Sanchez v National Australia Bank Limited
[2013] NSWSC 84
•19 February 2013
Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: Sanchez v National Australia Bank Limited [2013] NSWSC 84 Hearing dates: 1 February 2013 Decision date: 19 February 2013 Jurisdiction: Equity Division Before: Macready AsJ Decision: (1) Proceedings dismissed with costs.
Catchwords: PROCEDURE - application for dismissal - conduct giving rise to Anshun estoppel - whether conduct unreasonable - whether proceedings abuse of process Legislation Cited: Australian Securities Commission and Investment Act 2001
Civil Procedure Act 2005
Uniform Civil Procedure Rules 2005Cases Cited: Benchmark (Aust) Pty Ltd & Anor v National Australia Bank Limited [2012] NSWCA 130
Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287
Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245
Henderson v Henderson (1843) 67 ER 313
Johnson v Gore Wood & Co [2002] 2 AC 1
Meriton Apartments Pty Ltd v Industrial Court of New South Wales [2009] NSWCA 434
National Australia Bank Limited v Benchmark (Aust) Pty Ltd [2011] NSWSC 1464
Port of Melbourne Authority v Anshun [1981] HCA 45; (1981) 147 CLR 589
Rahme v Commonwealth Bank of Australia [1991] NSWCA 230
R&J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd [2008] NSWSC 232
Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118
Triantafilidis v National Australia Bank Ltd (1995) VConvR 54-536Texts Cited: Ritchie's Uniform Civil Procedure Category: Principal judgment Parties: Michael Angel Sanchez (Plaintiff)
National Australia Bank Limited (Defendant)Representation: Counsel:
S Burchett (Plaintiff)
J Stoljar SC and J Hynes (Defendant)
Solicitors:
File Number(s): 2012/270101
Judgment
This is the hearing of the National Australia Bank's (the Bank) notice of motion filed on 4 October 2012 seeking an order pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 that the proceedings be dismissed. There was originally a claim in submissions that the proceedings should be permanently stayed pursuant to s 67 of the Civil Procedure Act 2005 or pursuant to the Court's inherent jurisdiction to control its own proceedings. This claim was not pressed and the only claim pressed was for dismissal pursuant to the rule to which I have referred. It was said the various provisions of that rule would found an order for dismissal.
The parties submissions have helpfully set out most of the history of these proceedings and I will incorporate parts of the submissions in this judgment. I acknowledge the assistance this has provided.
The proceedings before the Court were brought by Michael Sanchez (Mr Sanchez) against the Bank and were commenced by Statement of Claim on 29 August 2012 (Current Proceedings).
The primary basis upon which this application is brought is that the claim in the Current Proceedings should reasonably have been asserted or disputed in earlier proceedings in which the Bank and Mr Sanchez were also parties, being the proceedings in Supreme Court Case No. 2010/27037 (the 2010 Proceedings).
The 2010 Proceedings were guarantee enforcement proceedings brought by the Bank to enforce guarantees given by Mr Sanchez in 2007 and 2008 in favour of the Bank. The 2010 Proceedings were prosecuted to finality in that on 30 November 2011, her Honour McCallum J entered judgment in the proceedings in favour of the Bank for the sum of $6,589,177.42.
It was submitted that an Anshun estoppel precluded the present proceedings from being brought and they were therefore frivolous and vexatious or an abuse of the process of the court and were liable to be dismissed. There is a challenge as to whether I have jurisdiction to deal with the matter and I will consider this question later in this judgment.
Background to the 2010 Proceedings
The 2010 Proceedings concerned a recovery action brought by the Bank against Mr Sanchez, Benchmark (Aust) Pty Limited (Benchmark) and Frank Landon Hodgkinson (Mr Hodgkinson) which sought to enforce guarantee obligations given by the parties to support the liabilities of an entity known as Lauderdale Project Pty Limited (Lauderdale). The claim was for approximately $6.4 million.
The general circumstances of the plaintiff's liability to the Bank, as referred to in the Bank's pleadings and evidence in the 2010 Proceedings, was as follows:
(1) On 15 August 2007 the Bank granted a Bill Facility to Lauderdale with a limit of $5.4 million (First Facility).
