Stewart v Biodiesel Producers Ltd

[2009] WASC 145

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   STEWART -v- BIODIESEL PRODUCERS LTD [2009] WASC 145

CORAM:   BEECH J

HEARD:   21 APRIL 2009

DELIVERED          :   28 MAY 2009

FILE NO/S:   CIV 1607 of 2008

BETWEEN:   ANTHONY PAUL STEWART

Plaintiff

AND

BIODIESEL PRODUCERS LTD
Defendant

Catchwords:

Estoppel - Res judicata - Cause of action estoppel - General principles - Whether record restricted to formal orders and pleadings or whether record includes evidence in earlier proceedings

Estoppel - Anshun estoppel - General principles - Plaintiff in this action cross-claimant in earlier proceedings - Whether Anshun estoppel precludes claims in this action

Legislation:

Nil

Result:

Plaintiff's claims not barred by cause of action estoppel
Plaintiff's claims precluded by Anshun estoppel

Category:    A

Representation:

Counsel:

Plaintiff:     Mr K S Pratt

Defendant:     Mr D M Stone

Solicitors:

Plaintiff:     B W Duckham & Co

Defendant:     Williams & Hughes

Case(s) referred to in judgment(s):

Biodiesel Producers Ltd v Stewart [2007] FCA 722

Blair v Curran [1939] HCA 23; (1939) 62 CLR 464

Boles v Esanda Finance Corp Ltd (1989) 18 NSWLR 666

Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287

Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21; (1988) 164 CLR 502

DP World Australia Ltd v Fremantle Port Authority [2009] WASCA 16

Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (in liq) (1993) 43 FCR 510

Gibbs v Kinna [1998] VSCA 52; [1999] 2 VR 19

Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101

Henderson v Henderson (1843) 3 Hare 100; (1843) 67 ER 313

Jackson v Goldsmith [1950] HCA 22; (1950) 81 CLR 446

Lee v Kim [2006] NSWCA 384; (2006) 68 NSWLR 433

Ling v Commonwealth (1996) 68 FCR 180

Macquarie Bank v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543

Pollnow v Armstrong [2000] NSWCA 245

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

Rahme v Commonwealth Bank of Australia [1991] NSWCA 230

Stewart v Biodiesel Producers Ltd [2008] FCAFC 66

Thoday v Thoday [1964] P 181

Trawl Industries of Australia Pty Ltd (in liq) v Effem Foods Pty Ltd (1992) 36 FCR 406

Verwayen v The Commonwealth [1990] HCA 39; (1990) 170 CLR 394

Willoughby v Clayton Utz [No 2] [2009] WASCA 29

Zavodnyik v Alex Constructions Pty Ltd [2005] NSWCA 438; (2005) 67 NSWLR 457

BEECH J: 

Introduction

1. The plaintiff, Mr Anthony Stewart, has commenced an action in this court against Biodiesel Producers Ltd (BPL).  Mr Stewart and BPL were parties to an action in the Federal Court.  Judgment was delivered on 16 May 2007.  In substance, BPL succeeded in the Federal Court action.

2. BPL pleads in its defence in this action that Mr Stewart is estopped by virtue of the Federal Court proceedings from bringing any of the claims the subject of this action.  On 23 October 2008 I ordered that the issues arising from those pleas by BPL be tried as preliminary issues. 

3. BPL contends that Mr Stewart's claims are precluded by cause of action estoppel or, alternatively, Anshun estoppel. 

4. I will begin by outlining the legal principles relevant to cause of action estoppel and Anshun estoppel.  Next, I will analyse the pleadings in this action and the pleadings in the earlier Federal Court action.  I will then turn to each of the four claims made by Mr Stewart in this action to determine, in each case, whether the claim is precluded by cause of action estoppel or Anshun estoppel. 

5. I begin with the principles relating to cause of action estoppel.

Legal principles:  Cause of action estoppel

1. In this area of the law there are numerous inconsistencies in terminology and taxonomy.  However, the basic principle is clear enough.  The final decision in a case estops or precludes any party to the litigation from disputing against any other party in later litigation the correctness of the earlier decision, except on appeal.  The same claim cannot be raised again between them:  Spencer Bower, Turner & Handley, The Doctrine of Res Judicata (3rd ed, 1996) [2], [9].  As Fullagar J said in Jackson v Goldsmith [1950] HCA 22; (1950) 81 CLR 446, 466, where an action has been brought and judgment has been entered in that action, no other proceedings can thereafter be maintained on the same cause of action between the same parties. (The principle extends to privies, but as the parties in this action were both parties to the Federal Court action I will say no more about privies.)

2. In Spencer Bower, Turner & Handley [3] ‑ [6] it is suggested that the estoppel effect and the merger effect of a judgment should be distinguished.  The learned authors state that the doctrine of merger arises only when a claim is successful, because only then has the cause of action merged into the judgment.  By contrast, the estoppel effect of the broad principle stated in [6] above applies to preclude a party from raising the same claim again in later litigation whether the claim in the earlier action succeeded or failed.  The authors describe this as 'cause of action estoppel' (which is the term used by Diplock LJ in Thoday v Thoday [1964] P 181, 197). The merger effect is described as 'merger in judgment', and the estoppel effect as 'res judicata estoppel'. Res judicata estoppel is used to refer both to cause of action estoppel and to issue estoppel.

3. The distinction between the two effects of a judgment, the estoppel effect and the merger effect, was also explained by Clarke JA in Macquarie Bank v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543, 556 ‑ 557.

4. There are a number of decisions of the High Court in which the concept of 'res judicata' is discussed.  These include Blair v Curran [1939] HCA 23; (1939) 62 CLR 464, 532; Jackson v Goldsmith (466 ‑ 467); Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589, 597 (Anshun's Case); and Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21; (1988) 164 CLR 502, 510 ‑ 511. In all of these cases, the term 'res judicata' was used to refer to the situation where the cause of action litigated in the earlier action had merged into judgment.

5. I propose to adopt the term 'cause of action estoppel'.

6. In any case, leaving aside issues of terminology, it is clear that the estoppel effect of the earlier decision, precluding the same claim from being made again in later proceedings between the same parties, applies whether the claim in the first proceedings succeeded or failed.  See, for example, Willoughby v Clayton Utz [No 2] [2009] WASCA 29; Trawl Industries of Australia Pty Ltd (in liq) v Effem Foods Pty Ltd (1992) 36 FCR 406, 409; Zavodnyik v Alex Constructions Pty Ltd [2005] NSWCA 438; (2005) 67 NSWLR 457 [33]; Macquarie Bank v NML (556 ‑ 557).

7. In Willoughby [14] Pullin JA quoted with approval the statement in Spencer Bower, Turner & Handley [19] that a party setting up a res judicata estoppel (expressed by Pullin JA as 'res judicata') as a bar to an opponent's claim must establish the following elements:

   (a)the decision was judicial in the relevant sense;

   (b)it was in fact pronounced;

   (c)the tribunal or court had jurisdiction over the parties and the subject matter;

   (d)the decision was final and on the merits;

   (e)it determined the same question as that raised in the later litigation; and

   (f)the parties to the later litigation were either parties to the earlier litigation or their privies, or the earlier decision was in rem. 

8. In this action, only element (e) is in issue. 

9. In cases of a plea of res judicata or cause of action estoppel, the primary question will be whether the cause of action in the later proceedings is the same as that which was litigated in the former proceedings:  Jackson v Goldsmith (467); Willoughby [11]; Macquarie Bank v NML (558 ‑ 559). 

10. That proposition invites attention to the meaning of 'cause of action' in this context.  As Brennan J said in Anshun'sCase (610 ‑ 613), the phrase 'cause of action' may be used in several senses including:

    (1)The series of facts which the plaintiff must allege and prove to substantiate a right to judgment;

    (2)The legal right which has been infringed; and

    (3)The substance of the action as distinct from its form. 

11. Brennan J's statement was referred to by Deane, Toohey & Gaudron JJ in Chamberlain (508), without choosing between any of these formulations.

12. The weight of authority in Australia is that the identity or otherwise of the causes of action is determined by matters of substance rather than the technical identity of the legal form of action or category of claim invoked:  Trawl Industries (411 ‑ 412, 418, 422); Zavodnyik [25], [30] ‑ [31]; Lee v Kim [2006] NSWCA 384; (2006) 68 NSWLR 433 [24] ‑ [25]; Macquarie Bank v NML (559); but cf Boles v Esanda Finance Corp Ltd (1989) 18 NSWLR 666, 672 ‑ 673.

13. That approach was said by Gummow J in Trawl Industries to be consistent with the requirements arising from the fact that, in that case (as in this case) both proceedings were in federal jurisdiction.  The identification of a matter the subject of the exercise of federal jurisdiction directs attention to the substance of the controversy, not the form in which the legal proceeding is framed (411 ‑ 412).

14. The same cases, apart from Macquarie Bank v NML, support the view that in determining whether as a matter of substance the causes of action are the same in the two proceedings, attention is to be directed to whether the same factual matrix is relied upon and to the remedy claimed in each proceeding.  In Macquarie Bank v NML (559) Clarke JA stated that what is required is 'an examination of the factual circumstances relied upon to establish the right to relief in each case in order to determine whether there is a sufficient identity between them to found the conclusion that the same cause of action was in question in both cases'.  Clarke JA suggested that Gummow J's test in Trawl Industries may be wider than the test favoured by him. 

15. In a passage cited with approval in both Zavodnyik and Lee, Gummow J tested whether the same factual matrix is relied upon by reference to whether the same evidence would be led to prove the case that the claimant had propounded in its pleadings in both actions:  Trawl Industries (422).

16. The question whether the causes of action in the two proceedings are the same is influenced by the level of particularity at which the examination of the factual situation is conducted:  Macquarie Bank v NML (560).  It involves an evaluative judgment on which minds may reasonably differ:  compare the majority approach of Clarke JA (556 ‑ 561) with that of Powell JA in dissent (616 ‑ 617).

17. There is an important question as to the material to which a court may have regard to in applying these principles.  In determining whether the same factual matrix has generated the controversy in the two cases and whether the claimant would call, in the second action, the same evidence to prove its case, can regard be had to the evidence led in the earlier proceedings, or only to the pleadings? 

18. This was the only question of legal principle on which Mr Stewart took any substantial issue with the legal principles advanced by BPL.  BPL submitted that regard may be had to the evidence led in the earlier case and that it did not matter that in the second case facts were relied upon which were not pleaded in the first case.  It was, BPL submitted, sufficient if the evidence to be relied on in both cases would be substantially the same.  Against this Mr Stewart submitted that, in determining a question of res judicata or cause of action estoppel, regard could be had only to the formal order of the court and the pleadings in the earlier action, and not to the evidence.  Mr Stewart submitted that that constituted the binding holding of the Court of Appeal in Willoughby. 

19. For the reasons that follow, I accept Mr Stewart's submission in this regard.

20. In considering the competing submissions it is, I think, useful to consider the decisions relied upon by the parties in some detail.  I begin with the decisions relied upon by BPL.

21. In Trawl Industries, the applicant in the Federal Court proceedings (Trawl) brought an action for damages by reason of alleged contraventions of s 52 of the Trade Practices Act 1974 (Cth) by the respondent (Effem) and a claim for negligence. (There were other applicants in the Federal Court proceedings but that is not presently relevant.) Trawl had already unsuccessfully brought proceedings against Effem in the Supreme Court of New South Wales. In the Supreme Court action Trawl had relied on contravention of s 52 of the Trade Practices Act but did not include any claim for negligence. 

22. Gummow J found that Effem had made out its case of cause of action estoppel against Trawl. 

23. In considering the claim of cause of action estoppel, Gummow J analysed the pleading in the Supreme Court action in detail (419).  In doing so, his Honour also referred to evidence adduced in the Supreme Court action, particularly in the form of witness statements which became exhibits.  He then analysed the pleading in the Federal Court action (419 ‑ 422).  Again, in doing so, he referred to particular alleged representations which had been dealt with in paragraphs of witness statements relied upon by Trawl in the Supreme Court proceedings.

24. His Honour concluded as follows:

    What emerges from this review of the matter in broad terms is that in the present proceeding Trawl seeks to recover a loss measured in the same way and in the same quantum as it did on the trade practices claim it propounded in the Supreme Court proceeding. Not all of the misrepresentations alleged in this Court are found in the pleading in the Supreme Court, but some are. The second, fifth and sixth set of claims in this Court are examples. Further, all of the alleged misrepresentations precede entry into the heads of agreement dated 7 June 1988.

