Bayne v Blake (No 1) [1909] HCA 55; (1909) 9 CLR 347 (10 September 1909)

Bayne and Another Plaintiffs, Appellants; and Blake and Another Defendants, Respondents.

This is an action brought by the appellants against the respondents, claiming damages for improperly putting in motion the process of the Court of Insolvency—I use advisedly a neutral expression. It was framed in part in accordance with what is said to be a well known cause of action, namely, fraudulently, falsely and maliciously and without reasonable and probable cause presenting a petition and obtaining orders nisi and absolute for the sequestration of the appellants' estates. It was also put as an action founded upon an abuse of the process of Court to the prejudice of the appellants.

The material facts may be very shortly stated. The respondents had obtained judgments in a suit brought against them by the appellants. The appellants gave notice of appeal to the High Court on 21st December 1905. On 20th December 1905 the respondents had taken out debtors' summonses against the appellants but had not served them. On 23rd December the respondents commenced an action in the Supreme Court to recover the amount of their taxed costs in the original action—a proceeding which I understand is peculiar to Victoria, and is not found elsewhere. On 26th January 1906 the respondents obtained judgment in that action, and in February they issued execution upon that judgment. On 6th February the respondents obtained orders nisi for the sequestration of the estates of the appellants which on 22nd February were made absolute. On 8th March the appellants' appeal to the High Court was perfected.

The complaint made by the appellants is that these proceedings taken under these circumstances were not a bonâ fide exercise of the rights of creditors against their debtors, but were an attempt to interfere with the rights of the appellants in seeking such redress as they were entitled to from the High Court. The object of the proceedings, it was said, was to stop the appeal or hamper the appellants in the conduct of their case and in obtaining the redress to which they claimed they were entitled. The decision of the Supreme Court was reversed by this Court. From that the respondents appealed to the Privy Council, and the decision of this Court was reversed by that tribunal.

As far as the result of the action taken by the respondents is concerned there can be little doubt that, whether they desired it or not, they certainly succeeded in hampering the appellants in the conduct of their defence to the respondents' appeal, with the result that the appellants only had £20 to defend their cause in London, so that the case was practically heard ex parte there, and there is reason to suppose that the members of the Board were under some strange misapprehension on questions of fact.

So far as the action is one for falsely and maliciously and without reasonable and probable cause obtaining adjudications of insolvency, I think it is a complete answer to say that it now appears that when the petitions were presented there were good petitioning creditors' debts and acts of insolvency. The debts have now been established by the decision of the highest Court in the realm, and so far as the action is based upon instituting insolvency proceedings against persons who had not committed an act of insolvency, the respondents had reasonable and probable cause for instituting these proceedings, and the action fails.

The action must then be supported, if at all, as an action for damages for an abuse of a process of Court. Although some of the authorities say that such an action will lie, there is no instance of an action of that sort having ever been brought, and what are the principles applicable to such an action seems to me to be a matter of great obscurity. The learned Judge from whom the appeal is brought found as a matter of fact that the respondents were not actuated in taking the insolvency proceedings by a desire to prevent the appeal going on, but by a desire to recover any property the appellants might have in satisfaction of their claim for costs. As I understand that finding, it is that the respondents had not that object in view in any way—that it was quite absent from their minds. If that is the meaning of the finding, I have very great difficulty in accepting that conclusion on the evidence before us. It appears to me, on the evidence, as I understand it, that that was at any rate one of the objects respondents had in taking the proceedings in the Court of Insolvency. But whether that would be sufficient to establish the cause of action of abuse of process of Court seems to me to be a very difficult point. The case of King v. Henderson[1] was relied upon in the argument of a previous appeal in this case (Bayne v. Riggall[2]), and this passage[3] from the judgment of the Privy Council was read by me:—"Their Lordships do not dispute the soundness of the proposition that a plaintiff or petitioner who institutes and insists in a process before the Bankruptcy or any other Court, in circumstances which make it an abuse of the remedy sought or a fraud upon the Court, cannot be said to have acted in that proceeding either with reasonable or probable cause. But, in using that language, it becomes necessary to consider what will, in the proper legal sense of the words, be sufficient to constitute what is generally known as an abuse of process or as fraud upon the Court. In the opinion of their Lordships, mere motive, however reprehensible, will not be sufficient for that purpose; it must be shown that, in the circumstances in which the interposition of the Court is sought, the remedy would be unsuitable, and would enable the person obtaining it fraudulently to defeat the rights of others, whether legal or equitable."

