To'a v Lutu [2010] TOLawRp 7; [2010] Tonga LR 44 (11 June 2010)

IN THE SUPREME COURT OF TONGA
Supreme Court, Nuku'alofa

CV 69/2009

To'a

v

Lutu anors

Ford CJ
13, 14, and 27 May 2010; 11 June 2010

Practice and procedure – strike out applications – malicious prosecution – time ran from when the loss arose – applications dismissed

The plaintiff described himself as a customs broker by occupation. The first defendant was a customs officer employed by the Customs Department. It was alleged that in September 2003 the first defendant laid an information before the police and alleged that the plaintiff offered him $3000 as a bribe in order to release a container. As a result, the plaintiff was prosecuted before the courts for conspiracy to commit bribery of a government servant. Apart from his occupation as a customs broker, the plaintiff claimed that he had a "side job" as a building contractor and he also exported Tongan crops, taro leaves and green and brown coconuts. He alleged that during the period when his criminal prosecution was being processed through the courts, he lost income because of the restrictions placed on his freedom to travel overseas. The plaintiff claimed against the defendant based on the tort of malicious prosecution. A significant part of his claim was based on his alleged economic loss. He also claimed damages on account of the legal costs he incurred in relation to his successful defence of the prosecution and on account of alleged injury and humiliation to his reputation. His total damages claim amounted to $1,207,140. He also claimed against the second and third defendants on the basis of their alleged vicarious liability as employer for a tort committed by the first defendant in the course of his employment. The first defendant applied to strike out the whole of the statement of claim on the grounds that it was statute barred. The first defendant contended that time began to run for the plaintiff from the date on which the first defendant was alleged to have filed his false statement against the plaintiff with the police, namely, September 2003. The plaintiff accepted the application of the limitation period but contended that in an action for malicious prosecution, time under any limitation period does not commence to run until judgment was given in favour of the plaintiff. The second and third defendants made an application for strike out on the grounds that there was no reasonable cause of action.

Held:

1. In action for malicious prosecution, time ran from the date at which the loss arose. All the authorities supported the plaintiff's contentions. The first defendant's application to strike out the proceedings as statute barred was, therefore, dismissed.

2. It could not be said that the plaintiff's claim was so hopeless that it could not possibly succeed and the strike out applications were, therefore, dismissed.

Cases considered:

Childs v Lewis (1920) 40 TLR 870

Deaton Pty Ltd v Flew [1949] HCA 60; (1949) 79 CLR 370

Jagroop v Soakai and the Kingdom of Tonga [2001] Tonga LR 234

John Dunlop v Her Majesty's Customs and Excise [1998] EWCA Civ 444

Kilboy v South-Eastern Fire Area Joint Committee [1952] S.C. 280

New South Wales v Lepore (2003) 195 ALR 412

O'Connor v Isaacs [1956] 2 QB 288

R v To'a [2006] TOSC 8

Thompson v Commissioner of Police of the Metropolis [1997] EWCA Civ 3083; [1998] QB 498 CA

Waterer v Freeman (1617) Hob 266

Wilkinson v Ancliff (BLT) Ltd [1986] 3 All ER 427

Statutes considered:

Criminal Offences Act (Cap 18)

Supreme Court Act (Cap 16)

Rules considered:

Supreme Court Rules 2007

Counsel for the plaintiff : Mr Fifita
Counsel for the first defendant : Mr Edwards
Counsel for the second and third defendants : the Solicitor General

Judgment

The application

[1] The defendants have made application to strike out the plaintiff's statement of claim in whole or in part. Counsel agreed that the application could be dealt with by way of written submissions.

[2] The application raises issues relating to the legal doctrine of vicarious liability and the limitation period for a claim of malicious prosecution.

The claim

[3] The plaintiff issued his writ on 8 April 2009. There is now, however, an amended statement of claim before the court which is long on detail, running to some 64 paragraphs, but short on substance. Practitioners drafting pleadings should concentrate on reducing them to statements in summary form of the material facts on which the party pleading relies for his claim or defence, as the case may be, but not the evidence by which those facts are to be proved.

