Melbourne City Investments Pty Ltd v Leighton Holdings Ltd
[2015] VSCA 235
•7 September 2015
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2015 0036
| MELBOURNE CITY INVESTMENTS PTY LTD (ACN 161 046 304) | Applicant |
| v | |
| LEIGHTON HOLDINGS LIMITED (ACN 004 482 982) | Respondent |
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| JUDGES: | TATE and BEACH JJA and ROBSON AJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 25 August 2015 |
| DATE OF JUDGMENT: | 7 September 2015 |
| MEDIUM NEUTRAL CITATION: | [2015] VSCA 235 |
| JUDGMENT APPEALED FROM: | [2015] VSC 119 (Sifris J) |
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PRACTICE AND PROCEDURE – Stay – Abuse of process – First application for stay refused – Second application for stay made after new appellate authority – Second application for stay granted – Whether second application for stay an abuse of process – Whether order refusing stay final or interlocutory – Order refusing stay interlocutory – Second application for stay not an abuse of process – Application for leave to appeal refused – Permanent stay granted.
PRACTICE AND PROCEDURE – Stay – Abuse of process – Group proceeding – Respondent company initiated proceeding – Respondent is lead plaintiff – Proceeding commenced for predominant purpose of generating legal fees for respondent's solicitor – Whether proper purpose – Whether proper use of processes of court – Application for leave to appeal refused – Permanent stay granted.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr N J O’Bryan SC with Mr M W L Symons | Stewart Peters, Lawyer |
| For the Respondent | Mr S H Parmenter with Mr B C Ryde | Allens |
TATE JA
BEACH JA
ROBSON AJA:
Introduction
The applicant, Melbourne City Investments Pty Ltd (‘MCI’) is a Victorian investment company managed and controlled by Mark Elliott, a Melbourne based solicitor. Towards the end of 2013, MCI commenced separate group proceedings pursuant to Part 4A of the Supreme Court Act 1986 against Treasury Wine Estates Limited (‘Treasury’) and the respondent to the present application, Leighton Holdings Limited (‘Leighton’). Treasury and Leighton are publicly listed companies in which, on the day of MCI’s incorporation, MCI purchased small parcels of shares (in each case for an amount slightly less than $700).
The group proceedings commenced by MCI might broadly be described as securities class actions, in which allegations are made that, in breach of the continuous disclosure provisions and misleading or deceptive conduct provisions of the Corporations Act 2001 (Cth), the relevant defendant failed to disclose information that was required to be disclosed. Putting to one side other group members, the loss claimed by MCI in each proceeding is the difference between the prices at which MCI acquired its shares and the prices that would have prevailed had each of Leighton and Treasury made what is alleged to be proper disclosure. At its highest, the most that MCI could ever gain, or have gained, by way of compensation in either proceeding was an amount of less than $700.
On 16 May 2014, Ferguson J heard applications, in both proceedings made by Treasury and Leighton, in which orders were sought that each proceeding be stayed as an abuse of process. Treasury and Leighton contended that the proceedings against them were brought by MCI for the collateral purpose of generating legal fees for its sole director and shareholder, Mr Elliott. On 23 July 2014, her Honour delivered reasons for judgment in which she concluded that there was no abuse of process and refused the stay applications. However, at the same time, her Honour ruled that Mr Elliott ought be restrained from acting for MCI which was the lead plaintiff in each class action.[1]
[1]Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 3) [2014] VSC 340 (‘Ferguson J Reasons’).
Treasury sought leave to appeal from the refusal of its stay application. Leighton did not seek leave to appeal.
On 22 December 2014, Treasury’s application for leave to appeal in its proceeding was granted, its appeal was allowed and an order was made that the proceeding against it be stayed permanently.[2]
[2]Treasury Wine Estates Limited v Melbourne City Investments Pty Ltd [2014] VSCA 351 (‘Treasury Wine’).
On 19 February 2015, Leighton filed a second summons, again seeking an order that the proceeding against it be permanently stayed on the grounds that its commencement and maintenance was an abuse of process. That application came on for hearing before Sifris J on 16 March 2015. While that application was pending, MCI sought special leave to appeal to the High Court against the decision of the Court of Appeal.
On 14 April 2015, Sifris J made an order staying the proceeding until further order.[3] In making that order, his Honour said that if special leave was refused (or if granted, and the appeal was unsuccessful), he would grant a permanent stay.[4] On the same day, and within hours of the delivery of judgment by Sifris J, MCI issued another proceeding against Leighton pleading the same causes of action and seeking the same relief as that sought in the proceeding that had been stayed.