    It is true that the contract dated 26 March 1987, said to have been released and discharged before entry into the heads of agreement, was not pleaded in the Supreme Court. Although not all of it had been taken to trial, the whole of the action by Trawl in the Supreme Court was disposed of. But each set of claims in this Court is particularised by reference to statements which were in evidence in the Supreme Court. Thus, this is a case where it can be said that the same evidence would be led to prove the case Trawl propounded in its pleadings in both actions. The one factual matrix has generated the controversy which is given legal form in the two pleadings. As a matter of substance, in this Court Trawl seeks to attack Effem again upon a corresponding cause of action.

    In my view, Effem has made out its case of cause of action estoppel against Trawl. This is so, even though no claim previously was made in negligence. The substance of the controversy embraces such a claim. The gist of the recovery sought both in negligence and for contravention of the TP Act is the same; the question is how much worse off is Trawl as a consequence of the acts and omissions of Effem?  (422)

25. I accept BPL's submission that the decision in Trawl Industries supports the proposition that it does not matter that in the second case the facts relied upon were facts which were not pleaded in the first case; it is sufficient if the evidence to be relied upon in both cases will be the same.  Both Gummow J's approach to analysis of the material (419 ‑ 422), and his conclusions (422), seem to me to support that view. 

26. An appeal against Gummow J's decision was dismissed:  Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (in liq) (1993) 43 FCR 510. The appeal related to other aspects of his decision (namely, his refusal of Effem's motion against the other applicants, who had not been parties to the earlier proceedings in the Supreme Court of New South Wales). There was no challenge to the decision to stay the proceedings by Trawl.

27. I accept BPL's submission that the relevant passages of the decision of Gummow J in Trawl Industries have been cited with approval in the New South Wales Court of Appeal decisions in Zavodnyik and Lee. 

28. In Zavodnyik a builder brought proceedings in the Fair Trading Tribunal in respect of work done under a residential building contract.  The builder was not licensed when it entered into the contract.  The Home Building Act 1989 (NSW) meant that the contract could not be enforced by the builder. During the hearing before the Fair Trading Tribunal, the builder sought to amend its pleading to include a claim for restitution. This was opposed by the owners. The upshot of exchanges between counsel and the Tribunal was that the builder's claim would be advanced only on the ground that it was licensed when subsequent variations were agreed to, or that strict compliance with the licensing requirements had not been required because of a provision of the Act governing the procedure of the Fair Trading Tribunal. Thus the builder abandoned any claim to recover in restitution. The claim was unsuccessful. Subsequently the builder made a fresh application, which was transferred to the District Court, to recover for the work it had done in restitution or on a quantum meruit basis. The New South Wales Court of Appeal (Handley JA, Mason P & Latham J agreeing) held that the District Court proceedings were barred by cause of action estoppel.

29. Handley JA applied the decision and reasoning of Gummow J in Trawl Industries, setting out substantial portions of the passages at 422 I have already set out: [25]. Handley JA stated that a non‑exhaustive comparison between the particulars of the claim in the Tribunal, and the claim in the District Court, demonstrated there was substantial overlap and that the builder would have to call substantially all the evidence it called in the Tribunal: [27] ‑ [28]. His Honour concluded as follows:

    When the analysis in Trawl Industries of Australia is applied, and the question considered as a matter of substance, it is evident that the restitution claim, although reduced in amount, is based on building work, architect's instructions, and evidence that were relied on by the builder in the Tribunal. As Gummow J said (quoted at 462 [25] supra): 'The one factual matrix has generated the controversy which is given legal form in the two pleadings ... This is so, even though no claim previously was made in negligence. The substance of the controversy embraces such a claim' [30].

30. For present purposes, the reference to evidence relied on by the builder in the Tribunal should be noticed. 

31. In Zavodnyik the cause of action in contract and the claim in restitution were alternative and inconsistent remedies based on the same facts.  That the causes of action were alternate did not prevent a cause of action estoppel from applying [31], [32].

32. Lee concerned successive actions for defamation brought by the respondent.  At [24] ‑ [25] of that case, Handley JA (Beazley & Santow JJA agreeing) applied Trawl Industries, quoting a substantial portion of the passage at 422 in Trawl Industries I have set out earlier. His Honour concluded that 'the overlap between the causes of action pleaded in the first and second statements of claim is almost complete. Both actions relate to the same defamatory imputations in the same articles in the same issues' [27]. The text of the matters complained of in the two proceedings were very similar.

33. In determining the question of cause of action estoppel in Lee the New South Wales Court of Appeal had regard to the course of the first defamation case [5] ‑ [8].  However, this decision does not seem to me to deal squarely with the issue I am presently considering, namely whether regard can be had to the evidence in the first proceeding in deciding whether cause of action estoppel arises.  Nevertheless, Handley JA cited with approval a substantial portion of the relevant passage in Trawl Industries.

1. As I have said, it seems to me that both Trawl Industries and Zavodnyik support the view that regard may be had to the evidence in the first proceeding. 

2. I turn to the decision of the WA Court of Appeal in Willoughby.  The appellants brought an earlier action against the respondent which was dismissed.  Subsequently, the appellants commenced a new action against the respondent pleading what was eventually conceded to be essentially the same causes of action as had been pleaded in the first action.  One of the issues in the appeal was whether the judgment dismissing the first action meant that the causes of action had been judicially determined and were therefore res judicata.  Pullin JA delivered reasons for decision with which Wheeler & Miller JJA agreed.  As I have said, Pullin JA set out the elements identified in Spencer Bower, Turner & Handley for a party  to establish in setting up a res judicata estoppel.  Pullin JA identified a question as to what may be examined in order to decide whether causes of action are res judicata.  He began with a statement of Fullagar J in Jackson v Goldsmith (467) that 'where the plea is of res judicata, only the actual record is relevant'.  The question which then arose in Willoughby was what constitutes the actual record.  Counsel for the appellant submitted that the reasons for judgment in the first action should be examined.  Counsel for the respondent submitted that the record consisted only of the statement of claim in the first action, the judgment in the first action and the statement of claim in the second action, submitting that reference to the reasons for judgment was impermissible.

3. Pullin JA referred [21] ‑ [22] to what was said at [204] in Spencer Bower, Turner & Handley, saying that that paragraph is dealt with in Pollnow v Armstrong [2000] NSWCA 245.

4. Paragraph [204] in Spencer Bower, Turner & Handley is in the following terms:

   It was formerly considered that the subject matter of a decision for the purposes of res judicata could only be ascertained from the formal judgment or order and the court could not examine 'what was said by the judges'.  The previous author was in some doubt but preferred the view that the court's reasons could be considered.  There were then many case favouring the broader view.

   Since then the law has been settled in favour of the broader view.  In R v Humphreys [1977] AC 1 Lord Hailsham said: 'The court will inquire into realities, and not mere technicalities', and in Rogers v R (1994) 181 CLR 251 Brennan J said that the court could look at 'any material that shows what issues were raised and decided'. The point now seems to be assumed. Thus, in Thrasyvoulou [1990] 2 AC 273 the House considered reports of planning inspectors. In Arnold [1991] 2 AC 93 it held that issue estoppel was excluded because of the special circumstances but that question could not be investigated if the court were confined to the pleadings and the order.

   The court can consider the pleadings, particulars, evidence, the notice of appeal or cross‑appeal, the reasons for judgment, the summing up, any questions put to the jury and its answers.  (footnotes omitted)

5. Pullin JA described Pollnow as authority for the proposition that the record consists of the pleadings and the judgment or order, but not the reasons for judgment.  He quoted [24] ‑ [25] the following passages from the decision of Meagher JA (Priestley & Sheller JJA agreeing):

   The doctrine of res judicata is concerned with results not reasons. Whether the trust failed because oral evidence to the contrary was believed, or because the deed relied on had been revoked, or because it related to different property from that claimed, or because it could not be proved … simply does not matter: if the trust alleged is found not to exist, the doctrine of res judicata will prevent further proceedings based on the same allegation [9].

   …

   In the circumstances, and in the absence of any binding authority requiring the application of Arnold's case to res judicata, I am of the view that for the purposes of res judicata one is restricted to the examination of the plaintiff's pleadings and the court's orders [13].

6. Pullin JA also set out [26] the following statement by Priestley JA in Pollnow:

   In regard to para 204 of the third edition of Spencer, Bower on Res Judicata, on the second paragraph of which counsel for the appellant relied (and which is set out in Meagher JA's reasons), I think counsel's reliance on it was due to a misunderstanding. The passages preceding para 204, and the cases cited in the second paragraph of para 204 itself for that matter, make it plain that the second paragraph is dealing with that branch of res judicata called issue estoppel, and not the main and original doctrine of res judicata, now frequently called in England cause of action estoppel. The two branches are substantially different and confusion between them would be lessened if the English habit of describing issue estoppel as a branch of res judicata were abandoned. At all events, none of the cases cited in para 204 gives the appellant in the present case any basis for escaping from the established rules of res judicata (properly so called and distinct from issue estoppel) referred to by Meagher JA in his reasons [2].

7. Pullin JA stated that in his view Pollnow's case is correct [27]. His Honour concluded that the submission of counsel for the respondent was correct in that reasons for judgment are not part of the record to be examined when deciding whether causes of action have already been determined in an earlier action [28].

8. BPL submits that Willoughby did not decide whether the evidence adduced in the earlier proceeding forms part of the 'record'.  All that Willoughby decided, BPL's submission continues, is that the reasons are not part of the record, referring to [28].  I accept that such a reading of Willoughby is open.  However, on balance, I am not persuaded by BPL's submission.  That is so for the following reasons. 

9. First, it is difficult to identify a principled reason why the record would include the evidence adduced at the earlier trial, but not include the reasons for decision.  I accept Mr Stewart's submission in this regard. 

10. Secondly, in Pollnow, Meagher JA stated that the record is restricted to the pleadings and the court's formal orders.  Pullin JA cited that passage.  In expressing the view that Pollnow was correct, I take his Honour to be referring not only to the decision in that case but also to the reasoning. 

11. For these reasons, I consider that I am bound by the decision in Willoughbyto hold that in considering the question of cause of action estoppel regard can be had to the formal order and the pleadings in the earlier action, but not to the evidence or the reasons for decision.

12. BPL advanced an argument that principle and practical considerations support regard being had to the evidence in the earlier proceedings in determining a cause of action estoppel, referring to what was said by Gummow J in Trawl Industries(418).  However, my conclusion that I am bound by Willoughby to hold that regard may not be had to the evidence in the earlier proceeding means that these considerations do not arise or do not assist me. 

Legal principles:  Anshun estoppel

1. The principles relating to Anshun estoppel were recently outlined by Newnes AJA in DP World Australia Ltd v Fremantle Port Authority [2009] WASCA 16 [73] ‑ [84] (McLure JA agreeing). The following outline draws heavily on what was said in that case.

2. Anshun estoppel rests on the principle that parties to litigation should bring forward their whole case, so that the court will not permit a party to reserve a claim and make it later when it could and should have been made in the earlier proceedings.  The starting point for the principle is the often cited statement of Wigram VC in Henderson v Henderson (1843) 3 Hare 100, 115; (1843) 67 ER 313, 319 as follows:

   [W]here 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.

3. This principle was approved by the High Court in Anshun'sCase (598).

4. Different views have been expressed on whether the principle in Henderson should be seen as relating to the scope of cause of action estoppel, or as espousing a separate principle.  Handley JA (with whom the other members of the New South Wales Court of Appeal have agreed) has applied the statement in Henderson to cause of action estoppel:  Zavodnyik [24]; Lee [22]. However, in Chamberlain (509) Deane, Toohey & Gaudron JJ stated that Henderson was not concerned with res judicata in its strict sense but rather with its implications when an issue is sought to be raised 'which could and should have been litigated in the earlier proceedings'.  Their Honours referred to Anshun'sCase (598); see also Chamberlain (512) (Dawson J).  Unless and until the High Court states otherwise, I propose to characterise an Anshun estoppel in the way stated in Chamberlain.

5. Anshun'sCase considered the principle in Henderson in the context of a failure to plead a defence in an earlier action.  The High Court rejected the proposition that it was an abuse of process to raise in subsequent proceedings matters which could and should have been litigated in earlier proceedings.  Gibbs CJ, Mason & Aickin JJ said:

   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 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 eg expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few (602 ‑ 603).

