Ganesh v Dobrowolski
[2019] VSC 577
•11 September 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROFESSIONAL LIABILITY LIST
S ECI 2019 00059
BETWEEN:
| ANANDAVALLI GANESH | First Plaintiff |
| GANESH RADHAKRISHNAN | Second Plaintiff |
| - and - | |
| WALTER DOBROWOLSKI | Defendant |
---
JUDGE: | Daly AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 20 June 2019 |
DATE OF JUDGMENT: | 11 September 2019 |
CASE MAY BE CITED AS: | Ganesh & Anor v Dobrowolski |
MEDIUM NEUTRAL CITATION: | [2019] VSC 577 |
---
PRACTICE AND PROCEDURE – Summons seeking proceeding be stayed under rr 23.01 and 23.02 Supreme Court (General Civil Procedure) Rules 2015 – Whether claims brought by first plaintiff an abuse of process – Issues raised by first plaintiff in this proceeding substantially identical to issues raised in her defence in a Magistrates’ Court proceeding – First plaintiff did not file a counterclaim – First plaintiff failed to attend trial – First plaintiff failed to attend court for application for re‑hearing – No Notice of Appeal filed within time – No independent medical evidence – Whether proceeding relating to second plaintiff an abuse of process – Second plaintiff not a privy of the first plaintiff in the Magistrates’ Court proceeding – No evidence of any control of the conduct of the Magistrates’ Court proceeding – Different claims – Angeleska v Victoria (2015) 49 VR 131 referred to and distinguished; Commissioner of State Revenue v Mondous (2018) 55 VR 643 referred to – Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 referred to.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | In person | |
| For the Defendant | Mr M Champion | Featherbys Lawyers |
HER HONOUR:
Background
The plaintiffs are husband and wife. They represent themselves in this proceeding, which was issued on 9 January 2019. From time to time they have invested in the residential property market, largely using borrowed funds. The defendant, Mr Dobrowolski, is a retired mortgage broker, who was retained by the plaintiffs some years ago to assist the first plaintiff, Ms Ganesh, to raise funds to complete the purchase of a property in Alfredton, a suburb of Ballarat (‘Sturt Street property’).
Ms Ganesh entered into a contract to purchase the Sturt Street property for $550,000 in August 2010. In January 2011, not long after Ms Ganesh had received a rescission notice from the vendors of the Sturt Street property, the plaintiffs retained the defendant to secure finance to complete the purchase. The defendant arranged for AMP Ltd (‘AMP’) to lend the plaintiffs $440,000 to complete the purchase (‘AMP loan’). This transaction involved the refinancing of properties in the name of the second plaintiff, Mr Radhakrishnan. However, a shortfall remained, and at settlement (which took place on 12 April 2011), the defendant provided the sum of $85,000 to facilitate the completion of the purchase (‘advance’). The defendant says that advance was made pursuant to a loan agreement between Ms Ganesh and the defendant. The plaintiffs deny the existence of any loan agreement, and contend that, unknown to them at the time, the defendant made the advance voluntarily. It is not entirely clear whether the plaintiffs contend the advance was a gift.
The Sturt Street property and two properties owned by the second plaintiff were sold in 2013 after the plaintiffs experienced financial difficulties. On 5 May 2017, the defendant issued a proceeding in the Magistrates’ Court seeking to recover the advance (‘Magistrates’ Court proceeding’).
In her defence in the Magistrates’ Court proceeding, Ms Ganesh denied the existence of any loan agreement, and said that she did not know that the defendant had made the advance until after the purchase of the Sturt Street property had been completed.
Ms Ganesh did not file a counterclaim in the Magistrates’ Court proceeding. In her defence, she said that she made payments of approximately $3,000.00 to the defendant out of ‘kindness and sympathy’. She alleged that the defendant had breached the terms of the National Credit Act 2009 (Cth) and the financial services industry code of practice by assisting her to obtain an unsuitable loan. She also alleged that the defendant had a conflict of interest, and had preferred his interests over her interests. In her defence, she also referred to the hardship she said she suffered following the repossession of the Sturt Street property, and stated:
Just because the defendant has, till this point in time, not made an application in a higher court for claims against the Plaintiff, it does not mean that the Plaintiff does not have to pay for all of the losses caused to the Defendant due to his actions.
And further:
The plaintiff, in acknowledging that he was the one who contributed for the settlement, has to take responsibility and accountability for:
- playing on the vulnerability of the Defendant,
- Being instrumental in causing severe financial hardship,
- credit impairment for the Defendant and her husband,
- trauma caused by the debt collection agents of AMP bank,
-so seriously affecting the physical and psychological health of the Defendant and the child that they require constant support.
- damages which are permanent and irreversible.
Accordingly, it is the plaintiff who has to compensate the defendant and her family for losses in excess of $1.2m
Ms Ganesh did not appear at the trial of the Magistrates’ Court proceeding, which was listed for 16 July 2018. In her absence, the magistrate held that the defendant had loaned Ms Ganesh the sum of $85,000, and made an order for repayment of the outstanding balance of the advance.
On 13 August 2018, Ms Ganesh made an application for a re-hearing, given that the trial was conducted in her absence. The application was dismissed on 5 November 2018, after Ms Ganesh failed to appear at the hearing of the application.
No appeal has been brought against the orders made on 16 July 2018 (or 5 November 2018). The defendant served a bankruptcy notice on Ms Ganesh on or about 19 December 2018.
The statement of claim
In their statement of claim in this proceeding, the plaintiffs claim substantial damages from the defendant, in the order of $12 to $13 million.
The statement of claim has a number of deficiencies, which one might expect of a pleading prepared by self-represented litigants. However, it is reasonably clear that the plaintiffs claim that:
(a) the defendant, in arranging the AMP loan to complete the purchase of the Sturt Street property, had placed the plaintiffs in an unsuitable loan, which has resulted in ‘substantial hardship, property loss and credit impairment to the plaintiffs’;
(b) the plaintiffs were unaware that the defendant had used his own funds to meet the shortfall in the settlement sum, and there was no agreement between them that he would lend Ms Ganesh money to complete the purchase;
(c) the AMP loan was arranged, and the funds were provided by the defendant to ensure that he received commissions from AMP; and
(d) the defendant:
‘Was recklessly indifferent to his conduct and the consequences on the plaintiffs by his decision to meet the gap without the knowledge and consent of the plaintiffs.’
In their statement of claim, the plaintiffs referred to the defendant’s claim in the Magistrates’ Court proceeding, and stated:
‘The First Plaintiff was unable to attend the court on the hearing date owing to her health condition and ex parte orders were made favouring the Defendant, on essential facts which were erroneous.’
Paragraphs 23 to 32 of the statement of claim set out the basis upon which the defendant’s allegation that he loaned Ms Ganesh $85,000 was denied, concluding:
‘In the premises, the Defendant was using his own funds, by his own discretion to meet the settlement gap was, at best, a speculative venture and was voluntary – for which the Plaintiffs are neither responsible or legally bound.’
