Re Twenty-First Larena Pty Ltd
[2010] VSC 84
•22 March 2010
| jIN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
LIST E
No. 5049 of 2009
IN THE MATTER of TWENTY-FIRST LARENA PTY LTD (ACN 005 621 143)
(Liquidators Appointed)
| INESSA MAXIMOVA | Plaintiff |
| v | |
| PETER GOODIN (AND OTHERS ACCORDING TO THE SCHEDULE) | Defendants |
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JUDGE: | Davies J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 3 March 2010 | |
DATE OF JUDGMENT: | 22 March 2010 | |
CASE MAY BE CITED AS: | Re Twenty-First Larena Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 84 | |
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PRACTICE & PROCEDURE – Exercise of power to dismiss summarily where plea of res judicata substantiated.
ESTOPPEL – Res judicata – Settlement of earlier proceeding – Action struck out with right of reinstatement in the event of non payment of settlement sum – Compliance with settlement terms – Conclusive determination of rights and liabilities in earlier proceeding – Finality of order for the purposes of res judicata – Application of principles of res judicata to consent order – Where different causes of action in later proceedings – Whether cause of action is substantially the same in subsequent proceeding.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr. I D Martindale SC with Mr. A W Sandbach | AJH Lawyers |
| For the First and Second Defendants | Mr. M Sifris SC with Mr. L M F Watts | Madisons Lawyers |
| For the Third, Fourth and Fifth Defendants | Mr. D H Denton SC with Mr. P T Duggan | Belleli King & Associates |
HER HONOUR:
The plaintiff has applied for the leave of the Court to appeal the order of Efthim AsJ summarily dismissing this proceeding generally under r 23.01 of the Supreme Court (General Civil Procedure) Rules 2005.[1] As the arguments supporting the granting of leave were germane to the substantive merits of the appeal, the application for leave proceeded as if it was the appeal itself, so that no further argument is required on the disposition of the appeal.
[1]The summary dismissal application was heard by Efthim AsJ on referral from Robson J and the plaintiff requires the leave of the Court to appeal: Supreme Court (Corporations) Rules 2003 ch v, r. 16.5(2).
The primary basis on which Efthim AsJ dismissed the proceeding was that the plaintiff was re-agitating an issue that was the subject of a settlement and order in an earlier proceeding and consequentially, the claim was bad in law.
The cause of action against the defendants in this proceeding was founded on Part 5.8A of the Corporations Act 2001 (Cth) (“the Corporations Act”). Part 5.8A of the Corporations Act enables an employee of a company which is being wound up to sue for and recover from a third party an amount equal to the loss or damage that the employee suffered because of action taken by the third party in entering into, or giving effect to, a transaction or agreement with the intention of defeating the employee’s recovery from the company of unpaid employee entitlements. The amount is sued for as a debt due to the employee by the third party.[2]
[2]Corporations Act 2001 (Cth) s 596AC(3).
The plaintiff is a former employee of Twenty-First Larena Pty Ltd (in liquidation) (“the company”), of which the third to fifth defendants (“the directors”) are the directors. The first and second defendants (“the administrators”) are the former administrators of the company. The plaintiff alleged that the defendants in this proceeding engaged in agreements or transactions with the intention of preventing her from recovering wages and statutory entitlements (“employee entitlements”) owed to her by the company. She sued the defendants for loss or damage quantified as her unpaid employee entitlements, her costs of a debt action in the Magistrates’ Court against the company suing for recovery of her employee entitlements and the differential solicitor/client costs of a Supreme Court action in which she successfully obtained an order for the termination of a deed of company arrangement approved by the creditors on the recommendation of the administrators and an order that the administrators pay her party/party costs.
Before Efthim AsJ, the directors argued that that the plaintiff’s claim against them for recovery of her employee entitlements was the subject of an earlier concluded proceeding in the Magistrates’ Court (“the earlier proceeding”), in which a consent order had been made giving effect to a settlement under which the directors agreed to pay, and paid, the plaintiff $25,000. They contended that this proceeding is res judicata by reason of that consent order, alternatively that the order created an issue estoppel or estoppel under the Anshun principle.[3] If there was no estoppel, they argued that there had been accord and satisfaction. They further contended that the proceeding was frivolous and vexatious as the plaintiff had already recovered her loss and to obtain an order in this Court would amount to a double recovery which is not permissible.
