Menz v Same
[2001] WASC 170
MENZ & ANOR -v- SAME & ORS [2001] WASC 170
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASC 170 | |
| Case No: | CIV:1857/1999 | 19 JUNE 2001 | |
| Coram: | MASTER SANDERSON | 29/06/01 | |
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Action stayed | ||
| PDF Version |
| Parties: | GRAHAM HARGRAVE MENZ GFS MANAGEMENT SERVICES PTY LTD (ACN 051 681 077) GARY EVAN SAME GODFREY EDWARD TAYLOR PHILIP JOHN PATTERSON MARCO ANTHONY TEDESCHI KERIN FRANCIS SMART |
Catchwords: | Practice and procedure Application for leave to amend statement of claim Cross-application to strike out writ and statement of claim Turns on own facts |
Legislation: | Nil |
Case References: | Breen v Williams (1996) 186 CLR 71 GFS Management Services Pty Ltd v Ground and Foundation Supports Pty Ltd [2001] WASC 143 Henderson v Henderson (1843) 3 Hare 100 Menz & Anor v Same & Ors [2000] WASC 288 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Arcadi v Colonial Mutual Life Assurance Society Ltd (1984) ATPR 40-473 Atkinson v Fitzwalter [1987] 1 WLR 201 Bank of New Zealand v New Zealand Guardian Trust Co Ltd [1999] 1 NZLR 664 Birtchnell v Equity Trustees Executors and Agency Co Ltd (1929) 42 CLR 384 Blair v Curran (1939) 62 CLR 464 Boardman v Phipps (1967) 2 AC 46 Brickenden v London Loan & Saving [1934] 3 DLR 465 Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 Chan v Zacharia (1984) 154 CLR 178 Charlie Carter Pty Ltd v SDAE (1987) 13 FCR 413 Coe v Commonwealth (1979) 24 ALR 118 Cohen v Cohen (1929) 42 CLR 91 Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1970) 122 CLR 25 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 Dallal v Bank Mellat [1986] QB 441 Day v Mead [1987] 2 NZLR 443 Dempster v Mallina Holdings Ltd (1994) 15 ACSR 1 Dey v Victoria Government Railways (1949) 78 CLR 63 Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 Farrington v Rowe McBride & Partners [1985] 1 NZLR 83 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) ACSR 688 Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 Fraser Edmiston Pty Ltd v AGT (Qld) Pty Ltd [1988] 2 Qd R 1 General Steel Industries Inc v Commissioner for Railways NSW (1964) 112 CLR 125 Greenhalgh v Mallard [1947] 2 All ER 255 H 1976 Nominees Pty Ltd v Galli & Apex Quarries (1979) 40 FLR 242 Hazelhurst v Levi, unreported; FCt SCt of WA; Library No 970209; Heathcote v Hulme [1819] 37 ER 322 Hill v Rose [1990] VR 129 Hooker Corp Ltd v Commonwealth (1986) 65 ACTR 32 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Hubbock & Sons Ltd v Williamson, Heywood and Clark Ltd [1899] 1 QB 86 Hungerfords v Walker (1989) 63 ALJR 210 James v ANZ Banking Group Ltd (1985) ATPR 40-567 Karedis Enterprises Pty Ltd v Antoniou (1995) ATPR 41,427 Kimberley Downs Pty Ltd v Western Australia, unreported; SCt of WA; Library No 6414; Mabo v State of Queensland (1992) 175 CLR 1 Maguire v Makaronis (1997) 188 CLR 449 McKenzie v McDonald [1927] VLR 134 Metropolitan Bank v Heiron (1880) 5 Ex D 319 Moffat v Wetstein (1996) 135 DLR (4th) 298 Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41-522 Muschinski v Dodds (1985) 160 CLR 583 Nationwide News Pty Ltd v Wiese (1990) 4 WAR 263 Nocton v Lord Ashburton [1914] AC 932 O'Halloran v RT Thomas & Family Pty Ltd (1998) 29 ACSR 148 Packard v Transport Trading Agency Co Ltd (1912) 14 WALR 191 Peruvian Guano Co v Bockwoldt (1883) 23 Ch D 225 Phillips-Higgins v Harper [1954] 1 QB 411 Potts v Mobil Oil Australia Ltd (1990) ATPR 41-0421 Ramsay v Pigram (1968) 118 CLR 271 Re A Company (No 00709 of 1992); O'Neill v Phillips [1999] 1 WLR 1092 Re Dawson [1966] 2 NSWLR 211 Re Diplock [1948] Ch 465 Sims v Craig Bell & Bond [1991] 3 NZLR 535 Tamar Management Pty Ltd v James (1985) ATPR 40-627 Taylor v Davies [1920] AC 636 Tyrell v Bank of London (1862) 10 HLC 26 United Dominion Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 Vyse v Foster (1872) LR 8 Ch App 309 Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 533 Warman International v Dwyer (1995) 128 ALR 201 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
GFS MANAGEMENT SERVICES PTY LTD (ACN 051 681 077)
Second Plaintiff
AND
GARY EVAN SAME
First Defendant
GODFREY EDWARD TAYLOR
Second Defendant
PHILIP JOHN PATTERSON
Third Defendant
MARCO ANTHONY TEDESCHI
Fourth Defendant
KERIN FRANCIS SMART
Fifth Defendant
(Page 2)
Catchwords:
Practice and procedure - Application for leave to amend statement of claim - Cross-application to strike out writ and statement of claim - Turns on own facts
Legislation:
Nil
Result:
Action stayed
Representation:
Counsel:
First Plaintiff : Mr P I Jooste QC
Second Plaintiff : Mr P I Jooste QC
First Defendant : Mr S Owen-Conway QC
Second Defendant : Mr S Owen-Conway QC
Third Defendant : Mr S Owen-Conway QC
Fourth Defendant : Mr S Owen-Conway QC
Fifth Defendant : Mr S Owen-Conway QC
Solicitors:
First Plaintiff : MacKinlay & Co
Second Plaintiff : MacKinlay & Co
First Defendant : Taylor Smart
Second Defendant : Taylor Smart
Third Defendant : Taylor Smart
Fourth Defendant : Taylor Smart
Fifth Defendant : Taylor Smart
Case(s) referred to in judgment(s):
Breen v Williams (1996) 186 CLR 71
GFS Management Services Pty Ltd v Ground and Foundation Supports Pty Ltd [2001] WASC 143
Henderson v Henderson (1843) 3 Hare 100
Menz & Anor v Same & Ors [2000] WASC 288
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
(Page 3)
Case(s) also cited:
Arcadi v Colonial Mutual Life Assurance Society Ltd (1984) ATPR 40-473
Atkinson v Fitzwalter [1987] 1 WLR 201
Bank of New Zealand v New Zealand Guardian Trust Co Ltd [1999] 1 NZLR 664
Birtchnell v Equity Trustees Executors and Agency Co Ltd (1929) 42 CLR 384
Blair v Curran (1939) 62 CLR 464
Boardman v Phipps (1967) 2 AC 46
Brickenden v London Loan & Saving [1934] 3 DLR 465
Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502
Chan v Zacharia (1984) 154 CLR 178
Charlie Carter Pty Ltd v SDAE (1987) 13 FCR 413
Coe v Commonwealth (1979) 24 ALR 118
Cohen v Cohen (1929) 42 CLR 91
Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1970) 122 CLR 25
Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373
Dallal v Bank Mellat [1986] QB 441
Day v Mead [1987] 2 NZLR 443
Dempster v Mallina Holdings Ltd (1994) 15 ACSR 1
Dey v Victoria Government Railways (1949) 78 CLR 63
Ebrahimi v Westbourne Galleries Ltd [1973] AC 360
Farrington v Rowe McBride & Partners [1985] 1 NZLR 83
Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) ACSR 688
Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421
Fraser Edmiston Pty Ltd v AGT (Qld) Pty Ltd [1988] 2 Qd R 1
General Steel Industries Inc v Commissioner for Railways NSW (1964) 112 CLR 125
Greenhalgh v Mallard [1947] 2 All ER 255
H 1976 Nominees Pty Ltd v Galli & Apex Quarries (1979) 40 FLR 242
Hazelhurst v Levi, unreported; FCt SCt of WA; Library No 970209;
Heathcote v Hulme [1819] 37 ER 322
Hill v Rose [1990] VR 129
Hooker Corp Ltd v Commonwealth (1986) 65 ACTR 32
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Hubbock & Sons Ltd v Williamson, Heywood and Clark Ltd [1899] 1 QB 86
Hungerfords v Walker (1989) 63 ALJR 210