[4] The claim is based on the tort of malicious prosecution. The plaintiff describes himself in the statement of claim as a customs broker by occupation. The first defendant is, or at least was at the material time, a customs officer employed by the Customs Department.

[5] It is alleged that in September 2003 the first defendant laid an information before the police alleging that the plaintiff offered him $3000 as a bribe in order to release a container. As a result, the plaintiff was prosecuted before the courts for conspiracy to commit bribery of a government servant contrary to sections 15 and 51 of the Criminal Offences Act.

[6] The statement of claim then outlines the slow progress of the prosecution through the Magistrates' Court. Although the dates are not particularised, it would appear that the preliminary inquiry in the Magistrates' Court was not completed until 2005. The case was then referred to the Supreme Court and, again without giving any dates, the statement of claim simply pleads that the proceedings were ended in the plaintiff's favour when he was discharged in the Supreme Court on all counts.

[7] Apart from his occupation as a customs broker, the plaintiff claims that he had a "side job" as a building contractor and he also exported Tongan crops, taro leaves and green and brown coconuts. He alleges that during the period when his criminal prosecution was being processed through the courts, he lost income because of the restrictions placed on his freedom to travel overseas. A significant part of his claim, therefore, is based on his alleged economic loss. He also claims damages on account of the legal costs he incurred in relation to his successful defence of the prosecution and on account of alleged injury and humiliation to his reputation. His total damages claim amounts to $1,207,140.00.

[8] The claim against the second and third defendants is based on their alleged vicarious liability as employer for a tort committed by the first defendant in the course of his employment.

The limitation period

[9] The first defendant has applied to strike out the whole of the statement of claim on the grounds that it was statute barred. The application is made in reliance upon section 16 of the Supreme Court Act (Cap 16), the relevant part of which provides:

"It shall not be lawful to sue any person for debt or damages after the expiration of five years from the date on which such liability was incurred."

[10] It is contended by the first defendant that time began to run for the plaintiff under section 16 from the date on which the first defendant is alleged to have filed his false statement against the plaintiff with the police, namely, September 2003. On that basis the five-year limitation period is said to have expired in September 2008 and the writ, which was not issued until April 2009, was out of time.

[11] In the alternative, it is claimed that even if the plaintiff did not know about the false statement having been filed with the police in September 2003, he certainly knew of the situation when the case was first called before the Magistrates Court in October 2003 but that still does not bring the issuance of the writ within the five-year limitation period prescribed in section 16.

[12] Reliance is placed on Wilkinson v Ancliff (BLT) Ltd [1986] 3 All ER 427 and a passage from The Law of Torts in New Zealand, (1991) Todd et al, 908.

[13] In response, the plaintiff accepts the application of the five-year limitation prescribed in section 16 of the Supreme Court Act but he contends that in an action for malicious prosecution, time under any limitation period does not commence to run until judgment has been given in favour of the plaintiff. No authority was cited for that proposition and, somewhat surprisingly, the date that the prosecution was terminated is not specified in the plaintiff's statement of claim. There is, nevertheless, a helpful chronology of events before the Court that was included with the submissions filed by counsel for the first defendant and it records that the plaintiff was acquitted on all charges by Chief Justice Webster on 24 February 2006. On that basis, the action would not be barred under the limitation period until 24 February 2011.

Discussion

[14] The passage cited by the first defendant from Todd simply confirms that the period of limitation runs from the date on which the cause of action accrued. There can be no dispute about such a statement of principle. The point at issue, however, is when does the cause of action accrue in a case of malicious prosecution. Wilkinson v Ancliff does not assist because it related to the limitation period in a personal injury action.

[15] To establish all the elements of a cause of action for malicious prosecution a plaintiff must be able to plead and establish:

"(a) he was prosecuted by the defendant, i.e. that proceedings on the criminal charge were instituted or continued by the defendant against him;

(b) the proceedings were terminated in the plaintiff's favour;

(c) the proceedings were instituted without reasonable and probable cause;

(d) the defendant instituted the proceedings maliciously; and

(e) the plaintiff suffered loss and damage as a result." see: Bullen & Leake & Jacob's Precedents of Pleadings (14th edition), Vol 1, p. 2-05.