[3]Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.
Efthim AsJ dismissed the proceeding generally on the grounds that:
(a) issue estoppel applied because “the issue in the current proceeding is identical with the issue in the [earlier proceeding]. The plaintiff has settled and been paid her employee entitlements. The issue of whether she can obtain damages for her loss has been decided by the prior settlement and order of the Court”;[4]
[4]Inessa Maximova v Peter Goodwin [2009] (Unreported, Efthim AsJ, 2 December 2009) [35].
(b) the relief claimed by the plaintiff in this proceeding was no different to the relief claimed in the earlier proceeding and concluded that “[i]t is clear, from an analysis of the pleadings in the [earlier proceeding] and in this proceeding, that the plaintiff has already recovered [her] loss and to obtain an order in this Court would amount to a double recovery which is not permissible”;[5]
(c) there had been accord and satisfaction: His Honour found that “[t]here has been a settlement contract entered into by the parties which has been satisfied by the [directors]”;[6] and
(d) on the ground that it was not competent for the plaintiff to pursue, in this proceeding, the recovery of her costs of the debt action against the company or the differential in the party/party costs awarded in her favour in the Supreme Court action and her solicitor/client costs.[7]
[5]Ibid [44].
[6]Ibid [46].
[7]Ibid [49]
Efthim AsJ held that the doctrine of res judicata did not apply because the cause of action relied on in the earlier proceeding, which had been brought under the Workplace Relations Act, was not the same as the cause of action in this proceeding, brought under the Corporations Act, although “the compensation sought is almost identical”.[8] On Anshun estoppel, Efthim AsJ concluded that the doctrine did not apply because the cause of action under the Corporations Act could not have been brought in the earlier proceeding, as such an action could not be brought without the company going into liquidation beforehand and the liquidators giving leave to the plaintiff to bring the action.[9]
[8]Ibid [33].
[9]Ibid [39]; Corporations Act 2001 (Cth) s 596AF.
In my view, Efthim AsJ wrongly concluded that the doctrine of res judicata did not apply. In my view, the consent order in the earlier proceeding gave rise to a res judicata and prevents the plaintiff from pursuing her claim against the directors in this proceeding. I therefore have concluded that leave should be given but that the appeal should be dismissed.
1. The background to the earlier proceeding
In 2006, the plaintiff instituted proceedings against the company for recovery of her employee entitlements (“the debt action”). On the day that the trial was due to start, 21 May 2007, the directors resolved to place the company into administration and appointed the administrators. In consequence, that proceeding was stayed by operation of statute.[10]
[10]Corporations Act 2001 (Cth) s 440D.
The next day, the plaintiff instituted against the directors, this time suing the directors for loss and damage, quantified as her employee entitlements, in reliance on statutory claims made under the Workplace Relations Act 1996 (Cth).
Shortly thereafter the administrators recommended a Deed of Company Arrangement (“DOCA”) to the creditors of the company, which the creditors voted to accept at a meeting held on 18 June 2007. In consequence, the plaintiff’s rights as against the company with respect to her employee entitlements became governed by the terms of that deed.[11]
[11]Corporations Act 2001 (Cth) s 444D.
The plaintiff then challenged the efficacy of that deed by commencing proceedings in the Supreme Court of Victoria on 24 August 2007 against the administrators and the directors (“the Supreme Court action”) seeking orders and relief under the Corporations Act for the termination of the DOCA and for the liquidation of the company. In short compass, the plaintiff asserted that the administration of the company and the subsequent entering into of the DOCA “was a sham, and was orchestrated by the various parties involved in order to defeat the legitimate employee-related claims of the plaintiff”.[12] The proceeding was resolved without adjudication on the merits and on 19 October 2009, Robson J ordered the termination of the DOCA and that the company be wound up. His Honour also ordered the administrators to pay the plaintiff’s costs of the proceeding.
[12]Affidavit of Alex Di Blasi sworn 17 March 2009 [48].
