Trawl Industries of Australia Pty Ltd (In Liq) v Effem Foods Pty Ltd

Re: TRAWL INDUSTRIES OF AUSTRALIA PTY LIMITED; (Receivers and Managers
Appointed) (In Liquidation); LAKE CUMBELINE PTY LIMITED; IDOBOOK PTY LIMITED;
PETER HORROBIN; RICHARD SANDS; and RAYMOND PRIDMORE
And: EFFEM FOODS PTY LIMITED
No. N G129 of 1990
FED No. 377
Estoppel - Federal Jurisdiction
(1992) 108 ALR 335

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Gummow J.(1)

CATCHWORDS

Estoppel - res judicata - meaning of "cause of action" - meaning of privity in interest - whether United States decisions should be followed - whether open to Federal Court to do so - Anshun estoppel - whether claim in negligence for economic loss made in accrued jurisdiction of the Federal Court could and should have been brought in earlier proceeding in State Court exercising federal jurisdiction.

Federal Jurisdiction - successive actions in courts exercising federal jurisdiction - estoppel - source of rules of preclusion.

Trade Practices Act 1974

Jurisdiction of Courts (Miscellaneous Amendments) Act 1987

Carl Zeiss Stiftung v Rayner and Keeler Ltd (1967) 1 AC 853

Tobacco Institute of Australia Ltd v Australian of Consumer Organisations Inc. (1988) 19 FCR 469

Ramsay v Pigram (1968) 118 CLR 271, and

Port of Melbourne Authority v Anshun Proprietary Limited (1981) 147 CLR 589, applied

HEARING

SYDNEY

#DATE 9:6:1992

Counsel and Solicitors for Mr A.J. Sullivan QC
the Applicants (Respondents instructed by Blake Dawson Waldron
to the motion):

Counsel and Solicitors for Mr J.N. West QC with
the Respondent (Applicant Mr R.M.P. Smith
on the motion): instructed by Sly and Weigall

ORDER

THE COURT ORDERS THAT:

1. The proceeding by the first applicant be stayed.

2. The respondent's motion filed 2 May 1990 otherwise be dismissed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

The respondent ("Effem") seeks a stay of the proceeding brought against it in this Court and complains that otherwise it will be vexed twice by litigation which has been concluded in the Supreme Court of New South Wales. It is necessary to turn first to that earlier litigation.

By heads of agreement dated 7 June 1988, the first applicant ("Trawl") and Effem entered into arrangements for the sale and purchase over 6 years of headed and gutted jack mackerel for use by Effem in the production of pet food. In the Supreme Court proceeding it has been held, inter alia, that on 11 April 1989, Trawl evinced an intention not to be bound by the agreement, and that Effem had accepted that repudiation. On 18 April 1989 receivers and managers were appointed to Trawl by the second applicant in the proceeding before me ("Cumbeline"). It held over the whole of the assets of Trawl a security which ranked second to a security of the ANZ Bank Limited ("the ANZ"). The appointment was made with the consent of the ANZ.
In the Supreme Court Trawl sought damages for repudiation by Effem's refusal to pay for the product Trawl was to supply, a price calculated in accordance with Trawl's construction of a pricing formula set out in cl 6 of the heads of agreement. On one branch of its case, Trawl sought rectification of the written contract with Effem. Damages were claimed for loss of profit, and for the cost of establishing and maintaining a fish processing plant at Geelong with freezing and coldstore facilities, less the salvage value of those works. The total claimed by Trawl in damages was $9.78m. Trawl raised other issues, including estoppel, and contravention by Effem of s. 52 of the Trade Practices Act 1974 ("the TP Act"). It will be necessary later in these reasons to refer more fully to these issues. But Cole J., the primary Judge, on 8 August 1989 ordered by consent that these issues and all questions of quantum be tried separately, an event which never came to pass. Trawl made no claim against Effem in negligence. The case was tried in the Commercial Division upon Points of Claim and Defence, Cross-Claim and Defence to Cross-Claim. In its defence, Effem took various grounds, including a challenge to the correctness of the construction by Trawl of the agreement between them, and by cross-claim it asserted that it was Trawl which had repudiated the agreement. The trial commenced on 31 July and was heard over 10 days. Cole J. reserved his decision on 7 September 1989.
On 26 October 1989, Cole J. delivered reasons for judgment of 61 pages and stood the matter over for short minutes. In his reasons for judgment, his Honour accepted the submission that by treating Effem's construction of the pricing clause as a repudiation, and then by wrongfully terminating it by accepting the supposed repudiation, Trawl had evinced an intention not to be bound by the contract. On the view Cole J. took of the oral evidence of Mr Peter Horrobin (the fourth applicant in this Court) as to a conversation with representatives of Effem on 23 March 1988 (concerning what was called "the critical legal term") Trawl failed on a claim for rectification of the contract so as to accord with its construction of it.
On 2 November 1989, the Supreme Court ordered (1) verdict and judgment be entered for Effem on Trawl's Further Amended Points of Claim, (2) verdict and judgment be entered for Effem on its Cross-Claim, (3) "the proceedings be referred to the Master for assessment of (Effem's) damages". The Court also declared that Trawl had repudiated the agreement dated 7 June 1988 and that it had been terminated by acceptance by Effem of that repudiation. The orders were entered on 9 November 1989. It is important to note that order (1) meant that there was to be no trial upon the other issues raised by Trawl (including those of contravention of s. 52) which had been the subject of the order of deferral by Cole J. on 8 August 1989.
An appeal and cross-appeal were heard by the Court of Appeal on 23, 24 May 1991. On 19 March 1992, the Court (Kirby P., Samuels, Clarke JJ.A.) dismissed the appeal and cross-appeal. On the cross-appeal, Effem had sought to bolster its position on its cross-claim under order (2) made by Cole J., with a declaration that the agreement was void for uncertainty. This had been one of the issues tried by Cole J. The dismissal by the Court of Appeal of the cross-appeal still left order (2) in force. No point appears to have been taken that the pendency of the inquiry before the Master rendered the cross-appeal interlocutory in character; cf. Computer Edge Pty Ltd v Apple Computer Inc. (1984) 54 ALR 767.
The issues argued on the appeal were no wider than those dealt with in Cole J.'s judgment of 26 October 1989. Thus, whilst there has been no trial of the issues of contravention by Effem of s. 52 of the TP Act, there is an order of the Court of Appeal dismissing an appeal against the entry of the verdict and judgment in favour of Effem on Trawl's Further Amended Points of Claim making, inter alia, those allegations. It was not disputed before me that the order for entry of that verdict and judgment was a final order; cf. Linprint Pty Ltd v Hexham Textiles Pty Ltd (1991) 23 NSWLR 508.
The proceeding in this Court was commenced by Application and Statement of Claim filed on 20 March 1990, during the pendency of the appeal to the Court of Appeal. The applicants seek to recover under s. 82 of the TP Act their alleged loss or damage suffered by reason of contravention by the respondent, Effem, of ss. 52 and 53 of the TP Act. Damages are also claimed in tort, for negligence. Put broadly, these complaints are based upon allegations of representations by Effem which were made on a number of occasions between March 1987 and March 1988, that is to say before entry by Trawl and Effem into the heads of agreement on 7 June 1988, and which concerned the prospective business relationship later consummated by Trawl and Effem in the heads of agreement.
Effem, by Motion filed 2 May 1990, seeks, inter alia, an order that the proceeding be stayed or dismissed by reason of the disposition of the proceeding in the Supreme Court. The hearing of that motion was stood over to await the outcome of the appeal to the Court of Appeal. It was restored to the list before me shortly after the delivery of judgment on 19 March 1992. In the meantime, on 8 August 1990, a liquidator to Trawl was appointed by the Supreme Court of Victoria on the application of a creditor which was a stranger to this litigation.
Effem, the respondent to the proceedings in this Court and the applicant on the motion, contends that Trawl, having agreed to split the first case, suffered an adverse finding on credit in respect of the evidence bearing upon the critical legal term, consented to judgment against it on the whole of its Further Amended Points of Claim, and lost an appeal, still seeks in this Court to vex it a second time in respect of the same factual matrix.
No question of merger arises because as plaintiff Trawl failed rather than succeeded in the Supreme Court: Thoday v Thoday (1964) P. 181 at 197-8 per Diplock L.J.; Phipson on Evidence, 14th Ed., 1990, pp which I have referred Diplock L.J. said:

