Australian Associated Motor Insurers Limited v NRMA Insurance Limited [2002] FCA 1061 | Case summary

REASONS FOR JUDGMENT Background 1 The first respondent NRMA Insurance Limited ("NRMA") is a well-known insurer of motor vehicles, as is also the applicant Australian Associated Motor Insurers Limited ("AAMI"). NRMA and AAMI are major competitors in that field of insurance. The second respondent ("Ms Smith") is a solicitor who has been retained by NRMA to recover moneys in the Local Courts from the owners of motor vehicles involved in accidents involving NRMA insured motor vehicles. NRMA and Ms Smith are hereafter referred to together as the "NRMA Parties". 2 A comprehensive motor vehicle insurance policy was issued by NRMA in August 1998, in which a number of general exclusions from entitlement to claim, including the cost of hiring a vehicle (ie demurrage), were inserted. Subsequently in November 2001, it appears that NRMA issued a replacement motor vehicle insurance policy, which provided for "optional cover" for the cost of hiring a vehicle, during the time when the damaged vehicle was not available to the insured whilst being repaired, in return for payment of an additional premium. That optional indemnity in relation to motor vehicle hiring costs was repeated in the subsequent NRMA motor vehicle insurance policy issued as from March 2002. 3 Notwithstanding the concurrence of that cover for demurrage claims, NRMA introduced a scheme in conjunction with Hertz Australia Pty Ltd ("Hertz"), having apparently unique features of demurrage indemnity, to operate collaterally to its standard form of motor vehicle insurance policy, called the Courtesy Car Programme. The operation of this collateral scheme is conveniently described in the reasons for judgment of Beazley JA of the Court of Appeal of New South Wales in Anthanasopoulos & Ors v Moseley & Ors (2001) 52 NSWLR 262 (delivered 27 August 2001) as follows (at 264): "There were a number of exclusions from the cover provided by the policy, including the cost of hiring a vehicle whilst the insured's damaged vehicle was being repaired. Notwithstanding this exclusion, the NRMA had in place a Courtesy Car Programme. Under this scheme, an insured was entitled to a courtesy car either at no cost to the insured up to fourteen days if the insured was not at fault, or at a preferential rate if the insured was at fault. Where the insured was not at fault the NRMA bore the cost of the hire for the fourteen day 'courtesy' period. In either case, the scheme required the insured to have the damaged vehicle repaired by an 'NRMA approved' repairer. The 'courtesy car' was a car hired from Hertz Australia Pty Ltd. The insured entered into the Hertz Rental Agreement directly with Hertz but the NRMA was billed for the hire for the first fourteen day period." 4 There have been a very large number of proceedings commenced in the Local Court in Sydney at the direction of NRMA since about 1 September 1999, in the respective names of its motor vehicle owners/policyholders as plaintiffs ("the NRMA Insured"), against the owners of motor vehicles insured by AAMI ("the AAMI Insured"), for the recovery of hiring costs outlaid by NRMA pursuant to its Courtesy Car Programme. It was a feature of the Courtesy Car Programme that Hertz would invoice NRMA direct for vehicle hire pursuant to the Programme. In apparently all of those cases thus far, judgment has been entered for damages equivalent to such hiring costs, and an order for costs has been made in favour of the named plaintiff motor vehicle owner (ie the NRMA Insured) against the named defendant motor vehicle owner (ie the AAMI Insured). In a large number of instances, apparently the majority, proceedings are still awaiting assessment of damages hearing in the Local Court. The existence of negligence has not been an issue, and perhaps understandably so, since claims can only be made under the Courtesy Car Programme where the NRMA Insured was not at fault. In some instances, the Local Court award of damages, and consequential legal costs, has already been satisfied by payment. Four Local Court proceedings have been the subject of the Court of Appeal proceedings in Anthanasopoulos, which was in the nature of a test case. 5 The following conclusions were unanimously reached in Anthanasopoulos, as set out in the reasons for judgment of Beazley JA with whom Handley JA and Ipp AJA agreed (Ipp AJA adding further reasons of his own with which Handley JA also agreed): (i) Pursuant to a long line of authority commencing with "The Greta Holme" [1897] AC 596, injury to property which deprives a party of the use of a non-income earning chattel is compensable. (ii) It was irrelevant that a third party (being in that context Hertz) provided a substitute for the chattel, the principle res inter alios acta duly applying in those circumstances. (iii) Because the Courtesy Car Programme was not part of the indemnity provided by the NRMA motor vehicle insurance policy for the time being in force, NRMA was not entitled to be subrogated to the rights of the NRMA Insured in relation to the recovery from the AAMI Insured involved in the proceedings of payments made by NRMA to Hertz for the benefit of the NRMA Insured. (iv) The issue of subrogation not having been pleaded however by any of the four appellants (ie AAMI Insured) in the Local Court, the magistrate had been correct in determining that the issue concerning subrogation was "outside the scope of the case". 6 In relation to that element of the reasons for judgment of Beazley JA set out in [5(iii)] above, Ipp AJA made important observations arising from his earlier dictum in Woodside Petroleum Development Pty Ltd v H & R - E & W Pty Ltd (1999) 20 WAR 380 at 387 (with which Malcolm CJ and Pidgeon J agreed), as follows: "Although no allegation as to the right of subrogation has to be made in the statement of claim, the defendant may raise the absence or inadequacy of that right in its defence; it is then for the insurer to justify its right to proceed in the name of the assured." At 277-278 in Anthanasopoulos, Ipp AJA said as follows: "Finally, I turn to the question of subrogation. I agree that, as the courtesy car programme was not part of the cover provided by the insurance policies in question, NRMA was not entitled to be subrogated to the rights of its insured. The magistrate held that as there was no right of subrogation on the part of NRMA, the subrogation issue was 'outside the scope of the case'. I agree with Beazley JA that his Worship was correct in this respect. I would add however, that this consequence follows largely by reason of the omission on the part of the appellants in each case to raise subrogation as an issue at the trials of the four actions, the subject of this appeal. Beazley JA has pointed out that, although the parties to each proceeding were the owners of the vehicles involved in the collisions, the cases were being prosecuted by NRMA, their insurer. NRMA was asserting that, pursuant to the doctrine of subrogation, it was entitled to recover the costs incurred in respect of the courtesy cars supplied by it. The involvement of NRMA in this way was not an issue that was raised, as an arguable defence, for consideration by the magistrate. … At the trial, it was perhaps open to the respondents to assert that, in reality, the cases were being brought by NRMA, and not the respondents themselves, and NRMA was not entitled to so prosecute the actions. I make no comment on the merits of such an argument, but merely point out that the issue, not having been raised at the trial, was an issue properly regarded by the Magistrate as falling outside the scope of the case." That observation has critical implication to issues arising on the present application to this Court. As I have already recorded, Handley JA agreed with the reasons for judgment of Ipp AJA as well as those of Beazley JA. 7 In an apparent endeavour to recover money already paid out in satisfaction of Local Court judgments, and to defeat or neutralise all subsequent Local Court proceedings as well, AAMI commenced the present proceedings in this Court by application and statement of claim filed on 7 December 2001, and subsequently filed an amended statement of claim on 14 February 2002. Relief was thereby sought not only against NRMA as first respondent in the present proceedings, but also against Ms Smith as second respondent, who had represented NRMA as solicitor in its numerous recovery proceedings brought in the Local Courts in the name of the NRMA motor vehicle policyholders involved in the Courtesy Car Programme. The essence of the numerous causes of action the subject of the amended statement of claim is the absence of a right of subrogation held by NRMA in respect of damages and costs sustained in consequence of claims made under the Courtesy Car Programme. By the present interlocutory application in this Court, NRMA and Ms Smith ("the NRMA Parties") seek to have these proceedings summarily dismissed pursuant to Order 20 rule 2, or in the alternative have the subject proceedings stayed, or alternatively have these proceedings struck out in whole or in part, pursuant to Order 11 rule 16 of the Federal Court Rules, or in any event made the subject of more particularity, pursuant to Order 12 rule 5. It became open to AAMI, in the wake of the Court of Appeal's obiter observations referred to in [5(iii)-(iv)] and [6] above, and the approval accorded to the principle in Woodside, to have thenceforth raised a defence in each uncompleted Local Court proceeding of absence of NRMA's right of subrogation, but AAMI has taken the course of endeavouring to accomplish the same result by the proceedings for damages commenced in this Court, and to claw back in this context the monetary equivalent of Local Court judgments already satisfied. In the meantime, NRMA has sought to counter AAMI's strategy by obtaining individual retainers, in the form extracted in [11] below, from the NRMA Insured in favour of Ms Smith in relation to all uncompleted Local Court proceedings, which document also purports to confer the equivalent of rights of subrogation arising out of NRMA's payment of claims pursuant to the Courtesy Car Programme. 