2. Settlement of the earlier proceeding
In early February 2008 the plaintiff settled her claim against the directors in the earlier proceeding and orders by consent were made by the Magistrates Court on 4 February 2008 in the following terms:
Struck out with right of reinstatement in the event of failure to pay settlement of sum. No order as to costs.
The reference to “settlement sum” was a reference to the amount of $25,000 that the directors had agreed to, and did, pay the plaintiff. The plaintiff has never sought to have this action reinstated.
The terms of the settlement were not documented in a formal agreement executed by the parties, but there is email correspondence to which reference should be made. On 1 February 2008, the plaintiff’s counsel emailed the directors’ counsel as follows:
I am instructed to settle the matter for $30,000 all in. That sum will be fully attributable to my fees to be paid within 14 days.
An order on Monday that the matter be struck out with a right of reinstatement – if there is a failure to make the payment.
Otherwise no other items.
I have copied this email to my instructor.
The directors’ counsel emailed back the following day as follows:
I have instructions to make the following offer – to be accepted by your return email.
1. [The directors] to make a settlement payment into the [] account on account of [counsel] in the sum of $25,000 within 14 days.
2. The matter is settled.
3. You and I on behalf of our clients will attend Court on Monday morning and obtain orders that :
(a) the matter be struck out as the matter is settled with the right of reinstatement should payment of the settlement sum not be made within 14 days.
The plaintiff’s counsel responded by email as follows:
I confirm my instructions that my clients, [the directors] accept that offer.
As discussed, I recommend that the settlement be documented in the written Terms on the lines set out below and executed by Counsel. I will finalise this with you on Monday morning and attend Court to obtain the consent orders.
Although recommended, no settlement deed was executed.
On 4 February 2008, after the consent orders were made, the plaintiff’s solicitors wrote to the directors’ solicitors confirming the orders that had been made and advising as follows:
We put you on notice that whilst the specific and discreet statutory claim in this proceeding has been settled on the basis of the aforementioned orders, our client expressly reserves all of her statutory and common law rights to sue some or all of your clients for other causes of action available to her.
As previously advised, proceedings will be served on your clients in due course.
The “reservation”, as a term of settlement, is in dispute between the parties.
3. The institution of these proceedings
In due course, on 24 April 2008, the plaintiffs’ solicitors wrote to the liquidators seeking their consent to the plaintiff issuing proceedings against the administrators and the directors under s 596AC of the Corporations Act for contravention of s 596AB of the Corporations Act in relation to the same employee entitlements, the subject of the settlement and orders in the earlier proceeding.[13] For reasons that were not explained in the evidence before me, the liquidators appear not to have responded to that request, despite follow up correspondence, until 12 February 2009 when they furnished their consent. The plaintiff then instituted this proceeding on 20 February 2009.
[13]The liquidators’ consent is a requirement of the Corporations Act 2001 (Cth) s 596AF.
4. Subject matter of this proceeding
In this proceeding, the plaintiff sought compensation from the administrators and the directors under s 596AC of the Corporations Act for the loss and damage that she claimed she suffered because of action taken by the administrators and the directors with the intention of preventing her from recovering her employee entitlements from the company. She particularised that allegation as follows:
(a) But for the Company being placed into voluntary administration, the [debt action against the company] would not have been stayed pursuant to section 440D of the Corporations Act2001, and the Plaintiff would have obtained judgment in respect of [her employee entitlements], interests and costs.
(b) But for the [administrators’] transactions, the Administration would not have taken place or, in the alternative, following a bona fide examination of the Company affairs, the control of the Company would have been returned to the directors on the basis that the Company was not insolvent, allowing the Plaintiff to continue the [debt action against the company] and obtain and enforce judgment.
(c) But for the Administration and the Deed of Company Arrangement, the plaintiff would not have had to engage in the Supreme Court [action].
Loss and damage was particularised as:
[The underpayment of her employee entitlements], the interest thereupon and the costs of the [earlier proceeding] …
The solicitor client differential between the party party costs reserved in the Supreme Court [action] and the solicitor own client costs and disbursements …
5. Application for leave to appeal and the appeal
The two principal grounds relied on by the plaintiff in support of this application were as follows:
(a)no estoppel was created by the order in the earlier proceeding because the order of the Magistrates Court striking out the proceeding with a right of reinstatement did not dispose of that proceeding; and
(b)there was no bar to the plaintiff instituting this proceeding as the settlement of the earlier proceeding was on the basis that she reserved her right to sue the directors on other causes of action and the $25,000 settlement sum was paid in partial settlement only of her loss and damage.