(2) Lauderdale was a company of which both Mr Sanchez and Mr Hodgkinson were directors. Mr Sanchez' son, Christian Sanchez, was a director and secretary of Lauderdale until 5 November 2007.
(3) Benchmark was a company of which Mr Sanchez was the sole director and secretary. Christian Sanchez was a fellow director until 24 November 2009.
(4) On 15 August 2007 the defendants and Christian Sanchez agreed pursuant to a written guarantee to guarantee the obligations of Lauderdale to the Bank up to a limit of $5.4 million plus other amounts including interest, costs and fees (2007 Guarantee).
(5) On 20 August 2008 the Bank provided a Business Overdraft Account to Lauderdale with a limit of $200,000 (Second Facility).
(6) On 20 August 2008 the defendants agreed pursuant to a written guarantee to guarantee the obligations of Lauderdale to the Bank up to a limit of $5.6 million plus other amounts including interest, costs and fees (2008 Guarantee). The 2008 Guarantee did not include Christian Sanchez as a guarantor party.
(7) Default occurred under the Second Facility and the First Facility and recovery action was commenced in mid-2009 against Lauderdale and the then guarantor parties, Mr Sanchez, Benchmark and Mr Hodgkinson.
Another facility provided by the Bank to a separate entity called Camden Retail Pty Limited (Camden) was raised in the 2010 Proceedings. In this respect, on 20 September 2008 the Bank provided to Camden a bill facility with a limit of $7.5 million which was to expire on 30 September 2009 (Camden Facility). Camden was a company associated with Mr Sanchez and his former business partner Leon Nikolaidis (Mr Nikolaidis).
It is apparent that there were two relevant guarantees given, one in 2007 and one in 2008 and this will become important in considering the course of the earlier proceedings.
It is useful to record what is the substance of the claim now sought to be pursued in the present proceedings. The present claim is found in an amended statement of claim filed on 1 November 2012. That amended claim provides for the following:
"(a) the Claim refers to the provision of the First Facility on 15 August 2007 and both the 2007 Guarantee and the 2008 Guarantee that were granted as security (paragraphs 2 - 4);
(b) the Claim refers to the provision of finance under the Camden Facility and the security provided (paragraph 5);
(c) the Claim refers to a representation made by Mr Crakanthorp to Mr Sanchez 'on or about 15 August 2008' that:
7.1 there would be no restriction as to how the funds pursuant to the [Camden Facility] could be applied; and
7.2 [Mr Sanchez] could, through Camden and Lauderdale, apply the funds from the [Camden Facility] which had not been used, or was not required in connection with the Camden Trust or the Lauderdale Trust including to service the monies borrowed by Lauderdale pursuant to the [First Facility] and the [Second Facility] (paragraph 7)
(d) the Claim refers to reliance by Mr Sanchez on the representation in entering into the Second Facility, Mr Sanchez entering into the 2008 Guarantee, Camden entering into the Camden Facility and Mr Sanchez entering into the Camden Guarantee (paragraph 9);
(e) the Claim refers to the restrictions applied by the Bank following September 2008 upon Lauderdale, Camden and Mr Sanchez as to how the funds under the Camden Facility could be applied (contrary to the representations) (paragraph 15.1), and that it refused to permit Mr Sanchez (through Camden and Lauderdale) to:
apply the funds from the [Camden Facility] which had not been used or required in connection with the Camden Trust for the Lauderdale Trust to service the monies borrowed by Lauderdale pursuant to the First Facility and the Second Facility. (paragraph 15.2)
(f) particulars are given of the refusal which refer to the Bank refusing to honour cheques and freezing Camden's account (paragraph 15.2); and
(g) the Claim pleads that the Bank's conduct (as summarised above) comprised conduct in trade or commence that was misleading or deceptive within the meaning of s. 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act)."
