James v Merryweather

Case •

[2021] NSWSC 387

•

16 April 2021

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: James v Merryweather [2021] NSWSC 387
Hearing dates: 22 March 2021
Date of orders: 16 April 2021
Decision date: 16 April 2021
Jurisdiction:Common Law
Before: Harrison AsJ
Decision:

The Court orders that:

(1) The plaintiff’s proceedings are dismissed.

(2) The plaintiff is to pay the defendants’ costs on an ordinary basis.

Catchwords:

PRACTICE AND PROCEDURE — Application for summary dismissal — Abuse of process — Res judicata — Where the plaintiff’s rights are merged with a prior consent judgment — Application granted

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW) r 13.4

Cases Cited:

Australia and New Zealand Banking Group Limited v James (No 3) [2019] NSWSC 832

Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502

General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1965] ALR 636; [1964] HCA 69

James v Australia and New Zealand Banking Group Ltd [2020] NSWCA 101

James v Australia and New Zealand Banking Group Ltd (2018) 97 NSWLR 663; [2018] NSWCA 41

James v Australia and New Zealand Banking Group Ltd (No 2) [2017] NSWSC 216

Land Enviro Corp Pty Ltd v HTT Huntley Heritage Pty Ltd (2008) 72 NSWLR 160

Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; (2015) 323 ALR 1

Trustees for the Roman Catholic Church for the Diocese of Bathurst v Hine [2016] NSWCA 213

Category:Procedural rulings
Parties: David Anthony James (Plaintiff)
Paul Merryweather and Greg Hall both in their personal capacities and their capacities as Receivers and Managers of each TLR Nominees Pty Ltd (in liq) and Newcastle Liquor Wholesalers Pty Ltd (in Liq) (Defendants)
Representation:

Counsel:
Self-represented (Plaintiff)
K. Boyd (Defendants)

Solicitors:
Self-represented (Plaintiff)
Allens (Defendants)
File Number(s): 2019/258383
Publication restriction: Nil

Judgment

  1. HER HONOUR: By notice of motion filed 24 July 2020, the defendants seek an order pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) that these proceedings commenced by the plaintiff on 19 August 2019 be summarily dismissed on the basis of res judicata.

  2. The plaintiff is David Anthony James. The defendants are Paul Merryweather and Greg Hall, both sued in their personal capacities and as Receivers and Managers of Price Waterhouse Coopers (“PWC”) in relation to TLR Nominees Pty Ltd (in liq) and Newcastle Liquor Wholesalers Pty Ltd (in liq).

  3. The plaintiff relied upon his two affidavits dated 24 September 2020 and 26 October 2020 in respect of the summary dismissal motion. The defendants relied upon two affidavits of their solicitor, Przemyslaw Kucharski, affirmed 24 July 2020 and 2 October 2020. Both parties have provided written submissions and relied upon a court book at the hearing of this motion. The plaintiff was self-represented. He was articulate and intelligent, and his submissions were written with clarity. The defendants were represented by Ms Boyd of counsel.

  4. The defendants seek to have these proceedings (the “2019 proceedings”) dismissed on the basis that Mr James sought to litigate in separate proceedings commenced in 2016 (the “2016 proceedings”), which they say litigated essentially the same case. Mr James opposes the orders sought on the basis that in the 2019 proceedings he is a natural person and is suing the defendants in their personal capacities. It is his case that under these circumstances the doctrine of res judicata does not apply.

Background

  1. Prior to 2013, the plaintiff was associated with a number of corporate entities, which were primarily in the business of producing and selling wine. A number of those companies banked with and provided security to Australia and New Zealand Banking Group Ltd (“ANZ”) (together, the “ANZ Companies”) and Robobank. Robobank is not involved with these current proceedings.

  2. On 19 August 2013, the defendants in these current proceedings were appointed by ANZ as joint and several receivers and managers (the “ANZ Receivers”) of the following companies associated with the plaintiff (together, “the Companies”):

  • TLT Nominees Pty Ltd ACN 133 250 307 (in liq) (Receivers and Managers Appointed);

  • Print National Nominees Pty Ltd ACN 098 730 431 (in liq) (Receivers and Managers Appointed);

  • James Australia Group Pty Limited ACN 000 975 191 (in liq) (Receivers and Managers Appointed);

  • Newcastle Liquor Wholesalers Pty Ltd ACN 135 338 635 (in liq) (Receivers and Managers Appointed); and

  • Rugama Trading Pty Ltd ACN 135 068 147 (in liq) (Receivers and Managers Appointed).

  1. Mr James had entered into a number of loan agreements in relation to TLT Nominees, Print National Nominees, James Australia Group and Liquor National Wholesale (together, the “ANZ Borrowers”). He had also entered into a number of written guarantees with the Companies in favour of ANZ, under which Mr James personally guaranteed to ANZ the repayment of moneys from time to time owing to ANZ by the ANZ Borrowers.

The law

  1. The Court has power pursuant to UCPR 13.4(1) to dismiss proceedings generally, or in relation to any claim, in three circumstances: if the proceedings are frivolous or vexatious, if no reasonable cause of action is disclosed or if the proceedings are an abuse of the process of the Court.

  2. The test for summary dismissal is well known. It is set out in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1965] ALR 636; [1964] HCA 69 per Barwick CJ at 129.