[3]Melbourne City Investments Pty Ltd v Leighton Holdings Limited [2015] VSC 119 (‘Sifris J Reasons’).
[4]Sifris J Reasons [46].
On 11 May 2015, MCI filed an application for leave to appeal to this Court. The applicant’s proposed grounds of appeal are as follows:
1. The Court erred in not holding that the decision on the First Application, handed down on 23 July 2014, gave rise to res judicata and/or issue estoppel on the issue of abuse of process.
2. The Court erred in deciding that there is a general exception to the application of res judicata or issue estoppel in special or exceptional circumstances established by Arnold v NatWest Bank Plc [1991] 2 AC 93 where it would cause injustice not to do so.
3. The Court erred in deciding that issue estoppel or res judicata do not apply where there has been a change in the law or a subsequent decision of an appellate court in another matter on the same issue.
4. The Court erred in eliding the principles concerning abuse of process on subsequent applications with the exceptions to issue estoppel.
5. The Court erred in holding that it followed from the Court’s reasons concerning res judicata, issue estoppel, and abuse of process that the applicant’s argument based on the Civil Procedure Act 2010 (Vic) must fail.
6. The Court erred in not applying the principles concerning estoppel, waiver, and election within litigation, each of which was applicable and decisive against the respondent’s claim.
7. The Court erred in holding that, in the absence of the High Court of Australia allowing an appeal, it was bound by the decision in Treasury Wine Estates Limited v Melbourne City Investments Pty Ltd [2014] VSCA 351 to permanently stay this proceeding as an abuse of process.
8. The decision of the Court of Appeal in Treasury Wine Estates Limited v Melbourne City Investments Pty Ltd [2014] VSCA 351 is wrong and should be overturned.
On 15 May 2015, the High Court (Hayne and Keane JJ) refused MCI’s application for special leave to appeal from the orders made in this Court on 22 December 2014, saying
The issues which the applicant seeks to agitate in this Court have been rendered substantially academic by the applicant’s decision to institute a second proceeding. In any event we are not persuaded that an appeal to this Court would enjoy sufficient prospects of success to warrant a grant of special leave. Special leave to appeal is refused with costs.[5]
[5]Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited [2015] HCA Trans 116.
The reference by their Honours to ‘a second proceeding’ was a reference to the proceeding issued on 14 April 2015, a few hours after the delivery of reasons for judgment by Sifris J. That said, we note for the sake of completeness that the refusal of an application for special leave ‘creates no precedent and is binding on no one’.[6]
[6]See North Ganalanja Aboriginal Corporation v Queensland (1996) 185 CLR 595, 643 (McHugh J). But cf the treatment by subsequent courts of Western Export Services Inc v Jireh International Pty Ltd (2011) 86 ALJR 1.
This judgment is concerned with MCI’s application for leave to appeal and, if leave is granted, the appeal from the order made by Sifris J staying MCI’s first proceeding against Leighton.
In addition to making submissions in opposition to MCI’s proposed grounds of appeal, Leighton relied in this Court upon a notice of contention that contained three issues that Leighton contends were not decided, or not raised for decision, by Sifris J. First, it was contended that Sifris J ought to have held that the disposition of the first stay application by Ferguson J was interlocutory and, as a consequence did not create any issue estoppel or res judicata. Secondly, it was contended that if the Court determines that the proceeding is an abuse of process then, irrespective of any question of issue estoppel or other impediment to Leighton’s application, the Court should, on its own motion, stay the proceeding as an abuse of process. Thirdly, it was contended that by commencing the second proceeding on 14 April 2015, MCI had ‘extinguished’ any right it might otherwise have had to obtain leave to appeal from the orders of Sifris J.
The issues in this application/appeal
At the hearing before us, there were two main issues. First, it was MCI’s case that following Leighton’s failure to obtain a stay before Ferguson J, Leighton was precluded from bringing another stay application in which it contended (on the very same grounds that Leighton relied upon in its first application) that the proceeding was an abuse of process. MCI submitted that this was so because the first decision engaged principles of res judicata and issue estoppel; alternatively, making exactly the same application again was an abuse of process.
