Australian Insolvency Group v LCM Litigation Investment Fund No 1 (No 2)

[2018] NSWSC 1571

Supreme Court

New South Wales

Medium Neutral Citation:	Australian Insolvency Group v LCM Litigation Investment Fund No 1 (No 2) [2018] NSWSC 1571
Hearing dates:	27/09/2018
Date of orders:	18 October 2018
Decision date:	18 October 2018
Jurisdiction:	Equity - Commercial List
Before:	McDougall J
Decision:	Cross-claim dismissed in part as against second cross-defendant.
Catchwords:	CIVIL PROCEDURE – application to summarily dismiss cross-claim as against second cross-defendant – where factual matrix of cross-claim overlaps with earlier proceedings judicially determined – whether present proceedings should be dismissed on res judicata or issue estoppel grounds – whether proceedings should be dismissed as an abuse of process – consideration of extent of overlap between present proceedings and earlier proceedings – consideration of reasonableness in not bringing certain allegations earlier – cross-claim dismissed in part as against second cross-defendant.
Legislation Cited:	Civil Procedure Act 2005 (NSW) Corporations Act 2001 (Cth)
Cases Cited:	Australian Insolvency Group Pty Limited v LCM Litigation Investment Fund No 1 Pty Ltd [2018] NSWSC 671 Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 Coope v LCM Litigation Fund Pty Ltd (2016) 333 ALR 524 Henderson v Henderson (1843) 3 Hare 100; 67 ER 313 LCM Litigation Fund Pty Ltd v Coope [2015] NSWSC 992 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275 Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 Tomlinson v Ramsey Food Processing Pty Limited (2015) 256 CLR 507 Walton v Gardiner (1993) 177 CLR 378
Category:	Procedural and other rulings
Parties:	Australian Insolvency Group Pty Ltd (Plaintiff) LCM Litigation Investment Fund No 1 Pty Ltd (First Defendant) LCM Litigation Fund Pty Ltd (Second Defendant / Cross-Claimant) Heli-Saw Holdings Pty Ltd (Third Defendant) Vannin Capital Ltd (First Cross-Defendant) Patrick Mark Coope (Second Cross-Defendant) Vannin Capital PCC (Third Cross-Defendant)
Representation:	Counsel: R Dick SC / Y Shariff (Second Cross-Defendant / Applicant) DL Williams SC / EAJ Hyde (Cross-Claimant Respondent)   Solicitors: Esplins Solicitors (Second Cross-Defendant / Applicant) Piper Alderman (Cross-Claimant / Respondent)
File Number(s):	2016/90011

Judgment

1. HIS HONOUR:   The essential question for decision is whether a cross-claim brought by the second defendant (LCM) against three cross-defendants including Mr Patrick Coope should be summarily dismissed as between LCM and Mr Coope. Mr Coope says that the claims sought to be brought against him in that cross-claim have been the subject of prior judicial decision, and that it is an abuse of process to reagitate them. He relies, alternatively (and in ascending order) on the Anshun [1] , or extended, doctrine of issue estoppel; alternatively on issue estoppel in the narrower sense; or alternatively on cause of action estoppel or the allied doctrine of res judicata.

   1. Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.

2. It is necessary to give some account of the background facts to show how that question arises.

Background

3. LCM carried on business as a litigation funder. It did so in joint venture with a company known as Vannin Capital Limited (Vannin Malta), pursuant to a number of agreements including an “administration agreement”. By cl 4.1 of the administration agreement, and subject to the occurrence of what is called a “trigger event”, LCM was entitled to receive performance fees and completion fees in respect of litigation that had been funded on the terms of the joint venture. Those fees were to be paid to the first defendant (LCM Trustee) as trustee of the LCM Unit Trust.