  3. In Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; (2015) 323 ALR 1 (“Tomlinson”) (per French CJ, Bell, Gageler and Keane JJ) at [20]-[26] the High Court explained res judicata, issue estoppel and Anshun estoppel as follows:

  1. at [20], their Honours referred to a final judgment quelling the controversy between the persons involved, with the rights and obligations in controversy ceasing to have an independent existence and merging in the final judgment, equating to a res judicata in the strict sense;

  2. at [22], their Honours explained the forms of estoppel that have been recognised as having the potential to result from the rendering of a final judgment in adversarial proceedings, including:

  1. “cause of action estoppel” (also referred to as claims estoppel), which operates to preclude “assertion in a subsequent proceeding of a claim to a right or obligation which was asserted in the proceedings and which was determined by the judgment”;

  2. issue estoppel, which operates to preclude the raising in a subsequent proceeding of an ultimate issue of fact or law which was necessarily resolved as a step in reaching the determination made in the judgment. Their Honours said that the classic expression of the primary consequence of its operation was that a “judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies”; and

  3. Anshun estoppel, which operates to preclude the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding; and

  1. specifically, in Tomlinson at [25]-[26], the plurality explained the concept of abuse of process as follows:

“[25] Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court’s procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel.

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

  1. These principles apply to judgments and orders made by consent: see Trustees for the Roman Catholic Church for the Diocese of Bathurst v Hine [2016] NSWCA 213 at [23] per Meagher JA (with whom Leeming and Simpson JJA agreed), citing Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 508; Land Enviro Corp Pty Ltd v HTT Huntley Heritage Pty Ltd (2008) 72 NSWLR 160 at [63]; James v Australia and New Zealand Banking Group Ltd (No 2) [2017] NSWSC 216 (“James (No 2)”) at [33]; James v Australia and New Zealand Banking Group Ltd (2018) 97 NSWLR 663; [2018] NSWCA 41 (“James (No 2) Appeal”).

The guarantee proceedings and consent judgment

  1. On 19 August 2013, ANZ commenced proceedings 2013/306563 against Mr James as defendant.

  2. On 16 May 2014, a consent judgment was entered against Mr James in favour of ANZ in the guarantee proceedings in the amount of $13,928,818.66 in respect of his liability to ANZ under guarantees that he gave concerning the companies (the “consent judgment”). Mr James was legally represented when the consent judgment was entered.

  3. After the consent judgment was entered, the PWC Receivers made distributions to ANZ from their realisations in the amount of $2,177,211.93. ANZ asserts that the total amount still owed by Mr James pursuant to the consent judgment is $11,751,606.73 (plus interest and costs).

Two later judgments

  1. Since consent judgment was entered, there have been two judgments that are relevant to this application. The first concerns the 2016 proceedings and the other concerns an attempt to set aside the consent judgment. It is necessary that I briefly set out both of those judgments.

The 2016 proceedings

  1. In the 2016 proceedings, Mr James as first plaintiff, together with the Companies and their liquidators as second plaintiff, commenced proceedings 2016/44772 against ANZ bank as first defendant and Newcastle Liquor Wholesalers Pty Ltd (Receivers and Managers Appointed) (in liq) as second defendant.

  2. On 17 October 2016, Mr James filed a notice of motion seeking leave to amend a statement of claim so as to bring personal claims against ANZ and the PWC Receivers. The proposed amended commercial list statement centred upon Mr James’ liability to ANZ in respect of guarantees he gave ANZ concerning the borrowings of the companies.

  3. In his proposed amended commercial list statement, under the heading “Discharge of Guarantees”, Mr James alleged:

“…

  1. by reason of the unauthorised taking into possession by the receivers of the stock, plant and equipment of the Other Companies, they were ‘unable to continue operating and, in effect, collapsed’;

  2. as a consequence, the loans by Mr James to the Other Companies ‘were made valueless’ and the value of his shareholding in the Other Companies was ‘reduced to nil’;

  3. but for the unauthorised conduct of the receivers, Mr James’s loans and shareholdings would have been assets available to be realised by him to meet his liability to ANZ under the guarantees;

…”

  1. Mr James also raised allegations of sale at an undervalue and breach of duty as an equitable defence. As a surety, he had the right to raise an alleged wrongful exercise of a mortgagee’s power of sale as a defence by way of set-off against the claim by the mortgagee under a guarantee of the mortgage.

  2. In considering the 2016 proceedings in James (No 2), Stevenson J at [29]-[31] dealt with the topic of res judicata. On this topic, his Honour stated:

“Res judicata

[29] Mr Jackman SC, who appeared with Mr Foreman for ANZ and the receivers, submitted that an ‘insurmountable impediment’ standing in the way of Mr James obtaining the leave he seeks is the judgment of 16 May 2014.

[30] Mr Jackman submitted that Mr James’s rights under the guarantee have merged with the judgment and the present application is precluded by the doctrine of res judicata and, for that reason alone, leave to amend should be refused.

[31] Mr Jackman further submitted that the claim is also precluded by the doctrines of issue estoppel, Anshun estoppel and abuse of process.”