The claim also raises a "further or alternative" pleading that the Bank knew or ought to have known that Mr Sanchez was relying on the ability of Lauderdale and Camden to apply the funds from the Camden Facility to meet the obligations of Lauderdale to the Bank and that:
"The [Bank] knew or ought to have known that [Mr Sanchez], unless he could raise alternative finance, had no other source of funds to discharge his liabilities to the [Bank] pursuant to the [2007 Guarantee and the 2008 Guarantee] in the event that the [Bank] did not perform the Representations." (paragraph 18.2)
Arising from this allegation, it is alleged that the Bank knew or ought to have known that Mr Sanchez was "vulnerable to suffering economic loss" in the event that the representations were not performed, and that the Bank was under a duty of care not to cause such economic loss to Mr Sanchez by resiling from the representation after Mr Sanchez had entered into the 2008 Guarantee and the Camden Guarantee. In resiling from the representation, it is alleged that the Bank breached the duty of care and Mr Sanchez suffered losses as a consequence.
It is useful in order to appreciate the nature of the claim to set out in full paragraph 18 of this amended statement of claim which was in these terms:
"18. Further, or in the alternative, at the time of making the Representations and thereafter:
18.1 the Defendant knew or ought to have known that the Plaintiff was relying on the ability of Lauderdale and Camden to apply the funds from the Third Facility to meet the obligations of Lauderdale to the Defendant, which he had guaranteed to the Defendant pursuant to the First Guarantee and which he thereafter did guarantee to the Defendant pursuant to the Second Guarantee;
18.2 the Defendant knew or ought to have known that the Plaintiff, unless he could raise alternative finance, had no other source of funds to discharge his liabilities to the Defendant pursuant to the First and Second Guarantees in the even that the Defendant did not perform the Representations;
18.3 by reason thereof, the Defendant knew or ought to have known that the Plaintiff was vulnerable to suffering economic loss in the event that the Representations were not performed by the Defendant; and
18.4 it was reasonably foreseeable that the Plaintiff would suffer economic loss in the event that the Plaintiff did not perform Representations."
Various further alternative claims are made alleging that Mr Sanchez was at a special disadvantage, that the Bank took unconscientious advantage of him and that the Bank breached s 12CA or s 12CC of the Australian Securities Commission and Investment Act 2001 (paragraphs 23-28).
Mr Sanchez alleges that the losses suffered by him comprise the capital loss referable to the loss of opportunity to develop Lauderdale estimated at $8.5 million, and Camden estimated at $12 million (paragraph 29).
It is apparent that the representations are now effectively linked to the claim which was now brought by the Bank on the 2007 Guarantee, which guarantee preceded the representations alleged to have been made by the bank officers.
Legal principles
In Port of Melbourne Authority v Anshun [1981] HCA 45; (1981) 147 CLR 589 at 598 Gibbs CJ, Mason and Aickin JJ considered what was described as the principle in Henderson v Henderson (1843) 67 ER 313. In that case Sir James Wigram VC said at 319:
"Where a given matter becomes the subject of litigation in, and of adjudication by a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to 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."
The decision in Port of Melbourne Authority v Anshun, and the cases that have followed, have developed the principle of Anshun estoppel which has been described to be an extension of the res judicata doctrine: Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245, 252 [39].
Whether such an estoppel will arise is "based on the reasonableness ... of the conduct of a litigant": Meriton Apartments Pty Ltd v Industrial Court of New South Wales [2009] NSWCA 434 (23 December 2009) [60]; Champerslife Pty Ltd [39].
The "unreasonableness" criterion involves evaluation of what the party could reasonably have been expected to do in the first proceeding. In Port of Melbourne Authority v Anshun Pty Ltd at 602, Gibbs CJ, Mason and Aickin JJ stated:
"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 the one proceeding."
Although expressed in reference to the failure to raise a defence, the principle equally applies with respect to a claim. As Priestley JA held (agreed with by Meagher JA and Hope AJA) in Rahme v Commonwealth Bank of Australia [1991] NSWCA 230, an Anshun estoppel can arise both where a cause of action in second proceedings could have been relied upon as a defence in the first proceedings and where a cause of action raised in a second proceedings could have been raised in the first proceedings but was not. The decision has been followed in a number of cases including by the Full Federal Court in Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287.
It will be necessary later to refer to the caution to be used in applying an Anshun estoppel in strikeout proceedings.
