Mendonca v Matthews Folbigg Pty Ltd

[2021] NSWSC 554

Supreme Court

New South Wales

Medium Neutral Citation:

Mendonca v Matthews Folbigg Pty Ltd [2021] NSWSC 554

Hearing dates:

16 April 2021

Date of orders:

21 May 2021

Decision date:

21 May 2021

Jurisdiction:

Common Law

Before:

Wilson J

Decision:

(1)   Leave to the plaintiff to file a Further Amended Statement of Claim is refused;

(2)   The Amended Statement of Claim filed on 15 July 2020 is struck out;

(3)   Subject to order (4), the plaintiff is to pay the defendants’ costs as agreed or assessed;

(4)   If any party seeks a different order as to costs written submissions in support of such an order are to be filed via email to my Associate, and served, by 4pm on 28 May 2021; with any submissions in reply similarly filed and served by 4pm on 4 June 2021.

Catchwords:

PRACTICE AND PROCEDURE – motion for strike out of proceedings – cross application for leave to file further amended statement of claim – professional negligence – question of negligence of solicitors acting on property purchase – where solicitors acted for both parties in a complex purchase arrangement – where contractual matters already determined in previous proceedings – factual findings foundational to current action – Anshun estoppel – abuse of process – orders made

Legislation Cited:

Universal Civil Procedure Rules 2005

Cases Cited:

Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231

Mendonca v Tonna [2020] NSWCA 196

Port of Melbourne Authority v Anshun Proprietary Limited (1981) 147 CLR 589; [1981] HCA 45

Reichel v Magrath (1889) 14 App Cas 665

Rippon v Chilcotin Pty Lty & Ors [2001] NSWCA 142; (2001) 53 NSWLR 198

Tomlinson v Ramsey Food Processing Pty Ltd (2005) 256 CLR 507; [2015] HCA 28

Tonna v Mendonca [2019] NSWSC 1849

Category:

Principal judgment

Parties:

Renuka Maria Mendonca (Plaintiff)
Matthews Folbigg Pty Ltd (Defendant 1)
Stuart Gough (Defendant 2)

Representation:

Counsel:
D Robertson / N Li (Plaintiff)
S Donaldson SC / G Ng (Defendants)

Solicitors:
Unsworth Legal Pty Ltd (Plaintiff)
YPOL Lawyers (Defendants)

File Number(s):

2020/28345

Publication restriction:

Nil

Judgment

1. HER HONOUR: On 16 April 2021 the Court heard evidence and submissions relevant to two Notices of Motion: the first filed by the defendants on 9 October 2020; and the second filed by the plaintiff on 16 November 2020. Orders and reasons were reserved until today.

2. Both Motions relate to proceedings commenced by the plaintiff by Statement of Claim ("SoC") filed on 28 January 2020. An Amended Statement of Claim ("ASoC") was filed on 15 July 2020. The Motion filed on behalf of the defendants seeks orders dismissing the plaintiff's claim, or ordering the proceedings permanently stayed, or striking out the ASoC. The Motion filed on behalf of the plaintiff seeks leave to file a proposed Further Amended Statement of Claim ("PFASoC"). Both Motions raise a common issue: whether the plaintiff's case as pleaded in the PFASoC would constitute an abuse of process having regard to prior proceedings between the plaintiff and two other parties.

3. On the date of hearing the parties submitted that it was the plaintiff's Motion to which the Court should give attention since, in filing that Motion, the plaintiff signalled an acceptance of the force of the defendants' arguments, and there was no real issue taken with the defendants' Motion. That is the approach the Court has adopted.

The Background to the Motions

4. The Motions relate to the purchase of a property at Galston that settled on 31 January 2014. Mark Tonna and Lorraine Tonna ("the Tonnas"), the proposed buyers of the property, contracted to purchase the Galston house and land, but ran into difficulties with finance pending the sale of a property they owned at Schofields. A plan was developed whereby the Tonna purchase would proceed, but on the understanding that the plaintiff would simultaneously buy the Galston property from the Tonnas, with the purchase monies paid by the plaintiff to the Tonnas used by them to make up the shortfall in their funding, allowing them to complete the Galston purchase. The funds that the Tonnas contributed to the settlement in turn formed part of the monies used by the plaintiff to complete her purchase.