Secondly, (and in the alternative to its first point), MCI submitted that this Court’s decision in TreasuryWine was plainly wrong and ought not be followed in any event. MCI submitted that success on either of its points required this Court to grant leave to appeal, allow the appeal and set aside the order staying the proceeding. While these were MCI’s principal contentions, it also advanced other arguments concerning the Civil Procedure Act 2010 and changes in circumstances following Ferguson J’s decision, including that MCI had changed solicitors and had continued to incur costs in the prosecution of the original proceeding following the expiration of the appeal period applicable in respect of Ferguson J’s orders.
Leighton disputed each of MCI’s contentions. Leighton submitted that Ferguson J’s decision was truly interlocutory, and not amenable to the principles of res judicata or issue estoppel; alternatively, Leighton relied upon the fact that Ferguson J’s decision had been overturned by the Court of Appeal as a ‘special or exceptional circumstance’ that gave rise to an exception to the application of res judicata or issue estoppel, in conformity with the principles discussed in Arnold v National Westminster Bank Plc.[7]
[7][1991] 2 AC 93 (‘Arnold’).
Next, Leighton submitted that, in the particular circumstances of this case where the Court of Appeal subsequently overruled Ferguson J, there was no abuse of process in Leighton bringing a second stay application. Further, Leighton submitted that there was no basis for contending that TreasuryWine was ‘plainly wrong’. Additionally, Leighton contended that, by issuing the second proceeding on 14 April 2015, MCI elected not to seek leave to appeal from Sifris J; alternatively, Leighton said that, because MCI had issued the second proceeding, MCI should not be given leave to appeal as this would involve MCI having two identical proceedings on foot, constituting a new abuse of process by MCI. Finally, Leighton submitted that even if it was somehow precluded from maintaining that MCI’s proceeding was an abuse of process, this Court should not permit a proceeding that is an abuse of process to continue, and therefore this Court should stay the proceeding on its own motion.
Before proceeding further, it is necessary to say something more about the resolution of the first stay application and the conduct of the proceeding following the delivery of judgment by Ferguson J.
The judgment of Ferguson J
In her reasons for judgment on the stay application, Ferguson J accepted that it was ‘probable that the reason for MCI’s existence is to launch proceedings, such as the present proceedings, to enable its sole director and shareholder to earn legal fees from acting as the solicitor for MCI’.[8] Her Honour also accepted that MCI commenced the proceedings against Leighton and Treasury ‘for the purpose of having Mr Elliott act as its solicitor so that he could earn fees’.[9] Her Honour explained this conclusion as follows:
The quantum of any damages claim being, as I have said, at best less than $700 in each, makes it unlikely that the proceedings were commenced for the purpose of recovering compensation. Another possible, but far less probable, inference would be that MCI is motivated by some general desire to assist shareholders to recover compensation from publicly listed companies which breach the law, or that MCI has some general desire to ensure that publicly listed companies comply with the law. Such inferences may have been likely if MCI had engaged independent solicitors. In circumstances, however, where Mr Elliott acts as the solicitor and has a significant financial interest in doing so, such inferences are less probable than the inference that I draw. They are certainly not inferences of equal probability to the inference that I draw. Again, the absence of evidence from Mr Elliott is something to be taken into account. It gives more comfort in drawing the inference that I do and leads to a conclusion that his evidence would not have helped MCI’s case.[10]
[8]Ferguson J Reasons [9].
[9]Ibid [11].
[10]Ibid.
Notwithstanding her Honour’s findings as to purpose, after a careful analysis, her Honour ultimately concluded that MCI’s proceedings against Leighton and Treasury were not an abuse of process. However, her Honour concluded that Mr Elliott ought to be restrained from acting for MCI while it was the lead plaintiff in the group proceedings.
Conduct of the proceeding following the first stay application
On 29 July 2014, MCI appointed a new solicitor (Mr Stewart Peters) as its solicitor on the record in place of Mr Elliott. The proceeding then continued in the trial division with directions hearings and various interlocutory applications being conducted, including applications to strike out pleadings, and the continuation of a security for costs application that had been commenced prior to the first stay application.
In October 2014, MCI filed its third further amended statement of claim, and Leighton filed and served a defence to this pleading. Leighton also provided anonymised share registry information, and a mediation was conducted on 17 December 2014.