The course of the 2010 Proceedings
Once the 2010 Proceedings were commenced, there was a defence filed raising a number of claims, importantly paragraph 36 of that defence was in the following terms:
"The First and Third Defendant say that by reason of the matters pleaded and in particular, the Plaintiff's misleading and deceptive conduct towards them and the Company pleaded in paragraph 28-32 above in breach of Sections 52 and 51A of the Trade Practices Act 1974 ("TPA"), they are entitled to damages from the Plaintiff, (including by way of set-off) pursuant to Section 82 of the TPA and to have their guarantees set aside pursuant to Section 87 of the TPA. They crave leave to file a Cross Claim once the Plaintiff has provided the further and better particulars sought by the Plaintiff's former solicitors Raj Lawyers, dated 4 March 2010."
After a number of further defences on 6 June 2011, the Court heard an application that was brought by the Bank which sought summary judgment against the defendants in the 2010 Proceedings. The application was heard by his Honour Kirby J. Counsel appeared for Mr Sanchez and Benchmark and opposed the Bank's application.
During the course the hearing of the application the following exchange occurred between Counsel for the Bank and his Honour:
"HIS HONOUR: Was separate security taken for the Camden facility?
STOLJAR: Yes, Camden was engaged in real estate development and security was taken over the development. In addition, Lauderdale gave a guarantee in 2008 and, of course, I don't think there is any dispute that the three defendants entered into a guarantee in 2008. What the bank seeks to do by way of reply is to say: Well, although it does not accept the allegation of unconscionable conduct or estoppel from anything that happened in 2008, the fact is the 2007 guarantee remains on foot, it is a continuing guarantee and demand has now been made under that guarantee and the bank relies on a guarantee to which, as far as the bank can apprehend, there is no defence. There is no suggestion that there was any unconscionable conduct back in 2007 which prevents the bank relying on that guarantee.
HIS HONOUR: Except in 2008 there was muddying of the waters and one can anticipate, I don't know, I am yet to hear from your opponent, there will be a contention that there had been a provision of funds in a timely way and if they had access to some of the Camden funds they could have stayed afloat. So it becomes quite a mess working it out but unconscionable in light of the representation which is said against you, failure to permit them to use such funds in a timely way to keep the thing afloat. They may have been able to survive. I don't know what their case is going to be.
STOLJAR: That anticipates matters that have never been put but in addition that anticipates allegations about conduct in 2008 that we would say cannot affect the guarantee that was entered into in 2007.
HIS HONOUR: I mean that would be impressive if there were not the further guarantee in 2008 and your demand in the statement of claim relying upon 2008. Once you mix it up, I mean you may ultimately be right, I mean there is no escape from the fact that you have advanced a lot of money and you have not been paid but if there were, for argument's sake, a representation and if they could have stayed afloat and if I can just interrupt my speech by enquiring about a search for affidavits by the defendant to give some content to what might be their defence. Have they been filed yet?
STOLJAR: No."
His Honour declined to grant the summary relief sought by the Bank on 6 June 2011 and instead granted leave for the parties to immediately approach the List Clerk to have the matter listed for hearing. His Honour also adjourned the hearing of the summary judgment application to the final hearing.
As a result of the discussions on 6 June 2011, the Bank filed an amended statement of claim which sought recovery under the 2007 guarantee and thus brought allegations previously contained in a reply to the Bank's principal claim. The Second Further Amended Defence (being the final pleading relied upon in the 2010 Proceedings), alleged in relation to the 2007 Guarantee that the defendants' liability under the agreement did not exist and had not existed since the date when the defendants entered into the 2008 Guarantee (paragraph 17(c)). The allegation was presented at the final hearing as one premised upon an assertion that the 2008 Guarantee had effectively replaced the 2007 Guarantee.
The terms of paragraph 17(c) of the defendant's second further amended defence to the amended statement of claim was as follows:
"the Plaintiff was not entitled to rely on the First guarantee after 20 August 2008, being the date when the Plaintiff and the Defendants entered into the Second Guarantee (as defined in paragraph 25 of the Amended Statement of Claim) as pleaded in paragraph 25 of the Amended Statement of Claim (which is not admitted)".
In that defence the defendants squarely raised as a defence to the claim also made by the Bank on the second guarantee a claim based upon the misrepresentations. See paragraph 34.4 of the second further amended defence. It was not expressed as a defence to the Bank's claim on the 2007 Guarantee.