8 A sample of the ordinary statements of claim filed in the Local Court at the instance of NRMA in the name of its individual policyholders, relating to recovery of the cost of hiring incurred under the Courtesy Car Programme, to which I shall hereafter describe for convenience as demurrage claims notwithstanding the technical misdescription thereby involved, has been tendered in the present strike-out proceedings. The amount claimed is $276.50, together with interest pursuant to s 39A of the Local Courts (Civil Claims) Act 1970 (NSW) commencing from 9 July 1999, and a so-called "issue and service fee" of $95.00. The purported cause of action is pleaded as follows: 1. At all material times the Plaintiff was the owner and driver of motor vehicle registration number PKA085. 2. At all material times the Defendant was the owner and driver of motor vehicle registration number QXB640. 3. On or about 9 July 1999 the Plaintiff's vehicle was being driven at Frenchs Forest. 4. The Defendant was driving motor vehicle registration number QXB640 when the Defendant collided with and damaged the Plaintiff's vehicle. PARTICULARS OF NEGLIGENCE 5. The Defendant was negligent in that whilst driving motor vehicle registration number QXB640 at Frenchs Forest, he: (a) Failed to keep a proper outlook whilst reversing colliding with the Plaintiff's vehicle; (b) failed to give way; (c) failed to stop; (d) failed to keep a proper lookout; (e) failed to brake, veer, slow down or otherwise control the vehicle to avoid the collision; and/or (f) was driving too fast in the circumstances. 6. As a result of the Defendant's negligence the Plaintiff suffered loss and damage. PARTICULARS OF LOSS AND DAMAGE 7. The Plaintiff has suffered losses as follows: (a) The cost of renting an alternative vehicle whilst the Plaintiff's vehicle was being assessed and repaired and unavailable for the Plaintiff's use, calculated as follows: Hertz Replacement Vehicle Charge for 7 days $241.50 Administration/Insurance Fee $35.00 Total $276.50 8. The Plaintiff has demanded that the Defendant pay the sum of $276.50 and the Defendant has neglected or refused to do so." The name of the solicitor acting for the plaintiff is thereafter disclosed as Ms Smith. As already indicated, it appears that this Local Court statement of claim exemplifies that which NRMA has caused to be adopted by each of its numerous policyholders whose damaged vehicles were the subject of the Courtesy Car Programme, and in relation to which vehicle hiring NRMA bore the entire cost because of the absence of negligence on the part of the NRMA Insured occasioning the damage. The relief sought and causes of action framed by AAMI against NRMA and Ms Smith in the present proceedings 9 The principal relief sought by AAMI's application, which initiated the present proceedings in this Court, against the NRMA Parties is as follows: "1. An order and injunction restraining the First Respondent ("NRMA Insurance") by itself, its servants or agents and the Second Respondent ("Smith") herself or by her servants or agents or otherwise from doing or attempting to do any of the following: (a) commencing or conducting any proceedings in any Court or Tribunal to recover moneys or damages in the name of an NRMA Insured (as defined in the Statement of Claim) in respect of expenditure incurred by NRMA Insurance as a result of the provision by NRMA Insurance to the NRMA Insured of a courtesy car under the "NRMA Courtesy Car Scheme" being that scheme identified in paragraph 6 of the Statement of Claim herein. (b) making any representation to the effect that expenditure or damage associated with the "NRMA Courtesy Car Scheme" is: (i) recoverable by the NRMA Insurance in the name of an NRMA Insured; or (ii) is payable by an NRMA Insured to NRMA Insurance from moneys to which the NRMA Insured is entitled pursuant to a Demurrage Claim (as defined in the Statement of Claim). (c) making any representation to the effect that any NRMA Insured is in any way obliged to assist NRMA Insurance in recovering from third parties expenditure or damage associated with the "NRMA Courtesy Car Scheme". 2. An order that NRMA Insurance and Smith account to any NRMA Insured in whose name NRMA Insurance and/or Smith have pressed claims and recovered moneys or damages in respect of the loss of use by the NRMA Insured of his or her vehicle. 3. A declaration that NRMA Insurance and Smith have in trade or commence in Australia engaged in conduct in contravention of: (a) section 52 of the Trade Practices Act 1974 (Cth) and section 42 of the Fair Trading Act 1987 (NSW); and (b) section 51AB or 51AA of the Trade Practices Act 1974 (Cth). 4. A declaration that Smith has, within the meaning of section 75B and section 80(1)(c) and (e) of the Trade Practices Act 1974 (Cth), aided, abetted, counselled or procured the contraventions, or been knowingly concerned in the contraventions by the NRMA Insurance of: (a) section 52 of the Trade Practices Act 1974 (Cth) and section 42 of the Fair Trading Act (NSW); and (b) section 51AB or 51AA of the Trade Practices Act 1974 (Cth). 5. An order for injunctive relief including corrective advertising under section 80 of the Trade Practices Act 1974 (Cth) requiring NRMA Insurance and Smith to notify those NRMA Insureds who have been provided with a Courtesy Car that: (a) the NRMA Insured is not obliged to assist NRMA Insurance or Smith in and about bringing or maintaining a Demurrage Claim; (b) NRMA Insurance and/or Smith is not entitled to receive for its own use and benefit the Judgment Moneys; (c) NRMA Insurance has no right to commence or maintain, in the name of an NRMA Insured, proceedings to recover the cost to NRMA of providing the NRMA Insured a Courtesy Car; (d) NRMA Insured has no lawful entitlement to take the proceeds of any proceedings brought in the name of the NRMA Insured for loss of use by that NRMA Insured of his or her vehicle; (e) the NRMA Insured may be able to recover an amount for himself or herself and retain that money for his or her own use; and (f) Judgment Moneys (as defined in the Statement of Claim) already received were received pursuant to a purported right of subrogation which did not exist and are moneys to which the named Plaintiff in the relevant proceedings are entitled to their own use. 6. Damages." 10 The amended statement of claim is very lengthy, and I have taken the course of annexing a complete copy thereof to these reasons for judgment, for more convenient use of reference. The lay-out of the amended statement of claim, broadly speaking, is firstly a segment of prefatory averments contained in paragraphs 1 to 15, followed by the causes of action against NRMA, "its servants and agents including Ms Smith" contained in paragraphs 16 to 29, thereafter causes of action pleaded against Ms Smith as a person involved in the circumstances giving rise to those causes of action contained in paragraphs 30 to 40, and concluding with causes of action against both NRMA and Ms Smith individually in paragraphs 41 to 58 in relation to the obtaining of retainer agreements from NRMA Insured concerning those Local Court proceedings at least where judgment has not yet been entered in favour of NRMA Insured against the AAMI Insured. 11 The "Retainer Agreement" referred to in the amended statement of claim is reproduced below: "SMITH PARTNERS LAWYERS [Date] Dear [NRMA Insured] RE You v [AAMI Insured] RETAINER AGREEMENT We confirm that we are acting for you on the following basis: 1. You hereby authorise and instruct us to act on your behalf in the proper conduct of the proceedings which are against [here was inserted the defendant] for the recovery of damages arising out of the loss of use of your vehicle as it was deemed a total loss during which time you were provided with the use of a Hertz hire car ("the car") by your insurer, NRMA Insurance Limited ('NRMA"), such damages being limited to recovery of the cost of the hire car and administration fee. 2. This authority is to be retrospective to 8 August 2000. You hereby ratify and confirm all acts, deeds, matters and things whatsoever, which may have been done or executed in and concerning the proceedings either before or after this retainer is signed. 3. You are the Plaintiff named in these proceedings and do hereby authorise and instruct Smith Partners, Lawyers of 311 Castlereagh Street Sydney in the State of New South Wales to act on your behalf in the proper conduct of the proceedings [here was inserted the title to any existing proceeding] in the Local Court Downing Centre, 143-147 Liverpool Street Sydney. 