6. Their Honours emphasised the significance of the potential for conflicting judgments as an important factor in this context.  They said as follows:

   The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgments is obviously an important factor to be taken into account in deciding whether the omission to plead can found an estoppel against the assertion of the same matter as a foundation for a cause of action in a second proceeding.  By 'conflicting' judgments we include judgments which are contradictory, though they may not be pronounced on the same cause of action.  It is enough that they appear to declare rights which are inconsistent in respect of the same transaction.

   It is for this reason that we regard the judgment that the Authority seeks to obtain as one which would conflict with the existing judgment, though the new judgment would be based on a different cause of action, a contractual indemnity (603 ‑ 604).

7. In Rahme v Commonwealth Bank of Australia [1991] NSWCA 230, Anshun estoppel was applied where a party brought a subsequent action on a cause of action which could have been raised in earlier proceedings. Priestley JA considered that Anshun'sCase was authority for the following propositions:

   1.Wigram VC's extended principle as stated in Henderson is accepted as good law by the High Court;

   2.that principle applies… to a proceeding in which a party is asserting a cause of action which could have been raised, but was not, in a previous proceeding in which the same party was asserting a different cause of action based on substantially the same facts against the same party as the second proceeding is being brought; and

   3.the extended principle of Henderson will be applied to the second proceeding when it was unreasonable for the party asserting the cause of action in that second proceeding to refrain from raising it in the earlier proceeding against the same opponent party (4).

8. In Rahme the Court of Appeal held that the failure of the plaintiffs to raise the Contracts Review Act 1980 (NSW) in the earlier proceeding was unreasonable and that later claim would cover much of the same ground, involve waste on a large scale and give rise to the possibility of inconsistent results.

9. In DP World Australia Ltd, Newnes AJA said as follows in relation to the Full Federal Court decisions in Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287 and Ling v Commonwealth (1996) 68 FCR 180:

   In Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287, the question was whether Anshun estoppel applied where there had been a failure to raise a cross-claim in earlier proceedings. In that case, Bryant had been sued by the Bank in the Supreme Court of New South Wales for recovery of possession of mortgaged property and for debt. He raised various defences and cross‑claims but later amended his pleadings to withdraw some of the cross‑claims. He then brought separate proceedings in the Federal Court based on the cross‑claims he had withdrawn. The Full Court of the Federal Court held that the proceedings were barred by Anshun estoppel. The court followed the approach taken in Rahme, noting that it was consonant with the High Court's emphasis in Anshun on looking at the substance of the issue sought to be raised in the later case, rather than its form. The court went on:

   It is true that, in [Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332] Brennan and Dawson JJ stated that the Anshun principle will ordinarily not apply to cross-claims.  They made an exception of cases where the relief claimed in the second proceedings is inconsistent with the judgment in the first.  In making this distinction, their Honours may have had in mind a situation such as the one before them in that case, where the cross‑claim depended on facts remote from those of the principal claim.  Questions of substantive degree may be involved; and in contrast to defences, many cross‑claims may have little or no connection with the principal claim in the action; there may be no more than an identicality of parties.  Where that is so, there may be no policy justification for forcing defendants to litigate their claims as cross‑claims rather than as principal claims in separate actions in the forum of their choice.  But, where, as here, a defendant's claim is intimately connected with that of the plaintiff, in the sense that each arises, substantially, out of the same matters of fact, there is every reason to require that both be litigated at the one time; thereby minimising costs and avoiding the possibility of inconsistent judgments (297 ‑ 298).

   In Ling v Commonwealth (1996) 68 FCR 180, the Full Federal Court (184, 195) emphasised that the fundamental issue in the application of an Anshun estoppel is whether it was unreasonable for the party bringing the second action to have failed to raise its subject in the first action. Wilcox J (with whom Whitlam J agreed) went on to make the following comments in relation to reasonableness in this context:

   In considering reasonableness … consideration must be given to all aspects of the case.  They include the extent of the overlap between the facts underlying each claim; the greater the overlap, the easier it is to argue that it was unreasonable not to raise the matter in the first case.  They also include any difficulties that existed, or might reasonably have been perceived, in raising the matter earlier … In assessing the reasonableness of Mr Ling's failure to raise his claim against the Commonwealth when he was sued by it in the earlier action, it is necessary to look at the whole of the circumstances that he then confronted (184).

   Wilcox J also uttered a note of caution about the application of the principle in Anshun to cross-claims.  His Honour (who had been a member of the Full Court in Bryant) said:

   The decision in Bryant does not mean that it will always be appropriate to apply the Anshun principle to cross-claims.  Some cross-claims have little or no connection with the claim in the action.  There may be no more than an identicality of parties.  It is difficult to see any justification for applying the Anshun principle to a case of that kind.  Some cross‑claims overlap the facts of the principal claim but involve additional facts.  Where this occurs, a question of degree arises.  It would be wrong to say that the Anshun principle is excluded whenever there are additional facts; to go so far would be to render it nugatory.  However, where the additional facts are substantial, it may be appropriate to accept the reasonableness of separate proceedings (183).

   Wilcox J referred with approval to the observation of the Judicial Committee of the Privy Council in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581, 590, that to shut a party out of bringing a case on the basis of such a principle is a serious step, a power not to be exercised except 'after a scrupulous examination of all the circumstances'. As his Honour noted, if the Anshun principle is too readily applied, there is a possibility of serious injustice [80] - [83].

10. Thus an Anshun estoppel can arise where in the first proceeding a respondent has cross‑claimed but has unreasonably failed to raise all his grounds of cross‑claim:  Bryant  (297 ‑ 298).  In that case the court observed that attention should be given to the degree of connection between the primary claim and the cross‑claim in the earlier action.  If the two have little or no connection then it may not be appropriate to require the defendant in the earlier action to litigate all of its claims as cross‑claims.  But where the defendant's claim is intimately connected with that of the plaintiff in the earlier action, in the sense that it arises substantially out of the same matters of fact, then it is, generally at least, reasonable to require that both be litigated at the same time (298).

11. In order that Anshun estoppel apply, it is necessary but not sufficient that the cause of action raised in the later proceeding could have been raised in the previous proceeding, and that the later proceeding will involve the same or substantially the same facts as the earlier proceeding:  Gibbs v Kinna [1998] VSCA 52; [1999] 2 VR 19 [27].

12. Anshun estoppel involves preventing a litigant from having a court adjudicate on the merits of a claim.  For that reason, it is only to be applied in the clearest of cases:  Gibbs v Kinna [33]. (See also the note of caution of Wilcox J in Ling (184), quoted with approval by Newnes AJA in DP World Australia Ltd in the passage set out at [59] above.)

13. A significant consideration is whether the later proceeding may give rise to inconsistent judgments.  Where there is no risk of inconsistent judgments, the decision whether it was unreasonable for the plaintiff not to litigate closely related issues in the earlier proceedings requires consideration of all the relevant facts.  This includes the character of the previous proceedings, the scope of any pleadings, the length and complexity of any trial, any real or reasonably perceived difficulties in raising the relevant claim earlier, and any other explanation for the failure to raise the claim previously:  Gibbs v Kinna [28]. In Anshun'sCase, the majority stated that there may be a variety of circumstances why a party may justifiably abstain from litigating an issue in one proceeding yet wish to litigate the issue in subsequent proceedings, including expense, importance of the particular issue, and motives extraneous to the actual litigation (603).

1. In order for judgments to be 'conflicting', it is enough that they are contradictory even though they may not be pronounced on the same cause of action.  It is sufficient if they appear to declare rights which are inconsistent in respect of the same transaction:  Anshun'sCase (603 ‑ 604); Trawl Industries (423).

2. In Zavodnyik, there was no risk of conflicting judgments. Nonetheless, the court held that even if there was no cause of action estoppel, there was an Anshun estoppel. Handley JA emphasised that there was a substantial if not total overlap in the facts, and that the amount now sued for was comprised within the earlier claim. Therefore, there was said to be every reason to require both claims to be litigated at the one time, minimising costs and delay to both parties and the demands on court time [40]. The extent of the overlap in the evidence in the earlier proceeding and that which would be required in the second was also emphasised as a significant consideration in Bryant (297 ‑ 298).

3. An element in Anshun estoppel is the notion that a party cannot improve his position by bringing separate actions:  Trawl Industries (423).

4. BPL submitted that Mr Stewart's claims in this action were doomed to fail, and that that was or may be relevant to any discretion the court may have in relation to the application of Anshun estoppel.  I am not persuaded that any attempt to assess the merits of the claim sought to be made in the later proceedings is of any assistance in determining whether the claim is precluded by Anshun estoppel.

5. The principles I have stated respecting cause of action estoppel mean that it is necessary to give close attention to the statement of claim in this action and to the pleadings in the Federal Court action.  I begin with the statement of claim in this action.

The pleadings in this action

1. There are four claims pleaded in Mr Stewart's statement of claim in this action:

   (a)breach of the Agreement (as defined in par 6);

   (b)a claim for quantum meruit for services provided;

   (c)breach of a collateral contract to pay the sum of $120,000; and

   (d)a claim for damages for loss arising from BPL's misleading and deceptive conduct.

2. I outline the allegations in the statement of claim as follows.

3. From March 2002 to June 2003, Mr Stewart was orally engaged by Mr Dennis Barron on behalf of BPL to undertake accounting, fundraising and secretarial services.  The terms of the agreement were that insofar as BPL did not have available funds to pay Mr Stewart, he would accrue an entitlement for the issue by BPL to him of ordinary fully paid 20 cent shares in BPL accruing at the rate of $75 per hour of time spent by Mr Stewart (par 4).  This is referred to as 'the Engagement'.  In reliance on the Engagement, Mr Stewart accepted the position of company secretary of BPL and provided accounting, fundraising and secretarial services, without being paid but with the expectation of receiving shares (par 5).

4. Mr Stewart pleads in par 6 that he agreed with Mr Dennis Barron on behalf of BPL that he would continue providing services to BPL on the basis that he would receive 20 cent shares to be issued to him at various stages when certain milestones were reached by BPL.  That is, Mr Stewart would receive:

   (a)0.5 million shares upon raising the required capital;

   (b)2 million shares upon completion of the operating plant;

   (c)1 million shares upon receiving a government grant of at least $2 million;

   (d)1 million shares upon BPL achieving a NPAT (net profit after tax) of $4 million; and

   (e)1 million shares upon BPL achieving a NPAT of $6 million.

5. This is referred to as 'the Agreement' (par 6).

6. It is also pleaded that Mr Stewart would be available on call by BPL, and that he would continue to act as company secretary and would also continue his then occupation as the finance manager of Clinipath Pathology (par 6).

7. The Agreement was approved by the board of BPL on 9 July 2003 (par 7) and 'referred to or evidenced in alternative formats' in a heads of agreement dated August 2003 and a Shareholders Agreement dated April 2004 (par 8).

8. In reliance on the Agreement 'as varied', Mr Stewart continued to provide services to BPL up to 6 June 2005 (par 9).  The particulars of the services provided state that 3,000 hours of professional time was spent.  A detailed list of tasks said to have been undertaken by Mr Stewart is set out in the particulars.

9. Mr Stewart pleads that the following milestones were achieved (par 10):

   (a)the raising of required capital occurred by a subscription agreement dated 5 August 2005;

   (b)completion of the operating plant occurred by September 2007; and

   (c)a government grant of $9.6 million was awarded in June 2004.

10. BPL has not issued the shares to Mr Stewart in accordance with the Agreement (par 11).

11. The quantum meruit claim is pleaded in par 12.  Mr Stewart pleads that BPL benefited from his services (meaning the services particularised under par 9); that BPL has been unjustifiably enriched by the services; and that it would be unconscionable for BPL to retain that benefit without Mr Stewart receiving any benefit.  He claims a reasonable return for the activities that he undertook as pleaded and particularised in par 9.  He particularises that return as the sum of $1,573,000 by reference to a report by Javelin Partners Pty Ltd dated 29 August 2006.  (As will be seen, this report was served but not tendered in the Federal Court proceedings:  exhibit 2C.)

12. In par 13 Mr Stewart pleads a collateral contract (the Grant Bonus Agreement).  He pleads that BPL undertook to pay to him a sum of $120,000 (representing 1.25% of the Commonwealth Government biofuels capital grant of $9.6 million) in addition to his accruing share entitlement under the Agreement, for doing all things necessary to facilitate the grant to BPL of that sum.  Mr Stewart pleads that he pursued the grant which was obtained, and that he has not been paid the sum of $120,000.  Particulars were given in relation to this claim.  I will say more about the particulars when I deal with the question of whether Mr Stewart's claim is precluded by an Anshun estoppel.

