Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Maxwell-Smith v S & E Hall Pty Ltd [2014] NSWCA 146
• Hearing dates: 14 April 2014
• Decision date: 14 May 2014
• Before: Beazley P at [1]; McColl JA at [2]; Barrett JA at [3]

Decision

1. If and to the extent that leave to appeal is required, grant leave to appeal.

2. Direct that a notice of appeal in the form of the draft in the white folder (Tab 2) be filed within seven days.

3. Dismiss the appeal.

4. That the appellants pay the respondents' costs in this Court

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: PROFESSIONS AND TRADES - lawyers - duties and liabilities - duty of solicitor to client after conclusion of retainer - duty confined to protection of the former client's confidences and the integrity of the judicial process and the due administration of justice - TORTS - collateral abuse of process - resort by judgment creditor to bankruptcy notice - whether the creditor's actions amounted to the tort of collateral abuse of process - requirement that plaintiff show some overt act or threat beyond obtaining issue of the process and deploying it in the ordinary course - that requirement not satisfied - tort in any event confined to court process - TORTS - collateral abuse of process - where solicitor acted for judgment creditor in obtaining issue of the bankruptcy notice and serving it - liability in tort can be incurred only by a party to the process
• Legislation Cited: Bankruptcy Act 1966 (Cth); Limitation Act 1969 (NSW)
• Cases Cited: Butler v Simmonds Crowley & Galvin [1999] QCA 475; [2000] 2 Qd R 252; Cooper v Winter [2013] NSWCA 261; Crawford Adjusters v Sagicor General Insurance (Cayman) Ltd [2013] UKPC 17; [2013] 3 WLR 927; Dowling v Colonial Mutual Life Assurance Society Ltd [1915] HCA 56; 20 CLR 509; Emanuele v Hedley (1998) 179 FCR 290; Gilding v Eyre (1861) 10 CB (NS) 592; 142 ER 584; Gordon v Treadwell Stacey Smith [1996] NZCA 110; [1996] 3 NZLR 281; Grainger v Hill (1838) 4 Bing (NC) 212; 132 ER 769; Hanrahan v Ainsworth (1990) 22 NSWLR 73; Kallinicos v Hunt [2005] NSWSC 1181; 64 NSWLR 561; Land Securities plc v Fladgate Fielder [2009] EWCA Civ 1402; [2010] Ch 467; Leerdam v Noori [2009] NSWCA 90; 255 ALR 553; Maxwell-Smith v S & E Hall Pty Ltd [2006] FCA 825; 233 ALR 81; Paradise Grove Pty Ltd v Stubberfield [2001] QCA 117; Re Bilen; Ex parte Sistrom (unreported, Federal Court, Neaves J, 11 April 1985); Smith v Rusk [2009] BCCA 96; 91 BCLR (4th) 106; Spautz v Gibbs (1990) 21 NSWLR 230; Talacko v Talacko [2010] FCAFC 54; 183 FCR 311; The Beach Club Port Douglas Pty Ltd v Page [2005] QCA 475; [2006] 1 Qd R 307; Varawa v Howard Smith & Co Ltd [1911] HCA 46; 13 CLR 35; Williams v Spautz [1992] HCA 34; 174 CLR 509
• Texts Cited: Paul Perell, "Tort Claims for abuse of process" (2007) 33 The Advocates' Quartely 193
• Category: Principal judgment
• Parties: Inge Maxwell-Smith (First Appellant); Eugene Maxwell-Smith (Second Appellant); S & E Hall Pty Ltd (First Respondent); Hugo Patrick White (Second Respondent)
• Representation: Counsel: First Appellant self-represented (First and Second Appellants); D J Hooke SC/J Masur (First Respondent); N J Beaumont SC/N F Case (Second Respondent); Solicitors: First and Second Appellants self-represented; Rankin Ellison Lawyers (First Respondent); K & L Gates (Second Respondent)
• File Number(s): 2013/155581

Decision under appeal

• Date of Decision: 2013-05-09 00:00:00
• Before: Kearns DCJ
• File Number(s): 2010/292575

HEADNOTE

[This headnote is not to be read as part of the judgment]

Background facts

Mr and Mrs Maxwell-Smith purchased land in 1995. They retained Mr White, a solicitor, to act for them in relation to that purchase. Later in the same year, they retained S & E Hall Pty Ltd, a building company, to construct a house on the land. A dispute arose between Mr and Mrs Maxwell Smith and S & E Hall in relation to the building work. The dispute became the subject of litigation. Mr White acted for S & E Hall in respect of the litigation. Mr White had ceased to be retained by Mr and Mrs Maxwell-Smith by the time he began to act for S & E Hall.

Mr and Mrs Maxwell-Smith were unsuccessful in the litigation. A number of costs orders were made against them in S & E Hall's favour. As a judgment creditor, S & E Hall obtained the issue of bankruptcy notices in 2002 and 2006 and served them on Mr and Mrs Maxwell-Smith. A bankruptcy order made on the basis of the 2002 bankruptcy notice was annulled. The 2006 bankruptcy notice was set aside.

District Court Proceedings

Mr and Mrs Maxwell-Smith brought proceedings in the District Court in 2010 alleging:

(1) that Mr White breached his retainer, a tortious duty of care and an equitable duty by acting for S & E Hall in the litigation relating to the building dispute; and,

(2) that S & E Hall and Mr White committed the tort of collateral abuse of process by obtaining the issue of and serving two bankruptcy notices on them for the purpose of recovering debts.

The primary judge (Kearns DCJ) held that there had been no breach of duty in relation to the retainer and that there had been no tortious abuse of process in relation to the two bankruptcy notices.

Court of Appeal Proceedings

There were four issues on appeal:

(1) Did Mr White breach any duty owed by him to the appellants in consequence of his having been retained and acted as their solicitor?

(2) Was S & E Hall or Mr White liable in tort for abuse of process for causing either or both of the 2002 bankruptcy notice and the 2006 bankruptcy notice to be issued and served on the appellants?

(3) Were any of the appellants' claims statute barred under s 14 of the Limitation Act 1969 (NSW) or, as to the claim of breach of equitable

duty against Mr White, by analogy?

(4) Were the District Court proceedings conducted in a way that entailed procedural unfairness to the appellants?

The Court granted leave to appeal but dismissed the appeal.

Held by Barrett JA (Beazley P and McColl JA agreeing):

In respect of (1):

i. There was no retainer in force between Mr and Mrs Maxwell-Smith and Mr White at the time Mr White began to act for S & E Hall: [23].

ii. After a solicitor-client retainer has come to an end, there is no continuing equitable or contractual duty of loyalty on the part of the solicitor to the former client. The court's jurisdiction to restrain a solicitor from acting is based not on any conflict of duty or interest but on the protection of the confidences of the former client or, as applicable, the protection of the integrity of the judicial process and the due administration of justice: [24], Cooper v Winter [2013] NSWCA 261, Kallinicos v Hunt [2005] NSWSC 1181; 64 NSWLR

561 considered.

iii. There was no evidence to suggest that Mr White would actually or potentially have breached any duty of confidentiality owing to Mr and Mrs Maxwell-Smith by acting for S & E Hall or that the integrity of any judicial process or the due administration of justice would or might be prejudiced by Mr White in so acting: [26].