"(Cause of action estoppel) is that which prevents a party to an action from asserting or denying, as against the other party, the existence of a particular cause of action, the non-existence or existence of which has been determined by a court of competent jurisdiction in previous litigation between the same parties. If the cause of action was determined to exist, i.e., judgment was given upon it, it is said to be merged in the judgment ... . If it was determined not to exist, the unsuccessful plaintiff can no longer assert that it does; he is estopped per rem judicatam."

Estoppel has been described as "a label which covers a complex array of rules spanning various categories": The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 409, per Mason C.J. Against Trawl, Effem relies upon "cause of action estoppel" in relation to the trade practices claims. It also relies upon that species of estoppel ("Anshun estoppel") applied by the High Court in Port of Melbourne Authority v Anshun Proprietary Limited (1981) 147 CLR 589. This second step is said to be necessary because, as I have indicated, in the Supreme Court no reliance was placed by Trawl upon any claim in negligence. Effem says any such claim should have been then brought forward and not left to this proceeding. With respect to the claims of contravention of the TP Act, Effem relies upon cause of action estoppel rather than issue estoppel because, in the events that happened, there was no determination by the Supreme Court of the integers in the claims of contravention of s. 52, beyond what is involved in the dismissal of the whole of Trawl's claim by order (1) made 2 November 1989. The relevant issues may have been taken on the pleadings there but they were not found in the Supreme Court; see Jackson v Goldsmith (1950) 81 CLR 446 at 460, 467.
The evidence before me, tendered without objection, included the pleadings and transcript of the trial before Cole J., the reasons for judgment of Cole J. and the Court of Appeal, and a number of witness' statements tendered at the trial.
Reliance is not placed by Effem upon the "issue preclusion" and "collateral estoppel" doctrine considered in Saffron v Federal Commissioner of Taxation (1991) 102 ALR 19. Nor does Effem seek to make any case of abuse of process; cf. Reichel v Magrath (1889) 14 App Cas 665; Hunter v Chief Constable of the West Midlands Police (1982) AC 529 at 536; Port of Melbourne Authority v Anshun Pty Ltd supra at 605; Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589; House of Spring Gardens Ltd v Waite (1991) 1 QB 241 at 254-5, 259; Saffron v Federal Commissioner of Taxation supra. Trawl denies the case for estoppel put by Effem, but does not seek to escape the consequences of failure in making good that denial by reference to the "special or exceptional circumstances" doctrine which was recently applied by the English Court of Appeal in Arnold v National Westminster Bank plc (1990) Ch 573. In that case, the litigants were parties to a 32 year sublease with a 5 yearly rent review. On the second review, a dispute as to construction of the relevant clause was relitigated on the footing that a decision at the time of the first review had since been shown to be wrong.
The second, third, fourth, fifth and sixth applicants were not parties on the record in the Supreme Court proceeding. However, it is submitted that for the purposes of the relevant estoppel doctrines they are bound as privies of the first applicant, Trawl, which was the plaintiff in the Supreme Court proceeding.
Estoppel or Preclusion and Federal Jurisdiction
The Further Amended Points of Claim by Trawl in the Supreme Court proceeding included allegations of contraventions of s. 52 of the TP Act in respect of which loss or damage was claimed under s. 82 of that Act. There were also claims in contract, estoppel and quasi-contract (or "restitution"), and for rectification of the heads of agreement. In its points of defence (paras 20 - 44), Effem alleged that as a result of certain conduct by the plaintiff in contravention of s. 52, it entered into the heads of agreement dated 7 June 1988, with the result that, inter alia, it should have a set-off against any damages awarded against it and the agreement should be "avoided" by order under s. 87 of the TP Act. The Supreme Court proceedings thus comprised the one matter (including accrued claims) in respect of which jurisdiction was invested in the Supreme Court pursuant to sub-s. 86 (2) of the TP Act, in the form it has taken since the Jurisdiction of Courts (Miscellaneous Amendments) Act 1987. The jurisdiction exercised by the Supreme Court (including the Court of Appeal) throughout the case was federal jurisdiction: Felton v Mulligan (1971) 124 CLR 367 at 373; Moorgate Tobacco Company Limited v Philip Morris Limited (1980) 145 CLR 457 at 476.
Accordingly, the questions of estoppel which arise on this motion concern two proceedings, each being a matter wholly within federal jurisdiction. A threshold question arises as to the applicable body of principles to resolve what the applicant on the motion says is the successive exercise of federal judicial power upon the one controversy, or overlapping controversies. An essential characteristic and function of the judicial power of the Commonwealth is the quelling of disputes, so that the making of final orders should have at least the potential effect of precluding re-litigation of the same claims and issues: Fencott v Muller (1983) 152 CLR 570 at 608. In my view, the Constitution brings with it as an element in the judicial power, rules of preclusion to effectuate the quelling of such disputes. There is thus no scope for the "picking up" of State law by the Judiciary Act 1903, s. 79. In Australia, the federal judicial power, whilst limited, is, within its sphere, paramount: The Queen v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 268.
