Mango Boulevard Pty Ltd v Spencer

Mango Boulevard Pty Ltd initiated proceedings against Spencer and others, claiming declarations that Spencer and Perovich were in default under a Shareholders Deed, entitling Mango Boulevard to an option to acquire their shares. Spencer and Perovich defended the claim and counterclaimed for the plaintiff’s shares. They defaulted in disclosure, leading to a self-executing order that, if not complied with, would strike out certain parts of their pleadings and grant judgment to Mango Boulevard on its counterclaim. The first and second defendants failed to comply with the self-executing order, resulting in the striking out of specified paragraphs and the entry of judgment for Mango Boulevard. The fourth defendant, Mio Art, replaced Spencer as trustee and filed a defence and counterclaim, which were also struck out, and summary judgment was granted to Mango Boulevard. Mango Boulevard appealed the primary judge's dismissal of its application for summary judgment and the variation of part of the self-executing order.

The central legal issues were whether the primary judge’s orders gave rise to res judicata or issue estoppel under the self-executing order and the further orders. The court had to determine whether the self-executing order operated as a judgment, if it gave rise to an issue estoppel precluding the fourth defendant from relying on a defence, and whether the primary judge erred in concluding that the fourth defendant’s counterclaim did not plead a defence. The court also needed to decide whether the further orders gave rise to an issue estoppel against the fourth defendant, precluding its defence relating to the plaintiff’s default.

The court found that the self-executing order did not operate as a final judgment because it did not comply with the requirement to be filed. Consequently, it did not give rise to res judicata. However, it did give rise to issue estoppel, precluding the fourth defendant from relying on certain defences. The court concluded that the primary judge did not err in striking out the fourth defendant’s counterclaim as an abuse of process, but this was not due to res judicata. Instead, it was because the counterclaim effectively repeated claims that had already been struck out. The court held that the further orders did not give rise to an issue estoppel against the fourth defendant. The appeal was allowed in part, with the order to vary the self-executing order set aside, and the appellant was ordered to pay the respondents’ costs of the appeal.