(iv) The primary judge correctly held that Mr White did not breach any duty owed to the appellants in accepting and executing instructions to act for S & E Hall as he did: [27].

In respect of (2):

i. In order for a plaintiff to prove that an alleged tortfeasor has committed the tort of collateral abuse of process, a plaintiff must prove that the alleged tortfeasor (1) used a court process for an improper purpose and (2) also engaged in some overt act or threat, distinct from initiating the proceeding itself, in furtherance of that purpose: [32]-[54], Grainger v Hill (1838) 4 Bing (NC) 212; 132 ER 769, Gilding v Eyre (1861) 10 CB (NS) 592; 142 ER 584, Varawa v Howard Smith & Co Ltd [1911] HCA 46; 13 CLR 35, Dowling v Colonial Mutual Life Assurance Society Ltd [1915] HCA 56; 20 CLR 509, Hanrahan v Ainsworth (1990) 22 NSWLR 73, Spautz v Gibbs (1990) 21 NSWLR 230, Williams v Spautz [1992] HCA 34; 174 CLR 509, Gordon v Treadwell Stacey Smith [1996] 3 NZLR 281; [1997] ANZ ConvR 68, Butler v Simmonds Crowley & Galvin [1999] QCA 475; [2000] 2 Qd R 252, Paradise Grove Pty Ltd v Stubberfield [2001] QCA 117, Beach Club Port Douglas Pty Ltd v Page [2005] QCA 475; [2006] 1 Qd R 307, Crawford Adjusters v Sagicor General Insurance (Cayman) Ltd [2013] UKPC 17; [2013] 3 WLR

927 considered.

ii. It is doubtful that a bankruptcy notice is a "process" to which the tort of collateral abuse of process applies: [64]-[67].

iii. The appellants failed to prove that S & E Hall engaged in any overt act or threat, distinct from initiating the proceeding itself, in furtherance of any allegedly improper purpose: [68].

iv. An action for the tort of collateral abuse of process did not lie against Mr White because the tort can only be committed by a person who is a party to the proceedings said to constitute the abuse or in which the abuse is said to have occurred: [59], Leerdam v Noori [2009] NSWCA 90; 255 ALR 553, Emanuele v Hedley

(1998) 179 FCR 290 applied.

v. The primary judge correctly dismissed the tortious abuse of process claims brought against Mr White and S & E Hall: [69].

In respect of (3):

i. The appellants brought their action for the tort of collateral abuse of process on 2 September 2010. The appellants' cause of action in respect of the 2002 bankruptcy notice first accrued sometime between 4 December 2002, when the bankruptcy notice was issued, and 2 June 2004, when the bankruptcy was annulled. The appellants' cause of action was not maintainable because it was brought more than six years after their cause of action first accrued: s 14(1)(b) Limitation Act 1969 (NSW): [72].

ii. Any cause of action against Mr White allegedly arising out of his retainer with S & E Hall in October 1996 was not maintainable because the proceedings against Mr Hall were not brought within the six year limitation periods for causes of action brought in contract (Limitation Act 1969 (NSW), s 14(1)(a)) or in tort (Limitation Act 1969 (NSW), s 14(1)(b)): [73].

In respect of (4):

i. The appellants were unable to point to any evidence regarding the District Court proceedings below that indicated that the manner in which they were conducted was procedurally unfair: [77].

ii. A judge's failure to refer to a particular document containing submissions does not bespeak error or want of procedural fairness particularly where, as here, the judgment shows clearly that all relevant issues were adequately addressed: [77].

iii. A judge's expressed observation on the demeanour of a party (particularly one who gives evidence) is not of itself objectionable or indicative of unfairness: [77].

Judgment

1 BEAZLEY P: I agree with Barrett JA.

2 McCOLL JA: I agree with Barrett JA's reasons and the orders his Honour proposes.

3 BARRETT JA: The appellants, Ms Maxwell-Smith and her husband Mr Maxwell-Smith, appeal from a decision of the District Court of New South Wales (Kearns DCJ) dismissing claims made by them as plaintiffs against three defendants, two of whom (S & E Hall Pty Ltd and Mr H P White) are the present respondents. The remaining defendant in the District Court (Mr Hall, the principal of the corporate defendant) is not a party to the proceedings in this Court.

4 The appellants filed a summons seeking leave to appeal but the respondents do not contend that leave is necessary. It is convenient, therefore, to proceed on the footing that such leave as may be necessary will be granted and that attention should be given to the appeal itself.

Background facts

5 The appellants purchased vacant land at Tura Beach in 1995. The second respondent, Mr White, a solicitor practising at Bega, acted for the appellants on the purchase.

6 Later in the same year, the appellants retained the first respondent ("S & E Hall"), a builder, to construct a house on the land, having rescinded an earlier building contract with another builder ("O'Dell"). Disputes arose between the appellants and S & E Hall in relation to the building work. Proceedings in the Consumer Claims Tribunal followed. The tribunal awarded S & E Hall a sum of about $7,000. Subsequent events were summarised by Kearns DCJ as follows:

"The plaintiffs made application to the Supreme Court to have that set aside. By consent the matter was remitted for a reconsideration. A second hearing resulted in Hall receiving an award of about $6,000. The plaintiffs again went to the Supreme Court. This time, the matter proceeded and the application was dismissed by Greg James J. He ordered costs against the plaintiffs. Application was made to the Court of Appeal for leave to appeal. That was dismissed. Application was made to the High Court for special leave to appeal. That was dismissed with costs."

7 The costs of the proceedings determined by Greg James J in December 1998 were assessed at $11,288.12. S & E Hall obtained a certificate of assessment of those costs which, upon filing in the registry of the Local Court at Bega, took effect as a judgment of that court. The High Court costs order was made in November 1999 and those costs were in due course quantified by taxation and a certificate of taxation in the sum of $5,528.27 was issued on 26 October 2000.

8 S & E Hall, relying on the Local Court judgment, obtained the issue of a bankruptcy notice against the appellants in March 2001. S & E Hall ultimately did not seek to rely on that bankruptcy notice as a foundation for a creditor's petition. A second bankruptcy notice, also based on the Local Court judgment, was issued in December 2002. Non-compliance with that bankruptcy notice formed the basis on which a sequestration order was made in September 2003. The bankruptcy was annulled in June 2004, but without any firm finding that the appellants were solvent when the sequestration order was made.

9 In April 2006, S & E Hall, relying on the costs order of the High Court and the subsequent taxation, obtained the issue of a third bankruptcy notice against the appellants. That bankruptcy notice was set aside by an order made by the Federal Court (Jacobson J) in July 2006: Maxwell-Smith v S & E Hall Pty Ltd [2006] FCA 825; 233 ALR 81.