The Court of Appeal’s decision in Treasury Wine
On 22 December 2014, the Court of Appeal, by a 2:1 majority (Maxwell P and Nettle JA in the majority, with Kyrou JA in dissent) granted leave to appeal, allowed the appeal and ordered that the proceeding against Treasury be stayed permanently. In their judgment, the majority noted that there was no challenge to any of Ferguson J’s findings that:
(a) it was unlikely that the proceeding had been commenced for the purpose of recovering compensation; and
(b) MCI commenced the proceeding for the purpose of generating legal fees for Mr Elliott — that purpose not being a purpose of earning legal fees as a desired by-product of the litigation, but rather as the predominant purpose.[11]
[11]TreasuryWine, [5]–[6].
In considering the issue of ‘purpose’, Maxwell P and Nettle JA said:
As the law stands, the only legitimate purpose for bringing a proceeding is to vindicate legal rights or immunities by judgment or settlement. Consequently, unless the predominant purpose of bringing a proceeding is a legitimate purpose, the proceeding is an abuse of process and is liable to be stayed.
The question for determination, therefore, is whether MCI’s purpose of ‘generating legal fees for Mr Elliott’ is a legitimate purpose. Plainly enough, generating legal fees does not constitute a purpose of vindicating legal rights or immunities. Obtaining payment of legal costs is but a corollary, or an incident, or a by-product, of the successful vindication of rights.[12]
[12]Ibid [9]–[10].
Their Honours then discussed relevant authority, including the High Court’s decision in Williams v Spautz.[13] Applying Williams, the majority concluded that it was no part of MCI’s purpose to secure a ‘result for which the law provides in the event that the proceedings terminate in [its] favour’.[14]
[13](1992) 174 CLR 509 (‘Williams’).
[14]TreasuryWine, [18].
Maxwell P and Nettle JA concluded:
Ultimately, the policy considerations which inform the law relating to abuse of process are twofold: to ensure that the processes of the Court are used fairly, and to maintain public confidence in the ability of the Court to function in that way. In this case, there is a palpable unfairness in a defendant being brought to court for the predominant purpose of enriching the plaintiff’s solicitor, and the community’s confidence would undoubtedly be shaken if that were held to be a legitimate purpose for bringing proceedings.[15]
[15]Ibid [22].
Conduct of the proceeding following the Court of Appeal’s decision
On 22 January 2015, the solicitor for Leighton wrote to Mr Peters referring to the Court of Appeal decision in TreasuryWine, asserting that, on the reasoning of the majority, the proceeding against Leighton was also an abuse of process.
On 12 February 2015, there was a further mediation of the proceeding. On 19 February 2015, Leighton filed its second application seeking a permanent stay of the proceeding against it.
The judgment of Sifris J
Sifris J commenced his judgment with a recitation of the history of the proceeding and the parties’ submissions. Turning to the substance of the argument, his Honour assumed (without deciding) that MCI was correct in its submission that Ferguson J’s decision, ‘despite its interlocutory nature’, was in the relevant sense, final in relation to the abuse of process issue, so as to create an issue estoppel or (as his Honour acknowledged was ‘less likely’) res judicata.[16] His Honour then discussed Arnold together with a number of decisions concerning the ability of a party to re-litigate matters decided in particular applications, including D A Christie Pty Ltd v Baker,[17] Nominal Defendant v Manning,[18] Kingston City Council v Monash City Council and Others,[19] National Parks and Wildlife Service v Pierson,[20] Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd,[21] Cassegrain v Gerard Cassegrain & Co Pty Ltd,[22] Watt v Ahsan[23] and Kermani v Westpac Banking Corporation.[24] His Honour then said:
From this very brief and non-exhaustive review of the more relevant authorities and for the purpose of this application, a number of propositions are readily apparent specifically in relation to second or subsequent interlocutory applications. First, even if the doctrine or plea of issue estoppel (and perhaps res judicata) is applicable, its application is not rigid and inflexible and there is clearly an exception for special or exceptional circumstances. There is no suggestion in any of the authorities (including Watt) that the plea is absolute particularly in relation to interlocutory matters. Secondly, in assessing whether the second or subsequent application is an abuse of process (whether as the preferred approach to issue estoppel or an alternative approach), special or exceptional circumstances are also examined in order to determine whether it is in the interests of justice to permit or refuse a second or subsequent application. Thirdly, the categories or class of cases that fall within special or exceptional circumstances (applicable whichever approach is followed), is not closed but does relevantly include a change in the law or a subsequent decision of an appellate court in another matter on the very issue particularly in circumstances where the case in which the second application is made is still in the interlocutory stage.[25]
[16]Sifris J Reasons [24].
[17][1996] 2 VR 582 (‘Christie’).