The plaintiffs claimed that the defendant owed them the following statutory duties:
(a) a duty to act honestly and fairly in their credit activities;
(b)a duty to ensure clients are not disadvantaged by conflicts of interest …;
(c) a duty not to assist a client enter an unsuitable contract.
Further:
The Defendant also had an obligation to comply with good industry practice (sic) and not recommend or place a client into unsuitable loans.
The statement of claim then went on to refer to a complaint made by Ms Ganesh to the Credit Ombudsman Service Limited (‘COSL’), and a report provided by COSL on 26 April 2015. The plaintiffs allege that COSL made the following findings:
a.The Defendant did not take reasonable steps to verify the financial situation of the Plaintiffs. This conduct was in breach of s 117(1)(c) of the National Credit Act 2009 (Cth) (NCA).
b.The Defendant did not provide a copy of the preliminary assessment under which the Defendant would have declared that the loan was not unsuitable for the Plaintiffs. This conduct was not compliant with s 115 and s 116 of the NCA.
c.Whatever assessment was carried out by the Defendant, COSL has determined that it was incomplete and inaccurate.
d.In the absence of the Defendant’s preliminary assessment, COSL carried out their own assessment to determine whether the loan was unsuitable using information that would have been available to the Defendant at the time of the loan application. COSL’s assessment concluded that the AMP loan and the Defendant’s alleged loan were both unsuitable (Unsuitable loans):
i.The Plaintiffs repayments to AMP Bank would cause them to experience hardship – Monthly deficit of $793.29.
ii.If repayment of the Defendants alleged “loan” of $85,000 was included, the Plaintiff’s monthly deficit would blow out to $3,449.29.
iii.As a result, the Defendant had recommended an unsuitable credit contract to the Plaintiffs, in contravention of s 123 of the NCA and that this occurred on 13 February 2011 when the Defendant submitted the online loan application for Sturt St property purchase to AMP Bank.
iv.Furthermore, the Defendant also recommended that the Plaintiffs remain in an unsuitable credit contract, in contravention of s 124 of the NCA and that this occurred when the Defendant made the alleged loan of $85,000 on 8 April 2011.
The statement of claim made further allegations regarding the defendant’s alleged breaches of consumer credit legislation, and stated as follows:
‘ … the Defendant failed to comply with [the consumer credit legislation] and is liable for penalties and compensation to the Plaintiffs for losses.’
Paragraphs 47 to 48 of the statement of claim refer to two properties owned by the second plaintiff, Mr Radhakrishnan. It appears that these properties were refinanced in order to facilitate the purchase of the Sturt Street property, and Ms Ganesh became a co‑borrower with respect to the loans secured by these properties. Ms Ganesh contends that she had no financial capacity to service these loans. Paragraph 49 of the statement of claim states as follows:
The consequence of the Defendants Unsuitable loans inter alia was:
a.The Francis St property went into default and had to be sold around early 2013.
b.The Freeman Drv property went into default and had to be sold around mid-2013.
c.The Sturt St property went into default, was re-possessed by AMP around September 2013 and sold around early 2014.
d.The Second Plaintiff wanted to retain the Francis St and Freeman Drv properties for a long term and relied on these properties as an income source after retirement. The Second Plaintiff did not expect and was not prepared for both these properties to be sold in such a sudden and short span of time. In consequence, the Second Plaintiff:
i.Has Lost Francis St property, its growth in value and rental income.
ii.Has lost Freeman Drv property, its growth in value and rental income.
e.The Plaintiffs have also incurred considerable break-costs for all the three properties. So much so, the Plaintiffs did not get any money from the properties but were in fact out of pocket due to the break-costs.
f.The First Plaintiff has not only lost the Sturt St property but has also incurred interest and costs associated with Sturt St property.
g. It led to AMP creditor claims.
h.It caused impairment to the credit files of both the Plaintiffs. Given the age of the Plaintiffs, this impairment is virtually for ‘life’ and will affect many day-to-day activities.
i.It resulted in the Plaintiffs need to relocate multiple times requiring multiple trips to and from the affected properties.
j.This added to unnecessary removalist, moving, travel and storage costs.
The plaintiffs alleged that, by making the advance, the defendant was guilty of the offence of fraud, and/or the offer of obtaining financial advantage by deception. The defendant was said to have engaged in this conduct to ‘enhance and preserve the benefits he received from the AMP loans.’
Finally, paragraph 52 of the statement of claim stated as follows:
The Unsuitable loans, improper loan assessments and misleading conduct by the Defendant was not in the best interests of the Plaintiffs and are continuing to impact the Plaintiff’s lives:
c. The Unsuitable loans led to lot of hardship.[1]
[1]There is no ‘a’ or ‘b’ in paragraph 52 of the statement of claim.
d.The Second Plaintiff was a full-time employee and had held the Francis St property and Freeman Drv property for over 10 years without any instance of default.
e.However, within a year or so after the Unsuitable loans, the Francis St and Freeman Drv loans fell into default.
f.This caused tremendous financial stress on each of the Plaintiffs and the property loans could not be maintained.
g.Around April 2013, AMP obtained a combined default judgment for the Freeman Drv property and Sturt St property.
h.The Defendant had full knowledge of the strained relationships between the Plaintiffs. The Unsuitable loans further escalated the division between the First and Second Plaintiff.
i.The burden imposed on the First Plaintiff as a consequence of the Defendant making her a party to the Freeman Drv loan (that was owned only by the Second Plaintiff) led to further stress and break-down in the 30-year-old marital relationship.
j.This also led to siblings being separated.
k.The loss of the rental properties made the Second Plaintiff so frustrated and angry that it resulted in the First Plaintiff suffering injuries. The First Plaintiff has now to also cope with the effect of those injuries on a day-to-day basis.
l.The repossession action by AMP with regards to the Sturt St property was another nightmare for the Plaintiffs.
m.AMP’s collection agents behaved inter alia in an indecent and intimidating manner with the First Plaintiff causing her trauma, suffering and affected her health. This has also affected the child who was a witness. Instances include:
i. Racial abuse
ii. Desecration of religious belongings.
iii.Use of a device that emitted a sharp white light and was directed to her eyes that is even now affecting her vision, causing headaches and severe pain in her eyes.
n.AMP sold the Sturt St property at a price much lower than the market and even lower than the original loan of $440,000.
o.AMP pursued the Plaintiffs even after the Sturt St property sale with further demands and legal notices.
i.Letter dated 16 September 2015 from HWL Ebsworth made a demand for $81,476.64
ii.Letter dated 16 May 2017 from the Sheriff’s Office made a demand for $47,227.54
PARTICULARS
The letters dated 16 September 2015 and 16 May 2017 are available for inspection with the Plaintiff by appointment.
p.The Defendant’s misleading or deceptive conduct has damaged the Plaintiffs relationship with their conveyancer.
q.With the continuous financial pressures, the Plaintiffs could not devote adequate time for the care of the younger child who has special needs. The child has consequently suffered through this neglect.
r.The financial burden and the constant pursuit by AMP and the Defendant have inter alia led to long term credit impairment, asset loss and income loss with devastating effect on the physical, psychological, emotional and mental health on the Plaintiff’s household that continues even today.
s.The health issues of the First Plaintiff impact the daily lives so much so that she requires lot of support even with household chores. The First Plaintiff’s health condition is unpredictable on a day to day basis and to such an extent that it has impacted on her ability to attend Court hearings from time to time.