5. The first defendant, Matthews Folbigg, is a firm of solicitors; Stewart Gough, the second defendant is a director of the first defendant. The firm and Mr Gough acted for the Tonnas in relation to the purchase of the Galston property. When the Tonnas were unable to complete the purchase due to a shortfall in finance, and were subject to a Notice to Complete from the vendor, the Tonna's financial adviser, the plaintiff's husband, Gerard Mendonca, suggested that the plaintiff could assist them to complete the purchase.

6. The proposal was, broadly, for the plaintiff to complete the purchase of the Galston property, with the Tonnas paying all expenses connected with her purchase, and the plaintiff later conveying the Galston property back to the Tonnas. The proposal was agreed by all participants, and the first and second defendants were engaged to act for the plaintiff on the purchase of the Galston property from the Tonnas.

7. Thus the defendants held a retainer to act for both the Tonnas in their purchase of the Galston property, and for Dr Mendonca in her simultaneous purchase of the same property from the Tonnas.

8. The sale transactions were completed on 31 January 2014.

9. Thereafter, a dispute arose between the plaintiff and the Tonnas as to the terms upon which the plaintiff purchased the Galston property. The Tonnas contended that the plaintiff was to hold the legal title to the property on trust for their sole benefit until the sale of a property owned by Mr and Mrs Tonna at Schofields permitted them to repay the plaintiff's contribution to the purchase monies and, thereafter, on direction from them, the plaintiff was to transfer the Galston property back to the ownership of the Tonnas.

10. The plaintiff denied that she was a trustee for the Tonnas, contending that there was no legally binding agreement for her to hold the Galston property on trust for them. Her position was that she bought the Galston property from the Tonnas, thus assisting them to avoid the substantial financial loss that would have followed should they have been unable to complete the contract for the purchase of the Galston property, and she held the Galston property for her own benefit. Such of the purchase monies for the Galston property as had been contributed by the Tonnas, Dr Mendonca asserted was a loan from them to her.

11. The whole dispute came before this Court in 2019 when Ward CJ in Eq heard and determined the competing claims, holding generally in favour of the Tonnas: Tonna v Mendonca [2019] NSWSC 1849 ("the 2019 judgment"). That judgment was handed down on 20 December 2019.

12. A month or so later, on 28 January 2020, the plaintiff filed the SoC that commenced the present proceedings, raising claims of professional negligence amongst other complaints against the first and second defendants, based upon asserted deficiencies in their conduct of the sale and purchase agreements relating to the Galston property on the plaintiff's behalf. That claim was filed three days before the date which marked the expiration of six years after the contentious sale of the Galston property settled.

13. The plaintiff also filed an appeal against the 2019 judgment of Ward CJ in Eq, commencing the appeal by Notice filed on 17 March 2020. The appeal was later, on 26 August 2020, dismissed by the Court of Appeal: Mendonca v Tonna [2020] NSWCA 196. An application for leave to appeal to the High Court was also dismissed.

14. On 15 July 2020, the plaintiff filed the ASoC against the defendants (not serving it on them until 4 September 2020). As at the date of filing, she was represented by HWL Ebsworth, although that firm filed a Notice of Ceasing to Act a week later.

15. Subsequently, the defendants wrote to the plaintiff, identifying potential difficulties with the ASoC, and inviting her to withdraw the current proceedings. When that did not occur, the defendants filed the present Motion. The plaintiff's response was to file her Motion of 16 November 2020, seeking leave to file a PFASoC. As the defendants submit, implicitly, in seeking to file the PFASoC, the plaintiff accepted the force of the matters raised by the defendants concerning the ASoC.

16. The defendants contend, broadly, that the plaintiff is seeking to relitigate matters already determined in the 2019 judgment and is precluded from doing so by principles of issue estoppel, or because the claim constitutes an abuse of process. The plaintiff contends that her proposed claim, as articulated by the PFASoC, is not one encompassed by the 2019 judgment and she should be granted leave to file it.

17. Her Honour's 2019 judgment is the essential background to the Motions now brought before the Court. This judgment assumes familiarity with her Honour's detailed account of the background to the dispute between the Tonnas and Dr Mendonca, and her consideration and resolution of the issues to be determined.