10 Mr White acted for S & E Hall in relation to the proceedings determined by Greg James J and the subsequent steps, including proceedings in the Federal Magistrates Court and the Federal Court concerning the several bankruptcy matters.

The District Court proceedings

11 The appellants commenced their District Court proceedings on 2 September 2010. The case pleaded against S & E Hall and Mr White was for the tort of collateral abuse of process in relation to the issue of and reliance on the 2002 and 2006 bankruptcy notices. Part of the claim was to the effect that the Federal Court, in the judgment of July 2006, had determined that the 2006 bankruptcy notice was an abuse of process and that that issue had therefore already been adjudicated. A like claim was made against Mr Hall but was struck out on 20 April 2012, that is, before trial.

12 Advanced separately against Mr White was a claim that he, by acting as he did for S & E Hall against the interests of the appellants, breached a retainer agreement between himself and the appellants, as well as a common law duty of care and an equitable duty owed by him to them.

13 The primary judge held that no tortious abuse of process had been committed by S & E Hall in relation to either the 2002 bankruptcy notice or the 2006 bankruptcy notice. As to the 2002 notice, his Honour found that S & E Hall had acted in circumstances where there was an undisputed judgment debt, levy of execution had been returned unsatisfied, the debtors had refused to pay and there was evidence that they could not pay. As to the 2006 bankruptcy notice, his Honour noted that it had been set aside in exercise of power conferred by s 30 of the Bankruptcy Act 1966 (Cth) and that, while the Federal Court had, in that connection, made an express finding that the notice was an abuse of process, that characterisation, in the context in which it was applied, did not establish the elements of the tort for which the appellants sued. The judge further found that the relevant elements had not been proved. He referred, in particular, to the element of "acting on" the abuse of process and the requirement that special damage be proved.

14 In relation to the claims against Mr White, the judge found that the collateral abuse of process claim failed for the reasons already stated - and also because Mr White was not a party to the process in question. As to the balance of the claim against Mr White, the judge found that the retainer as solicitor concluded with the completion of the purchase of the land and the subsequent disbursement of funds remaining in the trust account and that nothing that he had done for the appellants as clients had anything to do with the building contract between the appellants and the first respondents or matters arising under or in relation to that contract.

Issues on appeal

15 The amended notice of appeal and notices of contention filed by S & E Hall and Mr White raise the following issues for determination by this Court:

1. Did Mr White breach any duty owed by him to the appellants in consequence of his having been retained and acted as their solicitor?

2. Was S & E Hall or Mr White liable in tort for abuse of process for causing either or both of the 2002 bankruptcy notice and the 2006 bankruptcy notice to be issued and served on the appellants?

3. Were the District Court proceedings conducted in a way that entailed procedural unfairness to the appellants?

4. Are any of the appellants' claims statute barred under s 14 of the Limitation Act 1969 (NSW) or, as to the claim of breach of equitable duty against Mr White, by analogy?

16 If limitation defences are available, the need to consider the substantive issues will not arise. It is, however, desirable to consider those substantive issues first.

The case against Mr White for breach of solicitor's duty

17 Mr White accepted a retainer to act for the appellants on their purchase of the Tura Beach land. A "client service agreement" was entered into on 31 March 1995 referring specifically to that assignment. Contracts for the purchase of the land were exchanged on 4 April 1995 and completion of the purchase took place on 4 May 1995. The purchase moneys were paid out of funds held in Mr White's trust account following delivery to him by the appellants in April 1995 of bank cheques representing proceeds of the sale of their former home. A balance remained in trust after completion of the purchase of the Tura Beach land.

18 Mr White wrote to the appellants on 8 June 1995 confirming completion and stating that the transfer had been sent for registration, following which "[w]e will hold the title deed in our office in safe custody until such time as you require it". The letter drew attention to "some of the services we provide which you may not be aware of", including safe custody of documents and the making of wills.

19 On 27 March 1996, Mr White wrote to the appellants enclosing "our memo of fees with a cheque in your favour for the balance of your trust account". The fees were additional to those already charged for the conveyancing transaction. The first item in the memorandum of fees is "Conf with you re details of contract". This item is dated 9 June 1995, the date of the building contract (later rescinded) between the appellants and O'Dell. The primary judge found that the conference of 9 June 1995 concerned the O'Dell contract and that Mr White gave some advice to the appellants on that. The contract with S & E Hall was not made until 3 August 1995. Any recollection that the appellants may have had that the conference of 9 June 1995 concerned the S & E Hall contract, rather than the O'Dell contract, was in error. The finding of the primary judge was correct. The contract with S & E Hall could not have been in contemplation on the day on which the earlier contract was entered into with O'Dell.

20 The remaining items in the fee memorandum of 27 March 1996 (with one exception concerning a letter to the local council about the address to which notices intended for the appellants should be sent) concerned instructions from the appellants to disburse money from the solicitor's trust account and actions to comply with those instructions. Most of the payments out of the trust account were to S & E Hall. Mr White gave evidence that he was informed by the appellants in early August 1995 that they had rescinded their contract with O'Dell and entered into a new contract with S & E Hall. They subsequently asked him to draw several trust account cheques in favour of S & E Hall.

21 A trust account statement for the period 31 March 1995 to 27 March 1996 accompanied the letter of 27 March 1996. It showed that the whole of the moneys received from the clients in April 1995 had been expended by 27 March 1996 and that the solicitors did not hold any moneys for the clients after that date.

22 On 30 May 1996, the appellants complained to the Department of Fair Trading about S & E Hall. That company thereafter made an application to the Consumer Claims Tribunal which delivered a determination on 5 September 1996. Mr White did not receive instructions from either party in relation to the tribunal matter. He was, however, approached by S & E Hall on 15 October 1996 after the appellants took steps (in September 1996) to seek judicial review of the tribunal's decision. Mr White accepted a retainer for that matter and continued to act for S & E Hall thereafter as litigation between the parties escalated.

23 A threshold issue here is whether any retainer of Mr White by the appellants continued in force at the time Mr White began to act for S & E Hall in October 1996 in relation to matters arising from its contract with the appellants. The primary judge found that it did not and that there was no solicitor-client relationship with the appellants beyond the point in March 1996 when the remaining moneys in trust were paid out and an accounting was provided. His Honour was obviously correct in that respect. There can be no suggestion that either the invitation to get in touch if wills were required or the agreement to hold the certificate of title in safe custody until requested gave rise to a retainer for the provision of legal services.

24 The issue before the primary judge therefore called for the application of principles that govern the conduct of solicitors towards former clients, as distinct from current clients. In Cooper v Winter [2013] NSWCA 261, this Court endorsed the conclusion of Brereton J in Kallinicos v Hunt [2005] NSWSC 1181; 64 NSWLR 561 that, after the solicitor-client retainer has come to an end, there is no continuing equitable or contractual duty of loyalty on the part of the solicitor to the former client and that the court's jurisdiction to restrain a solicitor from acting is based not on any conflict of duty or interest but on the protection of the confidences of the former client or, as applicable, the protection of the integrity of the judicial process and the due administration of justice.