In the United States, the view has been taken that the establishment of the federal judicial power carried with it recognition of judicial authority to develop rules of "preclusion" with similar content to the rules developed over a long period by the common law courts; those rules have been taken as an appropriate guide for the federal courts: Wright, Miller and Cooper, "Federal Practice and Procedure", Vol. 18, para 4466, Degnan, "Federalized Res Judicata", (1976) 85 Yale L.J. 741 at 768 ff. As those learned authors point out, the supremacy of federal judicial power may require more than the simple application of the common law rules where what is involved is the effect upon State courts exercising non-federal jurisdiction of a prior decision of a court exercising federal jurisdiction, or the effect upon a court exercising federal jurisdiction of a prior decision of a court exercising purely non-federal jurisdiction; see also Wright, "Federal Courts", 4th Ed., 1983, pp 694-696, Chemerinsky "Federal Jurisdiction", 1989, section 8.10.
The present controversy arises from two proceedings, each in federal jurisdiction, so these latter questions do not arise. Nor is it necessary to consider the applicability of doctrines of res judicata, issue estoppel and the Anshun estoppel in situations where the first proceeding was of an administrative nature and did not involve the exercise of the judicial power of the Commonwealth; see Wiest v Director of Public Prosecutions (1988) 23 FCR 472 at 521-8; Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193; Attorney-General (N.S.W.) v Quin (1990) 170 CLR 1 at 17-9; Haoucher v Minister of State for Immigration and Ethnic Affairs (1990) 169 CLR 648 at 678-9.
The correct approach in a case such as the present, in my view, is to treat as applicable in federal jurisdiction the principles which have been developed at general law. This is to be supported either as an adoption from the common law to resolve an issue as to a characteristic of the federal judicial power, an issue which thus springs from the Constitution itself (cf. Breavington v Godleman (1988) 169 CLR 41 at 120-121, per Deane J.), or as an illustration of the role of the common law as the foundation of the legal systems of every part of the Commonwealth and as an ultimate constitutional foundation (cf. Breavington v Godleman, supra at 107, per Brennan J., Sir Owen Dixon, "The Common Law as an Ultimate Constitutional Foundation", (1957) 31 ALJ 240 and Judiciary Act 1903, s. 80). Before me both sides accepted that the issues were to be resolved by reference to the common law of Australia.
But when comparing what was at stake in successive proceedings in federal jurisdiction, for such purposes as the application of the general law principles of preclusion, the distinctive characteristics of that jurisdiction are of particular importance. The "matter" in respect of which federal jurisdiction is exercised in such cases will be the subject matter for determination, the substantial subject matter of the controversy; the Constitution itself thus directs attention to substance rather than merely to the form in which a legal proceeding happens to be framed: Crouch v Commissioner for Railways (Queensland) (1985) 159 CLR 22 at 37. The relevant general law principles are, as will appear, consistent with that basic constitutional doctrine.
Res Judicata
I turn first to consider the reliance placed upon the principles of res judicata.
To make out estoppel per rem judicatam or "cause of action estoppel", it is necessary to show that the earlier judgment relied on was a final judgment, and that between the former and the present litigation there is identity of parties and of subject matter or "cause of action": Carl Zeiss Stiftung v Rayner and Keeler Ltd (1967) 1 AC 853 at 909-910 per Lord Reid.
The absence of the second, third, fourth, fifth and sixth applicants in this Court as parties to the Supreme Court proceeding is, subject to the issue as to privity of interest (to which I will return), a fatal defect in the case of cause of action estoppel now sought to be put against them.
Further, in the proceedings in this Court, these applicants claim damages in tort and for wrongs allegedly done them by contravention of ss. 52 and 53 of the TP Act. Recovery of loss or damage is the gist of the causes of action both at common law and pursuant to the statute. The nature of the causes of action which may be vested in various parties by reason of the conduct of another or others in contravention of provisions such as ss. 52 and 53, or by reason of their involvement in such contravention (within the meaning of s. 75B), was explained by the Full Court in Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc. (1988) 19 FCR 469. It emphasised that conduct by the one respondent may give rise to distinct claims by a plurality of applicants, each in its own right seeking recovery of its own loss or damage. Each has, pursuant to the legislation, a right which may be described as a cause of action, but the right is not a joint right, if only because the loss or damage, the recovery of which is the gist of the action, will be sustained by and recoverable by each applicant for itself, alone and in its own right. It follows that disposal of a claim by one party will not bar the pursuit of the claims of the others. On any of the senses of the term, the cause of action will not be the same in each case; cf. Walker v Bowry (1924) 35 CLR 48 at 54-5; Jackson v Goldsmith supra.