4. You instruct Smith Partners to forward to NRMA such sums as may be recovered in the proceedings to defray NRMA's costs of providing the car at… per day for… days plus… per day administration/ insurance fee, totalling…, and confirm that you will execute any further document necessary to confirm NRMA's entitlement to that amount. Any other sums of damages recovered over and above this amount will be remitted directly to you. 5. You instruct Smith Partners to remit to NRMA any sums of money recovered by way of legal costs and disbursements of these proceedings. On this basis, you will not have to pay any legal costs of either the defendant or you or NRMA or its solicitors who may from time to time act in these proceedings. NRMA will be responsible for those costs. 6. Bronwyn Smith will be responsible for the work. Any enquiries should be addressed to the Solicitor or Paralegal responsible for the matter unless there is a specific legal question which you need answered by Bronwyn Smith. 7. You acknowledge that you are entitled to obtain independent legal advice regarding the retainer agreement and the proceedings. 8. You acknowledge receipt of this retainer and accept the terms herein. [Signature of Smith Partners] Smith Partners, Lawyers I acknowledge that these are the terms on which your firm has been engaged. [Signature of NRMA Insured]" 12 There is no evidence before me, in the context of the present strike-out/stay application, of defences filed as to the absence of NRMA's right of subrogation in relation to the choses in action of the NRMA Insured against the respective AAMI Insured, or of challenges having formally been made by the AAMI Insured to the retainer of Ms Smith, in either case in the Local Court, except for in those matters where defences were filed after the decision in Anthanasopoulos was handed down on 7 August 2001. In any event, interlocutory relief has not as yet been sought or threatened by or on behalf of AAMI, against either of the NRMA Parties. The strike-out and stay application of the NRMA Parties in broad outline 13 NRMA's strike-out/stay application to this Court, by notice of motion filed on 6 March 2002, seeks the following relief specifically which I am required to address: (i) dismissal of each of the claims for relief set out in AAMI's application, which have been set out in [9] above. (ii) alternatively, stay of the subject proceedings in this Court in whole or in part, either permanently or pending the disposal of all of the proceedings in the Local Court between the NRMA Insureds as plaintiffs and the AAMI Insureds as defendants, which have been referred to in AAMI's amended Statement of Claim as "the Demurrage Claims". (iii) further or in the alternative, that AAMI's amended statement of claim be struck out. (iv) further or in the alternative, that the following paragraphs of the amended statement of claim be struck out: Paragraphs 16 to 29, representing AAMI's claims against NRMA; Paragraphs 30 to 40, representing AAMI's claims against Ms Smith; Paragraphs 43 to 58, representing the alleged significance of and consequences to AAMI's claims against NRMA and Ms Smith. 14 Order 20 r 2(1) of the Federal Court Rules, primarily invoked by the NRMA Parties, provides as follows: "Where in any proceedings it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding - (a) no reasonable cause of action is disclosed; (b) the proceeding is frivolous or vexatious; or (c) the proceeding is an abuse of the process of the Court, the Court may order the proceeding to be stayed or dismissed generally or in relation to any claim for relief in the proceeding." The general principles governing summary strike out applications, such as the present, are well established and have been expressed in a variety of ways, as follows: (i) relief by way of strike out should only be sought in very clear cases; (ii) the Court's power to strike out should only be exercised in a clear case and with exceptional caution; (iii) the case must be clearly untenable or else hopeless, and without possible prospects of success; (iv) it must be plain and obvious that the impugned portions of the statement of claim are unarguable; and (v) it must be very clear in the face of judicial caution that there is no issue deserving of a hearing. The principles governing the stay of proceedings are more complex, but it suffices to cite the dictum of French J in Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275 at 279 to the effect that the power to stay or dismiss a proceeding for abuse of process "… ought to be very sparingly exercised and only in exceptional cases", and further that "[t]he possible varieties of abuse of process are only limited by human ingenuity and the categories are not closed". More recently in Australian Building Industries Pty Ltd v Stramit Corporation Limited [1997] FCA 1318, a Full Federal Court (Northrop, Lindgren and Lehane JJ) reviewed a number of High Court and United Kingdom authorities and summarised the same in the following terms: "A proceeding should not be dismissed summarily merely on the ground that it appears at the early stage of the hearing of the motion brought for that purpose, to advance a highly implausible claim which will very probably fail." Or as stated by the High Court in the joint judgment of Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ in Fejo v Northern Territory of Australia and Another (1998) 195 CLR 96 at [26], "Should the proceeding be dismissed because it was doomed to fail?" 15 The NRMA Parties have also invoked Order 11 rule 16, which is as follows: "Where a pleading - (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading; (b) has a tendency to cause prejudice, embarrassment or delay in the proceeding; or (c) is otherwise an abuse of the process of the Court, the Court may at any stage of the proceeding order that the whole or any part of the pleading be struck out." The rule has been described as "slightly wider" than Order 20 rule 2 (Practice and Procedure: High Court and Federal Court of Australia 2000). The expression "embarrassment" in the context of the above rule was said by Carr J in Bartlett v Swan Television & Radio Broadcasters Pty Ltd (1995) 17 ATPR 41-434 at 40,889 to "carr[y] the connotation of a pleading which is susceptible to various meanings, or contains inconsistent allegations or in which alternatives are confusingly intermixed or in which irrelevant allegations are made tending to increase expense. The list is not intended to be exhaustive". 16 Alternatively, the NRMA Parties seek orders for the provision of particulars in respect of AAMI's amended statement of claim, pursuant to Order 12 rule 5 of the Federal Court Rules, and/or for AAMI to provide an affidavit demonstrating a reasonable evidentiary basis for the allegations made, failing which they seek an order that the Federal Court proceedings be stayed or dismissed. Order 12 rule 5 reads as follows: "(1) The Court may order a party to file and serve on any other party - (a) particulars of any claim, defence or other matter stated in his pleading, or in any affidavit ordered to stand as his pleading; or (b) a statement of the nature of the case on which he relies; or (c) where he claims damages, particulars relating to general or other damages. (2) Without limiting the generality of sub-rule (1), where a party alleges as a fact that a person had knowledge or notice of some fact, matter or thing, the Court may order that party to file and serve on any other party - (a) where he alleges knowledge, particulars of the facts on which he relies; and (b) where he alleges notice, particulars of the notice. (3) The Court shall not make an order under this rule before the filing of the defence unless, in the opinion of the Court, the order is necessary or desirable to enable the respondent to plead or for some other special reason." 17 The parties have provided comprehensive written submissions, upon which senior counsel orally addressed. The appropriate course is to set out or summarise, the submissions of the NRMA Parties in the sequence in which the same have been presented, and thereafter the responses of AAMI interposed with my rulings and conclusions. Before doing so, I should record for completeness certain events, following upon the Court of Appeal's judgment in Anthanasopoulos on 27 August 2001. Contemporaneously with the filing of AAMI's amended statement of claim on 14 February 2002, an application was made by AAMI to the Local Court, Small Claims Division, to stay all Local Court proceedings the subject of the demurrage claims at issue in the Federal Court proceedings. Thereafter on 27 February 2002, according to NRMA, the Local Court invited the parties to consider applying to have the proceedings referred to and heard in the General Division of the Local Court, where apparently the jurisdictional authority of the Local Court is more comprehensive, though AAMI denies the extension of any such invitation. Nothing further appears to have taken place, at any rate of significance, in the Local Court since that time, pending doubtless the outcome of the present strike-out/stay application. Submissions made on behalf of the NRMA Parties for the strike out or stay of the Federal Court proceedings Introduction 18 The NRMA Parties informed the Court, that in the case of each judgment that has thus far been entered in the Local Court in favour of NRMA, payment has been subsequently received by Ms Smith on behalf of the AAMI Insured from AAMI and disbursed to NRMA, after deduction of her professional fees and expenses. The submissions advanced on behalf of the NRMA Parties were outlined in general summary as follows: (i) AAMI is estopped from further litigating in the Federal Court issues which have been or should have been litigated in the context of the demurrage claims brought in the Local Court, and which have been concluded by the entry of judgment in favour of the NRMA Insured. (ii) In respect of the demurrage claims which are still pending in the Local Court, it is vexatious and an abuse of process for AAMI to institute and maintain parallel proceedings in the Federal Court dealing with the subject matter of, and issues raised in, the pending claims in the Local Court. (iii) The Federal Court proceedings are in any event defective for want of parties, namely the NRMA Insured. (iv) The proceedings for relief comprise in reality a so-called "Claytons" representative action, without complying with the provisions of Part IVA of the Federal Court Act 1976 (Cth) or Order 6 rule 13 of the Federal Court Rules. 