[16] The issue of when the cause of action accrued in an action founded on the tort of malicious prosecution was considered by the English Court of Appeal In John Dunlop v Her Majesty's Customs and Excise [1998] EWCA Civ 444. In that case the appellant had been stopped by Customs officers at Heathrow airport on 31 January 1988 when returning from the Netherlands and his luggage was found to contain a number of allegedly pornographic magazines. A search warrant was obtained and further such magazines were found in the appellant's home. The appellant was charged with offences contrary to the Customs and Excise Management Act and on 27 April 1989 he was acquitted. On 24 April 1995 he issued a writ claiming damages for trespass to property; damages for conversion; damages for unlawful detention and damages for malicious prosecution. The Commissioner for Customs and Excise filed a defence pleading that the alleged causes of action did not arise within the six-year limitation period. The Master and a judge decided that the cause of action in the action for malicious prosecution accrued at the time the criminal proceedings were instituted against the appellant and, as a consequence, the action was statute barred. The appellant appealed maintaining that the cause of action was not complete and did not accrue until the criminal proceedings were determined in his favour on 27 April 1989 and that as a consequence his writ was issued three days before the limitation period expired.

[17] Counsel for Customs & Excise sought to rely on some observations by Diplock J. in O'Connor v Isaacs [1956] 2 QB 288, where at 325, it is stated: " . . . time runs in malicious prosecution from the date at which the loss, which is followed by special damage arose." Commenting on this passage in Dunlop, Roch LJ said:

"No authority was cited for that proposition in Diplock J.'s judgment. Nor does any authority appear in the reporting of counsel's arguments and of the judge's interventions during counsel's argument. Despite the eminence of that judge, I have reached the conclusion that modern authority establishes that the favourable determination of the earlier proceeding is one of the essential elements that a plaintiff claiming damages for malicious prosecution must prove as part of that cause of action."

[18] Lord Justice Brooke agreed with LJ Roch LJ and observed that counsel for the appellant had "demonstrated conclusively that for at least 200 years it has been established that no cause of action accrues to a plaintiff until the earlier proceedings have been determined in his favour." His Lordship noted that the rationale underlying this rule was robustly stated in Waterer v Freeman (1617) Hob 266:

"That the new action must not be brought before the first be determined, because till then it cannot appear that the first was unjust, which is the reason given by the Judges and that is the reason that the writ of conspiracy lies not till the plaintiff be lawfully acquitted."

[19] The conclusion of the Court of Appeal was expressed in the judgment of Lord Justice Roch:

"The conclusion I have reached is that the favourable determination of the proceedings forming the basis of the action for malicious prosecution is a necessary element of the cause of action which does not accrue until all the essential elements of the tort are present. Consequently in this case the limitation period did not start to run until the 27th April 1989, and this appeal must be allowed."

[20] Fleming in The Law of Torts, the 7th ed. 564 makes the point that all that needs be established is that the criminal charge had terminated in the plaintiff's favour:

"On the other hand, if the proceedings are terminated in favour of the plaintiff, it matters naught how this came about. The crux is not so much whether he has been proved innocent as that he has not been convicted."

[21] The foregoing authorities support the plaintiff's contentions. The first defendant's application to strike out the proceedings as statute barred is, therefore, dismissed.

Other grounds

[22] The first defendant has also made application to strike out particular sections of the statement of claim on other specified grounds. First, he refers to several of the pleaded paragraphs which record unsuccessful applications before various magistrates for adjournments and variation of bail conditions so as to allow the plaintiff to travel overseas. He alleges that they relate to the conduct of the prosecution and they cannot be the responsibility of the first defendant. A party who has misled the court by his fraud or malice, however, is ultimately liable for the consequences and he cannot be heard to say that they were due to some error of judgment or indiscretion on the part of judicial decision-makers in the criminal prosecution which he has set in motion.