The 2010 Proceedings were listed for final hearing on 29 November 2011 before her Honour McCallum J. On the morning of 29 November 2011, shortly before the hearing was to commence, the legal representatives for Mr Sanchez advised the Bank's legal representatives that Mr Sanchez would be unable to attend the hearing or be available for cross-examination due to his ill-health.
What happened thereafter is carefully set out by her Honour in her judgment reported as National Australia Bank Limited v Benchmark (Aust) Pty Ltd [2011] NSWSC 1464 in these terms:
"6 Kirby J evidently took the view (correctly, in my respectful opinion) that, since the 2007 guarantee had been pleaded only by way of reply to the defences raised and not as a substantive cause of action, it could not be relied upon by the Bank as the foundation for summary judgment. His Honour accordingly stood the notice of motion over to be heard together with the substantive claim and granted leave to the plaintiff to amend. The Bank duly amended its statement of claim to plead a cause of action based on the 2007 guarantee.
7 The only defence raised by the first and third defendants to the amended claim invoking the 2007 guarantee is that the Bank was not entitled to rely upon that guarantee after 20 August 2008, when the second guarantee was entered into.
8 The proceedings were listed for final hearing commencing on 29 November 2011. At the outset of the hearing, I was informed that the third defendant, Michael Sanchez, was unwell and would be unavailable for cross-examination during the time allocated for the hearing. It was common ground that the hearing of the defences to the claim under the 2008 guarantee could not proceed in his absence. However, the Bank proposed that it could nonetheless move on the notice of motion for summary judgment (with appropriate amendment) so as to seek judgment on the claim under the 2007 guarantee. For that purpose, the Bank did not require Michael Sanchez for cross-examination. It was indicated on behalf of the Bank that, if the Court were to grant summary judgment on the claim under the 2007 guarantee, the Bank would abandon the balance of its claim, obviating the need for any further hearing.
9 The first and third defendants did not oppose that course and the hearing proceeded accordingly. This judgment determines the Bank's notice of motion filed 24 March 2011 (as amended by leave during the hearing so as to apply to the claim under the 2007 guarantee)."
Her conclusion on the argument which has been put is at paragraph 35 in these terms:
"35 I have reached the conclusion that none of the matters relied upon by the first and third defendants is capable of prevailing over the clear wording of the contract, set out above. Clause 20 in the 2008 guarantee provides in the clearest terms that the 2008 guarantee was given as security additional to other security held by the Bank, including other security given by the same guarantors. The words used could hardly be clearer."
After recording some other matters she concluded the judgment on these terms:
"38 As already noted, the first and third defendants did not raise any other defence or opposition to the relief claimed in the notice of motion (as amended). I am satisfied to the point of certainty that there is no real question to be tried in respect of the Bank's claim under the 2007 guarantee and, accordingly, that the Bank is entitled to the relief sought.
39 I order that judgment be entered for the plaintiff against the first and third defendants in the sum of $6,589,177.42."
The following month, the Bank commenced bankruptcy proceedings against Mr Sanchez and thereafter a notice of intention to appeal from her Honour's judgment was lodged. After an initial stay, the summons for leave to appeal was filed on 8 February 2012 which was heard by the Court of Appeal. The Court of Appeal dismissed the application for leave to appeal and their reasons are set out in Benchmark (Aust) Pty Ltd & Anor v National Australia Bank Limited [2012] NSWCA 130.
The Court adverted to some arguments put to Justice McCallum that she must have identified other matters which required her considering whether the defence set out in the statement of issues used before McCallum J raised other matters. After referring to the terms of those issues at para 38 in the judgment of Sackville JA, he dealt with it in these terms:
"38. It is difficult to understand, even assuming that the primary Judge was in some way bound to identify for herself the issues the applicants wished to raise on the summary judgment application, how she could have discerned from these paragraphs a defence relating to the validity of the 2007 Guarantee. On their face, the paragraphs were directed to denying the enforceability of the 2008 Guarantee. To that end, they relied on events post-dating the execution of the 2007 Guarantee. They simply do not plead or identify a defence to NAB's claim to enforce the 2007 Guarantee.