25 Mr White had acted for the appellants on an isolated conveyancing transaction that had been completed some seventeen months before he began acting for S & E Hall in a matter involving the appellants. He had, after completion of that transaction, continued to hold moneys in trust, made payments, on instructions, to S & E Hall over a period of about seven months (August 1995 to March 1996) and given some advice on the building contract with O'Dell. He also held the title deed for the appellants' property in safe custody. The information that had come to the solicitor from the execution of his retainer and the subsequent events that might conceivably have been regarded both as confidential and as potentially applicable in the course of acting for S & E Hall was non-existent. Details of the land ownership (including the price paid) were a matter of public record easily discoverable on search. Details of the O'Dell contract (later rescinded) were no doubt confidential but did not bear in any way upon the matters on which Mr White came to act for S & E Hall. Details of the moneys received into the trust account and subsequently disbursed on instructions were also confidential but again not in any way bearing upon the legal services rendered to S & E Hall: the moneys were paid out to complete the purchase of the land, to pay the solicitor's costs and disbursements and to meet expenses of the building project, with virtually all of the payments in the last category being payments to S & E Hall itself.

26 There was, on the evidence, no conceivable basis on which the primary judge could have concluded that Mr White, when he accepted and executed instructions to act for S & E Hall in various litigation involving the appellants, possessed information to which an obligation of confidentiality in favour of the appellants attached, which confidentiality would be actually or potentially compromised by acting for S & E Hall. Nor was there any conceivable basis on which the primary judge could have found that the integrity of any judicial process or the due administration of justice would or might be prejudiced by Mr White's so acting.

27 The judge correctly held that Mr White did not breach any duty owed to the appellants in accepting and executing instructions to act for S & E Hall as he did.

Abuse of process - the Federal Court decision

28 Before turning to the judge's decision on the tort claim brought against both S & E Hall and Mr White, it is necessary to say something about the decision of the Federal Court (Jacobson J) in relation to the 2006 bankruptcy notice.

29 Jacobson J began by noting that the court's power to set aside a bankruptcy notice arises from s 30 of the Bankruptcy Act and that the Act confers no general discretion to set aside a bankruptcy notice that is valid in form and not an abuse of process. The court has power to set aside a bankruptcy notice which can be characterised as an abuse of process. In that regard, Jacobson J said, the relevant question is whether the purpose of a bankruptcy notice is to put pressure on a debtor to pay a debt, rather than to invoke the court's insolvency jurisdiction. No abuse of process occurs if a creditor genuinely intends to pursue the matter if there is default in complying with the notice and there is no evidence of collateral purpose or undue pressure.

30 Having regard to the evidence before him, Jacobson J inferred that S & E Hall's purpose in obtaining the issue of the 2006 bankruptcy notice was to put pressure on the appellants to pay the debt rather than genuinely to invoke bankruptcy jurisdiction. That inference was seen to be warranted by the following matters:

1. The bankruptcy notice sought payment of a small sum owing on a judgment debt that was more than five years old. No satisfactory explanation had been given for such a long delay.

2. Observations made by Moore J in July 2004 made it plain that S & E Hall was aware at that time of the probability that Mrs Maxwell-Smith was solvent, although the evidence did not allow Moore J to come to a firm view on the matter.

3. A letter from S & E Hall's solicitor dated August 2004 states in unequivocal terms that Mr and Mrs Maxwell-Smith owned assets the value of which greatly exceeded their debts; and this made it clear that S & E Hall was aware of the appellants' ability to meet their liabilities in August 2004.

4. S & E Hall had adduced no evidence to dispel the natural inference arising from lengthy delay and knowledge of solvency, that the bankruptcy notice was issued for a purpose collateral to that of pursuit of insolvency proceedings. There was, in particular, no evidence from S & E Hall explaining the delay or demonstrating that the appellants' financial position had deteriorated since 2004.

31 Section 30 of the Bankruptcy Act has been described as "a facultative provision giving the Court full power, within the limits of its jurisdiction to be found elsewhere, to make such orders as it considers should be made in order to carry out and give effect to the Act": Re Bilen; Ex parte Sistrom (unreported, Federal Court, Neaves J, 11 April 1985), quoted with approval by the Full Federal Court in Talacko v Talacko [2010] FCAFC 54; 183 FCR 311 (at [18]). To the extent that resort is had to notions of abuse of process in exercising the power the section confers, the preoccupation is obviously with the protection of the court's functions in giving effect to the bankruptcy legislation.

The tort of collateral abuse of process

32 The case of Grainger v Hill (1838) 4 Bing (NC) 212; 132 ER 769 is the first in which the tort of collateral abuse of process was recognised and relief in damages was held to be available upon proof of its elements, including special damage. It is instructive to examine the circumstances of that case.

33 The plaintiff, who owned and operated a vessel, had borrowed money from the defendants upon the security of a mortgage of the ship. He was allowed to retain the vessel and its register so that he could continue to conduct his business. A few months after the loan was made and some time before it was repayable, the defendants decided that they should have the money back. They contrived a means of obtaining possession of the register so that the plaintiff could no longer use the vessel. They did this by commencing an action of assumpsit and procuring the issue of a writ of capias ad respondendum which was indorsed for bail in the sum of £95.17s.6d and directed the sheriff to arrest the plaintiff and bring him to court. The defendants arranged for two sheriff's officers to take the writ to the plaintiff who was ill in bed. The officers told the plaintiff that they did not wish to apprehend him and were seeking to obtain the ship's register. They also said that, if he did not give them the register or find bail, they would either arrest him or leave him in the custody of one of the officers. He could not provide bail and, after being imprisoned for twelve hours and "being much alarmed", gave up the register. He later came to an accommodation with the defendants, was released from arrest, paid the costs, repaid the loan and retrieved the register. No further steps were taken in the defendants' assumpsit action.

34 The plaintiff brought proceedings against the defendants on two causes of action: one for the loss occasioned by inability to carry on business because of the defendants' taking of the ship's register; and the other in trover in respect of the taking of the register. A verdict was given for the plaintiff at trial. The defendants applied for a non-suit on several grounds, including that the former action did not lie unless the writ of capias had been issued without reasonable and probable cause, which had not been pleaded and could not be established without showing that the assumpsit action had concluded in a judgment against the defendants.

35 The Court of Exchequer Chamber dismissed the application for a non-suit. Tindal CJ held (at ER 773) that it was not necessary to prove the termination of the assumpsit proceedings and the absence of reasonable and probable cause for those proceedings. This was because the action was not one for malicious arrest or malicious prosecution. He said that the action was, rather, "for abusing the process of the law, by applying it to extort property from the Plaintiff". The demands made of the plaintiff to compel him to give up the register were not part of the duty imposed by the writ of capias. The complaint of the plaintiff was "that the process of the law has been abused, to effect an object not within the scope of the process".