James v ANZ Banking Group Ltd (1985) ATPR 40-567
Karedis Enterprises Pty Ltd v Antoniou (1995) ATPR 41,427
(Page 4)
Kimberley Downs Pty Ltd v Western Australia, unreported; SCt of WA; Library No 6414;
Mabo v State of Queensland (1992) 175 CLR 1
Maguire v Makaronis (1997) 188 CLR 449
McKenzie v McDonald [1927] VLR 134
Metropolitan Bank v Heiron (1880) 5 Ex D 319
Moffat v Wetstein (1996) 135 DLR (4th) 298
Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41-522
Muschinski v Dodds (1985) 160 CLR 583
Nationwide News Pty Ltd v Wiese (1990) 4 WAR 263
Nocton v Lord Ashburton [1914] AC 932
O'Halloran v RT Thomas & Family Pty Ltd (1998) 29 ACSR 148
Packard v Transport Trading Agency Co Ltd (1912) 14 WALR 191
Peruvian Guano Co v Bockwoldt (1883) 23 Ch D 225
Phillips-Higgins v Harper [1954] 1 QB 411
Potts v Mobil Oil Australia Ltd (1990) ATPR 41-0421
Ramsay v Pigram (1968) 118 CLR 271
Re A Company (No 00709 of 1992); O'Neill v Phillips [1999] 1 WLR 1092
Re Dawson [1966] 2 NSWLR 211
Re Diplock [1948] Ch 465
Sims v Craig Bell & Bond [1991] 3 NZLR 535
Tamar Management Pty Ltd v James (1985) ATPR 40-627
Taylor v Davies [1920] AC 636
Tyrell v Bank of London (1862) 10 HLC 26
United Dominion Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1
Vyse v Foster (1872) LR 8 Ch App 309
Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 533
Warman International v Dwyer (1995) 128 ALR 201
(Page 5)
1 MASTER SANDERSON: This is the return of the plaintiffs' chamber summons seeking to amend the statement of claim and the defendants' chamber summons seeking to strike out the writ and the statement of claim. Both chamber summonses were filed in early March of this year and the matter has been before the Court on a number of occasions. On each occasion I have refused the plaintiff leave to amend in terms of the minute then before the Court. The latest minute described as "minute of substituted statement of claim" was filed 13 June 2001. The plaintiffs now seek leave to amend in terms of this minute. The defendants have remained consistent throughout. They say first that the claim is fundamentally flawed and cannot succeed. They say further that even if it is open to the plaintiff to bring this action, the pleading is inadequate and the inadequacy is such that the action as a whole ought be struck out.
2 (In an earlier decision I dealt with an entirely different version of the statement of claim: see Menz & Anor v Same & Ors [2000] WASC 288. The proposed statement of claim dealt with in that decision and the issues raised by the application are entirely different to the matters presently under consideration.)
3 The first three paragraphs of the minute of substituted statement of claim (which I will refer to as the "minute") identify the parties. The second plaintiff is the alter ego of the first plaintiff. All of the defendants are partners of the same law firm. By par 4(a) it is pleaded that consequent upon a number of transactions there was a solicitor/client relationship established between the first plaintiff and the defendants, "particularly the third defendant". What is meant by this phrase "particularly the third defendant" is unclear and, as counsel for the defendant submitted, it is embarrassing. The third defendant's role in the development of the relationship between the plaintiff and the defendants may be a particular of the pleaded fact of the relationship. If that is so, it should be made clear in the pleading. This difficulty with the pleading is repeated in par 4(b)(c) and (d).