  1. Stevenson J referred to Tomlinson, as set out earlier in this judgment. His Honour then stated that the “matter [came] down to” whether a guarantor against whom judgment is entered under the guarantee (whether by consent or otherwise) contended in later proceedings that his or her liability under the guarantee and the judgment had been “discharged” by reason of:

  1. events occurring prior to the judgment which would otherwise have given rise to an equitable set-off between him or her and the creditor or to have discharged the guarantor from liability (the impeachment of title claim); or

  2. events occurring after judgment which would otherwise have entitled the principal debtor, and thus the guarantor, to an equitable set-off or to otherwise be brought to account (James (No 2) at [34]-[35]).

  1. At [36]-[42], his Honour concluded:

“[36] In my opinion, the answer to both of these questions is ‘no’ and that Mr James should be refused the leave he seeks on that basis alone.

[37] Mr James’s ‘rights and obligations’ (see Tomlinson at [32] above) under the guarantees have merged in the judgment. Mr James cannot now be ‘discharged’ from any obligation under the guarantees because he no longer has any obligation under the guarantees from which he could be discharged: those obligations have merged in the judgment.

[38] Inherent in each of the Impeachment of Title Claim and the Sale at Undervalue Claim is the proposition that Mr James is entitled in equity to set-off against his liability under the guarantees the damage he claims he has suffered by reason of the alleged events.

[39] Such right as Mr James had to make such a claim is also now merged in the judgment to which he consented.

[40] I see no basis upon which any of these matters could have the effect of discharging the judgment itself.

[41] In my opinion, these matters are a complete answer to the claims that Mr James seeks to propound.

[42] It is in those circumstances unnecessary to consider whether Mr Jackman’s subsidiary arguments (issue estoppel, Anshun estoppel or abuse of process) take the matter any further.”

  1. The result was that his Honour dismissed Mr James’ application to amend the commercial list summons. The statement was dismissed with costs.

  2. In James (No 2) Appeal, the Court of Appeal (per Mcfarlan, Leeming JJA and Sackville AJA) dismissed an appeal by Mr James from Stevenson J’s decision in James (No 2).

  3. In James (No 2) Appeal at [38], Mcfarlan JA stated:

“[38] Once final judgment is entered, as it was against Mr James in the present case, the rights and liabilities of the parties are merged in and subsumed by the judgment. In the case of an action on a guarantee, the rights of the creditor and guarantor are converted into the rights of a judgment creditor and a judgment debtor respectively. This means that rights which the judgment debtor may have had in its capacity as guarantor are no longer available to it to raise in opposition to enforcement of the judgment. The judgment debtor can claim no special status on the basis that the debt that founded the judgment was a guarantee debt. As with other judgment debtors, it cannot claim that the judgment creditor could, and should, have obtained payment of the judgment by proceeding against other persons or realising securities in a different way. To hold otherwise would raise the spectre of a multiplicity of assertions and counter assertions that would hinder the enforcement of judgments and detract from their finality in resolving disputes.”

  1. Leeming JA and Sackville AJA further stated at [69]-[70]:

“[69] Generally speaking, the guarantor’s entitlement is subject to the terms of the guarantee. In the present case, the contract of guarantee purported to confine Mr James’ rights and those of the companies whose obligations he guaranteed to a fraudulent exercise by the receivers of the power of sale. If Mr James’ case depended on whether the terms of the guarantee precluded Mr James’ reliance on s 420A we would be reluctant to uphold the summary dismissal of his claim. …

[70] The critical point in the present case is that when Mr James consented to judgment being entered against him, his rights as guarantor were merged in the judgment debt thereby created. …”

  1. On 14 September 2018, the High Court dismissed an application by Mr James for special leave to appeal the Court of Appeal’s decision.

  2. In summary, the 2016 proceedings were held to be precluded by the doctrine of res judicata by reason of the judgment entered by consent on 16 May 2014 against Mr James in favour of ANZ in the guarantee proceedings in the sum of $13,928,818.66.

Further notice of motion in the guarantee proceedings

  1. On 19 September 2017 (some three years later), Mr James filed a notice of motion seeking to set aside the consent judgment entered against him on 16 May 2014. He raised several matters in his application.

  2. The first was that he was induced to consent to the judgment and that it constituted misleading and deceptive conduct on the part of ANZ. That misleading and deceptive conduct was alleged to have had two components. The first was that Mr James was misled at the time he agreed to the consent judgment into believing that the security held by ANZ from the companies was sufficient to repay the borrowings the group had made. The misleading conduct was the failure of ANZ to disclose before judgment was entered that the receivers who had been appointed by ANZ had sold stock belonging to TLT and NLW for amounts that were substantially less than the book value of the stock held by those companies as disclosed in a report prepared by PWC at the request of ANZ prior to their appointment as receivers. Mr James says, in effect, that had he known the true position he would not have consented to judgment but instead would have sought to advance a case that the receivers had sold the stock at an undervalue in contravention of s 420A of the Corporations Act 2001 (Cth) and had, in breach of their duties, released the receivers appointed by Rabobank from claims the ANZ Receivers had to stock stored at a property in Baerami – claims that he now sought to advance if judgment is set aside.

