Ling, Noel v Commonwealth of Australia

[1996] FCA 370

CATCHWORDS

Practice and procedure - motion seeking that statement of claim be dismissed or struck out or that proceedings be stayed - Anshun estoppel - whether claim could have been set up in earlier proceedings - whether claim arises substantially out of the same matters of fact - whether any special circumstances that take this case outside the general rule

Ling v Commonwealth (1994) 51 FCR 88 referred
Re Ling; Ex p Ling v Commonwealth (1995) 58 FCR 129 referred
Henderson v Henderson (1843) 3 Hare 100 at 115 considered
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 referred
Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287 applied
Rahme v Commonwealth Bank of Australia unreported, Court of Appeal, NSW, 20 December 1991 referred

NOEL LING v COMMONWEALTH OF AUSTRALIA
No. NG 751 of 1995

CORAM:Lehane J

PLACE:Sydney

DATE:29 April 1996

IN THE FEDERAL COURT OF AUSTRALIA              )
NEW SOUTH WALES DISTRICT REGISTRY             )
GENERAL DIVISION  )     No. NG  751 of 1995

BETWEEN:NOEL LING

Applicant

AND:COMMONWEALTH OF AUSTRALIA

Respondent

CORAM:Lehane J

PLACE:Sydney

DATE:29 April 1996

MINUTE OF ORDERS

THE COURT ORDERS:

1. THAT the statement of claim is dismissed.

NOTE:        Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA              )
NEW SOUTH WALES DISTRICT REGISTRY             )
GENERAL DIVISION  )     No. NG  751 of 1995

BETWEEN:NOEL LING

Applicant

AND:COMMONWEALTH OF AUSTRALIA

Respondent

CORAM:Lehane J

PLACE:Sydney

DATE:29 April 1996

EXTEMPORE REASONS FOR JUDGMENT

LEHANE J: I shall state the circumstances very briefly, but I hope with sufficient accuracy and completeness for present purposes. On 3 September 1993 Beaumont J gave judgment for the Commonwealth of Australia (to which I shall refer to as the Commonwealth) against Mr Ling, the applicant in these proceedings, for a sum of $7.9 million. An appeal from his Honour's decision was dismissed by the Full Court: (1994) 51 FCR 88.

The liability to which Mr Ling was held to be subject arose out of the following circumstances.  Mr Ling was the proprietor of various businesses and apparently had connections with various others - the precise nature of the connections does not greatly matter for present purposes - all of which were engaged in the provision of English language courses for students from overseas, particularly from Asia.

A number of potential students from the People's Republic of China had enrolled for courses conducted by Mr Ling's businesses and had paid fees in advance.  By reason of circumstances that arose in 1989 and 1990, and in particular because of new and more rigorous requirements imposed by the Commonwealth in relation to the issue of visas to students coming from China, a number of the students who had enrolled and paid fees were unable to undertake the courses and withdrew.  As a matter of contract, a liability arose then, on the part of Mr Ling, to refund fees which those students had paid.

The Commonwealth took an assignment of the rights of a great number of students to obtain that refund, and it was in respect of Mr Ling's liability to those students that the judgment was given.  On 2 May 1995, Mr Ling commenced proceedings against the Commonwealth in the Supreme Court of Victoria.  Those proceedings have since been transferred to this Court and are the proceedings before me today.  In the statement of claim endorsed on the writ, Mr Ling claims relief - particularly damages - against the Commonwealth on two bases: defamation and allegedly negligent misrepresentations made by the Commonwealth.  I shall have to return to some of the detail of the allegations in the statement of claim.

Meantime, however, before the commencement of these proceedings, in reliance on the judgment of Beaumont J the Commonwealth served a bankruptcy notice on Mr Ling.  Mr Ling contended that the facts on which he based his statement of claim in these proceedings gave him a counterclaim for an amount exceeding the amount of the judgment debt on which the bankruptcy notice was based.  The question arose whether
the counter claim was one which Mr Ling might have set up in the original proceedings before Beaumont J.  It was held by Hill J that the matters on which Mr Ling relied could have been set up in those proceedings: see Re Ling; ex parte Ling v Commonwealth (1995) 58 FCR 129.

The particular matter before me today is a motion of the Commonwealth, as respondent, seeking that Mr Ling's statement of claim be dismissed or struck out, or alternatively that the proceedings be stayed.  I am no longer concerned with the statement of claim insofar as it relates to claims based upon allegedly defamatory statements.  Senior counsel appearing for Mr Ling today, though not instructed to abandon those aspects of the statement of claim, informed me that he had nothing to say in opposition to the motion of the Commonwealth to the extent that it seeks the dismissal or stay of that part of the claim.

What is before me, therefore, is in substance a motion for the dismissal or striking out of the statement of claim insofar as it relies on allegedly negligent misstatements.  In support of its motion the Commonwealth relied exclusively upon what has become known as an Anshun estoppel.  That is a form of estoppel deriving originally from the well known observations of Sir James Wigram VC in Henderson v Henderson (1843) 3 Hare 110 at page 115, adopted and applied by the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.

The case put by the Commonwealth is very simple.  It is that, as he now accepts, the
claim which Mr Ling seeks to establish in these proceedings was one which could have been set up in the original proceedings before Beaumont J.  It arises, the Commonwealth says, from substantially the same facts and there are no relevant special circumstances; therefore, the claim should have been raised, if it was to be raised at all, in those proceedings and ought now be struck out or dismissed.  For those propositions the Commonwealth relies heavily on the decision of the Full Court of this Court in Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287.