The plaintiffs contend that the order of 16 July 2018 in the Magistrates’ Court proceeding should be set aside. Ms Ganesh also claims for loss and damage said to have arisen out of the forced sale of the Sturt Street property, including the amount outstanding on the AMP loan, and the current value of the defendant’s judgment debt. She also claims damages for the following:
(a) monetary value of credit impairment for life, being $6 million;
(b) psychological trauma suffered by the plaintiff, being $575,000; and
(c) psychological trauma suffered by the plaintiff’s child, being $575,000.
Ms Ganesh also seeks an order that the defendant disgorge the commissions earned by him with respect to the AMP loan.
Mr Radhakrishnan claims losses said to have arisen out of the refinancing and subsequent forced sale of the two properties owned by him.
The defendant’s application
In his summons filed on 2 May 2019, the defendant seeks orders that:
(a) the proceeding be stayed as an abuse of process pursuant to r 23.01(c) of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’); or
(b) alternatively the statement of claim be struck out pursuant to r 23.02 of the Rules on the basis that, in its current form, the statement of claim may prejudice, embarrass or delay the fair trial of this proceeding.
Rule 23.01 of the Rules provides as follows:
(1) Where a proceeding generally or any claim in a proceeding—
(a) is scandalous, frivolous or vexatious; or
(b) is an abuse of the process of the Court—
the Court may stay the proceeding generally or in relation to any claim or give judgment in the proceeding generally or in relation to any claim.
Rule 23.02 of the Rules provides as follows:
Where an indorsement of claim on a writ or originating motion or a pleading or any part of an indorsement of claim or pleading—
(a) does not disclose a cause of action or defence;
(b) is scandalous, frivolous or vexatious;
(c)may prejudice, embarrass or delay the fair trial of the proceeding; or
(d) is otherwise an abuse of the process of the Court—
the Court may order that the whole or part of the indorsement or pleading be struck out or amended.
In addition, the defendants rely upon s 63 of the Civil Procedure Act 2010 (‘CPA’), which provides as follows:
Summary judgment if no real prospect of success
(1)Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.
(2)A court may give summary judgment in any civil proceeding under subsection (1)—
(a) on the application of a plaintiff in a civil proceeding;
(b) on the application of a defendant in a civil proceeding;
(c)on the court's own motion, if satisfied that it is desirable to summarily dispose of the civil proceeding.
The test under s 63 of the CPA is governed by the statement of the Court of Appeal in the oft-cited decision of Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd,[2] as follows:
(a)the test for summary judgment under section 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a ‘real’ as opposed to ‘fanciful’ chance of success;
(b)the test is to be applied by reference to its own language and without paraphrase or comparison with the ‘hopeless’ or ‘bound to fail test’ essayed in General Steel;
(c)it should be understood, however, that the test is to some degree a more liberal test than the ‘hopeless’ or ‘bound to fail test’ essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;
(d)at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.[3]
[2](2013) 42 VR 27.
[3]Ibid [35].
Further, Neave JA (who otherwise concurred with the statements made by the majority above) stated as follows:
… I am concerned that undue emphasis on the caution with which a court must exercise the power of summary dismissal runs the risk of reinforcing the historical approach to summary dismissal and may result in the legislative liberalisation of the test in s.63 have little impact in practice. That approach would be inconsistent with the objective of reforming the law relating to summary judgment, expressed in s 1(2)(e) of the Civil Procedure Act, and with the requirement that the Court give effect to the over-arching purpose of [the CPA], imposed by s 8.[4]
[4]Ibid [41].
Section 64 of the CPA provides as follows:
Court may allow a matter to proceed to trial
Despite anything to the contrary in this Part or any rules of court, a court may order that a civil proceeding proceed to trial if the court is satisfied that, despite there being no real prospect of success the civil proceeding should not be disposed of summarily because—
(a) it is not in the interests of justice to do so; or
(b)the dispute is of such a nature that only a full hearing on the merits is appropriate.
Therefore, the Court retains a residual discretion to not grant summary judgment. Nevertheless, the occasions where the Court has allowed a proceeding to continue notwithstanding that the proceeding has no real prospects of success are rare indeed.
The defendant relied upon an affidavit sworn by his solicitor, Mr Mark Featherby, on 1 May 2019. Mr Featherby deposed, in summary, as follows:
(a) the defence filed by Ms Ganesh in the Magistrates’ Court proceeding substantially, but not wholly, traverses similar ground to the statement of claim in this proceeding;
(b) the orders in the Magistrates’ Court proceeding were made on 16 July 2018, nearly six months prior to the issue of this proceeding;
(c) the defendant traded as a mortgage broker until his retirement in 2015. He was not in the business of providing financial advice;
(d) in August 2010, Ms Ganesh entered into a contract to purchase the Sturt Street property for the sum of $550,000, paying a deposit of $20,000;
(e) the defendant provided mortgage broking services to the plaintiffs between January 2011 and April 2011, after the vendors of the Sturt Street property served a notice of rescission;
(f) the defendant dealt almost exclusively with Ms Ganesh;
(g) in late February 2011, the defendant arranged for the AMP loan of $440,000, which required the refinancing of two properties in Glenroy and Hadfield;
(h) on 12 April 2011 the purchase of the Sturt Street property was completed with funds from the AMP loan, $85,000 from the defendant, and approximately $47,000 from the plaintiffs;
(i) on 16 June 2011 Ms Ganesh sent an email to the defendant, stating, amongst other things:
Rest assured soon as we are able I shall be increasing my limits on GSquare with NAB and to pay you[n] back the amount of $85K plus will be the very first thing I shall do.
(j) on 21 October 2013, the defendant issued a proceeding in the Magistrates’ Court against both plaintiffs, seeking the recovery of the advance. This proceeding was stayed (and subsequently struck out) following Ms Ganesh’s complaint to COSL;
(k) the COSL report of 26 April 2015 found that Ms Ganesh was obliged to repay the sum of $85,000 to the defendant, but that the defendant was not entitled to charge interest on the outstanding balance. COSL found that the defendant did not take reasonable steps to verify the plaintiffs’ financial position, but that Ms Ganesh had not provided any information which would enable COSL to determine any losses she had suffered by reason of the defendant’s breach;
(l) the defendant commenced the Magistrates’ Court proceeding on 5 April 2017;
(m)the trial of the Magistrates’ Court proceeding was conducted in Ms Ganesh’s absence on 16 July 2018. The defendant gave evidence at the trial, which the magistrate accepted;
(n) on 13 August 2018, Ms Ganesh made an application for a rehearing. In her affidavit in support of the application, Ms Ganesh deposed as follows:
1)I have health issues, details of which I am unable to provide for confidential reasons.
2)I have suffered from years of medical negligence and wrong prescriptions of pharmaceutical drugs which has compromised my health and I am now allergic to most foods and medications
3)The medical clinic which I was attending for nearly a decade refused to treat me after my body reacted very badly to a vitamin injection.