39. In any event, the exchanges between the primary Judge and counsel, at the hearing on 29 November 2011, made it abundantly clear that the only defence the applicants wished to raise to the summary judgment application was that the 2007 Guarantee had been supplanted or discharged by the 2008 Guarantee. Mr Stoljar SC set out the position quite precisely. Then counsel for the applicants expressed his agreement that the issue should proceed on the basis that the question for determination was whether, as a matter of construction, the 2008 Guarantee was a complete substitute for and replaced the 2007 Guarantee.
40. There can be no doubt that counsel for the applicants understood that the dealings in relation to the Camden Facility had nothing to do with NAB's summary judgment application, founded as it was on the 2007 Guarantee. This is demonstrated by counsel deciding not to read Michael Sanchez's affidavit insofar as it addressed the circumstances surrounding the Camden Facility.
41. The primary Judge did not misapprehend the issues for determination on NAB's summary judgment application. Nor did her Honour misapprehend the applicants' defence to the summary judgment application."
Having noted the limitations of the arguments which were put before McCallum J, it was plain that it was a very limited point which was dealt within the summary judgment application which she was considering. Given that the question of some other defences or claims might be made against the Bank, the Court said the following at [53]:
"53. I add one further point. If the applicants have a viable claim against NAB arising out of the circumstances in which the 2007 or 2008 Guarantee came to be executed or enforced, it may yet be open to them to pursue that claim. It is neither necessary nor appropriate to resolve that issue. But the grant of summary judgment to NAB in its claim against the applicants does not necessarily preclude the applicants from pursuing any claim for damages or other relief against NAB."
Notably, the Court has only suggested that it "may" yet be open to the applicant to pursue some other claim as of course they now seek to do in the present proceedings.
The Bank's claim
It was the submission of the Bank that the allegations now raised in the present proceedings are so relevant to those asserted in the 2010 proceedings that it would have been unreasonable for them not to have been raised and relied upon in the 2010 proceedings. The submissions put forward by the Bank were as follows:
"75. As set out in detail in paragraph 51 above, the Claim traverses numerous matters that were relevant to the issues before the Court in the 2010 Proceedings and were indeed raised in pleadings and evidence, including:
(a) the First Facility, the Second Facility, the 2007 Guarantee and the 2008 Guarantee;
(b) the provision of finance under the Camden Facility;
(c) the alleged representation of Mr Crakanthorp concerning the use that might be made of surplus funds available under the Camden Facility; and
(d) the Bank's refusal to honour cheques and the freezing of Camden's account.
76. While Mr Sanchez's substantive allegations including those concerning Mr Crakanthorp's alleged representations were not determined in the 2010 Proceedings, at all times prior to the final hearing, the parties proceeded on the basis that these issues would be dealt with. In this respect, extensive pleadings, evidence, submissions and other documents covering these issues were prepared and served by the parties.
77. Mr Sanchez did not bring any cross-claim in the 2010 Proceedings, notwithstanding the reference to his intention to do so in the Defence filed on 28 April 2010 (see paragraph 16(h) above), and the guiding comments of his Honour Kirby J on 6 June 2011 in which, as referred to above, his Honour predicted a contention that would be raised by Mr Sanchez in the following terms:
...there will be a contention that had been a provision of funds in a timely way and if they had access to some of the Camden funds they could have stayed afloat. So it becomes quite a mess working it out but unconscionable in light of the representation which is said against you, failure to permit them to use such funds in a timely way to keep the thing afloat. They may have been able to survive. I don't know what their case is going to be....
78. The further or alternative pleading now contained in the Claim (referred to in paragraph 52 above) clearly adopts his Honour's comments. The Claim alleges that the Bank knew or ought to have known that unless Mr Sanchez could raise alternative finance, he had no other source of funds to discharge his liabilities to the Bank under the 2007 Guarantee and the 2008 Guarantee in the event that the Bank did not perform the representation (paragraph 18.2) (Alternative Allegation).
79. The claim for damages asserted in the Claim is said to amount to the resulting loss of opportunity to develop Lauderdale and Camden which is pleaded to arise from matters including the Bank resiling from the representation made by Mr Crakanthorp, and a breach of duty of care by the Bank. While the asserted claim for damages is a different formulation of the claim for damages asserted in the 2010 Proceedings by Mr Sanchez, the claim remains a claim that is essentially and in substance one arising from substantially the same facts that were asserted by Mr Sanchez in the earlier proceedings.