13. Finally, Mr Stewart pleads a claim based on misleading and deceptive conduct. He pleads that the making and entering into of the Engagement, the Agreement, and the Grant Bonus Agreement was conduct in trade and commerce (par 15). Mr Stewart says that at no time did BPL indicate that it reserved the right to resile from the obligations it undertook, and thus in effect represented that such obligations would be performed (par 15A). Further, Mr Stewart relies on s 51A insofar as the representations related to future matters, and says that the representations were made without reasonable grounds (pars 15A, 15B).

14. He pleads that the conduct referred to was misleading or deceptive in that BPL (par 16(b)):

    (a)entered into the obligations pleaded in par 15;

    (b)did not perform those obligations;

    (c)did not inform Mr Stewart that it reserved the right to resile from its obligations; and

    (d)Mr Stewart performed the obligations imposed on him.

15. Mr Stewart says that, insofar as he has not been rewarded as contemplated, he has suffered loss and damage by reason of BPL's breach of the Trade Practices Act (par 16(c)).

16. In his prayer for relief Mr Stewart seeks:

    (a)a declaration that BPL has engaged in misleading and deceptive conduct;

    (b)an order that BPL issue to Mr Stewart 3.5 million ordinary fully paid shares;

    (c)alternatively, a determination as to the value of the services provided by Mr Stewart;

    (d)an order that BPL pay to Mr Stewart the determined value of the services together with the additional sum of $120,000;

    (e)alternatively, an order that BPL pay Mr Stewart damages.

17. I will refer to:

    (a)the claim based on the Agreement pleaded in pars 4 to 11, as the Agreement Claim;

    (b)the claim for quantum meruit in par 12 as the Quantum Meruit Claim;

    (c)the claim for breach of a collateral contract in par 13 as the Grant Bonus Claim; and

    (d)the claim for damages for misleading and deceptive conduct in pars 15, 15A, 15B and 16 as the Trade Practices Act Claim.

The pleadings in the Federal Court action.

1. In its amended application dated 5 September 2005 BPL sought an order setting aside the issue of performance shares (as defined), and an order rectifying BPL's register of members.  It also sought relief in relation to the circular resolution dated 30 November 2004 (the Circular Resolution).

BPL's statement of claim

1. By its statement of claim BPL pleaded that Mr Stewart was the company secretary of BPL from 7 June 2002 until 6 June 2005.

2. BPL pleaded in par 5, and Mr Stewart admitted, that by the Circular Resolution the directors of BPL resolved to issue to Mr Stewart 5,500 Performance Shares and to Mr Barron 9,000 Performance Shares (as defined in the Circular Resolution) on the terms and conditions contained in annexure A to the resolution.

3. BPL pleaded that Mr Stewart received legal advice that the issue of shares to Mr Barron was a related party transaction, and that the Corporations Act 2001 (Cth) required approval of the shareholders of BPL before Performance Shares could be issued to Mr Barron. BPL further pleaded that Mr Stewart did not disclose that legal advice to the board (par 4). That was said to support the conclusion that the Circular Resolution and the Performance Shares issued pursuant to it were voidable or should be set aside.

4. That was the basis of the ultimate decision of Lander J in the Federal Court action.

5. Further, BPL pleaded that the Circular Resolution had no effect because it purported to vary the rights attaching to the issued ordinary shares of BPL and it was not consented to by 75% of the holders of ordinary shares in accordance with s 246B(2) of the Corporations Act and cl 2.4 of BPL's Constitution (par 5).

6. Next, it was pleaded that in causing BPL to issue the Performance Shares, Mr Stewart acted in excess of the authority conferred by the Circular Resolution and in breach of his fiduciary and statutory duties as company secretary (par 6).  In support of that plea, BPL pleaded matters going to the proper construction of the Circular Resolution which, BPL said, led to the conclusion that the performance criteria on which the Performance Shares hinged had not been achieved; that Mr Stewart knew that that was so; and that he knew that the performance criteria must be achieved before the Performance Shares could be issued (par 7).

7. BPL also pleaded that it was a condition precedent to the issue of Mr Stewart's Performance Shares that at the date that each performance criteria was achieved Mr Stewart remained BPL's company secretary (see  pars 8.2 and 8.3).

8. In par 8A.2 there was a plea by BPL of estoppel arising from conduct of Mr Barron and Mr Stewart at various times in or immediately before November 2004 (see also par 8A.3 and 8A.4).  This estoppel plea was abandoned at the trial of the Federal Court action:  Biodiesel Producers Ltd v Stewart [2007] FCA 722 [294].

9. In par 8B BPL also alleged that the statements at par 8A.2 were misleading conduct in trade and commerce. 

10. BPL pleaded that by resolution on 18 July 2005, its board clarified or amended the Circular Resolution to provide as to when the performance criteria would be satisfied.  It was further pleaded that none of the performance criteria had been satisfied (par 10).

Mr Stewart's defence

1. In response to BPL's plea in relation to the Circular Resolution, Mr Stewart pleaded in par 4.3 of his defence that in an information memorandum dated May 2003, prepared in support of a capital raising of $400,000, BPL advised prospective shareholders that Mr Barron would receive a further 19.5 million shares upon the attainment of certain milestones set out in that memorandum.  In par 4.4 of his defence Mr Stewart pleaded that Mr Barron agreed to grant to Mr Stewart 5.5 million shares from the entitlement Mr Stewart had based upon the attainment of milestones as follows:

   1.0.5 million shares upon raising required capital;

   2.2 million shares upon completion of construction of the operating plant;

   3.1 million shares upon receiving a government grant of at least $2 million;

   4.1 million shares upon BPL receiving a net profit after tax of $4 million;

   5.1 million shares upon BPL achieving a net profit after tax of $6 million.

2. Mr Stewart gave detailed particulars of this agreement:  exhibit 1 page 99.

3. The plea and particulars make it clear that Mr Stewart's case in the Federal Court was that Mr Barron agreed to grant Mr Stewart some of Mr Barron's entitlement.  For example, it is pleaded that Mr Barron told Mr Stewart that he had spoken to other directors of BPL to 'inform them of his decision' (my emphasis) (exhibit 1 page 99).

4. In par 4.5 Mr Stewart pleaded that those matters were formalised, that is reduced to writing in a formal agreement, (see particulars at exhibit 1 page 100) in a Shareholders Agreement dated 20 April 2004.  By the Shareholders Agreement Mr Stewart and Mr Barron were required to subscribe at 0.1c each to 5,500 and 9,000 Performances Shares respectively, such Performance Shares to be convertible to 1,000 ordinary shares upon attainment of milestones there set out.

5. Mr Stewart denied that he acted in excess of the authority conferred by the Circular Resolution and in breach of his duties to BPL when he caused BPL to issue the Performance Shares.  Mr Stewart denied BPL's construction of the Circular Resolution saying that it authorised the issue of shares forthwith upon payment of the subscription money, provided that the conversion of the Performance Shares into B-class shares could only occur when the performance criteria was satisfied.

6. In par 8 of his defence, in response to par 7 of BPL's plea, Mr Stewart pleaded that the directors of BPL, as at the date of the Circular Resolution, were aware that since March 2002 Mr Stewart had worked for BPL without remuneration or reimbursement of expenses.  Further, Mr Stewart pleaded that during that period he had sent or received over 2,000 emails, made or received over 1,000 telephone calls, had satisfied any requests of directors of BPL, in particular worked closely with and under the direction of Mr Barron, and had performed a number of tasks listed.  The tasks listed substantially mirror the particulars under par 9 of the statement of claim in this action.

7. Mr Stewart denied substantially all of the claims made by BPL.

8. In response to BPL's estoppel claim, by the conclusion of the trial Mr Stewart pleaded that BPL was estopped from asserting that the issue of shares was unconscionable in that (par 22):

   (a)the Circular Resolution embodied therein gave effect to the Shareholders' Agreement dated 20 [April] 2004 and in the circumstances amounted to a promise that Mr Stewart would be rewarded for his work which was otherwise to be unremunerated; and

   (b)that in reliance on that, Mr Stewart had worked for BPL in the period November 2004 to May 2005.

9. Mr Stewart pleaded that any purported amendment of the Circular Resolution by the board of BPL was of no force and effect.  He also pleaded that BPL was estopped from amending the Circular Resolution because of the work that he did after 30 November 2004 (par 29). 

10. Both of Mr Stewart's estoppel pleas had, at the beginning of the trial, been put on a wider basis, that is including all the work done as pleaded in par 8 of the defence (exhibit 1 pages 28 ‑ 29).  The pleas at the beginning of the trial were not restricted to work done after 30 November 2004.

11. The trial was heard over 10 days.  On 1 September 2006, after five days of hearing, it was adjourned part‑heard.  The trial resumed on 9 October 2006.  During the adjournment, on 5 September 2006, Mr Stewart amended his defence, having given notice of his intention to do so on 1 September 2006.  Thus the first five days of the trial were conducted on the basis that the estoppel pleas relied on all of the work done by Mr Stewart from March 02 to June 05.  I will return to this point.

BPL's reply

1. In par 5 of its reply (exhibit 1 page 106) BPL responded to par 4.4 of Mr Stewart's defence.  BPL says that in circumstances unknown to it Mr Barron decided to give, and informed Mr Stewart that he would give him, 5.5 million of the 19.5 million shares then proposed to be issued by BPL.  BPL pleaded that the agreement between Mr Barron and Mr Stewart was a private transaction between them.  BPL pleaded that its agreement after late 2003 to issue Performance Shares or B-class shares to Mr Stewart was done at the request of Mr Barron and was treated by BPL (and Mr Barron and Mr Stewart) as part of an issue of a larger parcel of shares by BPL to Mr Barron.  BPL says the issue of these shares was as a reward for Mr Barron's achievements and encouragement for him to continue to make further achievements, not as a reward to Mr Stewart or an incentive for further achievement by him.

2. BPL admitted the existence of the Shareholders Agreement and pleaded that as a consequence of its express terms it ceased to have any effect on 30 September 2004.

3. In par 10 of its reply BPL took issue with par 8 of Mr Stewart's defence.  BPL pleaded that from March 2002 until 6 June 2005 Mr Stewart worked on a full‑time basis as the chief financial officer of Clinipath and performed his function as company secretary of BPL in his spare time.  BPL pleaded in par 10.3 that achievements made by BPL up to May 2005 were not as a result of work performed by Mr Stewart but as a result of work performed by Mr Barron and ANZIS, a third party entity.  Detailed particulars of this plea were given:  see exhibit 1 pages 117 ‑ 119 which set out what work was said to have been done by each of Mr Barron and ANZIS.

4. BPL pleaded in par 10.4 that Mr Stewart was aware that BPL regarded the issue of Performance Shares as recognition of Mr Barron's achievement as BPL's executive officer, and not as a recognition of any contribution made by Mr Stewart.  BPL also gave detailed particulars of that plea.  In those particulars BPL pleaded that its board had, up to July 2003, agreed in principle to issue Performance Shares to Mr Barron and that in or about July 2003 Mr Barron and Mr Stewart agreed between themselves that Mr Stewart would receive part of Mr Barron's allocation of Performance Shares.  Further, BPL pleaded that its board agreed to Mr Stewart receiving a part of Mr Barron's allocation of performance shares on the basis that the total number of performance shares to be issued would not be increased.

Mr Stewart's cross‑claim

1. In par 1 of his cross‑claim, Mr Stewart repeated his defence (exhibit 1 page 121).

2. Mr Stewart pleaded that by the terms of the Circular Resolution BPL agreed to issue 3 million B-class shares to him upon raising sufficient funds to enable commencement of the construction of the operating plant.  He pleaded that the condition had been fulfilled, as a result of which BPL was obliged to issue to Mr Stewart 3 million B‑class shares (par 4).

3. Mr Stewart also cross‑claimed for damages for repudiation by BPL of an Executive Services Agreement (as distinguished from the Engagement and the Agreement pleaded in this action) said to have been made in or about June 2004.  By the Executive Services Agreement Mr Stewart alleged that BPL engaged him as company secretary and chief financial officer for a period of five years (par 5).  Terms of the Executive Services Agreement were pleaded.  One of the terms pleaded was that Mr Stewart's remuneration would include 1.25% of any Federal or State grant received by BPL.

