Idoport Pty Ltd v National Australia Bank Ltd & Anor

[2006] HCATrans 673

[2006] HCATrans 673

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S270 of 2006

B e t w e e n -

IDOPORT PTY LIMITED

Applicant

and

NATIONAL AUSTRALIA BANK LIMITED

First Respondent

NATIONAL MARKETS GROUP LIMITED

Second Respondent

Application for special leave to appeal

GUMMOW J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 8 DECEMBER 2006, AT 9.33 AM

Copyright in the High Court of Australia

MR B.W. WALKER, SC:   May it please the Court, I appear with MR J.H. STEPHENSON for the applicant.  (instructed by Sarvaas Ciappara)

MR J.T. GLEESON, SC:   May it please the Court, I appear with MR R.A. DICK for the respondent.  (instructed by Freehills)

GUMMOW J:   Yes, Mr Walker.

MR WALKER:   Your Honours, this application presents as a candidate for special leave a point with the following characteristics.  It concerns, as between the parties, a matter potentially of considerable commercial import. Your Honours have seen the almost staggering figures in the materials, a figure of something like 29 billion seemed to be the ambition of those who pleaded the main proceedings, but rather more concretely, as we speak now, 63 million was a claim by those seeking a lump sum costs order.

GUMMOW J:   There used to be a suggestion 30 years ago that big sums of money were enough to get your special leave.  I am not sure that is true any more.

MR WALKER:   That is not my suggestion.  May I come immediately to the dark side of that first characteristic, namely, that as you might expect, and as the history very briefly narrated in the application book makes good, there are barrow loads of paper in the case which would ordinarily be enough for your Honours to stop listening.

However, by the time this point is raised here, against that background of massive scale and forensic effort, the points now presented about all of that come down to the extremely focused question where there is either no or virtually no point of interpretation to be argued in this Court about three sets of pleadings and claims for relief and then only in isolated portions, all of which are contained in the materials set out in the reasons for judgment against us in the courts below and of course, the critical order about which there is no dispute concerning the power for it to have been made or the propriety of it being made in the terms in which it was made.

GUMMOW J:   It comes down to construction of the order, does it not?

MR WALKER:   It comes down to construction ‑ ‑ ‑

GUMMOW J:   In the sense that you cannot win without upsetting the construction placed on the order.

MR WALKER:   That is exactly right.  So that the point comes down to whether or not the order which is conveniently printed at page 16 of the application book, lines 46 and following, with the critical phrase being as follows:

concerning any cause of action or the whole or any part of any claim for relief by it –

Now, that phrase – as I say, there is virtually no point of interpretation about what I will call the propriety of such an order being made in those terms.  That is not an issue between the parties.  It is accepted that that is an order properly founded on the jurisdiction which stems from that aspect of the rule against being twice vexed which specially comes when great costs have been incurred in what I will call abortive proceedings shown in the dicta set out on pages 12 and 13 of the application book.  Lord Justice Cotton quoted from Martin v Earl Beauchamp at line 35.  We would emphasise the expression “for the same matter”.  Lord Herschell in James M’Cabe v Bank of Ireland ‑ ‑ ‑

GUMMOW J:   Well, “matter” can mean more than proceedings, we constitutional lawyers know perfectly well.

MR WALKER:   Absolutely, and with respect to his Honour when the order was originally made appropriately captured by the language of “cause of action” and “claim for relief”.  The next characteristic the point has in my attempt to persuade your Honours this is apt for special leave, is that these circumstances have combined against us hitherto but for this Court’s intervention and overturning it to prevent us for bringing claims for causes of action which did not exist at the following times.

They did not exist at the times the main proceedings or the MLC proceedings were commenced.  They did not exist, in some measure, at the time of the dismissal and to the extent that they did exist at the time of the dismissal and were included in the MLC proceedings we know that the MLC proceedings costs have been paid in recognition, on my side of the record, of the import of these orders.

Can I remind your Honours of the relationship between the main proceedings and the MLC proceedings which one finds summarised on page 13 of the application book in Justice Bergin’s reasons at first instance.  In her paragraph 16 her Honour points out at about line 32 or so in relation to:

The MLC proceedings sought . . . the payment of Performance Bonuses in respect of the revenue of additional “operating entities” -

which is a key term –

named in the pleading, which had become part of the subsidiaries of the defendants after the commencement of the Main Proceedings.

Your Honours, it is for those reasons that – about things which are manifestly very important to the parties – that is not enough, obviously, but it is ‑ ‑ ‑

GUMMOW J:   Where do we find the core of the Court of Appeal’s reasoning on this construction point, particularly what you say is the curiosity that it barred then as yet unaccrued actions.

