Damages for misfeasance in public office: Nyoni v Shire of Kellerberrin

The Court’s ruling on damages followed an earlier finding of misfeasance against the respondents, the Shire of Kellerberrin and its CEO, each held jointly and severally liable for damages as against the successful Mr Nyoni.

Chief Justice Barker awarded general damages in recognition of the applicant’s reputational damage. His Honour also found that the respondents’ conduct, in having been intended to cause reputational harm to the applicant, justified an award in aggravated damages. Exemplary damages flowed from the Full Court’s earlier finding of ‘targeted malice’ against both respondents.

Principles

• The ‘misuse of public power’ element of the tort of public misfeasance in public office may be widened to include the use of a title attached to the public office, rather than the use of a power.

Background

Mr Nyogi owned and operated the only pharmacy in Kellerberrin, Western Australia. Kellerberrin Shire Council (Shire) had long-expressed dissatisfaction with Mr Nyogi’s operation of his business. Relevantly, Mr Nyogi held separate accounts for the electricity supply to his home and the pharmacy.

On 14 October 2010, electricity to Mr Nyogi’s residence and pharmacy was disconnected due to non-payment of fees. A Shire CEO was notified of the disconnection; he in turn informed other councillors and two pharmacy regulatory authorities by email. He also assisted the electrician who disconnected the electricity to produce and despatch a letter to a regulatory authority confirming the disconnection. The disconnection of electricity to the pharmacy was later found to be in error. Significantly, the CEO was not aware of this error at the time he wrote the email.

Mr Nyogi subsequently received letters from the two regulatory authorities, threatening that action may be taken against himself and his pharmacy should there be a repetition of the disconnection on the basis that he was not providing a safe and timely pharmacy service.

Federal Court decision

In 2014, Mr Nyogi (the applicant) commenced proceedings in the Federal Court of Australia, alleging that among others, the Shire and one of its CEOs (the respondents) had committed the tort of misfeasance in public office in relation to the disconnection of electricity to the applicant’s pharmacy. It was alleged that a CEO reported misleading information about the disconnection of electricity to councillors and to regulatory authorities, which had caused damage to the applicant, particularly reputational damage. The applicant sought damages on the basis that the actions of the CEO, a public officer, were malicious, amounting to misfeasance.

On 23 November 2015, the Federal Court in a joint judgment delivered by Justice Siopis found against the applicant and gave judgment for the respondents,¹ setting a high benchmark for the actions of a public officer to be found to be public misfeasance. He dismissed the claim for misfeasance and found that if a public officer performs an action that causes detriment to an individual’s business or reputation, this cannot be considered misfeasance if that action was within the officer’s authorised powers, even if the action was performed maliciously or with dubious intent. The Court held that the CEO’s actions in corresponding with the councillors and the authorities were not done in the exercise of powers attaching to a public office.

Decision

Misfeasance in public office

The applicant (the appellant) appealed to the Full Federal Court. On 13 April 2017, the majority (Justices North and Rares) found that malicious actions of a public officer that were intentionally targeted to cause injury would be considered misfeasance in public office,² lowering the benchmark set by the primary judge and widening the scope of the tort.

The majority held that the CEO’s reporting of information to the councillors and regulatory authorities was done with the intent to cause the appellant to cease operating his pharmacy, and that that would cause material or actual damage to the appellant.

In their judgment, the majority of the Full Federal Court set out the elements of the tort of misfeasance in public office. The tort requires:

1. A misuse of an office or power;
   
   
2. The intentional element that the officer did so either with the intention of harming a person or class of persons or knowing that he, she or it was acting in excess of his, her or its power; and
   
   
3. That the person suffered special or material damage such as financial loss, physical or mental injury.
   
   

The intent of the public officer and the damage suffered by the appellant was accepted by the Court. The question for the Court was whether the actions of the CEO constituted a ‘misuse of an office or power’, in particular, that the alleged misfeasance “is connected to a power of function that the officer has by virtue, or as an incident, of his or her public office” ³.

Contrary to the findings of the primary judge, the Full Federal Court held that the CEO’s communications to the Council and authorities constituted an official complaint, and that that amounted to the use of an office or power for the purposes of the tort. The majority found that the CEO exercised the power to make an official complaint, available to him as CEO, to deliberately harm the appellant. The CEO’s malicious purpose in making the complaint and failing to notify the councillors and authorities of the error was considered to be sufficient misuse of that power.

The majority concluded:

In dissent, Justice Dowsett did not consider that the CEO had a specific common law or statutory power to make complaints, and as such did not consider that he had misused an office or power. His Honour’s judgment is consistent with the more traditional approach to this element of the tort.