4. In its defence to cross‑claim BPL admitted the existence of the Circular Resolution, but said that the Resolution did not constitute an agreement between Mr Stewart and BPL (par 2.2).  Further, BPL repeated various aspects of its statement of claim and reply.  It pleaded that, for various reasons, Mr Stewart was not entitled to be issued with 3 million B‑class shares in BPL.

1. BPL pleaded a number of defences to Mr Stewart's claim based upon the Executive Services Agreement.  BPL said that there were various express conditions precedent, a number of which had not been satisfied before Mr Stewart's removal as company secretary.  One of those conditions precedent was that the Executive Services Agreement be ratified by the board of directors which, on 18 July 2005, the board decided not to do.

2. BPL pleaded that it was entitled to terminate the employment of Mr Stewart or not to perform the Executive Services Agreement on account of Mr Stewart's poor performance or breaches of contract.  That conduct was set out in par 7.3.

Result of the Federal Court action

1. Following the trial in the Federal Court, on 16 May 2005 Lander J made the following orders:

   1.   That the resolution of the Board of directors of [BPL] made on 30 November 2004 whereby it was resolved:

   (1) to issue 9,000 performance shares to Mr Dennis Barron subject to the receipt of the subscription money;

   (2) to issue 5,500 performance shares to Mr Anthony Stewart subject to the receipt of the subscription money;

   be rescinded.

   2.   Subject to [BPL] paying to [Mr Stewart] the subscription money of $55.00 paid by [Mr Stewart] on 29 March 2005, the issue of the performance shares to [Mr Stewart] be set aside.

   3.  [BPL's] register of members be corrected by deleting any reference to the issue of the performance shares to [Mr Stewart] on 10 January 2005 (wrongly described in the register as 2004).

   4.    The cross-claim be dismissed.

2. I will refer to some aspects of Lander J's reasons in considering whether an Anshun estoppel precludes any of the claims made by Mr Stewart in this action.

3. The Full Federal Court dismissed Mr Stewart's appeal against Lander J's decision:  Stewart v Biodiesel Producers Ltd [2008] FCAFC 66. Although there were seven grounds of appeal (exhibit 1 pages 390 ‑ 393), it appears from the decision of the Full Federal Court that the only ground of appeal argued was that the primary judge had failed to mould the relief granted in such a way as to make due allowance in favour of Mr Stewart for the work, time and skill exercised by him on behalf of BPL. It was conceded that no submission to this effect had been advanced on behalf of Mr Stewart before the primary judge. The court declined to grant leave to Mr Stewart to raise an argument not advanced before the primary judge. The Full Federal Court observed that it was common ground on the appeal that Mr Stewart had elected before the primary judge not to make any claim for remuneration on a quantum meruit basis in respect to work done by him [15]. I will return to this point.

4. This brings me to the four claims advanced in this action, and the question whether each of those claims is precluded by cause of action estoppel or by Anshun estoppel.  I begin with the Agreement Claim.

The Agreement Claim

Cause of action estoppel

1. In accordance with the legal principles I have stated, whether the claim is precluded by cause of action estoppel is to be assessed by reference to the pleadings and orders in the Federal Court action, not the evidence in that action.

2. The primary subject matter of the Federal Court action was the validity and proper construction of the Circular Resolution of 30 November 2004 and whether Mr Stewart was entitled to the Performance Shares he caused BPL to issue to him pursuant to the Circular Resolution. 

3. Paragraphs 4.3 to 4.5 of Mr Stewart's defence responded to BPL's plea in relation to the Circular Resolution.  I have outlined those pleas earlier in these reasons [97] - [100].  In summary Mr Stewart pleaded Mr Barron's entitlement as at May 2003 to 19.5 million incentive shares, and also pleaded Mr Barron's agreement in June 2003 to grant Mr Stewart 5.5 million shares from that entitlement.  The milestones for achievement of those entitlements precisely mirror the milestones pleaded by Mr Stewart in the statement of claim in this action.

4. Consideration of the plea and the particulars in the Federal Court action and in this action seem to me to make it clear that it is the same events which are said to give rise to the Agreement relied on in this action and the agreement pleaded in par 4.4 of the defence in the Federal Court action.  That is so, in my opinion, notwithstanding one obvious difference between the two agreements:  in the Federal Court Mr Stewart pleaded an agreement by Mr Barron to grant shares from his entitlement; in the Supreme Court Mr Stewart pleads an agreement by BPL for BPL to grant the shares to him.

5. In this and other respects, the case advanced by Mr Stewart in the Federal Court and the case he advances in this action are inconsistent and, therefore, alternative cases.  BPL's written submissions appear to suggest that that itself is a positive factor supporting a conclusion that a cause of action estoppel arises.  However in oral argument counsel for BPL accepted, rightly in my opinion, that the fact that the case sought to be proved in the subsequent proceedings is inconsistent with the case made in the earlier proceedings is not a positive factor in favour of a conclusion that a cause of action estoppel arises.  The inconsistency of the cases seems to me to be relevant to whether an Anshun estoppel arises.  I will return to the question of inconsistency in that context.

6. In the Federal Court action, Mr Stewart's cross-claim repeated his defence.  By his cross-claim he sought the issue to him of 3 million B‑class shares by the conversion of the Performance Shares issued to him pursuant to the Circular Resolution.

7. BPL submits that that relief is substantially the same as the claim made by the Agreement Claim.  The difference between B‑class shares and ordinary shares is said to be insubstantial, for present purposes.  The right to the shares is said to arise from the course of the relationship between BPL and Mr Stewart from 2003 to 2005.

8. Characterised in that way, at that level of generality, the two claims can be seen to have a great deal in common.  But there is a question as to whether the actions should be analysed at that level of generality (cf Macquarie Bank v NML (560)).  I am not persuaded that they should be analysed at such a general level for the purposes of the question of cause of action estoppel.

9. While the contrary conclusion is readily arguable, I am not persuaded that the cause of action in the Agreement Claim is the same as that which was litigated in the Federal Court action.  I accept that substantially all of the facts relied upon in the Agreement Claim were pleaded in the Federal Court action, albeit with some differences, including as to who was agreeing to grant shares to Mr Stewart.  The substantial commonality of fact seems to me to be significant for the question of whether an Anshun estoppel arises.  I will return to it in that context.  However, the Agreement Claim is founded on oral statements said to have given rise to an agreement made in June 2003.  While those statements were pleaded in the Federal Court action, they were pleaded as background to the Shareholders' Agreement which was in turn background to the Circular Resolution.  It was the validity and construction of the Circular Resolution which was at the heart of the Federal Court action.  For these reasons, I am not satisfied that the cause of action in the Agreement Claim is the same as the cause of action litigated in the Federal Court.

10. I turn to the question of whether an Anshun estoppel arises in relation to the Agreement Claim.

Anshun estoppel

1. In determining whether an Anshun estoppel precludes this claim (and the other claims) I take into account the principle stated above [62] that Anshun estoppel is only to be applied in a clear case.

2. In considering whether an Anshun estoppel arises it is important to keep in mind that Mr Stewart was the respondent in the Federal Court action.  He brought a cross-claim.  The application of Anshun estoppel depends upon the conclusion that it was unreasonable for Mr Stewart to refrain from raising the Agreement Claim in the Federal Court action.  Whether that is so invites attention to the degree of connection between the claim now made (the Agreement Claim) and the original claim and cross-claim in the Federal Court:  see Bryant and Ling, discussed earlier in these reasons.  It will be relevant (although not determinative) to ask whether the Agreement Claim arises out of substantially the same facts as the claim and cross‑claim in the Federal Court.

3. Paragraph 4.4 of Mr Stewart's defence in the Federal Court action pleaded the June 2003 Agreement in response to BPL's plea in relation to the Circular Resolution.  That in itself is an indication of the connection between the June 2003 Agreement and the Circular Resolution.  Moreover, Mr Stewart's defence elucidated that connection.  He pleaded that the June 2003 Agreement was formalised (ie reduced to writing in a formal agreement) by the Shareholders' Agreement of 20 April 2004 (par 4.5), and in turn that the Shareholders' Agreement was embodied in and given effect to by the Circular Resolution (par 22.1).

4. Those pleadings support a conclusion that a claim based on the June 2003 Agreement is intimately connected with the Circular Resolution, the subject of the claim and cross-claim in the Federal Court action, in the sense that each arises substantially out of the same matters of fact (Bryant 297 ‑ 298).

5. That intimate connection is reinforced by consideration of the evidence in the Federal Court action.

6. Lander J found that Mr Stewart prepared a draft of the Circular Resolution and sent it to BPL's solicitors on 16 November 2004, together with a document which he described as 'history of founder shares' [84]. The document read, relevantly, as follows:

   1.  BPL issued 7.5 million shares to Dennis Barron (Barron) in January 2002.

   2.  An Information Memorandum was prepared in support of a seed capital raising of $400,000 around March 2003.

   • The IM advised that Barron would receive a further 19.5 million shares upon the attainment of certain milestones as follows:

   •           9.0 million shares upon raising required capital;

   •           2.5 million shares upon completion of the operating plant;

   •2.0 million shares upon receiving a government grant of at least $2 million;

   •3.0 million shares upon achieving a NPAT of $4.0 million; and

   •           3.0 million shares upon achieving a NPAT of $6.0 million

   3.  Barron agreed to grant Tony Stewart 5.5 million shares from his abovementioned entitlement based upon the attainment of similar milestones as follows:

   •           0.5 million shares upon raising required capital

   •           2.0 million shares upon completion of the operating plant;

   •1.0 million shares upon receiving a government grant of at least $2 million;

   •1.0 million shares upon achieving a NPAT of $4.0 million; and

   •1.0 million shares upon achieving a NPAT of $6.0 million.

   4.  The abovementioned share allocation for Barron and Stewart were formalised in the Shareholders Agreement dated 20 April 2004 whereupon Barron and Stewart were required to subscribe at 1 cent each to 9,000 and 5,500 performance shares respectively on.

   5.  The performance shares were each convertible to 1,000 ordinary shares upon the attainment of certain milestones as follows:

Barron	Stewart	Total
Financial close	2.0 million	0.5 million	2.5 million
Completion of operating plant	1.0 million	2.0 million	3.0 million
Achieving a NPAT of $4.0 million	3.0 million	1.0 million	4.0 million
Achieving a NPAT of $6.0 million	3.0 million	2.0 million	5.0 million
Total	9.0 million	5.5 million	14.5 million

6. The Shareholders Agreement should now be extended/varied so that ordinary shares are issued upon the attainment of certain milestones as outlined in the original IM follows:

Barron	Stewart	Total
Raising required capital	4.0 million	3.0 million	7.0 million
Receiving government grant	3.0 million	1.5 million	4.5 million
Achieving a NPAT of $6 million	2.0 million	1.0 million	3.0 million
Total	9.0 million	5.5 million	14.5 million

1. Mr Stewart's evidence in the Federal Court was to the effect that the June 2003 Agreement, the Shareholders' Agreement and the Circular Resolution were a series of agreements or arrangements that gave rise to and effected his entitlement to 5.5 million incentive shares.  (See par 21 ‑ 45 and 76 ‑ 84 of his witness statement, exhibit 1 pages 1280 ‑ 1298.)

2. Counsel for Mr Stewart concedes, rightly, that Mr Stewart's case in the Federal Court is factually inconsistent with the case Mr Stewart seeks to make by the Agreement Claim in this action.  I have already explained that that is so in one respect, by reference to the pleadings.  In the Federal Court Mr Stewart said that Mr Barron had agreed to give him some of his (Mr Barron's) entitlement to shares.  In this action, the same conversation is said to amount to an agreement on behalf of BPL that BPL would grant shares to Mr Stewart. 

3. That is also reinforced by the evidence led by Mr Stewart in the Federal Court action.  That can be seen from the 'history of founder shares' document which I have just set out.  Further, Mr Stewart's evidence in his witness statement was unambiguously to the effect that Mr Barron had agreed to allot some of his shares.  (See pars 21 to 25 of his witness statement, exhibit 1 pages 1280 ‑ 1281.)  Mr Barron was called as a witness by Mr Stewart in the Federal Court action.  His evidence was to the same effect as that of Mr Stewart:  (see pars 19 ‑ 21 of Mr Barron's witness statement, exhibit 1 pages 1410 ‑ 1411).  Mr Barron's evidence was that he agreed to allocate 5.5 million of his shares to Mr Stewart and that at a subsequent directors' meeting in July 2003 that he told the directors of his decision.