4. AIG holds, in round figures, 20% of the issued units in the LCM Unit Trust.

5. AIG’s claim, in very broad outline, is that:

1. LCM Trustee has misapplied trust funds, because it has not paid them out in accordance with the terms of the unit trust deed;

2. LCM Trustee has failed to protect and get in the trust’s right to receive fees payable to LCM in respect of funded litigation; and

3. LCM Trustee has also failed to protect and get in the trust’s property, being the proceeds of other items of litigation that should have been dealt with on the terms of the joint venture between LCM and Vannin Malta.

6. The cross-defendants to LCM’s cross-claim are, in addition to Mr Coope, Vannin Malta and its ultimate holding company Vannin Capital PCC (Vannin Capital). One of the claims that LCM makes in that cross-claim is that a “trigger event”, for the purposes of the administration agreement or in some other agreement between it and Vannin Malta has occurred, with the result that Vannin Malta is not entitled to share in the profits of successful funded completed litigation. LCM says that the whole of the funder’s share of the fruits of that litigation are now, beneficially, its.

7. That is said to have consequences for AIG’s claim, but why that is so need not be explored.

8. Up until 31 March 2015, Mr Coope was one of three directors, and one of two joint managing directors, of LCM. He held his position as joint managing director pursuant to a written employment contract dated 11 February 2014. Clause 19.9(b) of that contract provided that Mr Coope’s employment could be terminated if he were “guilty of any serious misconduct”. On 31 March 2015, LCM acted to terminate Mr Coope’s employment on that basis.

9. In earlier proceedings in this court, the legitimacy of LCM’s termination of Mr Coope’s employment was decided in LCM’s favour. See the judgment of Stevenson J in LCM Litigation Fund Pty Ltd v Coope [2] . His Honour’s decision went on appeal. The Court of Appeal ordered that the appeal be dismissed, although it found, contrary to the conclusions of Stevenson J, that LCM had established both and not merely one of the instances of serious misconduct that it relied upon to terminate Mr Coope’s employment[3] .

   2. [2015] NSWSC 992.

   3. Coope v LCM Litigation Fund Pty Ltd (2016) 333 ALR 524.

10. The two instances of serious misconduct that were pressed against Mr Coope in the litigation before Stevenson J were referred to as “the Vannin or Wind Down Proposal” and “the Separation Proposal”. Stevenson J held that the first alleged breach did not justify termination but that the second did; and since one was enough, the termination was valid. The Court of Appeal upheld his Honour’s conclusion but said, in addition, that the first ground of termination had been made out.

11. The underlying facts are complex. Fortunately, for reasons I shall explain in a moment, it is not necessary to go into them.

The cross-claim in the present proceedings

12. The cross-claim asserts, in substance, that each cross-defendant breached its or his contractual obligations to LCM; that Mr Coope breached his statutory duties[4] to LCM; that Vannin Malta and Vannin Capital were knowingly involved in those breaches of duty; and that Mr Coope wrongfully induced or procured the breaches of contract alleged against Vannin Malta and Vannin Capital.

    4. Corporations Act 2001 (Cth), ss 181(1), 182(1).

13. LCM’s contentions, so far as they are relevant, allege three breaches of duty against Mr Coope. The first relates to the Vannin or Wind Down Proposal. The second relates to the Separation Proposal. The third relates to what is called the Cannaday Opportunity. The first two matters lay at the heart of the earlier proceedings heard and decided by Stevenson J. The third was not raised in the pleadings or the evidence in that case.

14. The purpose of pleading those breaches is twofold. First, it introduces a claim against Mr Coope for damages or equitable compensation in relation to each breach. Secondly, it is a necessary element of the subsequent pleading against Vannin Malta and Vannin Capital of the knowing involvement case.

15. Mr Coope accepts that the second purpose is legitimate. However, he submits, using the pleading as the basis for making a claim for damages or equitable compensation against him is not. That is so, he says, because the first two breaches were the very matters alleged against him in the earlier proceedings, and are thus the subject of res judicata or cause of action estoppel. As to the third breach, Mr Coope says, it is something that could and, reasonably, should have been raised against him in the earlier proceedings, and is thus the subject of Anshun estoppel.