[18](2000) 50 NSWLR 139 (‘Manning’).
[19][2001] VSC 41 (‘Kingston City Council’).
[20](2002) 55 NSWLR 315 (‘Pierson’).
[21][2006] VSC 170 (‘Tenth Vandy’).
[22](2013) 305 ALR 648 (‘Cassegrain’).
[23][2008] 1AC 696 (‘Watt’).
[24](2012) 36 VR 130 (‘Kermani’).
[25]Sifris J Reasons [41] (Footnote omitted).
His Honour then concluded that if MCI was unsuccessful in its special leave application then, in his view, ‘special and indeed exceptional circumstances exist[ed]’ so as to preclude MCI from challenging the stay application made to him on the grounds of issue estoppel, res judicata and abuse of process.[26] Sifris J described the special circumstances as being the Court of Appeal’s decision in TreasuryWine. His Honour so concluded on the basis of the exception to the application of the doctrines of issue estoppel and res judicata referred to in Arnold, which his Honour said applied in the present case and was ‘entirely justified’.[27] Sifris J then went on to say that it followed that MCI’s argument based on the provisions of the Civil Procedure Act ‘must also fail’.[28] His Honour concluded:
Finally, I am not satisfied on the evidence that the conduct of the Defendant [Leighton] after the First Application has precluded it from bringing the Second Application either by estoppel or waiver. It decided not to appeal and got on with the matter. It was only when the Court of Appeal handed down its decision that [it] gave consideration to the Second Application.[29]
[26]Ibid [42].
[27]Ibid [43].
[28]Ibid [44].
[29]Ibid [45].
Was Ferguson J’s decision interlocutory or final?
It has long been held that an order staying a proceeding because it is an abuse of process is interlocutory, unless the abuse of process lies in an attempt to litigate an issue which is res judicata.[30]
[30]Dodoro v Knighting (2004) 10 VR 277, 282 [20]; Port of Melbourne Authority v Anshun Pty Ltd (No 1) (1980) 147 CLR 35, 38. See also, Tampion v Anderson (1973) 48 ALJR 11; In the Matter of an Appeal by Luck (2003) 78 ALJR 177, 179; Little v State of Victoria [1998] 4 VR 596; Lucas v Public Transport Corporation Victoria (2000) 1 VR 156. While MCI sought to contend that the first instance Canadian decision of Renaissance Leisure Group Inc v Frazer (2001) 197 DLR (4th) 336 and the first instance English decision of Bank of Scotland v Hussain [2010] EWHC 2812 (Ch) supported the proposition that an initial decision on an issue of abuse of process is to be treated as a final determination of rights, properly understood, those decisions concerned cases where there was an attempt to litigate an issue that was res judicata. In any event, to the extent that those cases might be thought not to fall within that exception, they are contrary to settled High Court authority.
In Christie, this Court had to consider a case where a plaintiff in a personal injury action, having been unsuccessful in an extension of time application under s 23A of the Limitation of Actions Act 1958, brought a second application for an extension of time to a different judge. By majority (Brooking and Hayne JJA, with Charles JA in dissent) the court held that, as there was no explanation for why material put forward on the second application was not put forward on the first application, the second application should have been stayed as an abuse of process. Hayne JA concluded that, while an order dismissing an application for an extension of time under s 23A was not a final determination of any matter between the parties and did not create an estoppel precluding the making of a second application, the second application was, in the circumstances of that case, an abuse of process.
In his judgment, Brooking JA analysed a considerable number of cases that had examined the question of issue estoppel or res judicata in relation to applications of widely varying kinds. As his Honour pointed out, some of these decisions had applied principles of issue estoppel, and some had applied principles of abuse of process. Ultimately, Brooking JA said:
We are concerned, not with the ordinary interlocutory applications made in the course of litigation, which is governed by the Court’s own practice and procedure, but with an application under a statute which empowers a court to enlarge a limitation period if it decides, after having regard to the matters mentioned, that it is just and reasonable so to do. I see no reason why an applicant who fails on the issue raised by the statute (the issue whether it is just and reasonable to extend the time) should not be caught by the principle of issue estoppel. I have the misfortune in this respect to differ both from Hayne JA and from Charles JA, each of whom considers that Hall’s Case and Carr’s Case requires the contrary conclusion.[31]
[31]Christie, 597.