19 Before presenting the detail of the submissions advanced by the NRMA Parties, I would observe that it had always been open to AAMI, as motor vehicle insurer of many defendants in the numerous Local Court proceedings, to have caused challenges to be made in the context of those proceedings (ie the AAMI Insured) to Ms Smith's retainer purportedly by each of the plaintiffs for the time being involved in those proceedings (ie the NRMA Insured), and to have defended the proceedings in any event upon the basis of what the Court of Appeal has subsequently found in Anthanasopoulos to be an absence of an entitlement of NRMA to subrogation in respect of the causes of action of those plaintiffs for recovery, from those defendant vehicle owners, of the payments in the nature of demurrage made by NRMA to Hertz pursuant to the Courtesy Car Programme (see again [5(iii)] above). Any such defence would however have been required to be pleaded (see again the passage from Woodside extracted in [6] above). Of course, in those cases where judgment has been entered by the Local Court, it would be presumably too late for AAMI to cause those steps to be taken. There remains however numerous proceedings in the Local Court which are uncompleted, and I observe that defences of absence of subrogation have been raised in at least some of those pending proceedings. The claims formulated in the multitude of Local Court summonses which NRMA caused to be issued by its solicitor Ms Smith, whereof that extracted in [8] above is an example, were explicitly confined in scope to "[t]he cost of renting an alternative vehicle whilst the Plaintiff's vehicle was being assessed and repaired and unavailable for the Plaintiff's use…", being the cost of "Hertz Replacement Vehicle Charge". As NRMA's main competitor in the field of motor vehicle insurance at least in this State, AAMI was presumably aware of the Courtesy Car Programme from the time it was first promoted to the NRMA Insured, and the contrary has not been suggested. Another feature of AAMI's case is that the amended statement of claim does not purport to plead reliance on AAMI's part on the representations and continuing representations said to have been made by the NRMA Parties, the only persons to whom reliance is attributed being the NRMA Insured. Perhaps at least one of the reasons why AAMI has chosen to open this "second front" in the Federal Court is its appreciation that in the case of the large number of Local Court cases already concluded by entry of judgment, it would be too late to re-open the same in order to raise defences based on the absence of rights of subrogation in respect of the causes of action for negligence held by the NRMA Insured. 20 The NRMA Parties have submitted, by way of opening of their attack upon AAMI's amended statement of claim filed in the Federal Court, that if not struck out, or the proceedings the subject thereof stayed, both the Federal Court and the NRMA Parties will be vexed with addressing circumstances concerning purported challenges to the rights of subrogation of NRMA, and the retainer of Ms Smith, in literally the thousands of cases awaiting hearing in the Local Court, each involving different plaintiffs and defendants respectively insured by NRMA and AAMI respectively, yet each involving relatively small amounts of Hertz hiring fees of approximately $100 to $300. It was further said by the NRMA Parties that "[d]espite the elliptical pleading, there is no basis for supposing that the circumstances of each such claim are the same or for example, that the matters pleaded in para 50 of the amended statement of claim applied or had the same effect upon each NRMA insured". Since AAMI has pleaded that representations have been wrongfully made by the NRMA Parties in effect to each NRMA Insured, there may well be substance in that contention. A number of grounds of forensic attack have been made by the NRMA Parties upon the amended statement of claim of AAMI, which I will now summarise below in the sequence presented to the Court, together with the main thrust of the submissions of the NRMA Parties made in relation thereto. I will thereafter together summarise AAMI's responses, and provide my conclusions seriatim. Issue estoppel and res judicata 21 As to issue estoppel and res judicata (the latter otherwise known as estoppel by judicial decision), the NRMA Parties placed reliance upon the dictum of Dixon J (as he then was) in Blair v Curran (1939) 62 CLR 464 at 531-2 as follows: "A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commanded or be restrained or that rights be declared. The distinction between res judicata and issue-estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order. Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue-estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. Where the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived. But in neither case is the estoppel confined to the final legal conclusion expressed in the judgment, decision or order… the judicial determination concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide and which was actually decided as the groundwork of the decision itself, though not then directly the point at issue. Matters cardinal to the latter claim or contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous… But matters of law and fact which are subsidiary or collateral are not covered by the estoppel. Findings, however deliberate and formal, which concern only evidentiary facts and not ultimate facts forming the very title to rights give rise to no preclusion." 22 The NRMA Parties thereafter referred to authority to the effect that the judgment or decision or order of an inferior court given or made within jurisdiction can create an issue estoppel or res judicata binding on a superior court, citing Ex parte The Amalgamated Engineering Union (Australian Section); Re Jackson (1937) 38 SR (NSW) 13 at 16-17, where Jordan CJ described the implications of the estoppel (and res judicata)as follows: "This makes it necessary to consider the extent to which a decision of a Court of Petty Sessions in a proceeding under s 68 (ie of the Commonwealth Conciliation and Arbitration Act 1904-1934) is capable of operating as res judicata. The law of res judicata comes into operation whenever a judicial tribunal has given a judicial decision of a final nature upon a matter which it has jurisdiction to decide. Such a decision may have a twofold operation. It operates as an estoppel. Further, if it amounts to a judgment for the recovery of a remedy, it creates a merger of the cause of action as regards any Court within the same system of law, and may be pleaded in any such Court as a bar to any subsequent action to obtain a remedy in respect of the same subject matter… The estoppel created by res judicata is a rule of evidence… that every party to the litigation in which the decision was given is entitled, by proof of the decision, to prevent any other party to the litigation from asserting the contrary of the decision or from questioning it in any way, in any subsequent litigation between the parties. In order that proof of the decision should give rise to an estoppel, ie, should be conclusive evidence instead of being merely evidentiary, it must be pleaded where there is an opportunity of pleading it… Further, the estoppel is not restricted to judicial decisions appearing on the face of any formal record of the order of the tribunal. It extends to any matters in fact raised and judicially decided for the purpose of arriving at the decision… and also to any matters necessary to be determined in order to found the decision, provided always that the tribunal has jurisdiction to determine these matters for all purposes between the parties, i.e., jurisdiction to determine them directly and immediately as well as merely incidentally… And it extends to any unqualified admissions by the parties upon which the decision is based." Other authorities concerning the judgment or orders of an inferior court within jurisdiction creating binding estoppels upon a superior court are referred to in Spencer Bower, Turner and Handley, The Doctrine of Res Judicata 3rd ed. 1996 at [21], [23] and [26]. 