4)Additionally, I have suffered injuries sustained from a fall and a turbulent marital relationship.
5)Due to the effects of the above I suffer from extreme exhaustion, chronic pain, nausea, stomach cramps and headaches all of which has affected by ability to even sleep through the night for several years. Therefore I am compelled to take rest several times during the day.
6)My illness in July has further aggravated my condition.
7)Therefore I am unable to present myself in court and I respectfully request the court to allow for my representative to attend on my behalf. I do not any employment or any income means as I have to constantly care for my child with special needs. I do not have any financial capacity to afford a lawyer.
(o) the defendant has commenced bankruptcy proceedings with respect to the judgment debt. Ms Ganesh has made an application in the Federal Circuit Court to set aside the bankruptcy notice.
Mr Featherby also exhibited a number of documents to his affidavit, including:
(a) the plaintiffs’ application forms for the AMP loan, which showed that Mr Radhakrishnan was employed full time with the National Australia Bank Ltd as a Senior Project Analyst, and Ms Ganesh was employed part-time with a consulting firm providing unspecified services;
(b) an email exchange between the defendant and Ms Ganesh on 16 June 2011 regarding the advance;
(c) an email from Ms Ganesh to the defendant dated 18 July 2012;
(d) the pleadings and other documents in the two Magistrates’ Court proceedings; and
(e) the COSL report dated 26 April 2015.
Submissions
In his written outline of submissions, counsel for the defendant submitted, in summary, as follows:
(a) to the extent that the statement of claim concerns matters already litigated in the Magistrates’ Court proceeding, Ms Ganesh’s remedies are limited to an appeal on the question of law pursuant to s 109 of the Magistrates’ Court Act 1989 (Vic);
(b) further, to the extent that this proceeding seeks to re-litigate matters raised by her in her defence in the Magistrates’ Court proceeding outside the appellate process, it is an abuse of process;
(c) while Mr Radhakrishnan was not a party to the proceeding in the Magistrates’ Court, he was bound by the decision in the Magistrates’ Court proceeding as he was Ms Ganesh’s ‘privy’; and
(d) in the event that summary judgment is not granted, the statement of claim ought to be struck out, as it does not sufficiently disclose the causal link between the defendant’s alleged conduct and the millions of dollars of losses said to have been suffered by the plaintiffs. Further, the claims need to be pleaded with sufficient clarity to enable the defendant to consider whether claims arising out of events in 2011 are time barred.
In his oral submissions during the course of the hearing, counsel for the defendant observed that, in its current form, the proceeding was a ‘hybrid’, in that it was partly an appeal and partly a claim. To the extent that the proceeding can be characterised as an appeal, no question of law has been identified.
Counsel for the defendant submitted that while there was no counterclaim, one could consider the allegations made in the Magistrates’ Court proceeding regarding the defendant’s alleged breach of duty as amounting to a claim for a set‑off against the unpaid balance of the advance. Despite the fact the defendant’s claims in the Magistrates’ Court were ultimately undefended by reason of the failure of Ms Ganesh to appear, it was still a trial, resulting in a final order. Counsel for the defendant submitted that Ms Ganesh has forfeited her opportunity to agitate these issues, and no independent medical evidence has been provided to support Ms Ganesh’s contention that she was unable to appear because of her health issues.
Counsel for the defendant submitted that while there was no counterclaim, one could consider the allegations made in the Magistrates’ Court proceeding regarding the defendant’s alleged breach of duty as amounting to a claim for a set‑off against the unpaid balance of the advance. Despite the fact the defendant’s claims in the Magistrates’ Court were ultimately undefended by reason of the failure of Ms Ganesh to appear, it was still a trial, resulting in a final order. Counsel for the defendant submitted that Ms Ganesh has forfeited her opportunity to agitate these issues, and no independent medical evidence has been provided to support Ms Ganesh’s contention that she was unable to appear because of her health issues. Counsel for the defendant submitted that Mr Radhakrishnan was also bound by the decision in the Magistrates’ Court proceeding. He submitted that Mr Radhakrishnan was Ms Ganesh’s ‘privy’, such that I could find that there had been an issue estoppel precluding Mr Radhakrishnan from bringing his claims in this proceeding. He and Ms Ganesh are married, and apparently live at the same address. He was a co‑borrower of the AMP loan, and the defendant dealt with them as an indivisible unit. If Ms Ganesh had been successful in proving her claims with respect to the defendant’s alleged breach of duty in the Magistrates’ Court proceeding, such as to establish a right to set off against any debt she was found to have owed to the defendant, Mr Radhakrishnan would have obtained an indirect benefit from the Magistrates’ Court proceeding.
Counsel for the defendant referred to the decision of the Court of Appeal in Kermani v Westpac Banking Corporation (‘Kermani’),[5] where Robson AJA outlined the guiding considerations in determining whether the re‑litigation of issues determined in a previous proceeding by a person who was not a party to the previous proceeding amounted to an abuse of process, in particular: ‘… an individual should not be vexed twice for the same cause.’[6]
[5](2012) 36 VR 130.
[6]Ibid [97].
Counsel for the defendant also referred to the decisions of the High Court in Tomlinson v Ramsey Food Processing Pty Ltd[7] and UBS AG v Tyne[8] (which post-dated the decision in Kermani), along with the decision of Brereton J in Re HIH Insurance Ltd (in liq); De Bertoli Wines (Superannuation) Pty Ltd v McGrath (as liquidator of HIH Insurance Ltd),[9] where, after analysing the authorities, his Honour stated as follows:
The above authorities establish that a person who was not a party to earlier proceedings may none the less be precluded from maintaining later proceedings in respect of substantially the same subject matter, even though not in privity in the strict sense with the unsuccessful party in the earlier proceedings, if the person is sufficiently identified with a party to the earlier proceedings, and it was unreasonable to stand by and allow the earlier proceedings to be determined without intervening. In my view, in Australia these cases are best explained as a subspecies of Anshun estoppel; such that where a given matter becomes the subject of litigation and adjudication, the court requires not only the parties to bring forward their whole case, but other persons with a sufficient interest also to do so. Short of privity in the strict sense, there will be sufficient identification where there is control of one by the other – because it is offensive to the efficient administration of justice for a party who could have caused others with a similar interest to join the in the proceedings to refrain from doing so and then seek indirectly to relitigate the issue through a controlled entity. In addition, the requisite relationship will be taken to exist where there has been what Lord Hobhouse called an ‘order for the marshalling of litigation’, because where a court has put in place arrangements to facilitate the quick, just and inexpensive resolution of complex related litigation, it is offensive to the administration of justice that a person involved in those arrangement subsequently be able to circumvent them: [cf Ashmore 348H-349A]. … However, the existence of the requisite identification is not of itself enough; as with the more familiar form of Anshun estoppel, a non‑party will be precluded from later litigating the issue only where it was unreasonable to stand by without intervening in the earlier proceedings.[10]
[7](2015) 256 CLR 507.
[8](2018) 360 ALR 184.
[9](2014) 101 ACSR 1.
[10]Ibid [59].
