FEDERAL COURT OF AUSTRALIA
Deep Investments Pty Ltd v Casey [2018] FCA 603
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Details
- Case
- [2018] FCA 603
- Decision Date
CaseChat Overview and Summary
In Deep Investments Pty Ltd v Casey, the Federal Court considered an application for summary dismissal and the applicability of various estoppel principles to claims made by Deep Investments against various respondents. The dispute arose from a prior proceeding in the Supreme Court where a consent judgment had been entered. Deep Investments brought the current proceeding against the respondents, including CBC Partners and Mr Emanuel, seeking relief on various grounds, including breaches of fiduciary duty, misleading or deceptive conduct, and breaches of contractual and tortious duties.
The court was required to determine whether the claims in the current proceeding were precluded by principles of res judicata, issue estoppel, or Anshun estoppel, and whether the proceeding constituted an abuse of process. Additionally, the court needed to assess whether the statement of claim disclosed a reasonable cause of action.
The court concluded that there was no res judicata or issue estoppel created by the consent judgment that would preclude the claims against the respondents. However, there was an Anshun estoppel in relation to certain claims against the Raven respondents and the CBC respondents. The court found that the claims based on alleged breaches of fiduciary duty by the sale of certain shares and the trading in other shares were precluded by Anshun estoppel. Similarly, claims based on alleged breaches of contractual and tortious duties by failing to disclose certain trades were also precluded. The court held that the proceeding involved an abuse of process corresponding with the scope of the Anshun estoppels. Consequently, the statement of claim was struck out to the extent it made claims covered by Anshun estoppel and abuse of process. The court also found that the statement of claim did not disclose a reasonable claim or cause of action in relation to certain other allegations, but declined to grant leave to replead those claims.
In summary, the court struck out certain paragraphs of the statement of claim and granted leave for an amended statement of claim to be filed, excluding the precluded claims and repleading certain specified claims. The court allowed for further orders to be made, including orders for costs, by a specified date.
The court was required to determine whether the claims in the current proceeding were precluded by principles of res judicata, issue estoppel, or Anshun estoppel, and whether the proceeding constituted an abuse of process. Additionally, the court needed to assess whether the statement of claim disclosed a reasonable cause of action.
The court concluded that there was no res judicata or issue estoppel created by the consent judgment that would preclude the claims against the respondents. However, there was an Anshun estoppel in relation to certain claims against the Raven respondents and the CBC respondents. The court found that the claims based on alleged breaches of fiduciary duty by the sale of certain shares and the trading in other shares were precluded by Anshun estoppel. Similarly, claims based on alleged breaches of contractual and tortious duties by failing to disclose certain trades were also precluded. The court held that the proceeding involved an abuse of process corresponding with the scope of the Anshun estoppels. Consequently, the statement of claim was struck out to the extent it made claims covered by Anshun estoppel and abuse of process. The court also found that the statement of claim did not disclose a reasonable claim or cause of action in relation to certain other allegations, but declined to grant leave to replead those claims.
In summary, the court struck out certain paragraphs of the statement of claim and granted leave for an amended statement of claim to be filed, excluding the precluded claims and repleading certain specified claims. The court allowed for further orders to be made, including orders for costs, by a specified date.
Orders
Orders of the court
1. The following paragraphs of the statement of claim are struck out:
14, 17, 26(b)-(d), 42, 43(b), 44(a)-(c), 44(d)-(f) to the extent that they relate to para 14(c), 45-48, 50-55, 57 to 77, 78(b)-(f), 79-92.
2. The applicant have leave to file and serve an amended statement of claim by 1 June 2018:
(a) from which the paragraphs identified in order 1 are excised, and
(b) which repleads:
(i) the claim or claims based on breach of a fiduciary duty by misuse of position to obtain a benefit for a third party;
(ii) the claims based on contraventions of s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth).