4. The second element of inconsistency relates to whether the June 2003 Agreement endured beyond entry into the Shareholders' Agreement or was overtaken by it.  Both Mr Stewart's pleadings and the evidence adduced by him in the Federal Court were to the effect that the June 2003 Agreement was subsumed by the Shareholders' Agreement, which was in turn overtaken by the Circular Resolution.  I have already outlined par 4.5 and par 22 of the defence.  Paragraph 22 pleaded that the Shareholders' Agreement was given effect to by the Circular Resolution, and that the Circular Resolution was a promise that Mr Stewart would be rewarded for work which was otherwise to be unremunerated.  The statement that the work was otherwise to be unremunerated makes it clear that, on Mr Stewart's case in the Federal Court, the June 2003 Agreement did not continue to give him any rights to the issue of shares.

5. These inconsistencies between the case in the Federal Court and the case now advanced in this action seem to me to be of significance.  There seems to me to be a potentially considerable forensic advantage to Mr Stewart in advancing the Agreement Claim, inconsistent in these respects with the Federal Court action, in a separate action rather than having advanced it as part of the Federal Court action.  For example, the inconsistency as to who was granting these shares to Mr Stewart is essentially factual in character.  The two versions of what happened in June 2003 cannot both be right.  It is difficult to see how Mr Stewart could have advanced the case he pleaded and supported by evidence in the Federal Court while also, at the same time, advancing the Agreement Claim now made in this action. 

6. Of course, assuming the Agreement Claim is permitted to be made, the inconsistency in these respects between Mr Stewart's evidence and pleadings in the Federal Court action and in the Agreement Claim will, no doubt, provide substantial obstacles to the success of his claim in this action.  Nonetheless, the position in that regard seems distinctly better for Mr Stewart than if he had sought to advance the Agreement Claim at the same time as the pleadings and evidence he put forward in the Federal Court action.

7. Although nothing turns on it for present purposes, I note that it appears that Mr Stewart does not appreciate the inconsistencies between what he said in the Federal Court action about the June 2003 Agreement and what he now claims in the Agreement Claim.  As to the first aspect of inconsistency, in the course of cross‑examination before me Mr Stewart was referred to what he had said in par 3 of the history of founder shares document, namely that Mr Barron agreed to grant Mr Stewart 5.5 million shares from his entitlement (my emphasis).  Mr Stewart said that that was the effect of what Mr Barron had agreed with him in the Agreement set out at par 6 of the statement of claim in this action (ts 68).  As to the second, in par 14 of his affidavit of 25 November 2008 (exhibit A), he stated that he was 'initially offered ordinary shares by Mr Barron, which were subsequently subsumed in different forms of share entitlement' (my emphasis).  Nonetheless, for the reasons I have given, the factual inconsistency seems to me to be significant.

8. BPL submitted that the Agreement Claim may give rise to a judgment inconsistent with the judgment of the Federal Court.  Judgments will be relevantly inconsistent if they appear to declare rights which are inconsistent in respect of the same transaction:  Anshun's Case.  I am not persuaded that that can be said in this case in respect of the Agreement Claim.  BPL's argument in this respect depends upon characterising 'the transaction' as involving the whole of the relationship between Mr Stewart and BPL.  I do not think that that is the right approach.  Rather, to my mind, for this purpose the transaction the subject of the Federal Court action was the Circular Resolution and the issue of Performance Shares pursuant to it.

9. In considering whether an Anshun estoppel arises, regard must be had to any explanation by Mr Stewart for why he did not make the claim now made in the earlier proceedings.  The only evidence of that character is to be found in par 21 of Mr Stewart's affidavit sworn 25 November 2008.  That evidence relates only to the Quantum Meruit Claim and not to the Agreement Claim.  Thus there is no evidence before me to explain why the Agreement Claim was not advanced in the Federal Court action.

10. In his reply in this action Mr Stewart pleads that in the Federal Court action he proceeded on the basis that the Circular Resolution was valid.  In my opinion, that does not amount to a satisfactory explanation of why the Agreement Claim was not made in the Federal Court action, for at least two reasons.  First, it is not supported by evidence.  Secondly, the validity of the Circular Resolution was challenged by BPL in the Federal Court action.  That was the nub of the action.  In the circumstances, it would have been unreasonable for Mr Stewart to have proceeded on the basis that any claim arising if the Circular Resolution was invalid (based on substantially the same facts as were before the Federal Court), could be reserved to be made at a later time if he failed in the Federal Court action.

11. In summary, therefore, I consider that the Agreement Claim arises out of substantially the same facts as the Federal Court action and the cross‑claim in the Federal Court action.  Pursuit of the Agreement Claim will give rise to very substantial duplication of evidence given in the Federal Court action.  Further, the Agreement Claim is factually inconsistent in important respects with the case that Mr Stewart pleaded and supported by evidence in the Federal Court.  If Mr Stewart is permitted to maintain the Agreement Claim he would be better off than if he had run the Agreement Claim as part of the Federal Court action.  Finally, no explanation, much less a satisfactory explanation, has been advanced in evidence in the present case from Mr Stewart for his failure to advance the Agreement Claim in the Federal Court. 

1. For these reasons, I conclude that the Agreement Claim is precluded by an Anshun estoppel.

The Quantum Meruit Claim

Cause of action estoppel

1. In my opinion, on an examination of the pleadings in the Federal Court action, the Quantum Meruit Claim is not barred by cause of action estoppel.

2. BPL submits that the facts necessary for the Quantum Meruit Claim were pleaded in Mr Stewart' defence in the Federal Court.  In support of that submission BPL points to par 8 of Mr Stewart's defence.

3. I do not accept BPL's submission.

4. In order to found a claim for quantum meruit for services provided, a plaintiff must plead more than the fact that services were provided to the defendant.  An additional element in a quantum meruit claim is that the party to whom the services were provided freely accepted the services in the knowledge that the services were not being provided gratuitously.  BPL submits that that additional element may be satisfied by a plea that the services were provided at the request of the party to whom they were provided.  That may be so.  However, in my opinion, par 8 of the defence did not plead that all of the services there referred to were provided at the request of BPL.

5. Paragraph 8 relevantly provided that Mr Stewart had:

   'sent or received over 2,000 emails and made or received over 1,000 telephone calls and had made no less than five interstate trips … [and] between March 2002 and November 2004 had satisfied any of the requests of the directors of [BPL] and in particular worked closely with and under the direction of [Mr Barron] in his capacity as managing director of [BPL] and performed tasks such as [there follows a list of 33 tasks].

6. On my reading of par 8, it pleads that one of the things that Mr Stewart did, in addition to all of the other things which it pleads Mr Stewart did, was to satisfy any requests of the directors.  In other words, par 8 does not plead that all of the work done was done at the request of BPL.

7. For those reasons, I find that the Quantum Meruit Claim is not precluded by cause of action estoppel.

8. I turn to the question whether the Quantum Meruit Claim is precluded by Anshun estoppel. 

Anshun estoppel:  the conduct of the Federal Court action

1. In this context it seems to me to be necessary to give attention to the course of the conduct of the Federal Court action.

2. The trial commenced on 28 August 2006.  It was conducted over five days from 28 August 2006 to 1 September 2006, was then adjourned part heard, and resumed on 9 October 2006 for a further five days.

3. At the commencement of the trial par 21 of Mr Stewart's defence pleaded that BPL was estopped from asserting that the issue of shares was unconscionable because of the performance by Mr Stewart of the work done pleaded in par 8 of the defence, the benefit of which was said to have been taken by BPL.  Further, par 28 pleaded that if the BPL board purported to amend the Circular Resolution then by reason of the work performed by Mr Stewart as pleaded in par 8, BPL was estopped from refusing to give effect to the Circular Resolution.  BPL took issue with those pleas.  Consequently, at the time the trial commenced there were issues as to what work was done by Mr Stewart from March 2002 until June 2005 and as to the value of that work. 

4. Those issues were relevant to Mr Stewart's estoppel plea.  One of BPL's responses to the estoppel plea was that if any relevant estoppel arose, enforcement of the assumption on which the estoppel was based (the issue of the Performance Shares) would be disproportionate to the detrimental reliance (the work done by Mr Stewart) which was the foundation of the estoppel:  see Verwayen v The Commonwealth [1990] HCA 39; (1990) 170 CLR 394; Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101. That argument invited attention to the value of the work so that the detrimental reliance could be measured against the value of the Performance Shares.

5. Mr Stewart's witness statement dated 18 August 2006 was provided to BPL before the trial in the Federal Court.  It included a statement in par 12 as to his role at BPL, and a list of work was annexed to his statement as APS1 (exhibit 1 pages 1341 ‑ 1342).  The contents of APS1 are substantially identical to what is set out in the particulars under par 9 of Mr Stewart's statement of claim in this action.  Other parts of Mr Stewart's witness statement (which was tendered in the Federal Court action) dealt with how much work Mr Stewart said that he had done in various months during the period in question.

6. On the first day of the trial in the Federal Court BPL filed a written opening (exhibit 2B in these proceedings) in response to Mr Stewart's estoppel plea.

7. BPL's written opening included, at par 9.2(h), a statement that 'BPL has throughout said that it will pay Mr Stewart a reasonable monetary reward for his work'.  The outline stated that BPL had taken advice from a remuneration consultant, referring to the expert witness report of Mr Chris Costello dated 10 January 2006.  This report was said to be the only evidence as to an appropriate level of remuneration.  It was stated in the written opening that Mr Stewart did not plead any quantum meruit or similar claim.

8. Thus, the absence of a quantum meruit claim was specifically identified by BPL by the first day of the trial of the Federal Court action.

9. The following day a report by Mr Mark Kendrew of Javelin Partners Pty Ltd  dated 29 August 2006 was provided to Mr Stewart's solicitors.  I infer that Mr Stewart's solicitors provided a copy of the Javelin report of 29 August 2006 on or about the same day to BPL's solicitors.  The report provided an opinion on 'what was a reasonable amount of remuneration for the work performed by Mr Stewart as described in his statement and also annexure APS1' (among other things).

10. It is by reference to this report that Mr Stewart's statement of claim in this action quantifies his claim for quantum meruit for services provided.

11. The Javelin report of 29 August 2006 was ultimately not tendered at the trial of the Federal Court action.  It was, however, put before the trial judge and was the subject of discussion with counsel (see discussion before Lander J on 9 October 2006, ts 466 ‑ 467, exhibit 1 pages 1477 - 1478).

12. BPL led a substantial body of evidence to the effect that Mr Stewart had not performed all the work he claimed to have done, that the work was not of good quality, and that it was of little value to BPL.

13. The various witness statements and exhibits tendered by BPL in this regard are collected in footnote 32 of BPL's principal submissions before me.  I have examined all of the material there referred to.  I will not recite all of it.  I am satisfied that the material referred to in footnote 32 (with the exception of a couple of typographical errors) is all evidence related to the question of what work Mr Stewart had performed and its quality and value to BPL.

14. By way of example, substantial evidence from Mr Ross Beames, a director of ANZIS, was led on these topics.  Paragraphs 39 ‑ 58 of his primary witness statement (exhibit 1 pages 803 ‑ 809) directly responded to par 8 of Mr Stewart's defence in which the work Mr Stewart said he had done was set out.  In his responsive witness statement, Mr Beames responded to par 12 of Mr Stewart's witness statement and annexure APS1 (exhibit 1 pages 871 - 874).  Other witnesses also responded to par 12 of Mr Stewart's statement and APS1, including Mr Andrew White, the managing director of BPL (exhibit 1 pages 722 - 727), and Dr Donald McCully, chairman of the board of BPL (exhibit 1 pages 936, 967.1 - 967.2).  Mr John Pearce, a director of BPL, was cross‑examined in relation to this evidence (exhibit 1 pages 1438 ‑ 1447).

15. At the beginning of the third day of the trial, on 30 August 2006, Lander J enquired of counsel for Mr Stewart regarding the basis of the cross‑claim.  Mr Stewart's counsel stated unequivocally that the claim was based on contract and that Mr Stewart did not make a quantum meruit claim (exhibit 1 page 1443).

16. At that stage, an amendment to the defence or cross‑claim (or both) was evidently contemplated, but not yet formulated.

17. As I have explained earlier in these reasons, on 5 September 2006 Mr Stewart amended his estoppel defences.  The amendment was to rely only on work done by Mr Stewart after 30 November 2004 (the date of the Circular Resolution) in support of the estoppel pleas.  Notice of the intended amendment was given on the last day of the first week of the trial (1 September 2006).