  3. Second, Mr James contended that ANZ engaged in misleading and deceptive conduct by failing to disclose to him that ANZ had attempted on 10 occasions between 3 September 2010 and 3 February 2012 to manipulate the bank bill swap rate (“BBSW”) in contravention of s 12CC(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (as it then was), and that that conduct had been the subject of an investigation by the Australian Securities and Investments Commission (“ASIC”). Mr James also contended that had he known those matters, he would not have trusted ANZ and would not have been prepared to agree to the consent judgment. Originally, Mr James took the position that if the consent judgment was set aside, he would seek to advance a defence based on that conduct. However, at the hearing of the notice of motion, Mr Pritchard SC, who appeared for Mr James, indicated that Mr James would no longer seek to rely on that defence.

  1. In its defence, ANZ denied that it engaged in misleading and deceptive conduct or that Mr James relied on any non-disclosure by it. It also claimed that, even if Mr James was able to make out a case that he was misled by ANZ’s conduct, the Court should refuse relief on the following discretionary grounds:

  1. that it would be futile to set aside the judgment because Mr James had no arguable defence;

  2. that Mr James was delayed in seeking to set aside the judgment; and

  3. in the case of the claim based on the attempt to manipulate the BBSW swap rate, that the Court would not permit Mr James to advance an unrelated case based on a contravention of s 420A of the Corporations Act.

  1. Having considered Mr James’ submissions and ANZ’s defence, Ball J dismissed Ms James’ application to set aside the consent judgment in Australia and New Zealand Banking Group Limited v James (No 3) [2019] NSWSC 832 (“James (No 3)”). His Honour stated at [81]-[84]:

“[81] At the heart of Mr James’s case is the contention that ANZ created the impression that the secured assets would be sufficient to repay the debt and it was misleading of it not to correct that misleading impression. There are, however, difficulties with that contention.

[82] First, it is not correct to say that, assuming Mr James believed that the secured assets would be sufficient to discharge the debt owed to ANZ, that that belief had been created by ANZ or PWC. The PWC report was based on the information supplied by the relevant companies, which were controlled by Mr James. PWC was not prepared to finalise their report until Mr James confirmed the factual information it contained, which is what it did. It was not Mr James that relied on PWC. Rather, it was PWC that relied on Mr James.

[83] Second, contrary to Mr James’s affidavit evidence, it could not be said that the affidavits relied on by ANZ created the impression that nothing had changed since the PWC report. Those affidavits stated the amount still owing to ANZ at the times the affidavits were sworn. On their face, they did not purport to deal with the recoveries that had been made by the receivers. The receivers were appointed on 19 August 2013. Consent judgment was entered on 16 May 2014. The principal assets of TLT and NLW were debtors and stock. There was no reason to think that the debtors would be particularly difficult to collect or that the stock would be particularly difficult to sell. In the normal course of events, it would have been expected that, by the time the consent judgment had been entered, the receivers would have recovered most of what they could from the secured assets.

[84] Moreover, Mr James’s affidavit evidence is directly contradicted by the evidence he gave in cross-examination, when the following exchange occurred:

Q. Now can I ask you, 16 May 2014 was about nine months after the receivers were appointed on 19 August 2013, correct?

A. Yes.

Q. In that nine‑month period, may we take it you assumed that the receivers had collected some debts?

A. Yes.

Q. The receivers had realised some property?

A. No, they hadn't - real estate property?

Q. Had realised some secured assets?

A. Yes, they, they were doing their job. I assume they were doing their job.

Q. You assumed that they were selling wine, correct?

A. Trading the business, selling wine, yep.

Q. So you assumed, did you not, that in that nine‑month period, the receivers, PricewaterhouseCoopers, had actually collected some debts and sold some wine, yes?

A. I assume so.”

  1. In James (No 3), Ball J concluded at [114] that Mr James was not entitled to have the consent judgment dated 16 May 2014 set aside. The result was that his Honour dismissed the defendant’s notice of motion filed on 19 September 2017 with costs.

  2. In James v Australia and New Zealand Banking Group Ltd [2020] NSWCA 101, the Court of Appeal per Basten JA (with Emmett and Simpson AJJA agreeing) dismissed Mr James’ summons filed on 3 October 2019 seeking leave to appeal from the order of Ball J dismissing an application to set aside the consent judgment.

The current proceedings

  1. On 19 August 2019 (6 years after the appointment of the PWC Receivers), Mr James commenced the 2019 proceedings by filing (but not serving) his statement of claim. On 18 February 2020, Mr James served his amended statement of claim on the defendants.

  2. There has been prior correspondence between the parties as to whether these current proceedings were to continue if Mr James was unsuccessful in his appeal against Ball J’s decision in the Court of Appeal. It is as follows.

  3. On 10 March 2020, Allens, on behalf of the defendants, wrote to Mr James’ then solicitor, Allsop Glover, seeking to understand on what basis it was said that the 2019 proceedings could be maintained in the circumstances given the decisions of James (No 2) and James (No 2) Appeal.

  4. In response, Mr James’ then lawyers expressly conceded it had been commenced to preserve a limitation period, and that Mr James was only entitled to pursue these claims if the Consent Judgment was set aside (which did not occur).

  5. In a letter sent on 26 March 2020, Mr James’ then solicitors wrote:

“In the event the Consent Judgment is ultimately set aside, consistent with the decisions in [2017] NSWSC 216 and [2018] NSWCA 41, Mr James will be entitled to prosecute his claims against ANZ…

The SOC was filed but not served in circumstances where it was hoped that the Court of Appeal would have heard and determined the appeal from Ball J’s orders before the expiration of the 6 month period in which Mr James had to serve the SOC upon the receivers. As you are aware, the Court of Appeal’s determination of Mr James’ leave application is still pending.