I have very great difficulty in knowing what is exactly the meaning of "fraud" and "fraudulently" as used in that passage. Fraud, of course, imports a state of mind. I have very great difficulty in seeing how far a particular state of mind is involved in proceedings which are an abuse of the process of the Court. For instance, in Egbert v. Short[4], there was an application to stay proceedings or dismiss the action on the ground, as stated by Warrington J.[5], "that to allow it to proceed would be so oppressive and vexatious to the defendant as to amount to such an injustice to him that it ought not to be permitted." Now the ground for staying proceedings in insolvency that they ought not to have been taken in the present case seems to me to be exactly within the words: "To allow it to proceed would be so oppressive and vexatious to the defendant as to amount to such an injustice to him that it ought not to be permitted." In accord with that is an expression used by Bowen L.J. in Ex parte Heyworth; In re Rhodes[6]: "If it could be shown that the appeal from the judgment must be a frivolous one, we might reverse his decision. But, so long as he might reasonably have come to the conclusion that there was a reasonable ground of appeal, it would be a monstrous thing that a receiving order should be made while the appeal is pending." If that view is accepted, the finding of the Judge would be quite immaterial, because I agree that to allow the insolvency proceedings to go on would be so oppressive to the appellants as to amount to such an injustice to them that it ought not to be permitted. It was practically in that view that this Court set aside one of the adjudications. I say, if that is so, the finding is immaterial; but I only point out the difficulty, I form no conclusion on the matter.

But there is one thing quite clear, namely, that, assuming this was an abuse of process of Court and that it is actionable, actual damage is an ingredient of the action, just as it is in an action for fraud. Fraud without damage is not a cause of action. Therefore, the appellants in order to succeed must show that they have sustained some damage owing to the improper conduct of the respondents, and the connection between the conduct and the damages must be such that the Court can take notice of it. Now the damage the appellants have sustained, assuming either of the causes of action to lie, undoubtedly is that they were seriously hampered in the defence of their case, and so much so that they practically became inopes consilii. But it has been determined by the highest Court of Appeal that the appellants never had a cause of action, so that they have only been hampered in putting forward an untenable claim. In my opinion the Court cannot take notice of that as damage to sustain their present cause of action. That the appellants never had a cause of action has been decided in litigation between the same parties, and even if it appeared in the clearest way that the judgment was mistaken, or was given upon mistaken evidence, or that fresh evidence had been discovered—no matter what the circumstances were—so long as that stands as the final judgment between the parties their claim is untenable, and I do not think that being hampered in such an action can be regarded as giving rise to a cause of action.

For that reason I think the appellants fail. As to the other points, I reserve my judgment until the question arises for decision, which I think will be never.

I do not think it necessary to decide any point in this case except one, namely, that, although oppressive or vexatious proceedings will be set aside, it does not necessarily follow that the taking of these proceedings gives rise to a cause of action. The Court will not allow its process to be abused by oppressive or vexatious proceedings: but, unless that abuse involves or effects a fraud on the party against whom the proceedings have been directed, his successful exercise of the right to invoke the intervention of the Court to set them aside does not give him any right of action, and there is no actionable fraud without proof of special damage.

That the plaintiffs' appeal was crippled by the conduct of the defendants in procuring the adjudication in insolvency, and that the insolvency proceedings were instituted with the object of bringing about that result, may be true. I do not so decide. But, merely for the purposes of the argument, let me assume both propositions to be correct. Even so, the crippling of the plaintiffs' appeal is not actionable unless they thereby lost some substantial right. That no such right was lost is apparent from the fact that the Privy Council set aside the judgment of this Court in favour of the plaintiffs. That judgment of the Privy Council is conclusive to this Court, and therefore it is conclusively established that there never was a cause for that action. The plaintiffs' claim in this action must therefore be untenable simply because no cause, according to any legal intendment, ever existed for their former action. That appears to be conclusive against the claim, whatever opinion one may otherwise have in its favour. It seems to me, therefore, that this appeal should be dismissed.

When this case came before the Court in March of last year the only question to be determined was whether the Judge of first instance had rightly dealt with the matter under the summary procedure provided for by the Victorian Rules.