The respondent sought special leave from the High Court to appeal the decision of the Full Federal Court. The application was dismissed with costs on 16 February 2018.⁶

Award of Damages

The Full Federal Court remitted the proceedings to the primary judge, Justice Siopsis, to assess damages. Due to Justice Siopsis retirement, the assessment was allocated to Chief Justice Barker of the Federal Court. The appellant did not participate in the damages hearing. His Honour expressed this as “a matter of regret” but considered that he had an obligation to proceed in his assessment of damages, as ordered by the Full Federal Court.

Although the trial judge rejected the submission that the appellant suffered economic loss and damage, Chief Justice Barker followed the decision of the Full Federal Court and awarded general, aggravated and exemplary damages against the Shire and its CEO to be paid on a joint and several basis.

General Damages

Chief Justice Barker had no doubt that the appellant “would have suffered a considerable degree of distress” ⁷ on receiving the correspondence from the regulatory authorities following the CEO’s notification of the disconnection of the electricity. He considered the general damages to be awarded would have to be “more than nominal” ⁸.

Given the “existing grievances” ⁹ between the respondents and the appellant, His Honour found that “the reputational damage suffered by Mr Nyoni was a natural and proper consequence of Mr Friend’s conduct as CEO and on behalf of the Shire” ¹⁰. He held that the CEO “was using the Shire’s good offices to add real weight to the communication with the authorities”. ¹¹

As such, His Honour assessed general damages to be awarded in respect of the appellant’s reputational damage in the sum of $15,000.

Aggravated Damages

In considering aggravated damages, Chief Justice Barker noted, “the idea is that a particular ‘affront’ to an applicant’s rights may ‘aggravate’ the infringement of the right and so justify the claim, and the award, of additional damages for the aggravation” ¹².

His Honour found that in sending the email to the councillors and the authorities, the CEO intended on harming the appellant. He intended for the regulatory authorities to take action against the appellant as a consequence of the electricity being disconnected.

Chief Justice Barker considered that the CEO’s conduct warranted an award of aggravated damages by reason of the affront it constituted to the appellant right not to be harmed. His Honour awarded $5,000.

Exemplary Damages

Having identified that the respondents acted with malice, Chief Justice Barker was satisfied that the test in malice, set down in Uren ¹³, was made out. His Honour noted, “the CEO and the Shire should always strive to be exemplary government officials and entities. Here, they failed that test of public probity” ¹⁴.

His Honour was of the view that it could not be said that the undoubted primary intention of the CEO was to cause the appellant’s pharmacy to close, given that he was unaware of the initial error in the disconnection. However, His Honour agreed with the Full Court’s finding that the communication between the CEO, the Shire and the authorities constituted “targeted malice”. For these reasons, His Honour awarded exemplary damages in the sum of $10,000.

Why this case is important

The broad approach taken by the majority in considering what constitutes a ‘misuse of an office or power’ expands the scope of the tort beyond its traditional boundaries.

Traditionally, to succeed in the tort of misfeasance in public office, an appellant must prove that the public officer used a power attached to his, her or its office.¹⁵ On the majority’s approach, the public officer’s conduct need only involve the use of a title attached to the public office.

This approach may give plaintiffs greater opportunities to bring and succeed in misfeasance actions. Given that the High Court has declined to hear an appeal the scope of the first element of the tort of misfeasance in public office remains unresolved. Watch this space to see what the widened interpretation flushes out.

 

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¹ Nyoni v Shire of Kellerberrin (No 6) [2015] FCA 1294
² Nyoni v Shire of Kellerberrin [2017] FCAFC 59
³ ibid
⁴ Dunlop v Woollahra Municipal Council [1982] AC 172; [1981] 1 NSWLR at 84
⁵ Nyoni v Shire of Kellerberrin [2017] FCAFC 59
⁶ Shire of Kellerberrin v Nyoni & Ors [2018] HCATran 027(P18/2017)
⁷ Nyoni v Shire of Kellerberrin (no 10) [2018] FCA 1576
⁸ ibid
⁹ ibid
¹⁰ ibid
¹¹ ibid
¹² ibid
¹³ Uren v John Fairfax & Sons Pty Limited (1966) 117 CLE 118 at 129; [1966] HCA 40
¹⁴ Nyoni v Shire of Kellerberrin (no 10) [2018] FCA 1576
¹⁵ Cannon & Rochford v Tahche & Ors [2002] VSCA 84; Leerdam & Anor v Noori & Ors [2009] NSWCA 90