18. Consequently, when the trial resumed on 9 October 2006, the scope of the issues relating to work done by Mr Stewart had been reduced.  Only work done after 30 November 2004 remained in issue.

19. Mr Stewart was extensively cross‑examined in relation to par 12 and annexure APS1 of his witness statement.  Because Mr Stewart's evidence was given after the trial resumed in October 2006, by which time the issues were reduced, the cross‑examination in this respect focussed on work between 30 November 2004 and June 2005 (exhibit 1 pages 1488 ‑ 1508).

20. The parties led expert evidence as to the value of the work.  The expert evidence was led in the second week of the trial, in October 2006.

21. Mr Stewart tendered a report dated 25 September 2006 by Javelin Partners.  This report was supplementary to the report of 29 August 2006.  The report of 25 September 2006 related to the value of the work performed by Mr Stewart after 30 November 2004.  However, the approach taken in the report of 25 September 2006 involved giving some attention to the work done from March 2002 to May 2005.  See appendix B to the report (exhibit 1 page 1362).

22. BPL tendered a number of expert reports and led evidence from those experts.  Mr Costello's report of 10 January 2006 was tendered in this action (exhibit 2A).  This was the report referred to in BPL's opening submissions of 28 August 2006.  The report dealt with the value of Mr Stewart's work from March 2002 to June 2005.  In this report Mr Costello expressed the opinion that a reasonable remuneration for a person in Mr Stewart's position was approximately $39,000 per year.  BPL also tendered a responsive expert report of Mr Costello dated 22 September 2006.  In it he stated that he remained of the view expressed in his earlier report (exhibit 1 page 1056).

23. BPL also led expert evidence from Mr Ian Olsen of PKF Corporate Advisory.  Mr Olsen's first report was dated 29 September 2006.  That report dealt with what was reasonable remuneration for Mr Stewart in the period March 2002 until May 2005.  It responded to the first Javelin report of 29 August 2006.

24. Mr Olsen's second report was dated 10 October 2006.  It addressed the value of the work performed by Mr Stewart after 30 November 2004.  However, in approaching that question it did not focus solely on work done after that date.  That is because it responded to appendix B of the supplementary Javelin report which, as I have said, provided a breakdown of the time said to have been spent by Mr Stewart on various activities through the whole of his time as company secretary of BPL.

25. The transcript of the cross‑examination of these experts is not in evidence before me.

26. BPL's closing submissions in the Federal Court invited close attention to the question of the work said to have been done by Mr Stewart after 30 November 2004 and its value (see exhibit 1 pages 176 - 181).

27. In his reasons for decision, Lander J found that he did not need to resolve the estoppel plea [411] ‑ [420]. His Honour made some observations as to evidence of the witnesses. He stated that Mr Beames' evidence was mainly directed to the work performed by Mr Stewart. Lander J found that Mr Beames was a good witness whose evidence he accepted [180]. His Honour found that he would not have accepted Mr Stewart's evidence 'of the hours he worked for [BPL] from June 2003 or, more relevantly, from 1 December 2004' [183]. On that topic his Honour would have accepted the evidence of Mr Beames and Mr White. However, for the reasons I have referred to, his Honour found that it was not necessary to address that matter.

28. Further, his Honour stated that the most impressive of the expert witnesses was Mr Costello and that if he had to decide the issues the subject of the expert evidence he would have relied on Mr Costello's evidence and only accepted the other expert's evidence where it accorded with Mr Costello's [185] ‑ [186].

Anshun estoppel:  Analysis

1. In my opinion, the review of the course of the Federal Court action supports the following conclusions:

   (1)the question of what work was done by Mr Stewart from March 2002 until June 2005, and the value of that work, was in issue when the trial commenced and for the first five days of the trial;

   (2)substantial lay evidence was adduced by both parties, especially BPL, revealing significant conflicts of fact;

   (3)by the second day of the trial Mr Stewart had obtained an expert opinion on the value of his work over the whole of the period;

   (4)the parties obtained and adduced other expert evidence on the value of Mr Stewart's work both over the whole period and particularly from 30 November 2004 until June 2005;

   (5)the absence of any quantum meruit claim was specifically drawn to Mr Stewart's attention by BPL's opening outline provided on the first day of the trial; and

   (6)on the morning of the third day of the trial, counsel for Mr Stewart specifically stated that there was no quantum meruit claim.

2. In the circumstances, I conclude that the absence of a quantum meruit claim was a conscious choice on the part of Mr Stewart or his advisors, not a matter of oversight. 

3. In considering whether an Anshun estoppel arises it is relevant to consider whether there were any real or reasonably perceived difficulties in raising the relevant claim earlier and any other explanation for the failure to raise the claim during the earlier proceedings:  Gibbs v Kinna [28]. The only evidence adduced before me by Mr Stewart in this regard is par 21 and, perhaps, par 26 of his affidavit (exhibit A).

4. Paragraph 21 states that in the Federal Court proceedings

   the matter of a quantum meruit claim did not arise as:

   (a)firstly I was the Respondent in such proceedings;

   (b)secondly I had legal advice and a firm belief to the effect that I had valid legal grounds for my reliance on the existing share entitlement comprising the Circular Resolution signed by all four directors of [BPL] and an Executive Service Agreement properly executed by [BPL].

5. In my opinion, that evidence does not provide a satisfactory explanation for the failure to advance the Quantum Meruit Claim in the Federal Court action. 

6. First, the weight to be given to par 21 of Mr Stewart's affidavit must take account of his evidence in cross‑examination in the present case.  Mr Stewart said that he did not decide anything about the evidence to be led, his counsel did (ts 69).  He said that he was in counsel's hands as to the case he decided to advance.  He then agreed that the considerations referred to at par 21 of his affidavit did not affect in any way the decision about what evidence was to be called in the Federal Court.

7. Further and in any event, any belief on Mr Stewart's part that he was going to succeed on the issue of the validity of the Circular Resolution is not, in my opinion, sufficient to make it reasonable for him to reserve a quantum meruit claim for later proceedings in the event that he failed in the Federal Court action.  The Quantum Meruit Claim is intimately connected with and arose from substantially the same facts as the claim and cross‑claim in the Federal Court action.  To the extent that the issues in the Federal Court action were reduced to work done after 30 November 2004 only, that was Mr Stewart's choice.  He made that choice at a time when:

   (a)the parties had exchanged witness statements relating to the work over the whole period;

   (b)BPL's lay witnesses had already given evidence and been cross‑examined;

   (c)Mr Stewart and BPL each had an expert report as to the value of the work over the whole of the period.

8. I do not find the conclusionary assertion in par 26 of Mr Stewart's affidavit, that the work performed 'did not form an integral or necessary part of the Federal Court proceedings', of any assistance.  I refer also to his evidence in cross‑examination before me (ts 69 ‑ 71).

9. I accept that Mr Stewart would have needed to amend his pleading in the Federal Court action to advance the Quantum Meruit Claim.  However, in the circumstances I have outlined, and when the case was adjourned for five weeks part heard, it is difficult to imagine that BPL would have succeeded in any objection to an amendment during or at the end of the first week of the trial.  In this regard, BPL had had in its possession an expert report as to the value of the work since January 2006 and had specifically expressed its willingness to pay a reasonable remuneration in its opening outline on the first day of the trial.

10. Further, the conduct of the Federal Court action made it likely that credit based findings would be made in relation to the substantial disputes of fact between Mr Stewart on the one hand, and Mr White, Mr Beames and others called by BPL on the other hand, as to the amount and quality of the work done by Mr Stewart.  Credit findings would also be made as to the different expert evidence in relation to the value of Mr Stewart's work.  Lander J made observations in that regard, although he did not ultimately make any findings.  If Mr Stewart is permitted to advance the Quantum Meruit Claim in this action, rather than having included it in the Federal Court action, he will thereby have derived an advantage by bringing separate actions:  Trawl Industries (423).

11. Counsel for Mr Stewart submitted before me that it was reasonable for Mr Stewart not to advance the Quantum Meruit Claim because, had that claim been advanced, substantial further evidence would have been required to be adduced.  He submitted that further evidence would have been required in two respects:  first, evidence as to the work done before 30 November 2004; and second, further corroborative evidence would have been necessary.

12. Insofar as Mr Stewart says he would have needed to call additional evidence because his claim related, ultimately, only to work done after 30 November 2004, I refer to what I have already said.  Mr Stewart chose to limit the issues to work after 30 November 2004.

13. I am not satisfied by the evidence before me that any further corroborative evidence could or would have been led in support of the Quantum Meruit Claim, had that claim been made in the Federal Court action.  In that respect, I do not accept the nonresponsive evidence of Mr Stewart before me that he 'could have brought more witnesses in substantiation of the work that [he] did' (ts 69).  Moreover, the value of the work done after 30 November 2004 was squarely in issue in the Federal Court action.  Thus if there was any corroborative evidence to be given, the Federal Court action was the occasion for it to be adduced.  The only corroborative evidence actually adduced in the Federal Court was evidence in very general terms from Mr Barron. 

14. Counsel for Mr Stewart submitted that [21] of the reasons of the Full Federal Court in Stewart v Biodiesel Producers Ltd [2008] FCAFC 66 supported the conclusion that the evidence in support of a quantum meruit claim would involve substantially more evidence to that which was before Lander J. It appears from the Full Court's reasons that the primary ground of appeal argued was that Lander J had failed to mould the relief granted (to rescind the Circular Resolution and the issue of the Performance Shares) in such a way as to make due allowance in favour of Mr Stewart for the work, time and skill exercised by him on behalf of BPL. It was conceded that no submission to this effect had been advanced on behalf of Mr Stewart before the primary judge. The question on which the appeal turned was whether leave should be granted to Mr Stewart to raise an argument not advanced before the primary judge. The Full Federal Court refused leave. In the course of doing so, it made the following observations, upon which Mr Stewart relies:

    Mr Stewart now seeks to have the litigation substantially re‑opened in order for the Court to determine and make orders involving a final consideration of the amount of work which he had completed and the proper remuneration which he should be paid. As a means to progress such litigation, Mr Stewart proposes that, if the parties cannot agree, a Registrar of the Court should conduct an investigation into the value of Mr Stewart’s efforts. Having regard to the history of the matter to date and the observations of his Honour in his reasons for judgment, it seems, in our view, highly likely that the parties will not be able to agree on the amount of remuneration which should be paid. Reinvestigating the hours worked and the appropriate remuneration would require a far‑reaching inquiry. It would also introduce complex questions of valuation which, on the submissions before the primary Judge, have until now been unnecessary to consider. Clearly, the proposed orders, in addition to granting leave to litigate an issue which was not put before his Honour at the appropriate time, will give rise to an additional costly and time‑consuming inquiry. It is likely that further evidence will need to be adduced and considered, and that such an inquiry will quickly extend beyond the capacity of a Registrar [21].

1. In my opinion, the observations of the Full Federal Court were directed to a question materially different from the questions relevant to whether an Anshun estoppel arises.  The Full Federal Court was testing what was proposed by Mr Stewart on his appeal against not only what had occurred at the trial, but also against  the matters decided and not decided by Lander J.  Because of Lander J's decision on other issues, his Honour had found it unnecessary to deal with some of the issues before him including as to the work done and the value of the work. 

2. Further, to the extent that additional evidence related to the period before 30 November 2004, as I have said, that was only by reason of the choice of Mr Stewart to restrict his case. 

3. Taking into account all of my preceding findings and discussion, I am satisfied that it was unreasonable for Mr Stewart to have refrained from raising the Quantum Meruit Claim in his cross‑claim in the Federal Court action.

4. For these reasons I find that the Quantum Meruit Claim is precluded by an Anshun estoppel. 

The Grant Bonus Claim

Cause of action estoppel

1. In my opinion, no cause of action estoppel arises in relation to this claim.

2. Counsel for BPL conceded that the facts supporting the Grant Bonus Claim were not pleaded by Mr Stewart in the Federal Court action.  BPL contended that the wider principle in Henderson was part of cause of action estoppel, referring to the decisions of Handley JA in Zavodnyik and Lee.  However, as I have explained, I take the view that the principle in Henderson is part of Anshun estoppel, not cause of action estoppel.

3. I turn to Anshun estoppel.

Anshun estoppel

1. In considering whether the Grant Bonus Claim is precluded by an Anshun estoppel it is instructive to consider the particulars which Mr Stewart has given in relation to that claim in this action. 