Counsel for the defendant submitted that there was a sufficient identity of interest between Mr Radhakrishnan and Ms Ganesh with respect to the subject matter of the Magistrates’ Court proceeding, such that it was unreasonable for him to stand by and allow the Magistrates’ Court to continue without his intervention.
The plaintiffs filed detailed written submissions in opposition to the defendant’s application. Prior to turning to the substance of the submissions, it is apparent from the submissions and the statement of claim that the plaintiffs, while self-represented, appear to be well educated, and reasonably commercially astute. The plaintiffs (or perhaps Ms Ganesh) also appear to have a sufficient familiarity with legal terminology to incorporate such language in their materials, and to make reference to authorities. However, that apparent familiarity does not completely mask an understandable lack of comprehension of, among other things, the rules regarding pleadings, the principle of finality of litigation, and the distinction between civil and criminal law.
The plaintiffs’ submissions traversed the factual background to the dispute between the parties in some detail, and again denied that there had been an agreement reached between Ms Ganesh and the defendant for Ms Ganesh to borrow the sum of $85,000 to complete the purchase of the Sturt Street property. The plaintiffs stated as follows:
The “real issues” of the plaintiffs are:
(a)An act of perjury was committed by the Defendant, Mr Walter Dobrowolski in the face of the court (Ringwood Magistrate Court on 16 July 2018).
(b)Neither the First nor the Second Plaintiff had ever asked the Defendant or expected the Defendant to lend his personal funds to meet any gap for the settlement of Sturt Street property.
(c)As for the alleged loan of $85,000, the Magistrate Court order which was made in favour of the Defendant on 16 July 2018 trial hearing has erred on questions of law.
(d)As the Defendant did not have any contract, it follows that the Defendant did not have (and does not have) a cause of action against the plaintiffs.
(e)Defendant has breached the MFAA Code of Practise that was binding including inter alia non-disclosure of conflict of interest.
(f)Defendant had a duty of care but was negligent in his duties to the Plaintiffs that included assisting the Plaintiffs into loans that were unsuitable.
(g) Other conduct of Defendant pertinent to this proceeding.
Further:
The Plaintiffs had come to this court for justice because:
(a) The Defendant has committed an act of perjury.
(b)The Plaintiffs have suffered substantial loss and damage due to the actions of the Defendant.
(c)The losses and damage caused to the Plaintiffs exceeds the jurisdictional limit of the Magistrate Court (sic).
(d)The Defendant had targeted the First Plaintiff without any cause after deliberately committing the wrongdoing.
(e)Though the First Plaintiff was the owner of Sturt St property, the Second Plaintiff was a co-borrower for the loan. The Defendant has failed in his duty of care to both the Plaintiffs by considering both Plaintiffs as a unit and/or dissociating one or the other Plaintiffs at his whim and fancy.
(f)Due to the Defendant lying under oath and obtaining from the Magistrate Court an erroneous order, the Defendant seeks to perpetuate injustice through procedural means.
(g)The Defendant had served a Bankruptcy Notice dated 19 December 2018 on the First Plaintiff which jeopardises her financial liberty.
(h)The Plaintiffs pray for this court to render justice due to them.
The plaintiffs submitted further, in summary, as follows:
(a) the defendant committed perjury when giving evidence at the trial of the Magistrates’ Court proceeding;
(b) alternatively, if this proceeding is considered to be an appeal or an application for leave to appeal the decision in the Magistrates’ Court proceeding, then ‘the formation of the alleged contract that was claimed to be partly written and partly oral and the proper construction of a contract is a matter of law’;
(c) there was in fact no contract between the defendant and the plaintiffs with respect to the advance;
(d) the defendant has breached the Mortgage Finance Association of Australia (‘MFAA’) Code of Practise (sic);
(e) the defendant has been negligent;
(f) the defendant has engaged in misleading and deceptive conduct;
(g) any claims by the plaintiffs with respect to the defendant assisting the plaintiffs into suitable loans would not be statute barred, as these claims only came to light with the release of the COSL report on 26 April 2015; and
(h) the plaintiffs were not unjustly enriched by reason of the defendant providing funds at settlement.
The plaintiffs submitted that if there were deficiencies in their statement of claim, they should have leave to re-plead in order to amplify the causal link between the alleged conduct and the losses suffered by them.
Finally, the plaintiffs submitted that the Court should:
(a) recognise the defendant’s act of perjury and make appropriate orders;
(b) strike out the defendant’s summons and the defence, and prevent the defendant from further litigating ‘as it would be vexatious and an abuse of the court process’;
(c) grant relief to the first plaintiff for the judgment debt; and
(d) provide further directions, and grant leave to amend the statement of claim.
At the hearing of the application, Ms Ganesh submitted that since the birth of her second child, she has had a number of health issues, which have prevented her from dealing with the matters she has had to deal with. On the date scheduled for the hearing of her application for a re-hearing, she had a terrible headache. She submitted that there should be a further hearing of the matters raised in the Magistrates’ Court proceeding, because the defendant committed perjury at the trial of the Magistrates’ Court proceeding. Perjury is a very serious offence, and she has the right to pursue it in a higher court. She rejected the contention that the fact that she and Mr Radhakrishnan are married has any relevance to the current application.
Mr Radhakrishnan submitted that, as a result of the defendant’s ‘cover‑ups’, he has suffered tremendous consequences. He queried why the defendant would enter into a loan agreement with Ms Ganesh when she had no income. He submitted that the only reason why the defendant had obtained a favourable decision in the Magistrates’ Court proceeding was because he lied in court and because they (being the plaintiffs) were absent from court. He personally did not participate in the Magistrates’ Court proceeding because he was not a party to the proceeding. He does not understand what a counterclaim is, and the unsuitable nature of the AMP loan was not discussed at the trial of the Magistrates’ Court proceeding.
Consideration
The submissions advanced by the plaintiffs evidence an almost complete lack of understanding of the bases upon which the defendant presses his application for summary dismissal of the proceeding. In particular, the plaintiffs do not appear to consider that the failure of Ms Ganesh to appear at the trial of the Magistrates’ Court proceeding, or at the hearing of the application for a re-hearing, is of any great significance. The plaintiffs appear to concede that while there are some differences between the statement of claim in the proceeding and the matters raised in Ms Ganesh’s defence in the Magistrates’ Court proceeding, the factual matters raised and the allegations made traversed the same ground.
However, it appears that the plaintiffs acknowledge that they need to amend their statement of claim to address the deficiencies identified by counsel in his written outline of submissions, in particular the plaintiffs’ failure to adequately plead how the defendant’s alleged breach of duty caused them to suffer loss, and how the quantum of that loss is calculated.