No such cause of action, as regards the second, third, fourth, fifth and sixth applicants was at issue in the Supreme Court proceedings. Trawl did not seek to recover the loss or damage of any other parties nor was it claiming to act in any representative capacity, e.g. as trustee or next friend.
Certainly, the applicants' business affairs were inter-related. The fourth, fifth and sixth applicants (Messrs Horrobin, Sands and Pridmore respectively) were directors of Trawl and the second applicant, Cumbeline. Messrs Horrobin, Sands, Pridmore and Cumbeline guaranteed the indebtedness of Trawl to the ANZ. Trawl was a wholly owned subsidiary of Cumbeline. Messrs Sands and Horrobin each held one third of the equity in Cumbeline. The equity in the third applicant ("Idobook") was held by Mr Sands and his family. Idobook was a lender to both Trawl and Cumbeline. Cumbeline initially acquired half of the issued capital of Trawl which before 1987 had been in the hands of other interests. The balance of the capital was acquired by Cumbeline during the currency of the arrangements between Trawl and Effem.
Before me, Effem contended that in addition to Trawl, the other applicants in this Court had had, albeit not as parties on the record, a financial interest in the Supreme Court proceeding and that if Trawl had been wholly successful there the commercial consequence would have been that Trawl would have recouped the expenditure it incurred in establishing and maintaining its business, which expenditure had been funded, directly or indirectly, by the other applicants. But it should be borne in mind that the ANZ had at all material times first ranking security over the assets of Trawl and that, with its concurrence, receivers and managers were appointed to Trawl by Cumbeline under its second ranking security on 18 April 1989. This was before the hearing before Cole J. Thus at that stage, if not earlier, the ANZ had a substantial interest, albeit one not quantified in the evidence before me, in any recovery by Trawl in the Supreme Court litigation. And during the pendency of the appeal, a liquidator was appointed.
As their claims are pleaded, the second, third, fourth, fifth and sixth applicants in the proceedings in this Court each brings his or its own action to recover loss or damage allegedly suffered by conduct of the respondent done in contravention of s. 52 or s. 53, or in breach of a duty of care allegedly owed to each of them. The motion to stay those proceedings must fail, unless there is privity of interest between those applicants and the first applicant, such as to produce the result that they are bound by the outcome of the Supreme Court proceedings.
It is necessary then to look more closely at the doctrine of privity in interest; it operates in the same way upon the doctrines of cause of action estoppel and of issue estoppel.
Privity In Interest
The requirement of identity of parties between the parties in the concluded action and the action in which the estoppel is raised is satisfied where there is privity in interest. The basic requirement of a privy in interest is that the privy must claim "under or through" the person to whom he is said to be a privy. Privity was described in Bigelow v Old Dominion Copper Mining and Smelting Co. 225 US 111 at 128-9 (1912), in terms consistent with traditional doctrine, as a mutual or successive relationship to the same right of property. Thus, the necessary identity in interest may arise from a successive relationship in a temporal sense. Accordingly, a judgment against the holder of an office will bind successors in that office (Dundas v Waddell (1880) 5 App Cas 249). The necessary identity in interest in this sense is also seen with privies by operation of law, such as testator and subsequent executor, and intestate and subsequent administrator. Other examples are given in "Phipson on Evidence" supra pp 871-2; Halsbury, "Laws of England", 4th Ed. Reissue, Vol 16, pp 874-5. But the privy may also be bound where the relationship whilst not successive in the above sense, still is mutual. Thus, as Isaacs A.C.J. explained in Walker v Bowry, supra, with reference to Kendall v Hamilton (1879) 4 App Cas 504, a judgment against a joint contractor is a bar to any action against the others, not only because the cause of action is merged in the judgment but also because the right of each of them to be sued jointly is gone.
In House of Spring Gardens Ltd v Waite, supra, the English Court of Appeal considered the situation where two of the three defendants to a proceeding in Ireland had unsuccessfully sought, in a fresh proceeding in Ireland, to have a joint and several judgment against them set aside. Although only two of the three defendants were parties to this later action, if they had succeeded the judgment against all three would have been set aside in toto (see supra at 253). The third defendant was held to be a privy of the other two, so that he was estopped from alleging that the first Irish judgment was obtained by fraud, when the successful plaintiffs brought an action in England upon that judgment. On a close reading, Shiels v Blakeley (1986) 2 NZLR 262, is an example of mutuality between successive interests in the same fund. The plaintiffs were beneficiaries in a fund who had become "members" after the dismissal of proceedings by various parties, including other beneficiaries, against the trustees whom the plaintiffs now wished to sue, so as to litigate issues which had been decided in favour of the trustees in the first action. There had been no representative order in the first proceeding. But Somers J., who delivered the judgment of the Court of Appeal, held that the plaintiffs had a mutual interest with the other beneficiaries who had failed in the first action.
In Mercantile Investment and General Trust Company v River Plate Trust, Loan, and Agency Company (1894) 1 Ch 578, Romer J. held that a purchaser of land was not estopped as being privy in estate by a judgment obtained by a third party in an action against his vendor commenced after the purchase; the circumstances that the purchaser had given the vendor an indemnity, assisted him in the defence brought by a third party and paid the costs when the defence failed, did not bar the purchaser from disputing the claim in later proceedings brought directly by the third party.
It is important for the instant case to appreciate that in these authorities, when finding the necessary privity in a successive or mutual relationship, the courts have looked to legal rather than economic indicia as the criterion of operation of the privity doctrine. This has been true also in Australia.
The applicable principles in Australia are illustrated by Ramsay v Pigram (1968) 118 CLR 271, which was followed in Young v Public Service Board (1982) 2 NSWLR 456; see also Egri v DRG Australia Ltd (1988) 19 NSWLR 600 at 610. In Ramsay's Case, the appellant was appointed as nominal defendant to represent the Government of New South Wales in an action for negligence brought by the respondent to recover damages for personal injuries caused to him when a motor vehicle owned by the government and allegedly driven negligently by a New South Wales police officer collided with the respondent's motor vehicle. The appellant pleaded that the respondent was estopped from asserting negligence on the part of the police officer in the course of his duty. In an action for damages for personal injuries caused by the same collision, which the police officer himself had brought against the respondent, the jury had found a general verdict for the police officer. The appellant relied on an issue estoppel to prevent the respondent asserting negligence on the part of the police officer in the course of his duty.
The High Court held (supra at 279-80, 282-3, 284, 287-8, 290-291) that there was no privity of interest between the appellant and the police officer to entitle the appellant to rely upon the findings in the action previously brought by the police officer. (As counsel for Effem pointed out, the case may also have an alternative ratio decidendi. But equal effect then must be given to both rationes: Jacobs v London County Council (1950) AC 361 at 369. And in any event, in this Court greatest weight must be given to considered statements of the law by the Full High Court.)
The crucial passage in the judgment of Barwick C.J. (at 279) is as follows:

"Here it is quite clear that the Government had no interest in the action between the respondent and the police officer: nor can it be said that the action brought by the police officer was brought by him in any sense on behalf of the Government or that in relation to the defence of contributory negligence the respondent could have been treating the Government as the real 'defendant' to that claim. In every respect the action between the respondent and the police officer was personal to each of them, neither being in any sense in relation to the action or any of the issues involved in it, representative of another. Nor can it be said that the Government in any sense claims under or in virtue of the police ice officer or of any right of his, or that it derives any relevant interest through him."

Taylor J. (at 288) said he had not overlooked certain United States decisions to which the Court had been referred but that the law in Australia had developed along different lines. Windeyer J. (at 290) spoke to like effect.

It is appropriate now to return to the Supreme Court proceeding. I have described the issues that arose there. In my view, Trawl as plaintiff in the Supreme Court proceeding was not claiming under or in virtue of any legal right of the other applicants in the present proceedings. Nor did it derive any relevant interest through those applicants, or claim to represent them or their interests. It follows, in my view, that it did not, in the required sense, claim under or through them. But it is necessary to refer to further submissions by counsel for Effem.
It is alleged in this Court that acting on the faith of certain misrepresentations by Effem, Cumbeline invested moneys in Trawl and lent moneys to Trawl, Idobook lent moneys to Cumbeline to enable it to make that investment and the loans, and that the fourth, fifth and sixth applicants guaranteed certain obligations of Trawl with the ANZ. As a result of the conduct by Effem of which they complain, Cumbeline claims to have lost the value of the shares in Trawl, and that it is likely to be unable to recover the loan moneys, Idobook asserts that it is likely to be unable to recover its advances to Cumbeline and the fourth, fifth and sixth applicants say they are likely to be called on their guarantees. It is true that the success of Trawl's case in the Supreme Court might have had favourable economic consequences, in an imprecise way, for the other applicants, despite Trawl being placed first in receivership and then in liquidation.
Counsel for Effem submitted that if Trawl had been wholly successful in the Supreme Court, the damages recovered would have produced the "commercial consequence" that Trawl would have had sufficient funds to repay money lent to it and would not have defaulted on its obligations to the ANZ. The guarantors would not then have been called upon by the ANZ. Cumbeline would have been able to repay Idobook. Counsel for the applicants (including Trawl, in liquidation) submits (with several examples, Transcript 92, 93) that the extent to which a success for Trawl in the Supreme Court might have relieved the position of the other applicants, on the material before me, is a matter of speculation. I agree.
The above circumstances relied upon by counsel for Effem, would not suffice to render the first applicant the privy of each of the others, within the sense of the authorities I have discussed. But counsel further contended that there had been a relaxation in the applicable doctrine.
In Gleeson v J. Wippell and Co. Ltd (1977) 3 All ER 54, Megarry V-C dealt with an action for infringement of copyright in the plaintiff's drawings for a shirt with a clerical collar attached to it. She had failed in an infringement action against another shirt manufacturer, which had a trade relationship with the defendant in the course of which it had copied the defendant's shirt at its request. His Lordship held there was no privity of interest between the two and refused to stay the second action; he said (supra at 61) that he had been unable to state any clear principle as to what constituted privity of interest. Nevertheless, in Official Custodian for Charities v Mackey (No. 2) (1985) 2 All ER 1016, Nourse J. (at 1022) treated the Vice-Chancellor as having laid down a principle that there must be a sufficient degree of identification between the two parties "to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party". This test has attracted support in New Zealand: Shiels v Blakeley supra at 268. But, with respect, (i) Megarry V-C has been treated as doing that which he expressly professed not to be doing, (ii) the law as to privity has been a subject of some technicality and it would be a large step to supplant it with a loosely phrased, however alluring, invitation to judicial idiosyncrasy, (iii) the High Court decisions such as Jackson v Goldsmith (supra) and Ramsay v Pigram (supra) approach the subject at quite a different level of analysis, and (iv) not even the United States authorities, to which I will come, have gone so far.
Recognising this, counsel for the respondent sought support from an admittedly minority view in the House of Lords. However, even if that view be accepted, in my opinion it would not meet the present case. In Carl Zeiss Stiftung v Rayner and Keeler Ltd (No. 2) (supra) the majority of the House of Lords rejected an argument based on the existence of a privity of interest. It was held that representation of a common principal did not of itself lead to privity. Lord Wilberforce (supra at 968) took an apparently wider view to the effect that "one must look to see who in reality is behind the action". His Lordship said that the formal test of identity on the record might not be sufficient in all cases and that in some cases it would be appropriate to identify the "effective party". The particular example he gave was of persons claiming to be directors of a company who start an action in the company's name and after it has been struck out, commence a second action in the company's name but using a different firm of solicitors. In each action, the "effective party", in his Lordship's view, would be the directors, not the solicitors they engaged. It would be misusing the sense in which Lord Wilberforce spoke to treat Trawl in any way as having earlier represented the other applicants in the claims they now bring in this Court.
I should add that Lord Wilberforce expressed (supra at 969) his attraction to United States authorities which appear to take a looser view of the requirements of estoppel by record. But his Lordship was alone in doing so. The relevant passages from Lord Wilborforce's speech in Carl Zeiss appear to have been cited in argument before the High Court in Ramsay v Pigram supra at 273 (as were various United States authorities), but they struck no chord in the judgments. The result, in my view, is that any introduction of doctrines developed in the course of this century in the United States is for the High Court, after reconsideration of Ramsay v Pigram.
In any event, it is by no means clear that even in the United States the relationship between the applicants, which I have summarised above, would be sufficient to place each of the other applicants in privity with the first applicant. One category of cases in that country involves a non-party who has participated so actively in the first litigation that he assumed de facto the role of an actual party. For example, in Montana v United States 440 US 147 (1979), the United States was barred as being privy to the plaintiff in the first action, from challenging in a second action a state tax as unconstitutionally discriminating against the United States and its contractors. The United States had directed a federal contractor (on a federal dam project in Montana) to bring the first action, paid the contractor's costs, and directed the course of the litigation, including an appeal which was withdrawn. But perhaps this was an extreme case. A person who selects and pays the legal representatives of a litigant does not thereby acquire what Frankfurter J. called a "labouring oar" in the litigation: Drummond v United States 324 US 316 at 318 (1945).
In the United States, corporations are treated as entities distinct from their officers and shareholders and related corporations so that without more, judgments in an action entered against one do not bind the others. Their financial interest is ordinarily insufficient to bring about privity. However, a controlling shareholder who has directed or effectively controlled litigation by or against the corporation may be bound by the result: In re Teltronics Services Inc 762 F 2d 185 at 191 (1985). The determination of identity between litigants for the purpose of establishing privity has been said to be a "factual question" on which the trial court "should not be reversed unless its determination is clearly erroneous": Astron Industrial Associates Inc. v Chrysler Motors Corporation 405 F 2d 958 at 961 (1968).
A leading United States text points out, with reference to authority, (a) a director who absolutely controls corporate litigation but who owns a minor interest should not be "precluded" by the judgment ". . . lest the fear of personal consequences distort the decisions made on behalf of the corporation", and (b) whilst relationships between a parent corporation and its subsidiaries should generally be regulated by the same rules as apply to other shareholders, particular care may be required in assessing the relationships involved if there are independent interests: Wright, Miller and Cooper, "Federal Practice and Procedure", supra, section 4460. See also Towle v Boeing Airplane Company 364 F 2d 590 (1966); Walter E. Heller and Company v Cox 343 F Supp 519 (1972); Eagle Transport Ltd, Inc. v O'Connor 470 F Supp 731 at 733-734 (1979); General Foods Corp. v Massachusetts Dept of Public Health 648 F 2d 784 at 789-790 (1981) per Wyzanski J.; Nilsen v City of Moss Point, Mississippi 701 F 2d 556 (1983); "Developments in the Law - Res Judicata": (1952) 65 Harv L Rev 818 at 856 ff; and Morris, "Non parties And Preclusion By Judgment: The Privity Rule Reconsidered", (1968) 56 Cal Law Rev 1098 at 1120-1121.
Upon the evidence before me on the present stay application, in particular that as to the relationship between the applicants, it would by no means follow that Effem, by invoking United States authority, would succeed. I have discussed the nature of the several financial interests of the other applicants in Trawl and its well-being. The evidence before me includes detailed statements by the fourth, fifth and sixth applicants which were tendered in the Supreme Court proceeding. They were cross-examined upon those statements, Messrs Horrobin and Pridmore at some length. Thus, there is evidence that at least some of the present applicants actively participated in the litigation conducted by Trawl in the Supreme Court. But as the evidence stands, no one of them directed or effectively controlled it at any stage, and certainly not after Trawl went into receivership with the consent of the ANZ Bank.
The result is that there can be no res judicata or cause of action estoppel against the second to sixth applicants and the motion against them fails.
The First Applicant - Res Judicata or Cause of Action Estoppel
I turn now to consider the position of Trawl, first as regards cause of action estoppel and then the Anshun estoppel.