As Brooking JA noted, on the question of whether the plaintiff in Christie was caught by the principle of issue estoppel, he was in the minority. However, even if one was to accept that in an application under s 23A of the Limitation of Actions Act there can be issue estoppel, as Brooking JA noted, such a conclusion would not necessarily apply to an application governed by the court’s own practice and procedure.
Consistently with authority, we are bound to conclude that Ferguson J’s decision not to stay MCI’s proceeding as an abuse of process was interlocutory — and interlocutory in the sense that it was not capable of engaging the principles of res judicata or issue estoppel.[32] It follows from this conclusion that it is not necessary for us to determine the question of whether Arnold, in so far as it provides for an exception to the application of the doctrines of res judicata and issue estoppel, is good law in Australia. That said, we would simply note what has recently been said by the NSW Court of Appeal in Charafeddine v Morgan:
Arnold v National Westminster Bank Plc appears not to have been applied by any court in Australia. In O’Toole v Charles David Pty Ltd [1991] HCA 14; 171 CLR 232 at 258, Brennan J observed that the decision of Browne-Wilkinson VC at first instance in Arnold, in which his Honour held there to be special circumstances establishing an exception to the application of the issue estoppel, ‘rests on an uncertain foundation’. Doubt as to the existence of exceptions to the application of an issue estoppel was voiced by Callaway JA in Linsley v Petrie [1998] 1 VR 427 at 449 and Murray ACJ in Squires Transport Pty Ltd v Turnor [2004] WASCA 245 at [5]. It was, however, unnecessary for their Honours to decide the question: Linsley v Petrie at 441 per Hayne JA, 449 per Callaway JA and Smith AJA; Squires Transport Pty Ltd v Turnor at [5] per Murray ACJ, [63]-[64] per Templeman J and [97] per McKechnie J.[33]
[32]See generally, the recent decision of the High Court in Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28, [20]–[24] (French CJ, Bell, Gageler and Keane JJ), and [90] (Nettle J).
[33][2014] NSWCA 74, [25] (Beazley P, with whom MacFarlan and Leeming JJA agreed). However, Arnold was applied at first instance by Gillard J in Kingston City Council [2001] VSC 41, [108] [137]–[139] [173]. See further Commonwealth of Australia v Cockatoo Dockyard Pty Ltd [2006] NSW CA 322, [434]–[437] and [460]–[465].
Was the second application for a stay an abuse of process?
In Christie, a majority of the Court concluded that the making of the second s 23A application, in circumstances where there was no explanation for not putting forward on the first application the additional material that was relied upon in the second application, was an abuse of process. Leighton submits that the circumstances of its second application are relevantly distinguishable from those in Christie. It contends that, in circumstances where it moved with reasonable diligence following the Court of Appeal’s decision in Treasury Wine, it was not an abuse of process to bring a second application once the Court of Appeal had determined, on identical facts, that there was an abuse of process by MCI.
In support of its submission, Leighton relies upon the New South Wales Court of Appeal’s decision in Manning.[34] In Manning, Heydon JA said:
The point is that there are considerable differences between the particular goals of each type of [interlocutory] order, and the categories of circumstances in which each type of order is made. These differences make it difficult to propound a general rule suitable for all cases when the controversy in one specific case for decision does not have characteristics which are common to all categories. Not only are the categories different, but the circumstances of particular cases falling within each category are almost infinitely various. It is unlikely that a single set of rigid and exhaustive criteria could justly settle all issues.[35]
[34](2000) 50 NSWLR 139 (Mason P, Heydon JA and Foster AJA).
[35]Manning, 147–8 [45].
Mason P, although dissenting in the result, agreed with Heydon JA on this point. His Honour said:
There will be cases in which the attempt to revisit a contested interlocutory application without change of circumstances or genuinely fresh evidence will not amount to an abuse of process. For example, the opposition to an application for an interlocutory injunction on the first return of the motion may be of such a perfunctory nature on both sides that an attempt to revisit the issue at the interlocutory stage would not be an abuse of process even if the evidence were accessible to the defendant on the first occasion. One can also conceive of situations where the revisiting of a legal proposition adopted or assumed in an earlier interlocutory hearing would not constitute an abuse of process. For example, new and unexpected appellate authority may have arrived on the scene.
To concede that there may be exceptions to the rule of practice does not mean that there is no general rule. Nor does it mean that the rule of practice is a matter of pure discretion. Nor does it mean that cases falling within the letter and spirit of the rule of practice are any less abuses of process. The present case falls squarely within the ambit of the rule of practice.