3. Liberty to apply for further orders to give effect to these reasons, including orders for costs, by 11 May 2018.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
In summary, I have reached the following conclusions:(1)There is no res judicata created by the consent judgment in relation to the claims now sought to be brought against the Raven respondents.(2)There is no issue estoppel created by the consent judgment which precludes the claims now sought to be brought against any of the respondents.(3)Section 91 of the Civil Procedure Act 2005 (NSW) has no relevant operation.(4)There is an Anshun estoppel in relation to Deep Investments’ claims against the Raven respondents based on alleged breaches of fiduciary duty by the sale of pre-CGT National Australia Bank Limited (“NAB”) shares (as described in para 57 of the statement of claim) and by the trading in Boart Longyear Limited (“Boart Longyear”) and Billabong International Limited (“Billabong”) shares (as described in paras 64 and 72 of the statement of claim) pleaded in paras 78(d), (e) and (f) of the statement of claim.(5)There is an Anshun estoppel in relation to Deep Investments’ claims against the CBC respondents based on alleged breaches of contractual and tortious duties by failing to identify and inform Deep Investments of the trades in pre-CGT NAB shares, and Boart Longyear and Billabong shares pleaded in paras 42 and 43(b) of the statement of claim, and referred to in para 47 of the statement of claim.(6)Otherwise there is no Anshun estoppel.(7)The claim involves an abuse of process corresponding with the scope of the Anshun estoppels.(8)The statement of claim should be struck out to the extent that it makes claims covered by the Anshun estoppel and abuse of process.(9)The statement of claim does not disclose a reasonable claim or cause of action in relation to the alleged breaches of fiduciary duty by the CBC respondents and Mr Emanuel concerning avoidance of conflicts or the alleged contraventions of s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (“ASIC Act”), however, leave should not be granted to replead those claims or causes of action.FACTS It is necessary to examine the claims made in the Supreme Court proceeding and the facts that were known (or which it was reasonable for Deep Investments to have ascertained) during the course of that proceeding. Barry Deep, Rhonda Warne née Deep and Robert Deep are siblings. All are directors of Deep Investments. As at 18 May 2011, Deep Investments held a portfolio of shares which included shares that had a pre-capital gains tax (“CGT”) status in NAB. Deep Investments alleges that, as at February 2012, it owned a portfolio of shares worth around $40 million. According to Deep Investments, at the relevant times, Mr Casey and Mr Clarke had the day to day carriage of Deep Investments’ affairs within CBC. Mr Robinson was introduced to the Deep plaintiffs by Mr Casey and Mr Clarke. Deep Investments alleges, and it does not appear to be in dispute that, from between 2011 and 25 February 2012, Mr Robinson was employed by Wilson HTM Investment Group (“Wilson”), another provider of MDA services.
Evidence
Evidence Before The Court
Neither the CBC respondents nor Mr Emanuel offered a persuasive argument as to why reasonable diligence in the prosecution of the Supreme Court proceeding required Deep Investments to enquire as to the basis for Wilson’s allegations, or to consider whether it had a claim against Mr Emanuel or the CBC respondents in connection with those allegations. August 2014: Deep plaintiffs evidence in Supreme Court proceeding In August 2014 and June 2015, Mr Clarke swore affidavits in support of Deep Investments’ case in the Supreme Court. Mr Clarke’s August 2014 affidavit stated relevantly that:(1)for the Deep family’s share portfolios, CBC’s role was as the record keeper of the portfolios, including the processing of dividends and accounting for those transactions (para 8);(2)CBC did not have authority to pay bills or to transact account and held no powers of attorney or authorities to operate (para 7); and(3)there were discussions in October 2012 concerning the discovery by the Deeps that they were holding a substantial amount of Billabong shares, share in companies that they did not know and their original shares including pre-CGT shares had been sold (paras 62 to 71). Concerning the CBC respondents, Robert Deep’s affidavit sworn 6 August 2014 stated relevantly:4.CBC Partners Chartered Accountants and its predecessor firms have had an association with the Deep family for about the last 50 years.5.For some years now Kevin Casey has been the main contact at CBC Partners and also Paul Clarke from about 2008 has been involved and took over that role.6.CBC prepared our end of year tax