The question is whether Trawl seeks to vex Effem again upon a "cause of action" it lost in the Supreme Court. It is said that for the estoppel to operate, the cause of action in each proceeding must be the same: Ramsay v Pigram (1968) 118 CLR 271 at 280. But, as Brennan J. pointed out in Anshun (supra at 610-613) the phrase "cause of action" is used imprecisely and in several senses. These include (i) the series of facts which the plaintiff must allege and prove to substantiate a right to judgment, (ii) the legal right which has been infringed, and (iii) the substance of the action as distinct from its form.
Sir William Brett M.R. directed attention to this third sense by asking "whether the same sort of evidence would prove the plaintiff's case in the two actions": Brunsden v Humphrey (1884) 14 QBD 141 at 146. In that litigation the first action had been brought in a county court and the second in the High Court. In Chamberlain v Deputy Commissioner of Taxation, supra at 508, Deane, Gaudron, Toohey JJ. drew attention to what Brennan J. had said as to the imprecision of the phrase "cause of action", but did not espouse any particular formulation.
However, as indicated above, for the law of Australia it is most suitable to focus upon the substance of the two proceedings as distinct from their form. This reflects the constitutional basis of federal jurisdiction, to which I have referred earlier in these reasons. Also, it allows for the very many controversies which now come before superior courts, federal and State, without pleadings. And even where pleadings are necessary or are ordered, the effect of the Judicature system of pleading, now in general operation in Australia, is as described by Barwick C.J.:

"(T)here is no necessity to assert or identify a legal category of action . . . It is sufficient in matters in the Federal Court to assert the facts on which the plaintiff or applicant party relies and to nominate the remedies which he seeks as a consequence of the occurrence of those facts."

(Philip Morris Incorporated v Adam P. Brown Male Fashions Proprietary Limited (1981) 148 CLR 457 at 473)

Further, characterisation by regard to substance rather than form assists in cases where the first action was brought in a foreign forum, for the doctrine applies in such circumstances, as Carl Zeiss and House of Spring Gardens show.