16. At the conclusion of argument, Mr Williams of Senior Counsel, who appeared with Mr Hyde of Counsel for LCM, informed the court that he had instructions that LCM would not press its claims for relief against Mr Coope personally to the extent that they are based on the Vannin or Wind Down Proposal and the Separation Proposal. Mr Dick of Senior Counsel, who appeared with Mr Shariff of Counsel for Mr Coope, said that this was not enough; the prayers for relief against Mr Coope in the amended cross-summons, based on those breaches, should be deleted. I shall return to that, but the consequence is that I need not concern myself with the identity between the claims now made in respect of the Vannin or Wind Down Proposal or the Separation Proposal and those made in the earlier proceedings.

The Cannaday Opportunity

17. The so-called Cannaday Opportunity arises out of an email sent by Mr Doug Cannaday to Mr Coope on 9 February 2015. Mr Cannaday, writing from Ecuador, said:

I require funding assistance for litigation (arbitration) against the Government of the Republic of Ecuador concerning specific mineral rights related to a potentially valuable gold deposit. The upper end of the legal expense is expected to be less than $2.0 million USD and possibly less than $1.0 million. Unfortunately I have exhausted my own personal financial resources with no ability to fund additional legal expense in this matter.

18. Mr Cannaday thereafter laid out, in more detail, the nature of his claim and its potential value.

19. When Mr Coope received the email, he was the joint managing director of LCM. His contractual, fiduciary and statutory obligations required him to allow LCM to consider the application for funding. Mr Coope, who by then was deep in negotiation with Vannin Malta over the Vannin or Wind Down Proposal and the Separation Proposal, as part of which he proposed to become a 20% shareholder in and effectively managing director of Vannin Malta, did not do so. Instead, he referred Mr Cannaday’s email to Mr Cox of Vannin (whether Vannin Malta or Vannin Capital, I am unsure). Mr Coope’s email to Mr Cox, dated 12 February 2015, asked:

Do you have any interest?

20. Mr Cox replied, including Ms Yasmin Mohammad of Vannin, on 13 February 2015. He said:

Could be. Yas, please could you have a look at this for us?

21. On receipt of that email, Mr Coope replied to Mr Cox and Ms Mohammad, asking the latter “can I leave it to you to respond?”. Mr Coope added that he doubted that he could be of any assistance, but said that he would help if he could.

22. Thereupon, Ms Mohammad wrote to Mr Cannaday (copying her email to Messrs Coope and Cox), introducing herself, expressing her interest in looking into the dispute, and setting out various preliminary matters that, in her view, required attention.

23. It is open to infer that in acting in the way just described, Mr Coope breached his various duties to LCM, and that as a result LCM lost the benefit, whatever it may have been, of the Cannaday Opportunity.

24. It is obvious that if those facts had been known to LCM when it acted to terminate Mr Coope’s employment for serious misconduct, it could have relied on them also, as a separate ground of such misconduct. It is equally obvious that the conduct, if proved, might have been so characterised.

The relevant principles

25. The relevant principles were considered by the High Court in Tomlinson v Ramsey Food Processing Pty Limited [5] . The majority (French CJ, Bell, Gageler and Keane JJ) set out the principles at [20] – [26]. By reference to what their Honours there said, and for the most part without further citation or reference, those principles may be stated, for present purposes, as follows.

    5. (2015) 256 CLR 507.

26. A judicial determination of a dispute raised in adversarial proceedings operates in several ways to prevent the same issue being relitigated by the same parties or their privies.

27. First of all, once the decision is given, the rights and obligations in controversy cease to have an independent existence. They merge in the final judgment. This is the principle often referred to as res judicata.