returns and also looked after all of the accounting. I saw their role as advisors to make sure that we doing things [sic] in the most tax effective way, including my own personal tax requirements. Barry Deep’s affidavit sworn 8 August 2014 contains the following evidence, concerning the role of CBC and the move from Wilson to Raven:2.Kevin Casey had been the main contact at CBC Partners but more recently Paul Clarke from about 2008 took over that role.3.In 2011 I had been considering engaging JB Were to manage our share portfolios.4.Paul told me that CBC Partners had a share investing professional that they recommended to their other clients, and that before engaging JB Were’s services I should first meet the person they were recommending.…35.[In January 2012] Simon also told us that he would handle any legal action Wilson HTM might launch against us for leaving their company within the 12 month contract period and that there would be no legal cost to us whatsoever if we were willing to go with him to Raven Capital.…37.[In February 2012] Simon produced a piece of paper showing a glowing report for Deep Investments over the last six months. Kevin Casey declared that this was “the best result the Deep Investments portfolio has ever had”. Robert was impressed with the result and said at the meeting that he was agreeable for Simon to continue managing the Deep Investments portfolio.…43.[In March 2012] Simon said that we could leave Wilson HTM without any exit fees because he would take care of any possible legal action.
Decision
Reasons for decision
In addition to arguments that the current proceeding is precluded by Anshun estoppel and is an abuse of process, the Raven respondents relied on the principles of res judicata and issue estoppel. They said that the consent judgment is conclusive on the substance of the controversy raised by the causes of action in the Supreme Court proceeding and determined in their favour against Deep Investments; and that the issues of fact and law alleged or denied in the Supreme Court proceeding are taken to be matters necessarily decided by the consent judgment.Summary of conclusions In summary, I have reached the following conclusions:(1)There is no res judicata created by the consent judgment in relation to the claims now sought to be brought against the Raven respondents.(2)There is no issue estoppel created by the consent judgment which precludes the claims now sought to be brought against any of the respondents.(3)Section 91 of the Civil Procedure Act 2005 (NSW) has no relevant operation.(4)There is an Anshun estoppel in relation to Deep Investments’ claims against the Raven respondents based on alleged breaches of fiduciary duty by the sale of pre-CGT National Australia Bank Limited (“NAB”) shares (as described in para 57 of the statement of claim) and by the trading in Boart Longyear Limited (“Boart Longyear”) and Billabong International Limited (“Billabong”) shares (as described in paras 64 and 72 of the statement of claim) pleaded in paras 78(d), (e) and (f) of the statement of claim.(5)There is an Anshun estoppel in relation to Deep Investments’ claims against the CBC respondents based on alleged breaches of contractual and tortious duties by failing to identify and inform Deep Investments of the trades in pre-CGT NAB shares, and Boart Longyear and Billabong shares pleaded in paras 42 and 43(b) of the statement of claim, and referred to in para 47 of the statement of claim.(6)Otherwise there is no Anshun estoppel.(7)The claim involves an abuse of process corresponding with the scope of the Anshun estoppels.(8)The statement of claim should be struck out to the extent that it makes claims covered by the Anshun estoppel and abuse of process.(9)The statement of claim does not disclose a reasonable claim or cause of action in relation to the alleged breaches of fiduciary duty by the CBC respondents and Mr Emanuel concerning avoidance of conflicts or the alleged contraventions of s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (“ASIC Act”), however, leave should not be granted to replead those claims or causes of action.FACTS It is necessary to examine the claims made in the Supreme Court proceeding and the facts that were known (or which it was reasonable for Deep Investments to have ascertained) during the course of that proceeding. Barry Deep, Rhonda Warne née Deep and Robert Deep are siblings. All are directors of Deep Investments. As at 18 May 2011, Deep Investments held a portfolio of shares which included shares that had a pre-capital gains tax (“CGT”) status in NAB. Deep Investments alleges that, as at February 2012, it owned a portfolio of shares worth around $40 million.
Ratio Decidendi
Legal Principle Established
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