I have described in general terms the pleadings and decision in the Supreme Court action. But it should be noted that there Trawl pleaded contravention of s. 52 in two ways. First it was said (para 20) that in order to induce the supply of product to Effem by Trawl, Effem represented to Trawl that it would enter into an agreement for six years whereby it would pay Trawl an agreed price calculated upon what in para 5 Trawl alleged was the true construction of the pricing formula in cl 6 of the Heads of Agreement. It was alleged (para 21) that in reliance upon that representation Trawl executed the Heads of Agreement, supplied fish to Effem and incurred expenditure as set out in the earlier paragraphs of the pleading. Next (para 22A) Trawl alleged that the conduct of Effem in creating or encouraging the assumptions referred to in para 18A of the pleading, contravened s. 52. In para 23, it was alleged that by reason of the misleading conduct, which I have described, Trawl had suffered loss and damage.
Particulars thereof were given in the same terms as those set out for para 10 when specifying the damage alleged by Trawl by reason of what it alleged was the wrongful repudiation of contract by Effem. The particulars referred to five years loss of profit totalling $3,746,250, and consequential loss in establishing a fish processing plant and associated freezing and cold store facilities for processing the jack mackerel over the alleged six year period of the agreement between the parties. The costs of establishing and maintaining these works was specified as $9,540,361 less their estimated market value of $3.5 million giving a balance of $6,040,361 which together with the figure for the loss of profit gave a total sum for the claimed loss and damage of $9,786,611.
Paragraph 18A, which was imported in para 22A, referred to a conversation on 18 March 1987 between Mr Horrobin, Mr Pridmore and Mr Bob Lees who was at the time the senior fish buyer of Effem. Mr Horrobin's account of that meeting was set down in para 5 of his statement which became Exhibit A before Cole J. Trawl contended that as a result of that conversation it had a certain understanding as to the future requirements of Effem for fish and that upon the basis of that understanding it continued to carry on business and in addition incurred further expenditure in the purchase of equipment and the improvement of its premises. Trawl also alleged in para 18A that Effem further encouraged it to continue to have that understanding as a result of further conversations and communications between June and July 1987, September, October and November 1987, and between late February 1988 and early March 1988. Particulars were given with reference to other paragraphs in what became Exhibit A and in a further statement by Mr Horrobin of 30 July 1989 which became Exhibit A1.
Paragraph 18A was pleaded to found a substantive claim in estoppel and for "compensation or restitution" in respect of the expenditure and losses allegedly incurred and sustained by Trawl in reliance upon the conduct in question. It was these issues, together with the alleged contraventions of s. 52 and all questions of quantum which were the subject of the consent order by Cole J. on 8 August 1989 that they be heard separately and after the decision on the other questions arising in the proceeding.
I turn to consider more fully the pleading in this Court. In their Statement of Claim, the applicants plead (paras 3-7) the making of representations by the respondent to the applicants on or about 16 March 1987, which representations are alleged to have been false, misleading or deceptive, or alternatively to have been likely to mislead or deceive; they allege that thereby Effem contravened s. 52 of the TP Act and also engaged in conduct which contravened paras 53 (bb) and (f) of the TP Act. Particulars are given which largely repeat the material in para 4 of Mr Horrobin's statement of 30 June 1988 (which became Exhibit A2 before Cole J.). Allegations are then made, in general terms, of heads of loss or damage suffered by each of the applicants (para 7). Trawl claims that it lost the funds invested in and lent to it and that it has lost the opportunity of making profitable investments with its funds. This resembles the claim made in fuller detail in the claim by Trawl in the Supreme Court proceeding for contravention of s. 52, in the particulars to paras 23 and 10, discussed above. Then it is alleged (paras 8 - 10) that in making the said representations on or about 16 March 1987, Effem owed a duty of care to the applicants, that Effem was negligent and that by reason of the breaches of duty, the applicants have each suffered loss or damage as shown in the particulars to the claims under the TP Act.
Next, (paras 11 - 16) there is a second set of allegations of contravention of s. 52 of the TP Act, together in this case with allegations of contravention of paras 53 (bb) (e) and (f). The representations in respect of which complaint is made are said to have occurred on or about 18 March 1987. Particulars are given which refer in terms to statements by Messrs Horrobin and Lees filed in the Supreme Court proceedings. The events of 18 March 1987 were relied upon in para 18A (a) in the Further Amended Statement of Claim in the Supreme Court. Allegations of loss or damage suffered by each applicant are made by repeating particulars to para 7. In paras 17 - 19, there are concomitant allegations of breach of a duty of care.
The third set of allegations of contravention of the TP Act is found in paras 20 - 24. The misrepresentations in question are said to have been made in a written contract between Trawl and Effem dated 26 March 1987. This was not sued upon in the Supreme Court, but details of it were given in para 6 of Exhibit A in that proceeding. In addition to contravention of s. 52, the applicants allege contravention of paras 53 (bb) and (f). The particulars of the loss or damage allegedly suffered by each of the applicants is identified as that set out in the particulars to para 7. This is included in the first set of allegations of contravention of the TP Act. Again, (paras 25 - 27) there are accompanying allegations of a cause of action in negligence.
The fourth set of TP Act allegations is set out in paras 28 - 32. The misrepresentations relied upon are said to have been made in a telephone conversation between Messrs Pridmore and Lees in or about April 1987. Reliance is placed upon s. 52 and para 53 (bb). Mr Pridmore dealt with this in paras 7, 8 of his statement of 28 May 1989, Exhibit C in the Supreme Court. The particulars given of loss or damage relate only to the first applicant, Trawl, although it is pleaded that the applicants, that is to say all of them, have suffered loss and damage. It is alleged Trawl incurred expenditure in upgrading the Geelong plant, acquiring, maintaining and upgrading vessels and in carrying on its business. The accompanying claim in negligence is found in paras 33 - 35.
The fifth set of claims under the TP Act is set out in paras 36 - 40 of the Statement of Claim. The conduct com-plained of is alleged to have occurred in or about early June 1987, the representations relied upon for the first, second, third and fourth sets of allegations of contravention of the TP Act are stated then to have been repeated. Particulars are given by reference, inter alia, to para 4 in the statement which became Exhibit A2 in the Supreme Court proceedings. This also is included in the particulars to para 18A(b) of the Supreme Court pleading. It is said that there was contravention not only of s. 52, but of paras 53 (bb), (e), (f) and (g). The particulars of loss or damage are identified by reference to those given in para 7 for the first set of claims. The applicants plead a concomitant claim in negligence in paras 41 - 43.