28. Next, the decision may give rise to estoppels. First, there is cause of action estoppel, which precludes the assertion in a subsequent proceeding between the same parties of a right or obligation in issue in earlier proceedings between them, and made the subject of a judicial determination. Although this is not to be equated with res judicata, it is nonetheless, as between the parties, of similar effect.

29. Next, there is issue estoppel in the strict or narrow sense. That operates to prevent the parties relitigating, in subsequent proceedings between them, an issue of fact or law that was in controversy in earlier proceedings, and necessarily decided by the judgment. In other words, it applies to each issue of fact or law decided in the earlier proceedings where the decision of that issue was a necessary step to the final outcome.

30. The third form of estoppel is what I have called Anshun estoppel. That is traced back to the decision of Sir James Wigram V-C in Henderson v Henderson [6] . As explained by the High Court in Anshun, this precludes the assertion of a claim, or the raising of an issue of fact or law, if the claim or issue was so connected with the subject matter of earlier proceedings between the parties as to have made it unreasonable, in the context of that earlier proceeding, for the claim not to have been then made or for the issue not to have then been raised.

    6. (1843) 3 Hare 100; 67 ER 313.

31. Finally, and beyond the reach of those principles, there is the doctrine of abuse of process. The categories of abuse of process are not closed[7] . The doctrine is broader and more flexible than the doctrine of estoppel (however formulated). Its operation may overlap with estoppel; and it can operate in areas where estoppels do not.

    7. Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at [9].

32. Thus, as the majority concluded in Tomlinson at [26]:

Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel. Similarly, it has been recognised that making such a claim or raising such an issue can constitute an abuse of process where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to that earlier proceeding, nor the privy of a party to that earlier proceeding, and therefore could not be precluded by an estoppel.

Application of the principles to the facts

33. It is easy to see, once the principles have been stated, why LCM has offered the undertaking to which I referred at [16] above. And since that undertaking has been given and, on the assumption that the prayers for relief relating to the Vannin or Wind Down Proposal and the Separation Proposal are deleted from the cross-summons – and this will happen, whether as a result of voluntary action by LCM or because I strike them out – nothing more need be said about this aspect of the present dispute. That leaves the dispute over the Cannaday Opportunity.

The parties’ submissions

34. Mr Dick submitted that the cross-claim against Mr Coope must be dismissed, even in relation to the Cannaday Opportunity, by the proper application of the principles to which I have referred. He submitted that the true issue in the earlier proceedings was whether Mr Coope had been guilty of serious misconduct, and that issue had been decided by Stevenson J when his Honour made a declaration to that effect. “Serious misconduct” in terms of cl 19.9(b) of the employment agreement had been the real issue, Mr Dick argued. The basis on which it was alleged were, in effect, material facts or particulars; and the Cannaday Opportunity could be so described.

35. Thus, Mr Dick argued, either the right in question – to dismiss for serious breach – or the issues necessarily involved in the determination of that right – namely, whether there had been a serious breach – were closed by the earlier decision.

36. Mr Dick submitted, in the alternative, that it was unreasonable for LCM not to have raised the Cannaday Opportunity in the earlier litigation, as an alternative basis for upholding the validity of its dismissal of Mr Coope.

37. LCM’s evidence was that the email did not come to its attention until very recently. That discovery was the subject of an interlocutory judgment given by me on 7 May 2018, when I vacated the hearing date: see Australian Insolvency Group Pty Limited v LCM Litigation Investment Fund No 1 Pty Ltd [8] . Mr Dick submitted that, because LCM was aware that Mr Coope had been conducting negotiations behind its back with Vannin Malta or Vannin Capital or both, it ought to have made more strenuous searches to find the email.

    8. [2018] NSWSC 671.

38. Finally, Mr Dick submitted, it was an abuse of process for LCM now to pursue Mr Coope over the Cannaday Opportunity. I have to say that it is easier to understand the claim of abuse of process in relation to the Vannin or Wind Down Proposal and the Separation Proposal, and not nearly so easy to understand it in respect of the Cannaday Opportunity.