The case presented itself at that time in two aspects, first whether on the facts stated there was sufficient indication of a cause of action to prevent the claim being treated as frivolous or vexatious, and, secondly, whether there was sufficient evidence that the facts relied on could be established. The question whether there was a cause of action involved very difficult considerations which were dealt with by the Court at that time, and it came to the conclusion, without determining whether there was a cause of action or not, that at all events the facts were such as to render it illegal for the Judge to determine in a summary way whether there was a cause of action and whether the facts existed which were necessary to substantiate the claim. In pursuance of that view the Court set aside the summary judgment which had been entered for the respondents. The case then came on for trial in the ordinary way before Hood J. The appellants were in the unfortunate position of being obliged to call one of the respondents and some of the respondents' witnesses in support of their claim, and we now have before us all the evidence which could possibly be brought before the Court on the trial of the issues between the parties. The Judge had to determine, first, whether there was a cause of action, and, secondly, whether the facts alleged in support of the cause of action were proved. His Honor took the course of assuming that there was a cause of action and proceeded then to deal with the facts. It was contended by Mr. Duffy on behalf of the appellants that his Honor had in some way mistaken what the cause of action was and had not dealt with the facts upon the issues which really arose for determination. But I have not been able to see that it is open to that criticism. It appears to me, looking at the judgment as a whole, that the Judge dealt fairly with every aspect of the case put forward by the appellants, and, dealing with the case in that manner, and applying his mind to every element of the assumed cause of action, he came to the conclusion that the appellants had not in fact established their claim. The duty of this Court in dealing with decisions on questions of fact is laid down in Dearman v. Dearman[7] in these terms:—"Now, it is well settled that upon an appeal from a Judge of first instance who has had the advantage of hearing the witnesses, especially in a case where there is conflict of evidence, the Court of Appeal cannot reverse his decision on questions of fact unless it sees that the decision is manifestly wrong." I have considered the decision of the learned Judge very carefully in connection with all the facts with which he deals, and I am certainly unable to say the decision is manifestly wrong. The Judge on this occasion had before him evidence which was not before the Judge who decided the case originally, and which was not before this Court on the application of March last. That is the evidence of Mr. Riggall, which if believed—and it is supported by other parts of the evidence—is conclusive that, so far as he was concerned, in putting the law in motion there was no intention to use the process of the Court of Insolvency in any other way than to discover assets of the appellants for the purpose of having his debt paid. It appears to me that there was evidence before the learned Judge from which he might conclude that the statement of Mr. Riggall was corroborated by the circumstances. That being so, it is impossible for me on the question of fact to determine that the decision was manifestly wrong.

It would be unnecessary to go further than express this opinion, because that disposes of the matter. There is no doubt that the other question, whether the action will lie, involves very difficult questions. Some of the difficulties have been referred to by my brother the Chief Justice, and, with regard to that aspect of the case, I will only say that I agree that an action of the kind, whatever other elements may be necessary for its maintenance, clearly will not lie unless actual damage is shown as resulting from the wrongful conduct complained of. It is in this case clear that no damage has resulted from the wrongful act complained of which the law can appreciate. As to the other elements of the cause of action, the injury relied on was the setting in motion the process of the Court of Insolvency for a purpose to which it could not be legitimately applied. It appears to me that, as far as the cases indicate anything upon the subject, it is a necessary part of the cause of action that the purpose with which the proceedings are taken should amount to an abuse of the process of the Court. It may be that a person who is exercising his rights quite legitimately and with the intention of using the process of Court for ends to which it may be legitimately applied, is yet doing something which in the interests of justice the Court itself will think it necessary to restrain. Such was the case when in one of the cases between these parties this Court set aside the insolvency proceedings. But it does not follow that, because the Court in the exercise of its discretion will prevent the use of process of Court in circumstances which it considers unjust, that a person who is only exercising his rights and using the Court for a proper purpose is liable to the other party if damage results. It is not, however, necessary to express an opinion as to what are the elements of that cause of action. That question may some day come up for decision. But it is not necessary to decide it at present.

Assuming that there was a cause of action, I am of opinion that the decision of the learned Judge below cannot be interfered with. On that ground I agree that the appeal should be dismissed.

[1] (1898) A.C., 720.

[2] [1908] HCA 39; 6 C.L.R., 382, at p. 394.

[3] (1898) A.C., 720, at p. 731.

[4] (1907) 2 Ch., 205.

[5] (1907) 2 Ch., 205, at p. 211.

[6] 14 Q.B.D., 49, at p. 52.

[7] [1908] HCA 84; 7 C.L.R., 549, at p. 553.

High Court of Australia

Bayne v Blake (No 1) [1909] HCA 55; (1909) 9 CLR 347 (10 September 1909)

HIGH COURT OF AUSTRALIA