The Plaintiff's Notice of Motion

18. The plaintiff asks the Court to make the following order:

"1. The plaintiff be granted leave to file a further amended statement of claim in the form at Annexure A to this motion."

The Evidence

19. The plaintiff relies on her affidavit sworn 7 December 2020.

20. The first and second defendants rely upon the affidavit of Dougal James Langusch sworn 9 October 2020 together with a volume of documentary material, Ex. DJL-1.

The Plaintiff's PFASoC

21. Against the background of the Tonna's stalled purchase of the Galston property, and the Notice to Complete that had been served on them with respect to the settlement of their purchase, the plaintiff seeks to advance the following case against the defendants in the PFASoC.

22. At some point between 23 and 29 January 2014 Mr Gough and Mr Tonna, taking up the suggestion of the plaintiff's husband, developed a plan to ensure that the Tonna's could complete the purchase of the Galston Property. The plaintiff was to purchase the Galston Property, with the Tonnas paying all associated expenses, and the thereafter conveying the property back to the Tonnas. This plan is referred to as the "Substitution Solution".

23. The plaintiff retained Matthews Folbigg to provide legal services during the transaction. In particular, the plaintiff asserts in the PFASoC that "Mr Gough's agreement to act for Dr Mendonca on Dr Mendonca's purchase of the Galston Property was for the purposes of giving effect to the Substitution Solution".

24. By 30 January 2014, the Substitution Solution was varied ("the Amended Substitution Solution") so that, whilst the Tonnas remained the named purchasers under the purchase contract they had entered for the Galston property, they also entered into a separate contract for the sale and purchase of the Galston Property with the plaintiff. That contract was entered into and completed on 30 January 2014, with ownership of the Galston property passing to the Tonnas, and immediately thereafter from them to the plaintiff.

25. In completing her purchase from the Tonnas, the plaintiff relied upon $438,260 in funds contributed to the purchase price by the Tonnas.

26. In the ASoC the plaintiff asserted that, in purchasing the Galston property, she intended to obtain both the legal and beneficial title to the Galston Property, to the exclusion of any other person including the Tonnas, so that she could use it as an investment property, potentially leased to a tenant. She said that she relied upon the defendants to prepare an agreement to ensure that outcome.

27. In the PFASoC the plaintiff asserts that the defendants breached contractual and common law duties of care to her by failing to advise her that her purchase from the Tonnas was likely to give rise to the Tonnas having a proprietary interest in the Galston Property, and to advise her of the differing legal and economic consequences of the purchase. She alleges that the defendants also breached the fiduciary obligations owed to her by failing to cease to act for her in circumstances where there was a possibility of a conflict between them and the plaintiff, given that they also acted for the Tonnas. It is the plaintiff's proposed claim that, had she been properly advised by the defendants, she would not have purchased the Galston property in the way that she did, but rather would have ensured that her purchase was not subject to any claim, entitling her to the full benefit of economic gains made in the Galston property.

28. The plaintiff argues that leave to rely on the PFASoC should be granted, as there could be no unfair prejudice to the defendants if she were given that leave, whilst she would be irreparably prejudiced if leave was refused, and she was prevented from seeking relief for what are said to be breaches by the defendants of the terms of their retainer, duties of care, and fiduciary duties. She contends that her PFASoC does not raise matters that have already been considered by the Court, and there is no issue of estoppel or abuse of process.

The 2019 Judgment

29. In her judgment, Ward CJ in Eq made numerous factual findings, which were foundational to her Honour's final disposition of the matter, and which are of direct relevance to the present proceedings. Ultimately, her Honour concluded that there was a resulting trust over the Galston property for the plaintiff's benefit and that of the Tonnas, in shares proportionate to the financial contribution each made to the purchase price. Her Honour rejected the plaintiff's claim that she purchased the property for her sole benefit, and also rejected her allegation that the Tonnas were in breach of a residential tenancy or licence entered into to permit them to reside at the Galston property.

30. Her Honour found, at [408] - [409]:

"It must have been very clear to Dr Mendonca at the 29 January 2014 meeting (unless she had abandoned all decision-making to her husband - which she denies; or was taking no part in the discussion at all - which is not what I understand her evidence to be) that what was contemplated in that discussion was that she would acquire the Galston Property and that, at some point in the future (relevantly, with a proposed sunset date of 30 June 2015), the arrangement would be that Mr and Mrs Tonna would buy it back or it would be transferred back (whichever, of the two ways in which the discussion has been put, was how it was then framed).