23 As I have already observed, the NRMA Parties have contended that during those numerous proceedings in the Local Court which have been already litigated to finality, AAMI had never raised on behalf of the AAMI Insured defences as of absence of subrogation of NRMA as the purported motor vehicle insurer of the motor vehicles of the NRMA Insured to the rights or choses of the NRMA Insured against the AAMI Insured, in relation to damages by way of demurrage claims arising out of the Courtesy Car Programme, and the consequential absence of Ms Smith's retainer by the NRMA Insured as their solicitor, Ms Smith having been retained solely by NRMA. The significance of that omission has already been discussed. Had AAMI not neglected to do so, NRMA would have been obliged to justify, in the context of those proceedings already finalised in the Local Court, the existence of NRMA's right to proceed in the Local Court in the name of the NRMA Insured, and to do so by the retainer of Ms Smith. Those shortcomings need not of course apply in relation to the numerous Local Court proceedings not yet finalised. 24 The NRMA Parties therefore submitted that purportedly in line with principles explained in the passages from Blair v Curran and Re Jackson, it is no longer open to AAMI to advance in the Federal Court the issue that AAMI has suffered loss and damage, on account of its subjection as insurer to the judgments already entered in the Local Court, for the amounts the subject of the demurrage claims brought by NRMA in the name of the NRMA Insured against the AAMI Insured, by reason of the absence of rights of subrogation held by NRMA in the first place, that issue having been in effect already determined in the Local Court in each concluded proceeding by AAMI's failure to raise those issues by way of defence to those claims in the Local Court prior to entry of judgment. Therefore, so the submission of the NRMA Parties continued, AAMI's alleged entitlement to bring the present Federal Court proceedings is said by the NRMA Parties to stand in contradiction to "the factual and legal foundation for each of the judgments in the Demurrage Claims". Anshun estoppel and/or abuse of process 25 The submissions here of the NRMA Parties were similar to those advanced on the basis of issue estoppel and res judicata, but may be repeated for ease of reference. It was contended that "stripped of its essentials", AAMI is seeking to litigate in this Court, pursuant to its amended statement of claim, the issues whether NRMA was subrogated to the rights of action of the NRMA Insured comprising their demurrage claims against the AAMI Insured based on the Courtesy Car Programme, and whether as a consequence of that being the case, Ms Smith was not lawfully retained by the NRMA Insured to institute and prosecute in the Local Court those demurrage claims, AAMI having failed to raise in the Local Court prior to entry of judgment the issue as to absence of right of subrogation. In that regard, it is the submission of AAMI advanced in the present Federal Court proceedings, as has already been mentioned, that because NRMA was not subrogated to those rights of action of the NRMA Insured in relation to the AAMI Insured, the Local Court proceedings were never lawfully conceived, nor were subsequently maintained by Ms Smith as the solicitor on the record for each of the NRMA Insured, her retainer having emanated from NRMA and not from the NRMA Insured. The NRMA Parties further contended that in order to frame those issues in terms purporting to attract the jurisdiction of the Federal Court, AAMI has further pleaded by the amended statement of claim that to the extent that proceedings may have been properly instituted and maintained in the Local Court by the NRMA Insured as plaintiffs, the NRMA Insured were induced to consent to the institution of those proceedings, both concluded and pending, and to retain Ms Smith as their solicitor, by misleading and deceptive conduct and/or unconscionable conduct on the part of NRMA and/or Ms Smith, and further that by reason of that conduct, AAMI has suffered loss and damage because, but for that conduct, AAMI would not have been required or obliged to pay the amount for which judgment has been obtained in the name of each NRMA Insured in the Local Court against the AAMI Insured, and to incur the legal costs of involvement in each claim which has led to the entry of judgment in favour of the NRMA Insured. Moreover AAMI claims that it is continuing to sustain or be exposed to similar loss and damage by virtue of involvement in the pending proceedings in the Local Court or the numerous proceedings about to be launched. Thus AAMI seeks to recover from the NRMA Parties (ie NRMA and Ms Smith) the sums paid out by AAMI for which judgments for damages and costs have been entered in favour of the NRMA Insured against the AAMI Insured, and the legal costs incurred by AAMI for involvement on its part in both the concluded and the pending proceedings in the Local Court, and declaratory and/or injunctive relief. 26 The NRMA Parties have further contended that for the Federal Court to allow the causes of action the subject of the amended statement of claim to be litigated, in the face of the Local Court judgments regularly obtained against each of the AAMI Insured, would constitute abuse of the processes of the Court, whether by reason of the doctrine of Anshun estoppel or otherwise. Reliance was placed first upon dicta of the High Court in Walton v Gardiner (1992-1993) 177 CLR 378 (Mason CJ, Deane and Dawson JJ) at 392-393 concerning abuse of process, reading as follows: "The inherent jurisdiction of a superior court to stay its proceedings on grounds of abuse of process extends to all those categories of cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness. Thus, it has long been established that, regardless of the propriety of the purpose of the person responsible for their institution and maintenance… proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings." 27 The doctrine of Anshun estoppel derives of course from the decision of the High Court in Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589, where at 598-599, the joint judgment of Gibbs CJ, Mason and Aickin JJ contained the following: "The critical issue, then, is whether the case falls within the extended principle expressed by Sir James Wigram V.C. in Henderson v Henderson (1843) 3 Hare 100 at 115, [67] E.R. 313 at 319). The Vice-Chancellor expressed the principle in these terms: 'where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time. …' Although it has been said that the principle operates so as to extend the doctrines of issue estoppel as well as res judicata, its application to cases of issue estoppel is to be treated with caution." 28 I should intrude to mention that what may be described as the main area of distinction between res judicata and Anshun estoppel is that in the case of the former doctrine, proof that a party was seeking further to litigate a cause of action, which had previously been taken to judgment, operates as a complete bar to the later action, whereas in the latter, the estoppel operates only where the new litigation involves a point which "properly belonged" to the first proceeding or was unreasonably not included in it (Macquarie Bank Ltd v National Mutual Life Association of Australasia Ltd (1996) 40 NSWLR 543 (CA) at 558). Subsequently in Anshun at 602-603 the following further passage appears in the joint judgment: "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 e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few." 29 In finding in Anshun that there had crystallised an estoppel, the reasons of Gibbs CJ, Mason and Aickin JJ at 604 included further the following: "… The matter now sought to be raised by the Authority was a defence to Anshun's claim in the first action. It was so closely connected with the subject matter of that action that it was to be expected that it would be relied upon as a defence to that claim and as a basis for recovery by the Authority from Anshun. The third party procedures were introduced to enable this to be done. If successful, the indemnity case would have obviated an inquiry into contribution. If reserved for assertion in a later action, it would increase costs and give rise to a conflicting judgment. The Authority did not adduce evidence at the trial to show why it failed to raise the indemnity issue in the first action…" In concurring judgments in Anshun, Murphy J said at 605 that he preferred not to attempt to formulate an exhaustive theory of res judicata or issue estoppel in order to determine the appeal by the application of either theory, and Brennan J said at 613 as follows: "The Authority had an opportunity in its proceedings against Anshun in the first action to seek an order that Anshun indemnify it against its liability to [the injured plaintiff]… The Authority did not take that opportunity, and now it cannot pursue the remedy of full indemnity so long as the contribution orders stand. The right of indemnity arises upon the same facts as those which founded the contribution orders, and the cause of action upon which the Authority relies to maintain the second action merged in