I agree with the reasoning of Hayne JA in Christie. Subject to possible and presently irrelevant exceptions, the principle expressed as ‘the ordinary rule of practice’ in Brimaud means that an attempt to evade that principle in a second substantive interlocutory application is an abuse of process. Once the Court detects this and satisfies itself that the case falls within the letter and spirit of the rule of practice then the application should be dismissed.[36]
[36]Ibid 143–4 [17]–[19] (emphasis added).
In our view, Sifris J was right when he concluded that Leighton’s second application for a stay did not constitute an abuse of process. Assuming the correctness of the Court of Appeal’s decision in Treasury Wine, Leighton’s first application for a stay was wrongly refused. Upon learning of the Court of Appeal’s decision in Treasury Wine, Leighton promptly commenced a second application in which it noted the relevant change of circumstances. Like Sifris J, we are unable to see how, in the circumstances of this case, it can be said that Leighton’s second application for a stay was an abuse of process. For the same reasons, we also agree with Sifris J that the proper application of the provisions of the Civil Procedure Act did not require the dismissal of Leighton’s second stay application.[37] Indeed, in our view, it would have been wrong for Sifris J to dismiss the second stay application in reliance upon the Civil Procedure Act or any of its provisions.
[37]The specific provisions of the Civil Procedure Act 2010 that were relied upon by MCI were ss 16, 18(c), 20, 23 and 24, the sanction for non-compliance with which, MCI said, should have been the dismissal of the second application with costs, pursuant to ss 28 and 29 of the Civil Procedure Act.
Is the majority decision in Treasury Wine ‘plainly wrong’?
This Court is bound to follow Treasury Wine unless we determine that it is ‘plainly wrong’.[38] The test is a stringent one[39] and all the more so given that Treasury Wine is a very recent decision of this Court.
[38]Commissioner for State Revenue v Challenger Listed Investments (2011) 34 VR 617, 621–622 [20]–[23].
[39]DPP v Stevedores Holdings Pty Ltd (2012) 296 ALR 156, 180–181 [113]–[117].
MCI submits that in finding an abuse of process on the basis that the proceeding was commenced for the predominant purpose of obtaining legal fees for Mr Elliott, the majority in Treasury Wine ‘created a new and indeterminate category of abuse of process in Australian law and contradicted the ratio decidendi of the High Court’s decision in Williams’. Further, MCI contends that the majority ‘failed to recognise and give effect to the fundamental legal distinction between a plaintiff’s motive for commencing a proceeding and the purpose for which the proceeding itself is commenced or maintained’.
MCI submits that the ratio of Williams is that a proceeding is brought for an improper purpose, and thus constitutes an abuse of process, where the purpose of bringing it is not to prosecute it to a conclusion but to use it as a means of obtaining some advantage for which the proceeding is not designed or some collateral advantage beyond that which the law offers. It may be accepted that, in the course of its discussion of the boundaries of abuse of process, the plurality[40] described an abuse of process constituted by the bringing of a proceeding for an improper purpose in these terms. Equally, it may be noted that, as part of the same discussion, the plurality said:
To say that a purpose of a litigant in bringing proceedings which is not within the scope of the proceedings, constitutes, without more, an abuse of process might unduly expand the concept. The purpose of the litigant may be to bring the proceeding to a successful conclusion so as to take advantage of an entitlement or benefit which the law gives the litigant in that event.
Thus, to take an example mentioned in argument, an alderman prosecutes another alderman who is a political opponent for failure to disclose a relevant pecuniary interest when voting to approve a contract, intending to secure the opponent’s conviction so that he or she will then be disqualified from office as an alderman by reason of that conviction, pursuant to local government legislation regulating the holding of such offices. The ultimate purpose of bringing about disqualification is not within the scope of the criminal process instituted by the prosecutor. But the immediate purpose of the prosecutor is within that scope. And the existence of the ultimate purpose cannot constitute an abuse of process when that purpose is to bring about a result for which the law provides in the event that the proceeding terminates in the prosecutor’s favour.
It is otherwise when the purpose of bringing the proceedings is not to prosecute them to a conclusion but to use them as a means of obtaining some advantage for which they are not designed or some collateral advantage beyond what the law offers.[41]
[40]Mason CJ, Dawson, Toohey and McHugh JJ.
[41]Williams, 526–7.