It is hard to see how, at least by the conclusion of that meeting, Dr Mendonca could honestly have thought that the arrangement being contemplated was one in which she would acquire an investment property in which Mr and Mrs Tonna would have no future interest (and with which she would be free to deal from the day of its acquisition), i.e., one in which she would take the Galston Property "off their hands" for good. That would make no sense in relation to the discussion that Mr Tonna was to make all decisions in relation to the Galston Property and bear all the expenses. Indeed, if that were in fact the position Dr Mendonca considered to be the case during the course of that meeting (that she was acquiring the property outright and Mr and Mrs Tonna would have no entitlement to acquire the property at a later time, on whatever basis or terms might have been agreed) then this would raise the spectre of equitable fraud because it is abundantly clear that, whatever else was being discussed, there was discussion as to an arrangement whereby at some point in the future Mr and Mrs Tonna would have some right or entitlement either to buy the Galston Property back or have it transferred back to them; and if she was of the view that there would be no such right or entitlement it was surely incumbent on Dr Mendonca to disabuse them of that misapprehension."

31. She continued at [436]:

"I have no difficulty with the proposition (and I so find) that there was an agreement in principle, in broad terms, that Dr Mendonca would purchase the Galston Property from Mr and Mrs Tonna (in a settlement to occur simultaneously with the settlement of the purchase by Mr and Mrs Tonna of the Galston Property under their first contract of sale); that the deposit paid by Mr and Mrs Tonna would be in effect applied towards Dr Mendonca's purchase of the Galston Property from Mr and Mrs Tonna (but was not intended as a gift to Dr Mendonca); that Mr Tonna would pay all the expenses associated with the purchase by Dr Mendonca of the Galston Property and in relation to the Galston Property (including mortgage repayments); and that when the sale of the Schofields Property completed or Mr and Mrs Tonna were otherwise able to secure funds, the Galston Property would be transferred back to them or bought back by them. It is clear beyond doubt, in my opinion, that this was the understanding reached between the parties at the 29 January 2014 meeting."

32. Later, at [474] - [478], her Honour said:

"I am not persuaded that the intention of the parties at the time of Dr Mendonca's registration as legal owner on the title to the Galston Property was that Dr Mendonca was to have an immediate unconditional interest in the Galston Property without in some way taking into account Mr and Mrs Tonna's expectations and their contribution to the acquisition of the purchase price.

It was not the case that Mr and Mrs Tonna were here intending to make a gift of the deposit moneys to Dr Mendonca, nor were they gifting to her the other moneys contributed by their own family members to the acquisition of the Galston Property (the so-called "shortfall"). Nor can they be seen to have been agreeing to pay all expenses in relation to the Galston Property out of some form of altruism or charity to Dr Mendonca. To my mind, to find such an intention existed between the parties would defy logic and is inconsistent with the contemporaneous documents in evidence. Why the Tonnas would be assisting Dr Mendonca, a medical practitioner, who (according to the email sent by Mr Mendonca on 7 January 2014 referred to at [48] above) makes $150,000 a year, has no debt, and already owns two investment properties, acquire another property, makes no sense and is highly improbable.

Further, I am not satisfied that this was simply a loan arrangement (whereby the amount so contributed could be recovered on demand or otherwise from Dr Mendonca). The very fact that no demand was made for those amounts reinforces that Mr and Mrs Tonna understood that they were in effect making a contribution to the purchase price of the Galston Property in which they were to have an interest (in fact, they understood it would be their property); and it is telling that Dr Mendonca herself made no effort to repay those moneys (although professing that she was always willing to do so). Moreover, there is real doubt as to what amount Dr Mendonca would have been the subject of the so-called loan agreement (or at least as to how it could be determined in advance).

Thus, I conclude that it was not intended at the time of the acquisition of the Galston Property by the parties that Dr Mendonca would then be free to do whatever she wanted with the Galston Property (at least until the expiry of the "sunset date" of 30 June 2015 of which there was discussion at the 29 January 2014 meeting) to the exclusion of Mr and Mrs Tonna.