[23] Finally, the first defendant seeks to strike out the whole of the pleadings on the grounds that they constitute "an abuse of process, as well as (sic) scandalous, frivolous and vexatious, and that there is a reasonable defence that can be afforded the first defendant." Under this head, the first defendant details several grounds which he claims provide him with "a reasonable defence" and specific reference is made in this regard to the judgment of Webster C.J. in Rex v To'a [2006] TOSC 8. I see no substance in this type of convoluted submission. The particulars provided in support relate to the so-called reasonable defence allegation rather than to the abuse of process allegation. The alleged strength of a defendant's defence is not a recognized ground for a strike out order under Order 8, Rule 8 of the Supreme Court Rules 2007.

Vicarious liability

[24] The stated grounds for the strike out application filed by the second and third defendants ("the applicants") are:

"(1) There is no reasonable cause of action against the applicants, namely:

(a) The applicants have not themselves been alleged to have committed any tort against the plaintiff; and

(b) The principle of vicarious liability does not apply to the malicious prosecution claim against the first defendant, and should therefore not bind the applicants to this claim."

(emphasis added)

[25] The plaintiff does not dispute the allegation in (a) but he contends that the applicants, as the first defendant's employer, are liable for any wrongful acts committed by him in the course of his employment.

[26] The principal grounds advanced by the applicants in support of their contention that vicarious liability has no application to the facts of this case are set out in the following passage from counsel's submissions:

"18. (1) Reporting an alleged crime to the police is a normal duty expected of any person;

(2) Reporting an alleged crime to the police is unconnected to the authorised duties of the plaintiff (sic), and thus quite independent of an outside those duties;

(3) Reporting an alleged crime to the police is not at all closely connected with what was authorised or expected, or with the employment itself, that it would be fair and just to conclude that vicarious liability does not arise.

(4) A reasonable man would say that reporting to the police a crime was so devergent from his employment as to be plainly alien to his employment and wholly distinguishable from that, in which case the employer would not be liable."

Discussion

[27] Order 8, Rule 8 (1) of the Supreme Court Rules 2007 is in these terms:

"(1) The Court may at any time order that any pleading or part thereof be struck out if:

(a) it discloses no reasonable cause of action or defence, as the case may be; or

(b) it is scandalous, frivolous or vexatious; or

(c) it is unclear, or may otherwise prejudice or delay the fair trial of the action; or

(d) it is otherwise an abuse of process of the Court."

[28] The guiding principle relevant to the consideration of any strike out application was laid down by the Court of Appeal in Jagroop v Soakai and the Kingdom of Tonga [2001] Tonga LR 234, 236:

"The principle upon which an application to strike out a claim may be entertained by the Court is clear. No party should have his claim denied without a hearing in the ordinary way, except where the claim is so hopeless that it cannot possibly succeed."

[29] It would appear from the words highlighted above [24] that the applicants' application is based on subparagraph (1) (a) of the rule and that they are contending that there is no reasonable cause of action against them because the principle of vicarious liability has no application to the malicious prosecution claim made against the first defendant. The problem with this approach is that it seeks to build into subparagraph (1) (a) an additional element, namely the application of the doctrine of vicarious liability, whereas all the subparagraph is concerned with is whether there is an underlying cause of action.

[30] Although the phrase "cause of action" has a broad definition, it is far from clear that, in the context of Rule 8 (1) (a), it could be said to encompass the concept of vicarious liability. For the vicarious liability maxim to apply in any given case there must be an underlying cause of action by virtue of which a servant wrongdoer has a liability to the plaintiff. The principle of vicarious liability then imputes the servant's liability to the master. In other words, the cause of action and the vicarious liability maxim are different concepts and, therefore, any application to strike out the vicarious liability pleading would need to be based on one of the other subparagraphs of the strike out rule instead of subparagraph (1) (a). The applicants have not presented their application in that way, however, and so it cannot succeed.

[31] In England the equivalent CPR provision, r.34 (2), is broader than Order 8 Rule 8 (1). It provides: "(a) that the statement of case discloses no reasonable grounds for bringing or defending the claim". Similarly, in New Zealand the relevant ground in the new High Court Rules is: "discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading". Those provisions would no doubt give the court the type of authority the applicants need to be able to rely on in their application in the present case.