In those circumstances, Mr James has served the SOC within the statutory period for service of a statement of claim in the NSW Supreme Court under r 6.2(4)(a) of the Uniform Civil Procedure Rules 2005 (NSW).”

  1. In a letter sent on 20 April 2020, Mr James’ then solicitors wrote:

“In response to the clarification you have sought in relation to our client’s position, we are instructed that our client does not contend that he may pursue, in these proceedings, all or any part of the claims made in the statement of claim against your clients in these proceedings in the event that the original 2014 judgement that is not set aside.”

  1. As set out earlier in this judgment, on 1 June 2020 the Court of Appeal delivered judgment refusing Mr James leave to appeal Ball J’s decision in James (No 3). As a result, the consent judgment has not been set aside and remains a final order of this Court.

  2. Following this, Mr James’ lawyers ceased to act in this matter.

  3. For the reasons which follow, it is my view that the current amended statement of claim seeks to agitate the same claims based on the same alleged conduct as those sought to be litigated in the 2016 proceedings. Mr James purports to make those claims as a natural person but pleads his case as a guarantor. To illustrate that this current amended statement of claim essentially re-pleads the case Mr James ran in the 2016 proceedings and lost, Ms Boyd of counsel referred me to the pleadings, comparing the paragraphs of the statement of claim in the 2016 proceedings with the statement of claim in these proceedings. As I will set out under the following heading, they are essentially the same.

Similarities between the 2016 and 2019 pleadings

  1. Both the 2016 and 2019 pleadings (at paragraphs [1] and [2], respectively) begin by stating that “At all material times Mr James was the sole director of each of the relevant companies”. What follow are substantially similar pleadings, which I will compare under their pleaded headings which follow.

  2. So as not to set out the pleadings in their entirety, after setting out the pleadings in relation to the first heading “ANZ companies and securities” in full by way of illustration, I will consider the pleadings that follow in summary form.

ANZ companies and securities

  1. The first heading in both the 2016 and 2019 pleadings is “ANZ companies and securities”. The pleading under this heading in the 2016 statement of claim states:

“10.   On 9 April 2010 TLT granted a Charge Registered No. 1967045 to ANZ over all its assets and undertaking including stock (‘the TLT Charge’).

11.   On 14 February, 2013 NLW granted a Charge PPSR No.201302210046303 to ANZ over all its assets and undertaking including stock (‘the NLW Charge’).

12.   On 23 December 2010 Rugama granted a Charge Registered No. 2117924 to ANZ over all its assets and undertaking (‘the Rugama Charge’).

13.   On 5 July 2004 PNN granted a Charge Registered No. 1058139 to ANZ over all its assets and undertaking (‘the PNN Charge’).

14.   On 5 July 2004 PNN granted a first registered Mortgage No. AA851194 to ANZ over its property comprised in Certificate of Title Folio Identifier 3/578356 known as 10 Denney Street, Broadmeadow NSW (‘the Broadmeadow property’).

15.   On 23 October 2010 PNN granted a second registered Mortgage No. AG195444 to ANZ over the Broadmeadow property.

16.   On 19 August 2005 JAG granted a Charge Registered No. 1200268 to ANZ over all its assets and undertaking (‘the JAG Charge’).

17.   On 12 April 2007 JAG granted a first registered Mortgage No. AD62663 to ANZ over its property comprised in Certificate of Title Folio Identifier 137/883803 known as 463 New England Highway, Rutherford NSW.

18.   Mr James guaranteed the indebtedness of all of the ANZ Companies to ANZ, inter alia by:

(a)   Individual Guarantee and Indemnity dated 19 August 2005 for JAG;

(b)   Individual Guarantee and Indemnity dated 21 December 2005 for PNN;

(c)   Individual Guarantee and Indemnity dated 16 November 2006 for PNN and Liquor National Wholesale Pty Ltd;

(d)   Individual Guarantee and Indemnity dated 9 April 2010 for TLT;

(e) Corporate Cross-Guarantee and Indemnity dated 22 March 2005 for and between Liquor National Wholesale Pty Ltd, PNN, PNA, Killara 10 and Australian Beverage Distributors Pty Limited, (collectively ‘the Guarantees’).

19.   At all material times TLT traded as Bluestar Wholesale `Company and carried on the business of on premise distribution and manufacturing of key product lines including exclusive wine products inter alia from the premises Unit 15/16, 1 Burroway Road, Homebush Bay, NSW (‘the Homebush Bay warehouse’).

20.   At all material times NLW traded as Peter Doyles Cellars and carried on the business of distribution to key club accounts and large NSW state based customers operating from the premises 56 The Avenue, Maryville, NSW (‘the Maryville warehouse’).”

  1. The corresponding pleading in the 2019 statement of claim states:

“12.   On 9 April 2010, TLT granted a Charge Registered No. 1967045 to ANZ over all its assets and undertaking including stock (‘TLT Charge’).

13.   On 14 February 2013, NLW granted a Charge PPSR No.201302210046303 to ANZ over all its assets and undertaking including stock (‘NLW Charge’).

14.   On 23 December 2010, Rugama granted a Charge Registered No. 2117924 to ANZ over all its assets and undertaking (‘Rugama Charge’).