Paragraphs 44 - 48 contain the sixth set of allegations of contravention of the TP Act. The representations are said to have been made in a telephone conversation between Messrs Lees and Horrobin on or about 11 September 1987. This was dealt with by Mr Horrobin in para 13 of Exhibit A and paras 9-11 of Exhibit A1. These paragraphs were also given as particulars of para 18A (g) of Trawl's pleading in the Supreme Court. Contravention is alleged of s. 52 and para 53 (bb). Particulars are given of loss or damage said to be suffered by Idobook, the third applicant; in addition, the particulars given of the first set of claims are again relied upon in respect of all the applicants. In paras 49 - 51, there is an accompanying claim in negligence.
The seventh set of claims is found in paras 52 - 56. The representations complained of are said to have been made in or about August and September 1987 by Mr Lees to Mr Pridmore. Paragraph 21 of Mr Pridmore's statement (Exhibit C) dealt with this conversation. The same particulars of loss or damage in respect of each of the applicants is relied upon as with the sixth set of claiMs The accompanying claim in negligence is found in paras 57 - 59.
The eighth set of claims is contained in paras 60 - 64. The representations by Mr Lees which are complained of and alleged to have contravened s. 52 and para 53 (e) of the TP Act, are alleged to have been made between October 1987 and January 1988. Particulars are given by reference to paras 27 and 28 of what was Exhibit C in the Supreme Court. Loss or damage is alleged to have been suffered by the first, second and third applicants. In addition to the particulars given for the sixth set of claims, Trawl claims the lost value of its investment in certain equipment. Negligence is then pleaded in paras 65 - 67.
The ninth, and penultimate, set of claims is set out in paras 68 - 72. The conduct complained of (a further representation by Mr Lees) is said to have occurred on or about 18 February 1988, and to have contravened s. 52, together with paras 53 (bb), (e), (f) and (g) of the TP Act. The meeting between Mr Lees and Mr Pridmore is detailed in paras 30-32 of Exhibit C in the Supreme Court. It is alleged (in para 72) that by reason of the conduct in question, the applicants have suffered loss or damage, but the particulars are given by reference to those in the eighth set of claims, and these relate only to the first, second and third applicants. In paras 73 - 75, there is a claim in negligence.
The tenth, and final, set of claims of contravention of the TP Act is made in paras 76 - 80. The conduct complained of is said to have occurred on or about 23 March 1988, and to have contravened s. 52 together with paras 53 (bb), (e), (f) and (g). On 23 March 1988, there was a meeting between Messrs Lees, Pridmore and Horrobin at the offices of Trawl in Geelong. The meeting appears to be the subject of the allegations in para 20 of the pleading by Trawl in the Supreme Court. That asserted one of the two counts of contravention by Effem of s. 52. Again, it is said that "the Applicants" have suffered loss and damage, but the particulars relied upon are those given in respect of the eighth set of allegations, and relate only to the first, second and third applicants. Then there is a claim in negligence in paras 82 and 83. The primary relief claimed is stated to be damages pursuant to s. 82 of the Act, and pursuant to the common law.
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?
In Port of Melbourne Authority v Anshun Pty Ltd supra at 597 it was held that the disposition of a statutory claim to contribution between tortfeasors did not bar a concurrent contractual claim to a full indemnity by one tortfeasor of the other. However, the claims to contribution and to indemnity involved quite distinct, and limited, measures of loss.
The First Applicant - Anshun Estoppel
If that not be the case and there is no full cause of action estoppel against Trawl then, in my view, the negligence claim (and the precise contraventions of the trade practices law not previously pleaded) could and should have been brought forward by Trawl in the Supreme Court; see Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 509, Chamberlain v Deputy Commissioner of Taxation (1991) ATC 4,175 at 4,178.
Counsel for Trawl sought to resist this conclusion on several, but related, grounds. He submitted that whilst all of the claims now put forward could have been litigated in the Supreme Court they had not been, so that no costs and expense in dealing with them had been incurred. It was said that to allow Trawl's case to proceed in full in this Court would not produce "inconsistent judgments".
But there is no evidence called by Effem to show why it failed to raise all issues in the first action; see Anshun supra at 604. If a party to litigation chooses not to take a point it may properly be said to have been irrevocably abandoned or "waived", The Commonwealth v. Verwayen supra at 423, 483. An element in the Anshun doctrine is that in such a case the party in question cannot improve his position by bringing separate actions, a point made by Brennan J. in Anshun supra at 612. Further, there must be cost and expense in preparing again for this Court the evidence that was prepared for the Supreme Court. And the entry of judgment for Effem upon the action against it by Trawl in the Supreme Court must conflict with the judgment now sought by Trawl against Effem, in the sense of being contradictory, albeit without precise correspondence between the legal claims. In Anshun supra at 603-4, Gibbs C.J., Mason and Aickin JJ. said that by "conflicting" judgments they included judgments which were contradictory though not pronounced on the same cause of action, it being enough that they appeared to declare rights which were inconsistent in respect to the same transaction; cf. Tanning Research Laboratories Inc. v O'Brien (1990) 169 CLR 332 at 346, 354.
Accordingly I do not accept the submissions advanced to resist the application against Trawl of that species of estoppel applied in the Anshun case.
Conclusions
Upon Effem's motion filed 2 May 1990, I should order that the proceeding by Trawl be stayed. The motion otherwise should be dismissed. I will hear the parties on costs of the motion.
It will be apparent that the prosecution of the action in this Court by the remaining applicants will involve a substantial measure of duplication in the preparation for and conduct of the trial upon the same or substantially the same issues for which evidence was prepared, and on some issues was dealt with, in the Supreme Court proceeding. It will be for this Court to give appropriate directions, consistently with the interests of justice, for the utilization in the present proceeding of the material I have described; see the remarks of Lockhart J. in Sterling Pharmaceuticals Pty Limited v The Boots Company (Australia) Pty Limited (28 February 1992, unreported, pp 11-13). Leave to appeal from that decision was refused by the Full Court on 20 May 1992. As I have indicated, these are questions further to be pursued at the appropriate directions hearing. They do not arise immediately in the disposition of the present motion.

[1992] FCA 377

09 JUNE 1992