MR WALKER:   If one goes to page 73 of the application book – I query whether this is core but that is where the matter seems to be decided.  In paragraph 80 there is a reference to an argument concerning what is called:

the substance of the appellant’s claim in each set of proceedings –

We obviously submit that error begins to intrude when one moves away from what the order requires in terms of cause of action and claim for relief.  Paragraphs 81 and 82 continue that approach.  When one gets to paragraph 83 that which may well be the decisive matter against us is mentioned, namely, “a declaration” to cover future matters.

Our simple point of course is that that declaration as to the future does not decide a cause of action which has not accrued and which may accrue in the future any more than an issue estoppel to which the declaration in fact would add nothing, any more than an issue estoppel concerning the existence and meaning of the consulting agreement would embark upon determination of a cause of action which had not yet accrued.

GUMMOW J:   What do you say about Mr Gleeson’s point on page 111 about line 28, paragraph 15:

Neither the Judgment of the Court of Appeal nor the barring order operates to “shut out” the applicant . . . The Judgment merely confirms that the applicant must first pay the respondents’ costs of the Main Proceedings.

MR WALKER:   That it only tells part, not even half the story.  One has to ask, in that argument what is it that we are being reassured we are not being barred from doing.  What it is we are being barred from doing in this case, in what have been called the present proceedings, is asserting causes of action for discrete financial sums accruing from time to time pursuant to conduct which occurs from time to time.

We are being shut out from litigating them because we have not paid the costs of unsuccessful litigation of different causes of action arising from different conduct being adjudged in different circumstances where the software at the heart of all of this no doubt could be in different mutations.  So when it is said we are not shut out, it is being said that the tariff to run a case concerning different causes of action includes the costs of not having been able to conclude by reason of a failure to supply ordered security for costs proceedings for other and earlier courses of action.

In short, my friend’s argument amounts only to saying this.  There is not a permanent or unconditional bar on the present proceedings.  All you have to do is to pay the costs for the past proceedings and, in our submission, when one considers the costs being paid are not costs for having raised previously the same claim as you now wish to raise – that is what I call the aspect of the twice vexed – the rule against being twice vexed which lies at the heart of this salutary power of a superior court – we, rather, are being barred for not having paid the costs of claims which will not be advanced in the proceedings for which the tariff is being required.

I stress, our point is not one to complain about the existence of the jurisdiction, not a syllable to be uttered against it, or this all being now water under the bridge, the exercise of the discretion against us under that power in this case, nor as to the meaning which it has.  Rather, we say, that by no stretch of the imagination can the word “concerning”, which is an important word in the reasoning at both levels below in this case, transform the cause of action identity which the order bespeaks so as to allow non‑identity

We have given examples which are perhaps deliberately removed from the particular commercial circumstances of this case to illustrate just how fundamentally wrong, in our submission, it is to regard the present proceedings cause of actions as being presented in a claim concerning the causes of action asserted in the main proceedings.  One may imagine a long, perhaps a 99‑year lease, under which there is early litigated and in vain, perhaps for the same circumstances as existed in this case, namely, failure to be able to comply with the security for costs order, questions concerning the interpretation of covenants between landlord and tenant as to who bears responsibility for repairs, for example.

Fifteen or 20 or 35 years later and the rule, as we know, applying to successors in title, a claim is made of a relatively straightforward kind for a simple instance of waste by the landlord, for example.  It is clear from the reasoning against us below that if an order were pronounced in the terms in those early landlord/tenant aborted proceedings then the later proceeding would be one which could not be entertained but for paying that high tariff. 

Furthermore, that would be a well‑known fact. Furthermore, that then becomes an entirely artificial, and in our submission, alien to the law notion of the risk allocation understood between landlord and tenant to continue throughout their relationship as to whether one can or should risk breaching a covenant.

The relative impunity which is given, for example, to a landlord in the example I have invented is an extraordinary reversal of what one would ordinarily understand to be the allocation of risk, in terms of financial burden, for breaching covenants.

HEYDON J:   Mr Walker, the original proceedings and the proceedings you want to go on with call for a construction of the same terms of the consulting agreement, do they not?

MR WALKER:   Unquestionably.

HEYDON J:   And they call for the performance – both of them seek payment of performance bonuses under the agreement.

MR WALKER:   Unquestionably.  The same terms are involved, yes, your Honour.

HEYDON J:   And this common issue exists - is a system developed without the use of the Ausmaq Service, a system of similar and equivalent functionality?

MR WALKER:   There may well be commonality.  It depends on the facts as they come out in the present proceedings, of course, which have not got anywhere, but your Honour may proceed on the basis that that is not an inappropriate way of seeing the potential similarity.

HEYDON J:   The difference seems to turn on new operating entities.