It was argued, therefore, that the order did not have the effect of precluding the plaintiff, by any form of estoppel, or principle of accord and satisfaction or of double recovery from re-litigating, in this proceeding, either the cause of action in, or the issues the subject of, the earlier proceeding.
The first ground was not argued before Efthim AsJ. The second ground, I was told, was raised below although it did not appear in the written submissions on behalf of the plaintiff below nor was reference made to it in the judgment of Efthim AsJ. It was submitted that Efthim AsJ fell into legal error in not considering the legal effect of the reservation, though I note that it is unclear whether Efthim AsJ had the benefit of the argument as it was put to me. The importance in the interests of efficiency, expedition and finality of litigation of parties presenting their arguments fully and clearly at first instance cannot, and must not be, underestimated.[14] A considered judgment on all points enables parties fully to evaluate the correctness of the decision and the likely merits of appeal. In this matter, the hearing before Efthim AsJ took some time and His Honour reserved his decision for consideration and His Honour’s reasons reflect his consideration. But as Efthim AsJ did not have the benefit of argument on the first ground, at least, the parties did not have the benefit of His Honour’s consideration on that point and the opportunity to evaluate the correctness of his reasoning, before the occasion of the application for leave to appeal. The failure of a party to raise below an argument on which that party relies to contend that the decision below was affected by error may be a factor that is relevant to the Court’s exercise of discretion to grant or refuse leave to appeal. In appropriate cases, the non-advertence to an argument below may be sufficient reason in itself for the Court to refuse leave. It is conceivable that in some circumstances, it may amount to an abuse of process for a party to appeal or seek leave to appeal from a decision of the Associate Judge where the party has not raised all arguments below. Parties should not treat applications before Associate Judges as “dress rehearsals” for appeal.[15] It is unfortunate that Efthim AsJ did not have the advantage of the case as it was presented before me. That being said, it is not reason in this matter to refuse leave to appeal as the application was able to proceed without prejudice to the other parties, save presumably with respect to costs.
[14]Coulton v Holcombe (1986) 162 CLR 1; Metwally v University of Wollongong [1985] 60 ALR 68, 71.
[15]Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231 (Unreported, Giles, McColl and Campbell JA, 31 July 2009) McColl JA [44].
6.The power to dismiss a proceeding
On the granting of leave, the appeal proceeds as a rehearing of the application for summary dismissal.[16] The Court’s power under Order 23 and in its inherent jurisdiction to dismiss a proceeding generally should be exercised only if the Court is satisfied that the claim is clearly untenable.[17] Whilst the power should be exercised sparingly, the courts have not hesitated to dismiss an action summarily if the plea of res judicata has been substantiated.[18] In Dallal v Bank Mellat[19] Hobhouse J said:
[16]Supreme Court (Corporations) Rules 2003 ch v, r. 16.5; Supreme Court (General Civil Procedure) Rules 2005 r.77.06(7).
[17]Reed International Books Australia Pty Ltd (trading as Butterworths) v King & Prior (1993) 11 ACSR 560; Burton v The President &c of the Shire of Bairnsdale [1908] 7 CLR 76, 93; Attorney-General (Duchy of Lancaster) v London and North Western Railway Company [1892] 3 Ch 274, 276-7; Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, 99.
[18]Chamberlain v Deputy Commissioner of Taxation (1987-1988) 164 CLR 502, 510-11 (Deane, Toohey and Gaudron JJ); Bryant v Commonwealth Bank of Australia [1995] FCA 1103 (Unreported, Sackville J, 3 March 1995).
[19](1986) QB 441.
… if there is an obviously available defence of res judicata to either a part or the whole of the plaintiff's action, then the courts are willing to exercise the remedy of striking out notwithstanding that the defence would be pleadable and triable, albeit with an entirely predictable outcome. ... There must be an end to litigation. A defendant must be protected against the repeated bringing of actions by the same person in respect of substantially the same subject matter. Therefore, where this procedural abuse is identified, the courts provide the defendant with the procedural remedy of striking out.[20]
I have concluded that the plea of res judicata has been substantiated and that the proceeding should be summarily dismissed.