Accordingly, I do not accept that registration of the transfer to Dr Mendonca was intended by the contributors to the purchase price to confer on Dr Mendonca an immediate unconditional beneficial interest in the Galston Property free of any claim by Mr and Mrs Tonna in relation to their contribution to the Galston Property. I thus find that the Galston Property is held on resulting trust by Dr Mendonca for herself and Mr and Mrs Tonna as tenants in common in shares reflecting their respective contributions to the Galston Property. That contribution, in Dr Mendonca's case, is the $1.08 million she borrowed from ANZ; in Mr and Mrs Tonna's case, their contribution comprises the sums of $145,000 plus $225,000 plus the legal expenses and stamp duty in relation to the acquisition of the Galston Property by Dr Mendonca (but not the stamp duty and legal expenses in relation to the first contract of sale entered into by Mr and Mrs Tonna as purchasers; nor any legal costs referable to the financing issues or disputes in relation to the first contract of sale)."

33. As can be seen from the portions extracted from the 2019 judgment, findings of fact as to the intentions of the plaintiff and the Tonnas when contracting for the purchase of the Galston property were important; indeed, they might fairly be regarded as fundamental to her Honour's conclusions.

Determination

34. In the ASoC filed by the plaintiff, she asserts the following in the pleadings and particulars to the claim:

"3C Further and in the alternative, the defendants knew or ought to have known that, and it was the fact that the plaintiff:

(d) intended to obtain the legal and beneficial title to the Galston Property to the exclusion of any other person, including the Tonnas;

(e) intended to purchase the Galston Property as an investment property, to be owned by her in her own right, and to be leased by her to a third party, including potentially the Tonnas, in consideration for rental income;

(f) did not intend to purchase the Galston Property as an investment property, to be as a trustee to hold the title on trust for the benefit of the Tonnas in any proportion, or at all".

35. As is pointed out by the defendants’ motion, these particulars are inconsistent with and traverse the conclusions of Ward CJ in Eq.

36. To that extent, the claim is, as the defendants submit and the plaintiff by her Motion seeking to file the PFASoC seems to acknowledge, one that cannot be maintained.

37. The PFASoC, it is asserted, does not turn on the plaintiff's intention in making the purchase of the Galston property, but it is difficult to see how the question of her intention is other than a matter of considerable continuing relevance. Dr Mendonca says that, had she been better or differently advised, she may have formed a different intention, but that seems to be contrary to the evidence that she relied upon in the proceedings before Ward CJ in Eq, evidence that the plaintiff can now hardly resile from, even though her Honour did not entirely accept it. For example, at [93] - [94] her Honour observed that:

"Dr Mendonca was cross-examined at some length as to aspects of this conversation [with her husband concerning the arrangements about the Galston property]. She was adamant that she had not been prepared to talk about this while she was on holiday with her family. More than once, Dr Mendonca (in evidence that was suggestive of some past, if not indeed continuing, disharmony in the relationship with Mr Mendonca) said that she did not wish to start a fight; her position being that she wanted to enjoy their holiday (see for example at T 485.39). There are aspects of Dr Mendonca's evidence as to the conversations about the Galston Property purchase (to which I will refer in due course) that I find implausible. While her refusal to engage in discussion about the acquisition of a property in Galston while she was on holiday with her children (and her desire not to start a fight about it), and her seemingly supreme indifference as to whatever indicative loan approval Mr Mendonca might have obtained, strikes me as not implausible, it does make her subsequent conduct less credible. For her to place such emphasis in cross-examination on not wanting to start a fight with her husband when the Galston Property issue was raised with her on 26 January 2014 is difficult to square with the seeming docility with which Dr Mendonca then seems to have been immediately willing to engage in such a discussion (on her evidence either at the airport in Queensland on her way back from the Gold Coast or in the car on the drive to her home at Northmead) and indeed the alacrity with which she seems to have then responded to the proposal put to her on 29 January 2014 that she acquire a property about which (on her evidence) she knew almost nothing and to do so within a very short space of time. It is also difficult to accept that Dr Mendonca did not raise with her husband (her tax accountant) what amount ANZ was prepared to lend her at the time.

In any event, Dr Mendonca's position is that she asked no questions about the Galston Property or the indicative loan approval when the subject was raised with her on 26 January 2014 (and, indeed, her evidence is that she never asked Mr Mendonca the amount of the indicative loan approval)."