36 Park J said (also at ER 773) that the case was not one of malicious arrest, but "a case primae impressionis, in which the Defendants are charged with having abused the process of the law, in order to obtain property to which they had no colour of title". He said that the compulsion under which the register was detained was tantamount to a conversion. Vaughan J said (at ER 774) that the plaintiff's complaint was of "an abuse of the process of law, for the purpose of extorting property to which the Defendants had no claim", and that, as to the claim in trover in respect of the register, the "taking was as much a forcible taking as if a pistol had been presented to the Plaintiff's head". Bosanquet J said (at ER 774) that the action was not one of malicious arrest or prosecution, or for maliciously doing that which the law allows to be done - rather, "the process was enforced for an ulterior purpose; to obtain property by duress to which the Defendant had no right". The action was "not for maliciously putting process in force, but for maliciously abusing the process of the Court"; and "the register was illegally obtained by duress, under an abuse of the process of the Court". Tindal CJ and Park J expressly acknowledged that there was no precedent for the cause of action of abuse of process on which the plaintiff succeeded.

37 Grainger v Hill is regarded as having set the parameters within which relief in damages for tort may be awarded in case of abuse of process. In conformity with the approach there adopted, the High Court has regarded the purpose of the party instituting the proceedings as of crucial importance. In Varawa v Howard Smith & Co Ltd [1911] HCA 46; 13 CLR 35, the plaintiff alleged that the defendant company had instituted proceedings for breach of contract and procured the issue of a writ of capias ad respondendum pursuant to which the plaintiff was arrested with the intention of coercing him into paying the defendant money to which it was not entitled. The allegations were found not to have been proved, but the Court recognised the existence of the tort of collateral abuse of process. Griffith CJ referred (at 55) to the abuse in Grainger v Hill as being "a use of original process for purposes foreign to the scope of the process itself, that scope being merely to obtain security for enforcing the payment of an alleged debt". Isaacs J observed (at 91) that the term "abuse of process", in the relevant context, "connotes that the process is employed for some purpose other than the attainment of the claim in the action". Isaacs J also said:

"If the proceedings are merely a stalking-horse to coerce the defendant in some way entirely outside the ambit of the legal claim upon which the Court is asked to adjudicate they are regarded as an abuse of process for this purpose".

38 The distinction was elaborated in Dowling v Colonial Mutual Life Assurance Society Ltd [1915] HCA 56; 20 CLR 509. Isaacs J there said (at 522):

"Where it can be shown in a case of insolvency that the creditor is making his application not intending to pursue it to a recognized lawful end - whatever his motive may be for attaining that lawful end - but for the real purpose of attaining some other and improper end, such as extorting money as in Davies' Case [Re Davies; Ex parte King (1876) 3 Ch D 461] where the petition was hung up while in existence and used as a means of extortion, there is an abuse of process."

39 But, as in Dowling's case itself, there is no abuse if the process of the court is employed with a view to producing the result that that process exists to produce, even though the motive for seeking that result is to use it as a platform from which to launch some lawful action that becomes available through the obtaining of it.

40 Williams v Spautz [1992] HCA 34; 174 CLR 509 was a case in which the court was asked to stay proceedings as an abuse and thereby to preserve the integrity of its own functions. A question canvassed but not directly relevant to the matters in issue was whether an essential element of the allied tort is an improper act of the defendant which is distinct from resort to the court's process itself and which occasions damage to the plaintiff - in Grainger v Hill, the demand for the register to which there was no entitlement and use of the writ of capias (and the control the defendants had over its execution and enforcement) to achieve that end with a view to coercing early repayment of the money lent.

41 Dealing with the notion of abuse as relevant to the protection of the court's own process, Mason CJ, Dawson, Toohey and McHugh JJ said (at 527) that decided cases did not insist on the need for an improper act as an ingredient in the concept of abuse of process but did "speak of the 'use' of process for a purpose which stamps it as an abuse". They went on to say (at 528), in relation to the tort of collateral abuse of process, that "it is perhaps understandable that emphasis has been given to the need for an improper act which occasions damage to the plaintiff". They continued:

"At least in the United States, as the judgment in Rosemont Enterprises Inc v Random House Inc pointed out [(1966) 261 F Supp, at p 695. See also Stromberg v Costello (1978) 456 F Supp 848; Curiano v. Suozzi (1984) 469 NE 2d 1324, at pp 1326-1327] '[t]he gist of the action for abuse of process lies in the improper use of process after it is issued' (emphasis added)."

42 Brennan J (at 539) expressed his general concurrence with the majority on that matter.

43 Deane J (at 551-552) took a similar view of the elements of the tort. He expressed agreement with the conclusion reached by Priestley JA in this Court (Spautz v Gibbs (1990) 21 NSWLR 230) that the tort "necessarily involves some collateral overt or extraneous act" as distinct from "the mere institution of proceedings, however well-founded, for some 'improper' subjective purpose", adding:

"It is that collateral overt or extraneous act, and not the initiation of the proceedings themselves, which constitutes the 'collateral abuse' for the purposes of the tort. As Samuels AP commented in United Telecasters Sydney v. Hardy [(1991) 23 NSWLR, at p 343); Meagher and Clarke JJA agreeing (at p 348)], the 'gravamen of the action is the use of a process; not simply an improper subjective purpose'. The collateral overt or extraneous act may, in my view, be committed before the initiation of the relevant proceedings provided its effect persists at the time when the proceedings commence."

44 Gaudron J (at 552) was of the same opinion, referring to "the tort of collateral abuse of process which, I am inclined to think, requires some act amounting to a misuse or attempted or threatened misuse of the process involved".

45 In Butler v Simmonds Crowley & Galvin [1999] QCA 475; [2000] 2 Qd R 252, the Queensland Court of Appeal addressed the issue whether the ingredients of the tort of collateral abuse of process exceed those that must be proved where abuse is asserted as a basis for removing a party's right to continue to have the benefit of the court's process. The question was whether the plaintiff in a tort case must prove a separate and improper act of the defendant, over and above resort to the court's process. After reviewing relevant case law and, in particular, obiter dicta in this Court in Spautz v Gibbs (above), McMurdo P, Pincus and Thomas JJA answered that question in the affirmative. They said (at [38]):

"Our primary view then is that an improper act in the prosecution of the process is a necessary element in establishing a right to damages for the tort of collateral abuse of process. Priestley and Meagher JJA in Spautz v Gibbs, although held to be incorrect in treating this as an element necessary for obtaining a stay of proceedings, were in our respectful view correct in identifying such a requirement in the tort cases. Such an act will usually be found, as Gaudron J's analysis suggests, in the form of an overt act such as a demand which identifies the true collateral purpose. No such allegation is made by the appellants, and none is foreshadowed despite adequate opportunity extended to the applicants to indicate any additional facts upon which they might wish to rely. In the absence of some concrete additional factor of this kind, any disgruntled unsuccessful litigant could proliferate litigation by proceeding to sue the successful adversary, basing the claim on mere occurrence of the earlier litigation with an added assertion of improper motive or absence of legitimate purpose in bringing or defending the proceedings. There is much to be said for recognising a rule that a plaintiff wishing to obtain damages by reason of someone else's successful pursuit of proceedings should be required to allege and show something more substantial than a predominant collateral purpose."