4 By par 4(c) it is pleaded that in or about October 1989 the first plaintiff instructed the defendants in relation to acquiring a licence for the use of a sheet piling system for ground retention. Paragraphs 4(d) through to par 4(r) plead, in summary, that during the course of acting as solicitor for the first plaintiff the third defendant entered into a business relationship with the first plaintiff. It is alleged that at the same time the third defendant and the first plaintiff were entering into this business relationship accounts were rendered by the defendants for legal services and paid by the second plaintiff.
(Page 6)
5 Paragraphs 5 through to par 10 deal with what is described in a subheading as "The Venture Operations and Relationships". It is pleaded that the first plaintiff and/or the second plaintiff until 11 February 1999 provided managerial services for an agreed annual fee. Paragraph 7, par 8 and par 9 are directed towards establishing that the company running the business was "a small domestic company" which was "virtually a partnership". By par 10 it is pleaded that from 1990 through until February 1999 the defendants rendered accounts for the services they performed.
6 Paragraph 11 and par 12 plead that as a consequence of the relationship between the plaintiffs and the defendants, fiduciary duties and obligations arose. These fiduciary duties are said to include a duty to avoid a conflict of interest: (par 12(a)). Other fiduciary duties pleaded appear to pick up the notion of the company as a quasi-partnership. The pleading does not suggest that these fiduciary obligations had anything to do with the relationship of solicitor/client between the first and/or second plaintiff and the defendants.
7 Paragraph 13 through to par 16 deal with alleged breaches of fiduciary duties and obligations. By par 13 it is alleged that the third defendant "was in a conflict of interest position" because while acting as a solicitor for the plaintiff he entered into a business relationship with him. With respect, the mere fact that a solicitor acting for a party enters into a business relationship with that party cannot in and of itself amount to a breach of fiduciary duty. The nature of the duty depends upon the relationship between the parties. Thus as between a medical practitioner and patient, there is a duty on the medical practitioner not to divulge patient information. That duty arises because as a necessary aspect of the doctor/patient relationship, confidential information about the patient will be provided to the medical practitioner. However, it is not part of the fiduciary duties of the medical practitioner to release to the patient notes made by the practitioner during the course of consultations. Even assuming that such a duty could be couched in proscriptive terms - that is to say a duty not to refuse to hand over notes when requested to do so - the nature of the fiduciary relationship does not lead to the existence of such a duty: see generally Breen v Williams (1996) 186 CLR 71. In my view it cannot be argued that it is an aspect of the fiduciary relationship between a solicitor and client that the solicitor must not go into business with his client. In any event par 13 cannot stand.
8 Paragraph 14 seems to be the same plea couched in different terms and that too must fail. Paragraph 15 is at the heart of the plaintiffs' claim.
(Page 7)
- What is alleged is that the third defendant failed to properly advise the plaintiffs in relation to an employment agreement for management of the business by the plaintiffs. It is alleged that the third defendant was in a position where he had a conflict of interest. He had an interest in the company and he was acting as the plaintiffs' solicitor. In the circumstances it is said that the plaintiffs should have been advised to obtain independent legal counsel regarding the employment agreement. That, it is said, was a breach of the third defendant's fiduciary duty owed to the plaintiffs which gives rise to a right to relief. Paragraph 16, although couched in slightly different terms, raises the same point.
9 Paragraph 17 draws in the defendants other than the third defendant by saying that as partners with the third defendant they are liable to the plaintiffs for any breach of fiduciary duty by the third defendant.
10 Paragraph 18 through to par 22 deal with the termination of the plaintiffs' engagement. Once again there is reference to the quasi-partnership nature of the arrangement between the parties. There are a number of other allegations in these paragraph which appear unrelated to any cause of action. Paragraph 19 is essentially a claim for unfair dismissal. Paragraph 21 refers to the Articles of Association and their failure to protect the first plaintiff's position. There is no reference elsewhere in the pleading to the Articles of Association, nor is it anywhere suggested that a failure on the part of the third defendant to advise the plaintiffs that amendment should be made to the Articles of Association amounted to a breach of fiduciary duty.