38. At [128], her Honour summarised some of the plaintiff's evidence concerning her purchase of the Galston property, thus:

"Dr Mendonca was cross-examined as to her recollection of events on 29 January 2014. Her recollection of events may be summarised as follows: there was a discussion (either at the airport while on the Gold Coast or in the car from the airport in Sydney to their Northmead home) in which Mr Mendonca asked if she was interested in purchasing a property at Galston and told her he had an indicative pre-loan approval from ANZ (her bank) but not the amount of that approval; they landed at Sydney airport; she cannot recall if they had taken more than carry-on luggage or if they had to wait for luggage at the luggage carousel; they had parked at a Park and Ride facility and she thinks the family either caught a shuttle bus to pick up the car or Mr Mendonca collected the car and picked the family up at the airport; they travelled to the Northmead home and unpacked the car (which took about 5 minutes); Mr Mendonca showed her the advertising brochure for the Galston Property; they dropped the children at the child care facility (and had to arrange lunch there for the children as they were too late for lunch); then they drove to Matthews Folbigg's Parramatta office where there was a short meeting (not attended by Mr and Mrs Tonna); then they drove to the ANZ branch at Wentworthville where, without an appointment, she saw a bank officer who looked her details up on a screen and told her she could borrow around a million dollars; then they returned to Mr Gough's office for a meeting with Mr and Mrs Tonna. Dr Mendonca says that at some time in that chronology of events, they drove past the Galston Property so she could see the property although she accepted that she would not have been able to see inside the Galston Property on that occasion."

39. The plaintiff's evidence on a number of issues was found by her Honour to be implausible, or lack credibility. Notwithstanding those conclusions, her Honour was satisfied that it was clear on the plaintiff's evidence that her interest in purchasing the Galston property was as an investment property (at [317]). She denied at all times any other intention in making the purchase.

40. Against that background the plaintiff now proposes to claim that the defendants breached their contractual and common law duties of care to her. The plaintiff's claim as to causation relies upon the premise, not pleaded or particularised, of her intention. It is the unstated foundation of the PFASoC that the plaintiff’s firm intention was the acquisition of an investment property, an intention which was frustrated by the failures of the defendants. Necessarily, a critical part of the claim rests upon the asserted intentions, one which is contrary to the facts found by Ward CJ in Eq.

41. To pursue that claim, it would be necessary to relitigate the issue of Dr Mendonca's intention in and understanding of her entry into the Amended Substitution Solution. It would also be necessary to advance a case that traversed the findings of Ward CJ in Eq to the effect that both the Tonnas and the plaintiff intended that the Tonnas would acquire an interest in the Galston property with the plaintiff's purchase of it.

42. The plaintiff's assertion to the Court (not pleaded in the PFASoC) that, had she been properly advised she would have formed a different intention seems to contradict her own evidence in the 2019 proceedings as to an intention to acquire an investment property, and to rest upon speculation. It is not clear why the defendants were obliged under their retainer to advise the plaintiff to decline to participate in an arrangement through which she acquired an investment property, an acquisition made possible by the substantial financial contribution by the Tonnas, and from which she profited.

43. I accept the submission of the defendants that:

"… seeking, in these proceedings, findings that a renegotiation would have occurred had Matthews Folbigg or Mr Gough discharged the duties that they are said to have owed, and that such a renegotiation would have produced a commercial outcome more favourable to Dr Mendonca, involves relitigating issues concerning the states of mind of the parties in connection with the agreement in principle and the consequent transactions."

44. The plaintiff's PFASoC would necessarily assert factual matters that contradict or are inconsistent with findings of fact made by Ward CJ in Eq on the basis of the same evidence as would be advanced in the proposed case. The defendant argues, and I accept, that the plaintiff is estopped from doing so, in accordance with the principle first given in Port of Melbourne Authority v Anshun Proprietary Limited (1981) 147 CLR 589; [1981] HCA 45.

45. In Tomlinson v Ramsey Food Processing Pty Ltd (2005) 256 CLR 507, at [19] - [23]; [2015] HCA 28 the principle was discussed:

“To put the principle governing who is privy in interest stated and applied in Ramsay v Pigram in perspective, however, it is appropriate to say something more generally as to the place of issue estoppel in Australian law.