39. Mr Williams submitted that it was a serious matter to dismiss a claim summarily. That is undoubtedly correct, but it does not really take the analysis much further.

40. Mr Williams submitted that the questions of res judicata and issue estoppel depended fundamentally on identification of the issue that had been decided. That required, he submitted, consideration of the pleadings and the orders made, as to res judicata; and of the pleadings, reasons for decisions and orders made as to issue estoppel. He submitted that the true issue was whether LCM had been entitled to dismiss Mr Coope summarily on the grounds asserted. That being so, he submitted, an alternative case of serious misconduct, based on the Cannaday Opportunity, neither merged in the orders made nor was decided (necessarily or at all) by the judgment.

41. As to Anshun estoppel, Mr Williams accepted that the evidence as to discovery of the email was not as enlightening as it might be. However, he submitted, this did not matter. There was evidence which, if accepted, would prove that LCM had not discovered the relevant email until recently. That left the question of whether it was reasonable for LCM not to have undertaken searches earlier. Mr Williams submitted that this was, in essence, a triable issue, and one the resolution of which required an understanding of the totality of the relevant evidence .

42. Mr Williams accepted, I think, that the doctrine of abuse of process could operate even if all his earlier submissions found favour. However, he submitted, on that assumption, there was really no basis for arguing that the litigation of the Cannaday Opportunity was an abuse of process.

Decision

43. For res judicata and cause of action estoppel, the question is whether the cause of action that had been claimed in the earlier proceedings has passed into the judgment given by which they were concluded. The words “cause of action” are susceptible of more than one meaning. As Brennan J said in Anshun at 610, those words are “sometimes used to mean the facts which support a right to judgment… sometimes to mean a right which has been infringed… and sometimes to mean the substance of an action as distinct from its form…”.

43. His Honour’s words were cited, with apparent approval, by Deane, Toohey and Gaudron JJ in Chamberlain v Deputy Commissioner of Taxation [9] , with whom Brennan J substantially agreed, at 508.

    9. (1988) 164 CLR 502.

44. The facts of Chamberlain are simple. The respondent Commissioner sued the appellant for outstanding tax. By mistake, the writ claimed only one-tenth of the amount in fact owing. The appellant, not surprisingly, settled the case on the basis that the respondent should have judgment for the amount claimed together with costs. The respondent thereafter issued a further writ claiming the balance of the tax said to be due. He obtained judgment at first instance, which judgment was upheld on appeal. The matter then went to the High Court which allowed the appellant’s appeal.

45. Deane, Toohey and Gaudron JJ considered that whether one focused on the facts supporting a right to judgment, or on the right impugned, or on the substance of the action, the outcome in Chamberlain was “inevitable”. Their Honours said at 508 that:

[th]e cause of action relied upon by the respondent in the second proceeding is that upon which he had earlier relied. The additional credit reflecting the amount paid by the appellant after judgment was entered in the earlier proceeding was not part of the cause of action; it was simply an amount paid in respect of that cause of action.

47. It followed, their Honours said at 510, that:

The point of the present appeal is that the respondent brought an action against the appellant and recovered judgment against him. He obtained the judgment of the court in which the cause of action upon which he relied merged, thereby destroying its independent existence so long as that judgment stood. And, so long as that judgment stands, it is not component for the respondent to bring further proceedings in respect of the same cause of action.

48. The consequence, as the court’s orders show, was that the appellant, defendant below, should have had judgment on the claim brought against him by the respondent, Commissioner.

49. I turn to the facts of this case.

50. In the earlier proceedings, the relief that LCM sought was a declaration of the validity of its termination of Mr Coope’s employment. I accept, as Mr Dick pointed out, that the first version of the summons sought damages as well. I accept also, again as Mr Dick submitted, that LCM could have maintained that claim for damages. The fact that it did not do so may be relevant to the questions of Anshun estoppel and abuse of process. It does not, it seems to me, bear on the analysis of the anterior questions – res judicata, or the narrower or more limited forms of estoppel.