15.   On 5 July 2004, PNN granted a Charge Registered No. 1058139 to ANZ over all its assets and undertaking (‘PNN Charge’).

16.   On 5 July 2004, PNN granted a first registered Mortgage No. AA851194 to ANZ over its property comprised in Certificate of Title Folio Identifier 3/578356 known as 10 Denney Street, Broadmeadow NSW (‘Broadmeadow property’).

17.   On 23 October 2010, PNN granted a second registered Mortgage No. AG 195444 to ANZ over the Broadmeadow property.

18.   On 19 August 2005, JAG granted a Charge Registered No. 1200268 to ANZ over all its assets and undertaking (‘JAG Charge’).

19.   On 12 April 2007, JAG granted a first registered Mortgage No. AD62663 to ANZ over its property comprised in Certificate of Title Folio Identifier 137/883803 known as 463 New England Highway, Rutherford NSW.

20.   Mr James guaranteed the indebtedness of all of the ANZ Companies to ANZ, inter alia by:

(a)   Individual Guarantee and Indemnity dated 19 August 2005 for JAG;

(b)   Individual Guarantee and Indemnity dated 21 December 2005 for PNN;

(c)    Individual Guarantee and Indemnity dated 16 November 2006 for PNN and Liquor National Wholesale Pty Ltd;

(d)   Individual Guarantee and Indemnity dated 9 April 2010 for TLT;

(e)   Corporate Cross-Guarantee and Indemnity dated 22 March 2005 for and between Liquor National Wholesale Pty Ltd. PNN, PNA, Killara 10 and Australian Beverage Distributors Pty Limited,

(collectively the ‘ANZ Guarantees’).

21.   At all material times, TLT traded as Bluestar Wholesale Company and carried on the business of on premise distribution and manufacturing of key product lines including exclusive wine products inter alia from the premises Unit 15/16, 1 Burroway Road, Homebush Bay, NSW (‘Homebush Bay warehouse’).

22.   At all material times, NLW traded as Peter Doyles Cellars and carried on the business of distribution to key club accounts and large NSW state based customers operating from the premises 56 The Avenue, Maryville, NSW (‘Maryville warehouse’).”

  1. As these excerpts show, the pleadings in relation to the ANZ companies and securities in the 2016 and 2019 statements of claim are identical.

Homebush Warehouse

  1. Under the heading “Homebush Warehouse”, paras [34]-[40] of the 2016 statement of claim are identical to paras [36]-[43] of the 2019 pleadings.

PWC Report

  1. The pleadings in relation to the PWC Report as set out at paras [40A]–[40E] of the 2016 pleadings are substantially similar to paras [44]-[48] of the 2019 pleadings.

TLC Stock

  1. In relation to the TLC Stock, paras [41]-[58] of the 2016 pleadings are substantially similar to paras [49]-[68] of the 2019 pleadings.

Maryville Warehouse

  1. The Maryville Warehouse is referred to at paras [59]-[64] of the 2016 pleadings in terms that are substantially similar to paras [67]-[73] of the 2019 pleadings.

NWL Stock

  1. Paragraphs [65]-[75] of the 2016 pleadings refer to NWL Stock on identical terms to paras [74]-[84] of the 2019 pleadings.

Broadmeadow Property

  1. As to the Broadmeadow property, paras [76]-[83] of the 2016 pleadings are substantially similar to paras [85]-[92] of the 2019 pleadings.

Appointment of Receivers by ANZ

  1. In the 2016 pleadings, paras [85]-[96] are substantially similar to paras [93]-[96] of the 2019 pleadings, except that in the 2019 pleadings a heading “Claims in Trespass and Conversion” has been added.

Conduct of Receivers at Homebush Bay Warehouse

  1. The crux of Mr James’ claim made in both statements of claim concerns the conduct of the receivers at the Homebush Bay Warehouse. Paragraph [97] in the 2019 pleadings is that “on or about 19 August 2013 the receivers entered upon and took possession of the Homebush Bay Warehouse”. This is the equivalent of para [87] in the 2016 pleadings.

  2. Paragraph [88] of the 2016 proceedings is not pleaded in the current proceedings.

  3. Paragraphs [89]-[98] of the 2016 pleadings are identical to paras [98]-[105] of the 2019 pleadings.

  4. The words “each of Aramax” contained in para [99] of the 2016 pleadings have been removed from para [106] of the 2019 pleadings. Otherwise, paras [100]-[109] are identical to paras [107]-[114] of the 2019 pleadings.

  5. Paragraph [88] of the 2016 pleadings is not replicated in the 2019 pleadings because it was based upon an allegation that the receivers were the agents of ANZ, and ANZ is no longer a party to the 2019 proceedings.

Conduct of Receivers at the Maryville Warehouse

  1. Paragraphs [110]-[128] of the 2016 pleadings are identical to paras [115]-128] of the 2019 pleadings.

Conduct of Receivers at the Broadmeadow Property

  1. Paragraphs [129]-[145] of the 2016 pleadings, which plead the conduct of receivers at the Broadmeadow Property, are substantially similar to paras [129]-[141] of the 2019 pleadings.

Homebush Bay – PN and PNA/Mr James in his capacity as guarantor against the Receivers

  1. “Claims in negligence” is a new heading at para [142] of the 2019 pleadings. It pleads that the receivers owed duties to the plaintiff in his capacity as guarantor.

