Bank of Western Australia Limited v Tannous

Supreme Court of NSW|2012-05-29|Before: Davies J

Judgment 1HER HONOUR: By notice of motion filed 30 April 2012 Firstfolio Mortgages Australia Pty Ltd seeks firstly, an order pursuant to Uniform Civil Procedure Rules ("UCPR") r 13.4 that the second defendant's cross claim filed 13 January 2012 ("fourth cross claim") be dismissed; secondly, alternatively, an order pursuant to UCPR 14.28 striking out the fourth cross claim in its entirety; and thirdly, in the further alternative, an order that the fourth cross claim be permanently stayed. 2Firstfolio Mortgages Australia Pty Ltd ACN 095 875 479 ("Firstfolio") is the cross defendant to the fourth cross claim. Emily Tannous is the cross claimant to the fourth cross claim ("Mrs Tannous"). I shall refer to the parties by name. 3The plaintiff is Bank of Western Australia Limited ACN 050 494 454 ("Bankwest"). The defendants are Arthur Tannous ("Mr Tannous"), Emily Tannous and Michael Tannous ("Michael"). 4Firstfolio submitted that it is firstly, precluded by an Anshun estoppel; secondly, constitutes an abuse of the process of the court, within the meaning of UCPR 13.4(l)(c) or 14.28(l)(c); and finally or discloses no reasonable cause of action or has a tendency to cause embarrassment, within the meaning of UCPR 13.4(1)(b) or 14.28(1)(a)-(b). Mrs Tannous acknowledges that this claim needs to be amended and seeks the opportunity to replead this claim. 5Firstfolio says that the fourth cross claim seeks substantially similar relief, against the same party, and in respect of the same facts and circumstances, as previous cross claims brought by Mrs Tannous and her husband Arthur Tannous, in 2009 and 2010. 6On 3 December 2010, Davies J entered judgment for Firstfolio in respect of three previous cross claims. It is common ground that Mrs Tannous has not appealed from that decision.

The amended statement of claim 15In the amended statement of claim filed 29 August 2011, Bankwest claims possession of the property arising out of loan agreements said to have been entered into between Mr and Mrs Tannous and Bankwest in December 2006 and a mortgage said to have been granted by them to Bankwest in March 2007, when Firstfolio's prior mortgage was discharged. I refer to parts of the amended statement of claim later in the judgment. Mr and Mrs Tannous in their defence filed 13 January 2012 defend the allegations raised in the amended statement of claim on the basis that the Bankwest loan agreements and mortgage were fraudulently entered into, and alternatively, that the contracts were unjust under both Part 2 of the Contracts Review Act 1980 and s 70 of the Uniform Consumer Credit Code.

The previous three cross claims 16There were three cross claims that were dealt with by Davies J in his judgment dated 3 December 2010. I shall refer to this judgment in more detail shortly but I shall refer briefly to these earlier cross cliams so far as they concern Mrs Tannous.

First cross claim 17On 11 August 2009, Mrs Tannous filed the first cross claim against Bankwest and Firstfolio ("first cross claim"). As against Firstfolio, Mrs Tannous sought three declarations. They were, firstly that Mrs Tannous had not executed any mortgages, charges, encumbrances, memorandums and loan agreements in favour of Firstfolio; secondly, that all mortgages, charges, encumbrances, memorandums and loan agreements in favour of Firstfolio are and were void as against Mrs Tannous; and finally, that the debt created by the loan agreements or mortgages is not personally due and payable by Mrs Tannous and no monies were due and payable by Mrs Tannous in respect of any mortgages or loans with the charges over the property. Mrs Tannous also sought an order that Firstfolio indemnify her, including return of any monies received pursuant to any purported charges or mortgages of Mrs Tannous's interest in the property subject to an adjustment for the discharge of the share of Mrs Tannous's liability in respect of a mortgage of approximately $30,000 (being an existing liability of Mr and Mrs Tannous to Fiduciary at the time of the Firstfolio loan). 18In the first cross claim, Mrs Tannous pleaded that the Firstfolio loan and the Firstfolio mortgage were not authorised or executed by her, were fraudulent, and did not bind her: [5]-[6], [18]-[28]. Although it is not clearly pleaded, it appears that the grounds of relief were fraud or the Contracts Review Act. 19It is difficult to see how Mrs Tannous can be afforded relief under the Contracts Review Act as she says that she did not sign the loan documents or the mortgage. It follows that if she is not a party to any contract that as a consequence the Contracts Review Act has no application and the Court has no power to grant relief to her under that Act: see Permanent Trustee Co Ltd v Frazis [1999] NSWSC 319 at [17].