7. The earlier proceeding created a res judicata in relation to the claim against the directors
[20]Ibid 451-2; cited with approval in Chamberlain v Deputy Commissioner of Taxation (1987-1988) 164 CLR 502, 511 (Deane, Toohey and Gaudron JJ).
The submission that the consent order in the earlier proceeding did not give rise to a res judicata or create any form of estoppel was put on the basis that the order did not dispose of that proceeding as a proceeding can be terminated only by judgment or discontinuance in accordance with the rules. Senior Counsel for the plaintiff placed considerable reliance on the observations of Kaye J in R v McGowan[21] that an order striking out a proceeding is not a curial determination of the merits of that proceeding, and, therefore, does not put an end to that proceeding.[22] Reference was also made to the commentary in Williams’ Civil Procedure Victoria[23] which states:
An order that a proceeding be struck out does not determine the proceeding and it may on proper grounds be reinstated in the list of cases for trial. “Struck out” means only that the proceeding is removed from the list. See R v McGowan; Ex parte Macko [1984] VR 1000 at 1002, referring to the argument of counsel in Aiken v Aiken [1941] VLR 124. See also Roberts v Gippsland Agricultural and Earth Moving Contracting Co Pty Ltd [1956] VLR 555 at 565; [1957] ALR 71. Once a case is in the list it cannot go out of the list except by being tried and disposed of, by the parties consenting to its being withdrawn, or by the court striking it out or ordering it to be withdrawn: Crotty v Clarke (1896) 22 VLR 594 at 600.[24]
However, the enquiry for the application of the doctrine of res judicata is not whether the proceeding has been terminated but whether there has been an order or decision of the Court in that proceeding which is final, in the sense that it was determinative of the rights and liabilities of the parties.[25] It is well established that a consent order is capable of founding a res judicata or estoppel because the order “gives judicial sanction and coercive authority to an agreement”. [26] In that sense, it is an order made on the merits because the issues in the proceeding will be taken to have been conclusively determined.
[21][1984] VR 1000.
[22]See also Hickman v Smith & Anor [2009] VSC 126, [21].
[23]Butterworths, Civil Procedure Victoria, vol 1 (at 240).
[24]Butterworths, Civil Procedure Victoria, vol 1 (229) [49.02.35]
[25]Ramsay v Pigram [1967] 118 CLR 271, 276; Spencer Bower and Handley, Res Judicata (4th ed, 2009) 60 [5.02].
[26]Spencer Bower and Handley, Res Judicata (4th ed, 2009) 20 [2.16]; Chamberlain v Deputy Commissioner of Taxation (1987) 164 CLR 502.
The right to reinstatement, under the terms of the Magistrates’ Court order, was not at large. The term of the order permitting the reinstatement of the proceeding was only “in the event of failure to pay settlement of sum”. That term was binding on the plaintiff[27] and the right of reinstatement was a right, properly understood, that was reserved to her only if there was a failure by the directors to make payment of the $25,000 that was agreed on. That was the bargain struck between the parties and that was the limit of the plaintiff’s right to seek reinstatement, giving effect to the bargain that she reached with the directors.[28] Unless that right was triggered by the event of default, which it was not, the terms of the order were conclusive of the disposition of the proceeding.[29] The order was “final” in the sense that rights and liabilities of the parties were decided upon by that order, by which the parties intended to terminate the litigation and the cause of action merged into the order of the court.[30]
[27]Gray v Dalgety & Co Ltd (1916) 21 CLR 509, 543 (Isaacs J); O’Toole v Charles David Pty Ltd (1990) 171 CLR 232, 245 (Mason CJ), 257-8 (Brennan J); Executor Trustee and Agency Company of South Australia Ltd v Deputy Federal Commissioner of Taxes (South Australia) (1939) 62 CLR 545; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, 608-9 (Brennan J).
[28]O’Brien v O’Brien and Nicholls Pty Ltd & Ors [2001] VSC 411.
