively, damages for negligence and the mismanagement of the sale of assets including the property “Lilydale”.

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

The malicious prosecution relied upon comprised two charges brought by the police against the plaintiff pursuant to s4 of the Inclosed Lands Protection Act 1901 (NSW). The first charge alleged that on 26 October 1996 the plaintiff without lawful excuse remained on enclosed lands without the consent of the owner, occupier or person apparently in charge of those lands after being requested by a person apparently in charge of those lands to leave those lands.
The second charge alleged that on 31 October 1996 the plaintiff without lawful excuse had entered into enclosed lands without the consent of the owner, occupier or person apparently in charge of those lands.

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

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

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

On 6 April 2001 Master Harrison struck out the first statement of claim. Master Harrison concluded that as to the alleged malicious prosecution, the pleading was defective in that it did not adequately plead how the police were misled and how that was relevant to the institution or continuation of proceedings. It did not particularise in as much detail as possible the alleged untrue allegations, it did not properly plead or provide particulars in relation to whether the defendants had acted without “reasonable or proper cause”. Leave was granted to the plaintiff to amend the statement of claim accordingly.

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

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

A further amended statement of claim (the third statement of claim) was filed on 16 January 2002. As before, the defendants brought a motion pursuant to Pt 15 r 26 to strike out the third statement of claim.

His Honour noted that the statement of claim was replete with irrelevancies which served only to cloud the issues as to malicious prosecution.

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

The SFASC (which was the fourth statement of claim) no longer sought to raise the abuse of process claims and was restricted to those relating to malicious prosecution. The defendants opposed leave being granted to the plaintiff to file the SFASC on the basis that to do so would be a futile exercise since the SFASC was as defective as the earlier statements of claim and was also liable to be struck out pursuant to Pt 15 r 26 of the Supreme Court Rules.

The court accepted the submission made by the Bank that this fundamental difficulty remains in the SFASC, ie that no facts have been pleaded nor particulars provided in the SFASC which would establish that either the Receiver or Mr Ariff were agents of the Bank.

The Bank succeeded on this argument. This meant that as against the Bank the SFASC did not disclose a reasonable cause of action in that an essential ingredient of a malicious prosecution claim had not been made out, ie that the Bank in fact prosecuted the plaintiff.

The Court held that this additional element of the tort of malicious prosecution was unable to be made out against any of the defendants and for this further reason the SFASC did not disclose a reasonable cause of action against them.


Held it would be futile to allow the plaintiff to file the SFASC since it would inevitably be struck out at the behest of the defendants pursuant to Pt 15 r26. Accordingly, the Court refused the plaintiff’s application for leave to file the SFASC.

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

The approach of Anderson J in Holding v Jennings (1979) VR 289 at 293 was followed where his Honour said:

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

The Court held that apart from the significant defects in the SFASC as a pleading, it was also apparent that in two essential respects the pleading disclosed no reasonable cause of action and the defect was of such a kind as to be incapable of correction by further pleading. The action was dismissed. Costs were reserved.

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