An exercise of judicial power, it has been held, involves “as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons” [1] . The rendering of a final judgment in that way “quells” the controversy between those persons [2] . The rights and obligations in controversy, as between those persons, cease to have an independent existence: they “merge” in that final judgment. [3] That merger has long been treated in Australia as equating to “res judicata” in the strict sense [4] .

Estoppel in relation to judicial determinations is of a different nature. It is a common law doctrine informed, in its relevant application, by similar considerations of finality and fairness [5] . Yet its operation is not confined to an exercise of judicial power; it also operates in the context of a final judgment having been rendered in other adversarial proceedings [6] . It operates in such a context as estoppel operates in other contexts: as a rule of law, to preclude the assertion of a right or obligation or the raising of an issue of fact or law [7] .

Three forms of estoppel have now been recognised by the common law of Australia as having the potential to result from the rendering of a final judgment in an adversarial proceeding. The first is sometimes referred to as “cause of action estoppel” [8] Estoppel in that form operates to preclude assertion in a subsequent proceeding of a claim to a right or obligation which was asserted in the proceeding and which was determined by the judgment. It is largely redundant where the final judgment was rendered in the exercise of judicial power, and where res judicata in the strict sense therefore applies to result in the merger of the right or obligation in the judgment. The second form of estoppel is almost always now referred to as “issue estoppel” [9] . Estoppel in that form 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 [10] . The classic expression of the primary consequence of its operation is 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”: Blair v Curran (1939) 62 CLR 464 at 531; Kuligowski v Metrobus (2004) 220 CLR 363 at 373 [21]. The third form of estoppel is now most often referred to as “Anshun estoppel” [11] , although it is still sometimes referred to as the “extended principle” in Henderson v Henderson [12] . That third form of estoppel is an extension of the first and of the second. Estoppel in that extended form operates to preclude the assertion of a claim [13] , or the raising of an issue of fact or law [14] , 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 [15] . The extended form has been treated in Australia as a “true estoppel” [16] and not as a form of res judicata in the strict sense [17] . Considerations similar to those which underpin this form of estoppel may support a preclusive abuse of process argument.

The present significance of the recognition of those three forms of estoppel is that each has the potential to preclude assertion of a right or obligation, or the raising of an issue of fact or law, between parties to a proceeding or their privies. Absent a principled basis for distinction – and none has been suggested – one principle must govern the identification of privies for the purpose of all forms of estoppel which result from the rendering of a final judgment in an adversarial proceeding.”

1. R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 374.

2. Fencott v Muller (1983) 152 CLR 570 at 608.

3. Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73 at 106; Blair v Curran (1939) 62 CLR 464 at 532; Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 510.

4. Blair v Curran (1939) 62 CLR 464 at 532; Jackson v Goldsmith (1950) 81 CLR 446 at 466; cf Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2014] AC 160 at 180 [17].

5. Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575 at 604 [36]; D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at 17 [34].

6. Administration of Papua and New Guinea v Daera Guba (1973) 130 CLR 353 at 453; Kuligowski v Metrobus (2004) 220 CLR 363 at 373-374 [22].

7. Jackson v Goldsmith (1950) 81 CLR 446 at 466.

8. The expression was coined by Diplock LJ in Thoday v Thoday [1964] P 181 at 197-198.

9. The expression was coined by Higgins J in Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537 at 560-561.

10. Blair v Curran (1939) 62 CLR 464 at 510, 531-533; Jackson v Goldsmith (1950) 81 CLR 446 at 466-467.

11. After Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589

12. (1843) 3 Hare 100 [67 ER 313].

13. eg, Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287 at 297-298; Ling v The Commonwealth (1996) 68 FCR 180 at 184, 188, 193.

14. Hoysted v Federal Commissioner of Taxation (1925) 37 CLR 290; [1926] AC 155.

15. Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 598, 602-603.

16. Rogers v The Queen (1994) 181 CLR 251 at 275. See also Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 601-602, rejecting the approach in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581 at 590.

17. Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 509, 512.

46. It is issue estoppel and Anshun estoppel that precludes the plaintiff from advancing her PFASoC.

47. Whilst the plaintiff has the right to pursue available legal remedies, the present claim could have been - and arguably should have been - advanced together with the earlier litigation. There was no cogent reason advanced to explain that failure.