2. Mr Stewart was asked for particulars of every fact and matter relied upon to support the plea in par 13(a) of the statement of claim that BPL underpaid Mr Stewart the sum of $120,000 in addition to his accruing entitlement to shares.  The response to that request referred to the heads of agreement dated September 2003, the minutes of the meeting of the directors of BPL of 4 November 2004, and cl 14.4 of the Shareholders' Agreement.  All of those were in evidence in the Federal Court action (see exhibit 1 pages 455 ‑ 464, 1254, and 410 ‑ 454 respectively.)  Mr Stewart also gave evidence of the discussion at the board meeting on 4 November 2004 in his witness statement, par 178 (exhibit 1 page 1324).

3. BPL requested particulars of the plea in par 13(c) of the statement of claim that the grant was obtained as a result of the efforts of Mr Stewart.  Mr Stewart's response to that request referred to the particulars in par 9 of the statement of claim.  As I have already observed, Mr Stewart gave evidence in the Federal Court in support of the particulars under par 9 of the statement of claim.

4. Counsel for Mr Stewart before me did not identify any fact or evidence relevant to the Grant Bonus Claim which had not been in evidence in the Federal Court action.

5. Mr Stewart did not give any evidence to explain why the Grant Bonus Claim was not advanced in the Federal Court action.

6. In his reply, Mr Stewart pleaded that it was reasonable for him to advance the Grant Bonus Claim in this action because he was justified in relying on the Executive Services Agreement until the Federal Court action was determined.  There is no evidence to support the plea that that is the reason why he did not advance the Grant Bonus Claim.  In any event, for reasons corresponding to those I have given in relation to the Agreement Claim and the Quantum Meruit Claim, I do not accept that such an approach would have been reasonable.  In circumstances where all the evidence upon which the Grant Bonus Claim was put before the Federal Court, it would have been unreasonable for Mr Stewart to have proceeded on the basis that the Grant Bonus Claim could be reserved to be made at a later time if he failed in the Federal Court action in relation to the Executive Services Agreement.  The validity of the Executive Services Agreement was squarely in issue in the Federal Court action.

7. In all the circumstances, including that:

   (a)all the evidence on which the Grant Bonus Claim relies was adduced in the Federal Court; and

   (b)there is no explanation as to why the Grant Bonus Claim was not advanced in the Federal Court action;

8. I am satisfied that an Anshun estoppel precludes the Grant Bonus claim in this action.

The Trade Practices Act claim

Cause of action estoppel

1. In my opinion, the Trade Practices Act Claim is not precluded by a cause of action estoppel. The Trade Practices Act Claim is founded on the Engagement, the Agreement and the Grant Bonus Agreement. The Engagement was not pleaded in the Federal Court action. I have already found that the Agreement Claim and the Grant Bonus Claim are not precluded by a cause of action estoppel. For corresponding reasons, the Trade Practices Act Claim is not precluded by a cause of action estoppel.

Anshun estoppel

1. The conduct said by Mr Stewart to be misleading or deceptive is the entering into of the Engagement, the Agreement and the Grant Bonus Agreement. As I have already explained, Mr Stewart led evidence of all the facts relating to the Agreement and the Grant Bonus Agreement in the Federal Court action. The other matters relied on in the Trade Practices Act Claim, pleaded in par 15A, par 15B and par 16 of Mr Stewart's statement of claim, were all or substantially all in evidence in the Federal Court action.

2. Counsel for Mr Stewart did not identify any additional evidence that Mr Stewart would lead in support of the Trade Practices Act Claim in this action that was not led in the Federal Court action. Rather, he emphasised that the Trade Practices Act Claim would invite attention to an additional matter. That claim, the submission continued, invoked s 51A of the Trade Practices Act on the basis that the conduct by BPL in entering into the Agreement and Grant Bonus Agreement involved representations as to future matters.  That meant that attention would be directed to whether BPL had reasonable grounds for such representations.

3. It is important to notice that that involves additional evidence on the part of BPL, not Mr Stewart. In this respect, Mr Stewart simply invokes s 51A; he does not plead facts demonstrating the absence of reasonable grounds.

4. In my opinion a litigant acts unreasonably if he reserves until later proceedings a potential claim, notwithstanding that all of the evidence on which he relies relating to that claim is adduced in the proceedings, on the basis that the potential claim would involve additional evidence from the opposing party.  In other words, the fact that the claim may involve additional evidence from the opposing party does not afford a reasonable ground for reserving the claim until later proceedings.

5. Mr Stewart did not adduce any evidence to explain why the Trade Practices Act Claim was not advanced in the Federal Court action. In his reply Mr Stewart pleads that he acted reasonably in that he believed and was advised that the Circular Resolution and the Executive Services Agreement were valid. For reasons corresponding to those in relation to the Grant Bonus Claim [212] I do not accept that contention, which is anyway not supported by evidence.

6. For these reasons, I find that the Trade Practices Act Claim is precluded by an Anshun estoppel.

Conclusion

1. For the reasons that I have given, in my opinion:

   (a)the claims made in this action are not precluded by a cause of action estoppel; and

   (b)each of the claims made in this action is precluded by an Anshun estoppel.

2. Consequently, it would seem appropriate that the action be stayed.  I will hear from the parties as to the appropriate orders and as to costs.

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION: STEWART -v- BIODIESEL PRODUCERS LTD [2009] WASC 145 (S)

CORAM:   BEECH J

HEARD:   21 APRIL 2009 AND ON THE PAPERS

DELIVERED          :   28 MAY 2009

SUPPLEMENTARY

DECISION              :3 JULY 2009

FILE NO/S:   CIV 1607 of 2008

BETWEEN:   ANTHONY PAUL STEWART

Plaintiff

AND

BIODIESEL PRODUCERS LTD
Defendant

Catchwords:

Costs - Whether plaintiff should pay defendant's costs of the action on an indemnity basis - Turns on own facts

Legislation:

Nil

Result:

Plaintiff to pay defendant's costs to be taxed if not agreed

Category:    B

Representation:

Counsel:

Plaintiff:     No appearance

Defendant:     No appearance

Solicitors:

Plaintiff:     B W Duckham & Co

Defendant:     Williams & Hughes

Case(s) referred to in judgment(s):

Colgate‑Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225

DP World Australia Ltd v Fremantle Port Authority [2009] WASCA 16

Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122(S); (2003) 28 WAR 95

NMFM Property Pty Ltd v Citibank Ltd (No 2) [2001] FCA 480; (2001) 109 FCR 77

Redowood Pty Ltd v Link Market Services Pty Ltd [2007] NSWCA 286

Stewart v Biodiesel Producers Ltd [2009] WASC 145

Unioil International Pty Ltd v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190

1. BEECH J:  On 28 May 2009 I delivered my reasons on the trial of preliminary issues in this action:  Stewart v Biodiesel Producers Ltd [2009] WASC 145.  In summary, I found that Mr Stewart's claims in this action were not precluded by a cause of action estoppel, but were precluded by an Anshun estoppel. 

2. On 28 May 2009 I ordered that:

   1.The action be permanently stayed;

   2.Subject to par 3, the plaintiff pay the defendant's costs of the action to be taxed; and

   3.The defendant have liberty to apply with accompanying written submissions within seven days for an order for indemnity costs, in which event:

   (a)the order in par 2 is vacated;

   (b)the plaintiff file and serve submissions in opposition within 14 days; and

   (c)the question of costs be determined on the papers.

3. The defendant invoked the liberty in par 3 of those orders.  The defendant applies for an order to the effect that the plaintiff pay the defendant's costs on an indemnity basis.

4. For the reasons that follow, I am not persuaded that costs should be awarded on an indemnity basis. 

5. I begin with an outline of some general principles relevant to the exercise of the discretion to award costs. 

6. The usual costs order is that the party who succeeds in an action is awarded its costs on a party and party basis.  An order for indemnity costs will be made only if there is some special or unusual feature in the case to justify departure from the ordinary practice.  The court has power to make an indemnity costs order whenever justice requires it:  Unioil International Pty Ltd v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190; Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122(S); (2003) 28 WAR 95 [8].

7. The categories of cases in which the discretion to award indemnity costs may be exercised are not closed:  Colgate‑Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, 233 ‑ 234; Unioil International Pty Ltd (191). 

8. Most of the situations in which indemnity costs have been awarded have involved an element of improper or unreasonable conduct on the part of the unsuccessful party or its advisers in the conduct of the case:  Flotilla Nominees Pty Ltd [9]; Colgate‑Palmolive Co (233 ‑ 234).  In Flotilla Nominees Pty Ltd [9] Pullin J gave some examples:

   Thus, the making of allegations of fraud knowing them to be false, or the commencement of proceedings for some ulterior motive, or in wilful disregard of known facts or the established law, or the making of allegations which ought never to have been made, or the undue prolongation of a case on groundless contentions, and even an unreasonable refusal to accept an offer of compromise, may lead to indemnity costs orders.  See Colgate-Palmolive v Cussons (supra) at 233.  The creation of false issues by tactical denials or failures to admit the facts may, in the circumstances of particular cases, lead to such an order:  Unioil's case.  An action commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success, may lead to such an order because such action might be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts or the clearly established law.  See Fountain Selected Meats (supra).

9. Where one party points out to the other, with sufficient particularity, reasons why it is inevitable that the other party's case must fail, this can be a factor in favour of an award of indemnity costs:  NMFM Property Pty Ltd v Citibank Ltd (No 2) [2001] FCA 480; (2001) 109 FCR 77 [87] ‑ [88].

10. Generally at least, an indemnity costs order will not be made unless it is shown that some part of the costs order will not be covered by an order for party party costs or by a special costs order:  Unioil International Pty Ltd (193); Flotilla Nominees Pty Ltd [11], [24] ‑ [26].

11. I turn to the matters relied upon by Biodiesel Producers Ltd (BPL)  in support of its contention that costs should be awarded on an indemnity basis.

12. The starting point for BPL's submissions is the proposition that the rationale of the Anshun doctrine is to prevent abuses of the process of the court.  Consequently, an attempt to litigate a claim which should (in the Anshun sense) have been litigated in the prior proceedings is itself an abuse of process.  BPL refers to the decision of the New South Wales Court of Appeal in Redowood Pty Ltd v Link Market Services Pty Ltd [2007] NSWCA 286 [44] ‑ [45] in support of its submissions. I accept that those passages in the Redowood decision support the proposition advanced by BPL.  However, in my principal reasons in this action I stated [55] that in Anshun's case the High Court rejected the proposition that it was an abuse of process to raise in subsequent proceedings matters which could and should have been litigated in earlier proceedings.  In that respect, I followed what Newnes AJA (as his Honour then was) had said (McLure JA agreeing) in DP World Australia Ltd v Fremantle Port Authority [2009] WASCA 16 [75].

13. Consequently, I do not accept BPL's contention that commencement of an action subsequently found to be precluded by Anshun estoppel of itself involves an abuse of process. 

14. BPL refers to three further matters in support of its contention that indemnity costs should be awarded:

    1.A deliberate decision was made in the Federal Court action not to pursue the Quantum Meruit Claim which was then pursued in this action (as I found [187]);

    2.The Agreement Claim in this action involved an attempt to characterise conversations between Messrs Stewart and Barron as amounting to a contract between Mr Stewart and BPL, when Mr Stewart had said in the Federal Court action that those same conversations constituted an agreement between Mr Stewart and Mr Barron personally.  BPL says this must have been apparent at least to Mr Stewart's legal advisers;

    3.BPL's solicitor's letter of 23 July 2008 which stated that the Anshun principle would preclude this action. 

15. BPL's solicitor's letter of 23 July 2008 made a number of assertions about alleged flaws in Mr Stewart's claim in the action.  The decision in the Federal Court action was said to create an issue estoppel in several respects.  Those contentions were developed in some detail.  The letter stated that the claim or parts of the claim were untenable for grounds relating to the merits of the action.  A short paragraph near the end of the letter stated that the relief claimed was relief which ought reasonably to have been claimed in the proceedings and arose out of substantially the same facts, and that accordingly there was an Anshun estoppel. 

16. Questions of issue estoppel were not pursued at the trial of preliminary issues.  Questions as to the merits have not been determined.  In my view, the letter is not of the kind referred to by Lindgren J in NMFM Property Pty Ltd [87] as might justify an award of indemnity costs.

17. In my opinion, the three matters relied on by BPL, individually and taken together, do not call for a departure from the general rule that costs be paid on a party party basis. 

18. For these reasons, I am not satisfied that it is appropriate to award costs on an indemnity basis. 

19. Accordingly, I order that the plaintiff pay the defendant's costs of the action to be taxed.