11 Paragraph 23 through to par 26 deal with the loss suffered by the plaintiffs as a consequence of the alleged breach of fiduciary duty. The prayer for relief seeks equitable compensation. During the course of his submissions counsel for the plaintiffs submitted that the maximum damages that could be claimed by the plaintiffs was $100,000. This amount was calculated by reference to par 26 which pleads that the first plaintiff's salary package as manager was approximately $100,000 per annum. Counsel submitted that if the third defendant had recognised his conflict of interest position he would have advised the plaintiffs to seek independent legal advice about their contract of employment with the company. If such independent advice had been taken, counsel submitted that it would have resulted in a clause being inserted in the employment agreement to the effect that if the plaintiffs were summarily terminated they would be entitled to compensation of one year's remuneration - approximately $100,000. That, it was said, was the maximum of the
(Page 8)
- plaintiffs' claim. It is difficult to reconcile this formulation of the plaintiffs' case with what is proposed in the minute.
12 The defendants oppose the plaintiffs' application on three separate grounds. First, it is said, that the issues raised in these proceedings were determined in GFS Management Services Pty Ltd v Ground and Foundation Supports Pty Ltd [2001] WASC 143. Secondly, it is said that if all issues raised in this action were not raised in the earlier proceedings, they could have been so raised and it is not now open to the plaintiffs to agitate these issues. Put simply, it is said that there is an "Anshun" estoppel. Thirdly, it is submitted that under any circumstances the pleading is inadequate and ought not be allowed to stand. It is said that given the number of attempts that have been made to amend the pleading the point has been reached where further leave to replead ought not be granted.
13 The GFS Management action was an oppression case. Essentially it was alleged that the third defendant in these proceedings and another shareholder of Ground and Foundation Supports Pty Ltd had acted oppressively towards the present plaintiffs. (The second respondent in the GFS Management case is in fact the fifth defendant named in these proceedings. This is explained by saying that the fifth defendant in these proceedings is the trustee of the Philco Trust, of which the third defendant is a beneficiary. In the GFS Management case the fifth defendant in this action was sued in his capacity as a trustee. However, as the decision makes plain, the complaints that were made in that action were made against the third defendant in these proceedings.)
14 In his decision, Scott J outlines the commercial relationship which developed between the first plaintiff and the third defendant. In the course of his reasons his Honour says (at par 4):
"… At that time (the time when the plaintiff became interested in the sheet piling system) Patterson was Menz's solicitor in relation to matters unconnected with this proposed sheet piling business".
- I note in passing that this finding of fact appears to be at odds with the plaintiff's pleaded case: see par 4 of the minute.
15 His Honour then goes on to detail the relationship up to the point where the plaintiff's employment was terminated. His Honour then says (at par 27):
(Page 9)
- "There are three separate matters which senior counsel for the applicant maintains constitute oppressive conduct by the majority shareholders and directors in this case;
1 That Menz was grossly underpaid for his services in acting as managing director of GFS. More accurately expressed the complaint is that the applicant was underpaid for its role in providing the services of Menz to GFS.
2 The circumstances surrounding the dismissal of Menz's stepson, Martin, as an employee of GFS;
3 The summary dismissal of Menz as the manager of GFS on 11 February 1999."
16 It can be seen immediately that the first of these questions is very closely related to the claim as formulated by counsel in his submissions. It is common ground that the plaintiffs were engaged on contract to provide management services. In these proceedings it is said that the third defendant, and by association the other defendants, breached their fiduciary duty in not advising the plaintiffs to seek independent legal advice in relation to that contract. By implication it is said that the contract was unfair. The inference must be drawn because the plaintiffs are claiming equitable compensation and the amount of that compensation is said to be one year's remuneration which would have been provided for in a fair contract. His Honour, during the course of his reasons, considered whether or not the employment contract was fair. He concluded (at par 45):
"… Whilst it was submitted that the underpayment of Menz was an act of oppression, having regard to all of the evidence, I am not persuaded that was so, even although it may properly be said that the salary paid to Menz was at the lower end of the appropriate salary range."
17 It is clear that there is a difference between what was determined in the GFS Management case and what is to be determined in this case (leaving to one side the claim as formulated in the minute and relying upon what was said by counsel during the course of his submissions). In the GFS Management case the question was whether or not the remuneration paid to the present first plaintiff was so low as to amount to oppressive conduct. Here the question is whether properly advised, the plaintiffs would have secured an employment contract which provided for
(Page 10)
- one year's remuneration on summary termination. On that basis it cannot be said that the issues raised by these proceedings were determined in the GFS Management case.