48. A single comprehensive action could have been brought by the plaintiff, and the whole efficiently determined in 2019, without need for the same witnesses to give evidence about the same factual matters years on, and without raising the possibility of differing and conflicting judgments emanating from the Court. Although the plaintiff contends that the defendants and the cause are different in the proposed claim to the defendants and cause in the 2019 claim, it is a distinction without a material difference, reliant as it is on the same factual circumstances, and evidence of the same witnesses. It is tolerably clear that the PFASoC is pleaded as it is to avoid the application of the principles of Anshun estoppel, which plainly bar the progress of the ASoC. As was said in Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231 at [81] - [83]:

"[Anshun estoppel] operates "not only [in respect of] points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time": Anshun (at 598) per Gibbs CJ, Mason and Aickin JJ. There will be an estoppel if it appears that "the matter relied upon ... in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it": Anshun (at 602). The test is one of reasonableness. Gibbs CJ, Mason and Aickin JJ rejected (at 602) Lord Kilbrandon's formulation of the test in Yat Tung (at 590) that it was "an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings".

Thus Anshun estoppel introduces "an evaluative element based upon what a litigant could reasonably have been expected to do in earlier proceedings"; it is "allied to, but not co-extensive with, res judicata and issue estoppel": Spalla v St George Finance Ltd (No 6) [2004] FCA 1699 (at [64] - [65]), referring to Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287 (at 295) (Full Federal Court).

An Anshun estoppel also arises where an omission to plead a claim or defence will contribute to the existence of conflicting judgments, including those which are contradictory, though they may not be pronounced on the same cause of action as long as they appear to declare rights which are inconsistent in respect of the same transaction: Anshun (at 603 - 604). Thus an Anshun estoppel will apply even though the parties to the second proceedings are not the same as in the first. Although there may be "no question ... of oppression and unfairness" where the parties in the second action "were not parties to the earlier action", the new proceedings may threaten the integrity of the administration of justice if they raise the prospect of conflicting judgments: Spalla (at [64] - [65]), referring to Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287 (at [36])."

49. To the extent that the defendants, despite the ease with which the plaintiff could have brought her claim against them in the 2019 proceedings, were not joined in the earlier action, and were not parties to the 2019 action, they rely upon a claim of abuse of process by the plaintiff. That is, in seeking to bring the proposed claim against the defendants, the plaintiff is seeking to re-litigate matters of fact already determined (adversely to her) in 2019, and this amounts to an abuse of process. The defendant points to an applicable passage from Reichel v Magrath (1889) 14 App Cas 665 at 668, quoted with approval in Rippon v Chilcotin Pty Lty & Ors [2001] NSWCA 142; (2001) 53 NSWLR 198, at 201-202:

"… it would be a scandal to the administration of justice if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceedings to set up the same case again … there must be an inherent jurisdiction in every Court of Justice to prevent such an abuse of its procedure …"

50. As in Rippon, the PFASoC is an attempt to re-litigate issues already decided in the 2019 judgment, and it raises the prospect of conflicting judgments, threatening the integrity of the administration of justice. That cannot be permitted.

50. In my conclusion, the plaintiff is prevented by principles of Anshun estoppel from advancing the PFASoC or, in the alternative, it would be an abuse of process for her to do so.

51. There are further issues connected with the expiration of the period in which the plaintiff may advance a claim against the defendants, but it is not necessary to consider that question.

52. Leave to file the PFASoC must be refused.

53. Since the plaintiff implicitly accepts that her ASoC is not a claim that she can advance, that claim must be struck out as an abuse of process pursuant to r 14.28(1)(2) of the Universal Civil Procedure Rules 2005.

ORDERS

55. For these reasons the Court makes the following orders:

1. Leave to the plaintiff to file a Further Amended Statement of Claim is refused;

2. The Amended Statement of Claim filed on 15 July 2020 is struck out;

3. Subject to order (4), the plaintiff is to pay the defendants' costs as agreed or assessed;

4. If any party seeks a different order as to costs written submissions in support of such an order are to be filed via email to my Associate, and served, by 4pm on 28 May 2021; with any submissions in reply similarly filed and served by 4pm on 4 June 2021.

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Endnotes

Decision last updated: 21 May 2021