46 Like observations were made by McMurdo P (Moynihan and Dutney JJ concurring) in Paradise Grove Pty Ltd v Stubberfield [2001] QCA 117, as follows:

"The tort arises out of the misuse of the court's process, no matter how properly obtained, for any purpose other than which it was designed to serve. It is immaterial whether the action commenced was founded on reasonable cause or even terminated in favour of the instigator. The gravamen of the offence [sic] is the use of the action for improper purposes. See Fleming, The Law of Torts, 8th Ed, 622-624.

In addition to the improper purpose, there must be some overt act or threat distinct from the proceedings themselves in furtherance of that purpose, for were it otherwise, any legal process could be challenged on account of its hidden agenda."

47 The Queensland Court of Appeal returned to this matter briefly in The Beach Club Port Douglas Pty Ltd v Page [2005] QCA 475; [2006] 1 Qd R 307. McPherson JA, with the concurrence of Jerrard JA and Chesterman J, referred (at [14]), in the abstract, to the availability of redress in tort to someone prosecuted without reasonable and probable cause and continued:

"It will do you no good to resort to the tort of collateral abuse of process unless you are able to show that the proceedings, if civil, were instituted with an improper motive: Williams v Spautz (1992) 174 CLR 509; and (in Queesland) that they involved an improper act in prosecution of those proceedings: Butler v Simmons Crowley & Galvin [2000] 2 Qd R 252." (emphasis added)

48 Statements in this Court are to the same effect. In Hanrahan v Ainsworth (1990) 22 NSWLR 73, an exhautive review of the decided cases undertaken by Clarke JA led him to the following conclusion (at 120):

"The tort of abuse of process is concerned with the use to which

proceedings are put. The intentions or motives of the person who sets the proceedings in motion are relevant only if put into effect. It is the use of the process to effect an improper purpose that is the gist of the action." (emphasis added)

49 Priestley JA (Meagher JA concurring) reached the same conclusion in Spautz v Gibbs (above). Particular reference may be made to Priestley JA's discussion of United States cases at 279-280 and their requirement that there be some "actual use" of the legal proceeding otherwise than for its proper purpose. There was thus emphasis of the need to find that the proceeding was "used" in some way distinct from merely producing the result that it would in the ordinary course achieve, if prosecuted to a successful conclusion.

50 In England, acceptance of the tort of collateral abuse of process has been, at best, hesistant. It was pointed out in Land Securities plc v Fladgate Fielder [2009] EWCA Civ 1402; [2010] Ch 467 that proceedings had been successfully brought on only two occasions, first in Grainger v Hill and then some 23 years later in Gilding v Eyre (1861) 10 CB (NS) 592; 142 ER 584 and that the claim in the later case was somewhat differently pleaded and involved malice. In Crawford Adjusters v Sagicor General Insurance (Cayman) Ltd [2013] UKPC 17; [2013] 3 WLR 927, an appeal from the Cayman Islands, the Privy Council recognised the tort and several of their Lordships made observations about its scope. In that litigation, both the trial judge and the intermediate appeal court had found against the tort claimant because the defendant had not used the facility of bringing the particular legal action in order to obtain an object for which that action was not designed. The main issues concerned malicious prosecution and only three of the five members of the Board dealt in any depth with the alternative of collateral abuse of process. Lord Wilson and Lord Sumption referred to the question whether a tort claimant must prove an overt act or threat of the defendant going beyond initiation and prosecution of the proceeding. Each of them took note of what had been said in Williams v Spautz and concluded that that the supposed requirement is in truth no more than recognition of the need for proof of improper purpose. Lord Wilson said (at [66]):

"If the rationale behind the suggested need for proof of an overt act or threat is no more than that, in its absence, the defendant in an application for a stay, or indeed a claimant in an action based on the tort, might fail to establish that the other party's purpose had been improper, it would readily be understandable. But, insofar as in some quarters the overt act or threat has taken root not just as having likely evidential importance but as being a substantive requirement, whether for the defendant's application or for the claimant's tort, I struggle to understand the reason for it."

51 Lord Sumption said (at [155]):

"It is sometimes said, for example in Fleming, The Law of Torts, 10th ed (2011), 708, that in addition to the extraneous purpose, it is necessary to prove some 'overt act' other than the proceedings themselves, such as the extortionary threat in Grainger v Hill. The better view, however, is that this is not an additional requirement but merely evidence of the extraneous purpose. . . . In the great majority of cases, an overt act may be the only way of proving the abuse. But it is not a legal element of the tort."

52 The New Zealand Court of Appeal, in Gordon v Treadwell Stacey Smith [1996] NZCA 110; [1996] 3 NZLR 281, accepted the analyses by Clarke JA in Hanrahan v Ainsworth (above) and Priestley JA in Spautz v Gibbs (above) and said:

"The tort is not committed merely by the issuance of proceedings on a false basis or for an improper purpose."

53 In Canada (with the possible exception of British Columbia: Smith v Rusk [2009] BCCA 96; 91 BCLR (4th) 106), proof of an overt act or threat beyond mere initiation and prosecution of the suit is an element of the tort. A survey of the case law to 2007 may be found in an article by Justice Perell of the Ontario Superior Court of Justice: Paul Perell, "Tort Claims for abuse of process" (2007) 33 The Advocates' Quartely 193.

54 Particularly in light of what was said by the Queeensland Court of Appeal in Butler v Simmonds Crowley & Galvi (and confirmed in Paradise Grove Pty Ltd v Stubberfield and Beach Club Port Douglas Pty Ltd v Page) by way of endorsement and adoption of statements of judges of this Court in Hanrahan v Ainsworth and Spautz v Gibbs, reinforced by clear and obviously considered dicta of members of the High Court in Williams v Spautz, this Court must, I think, proceed on the footing that a plaintiff in a tort action for collateral abuse of process is required to prove, in addition to improper purpose of the defendant, deployment of the relevant process, in furtherance of that purpose, by way of an overt act or threat distinct from pursuit of the proceeding itself according to its ordinary course.