It is apparent from both the defence in the Magistrates’ Court proceeding and the statement of claim in this proceeding that Ms Ganesh was aware of the monetary jurisdictional limit of the Magistrates’ Court. Ordinarily, where a defendant to a debt claim in the Magistrates’ Court has a cross-claim against the plaintiff for an amount greater than $100,000, the defendant would file and serve a defence and counterclaim, and then apply to uplift the proceeding to this Court or to the County Court. The question here is whether the Ms Ganesh’s failure to do so has foreclosed the plaintiffs’ ability to bring their claims against the defendant. Further, the plaintiffs appear to be contending that Ms Ganesh’s conduct in failing to appear at the trial of the Magistrates’ Court proceeding, and failing to appear at her application for a re‑hearing, is excusable on the grounds of Ms Ganesh’s poor health. The question remains whether those circumstances justify allowing the plaintiffs to relitigate their claims against the defendant in this Court.
When a proceeding is brought which seeks to relitigate issues determined in an earlier proceeding, where the parties in the two proceedings are identical, the later proceeding may be dismissed or stayed on the grounds that the principles of res judicata (also known as cause of action estoppel), issue estoppel, or Anshun[11] estoppel apply. Alternatively, the later proceeding may be dismissed where none of the above apply, but the proceeding may otherwise be held to be an abuse of process. A party who is not a party to the earlier proceeding may also be barred from bringing claims with respect to the subject matter of the first proceeding where that party is a ‘privy’ of a party to the first proceeding, or where it is otherwise an abuse of process for the non‑party to seek to litigate the issues in the first proceeding in a subsequent proceeding. There are some differences in the legal underpinnings and operation of the above principles, but underlying each of them is the public interest in the finality of litigation.
[11]Port of Melbourne Authority v Anshun (1981) 147 CLR 589 (‘Anshun’).
A cause of action estoppel arises where the causes of action raised in the earlier proceeding have been the subject of final determination, such that the causes of action merge into the final judgment given in the first proceeding and no longer exist independently. There is limited scope for evaluative judgment in relation to whether the cause of action in a later proceeding has been extinguished by the earlier judgment. The current case is one of those relatively rare instances where there is some scope for debate, given that Ms Ganesh’s claims against the defendant were raised by way of defence to the defendant’s debt claim, rather than being advanced by way of a counterclaim.
An issue estoppel arises where the earlier proceeding has determined an issue necessary for the determination of the claims in the earlier proceeding. As stated by the Court of Appeal in Commissioner of State Revenue v Mondous:[12]
… the prior determination of an issue of fact or law legally indispensable to the decision is held to have disposed of the issue once and for all, so that it cannot be raised afterwards between the same parties or their privies.[13]
[12](2018) 55 VR 643, referring to Blair v Curran (1939) 62 CLR 464, 531 and Tomlinson v Ramsay Food Processing Pty Ltd (2015) 256 CLR 507, 517.
[13]Ibid [83].
An Anshun[14] estoppel may arise where a claim or issue could have been litigated in a previous proceeding, and should have been, but was not litigated in the earlier proceeding. The question of whether the claim or issue should have been litigated in the prior proceeding involves a consideration of the circumstances relevant to why the issue was not litigated in the prior proceeding, and as such, requires an evaluative judgment. The test is whether it was unreasonable for the party not to have raised the issue in the previous proceeding. Further, as stated by Kenny JA in Gibbs v Kinna:[15]
First, the cause of action must be one that could have been raised in the previous proceeding. … Secondly, it must appear that the same or substantially the same facts will arise for consideration in the second as in the first proceeding.[16]
[14](1981) 147 CLR 589
[15](1999) 2 VR 19, referred to in Angeleska v Victoria (’Angeleska’) (2015) 49 VR 131 at [194].
[16]Ibid [23].
As noted above, there may be cases which do not conveniently fall within the categories above, but where the re‑litigation of issues which arose in an earlier proceeding may be held to be an abuse of process. An authoritative statement of the position relevant to the current application is the following survey of the authorities by the Court of Appeal in Angeleska:[17] (omitting footnotes)
[17](2015) 49 VR 131.
It is not possible to formulate any strict rules that exhaustively describe when an abuse of process will be held to arise, and the categories of abuse of process are not closed. Nevertheless, in an often cited passage, McHugh J in Rogers v The Queen stated:
Inherent in every court of justice is the power to prevent its procedures being abused. Although the categories of abuse of procedure remain open, abuses of procedure usually fall into one of three categories: (1) the court’s procedures are invoked for an illegitimate purposes; (2) the use of the court’s procedures in unjustifiably oppressive to one of the parties; or (3) the use of the court’s procedures would bring the administration of justice into disrepute. Many, perhaps the majority of, cases of abuse of procedure arise from the institution of proceedings. But any procedural step in the course of proceedings that have been properly instituted is capable of being an abuse of the court’s process.
The authorities make it clear that abuse of process principles may be invoked to prevent the re‑litigation of cases which have been disposed of by previous proceedings. In this respect, there is a degree of conceptual overlap with the doctrine of Anshun estoppel. It is clear, however, that the Court’s power to prevent an abuse of its process can be exercised even where no estoppel arises. In Walton v Gardiner, Mason CJ, Deane and Dawson JJ stated:
The inherent jurisdiction of a superior court to stay its proceedings on grounds of abuse of process extends to all those categories of cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness. Thus, … proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings. The jurisdiction of a superior court in such a case was correctly described by Lord Diplock in Hunter v Chief Constable of the West Midlands Police as ‘the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people.
Accordingly, the Court need not conclude that Mrs Slaveska’s claims in respect of Incidents 5-10 would be barred by an Anshun estoppel in order to consider that the continuation of those claims would be an abuse of the Court’s process. Plainly, however, various considerations may inform both analyses.
The focus of an abuse of process analysis is ultimately the substance of proceedings, rather than their form. As a result, in appropriate circumstances, litigation may be regarded as an attempt at re‑litigation notwithstanding that it is brought by a different party to the earlier proceeding.
In such a case there must, however, be some relevant connection between the plaintiffs or other special factor rendering the attempted re‑litigation an abuse of process. This need not be a subjective intention to misuse the court’s procedures. In Batistatos v Roads and Traffic Authority (NSW), the High Court referred with approval to remarks of Deane J in Oceanic Sun Line Special Shipping Co Inc v Fay emphasising there was no ‘requirement that the continuance of the action would involve moral delinquency on the part of the plaintiff’. Rather, what was decisive was the objective effect of the continuation of the action.
In Kermani v Westpac Banking Corporation, Robson AJA stated:
The guiding considerations [in a re‑litigation type abuse of process analysis] are oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice. Regard may be had to:
(a)the importance of the issue in and to the earlier proceeding, including whether it is an evidentiary or ultimate issue;
(b)the opportunity available and taken to fully litigate the issue;
(c)the terms and finality of the findings as to the issue;
(d)the identity between the relevant issues in the two proceedings;
(e)any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceeding;
(f)the extent of the oppression and unfairness to the other party if the issue was re‑litigated and the impact of the re‑litigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and
(g)an overall balancing of justice to the alleged abuse against the matters supportive of abuse of process: Rippon v Chilcotin Pty Ltd.
The question, therefore, is whether it would be unjustifiably oppressive to the respondents or would otherwise bring the administration of justice into disrepute to allow Mrs Slaveska to maintain her claims in respect of Incidents 5-10 (subject to proper re‑pleading) given her significant involvement in her husband’s proceeding.[18]
[18]Ibid [154]-[159].