18 But there appears to be no reason why the issues raised here could not have been determined in the GFS Management case. The present plaintiffs' contract of employment was squarely in issue. Given that issue had been raised there was no impediment to any allegations of breach of fiduciary duty by the third defendant and/or his partners, the other defendants, in the oppression action. This conclusion can be tested in this way. In the GFS Management case his Honour was asked to determine whether the contract of employment was oppressive, having regard to the remuneration paid to the first plaintiff. It could well have been put to him that the contract was oppressive because there was no right to a year's remuneration on summary dismissal. In other words, it was open to the present plaintiffs to raise in the oppression action precisely the same issues as are raised in these proceedings. Furthermore, there would have been no impediment to joining the defendants other than the third defendant as defendants in the oppression action. Their liability is entirely derivative. It is nowhere alleged in the pleading that anyone of these defendants is liable in any way other than as partners with the third defendant in a legal practice. If the allegation of breach of fiduciary duty had been made in the oppression action they could have been joined as defendants and they would have participated in precisely the same way as they are participating in these proceedings.
19 During the course of his submissions counsel for the plaintiffs indicated that it had been a deliberate decision to quarantine any allegation of breach of fiduciary duty from the matters raised in the oppression action. Accepting that was the approach adopted it says nothing about whether such issues could have been raised in those proceedings. In my view that could have been done.
20 It is important in this context to determine what precisely was the ratio in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. The facts in the case (taken from the headnote) were as follows:
"Under an agreement for the hire of a crane the hirer agreed to indemnify the owner against any claims that might be made against it arising out of the use of the crane. A workman suffered injury arising out of the hirer's use of the crane and he sued the hirer and the owner for damages. The defendants served notices of contribution on each other, but the owner's
(Page 11)
- notice was confined to a claim for contribution. Damages were awarded against both defendants, and between them it was ordered that the owner pay 90 per cent of the damages and the hirer, 10 per cent. The owner then brought a separate action against the hirer claiming an indemnity in respect of all amounts it had paid to the workman as damages and costs. The judge ordered that the action be stayed on the ground that the claim under the agreement should have been raised in the original action and hence the owner was estopped from raising it."
21 On these facts it is clear that at first instance there had been no determination of the question of the right of the owner to seek an indemnity from the hirer. But that question could have been raised in the proceedings. Why it was not raised was, the Court held, of no consequence. The relevant question was whether or not it could have been raised. In their joint judgment Gibbs CJ, Mason and Aickin JJ, after referring to Henderson v Henderson (1843) 3 Hare 100, said (at 602):
"In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence 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. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in one proceeding."
22 Murphy J put the position in a slightly different way. His Honour said (at 605):
"In this instance, the issue now sought to be raised was plainly open to be agitated in the previous litigation. The judgment in that case is inconsistent with the judgment now sought by the plaintiff. To preserve the orderly administration of justice the earlier judgment should be treated as conclusive on the question of indemnity. There is no discretion to allow the raising of that issue against the unwilling defendant; the attempt to do so is properly characterised as an abuse of process."
23 As I have indicated above, the question at issue in the oppression action was whether the remuneration paid to the plaintiffs was fair. There is no reason why the overall fairness of the contract could not have been
(Page 12)
- considered in the context of that case. That is now a central question in these proceedings. It may well be that a court could conclude that the failure of the third defendant to advise the plaintiffs to seek independent legal advice was, in all the circumstances, a breach of fiduciary duty. That is a finding that is open independent of an award of equitable compensation. Unlike the claim in tort, a claim for breach of fiduciary duty is not dependant upon a party suffering loss and damage. But to analyse the case in those terms is to miss the point. The oppression action necessarily involved an examination of all the conduct of the third defendant to the plaintiffs. In that context it was open to raise a claim for breach of fiduciary duty and that was not done. In those circumstances it seems to me that an estoppel arises and this action ought be stayed.
24 I will hear the parties as to the precise form of the orders and as to costs.
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40
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