80. Why Mr Sanchez did not raise and press in the 2010 Proceedings a cross-claim asserting the matters that he now seeks to raise in the Current Proceedings is inexplicable. No evidence has been adduced to explain this omission. This is particularly demonstrated in the context of (a) of the versions of the defence that were filed by Mr Sanchez and which substantially raised the allegations that are now pressed, and (b) the comments of his Honour Kirby J on 6 June 2011 where the Alternative Allegation was, in substance, raised.
81. The matters raised in the Alternative Allegation were known to Mr Sanchez when conducting the 2010 Proceedings, including at the final hearing on 29 November 2011. Indeed, the substance of the Alternative Allegation had been specifically drawn to the attention of Mr Sanchez by Kirby J on 6 June 2011.
82. Notwithstanding this, Mr Sanchez, through his solicitors, made a forensic decision not to raise these matters, whether at the final hearing in response to the claim under the 2007 Guarantee or at any stage during the 2010 Proceedings. Having made that election it is too late for Mr Sanchez to raise the matters now. Mr Sanchez cannot now assert a right to take a position which is inconsistent with one taken earlier in the 2010 Proceedings: Commonwealth v Verwayen (1990) 170 CLR 394 at 481 per Gaudron J.
83. Mr Sanchez has at all material times been represented by solicitors and has had the same solicitors in both the 2010 Proceedings and the Current Proceedings. Given the various amendments to Mr Sanchez's defence in the 2010 Proceedings and his consistent representation, there was no want of opportunity to raise the matters that are now sought to be litigated by Mr Sanchez."
The plaintiff seeks to avoid the result intended by the Bank by suggesting that the conduct at the hearing before McCallum J indicate an intention by the Bank to abandon their claim under the 2008 Guarantee if it succeeded on the 2007 Guarantee and the consequence that evidence on the representations was not read. The only argument put forward by the plaintiff at that hearing was that the 2007 Guarantee is replaced by the 2008 Guarantee. As a result, the merits of Sanchez' claim in relation to the Camden finance facility had never been considered by the court despite the extensive evidence in pleadings prepared and served on his behalf due only, it was submitted, to his ill-health on the date of the hearing of the 2010 proceedings.
The plaintiff submits that the hearing before McCallum J was in effect a separate determination of the issue of liability under the 2007 Guarantee only and that the Bank should have been aware of the potential for further litigation of the issues raised by the defence which were excluded from the hearing and expressly did not seek a determination of those matters.
In effect, the plaintiff suggests that the Bank elected to take the risk that these other matters would be subsequently and separately pursued.
The plaintiff's submissions concluded as follows:
"The Bank would have the Court apply the principle purely on the basis of the availability of the earlier proceedings as a vehicle, in which Sanchez might technically have had an opportunity to plead and pursue his damages claims, without regard to:
- the very limited compass of the previous case ultimately pursued by the bank,
- the substantial width of the case, which Sanchez previously pleaded and sought to pursue, - his inability to attend the previous hearing and have the merits of his case considered,- the 'tactical' choice made by the Bank to proceed without consideration and determination of the substantial issues raised by him,- the inconsistency between the position now taken by the Bank with the bases, upon which it obtained a summary judgment on part of its claim and the application for leave to appeal was dismissed, and- the lack of prejudice to the Bank of now having the merits of his claims considered and determined separately from the Bank's simple debt claim.With a proper consideration of all the circumstances, it is submitted, that it was clearly not unreasonable for Sanchez to have not run his claims in these proceedings in the bank's earlier proceedings on the 2007 guarantee. Alternatively, it is clearly not unarguable, that an 'Anshun estoppel' applies, such as to justify summary relief."
As I stated earlier in this judgment it is necessary to refer to the caution to be used in applying an Anshun estoppel in strikeout proceedings. Referring to the power of the court to summarily terminate proceedings, the High Court's decision in Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118 states at [24] per French CJ and Gummow J:
"The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process. The same applies where such a disposition is sought in a summary judgment application supported by evidence. As to the latter, this Court in Fancourt v Mercantile Credits Ltd said:
'The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried'
.