The appellants' pleaded collateral abuse claim

55 In their amended statement of claim, as it related to the abuse of process claim, the appellants began by pleading the issue and service of each of the three bankruptcy notices, the "withdrawal" of the first, the making of a sequestration order on the basis of non-compliance with the 2002 bankruptcy notice (referred to in the pleading as "the second Bankruptcy Notice"), the annulment of that bankruptcy and the setting aside of the 2006 bankruptcy notice (the "third Bankruptcy Notice") by the order of Jacobson J. The amended statement of claim continued:

"26. The issuing of the second Bankruptcy Notice and the third Bankruptcy Notice each

(a) sought payment of a debt for a small amount of money based on a judgment debt which was several years old;

(b) were issued without any explanation existing or being proffered as to why they were issued after such a lengthy delay;

(c) were issued at a time when the Defendants were aware that the Plaintiffs were, or were likely to be, solvent and able to meet their liabilities;

(d) were issued at a time when the Defendants were aware that the Plaintiffs possessed assets the value of which greatly exceeded, or significantly exceeded, their debts;

(e) in the circumstances set out above, were issued for an improper purpose, namely to put pressure on the Plaintiffs to pay a debt, and

(f) were not issued for the purpose of properly invoking the Court's insolvency jurisdiction.

27. In the circumstances, the issuing of the second Bankruptcy Notice and third Bankruptcy Notice were each an abuse of process by the Defendants.

28. Further, the issuing of the third Bankruptcy Notice has been determined by the Federal Court to have been an abuse of process.

29. The determination of the Federal Court pleaded in the preceding paragraph is binding upon:

(a) The First Defendant;

(b) The Second Defendant; and

(c) The Third Defendant.

30. As a result of issuing the second Bankruptcy Notice, and the consequent bankruptcy of the Plaintiffs, a trustee was appointed to administer the Plaintiffs' estates ('the trustee').

31. The trustee incurred fees and costs with administration of the Plaintiffs' estates and other associated costs.

32. Without instructions from the Plaintiffs, White handed over to the trustee the Certificate of Title to the land that White held on behalf of the Plaintiffs.

33. As a consequence of the bankruptcy notices, the bankruptcy, trustee being appointed to administer the Plaintiff's estates, and the Plaintiffs have suffered loss and damage.

Particulars

Fees, costs, associated costs and interest incurred by the Trustee amounting to approximately $300,000. See also particulars to paragraph 17 herein."

56 The particulars to paragraph 17 were as follows:

"The Plaintiffs incurred substantial legal costs in the Supreme Court, the Court of Appeal, the High Court of Australia arising from the dispute, were bankrupted, lost control of the land and the Plaintiffs [sic] home, suffered pain, suffering and psychological stress and damage, and other loss. Further, in or about April 2001 a Bankruptcy Notice was served on the Plaintiffs and subsequently withdrawn (the 'First Bankruptcy Notice')."

57 The references to the first, second and third defendants are references to, respectively, Mr Hall, S & E Hall and Mr White. The claims that went to trial were those against Mr White and S & E Hall only, the claim against Mr Hall having been struck out on 20 April 2012.

Assessment of the appellants' collateral abuse claim

58 As their pleading makes plain, the appellants' contention in the District Court was that "the issuing of" each of the 2002 bankruptcy notice and the 2006 bankruptcy notice was "an abuse of process" (paragraph 27), that "the issuing of" the 2006 notice had "been determined by the Federal Court to have been an abuse of process" (paragraph 28), that the determination of the Federal Court in that respect was "binding upon" Mr Hall, S & E Hall and Mr White (paragraph 29) and that the appellants had suffered loss and damage as a consequence of "the bankruptcy notices", "the bankruptcy" and "trustee being appointed to administer the Plaintiffs estates".

59 For reasons already stated, the position of Mr Hall may be ignored. As to Mr White, there are no allegations of specific conduct on his part. He, not being a creditor of the appellants, was in no position to obtain the issue of a bankruptcy notice or to use such a notice. Nor was he a party to the Federal Court litigation. The fact that Mr White acted in a professional capacity for S & E Hall simply cannot make him responsible for any relevant tortious conduct engaged in by S & E Hall. The tort of collateral abuse of process can only be committed by a person who is a party to the proceedings said to constitute the abuse or in which the abuse is said to have occurred. This is made clear by the decision of this Court in Leerdam v Noori [2009] NSWCA 90; 255 ALR 553 (to which the primary judge referred) and the decision of the Full Federal Court in Emanuele v Hedley (1998) 179 FCR 290 referred to therein.

60 Turning to the position of S & E Hall, it must be said at once that the pleading is inaccurate and imprecise in its references to the "issuing of" the bankruptcy notices as something done or effected by S & E Hall. A bankruptcy notice is "issued" by an Official Receiver on the application of a judgment creditor (Bankruptcy Act, s 41) and it is then for the judgment creditor to make use of the notice so issued by serving it on the debtor and, if it is not complied with, relying on the non-compliance as a basis for seeking a sequestration order. The parts of the pleading referring to the "issuing" of a bankruptcy notice can only, I think, be read as referring to the actions of S & E Hall in obtaining the issue of the bankruptcy notice by an Official Receiver and thereafter serving and otherwise relying on it in ways made available by bankruptcy law to a creditor in S & E Hall's position.

61 With the references to "issuing" understood in that way, the allegations in the amended statement of claim are, in essence, that S & E Hall obtained the issue of, and deployed, each of the 2002 bankruptcy notice and the 2006 bankruptcy notice for the improper purpose stated in paragraph 26(e) of the amended statement of claim, as distinct from the proper purpose stated in paragraph 26(f).

62 But even if S & E Hall deployed each of the two bankruptcy notices for the improper purpose stated in paragraph 26(e), as distinct from the proper purpose stated in paragraph 26(f), it does not and cannot follow that the tort of collateral abuse of process was committed by it. The message conveyed by a bankruptcy notice is that unless, within a specified time, the debtor either pays the judgment debt or secures the payment of it to the satisfaction of the court or the creditor, an act of bankruptcy will be committed and consequences may follow. An obvious purpose of a creditor, in serving a bankruptcy notice, is to obtain payment and, in default, to gain the ability to present a creditor's petition. The debtor, once served, is effectively given a choice of paying (or compounding) or facing the consequences of the commission of an act of bankruptcy. It would be facile to suggest that the sole proper motive is to obtain a foundation for the presentation of a creditor's petition and that the obtaining of payment of the debt is a foreign and impermissible purpose.

63 The only steps that S & E Hall was shown to have taken upon and in consequence of the issue of either bankruptcy notice were steps that bankruptcy law made available and allowed it to take. It may be that, as the Federal Court found in relation to the 2006 notice, a collateral purpose that the law would regard as impermissible attended or motivated the taking of the steps. But the pleading did not allege - nor did the evidence identify - anything beyond and distinct from the pursuit of the legally available steps themselves.