[29]Ibid [30]; Chamberlain v Deputy Commissioner of Taxation (1987) 164 CLR 502.
[30]Chamberlain v Deputy Commissioner of Taxation (1987) 164 CLR 502; Blair v Curran (1939) 62 CLR 464, 532 (Dixon J).
The rule of res judicata is that no proceeding can be maintained on a “cause of action” upon which judgment has been entered.[31] In Port of Melbourne Authority v Anshun Pty Ltd[32] Brennan J observed that the phrase “cause of action” is used imprecisely in this context as the words are:
… sometimes used to mean the facts which support a right to judgment … sometimes to mean a right which has been infringed … and sometimes to mean the substance of an action as distinct from its form …[33]
As the cases illustrate, the doctrine may apply to causes of action other than the precise one sued on in a preceding action where the cause of action previously adjudicated is substantially the same as the cause of action in the subsequent proceeding.[34] In Trawl Industries of Australia Pty Ltd v Effem Food Pty Ltd[35] Gummow J said that “for the law of Australia it is most suitable to focus upon the substance of the two proceedings as distinct from their form”.[36] Thus, it is not the legal form of a cause of action to which consideration should be directed but rather, whether the controversy in the subsequent action, as a matter of substance, is the same as the controversy determined in the first proceeding.
[31]Blair v Curran (1939) 62 CLR 464, 532 (Dixon J); Jackson v Goldsmith (1950) 81 CLR 446, 466 (Fullagar J); Chamberlain v Deputy Commissioner of Taxation (1987) 164 CLR 502; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.
[32](1981) 147 CLR 589.
[33]Ibid 610.
[34]Trawl Industries of Australia Pty Ltd v Effem Food Pty Ltd (1992) 108 ALR 335, 347 (Gummow J); Murphy v Abi-Saab (1995) 37 NSWLR 280; S635 OF 2003 v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCAFC 65.
[35](1992) 108 ALR 335.
[36]Ibid 437.
The question then is whether the substance of the earlier proceeding and this proceeding was the same, not whether each action was based on the same statutory claim. That requires consideration of the rights and liabilities necessarily determined by the order of the Magistrates’ Court. For that purpose, the Court may look at “any material that shows what issues were raised and decided”,[37] including pleadings[38] and all evidence “as is available and admissible”.[39]
[37]Rogers v R (1994) 181 CLR 251, 263 (Brennan J).
[38]Mangena v Wright [1909] 2 KB 958, 974-5; Sterling Engineering Co Ltd v Patchett [1955] AC 534, 541.
[39]Isaacs v Ocean Accident and Guarantee Corporation Limited (1957) 75 WN (NSW) 483; Ord v Ord [1923] 2 KB 432, 442.
In the earlier proceeding, the plaintiff sued the directors in their capacity as directors of the company for recovery of employee entitlements that she claimed were due to her by the company. The right sued on was the right to recover from the directors in that capacity the employee entitlements that the company was required to pay her. That right was grounded in a statutory claim under the Workplace Relations Act.
In this proceeding, she sued the same directors in their capacity as directors of the company for recovery of the same employee entitlements that she claimed were due to her by the company. The right sued on was grounded in a statutory claim under the Corporations Act but it is the same right that was claimed: that is, the right to recover from the directors in that capacity the employee entitlements that she alleged that the company owed her.
The subject matter of both proceedings was the same, albeit based on different statutory claims: viz, the directors’ personal liability to the plaintiff for the employee entitlements underpaid by the company. The plaintiff has an order of the Magistrates’ Court determining that right and which is conclusive as to the directors’ liability to her. Her right to recover her employee entitlements from the directors has passed into judgment and it is not competent for her to bring further proceedings with respect to pursuing the same right against the same directors, even though she relied on a different statutory claim to found the action. In my view, the Magistrates’ Court order created a res judicature on the plaintiff’s right to recovery of her employee entitlements from the directors. By operation of law, that “cause of action” had ceased to exist.[40]
[40]Chamberlain v Deputy Commissioner of Taxation (1987) 164 CLR 502, 510-11 (Deane, Toohey and Gaudron JJ).