51. The material facts relied upon to support the validity of the termination, and thus the claim for declaratory relief, were the facts pleaded in relation to the Vannin or Wind Down Proposal and the Separation Proposal. Stevenson J held that the first did not, but the second did, justify the termination, and his Honour granted declaratory relief accordingly. The effect of the Court of Appeal’s decision is that the grant of declaratory relief could have been sustained on the first ground also, but nothing turns on this.

52. Looking at the matter in terms of analysing the right said to have been infringed, that right was LCM’s interest, under its contract with Mr Coope, in having the latter perform faithfully his duties (whether contractual, fiduciary or statutory does not matter). That could be said to bring the matter nearer to the present facts; the allegation in respect of Cannaday Opportunity is, after all, another way of saying that Mr Coope did not perform faithfully his various duties owed to LCM. However, the right claimed cannot be divorced from its contractual consequence. That contractual consequence was the right given to LCM to terminate Mr Coope’s summarily, by reason of serious breach. Again, therefore, the analysis comes back to the nature of the serious breaches alleged and (at one level or another) proved.

53. If one considers the earlier proceedings in terms of the substance of the action, the same conclusion must follow. The substance was that LCM was seeking to uphold the validity of its decision to terminate, which decision was based upon the two breaches alleged. Again, I accept, that if LCM had become aware of the Cannaday Opportunity prior to the hearing, it could have sought leave to amend to include it as an alternative ground of justification of its summary termination of Mr Coope’s employment (Shepherd v Felt and Textiles of Australia Ltd [10] ). But again, for present purposes (res judicata, cause of action estoppel or issue estoppel), what LCM might have done does not seem to me to bear on the proper analysis of what it did do, and of the consequences of what it did do.

    10. (1931) 45 CLR 359.

54. Accordingly, I conclude that none of the principles of res judicata, cause of action estoppel or issue estoppel in the narrow sense operate to prevent LCM from litigating, in its cross-claim against Mr Coope, the proposition that he breached his contractual and other duties, and ought pay damages or compensation in consequence, by reason of the facts relating to the Cannaday Opportunity.

55. I turn to Anshun estoppel.

56. There may be cases where it can be seen, even on an interlocutory and summary application, that the withholding of a claim in earlier litigation, only to press it later, is so unreasonable in the Anshun sense that it ought not be allowed to proceed. In those clear cases, the claim may be dismissed on the ground of Anshun estoppel, or it may be stayed permanently on the basis of abuse of process.

57. However, the present case is by no means so clear. LCM’s evidence is that it only discovered the Cannaday emails when it was preparing for a hearing in May this year (the hearing that was vacated as a result of the orders to which I referred earlier[11] ). The evidence of LCM’s witness Ms Taylor was to the effect that she was searching LCM’s email folders, in an attempt to find material that was required for the hearing, when she stumbled across the Cannaday emails. She said that they had not been found earlier, when preparing for the hearing before Stevenson J. She gave similar evidence, on information and belief, as to Mr Patrick Maloney, who was the former joint managing director and is now the CEO of LCM.

    11. See at [37] above.

58. Mr Dick attacked the evidence as to Mr Maloney, on the basis that he should have given it so that he could be cross-examined upon it. That attack assumes that I would have permitted cross-examination: not necessarily a safe assumption.

59. As I understand the evidence, LCM had access to Mr Coope’s “Vannin” emails, whether they were to be found in his inbox, his sent mail box, or elsewhere. The evidence was that LCM at the relevant time maintained a system of folders, to which each employee had access. One such folder was labelled “Vannin”. If the Cannaday emails were in the Vannin folder, they could have been found there upon search.