[32] But, quite apart from these issues relating to the precise wording of the relevant rule in the Tonga Supreme Court Rules, it seems to me that the strength or weakness of any vicarious liability pleading is inevitably going to be dependent upon the facts of the case and except in some exceptional situation, which I hasten to add this is not one, such a pleading is not a suitable subject for a strike out application prior to trial. The situation is well explained in Todd, The Law of Torts in New Zealand, 3rd Ed., 18.2.1:

"An employer may be liable for a malicious prosecution by an employee or agent, on the application of ordinary principles regarding the responsibility of employers acting by their employees or agents. The question is whether the tortious conduct was within the scope of the employee's authority or, if not at the time, whether it was later ratified by the employer. It is a question of fact and degree whether a tortious act is so much within the scope of employment as to allow a court to determine that the act was the performance of a duty generally authorised but cautiously carried out. Certainly there is no objection in principle to an employer being held liable for the malicious conduct of another."

[33] In New South Wales v Lepore (2003) 195 ALR 412, the High Court of Australia carried out a review of modern developments in relation to the doctrine of vicarious liability. The case involved two appeals from decisions of the New South Wales Court of Appeal and one appeal from the Queensland Court of Appeal. The principal issue before the High Court related to the liability of school authorities for sexual assaults carried out on pupils by their teachers.

[34] The respective appeals were decided on their own facts and dismissed but the court took the opportunity to review the approach to vicarious liability that has been followed in recent times by the highest courts in Canada and the United Kingdom. There was discussion on whether vicarious liability could be imposed for the deliberate criminal acts of another. Gummow and Haynes JJ were content to leave that issue for further consideration but they took the opportunity to restate the vicarious liability maxim in a summation [239] which, in my view, has equal application in this jurisdiction:

"When an employer is alleged to be vicariously liable for the intentional tort of an employee, recovery against the employer on that basis should not be extended beyond the two kinds of case identified by Dickson J. in Deaton Pty Ltd v Flew [1949] HCA 60; (1949) 79 CLR 370: first, where the conduct of which complaint is made was done in the intended pursuit of the employer's interests or in the intended performance of the contract of employment or, secondly, where the conduct of which complaint is made was done in the ostensible pursuit of the employer's business or the apparent execution of the authority which the employer held out the employee as having."

[35] As noted in Lepore, the precise jurisprudential basis for the doctrine of vicarious liability may still be open to debate. That is a continuation of the observation made by Lord Cooper in Kilboy v South-Eastern Fire Area Joint Committee [1952] S.C. 280, 285:

"A mixture of ideas has inspired many unconvincing judicial efforts to find a common basis for the maxim. What was once presented as a legal principle has degenerated into a rule of expediency, imperfectly defined, and changing its shape before our eyes under the impact of changing social and political conditions."

[36] In Jagroop the Court of Appeal accepted that in an area of the law which may be somewhat uncertain and is still developing, it is not normally appropriate to strike out. It reaffirmed the principle that if a plaintiff has a cause of action which may possibly succeed, he is entitled to pursue it.

[37] Finally, and it would only become relevant if liability can be established, the quantum of the relief claimed would appear to be exorbitant. In a chapter dealing with damages in malicious prosecution cases McGregor on Damages 18th Ed. 38-005 has a reference, in relation to non-pecuniary loss, to the observation made by Lord Woolf MR in Thompson v Commissioner of Police of the Metropolis [1997] EWCA Civ 3083; [1998] QB 498 CA:

"The figures should start at about £ 2000 and for prosecution continuing for as long as two years about £ 10,000 could be appropriate."

In relation to pecuniary loss, the learned authors state, 38-007 :

"As to pecuniary loss, loss of general business and employment should be recoverable; authority however is lacking. All that can be said is that in Childs v Lewis (1920) 40 TLR 870, an action for false imprisonment, it was admitted that, had the action been for malicious prosecution, the loss of the claimant's director's fees by reason of his forced resignation would have been recoverable. The claimant's expenses in defending himself against the prosecution should also be recoverable."

Conclusion

[38] For the reasons stated, it cannot be said that the plaintiff's claim is so hopeless that it cannot possibly succeed and the strike out applications are, therefore, dismissed.

[39] Costs are reserved. The statements of defence are to be filed within 28 days.