The reservation of rights makes no difference, whether or not that right was made a term of the settlement. It is unnecessary for me to decide whether the right was a term of settlement. For present purposes, I assume that the reservation in the form it appeared in the solicitor’s letter of 4 February 2008 was a term of settlement. The rights that the plaintiff claimed that she had reserved did not preserve for the plaintiff any entitlement to open the same subject matter of litigation and pursue the same relief in subsequent proceedings against the directors. On entry of judgment she became bound by the Magistrates’ Court order and her right to sue the directors for her loss and damage arising from the company’s failure to pay her employee entitlements was conclusively determined.
8. Other grounds
If, contrary to my view, the plea of res judicata is not applicable, I agree with Efthim AsJ for the reasons that he gave[41] that the issue of the damages that the plaintiff may recover from the directors for the non payment of her employee entitlements was conclusively determined by the prior settlement and order of the Magistrates’ Court which gave rise to an issue estoppel in this proceeding.
[41]Inessa Maximova v Peter Goodwin [2009] (Unreported, Efthim AsJ, 2 December 2009) [35].
In light of my conclusion it is unnecessary for me to consider the other grounds on which the plaintiff relied in opposition to summary dismissal of her claim against the directors.
9. Claim against the administrators
Next, it is necessary to consider the dismissal of the proceedings as against the administrators. Efthim AsJ found that the plaintiff obtained the relief that she sought from them through her settlement of the earlier proceeding.[42] For the plaintiff it was submitted that the plaintiff “is only precluded by the settlement from proceeding against the administrators if the proper construction to take place on what has occurred is either that the plaintiff has received full satisfaction, so that any further proceeding would lack subject matter for the reason that no loss remains to be recovered, or the settlement was in terms of satisfaction of her right against the then defendants or anyone else in relation to her claim”. It is quite clear, in my opinion, that the consent order entered in the Magistrates’ Court pursuant to the settlement was intended by the plaintiff and the directors to represent the full amount of her loss and damage arising out of the non-payment of her employee entitlements by the company. The reservation of right referenced in the solicitor’s letter was not a reservation with respect to pursuing other persons for the difference and the material before the Court does not indicate that the compromise was other than in full satisfaction of her loss and damage.[43]
[42]Ibid [50].
[43]Baxter v Obacelo Pty Ltd (2001) 205 CLR 635.
10. Claim for costs
Next it was argued for the plaintiff that “there is no bar in principle” to the plaintiff’s claim for recovery of her costs in the debt action against the company which was stayed pursuant to s 440D of the Corporations Act upon the company going into administration and later stayed again pursuant to s 471B of the Corporations Act when the company went into liquidation and the recovery of the difference between the costs ordered to be paid to her in the Supreme Court action and the costs she incurred in that proceeding. I agree with Efthim J that it is not open to the plaintiff to pursue those costs in this proceeding under the guise of loss and damage suffered by her by reason of the contraventions alleged against the defendants. She has no award of those costs in her favour and did not seek them in those other proceedings. Furthermore, she has no entitlement as of right to be awarded them. The claim is not sustainable in this proceeding.
11. Claim for declaratory relief
Finally it was argued that the plaintiff also sought declaratory relief in this proceeding that the defendants have contravened Part 5.8A of the Corporations Act and that nothing in the earlier action properly denied her the right to that relief. In my view, it would be an abuse of process for the plaintiff to pursue the declaratory relief sought in the circumstance where it is ancillary to the relief under Part 5.8A of the Corporations Act for recovery of loss and damage that the plaintiff is not entitled by operation of law to recover.
12. Orders
Accordingly, the orders made by Efthim AsJ should be affirmed.
The orders that I will make are:
(1) Leave is granted to the plaintiff to appeal the decision of Efthim AsJ.
(2) The appeal is dismissed.
I will hear the parties on the appropriate order as to costs.
SCHEDULE OF PARTIES
BETWEEN
| INESSA MAXIMOVA | Plaintiff |
| AND | |
| PETER GOODIN | First Defendant |
| ROBYN ERSKINE | Second Defendant |
| DAVID GOBERMAN | Third Defendant |
| ALINA GOBERMAN | Fourth Defendant |
| ZHANNA GOBERMAN | Fifth Defendant |
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