60. The question really is, why should LCM have made that search to prepare for the hearing before Stevenson J? The case was brought on with considerable haste, because of the circumstances of Mr Coope’s dismissal. LCM had the evidence of the two asserted breaches on which it relied to justify its termination of Mr Coope’s employment. One could well ask, in those circumstances, why it should go searching for further evidence of other breaches, that were not known to it at the time it made the decision to terminate and thus were not relied upon by it.

61. Mr Dick submitted that looking in the Vannin folder was “blindingly obvious” (in fairness to Mr Dick, I think he may have adopted a comment made by me to that effect). However, given the frequency and intensity of the dealings between LCM and Vannin, it is likely that the Vannin folder would have contained a huge number of emails, perhaps attaching an equally huge number of documents. It is not immediately obvious that a search of that resource would have been justified, in preparing for the hearing before Stevenson J.

62. The command of s 56 of the Civil Procedure Act2005 (NSW) cuts both ways. In one sense, it dictates that all issues should be resolved in the one hearing wherever possible, and that multiplicity of litigation should be avoided. In another, it dictates that resources ought not be wasted in an attempt to see whether a case beyond that articulated in the pleadings might be available. Both considerations apply to the present facts. In substance, on these particular facts, each cancels out the other.

63. In this case, I am by no means satisfied that the court has been given all the information that may be available to enable it to decide the Anshun point. In particular, there is still some confusion (at least on the evidence) as to the precise location of the Cannaday emails when Ms Taylor stumbled across them. Mr Dick submitted, with some justification, that they must have come either from Mr Coope’s own folders (inbox or sent mail) or from the shared Vannin folder. That no doubt is so, as a matter of logic. But logic alone may not supplant the need for proof.

64. Thus, in the present case, I am not persuaded that it is so plainly obvious now that it was unreasonable not to bring forward the Cannaday Opportunity in the earlier proceedings, to the point that it cannot be said that other evidence, not put before the court on this application, could lead to a different result. In short, on the facts of this case as they appear to me at present, I think that the question is one that ought to go to trial.

65. A decision that Mr Coope ought not have the cross-claim summarily dismissed on the basis to Anshun estoppel does not prevent him from raising the defence at trial. It does not prevent appropriate investigation of the merits of that defence. It may prove that his contention is correct, but equally it may prove that it was not. It is sufficient to say that I am by no means convinced that his position is so plainly correct that it ought form the basis of an order for summary dismissal.

66. I turn to abuse of process.

67. I accept that, at the level of principle, the doctrine of abuse of process is conceptually distinct to the doctrines that I have been considering. Of course, all those doctrines share common aims, including the public interest in finality of litigation and the need to avoid the waste of scarce public resources. However, once it is accepted (as it must be – see Tomlinson at [25], [26]) that a proceeding may be stayed on the ground of abuse of process even if none of the doctrines earlier discussed apply, there must be some distinction between the two sources of power.

68. One matter that may be relevant in considering abuse of process is that the proceedings have been brought for an ulterior purpose: see French J in Sea Culture International Pty Ltd v Scoles [12] at 279. Another may involve considerations of fairness in raising, or raising again, claims or issues as part of a balancing process: see Walton v Gardiner [13] at 395 – 396 (Mason CJ, Deane and Dawson JJ).

    12. (1991) 32 FCR 275.

    13. (1993) 177 CLR 378.

69. The very invocation of the concept of a balancing process suggests, strongly, a clear distinction between abuse of process on the one hand and the doctrines earlier discussed on the other. The first three – res judicata, cause of action estoppel and narrow issue estoppel – involve no element of discretion; no element of balancing considerations: see Dawson J in Chamberlain at 512. Anshun estoppel does involve a balancing exercise of sorts, but the considerations that are balanced in considering whether to stay a proceeding on the ground of abuse of process may not be the same as those considered in determining whether it was relevantly unreasonable for a particular claim not to have been brought forward in an earlier proceeding.