64 It is important to note that the bankruptcy notices were not processes of a court. Under s 40(1)(g) of the Bankruptcy Act, a debtor against whom a creditor has obtained a final judgment or order for at least $5,000 and who has been served with a bankruptcy notice by the creditor commits an act of bankruptcy by failing to comply with the notice or to satisfy the bankruptcy court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount payable under the judgment or order. Under s 41, an official receiver may issue a bankruptcy notice on the application of such a judgment creditor. Under s 16, official receivers are appointed by the Minister administering the Bankruptcy Act. Official receivers have such powers and functions as the Act confers on them (s 15(3)) and their acts are subject to review by the bankruptcy court (s 15(4)). By "bankruptcy court", I mean the Federal Court of Australia and the Federal Magistrates Court of Australia which, by virtue of s 27, exercise concurrent jurisdiction in bankruptcy. An official receiver is not an official of either of those courts.

65 A bankruptcy notice, once issued, may become central to court proceedings in one of two broad ways. There may be an application for an order of the bankruptcy court setting aside the bankruptcy notice or otherwise seeking to deprive it of legal efficacy; or proof of non-compliance with the bankruptcy notice may, in the way already noticed, become the basis for an application for a sequestration order on account of the resultant act of bankruptcy. Only in those ways do the processes of a court follow on from what are the essentially non-curial steps of issue and service of a bankruptcy notice.

66 I mention these matters because, in this country, the only form of "process" abuse of which has been recognised as within the scope of the tort is process by which compulsion of a court is brought to bear. It is the deliberate and knowing deployment of that compulsion, by the misuse of court process, that is an essential ingredient of the tort. A bankruptcy notice, which is not a process of a court and is not attended by any judicial compulsion, is distinguishable from the kinds of "process" abuse of which has been held to ground the cause of action in tort.

67 In saying this, I do not intend to cast doubt on the decision of Jacobson J in relation to the 2006 bankruptcy notice. As his Honour made clear, he was concerned with notions of "abuse of process" in a sense connoting use of means made available by law for some ulterior purpose which was relevant to the exercise of the particular power conferred on the court by s 30 of the Bankruptcy Act. He was not concerned with issues that arise in a tort case such as the present.

68 Even if a bankruptcy notice were within the concept of "process" that is relevant for present purposes, the tort claim would founder because of the absence of any allegation (or proof) that, following the obtaining of either bankruptcy notice by S & E Hall, it was put to some use that, having regard to its nature and function, involved an improper purpose. The only thing done with either bankruptcy notice was to serve it on the appellants. That was a proper and regular use of it. The requirement that, as referred to in Paradise Grove Pty Ltd v Stubberfield (above), there be, in addition to improper purpose, "some overt act or threat distinct from from the proceedings themselves in furtherance of that purpose" was not satisfied. There was no "overt act such as a demand which identifies the true collateral purpose", to adopt the language in Butler v Simmonds Crowley & Galvin (above) and The Beach Club Port Douglas Pty Ltd v Page (above). There was simply nothing akin to the use of the capias in Grainger v Hill to apply pressure to obtain the register.

69 The primary judge correctly dismissed the tortious abuse of process claims brought against Mr White and S & E Hall. In particular, his Honour was correct in his finding that the appellants had not proved the element of what he termed "acting on" the abuse of process, that is, some overt act or threat beyond obtaining issue of the bankruptcy notice and serving it.

The limitation issue

70 Limitation issues are raised by notices of contention filed by both S & E Hall and Mr White. They relate to the collateral abuse of process claim as it relates to the 2002 bankruptcy notice (but not the 2006 bankruptcy notice) and the claim against Mr White for breach of duty as a solicitor. In view of the conclusions already expressed, it is not necessary to deal with those matters in any detail.

71 In relation to the first aspect, it is sufficient to note that the District Court proceedings were commenced on 2 September 2010; that the 2002 bankruptcy notice was issued on 4 December 2002; that service of that notice led on to the making of a sequestration order on 15 September 2003; and that the bankruptcies of the appellants were annulled on 2 June 2004.

72 Such damage, if any, as the appellants suffered by reason of the issue and service of the 2002 bankruptcy notice was, of its nature, suffered in the period 4 December 2002 to 2 June 2004, which period ended more than six years before the commencement of the District Court action. Having regard to s 14(1)(b) of the Limitation Act 1969 (NSW) and the period of six years to which it refers, any cause of action in tort for collateral abuse of process arising from the issue and service of the 2002 bankruptcy notice was statute barred before the proceedings were commenced on 2 September 2010.

73 The same conclusion is warranted in relation to the action against Mr White for breach of duty as a solicitor, in so far as the action is framed in tort (s 14(1)(b)) or contract (s 14(1)(a)) and assuming (contrary to the conclusion already expressed) that he breached his duty to the appellants by accepting a retainer by S & E Hall in October 1996, more than thirteen years before the commencement of the District Court proceedings. To the extent that the breach of duty claims include allegations of equitable wrongs, the court would apply the statute by analogy.

74 It follows from what I have said that all the claims brought against S & E Hall and Mr White, with the exception of the collateral abuse of process claim in respect of the 2006 bankruptcy notice, would properly have been held to be time barred, had such a defence been pleaded in the District Court.

The procedural fairness grounds of appeal

75 These are stated in the draft notice of appeal as follows:

"3. His Honour erred by not recognising that English is the 1st appellant's second language and without legal representation she was not be [sic] able to express and clearly explain the relevant points to establish the abuse by the respondents. She filed a written argument, which clearly explained her point of view, but His Honour overlooked this important document and it was not mentioned in the Reason for Judgment.

4. His Honour did recognise her inability to express herself clearly and said, 'my presentation and mood were labile, and that my concentration wavered from occasionally being focussed on the point in hand to being far removed from it'."

76 No explicit submissions were addressed to these matters, which are advanced in a context where the first appellant presented her own case in the District Court and also spoke for her husband.

77 It is sufficient, in this connection, to say three things: first, that a judge's failure to refer to a particular document containing submissions does not bespeak error or want of procedural fairness particularly where, as here, the judgment shows clearly that all relevant issues were adequately addressed; second, that a judge's expressed observation on the demeanour of a party (particularly one who gives evidence) is not of itself objectionable or indicative of unfairness; and third, that the first appellant, when addressing this Court and presenting her argument, showed herself to have a good command of the English language and a quite adequate ability to explain herself and make her meaning clear. There is no reason to think that she was not similarly capable before the primary judge.

78 It should be added that perusal of the 341 pages of transcript of the District Court proceedings leaves a clear impression that the primary judge dealt courteously and fairly (although, at times, firmly) with the self-represented litigant whose understandable propensity was, at times, to stray from the particular matter at hand in order to reinforce particular points she wished to make.

Conclusion

79 At the end of the hearing in this Court, leave was granted and directions made for the subsequent lodgement by the appellants of short written submissions in reply following perusal of the transcript of the hearing. Such submissions were in due course lodged and have been taken into account.

80 The appellants have failed to establish an entitlement to the relief they seek in this Court. I propose orders as follows:

1. If and to the extent that leave to appeal is required, grant leave to appeal.

2. Direct that a notice of appeal in the form of the draft in the white folder (Tab 2) be filed within seven days.

3. Dismiss the appeal.

4. That the appellants pay the respondents' costs in this Court.

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Decision last updated: 14 May 2014