More recently, in Batistatos v Roads and Traffic Authority (NSW) Gleeson CJ, Gummow, Hayne and Crennan JJ repeated a statement by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde which included the following:
'Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.'" (citations omitted)
The plaintiff submitted that a determination in relation to whether an Anshun estoppel arises should be dealt with at the stage of a final hearing, as was stated by Ormiston JA in Triantafilidis v National Australia Bank Ltd (1995) VConvR 54-536 at 66,637, in relation to requirements of the unreasonableness test:
"If this be the kind of necessary enquiry which Anshun's Case requires, then it is not ordinarily appropriate that it be dealt with upon an application for a summary judgment or stay. Unless the alleged unreasonableness is manifest (eg if the potential judgment would be plainly inconsistent), the appellant is entitled to have both the questions of principle and the issues of fact resolved upon a trial and upon the basis of precisely pleaded defences."
However, as was submitted by the Bank, in that case Ormiston JA was in the minority on this issue. Phillips JA (with whom Brooking JA agreed) did not share the view of Ormiston JA concerning the appropriateness of dealing with the issue at a summary stage in that case.
The Bank submitted that other courts have not insisted on dealing with Anshun points only at a final hearing. In Rahme v Commonwealth Bank of Australia, Bryant v Commonwealth Bank of Australia and R & J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd [2008] NSWSC 232, the issue was dealt with on a summary or interlocutory basis rather than at a final hearing.
The Bank submits that the failure of the plaintiff to run the current claim as a cross-claim in the 2010 Proceedings was unreasonable such that an Anshun estoppel precludes the claim from being brought. In Port of Melbourne Authority v Anshun Pty Ltd, the Court said at [37]:
"...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 the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few."
The plaintiff submitted that the approach taken before McCallum J was for the issues in relation to the 2007 Guarantee to be decided on the basis that it was a separate issue from the more difficult and complex issues that would arise in relation to the 2008 Guarantee because of the defence that the plaintiff wished to raise, that the Bank made false or misleading and deceptive representations or otherwise engaged in unconscionable conduct such as to preclude enforcement of the 2008 Guarantee. On the face of exchanges in Court that is not the case.
In the proceedings before McCallum J, it was common ground that the hearing of the defences to the claim under the 2008 Guarantee could not proceed in the absence of Mr Sanchez. The course of the hearing involved the abandonment of the claim on the 2008 Guarantee and the defences to that claim.
It is fundamental to the Bank's case that those defences were quite different in fact to what is now propounded. It is not the case, as suggested by the plaintiff, that "all the issues" in respect of the representations were on the table. Despite warnings from Kirby J, Mr Sanchez had not amended his defence to include a claim for capital losses as an answer to the 2007 Guarantee. He could have but did not.
There is no explanation as to why this was not done. At the hearing before McCallum J no one raised the possibility of these other claims.
In my view it was unreasonable for Mr Sanchez not to have raised these. If he had, the trial could have been adjourned and leave given to raise the matters in a third amended defence.
Jurisdiction
The Notice of Motion seeks an order that the proceedings be dismissed pursuant to UCPR r 13.4. Rule 13.4 provides that proceedings may be dismissed if they are, among other things, an abuse of process. It was submitted by the Bank that bringing proceedings in circumstances giving rise to an Anshun estoppel is a form of abuse of process (Johnson v Gore Wood & Co [2002] 2 AC 1 at 22; see also Ritchie's Uniform Civil Procedure at [14.28.20].
It was further submitted by the Bank that in the event that a court determines that proceedings have been commenced or pursued in circumstances giving rise to an Anshun estoppel, it is appropriate that the proceedings be dismissed. In Rahme v Commonwealth Bank of Australia and Bryant v Commonwealth Bank of Australia, proceedings were dismissed based on similar issues to those in this matter.
In my view, where conduct is of itself, unreasonable such as to give rise to an Anshun estoppel, there is an abuse of process and therefore there is power under r 13.4.
Accordingly, order 1 of the Notice of Motion does not give rise to any issue of jurisdiction.
Orders
(1) I dismiss the proceedings with costs.
Amendments
18 February 2013 - Decision date changed from 21/02/2013 to 19/02/2013
Decision last updated: 18 February 2013
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