A little later on, the plurality said:
Much earlier, Isaacs J was at pains to distinguish between motivation and abuse of process. Enquiry into motivation alone might prove a fragile foundation on which to base an exercise of the power to grant a permanent stay. For that reason, apart from any other, it is more satisfactory to base an exercise of the jurisdiction in cases of improper purpose upon a use or threatened use of the proceedings for such a purpose. Then the conclusion which the court reaches is more likely to be founded upon objective evidence rather than subjective evidence of intention.
…
It has been suggested that the criterion for abuse of process is whether the improper purpose is the sole purpose of the moving party. However, in more recent times it has been said, in our view correctly, that the predominant purpose is the criterion.
…
It is, of course, well established that the onus of satisfying the court that there is an abuse of process lies upon the party alleging it. The onus is ‘a heavy one’, to use the words of Scarman LJ in Goldsmith v Sperrings Ltd and the power to grant a permanent stay is one to be exercised only in the most exceptional circumstances.[42]
[42]Ibid 529 (citations omitted).
One can debate at length whether some of the language used in the judgment of the majority in Treasury Wine might, in some circumstances and taken out of context, be regarded as too wide. However, that would be a sterile debate. The real question is whether the majority’s conclusion, addressed to the circumstances of the case, that MCI’s proceeding against Treasury was an abuse of process, was correct.
As the majority in Treasury Wine noted, there was no challenge on the appeal to the following findings made by Ferguson J, namely:
(a) MCI had commenced its proceedings against Treasury and Leighton for the purpose of having Mr Elliott act as its solicitor so that he could earn fees;
(b) it was unlikely that MCI’s proceeding had been commenced for the purpose of recovering compensation (the maximum amount of which would have been something less than $700); and
(c) MCI commenced proceedings for the purpose of generating legal fees for Mr Elliott — not as a desired by-product of the litigation, but as the predominant purpose.
We see no error in the conclusion of the majority that the proceeding was brought for an improper purpose, to use them as a means of generating income for Mr Elliott rather than to recover compensation. It is one thing to commence a proceeding for the purpose of obtaining substantive relief, and in the knowledge that if one is successful then costs will likely follow the event. It is another to have commenced a proceeding for the predominant purpose of simply generating income for a legal practitioner in circumstances where the value of any loss meant that it was unlikely that the proceeding had been commenced for the purpose of recovering compensation. We agree with the majority in Treasury Wine that commencing a proceeding, in the circumstances we have described, for the predominant purpose of generating income for a legal practitioner, was and is an abuse of process.
MCI’s remaining arguments
MCI advanced two further arguments.
First, it submitted that Sifris J was wrong merely to mirror the Court of Appeal’s conclusion in Treasury Wine. In support of this submission, MCI contended that the question for Sifris J was whether the proceeding was an abuse of process at the time of the second application. MCI noted that by the time of the second application the position was very different from the position at the time of the first application. Specifically, Mr Elliott had been replaced as MCI’s solicitor by Mr Peters, and an undertaking had been given not to engage Mr Elliott as a solicitor in the proceeding or otherwise to engage Mr Elliott to provide legal services in the proceeding for remuneration.
Secondly, MCI submitted that, by reason of Leighton’s failure to seek leave to appeal from the decision of Ferguson J, MCI had incurred significant expense in continuing to prosecute its proceeding against Leighton and in engaging in the various interlocutory steps to which we have already referred.
We do not think there is substance in either of these two arguments. Sifris J having concluded (correctly in our view) that the commencement of the proceeding was an abuse of process was well-entitled to order a stay notwithstanding MCI’s attempts to ‘mend its hand’. In this regard, we note that the majority in Treasury Wine did not regard the equivalent change of circumstances in that case as being a matter sufficient to change the outcome of the result of the stay application.
As to such expense as has been incurred in prosecuting the original proceeding between the time of Ferguson J’s order and the hearing of the second stay application, properly analysed, we think that little (if any) of these costs will in fact be wasted. It seems to us that all of that work is work that would have needed to have been done in the second proceeding (issued immediately following Sifris J’s judgment) and/or is work, the benefit of which can be used in that proceeding.
Conclusion
MCI’s appeal does not have a real prospect of success. Accordingly, its application for leave to appeal must be refused.
We mentioned above that Sifris J indicated that if the High Court refused special leave from Treasury Wine he would order a permanent stay of the proceeding. We have noted that the High Court did refuse special leave on 15 May 2015. In the circumstances we have described above, we consider it appropriate that this Court now grant a permanent stay.
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