In Angeleska,[19] the Court of Appeal held that it was an abuse of process to allow the plaintiff from bringing a claim for personal injury against members of the police force arising out of incidents which were the subject of a previous proceeding. The applicant’s husband was the plaintiff in the previous proceeding. The applicant was intimately involved in the (very lengthy) trial of the previous proceeding, as she was the litigation guardian of her husband in that proceeding, and conducted the trial on behalf of her husband. The Court of Appeal found that her claims should be dismissed, on the basis that:
[19]Ibid.
(a) the issues in the proceeding brought by the applicant were substantially identical with those determined in the proceeding brought by her husband;
(b) it would be unfairly oppressive to the respondents, who were also the defendants in the first proceeding; and
(c) allowing the applicant to bring her claims would undermine the principle of finality in litigation so as to bring the administration of justice into dispute.
In my view, this proceeding is an abuse of process, at least insofar as it concerns the claims brought by Ms Ganesh. The matters raised by Ms Ganesh in the statement of claim, insofar as they concern the character of the advance, and the losses said to have been suffered by her as a result of the defendant’s alleged breach of duty were raised in her defence in the Magistrates’ Court proceeding, and could have been and should have been prosecuted in the Magistrates’ Court proceeding. Ms Ganesh’s claims traverse the same factual matters as those contained in her defence in the Magistrates’ Court proceeding. She chose not to attend the trial of the Magistrates’ Court proceeding, or her application for a rehearing. She could have brought a counterclaim seeking relief in relation to the allegations made by her in her defence, but chose not to do so. She could have appealed the decision in the Magistrates’ Court proceeding on a question of law, but chose not to do so.
Arguably, Ms Ganesh is precluded from asserting that she was not indebted to the defendant on the grounds of cause of action estoppel, as well as from pursuing her claims against the defendant for breach of duty, which were raised in her defence in the Magistrates’ Court proceeding. Her failure to attend the trial did not prevent the trial from proceeding, and final judgment being granted. The terms of the judgment implicitly amount to a dismissal of the claims in her defence, presumably on the basis that she advanced no evidence in support of those claims (although I note that the COSL report was in evidence before the learned magistrate).
It might also be arguable that no cause of action estoppel arises, or no issue estoppel arises with respect to her claims that the defendant breached his duty to her by reason of those issues being raised by way of defence, rather than by way of a counterclaim. However, given that she could have raised the allegations in the defence by way of counterclaim, the principles in Anshun[20] apply, as there is such a close connection between the allegations in the defence and her claims in this proceeding that it was unreasonable for her not to bring them by way of a counterclaim in the Magistrates’ Court proceeding. Alternatively, the bringing of her claims in this proceeding (including her claim that the judgment in favour of the defendant in the Magistrates’ Court proceeding ought to be set aside) is an abuse of process. Adopting the language of McHugh J in Rogers v The Queen,[21] by seeking to relitigate her claims in this proceeding, Ms Ganesh is engaging in conduct which would be unjustifiably oppressive to the defendant. Further, allowing those claims to be brought in this proceeding, given that Ms Ganesh has chosen not to participate in the Magistrates’ Court proceeding, or apply for leave to appeal the orders made in that proceeding, would bring the administration of justice into disrepute.
[20](1981) 147 CLR 589.
[21](1994) 181 CLR 251.
That the quantum of Ms Ganesh’s claims in the Magistrates’ Court proceeding exceeded the monetary jurisdictional limit of the Magistrates’ Court does not provide an answer to the defendant’s application for summary judgement. As noted in paragraph 49 above, there is a process by which those claims could have been transferred to an appropriate court. Secondly, while Ms Ganesh has repeatedly asserted that her health problems have hampered her ability to deal with the Magistrates’ Court proceeding, she has provided no details of these problems or any evidence to support her contentions in that regard. I appreciate that she has the care of a disabled son to attend to, and her family has faced financial turbulence in recent years, but I note that these difficulties have not prevented her from pursuing further education, pursuing investment opportunities, dealing with COSL, and bringing her claims in this proceeding.
For completeness, I do not consider that Ms Ganesh’s status as a self-represented litigant alters the position. First, the question of whether the judgment in the Magistrates’ Court proceeding creates an estoppel (either a cause of action estoppel or an issue estoppel) preventing Ms Ganesh from re-litigating the issues in the Magistrates’ Court proceeding does not invite consideration of any discretionary matters. Rather, it requires a comparative analysis of the claims in this proceeding and the Magistrates’ Court proceeding. Even if no estoppel applies, the interests of others are to be taken into account when determining whether an action is an abuse of process, namely, the interest of the defendant in not being vexed again by the same claim, and the public interest in the finality of litigation. That Ms Ganesh is self-represented does not affect the weight to be given to those interests.
Further, while Ms Ganesh does not necessarily understand complex legal issues, she has shown herself to be quite capable of navigating court procedure and preparing comprehensive court documents. She understood at the time of filing her defence that she had claims against the defendants, and that her estimate of the value of those claims exceeded the jurisdiction of the Magistrates’ Court. However, for whatever reason, she chose not to press those claims at that time, either in the Magistrates’ Court or in another court.
As such, Ms Ganesh’s only avenue of relief is to seek leave to appeal the decision in the Magistrates’ Court proceeding on a question of law. It is not appropriate in the current circumstances to speculate as to what questions of law Ms Ganesh would raise in any Notice of Appeal, or to speculate as to whether she would be given leave to appeal out of time (noting that ‘exceptional circumstances’ are required for an extension of time to be granted). However, if she were to be granted leave, and her appeal against the decision in the Magistrates’ Court were to be successful, the most likely course of events would be that the proceeding would be remitted to the Magistrates’ Court to in effect, start again. Depending upon the terms of the remitter, it might then be possible for Ms Ganesh to apply to bring a counterclaim (noting that the time limits under the relevant court rules have no doubt long expired), and, if successful, apply to uplift the proceeding to this Court or the County Court should she seek damages in excess of the jurisdictional limit of the Magistrates’ Court. Accordingly, while Ms Ganesh faces a number of hurdles in seeking to regularise her claims against the defendant, it is not impossible for her to do so. However, the defendant should have judgment in his favour in relation to her claims in this proceeding.
For completeness, I do not consider this to be an appropriate occasion for the exercise of the Court’s discretion under s 64 of the CPA. As noted above, Ms Ganesh has not yet exhausted the remedies available to her with respect to the decision in the Magistrates’ Court proceeding.
However, the position is different with respect to Mr Radhakrishnan. While his claims against the defendant arise out of the same transaction (at least in general terms) which was the subject of the Magistrates’ Court proceeding, being the procurement of the AMP loan to complete the purchase of the Sturt Street property, Mr Radhakrishnan’s claims against the defendant are quite distinct from those brought by Ms Ganesh. He was not the recipient of the advance, which was the subject of the judgment debt on the Magistrates’ Court proceeding, so the question of whether a loan agreement was actually made between Ms Ganesh and the defendant does not concern him, at least in a legal sense. Secondly, while it is not entirely clear how it is said that the conduct of the defendant caused the losses claimed by him, it is significant that those losses are different than those said to have been suffered by Ms Ganesh, as they are said to arise out of the forced sale of properties of which he was the sole proprietor. Thirdly, Mr Radhakrishnan was not a party to the Magistrates’ Court proceeding. While he is the husband of Ms Ganesh, the existence of a marital relationship between them of itself is insufficient to lead to a conclusion that the determination of the issues in the Magistrates’ Court proceeding binds him as well.