the contribution orders. No doubt it would be necessary in the second action to prove the hiring agreement, a fact additional to the facts upon which the contribution orders were founded. But the agreement is solely the source of the legal right; it is not one of the facts which, fulfilling the conditions of the indemnity clause, support the right of indemnity in the relevant sense. The facts which support the right of indemnity are the facts on which the contribution orders were founded. As the Authority's right of indemnity merged in the contribution orders, the second action is barred. There is no discretion to be exercised…" 30 In Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287 at 295, a Full Federal Court (Beaumont, Wilcox and Moore JJ) described the principles in Anshun as "… allied to, but not co-extensive with, the principles of res judicata and issue estoppel, as traditionally understood", and the application of the principle of Anshun estoppel as not confined to circumstances where the former principles operate. In that regard, I would refer again to the dicta in Anshun cited above that "… its application to cases of issue estoppel is to be treated with caution". I should interpose to add that subsequently to Bryant, a Full Federal Court again considered the application of the Anshun principle in Ling v Commonwealth (1996) 68 FCR 180. In his reasons for judgment with which the other members of the Court concurred, Sundberg J at 194-195 referred to the approach of the Privy Council in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581 at 590, where "special circumstances" appear to have been considered as an issue separately from "unreasonableness", but preferred the High Court's approach in Anshun, that is to say, to ask whether the failure to raise a grievance was reasonable. In his concurring judgment, Wilcox J stated that the Anshun principle was designed to minimise the burden of litigation. 31 The next authority cited by the NRMA parties in the present context, though more specifically related to abuse of process generally, was Haines v Australian Broadcasting Corporation (1995) 43 NSWLR 404, where in proceedings for defamation, the Supreme Court had already held, after a separate trial, that the pleaded imputation was incapable of being conveyed by the matter complained of, and the plaintiff sought to amend the statement of claim so that his action continued against an unserved defendant and a new party, and where that plaintiff no longer pleaded his claim in defamation, and in lieu thereof, pleaded claims for injurious falsehood and for misleading or deceptive conduct. The representation propounded as the basis for those later causes of action was in fact however no different in substance from the defamatory imputation which had been rejected at the earlier separate trial. Hunt CJ at CL said at 410 that notwithstanding the absence of an issue estoppel, there was nevertheless a line of authority which demonstrated that a party's attempt to re-litigate against another party an issue which he had already lost may amount to an abuse of process, and at 414, his Honour continued as follows: "There are obviously limitations to striking out pleadings or causes of action as an abuse of process upon the basis stated in Reichel v Magrath (1989) 14 App Cas 259 and elaborated in the cases to which I have referred. The issue determined in the earlier case which is sought to be litigated in the later case must be one which the party propounding it in the latter lost in the former. The principle does not work in reverse to enable the party who won the issue in the earlier case to prevent it being litigated in the later proceedings by someone who was not a party in the former. It must be an issue which was necessarily determined in the earlier case, and one of importance to the final result. It must have been properly argued - by which I mean that it is readily apparent from whatever records there are of the earlier case that the tribunal which decided it was an appropriate one to do so, that the parties were appropriate contradictors and that the issue was regarded by them as one of importance in that case. In normal circumstances, the decision disposing of the issue must have been a final one - by which I mean that it is not subject to appeal. (The filing of a notice of appeal may clearly be seen in some circumstances as merely seeking to delay the inevitable). There may also be circumstances in which, notwithstanding the absence of an appeal, it is clear that the earlier decision has overlooked some binding authority, or that it has caused the unsuccessful party a manifest injustice. As most of the cases have emphasised, all the circumstances of the determination in the earlier case may be considered, and there can be no definitive statement of the circumstances which will inevitably lead to a finding of abuse of process." In relation to the Local Court proceedings, it has not been however a case of AAMI losing an issue in any of the proceedings against the NRMA Insured, but rather failing to raise an issue, as I have already mentioned. 32 A further authority cited by the NRMA Parties in this doctrinal area, but of more direct significance for present purposes, is Tiufino v Warland (2000) 50 NSWLR 104, a decision of the Court of Appeal of the Supreme Court of New South Wales (Mason P, Handley and Powell JJA). The context to the appeal was a property damage claim previously conducted before a magistrate, which arose out of a motor vehicle collision, and the subsequent bringing of proceedings in the Supreme Court for damages for personal injury. The magistrate had held in effect that the plaintiff in the later personal injury proceedings in the Supreme Court had been responsible for the collision, and that the defendant in those later proceedings had not been guilty of contributory negligence. What was seen as an attempt to re-litigate in the Supreme Court that which was described at 114 as "these simple issues of fact" was disallowed by the Court of Appeal in Tiufino. Relevantly to matters arising in the present proceedings, Handley JA (with whose reasons for judgment Mason P and Powell JA agreed) pointed out (at 111), that "[r]es judicata estoppels must be mutual… but there is no authority that a compulsory third-party insurer cannot take advantage of issue estoppels available to its insured and there is authority that it can". His Honour added (at 111) that "[t]he causes of action were different… but this does not exclude an issue estoppel". Though cited by NRMA in the context of its submissions concerning Anshun estoppel, this authority would appear to apply equally appropriately to doctrines of issue estoppel and res judicata. I should add that in his journal article "Res Judicata in the European Court" published in the Law Quarterly Review (Vol 116, April 2000) at 191-192, Handley JA referred to Drouot Assurances S.A. v Consolidated Metallurgical Industries [1999] QB 497, being proceedings based on Article 21 of the Brussels Convention, where it was said that if the interests of the insurer are "identical to and indissociable from those of its insured", the parties will be the same for the purpose of res judicata estoppels, but not where the interests of the insurer and insured "diverge". Handley JA at 193 indicated his implicit concern that "[t]his means that identity will not exist where one suit was brought by an insurer in the name of the insured for damage to the insured's vehicle, and the other was brought by the insured for his personal injuries". Consistently with that expression of concern, and what his Honour observed in Tiufino in the passage extracted above, his Honour at 110 in Tiufino said that there was no occasion to consider whether the qualification to the general rule of issue estoppel established in Arnold v National Westminster Bank Plc [1991] 2 AC 93 should be accepted in Australia, and in so doing, he cited the observation of Brennan J (as he then was) in O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 258 as to the "uncertain foundation" on which Arnold rested, and observations also expressed in Linsley v Petrie [1998] 1 VR 427 at 441 (per Hayne JA) and 449 (per Calloway JA). 