70. However, accepting as I do that abuse of process may operate where none of the preceding doctrines do, I have very great difficulty in seeing how, on the facts of this case, it could be an abuse of process for LCM now to press its claim for damages or equitable compensation for breaches of contractual and other duties in respect of the Cannaday Opportunity. Mr Dick’s written submissions for Mr Coope on the question of abuse of process [14] characterised the present claim as an abuse of process because[15] “the Cross-Claim seeks to re-litigate claims that Mr Coope breached his contractual, equitable and statutory duties” when those claims “have already been determined in the First Proceeding and in the Appeal”.

    14. Written submissions dated 24 August 2018.

    15. At [18].

71. So far as the Cannaday Opportunity is concerned, the submissions stated that “the allegation is raised in breach of the same duties that were alleged to have been breached in the First Proceedings and, properly characterised, it is no more than a further particular of the cause of action previously brought against Mr Coope”. It was all “part of the same factual matrix”, Mr Dick submitted, “namely the communications between Mr Coope and Vannin in January and February 2015 which were relied upon to establish the various breaches of dut[y]…”.

72. In short, as I understand those submissions, they were based on the proposition that relitigation of the question of breach, by reference only to the Cannaday Opportunity, was, one way or another, a relitigation, with further particulars, of the claim of breach already brought and decided.

73. If that be the only basis on which abuse of process was pressed then what I have said as to the preceding issues deals with it. If, however, the submissions intended to go beyond this, then it is necessary to ask why the public interest requires that the cross-claim go no further, or what it is that is inherently unfair, as between LCM and Mr Coope, in permitting it to go forward. That, in my view, is essentially a factual inquiry.

74. It may be possible, even on an interlocutory hearing, to see that litigation of a particular claim is so obviously unfair, or so obviously against the public interest overall, that it amounts to abuse of process. But I do not think that this is such a case. If LCM is correct, Mr Coope’s breach of duty in respect of the Cannaday Opportunity was egregious. On LCM’s case, it was flagrantly inappropriate for Mr Coope to have sought to divert from his then present employer LCM to his then prospective employer Vannin Malta (in which he would hold a 20% interest) what was potentially a profitable opportunity to fund litigation. It does not seem to me to be in the public interest that what is arguably a flagrant breach of duty should be allowed to go unexamined and, if proved, unrequited (by an award of damages or compensation).

75. Equally, if it proves to be the case that LCM should have done more to discover the Cannaday Opportunity emails, then it might be possible to characterise the litigation of the particular breach as an abuse of process. But in that result, it is likely that Anshun estoppel would apply in any event.

76. In short, as I indicated earlier in these reasons[16] , I find it difficult to see how abuse of process can justify summary dismissal of the cross-claim, with reference to the Cannaday Opportunity, if none of the other grounds argued have that result.

    16. See [69] above.

Conclusion and orders

77. Mr Coope’s notice of motion succeeds, in effect by concession, to the extent that the claims against him based on the Vannin or Wind Down Proposal and the Separation Proposal should not proceed. I think that the appropriate course, if LCM does not undertake forthwith to amend its cross-summons and list statement accordingly, is to order that the relevant prayers for relief and paragraphs be struck out. However, it fails in respect of the Cannaday Opportunity.

78. The result is that each party has had a measure of success. It was necessary for the matter to proceed to hearing, because LCM resisted totally the proposition that its cross-claim against Mr Coope should be dismissed summarily, and only conceded the point, to the extent it did, very late in the piece. There is no point speculating as to what might have happened, had the claim been limited to that which is now conceded. In the result, I think that the appropriate order as to costs is that LCM should pay two-thirds of Mr Coope’s costs of the notice of motion.

79. I stand the matter over to 10:00am on 25 October 2018 before me for the making of orders and for directions. I direct the parties to bring in short minutes of order to give effect to these reasons.

**********

Endnotes

Decision last updated: 18 October 2018