The test for determining whether one party is the privy of another for the purpose of determining whether that party is estopped from re-litigating issues in a prior proceeding to which the alleged privy was not a party was the subject of consideration by the High Court in Tomlinson v Ramsey Food Processing Pty Ltd.[22]
[A] party to a later proceeding ("A") can be privy in interest with a party to an earlier proceeding ("B") on either of two bases. One basis is that A might have had some legal interest in the outcome of the earlier proceeding which was represented by B, or that B has some legal interest in the outcome of the later proceeding which is represented by A. The extent to which the representation by A or B will be sufficient to bind the other is the critical issue which will be explored later in these reasons. The other basis is that, after that earlier proceeding was concluded by judgment, A might have acquired from B some legal interest in respect of which B would be affected by an estoppel which A then relies on in the later proceeding.[23]
[22](2015) 256 CLR 507.
[23]Ibid [33].
The authorities provide that the relevant interest must be a legal interest, not an economic interest.[24] Further, one party may be a privy of another by reason of the relationship between them, such as agent and principal. Generally, the courts are reluctant to bind a non-party to a decision in an earlier proceeding unless the non-party had some degree of control over the conduct of the previous proceeding, or where the party whose interests were being represented in the earlier litigation authorised the conduct of that party.[25] Simply because parties are husband and wife does not, without more, mean they are privies of each other.
[24]Ibid [35].
[25]See Angeleska (2015) 49 VR 131; UBS AG v Tyre (2016) 360 ALR 184; Commissioner of State Revenue v Mondous (2018) 55 VR 643.
In my view, Mr Radhakrishnan was not the privy of Ms Ganesh for the purpose of determining whether he was bound by the decision in the Magistrates’ Court proceeding. As noted above, he was not a party to the alleged loan between her and the defendant. He was the co-borrower of the AMP loan, but the properties over which the AMP Loan was secured were owned by them separately. While there was no evidence that he did not have control or authorise the manner in which Ms Ganesh conducted the Magistrates’ Court proceeding, there is no evidence that he did control or authorise Ms Ganesh’s conduct. Given that the onus of establishing any estoppel rests with the defendant, the absence of such evidence (given that Mr Radhakrishnan is not legally represented) is not conclusive.
The considerations referred to above are also relevant to the determination of the question of whether, by bringing his claims in this proceeding regarding the defendant’s alleged breach of duty, Mr Radhakrishnan is engaging in an abuse of process, such that summary judgment ought to be granted in favour of the defendant.
In my view, while there is an overlap in the factual matters alleged by Mr Radhakrishnan claims in this proceeding and the matters raised by Ms Ganesh in her defence, Mr Radhakrishnan is not engaging in an abuse of process by raising his claims in this proceeding. The position in the current case can be distinguished from the circumstances considered by the Court of Appeal in Angeleska.[26] First, while there is a factual overlap between the claims in this proceeding and the Magistrates’ Court proceeding, there are some material differences. First, Mr Radhakrishnan does not, and cannot seek to set aside the judgment in the Magistrates’ Court proceeding. Secondly, a substantial complaint made by Ms Ganesh is that the defendant arranged for her to be liable under the AMP loan (which refinanced Mr Radhakrishnan’s properties as well as providing funding for the completion of the purchase of the Sturt Street property) when she had no income. While the defendant may have treated the couple as an indivisible unit, an assessment of whether the defendant breached his duty to Mr Radhakrishnan necessitates a review of Mr Radhakrishnan’s personal financial circumstances, not Ms Ganesh’s personal financial circumstances.
[26](2015) 49 VR 131.
Accordingly, Mr Radhakrishnan’s position in the current case can be distinguished from the position of the applicant in Angeleska.[27] There, the Court of Appeal found that there was a substantial identity of issues between the proceeding brought by the applicant and the earlier proceeding brought by her husband. The Court noted:
….the Court in her proceeding would at a minimum need to reach a number of factual conclusions with respect to each incident that are inconsistent with findings made in her husband’s proceeding.[28]
[27]Ibid.
[28]Ibid, [161].
In the current case, there were no factual findings made in the Magistrates’ Court proceeding which concern the claims advanced by Mr Radhakrishnan in this proceeding. While the grant of judgment in the Magistrates’ Court proceeding amounted to an implied rejection of Ms Ganesh’s defence, those matters were not ventilated at trial, by reason of Ms Ganesh’s absence. The only express factual finding made in the Magistrates’ Court proceeding was that Ms Ganesh was indebted to the defendant for the balance of the advance, which does not concern Mr Radhakrishnan.
The question of oppression was also relevant to the decision in Angeleska.[29] I accept that the defendant no doubt feels unduly oppressed by the conduct of the plaintiffs in bringing this proceeding, especially given that the relevant events occurred over eight years ago. But in Angeleska[30], the defendants had been subjected to a 115 day trial in the proceeding brought by the applicant’s husband, where they were accused of violence and corruption, and of conspiring to destroy her husband’s business and reputation, and even to kill him. In the current case, all that the defendant was required to do was to participate in an undefended trial.
[29]Ibid.
[30]Ibid.
Finally, the Court of Appeal in Angeleska[31] considered that allowing the applicant to re-litigate the issues determined in her husband’s proceeding would so undermine the principle of finality so as to bring the administration of justice into disrepute because of the intimate involvement of the applicant in her husband’s proceeding. She was his McKenzie friend, his litigation guardian, a witness, and she conducted the trial on behalf of her husband. There is no evidence as to whether Mr Radhakrishnan had any involvement in the Magistrates’ Court proceeding.
[31]Ibid.
Conclusion
Accordingly, I will grant summary judgment in favour of the defendant against Ms Ganesh, but not against Mr Radhakrishnan. However, I accept the criticisms of counsel for the defendant that the statement of claim fails to adequately plead the causal link between the defendant’s alleged breach of duty and the losses said to have been suffered by Mr Radhakrishnan, and fails to provide sufficient details of the relevant transactions to enable the defendant to establish when Mr Radhakrishnan suffered any loss.
I propose to make the following orders:
(a) the statement of claim filed 9 January 2019 be struck out;
(b) there be judgment in favour of the defendant with respect to the claims of the first plaintiff;
(c) the defendant’s application for summary judgment against the second plaintiff is refused, without prejudice to the defendant’s right to bring a fresh application for summary judgment;
(d) the second plaintiff have leave to file an amended statement of claim, to be filed and served by 4.00pm on 23 October 2019, without prejudice to the defendant’s right to bring a further strike out application; and
(e) the proceeding be listed for directions before Judicial Registrar Clayton on a date to be fixed not before 11 November 2019.
I shall hear further from the parties on the question of costs.
3
5
0