33 The most recent of the authorities cited by the NRMA Parties in relation to the doctrine of abuse of process was that of the decision of the Court of Appeal of the Supreme Court of New South Wales in Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198, which related to circumstances, first, where the purchasers of a business had successfully sued in the Supreme Court for damages against the vendor on one count for breach of warranty as to the net profits of the business, but had unsuccessfully sued on a second count for damages for misleading and deceptive conduct, and secondly, where the purchasers had subsequently sued the vendor's accountants in the District Court for negligent misrepresentation, they having prepared the financial statements upon which the purchasers claimed to have relied in purchasing the business. The reason for the purchasers bringing the second action was their dissatisfaction with the level of damages which had been awarded against the vendor in the prior proceedings in the Supreme Court. In allowing an appeal against the District Court judge's dismissal of the accountants' motions for the stay of proceedings or the summary dismissal thereof, the Court of Appeal held that the later proceedings against the accountants were an abuse of process, the claims against the accountants being said by the Court of Appeal to have been so relevant to the subject matter of the first proceedings in the Supreme Court that it was unreasonable for the purchasers not to have relied upon the same in that action. At [28] and [30], Handley JA said as follows: "The present proceedings are an attempt to litigate or re-litigate issues which were either decided in or are barred by the earlier proceedings. In substance, ignoring the camouflage, the purchasers are attempting to re-litigate the issue of reliance on the 1991 figures which they lost. … The substance of the matter therefore is clear. The purchasers, disappointed with their bargain, sued their vendor in contract and in misrepresentation. They lost their case in misrepresentation and were disappointed with their modest recovery in contract. A few weeks before the expiration of the limitation period they sued the accountants for what is in substance the same misrepresentations. In the first proceedings they had to prove that they relied upon those misrepresentations. This turned on the evidence of Mr Hoefl, the contemporary documents, and the surrounding circumstances. The purchasers lost that issue and seek to re-litigate it against the accountants on substantially the same evidence in the hope that this time Mr Hoefl will be believed." As in the case of Tiufino, the passage extracted above adopts language perhaps more in the category of issue estoppel than Anshun estoppel. 34 The NRMA Parties made the following submissions by way of application of the principles concerning Anshun estoppel and abuse of process: (i) By the proceedings which AAMI has now brought against the NRMA Parties in this Court, AAMI is seeking to contradict the result of the multitude of judgments already obtained in the name of the NRMA Insured in the Local Court against the AAMI Insured, because AAMI pleads that those judgments were irregularly obtained upon the non-existent foundation of NRMA's supposed rights of subrogation in respect of the entitlement of the NRMA Insured to pursue their respective demurrage claims against the AAMI Insured, and Ms Smith's consequential absence of authority and retainer to commence and pursue those claims on the instructions of NRMA. (ii) The issue of Ms Smith's retainer or otherwise by the NRMA Insured was a matter which could and should have been litigated in each of the concluded Local Court proceedings by an application for a stay of proceedings, or for the proceedings to be dismissed, and for an order that Ms Smith pay the costs of the AAMI Insured by reason of an absence of retainer, that issue being said to be intimately connected with the subject matter of the Local Court proceedings; it was further contended that AAMI must be taken to have known of the shortcomings relevantly of NRMA's Courtesy Car Programme. (iii) The issues now sought to be raised by AAMI's amended statement of claim as to the NRMA Insured being induced to authorise their respective Local Court proceedings, by misleading and deceptive or unconscionable conduct on the part of the NRMA Parties, could have been raised by AAMI by way of third party claims for damages brought by the AAMI Insured against the NRMA Parties, being a course whereby "[AAMI] would have been compelled to focus, with precision, upon the conduct of [the NRMA Parties] in respect of the NRMA Insured". (iv) The issues arising in any such hypothetical third party claims would, moreover, have been closely intertwined with the issue that could and should have been raised by the AAMI Insured as a defence in the Local Court proceedings, namely whether NRMA was subrogated to the rights of the NRMA Insured to pursue their respective demurrage claims against the AAMI Insured, and with the further issue as to whether Ms Smith was in truth retained as the solicitor for the NRMA Insured in those proceedings; furthermore, so the NRMA Parties' contentions continued, "although the third party procedure would be necessary because, nominally, NRMA and Smith were parties separate from the plaintiff in each of the Demurrage claims, substantially there was an identity of parties since, on AAMI's case, NRMA was effectively the plaintiff in each of the proceedings, and Smith was its solicitor… NRMA and each of its insureds were privies, as were AAMI and each of its insured; relevantly they had an identity of interest". (v) In any event, the AAMI claims of misleading and deceptive conduct and unconscionable conduct now being advanced were said by the NRMA Parties to have been so relevant to the subject matter of the proceedings in the Local Court that it was unreasonable for the AAMI Insured not to have raised those claims and relied on them, referring in that context specifically to dicta in Anshun at 602 which I have already cited. 35 The NRMA Parties concluded this segment of their submissions with the following observation: "… AAMI cannot reasonably contend it did not know of the basis upon which the claims were being pursued by NRMA as subrogated by the rights of its insureds." In that context, the NRMA Parties further submitted that AAMI has not proffered any evidence thus far as to when and in what circumstances AAMI first became aware of facts bearing relevantly upon the viability of NRMA's retainer of Ms Smith, particularly given that such facts were germane to the findings made by the Court of Appeal in Anthanasopoulos summarised in [5(iii) and (iv)] above, being findings doubtless made as a consequence of submissions of the four appellants to the Court of Appeal, each of whom fall within the description of an AAMI Insured. Vexatious nature of the proceedings 36 This third segment of the submissions of the NRMA Parties commenced with the background circumstance that an application, which had been made to the Local Court by AAMI in the name of the AAMI Insured for a stay of the pending Local Court proceedings, had not been granted by the Local Court, and that instead, the parties to the proceedings were invited by the Local Court to have the assessment of the pending demurrage claims transferred to the General Division of the Local Court (see again [17] above). The NRMA Parties contended that the Local Court has jurisdiction to deal with issues as to the entitlement of NRMA to be subrogated to the rights of its insured engaged in the pursuit of the demurrage claims, and as to the retainer of Ms Smith to represent the NRMA Insured in relation to those claims, and as to whether the institution of the proceedings was procured by the misleading and deceptive conduct and unconscionable conduct the subject of AAMI's amended statement of claim. The NRMA Parties contended that the present Federal Court proceedings should be stayed as vexatious for those reasons, or stayed "pending the determination of each of the Demurrage Claims now before the Court". 37 The NRMA Parties have placed reliance upon the following passage in Henry v Henry (1995-1996) 185 CLR 571 at 590 (Dawson, Gaudron, McHugh and Gummow JJ): "Parallel proceedings in another country with respect to the same issue may be compared with multiple proceedings with respect to the same subject matter in different courts in Australia. In Union Steamship Co of New Zealand Ltd v The Caradale (1937) 56 CLR 277 at 281, Dixon J observed of that latter situation that '[t]he inconvenience and embarrassment of allowing two independent actions involving the same question of liability to proceed contemporaneously in different courts needs no elaboration'. From the parties' point of view there is no less - perhaps, considerably more - inconvenience and embarrassment if the same issue is to be fought in the courts of different countries according to different regimes, very likely permitting of entirely different outcomes." A further authority cited in the present context by the NRMA Parties was that of Royal Bank of Scotland Ltd v Citrusdal Investments Ltd [1971] 1 WLR 1469, where the issue was whether the defendants' tenancy was a business or non-business tenancy. The resolution of that issue had been initiated by the tenants in pending county court proceedings, and about three weeks later, the landlord sought declaratory relief relating to the same issue in the Chancery Division of the High Court. A stay of the High Court proceedings was granted on the ground that "… the matter raised by the originating summons substantially duplicates the application to the Barnet county court… the parties are precisely the same, the subject matter of both proceedings is the same, the issue in each is substantially the same, namely business tenancy or no business tenancy, and… there is no real issue as regards the claims for possession and mesne profits because the result must follow automatically from the decision on the business tenancy point". Reliance was also placed by the NRMA Parties upon Johnson Tiles Pty Ltd v Esso Australia Limited (1999) ATPR 41-679, where Merkel J observed at 42,677 as follows (under the heading "Multiplicity of Proceedings"): "It is well established that, prima facie, it is vexatious and oppressive for a second or subsequent action to be commenced in a court in Australia if an action between the same parties