MR WALKER:   Yes.  That is one of the – and, also, new circumstances and conduct, but that new operating entities is one of them.  As your Honour has gathered, for example, that is one of the explanations I think to be understood from the record about why the MLC proceedings were commenced separately.

HEYDON J:   Concerning a cause of action or concerning the whole or part of any claim for relief in the original proceedings?

MR WALKER:   Yes.

HEYDON J:   Why do not the circumstances “we agree on” fit within the words “concerning any cause of action” or “concerning part of the claim for relief”?

MR WALKER:   Because what that word introduces in the phrase is a matter, namely, “cause of action” which – I should not have said “matter”.

GUMMOW J:   No, that is a dangerous word for you.

MR WALKER:   I withdraw that. It introduces a concept, cause of action, which is, we submit, intractable in its meaning in the context of an order which, after all, has the effect of reversing the usual course which is a court is there without the exercise of a discretion simply to hear cases within its jurisdiction.  That is the plank against which we rest for the whole of our argument about how the error, as we submit it is, has been committed below, that this is an order to be interpreted against the expectation and requirement in our system that courts hear cases within their jurisdiction.

So, one asks whether a cause of action in relation to the conduct of – I will call them putative operating entities – we have to prove they are operating entities, of course - which were not conducting themselves, obviously, in the way that we now want to allege in the present proceedings at the time of the main proceedings, whether the claim with respect to their conduct is the same cause of action as the causes of action raised in the main proceedings.

The answer to that, on any analysis, is no, they are not the same cause of action.  So then comes the really important aspect of the way in which we have lost below.  Does the word “concerning” shift away from the simplicity of that analysis, the simplicity which, in our submission, is a virtue of our argument, namely, it says you cannot have two goes at the same cause of action without paying the costs of your first abortive attempt.

GUMMOW J:   Or, alternatively, you cannot go on in a different procedural structure because of corporate entities reagitating what is at the heart of the relevant cause of action, namely this agreement that Justice Heydon has been taking up with you, and enough is enough unless costs are paid.

MR WALKER:   If I may try and address your Honour’s questions and Justice Heydon’s question at the same time, the word “concerning” is not one with any of the nuances of meaning that you can give it, including in this context, one which can possibly be seen to change the identity of the cause of action which is the word introducing it.  “Concerning” is not a word that says resembling.

GUMMOW J:   In conveyance it is very broad term, actually.

MR WALKER:   Yes.  And in many contexts it is a very broad term of connection but if proceedings are to concern “a cause of action” they must, in our submission, in some way raise or rely on it.  That is what proceedings do with respect to causes of action.  The relation between proceedings and causes of action is integral to the concept of each and, in our submission, that connective cannot be used so as to include, for example, the connection between cause of action A and cause of action B where had cause of action A been litigated to a finish, matters would have arisen by way of issue estoppel which could be availed of in the advancement of cause of action B.

That is a connection which is one which of its nature bespeaks a distinction between the two causes of action.  The issue estoppel arises precisely because there has not been a merger of cause of action B in the judgment on cause of action A, which bespeaks their difference.  Because they are different, in our submission, one cannot say that proceedings for cause of action B are those which concern cause of action A.

Now, in this context, in particular, there are no issue estoppels so the barrier to our being able to litigate in the main proceedings is one which has been raised notwithstanding no one has the benefit of issue estoppels arising from the main proceedings.

It is for those reasons, in our submission, that against the general or primary requirement that courts not pick and choose the litigation that they must entertain, but deal with them, whether on the merits or peremptorily within the powers given to courts to protect themselves or defendants is a matter for each case and from time to time.

HEYDON J:   If you had failed to get the declaration sought in the main proceedings you would not be able under the general law, would you, to start a separate action seeking to recover the sums as they fell due in respect of matters that collide, as it were, with the ‑ ‑ ‑

MR WALKER:   Failure to get that declaration may well be supposed to be possible on grounds which would itself constitute an issue estoppel of that kind, but it could be refused on discretionary grounds such as the fact that it completely lacks utility.

HEYDON J:   It would depend on the grounds.

MR WALKER:   Yes.  I see the time, your Honour.

GUMMOW J:   Thank you, Mr Walker.  We do not need to call on you, Mr Gleeson.

The determination of any appeal to this Court would turn upon the construction of an order of the Supreme Court of New South Wales which is set out at paragraph 16 of the application book.  We are not satisfied that there are sufficient prospects of success in demonstrating error in the construction of that order later placed upon it by Justice Bergin and then by the New South Wales Court of Appeal.  Accordingly, the application for special leave to appeal is refused with costs. 

We will now adjourn to reconstitute.

AT 9.55 AM THE MATTER WAS CONCLUDED