  2. Paragraphs [151] of the 2016 pleadings and [191] of the 2019 pleadings are the same, pleading that as at 19 August 2013, the net assets of PN were approximately $149 million.

  3. The breach of duty of sale at undervalue claims are also the same between the 2016 and 2019 pleadings.

  4. Paragraph [175] of the 2016 proceedings is the equivalent to para [217] of the 2019 pleadings. Paragraph [176] of the 2016 pleadings is the same as para [218] of the 2019 pleadings, and relevantly alleges:

“Mr James is entitled in equity to have the force of loss and damage suffered by TLT ascertained and brought to account and the liability of the principal debtors to ANZ which in turn determines the amount of his liability under the guarantee".

  1. Counsel for the defendants drew particular attention to the above paragraph, because both Stevenson J and the Court of Appeal quoted para [218] of the 2016 statement of claim in each of their judgments. Then para [179] in the 2016 pleadings is equivalent to para [222] in the 2019 pleadings. The addition in these proceedings is the line “in his capacity as guarantor”. There is a claim for unconscionable conduct but it is not pressed.

Set off

  1. Mr James’ pleadings in relation to set off are at para [223] of the 2016 pleadings and [180] of the 2019 pleadings. Paragraph [226] of the 2016 pleadings is equivalent to para [183] in the 2019 pleadings, namely that “Mr James is entitled to set off in equity, all amounts and have that brought to account against the indebtedness of the principal debtors.”

Differences between 2016 and 2019 statements of claim

  1. A difference between the 2016 pleadings and the 2019 pleadings is that in the latter, the receivers are said to have owed duties to Mr James in his capacity as guarantor. In the earlier proceedings, the receivers owed duties to the two companies. The change does not assist Mr James, as the Court of Appeal and Stevenson J found that Mr James no longer had the status of a guarantor, so he cannot maintain his claim on that basis.

  2. There are separate proceedings involving Aromax, so these claims that were contained in the 2016 proceedings are not in the current statement of claim. Nor is the claim concerning Robobank and its securities included in the 2019 proceedings, because as I understand it, Robobank is not pursing Mr James for the debt as guarantor.

  3. There is a difference between paras [165] of the 2016 pleadings and para [207] of the 2019 pleadings. In the 2016 proceedings, it was alleged that the receivers owed duties to TLT. In para [207] of the 2019 pleadings, the receivers’ duties were said to include Mr James.

The defendants’ submissions

  1. Counsel for the defendants submitted that the claim Mr James is describing is not the claim that is on foot, and there is no obligation for the defendants to invite him to make an amendment. In any event, Mr James has no claim in a capacity other than that as his guarantor. The loss alleged to have occurred, occurred to the companies. Mr James has no personal claim. These proceedings were commenced in 2016 with Mr James seeking to bring derivative action. That was abandoned and then Mr James sought to run these personal claims, which was said to be prevented by the doctrine of res judicata. He has no personal claim other than that as guarantor, and he no longer has that status by reason of the consent judgment.

  2. As to the issue of agency, counsel for the defendant submitted that there are various deeds that say the receivers are the agents of the companies, and there is a legal question about agency for the bank. However, there is no evidence concerning this issue on this application.

  3. The defendants submitted that as the claims Mr James seeks to litigate in the 2019 proceedings are the same as those sought to be litigated in the 2016 proceedings, the claim are precluded by both the doctrine of res judicata and issue and/or claims estoppel, and is an abuse of process. This is because when the 2019 proceeding was commenced, the plaintiff’s then lawyers expressly conceded it had been commenced to preserve a limitation period, and that Mr James was only entitled to pursue these claims if the consent judgment was set aside (which did not occur).

  1. On this basis the defendants submitted that in essence, Mr James is precluded from bringing his claim on the basis of a “double” res judicata in that:

  1. the consent judgment precludes Mr James from making the claims he now seeks to make; and

  2. the Court of Appeal (and Stevenson J) have already determined that the consent judgment precludes Mr James from making the claims he now seeks to make.

  1. Moreover, the defendants noted that Mr James himself has expressly conceded that he could only pursue these claims if the consent judgment were set aside. That has not occurred. In those circumstances, the defendants submitted that the 2019 proceedings have no prospects of success.

Mr James’s submissions

  1. I have taken into account the written and oral submissions made by Mr James. In oral submissions, Mr James admitted that the current statement of claim replicates part of the 2016 statement of claim. He explained that this is because this matter has been going for so long that the statute of limitations of up to six years was about to be reached while the decision of Ball J was reserved in the Court of Appeal. He says that if the Court of Appeal decision was in his favour, all of the 2019 statement of claim could have been run.

  2. Mr James submitted that the main difference between the 2016 proceedings and the 2019 proceedings is that in the latter, the receivers owed duties to Mr James in his personal capacity as guarantor. He seeks to sue the receivers as defendants in their personal capacity.

  3. According to Mr James, there is now more extensive evidence against the defendants’ conduct going back to a period in the beginning of 2013 which he did not have before, involving a period where the defendants were appointed as investigating accountants in about March of 2013. He claims that he now has evidence of their conduct that they continued for that period of about five months before their appointment. Mr James maintains that he still should be able to claim that he had been damaged by the defendants’ pre-appointment and post appointment conduct.