is already pending with respect to the same subject matter in an Australian court. In such circumstances it would lie on the party who brings the second action to show that it was not so." 38 In order to exemplify the extent of the alleged abuse of process asserted by the NRMA Parties to be constituted by AAMI's pursuit of the Federal Court proceedings, there has been tendered by the NRMA Parties an affidavit of 14 February 2002 made by AAMI's solicitor Mr Courtenay, which was originally filed in the Local Court, and which disclosed the following details: (i) The firm of solicitors retained by AAMI to defend the Local Court demurrage claims of the NRMA Insured had filed defences in 1307 of such cases, whereof approximately 1157 were pending for resolution, and apparently the remainder had been finalised by entry of judgment. (ii) Instructions had been received as to a further 1000 matters (approximately), in relation to which certain AAMI insured vehicle owners had received letters of demand from Ms Smith, but no proceedings in the Local Court had been actually commenced. (iii) AAMI provided policies of motor vehicle insurance to approximately 25 per cent of the insurance market in New South Wales, and NRMA provided policies of motor vehicle insurance to approximately 57 per cent of the same market. (iv) There is a likelihood that approximately 5000 claims will arise out of NRMA's "Courtesy Car Programme", including those already pending or finalised. (v) A challenge to Ms Smith's retainer on the part of AAMI Insured appeared to have first occurred in relation to 112 NRMA demurrage claims listed for hearing before Assessor Roberts in the Local Court on 12 December 2001; shortly prior thereto on 7 December 2001, the present proceedings were commenced by AAMI by application and statement of claim in this Court. (vi) At the hearing before Assessor Roberts on 12 December 2001, Ms Smith's retainer was challenged on behalf of the AAMI Insured involved in that hearing, and in response to the challenge, counsel briefed by Ms Smith on behalf of the NRMA Insured tendered in evidence 99 purported retainer agreements made between NRMA Insured and Ms Smith, each bearing a date subsequent to the date of communication of Ms Smith's retainer to AAMI. (vii) Assessor Roberts announced that he was of the opinion that those documents so tendered constituted prima facie evidence of a valid retainer in each of the 99 instances, and he stood over all of the 112 matters until 20 February 2002 for the purpose of entry of judgment and argument as to costs; Ms Smith stated to Assessor Roberts that at the adjourned hearing, she would be in a position to tender a retainer agreement in respect of each of the remaining 13 matters. (viii) Subsequently on 30 January 2002, Assessor Roberts stated that at the pending adjourned hearing on 20 February 2002, there would be listed before him, not only the 112 matters abovementioned, but also the other demurrage claims which had reached the stage of being listed for pre-trial review, and further that he would be willing to consider entering judgment in favour of each of the named plaintiffs (ie the NRMA Insured) in every one of the demurrage claims listed before him, unless named the defendant involved could satisfy him that there was a live issue in dispute between the parties. It was in relation to the foregoing material that the purpose of Mr Courtenay's affidavit was submitted by the NRMA Parties to support the grant of a stay of proceedings in the Local Court made by AAMI's legal representative in relation to each of the pending demurrage claims, the NRMA Parties contending in summary that the whole dispute between AAMI, NRMA and Ms Smith should be heard in the one place at the one time, and further that AAMI's resort to the Federal Court proceedings represented, in effect, a contradiction of the course which AAMI had previously urged upon the Local Court. 39 The NRMA Parties contended that AAMI would not be prejudiced by the existing and prospective Local Court proceedings continuing at the initiative of NRMA for the following reasons: (i) If the defence of absence of retainer propounded by the AAMI Insured at the instance of AAMI is to succeed in the context of subsisting Local Court proceedings, (each of which proceeding presumably has been stood over generally pending the outcome of the Federal Court proceedings), the declaratory and damages claims advanced by AAMI in this Court based on AAMI's amended statement of claim would be rendered otiose or moot, and the AAMI Insured would be entitled to judgment and an order for costs in the Local Court, whereof "AAMI will reap the benefit", and the Federal Court would probably upon that hypothesis regard the order for corrective advertising presently sought by AAMI in the present Federal Court proceedings as unnecessary. (ii) The AAMI Insured may seek to apply for a stay or dismissal of the Local Court proceedings individually on the ground of an alleged absence of retainer of Ms Smith, whether for the reasons pleaded in the amended statement of claim or otherwise; if that application to the Local Court was to succeed, AAMI would achieve what it seeks by the Federal Court proceedings, namely the termination of the demurrage claims and an order that Ms Smith pay the costs of each of the Local Court proceedings on the ground of absence of a retainer. (iii) The issue as to whether the NRMA Parties procured the retainer of any of the NRMA Insureds in the pending demurrage claims by misleading and deceptive or unconscionable conduct, thereby occasioning damage to AAMI, may therefore be fully litigated in the Local Court, which has the necessary procedures which would permit a full and fair determination of the issues raised by the present dispute between the parties; in that regard I was referred to s 13 of the Local Court (Civil Claims) Act 1970 (NSW) headed "Actions not to be split or divided", to be read with Part 19 of the Local Courts (Civil Claims) Rules 1988 (NSW) dealing with third party procedures. Want of parties 40 The NRMA Parties submitted that the Federal Court proceedings are in any event defective for want of parties, namely the numerous NRMA Insured, for the following reasons: (i) AAMI has sought the finding of the Federal Court that the retainer by each of the NRMA Insured of Ms Smith is "invalid and ineffective", at least in part, either upon the proper construction thereof or by reason of contraventions of the TP Act and/or breach of fiduciary duty and/or negligent representation on the part of NRMA and Ms Smith (amended statement of claim paras 56-58). (ii) AAMI has further sought "in substance" declarations by the Federal Court that each of the NRMA Insured was not and is not entitled to commence or prosecute his or her claims in the Local Court using the legal services of Ms Smith, and injunctions from the Federal Court restraining each of them from so doing; accordingly the rights of the NRMA Insured, as well as the other unnamed parties (the so-called "Otherwise Insured") and their unnamed insurers, would be affected by the Federal Court's findings, yet they have not been joined in the proceedings. (iii) Reliance was placed upon what was said by a Full Federal Court (Lockhart, von Doussa and Sackville JJ) in News Limited and Others v Australian Rugby Football League Limited and Others (1996) 64 FCR 410 at 523-527, where the following observation in particular appears at 524: "An order which directly affects a third person's rights against or liabilities to a party should not be made unless the person is also joined as a party. If made, the order will be set aside." (iv) The injunctions sought in paragraphs 1(a) and 5 of the AAMI application filed in the Federal Court seek the restraint of the further conduct of existing demurrage claims by Ms Smith in the name of the NRMA Insured as plaintiffs pending in any court (including the Local Court), and thus directly affect the so-called right of each NRMA Insured to continue with his or her proceedings in the Local Court utilising Ms Smith as his or her solicitor, and would thus prevent the recovery by each NRMA Insured of the amount of the demurrage outlays made in favour of Hertz; moreover the allegations made in para 41 and following of the amended statement of claim bear directly upon the legal effect of the retainer agreements to which each NRMA Insured is a party; therefore, so the contention of the NRMA Parties continued, unless and until each of the NRMA Insured was to be joined in the Federal Court proceedings, those proceedings should be regarded as vexatious or an abuse of the Court's process. (v) Once each of the NRMA Insured would be joined in the Federal Court proceedings, then for the reasons already developed by the NRMA Parties, the case for the Federal Court to thereafter stay the Federal Court proceedings becomes manifest, since the Federal Court as a superior court of record should not be required to adjudicate upon a multiplicity of "tiny claims", in circumstances where the Local Court is able and equipped to continue to undertake that function.

Australian Associated Motor Insurers Limited v NRMA Insurance Limited

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Judgment (40 paragraphs)

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Legislation Cited (8)

Cases Cited (30)

Cited By (3)