Mr Ling, on the other hand, seeks to rely on certain statements made by members of the High Court in Anshun itself.  He suggests that Bryant is distinguishable and submits formally that Bryant was wrongly decided and ought not be followed.  Bryant of course is binding on me and if it is applicable and indistinguishable then clearly I must follow it; the question arising on this motion is, therefore, whether the decision in Bryant requires me to dismiss or strike out the relevant parts of the statement of claim.

It will be recalled that the basis of the so-called Anshun estoppel is that stated by Sir James Wigram in Henderson v Henderson: that is, that the court requires parties to litigation to bring forward their whole case and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward only because they have from negligence, inadvertence or even accident omitted part of their case. 

That principle was applied in Bryant to circumstances in which the Commonwealth Bank (the Bank) had taken proceedings against Mr Bryant for possession of premises mortgaged to the bank and also for the recovery of indebtedness claimed to be owing under the mortgage.  Mr Bryant filed, in addition to defences, a number of cross-claims in each proceeding.  Those cross-claims depended upon representations alleged to have been made by the Bank; an alleged fiduciary relationship between the parties; and conduct alleged to be misleading and deceptive within the meaning of section 52 of the Trade Practices Act, 1974.

Before the Supreme Court of New South Wales, in which the Bank commenced its proceedings, Mr Bryant abandoned his cross-claims but on the evident footing that he would be able to renew them at some other time and in some other place.   What Einfeld J decided in Bryant, and the Full Court affirmed, was that Mr Bryant was precluded by the Anshun principle from raising, by way of separate proceedings in this Court, matters which could have been the subject of cross-claims in the Supreme Court and, but for their abandonment, would have been the subject of such cross-claims.

In coming to that conclusion the Full Court followed a decision of the Court of Appeal of the Supreme Court of New South Wales in Rahme v Commonwealth Bank of Australia, 20 December 1991 unreported.  The Full Court concluded that the Anshun principle was applicable to cross-claims as much as to defences and in a passage, for present purposes of some importance, said this:

Questions of substantive degree may be involved; and in contrast to defences, many cross‑claims may have little or no connection with the principal claim in the action; there may be no more than an identicality of parties.  Where that is so, there may be no policy justification for forcing defendants to litigate their claims as cross‑claims rather than as principal claims in separate actions in the forum of their choice.  But, where, as here, a defendant's claim is intimately connected with that of the plaintiff, in the sense that each arises, substantially, out of the same matters of fact, there is every reason to require that both the litigated at the one time; thereby minimising costs and avoiding the possibility of inconsistent judgments (cf Federal Court  of Australia Act 1976 (Cth), s 22).

It will be recalled that the case in which their Honours applied that principle was one where the Bank had made a contractual claim against Mr Bryant for debt and had also commenced proceedings for possession under a mortgage.  The claims by Mr Bryant against the Bank arose out of the same general set of circumstances as did the Bank's claim against Mr Bryant, but clearly in a literal sense each cause of action was founded on different elements in that set of circumstances.

Much the same, I think, may be said of this case.  The claim of the Commonwealth against Mr Ling, on which it obtained judgment, arose out of contract.  The circumstances which, under the contract, gave rise to the claim were that in consequence of certain events in China and a subsequent change of Australian Government policy Chinese students were no longer easily able to attend courses such as those Mr Ling offered in Australia.  Mr Ling's claim against the Commonwealth arises substantially out of the same matters of fact.  Thus, the matters which gave rise to the contractual claim matters correspond closely with those which it is alleged falsified the representations said to have been made on behalf of the Commonwealth to Mr Ling.  Try as I may, I find it difficult to see any element in the circumstances of the proceedings before Beaumont J
and those alleged in Mr Ling's statement of claim which suggest a relevant point of distinction between those circumstances and the circumstances with which the Court was concerned in Bryant.

One possible distinction might be that whereas in Bryant a cross-claim had been instituted and then abandoned, in this case although it appears that a cross-claim was considered by Mr Ling's advisers one was never in fact instituted.  I cannot see, however, that when one comes to apply the principles stated by the Full Court, that can be regarded in any sense as a relevant point of distinction.

As I have already confessed, none other occurs to me and I do not think that there was any matter put to me by senior counsel for Mr Ling which provides a satisfactory basis of distinguishing the facts in Bryant from those in this case.

That then brings me to the question whether there are special circumstances taking this case out of the general rule or which, as a matter of discretion, the Court might be prepared to accept as sufficient to justify the displacement of the general rule.  The only special circumstances suggested by senior counsel for Mr Ling, as I understood his argument, were circumstances arising out of the fact that the Commonwealth's claim against Mr Ling was not one which was originally a contractual claim of the Commonwealth but was rather a claim of students who withdrew from courses, acquired by the Commonwealth by way of assignment.

The Commonwealth had already acquired the students' claims when it took the proceedings against Mr Ling.  At that time the circumstances already existed, giving rise to the claim against the Commonwealth which Mr Ling seeks to assert in the proceedings before the Court today.  The factual circumstances giving rise to one claim were then in the relevant sense the same as those giving rise to the other.  I can see no basis for holding, on any evidence or submissions before me today, that there are special circumstances.

It follows in my view that the Commonwealth succeeds on its notice of motion.  Given the situation in relation to the claim for defamation, the appropriate order in this case, as in Bryant, is that the statement of claim be dismissed.

I certify that this and the preceding 7 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lehane.

Associate:

Dated:  9 May 1996

Heard:  29 April 1996

Place:  Sydney

Decision:  29 April 1996

Appearances:  Messrs G T Bigmore QC and M R Aldridge of counsel  instructed by Gadens Ridgeway appeared for the applicant.

Messrs L S Katz SC and F Kunc of counsel instructed by the Australian Government Solicitor appeared for the respondent.