  4. Mr James, in both his written and oral submissions (T 15-19), says that the most significant point he seeks to advance is that he and the defendants do not have any other relationships other than that they were joined to a case where ANZ proved that it was a judgment debtor, and therefore Mr James was not able to make claims against them. He says that once that case is done, there is no more protection for any other third party. He says that PWC was involved with his computer system and crashed h entire empire. He says that he only seeks to fight with ANZ and PWC, who he claims have done everything in their power to hide whatever went on.

  5. Mr James also says that the receivers have never declared that they are agents of ANZ, and it was only assumed that they were agents of ANZ in the 2016 proceedings. ANZ appointed them, but Mr James says that nowhere does ANZ say that they are the agent because they do not want to make that claim. It is Mr James’ contention that if the defendants have been involved in criminal conduct, then clearly they are not acting in their capacity as the agent of ANZ.

  6. He says that there are claims by Aromax Nominees and Primax, the special purpose liquidator, alleging trespass and criminal conduct. This claim is going to be heard in March 2022 and is set down for a seven-day hearing. The claims are in excess of $70,000,000.

  7. The special purpose liquidator’s position is that Mr James owned seven wineries and extensive property holdings with Rabobank to the value of more than $50,000,000. Mr James says that he had $25,000,000. He says at the time that the receivers were appointed, the Companies owed $12,000,000 to ANZ and $25,000,000 to Rabobank. The ANZ Receivers ended up only giving $2,000,000 to ANZ. Mr James also says that Rabobank lost every cent because of the conduct of the ANZ Receivers, but has not pursued Mr James as the guarantor, nor has it pursued the Companies.

  8. Mr James submitted that he could have sold the properties he would have been able to pay out the debt of $30,000,000. Rabobank would have been paid in full. Rabobank had renewed its facilities one week before PWC was appointed. It renewed for $25,000,000 with the loans after inspecting the assets. ANZ called in the loans about one week later, and Mr Merryweather and Mr Hall were employed by ANZ as agents.

  9. Mr James admits that he wants to go behind the consent judgment because it has nothing to do with the defendants, but rather has to do with his relationship with ANZ. He says he has the right to run his case. He says he should not be blocked from running his claims against PWC because it has not been defined or determined by any court, except when Stevenson J stated in James (No 2) that “there just happened to be another plaintiff and if there were 20 plaintiffs, they would have all got that”. He says that this decision does not protect the defendants from what they did, and his claim should be preserved and heard on its merits.

Conclusion

  1. As Macfarlan JA explained in James (No 2) Appeal at [38]:

“[38] Once final judgment is entered, as it was against Mr James in the present case, the rights and liabilities of the parties are merged in and subsumed by the judgment. In the case of an action on a guarantee, the rights of the creditor and guarantor are converted into the rights of a judgment creditor and a judgment debtor respectively. This means that rights which the judgment debtor may have had in its capacity as guarantor are no longer available to it to raise in opposition to enforcement of the judgment. The judgment debtor can claim no special status on the basis that the debt that founded the judgment was a guarantee debt. As with other judgment debtors, it cannot claim that the judgment creditor could, and should, have obtained payment of the judgment by proceeding against other persons or realising securities in a different way. To hold otherwise would raise the spectre of a multiplicity of assertions and counter assertions that would hinder the enforcement of judgments and detract from their finality in resolving disputes.”

  1. In these current proceedings, the plaintiff has put in issue the conduct of the defendants during the period from five months prior to their appointment as receivers by ANZ. Mr James says that the defendants are being sued in their personal capacity. However, Mr James variously refers to the defendants in his written and oral submissions as being both agents and non-agents of ANZ. While he asserts there is new evidence, none has been provided, and his position is contradictory.

  2. Earlier in this judgment, I have compared the pleadings in the 2016 statement of claim with this current 2019 statement of claim. Hs pleadings are almost identical. As Mr James admits, he is trying to go behind the earlier consent judgment. This he cannot do. As Macfarlan JA explained in James (No 2) Appeal, once final judgment was entered, albeit by consent, as it was against Mr James, the rights and liabilities of the parties were merged and subsumed by the judgment. In the case of an action on a guarantee, the rights of the creditor and guarantor are converted into the rights of a judgement creditor and a judgment debtor, respectively. This means that rights which the judgment debtor may have had in its capacity as guarantor are no longer available.

  3. To refer to the succinct holding of Leeming JA and Sackville AJA in James (No 2) Appeal, when Mr James consented to judgment being entered against him, his rights as guarantor were merged in the judgment debt thereby created.

  4. The claims made in these current proceedings were made and determined in the 2016 proceedings. The plaintiff is estopped from re-litigating his claim on that basis. As such, these current proceedings are an abuse of process: see Thomlinson at [25]-[26]. They should be dismissed.

Costs

  1. Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendants costs on an ordinary basis.

The Court orders that:

  1. The plaintiff’s proceedings are dismissed.

  2. The plaintiff is to pay the defendants’ costs on an ordinary basis.

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Decision last updated: 16 April 2021

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Cases Citing This Decision

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Cases Cited

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Statutory Material Cited

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Australia and New Zealand Banking Group Limited v James (No 3) [2019] NSWSC 832
Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21
Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21