Second cross claim 20On 1 July 2010, Mrs Tannous filed the second cross claim against ING and the Registrar-General ("second cross claim"). The relief sought against ING was of substantially similar effect to that sought against Firstfolio in the first cross claim. In the second cross claim, Mrs Tannous pleaded that the Firstfolio loan and the Firstfolio mortgage were not authorised or executed by her, were fraudulent, and did not bind her; that she had not executed any mortgage or loan document with Firstfolio or ING, that no monies are or were payable by Mrs Tannous to Firstfolio or ING, that the payment of $571,171.26 purporting to be payment by Bankwest to ING was monies to the account of, or for the use of, Mrs Tannous or alternatively made under a mistake of fact and that such monies were repayable to Mrs Tannous: [6]-[24]. It appears that again she seeks relief on the basis of fraud and the Contracts Review Act.

Third cross claim 21On 1 July 2010, Mr Tannous filed the third cross claim against Bankwest, Firstfolio and ING ("third cross claim"). The relief sought by Mr Tannous against Firstfolio and against ING was to substantially similar effect to the relief sought by Mrs Tannous in the first cross claim and the second cross claim, respectively. For the purposes of his application it is not necessary to discuss this cross claim in detail.

The hearing before Davies J for Firstfolio on Mrs Tannous's previous cross claims 22On 12 November 2010, Davies J heard applications by Firstfolio and ING for the summary dismissal or strike out of the first, second and third cross claims against them. Mr Lee SC represented Firstfolio and Mr Kumar represented Mrs Tannous. 23Senior counsel in this hearing, Mr Lee SC, for Firstfolio referred to the following portions of the transcript before Davies J. [Firstfolio is referred to as FMA in that transcript]. 24At T 13.16; 14.42-48; 15.3-27 the following exchanges took place: KUMAR: ... we would concede that there are certain parts that I have to clarify in the issues between the parties. So far as the FMA claim is concerned, they say they are not seeking anything, therefore they should not be joined. My submission is if the contract or discharge of mortgage or any of those have been made so that the Tannouses would not be able to raise any unjust enrichment or any other issue in relation to why there was a discharge of the contract. In my submission they can revisit the contract and I can submit some authorities on that point. Your Honour, if I could take your Honour to Fisher and Lighthoods, 2nd Edition. I have some copies for my friends. HIS HONOUR: Yes. KUMAR: If your Honour goes to page 855, this is the first page that I have handed up, your Honour, the payment of the mortgage itself does not discharge the mortgage itself. In my submission it does not. If your Honour also goes over to the next page - HIS HONOUR: I'm sorry, what do seek to draw from this passage? KUMAR: My friend submits that the mortgage has been discharged therefore it is not in force and therefore that is the end of the issue. We said the unjust issue - HIS HONOUR: How can the unjust issue get revisited if the mortgage has come to an end and the loan agreement is paid out? KUMAR: Well, your Honour, we submit the authorities say that there is an merging of the mortgage and loan agreement because the mortgage hasn't been discharged. HIS HONOUR: So you want to raise unjustness of the FMA contract under the Act, the Contracts Review Act. KUMAR: There was a time limitation. I am aware that there is a two-year time limitation. HIS HONOUR: That is what I am trying to get, what Act or what basis for relief do you claim against FMA? You say that the contract is unjust. If you are doing it under the Contracts Review Act you may have some limitation problems, may you not? KUMAR: Yes, your Honour. HIS HONOUR: So on what other basis do you claim? KUMAR: Well, your Honour, the declaration itself and whether the document itself is valid or invalid against the Tannouses. It is up to your Honour to look at that. HIS HONOUR: But why isn't that an issue that can be determined as between you and Bankwest? If you establish that the contract with Bankwest was unjust or should for some other reason be set aside, isn't the issue of any money you may be obliged to pay to Bankwest, isn't that something that will be dealt with that will involve or may involve the question of contract with FMA? KUMAR: In a way it would because these two are tied together. It started off as a similar contract, similar to a contract replaced by another contract. From there it went in the Court next to look at both these contracts. HIS HONOUR: And that gives you the right, you say, to seek a declaration? KUMAR: Yes, your Honour. HIS HONOUR: But what will that achieve that would not be achieved by just defending Bankwest again against you? KUMAR: I concede it doesn't give us any additional right as such. HIS HONOUR: You see, isn't the issue of FMA's contract only relevant when the Court comes to consider what relief should be given viz a viz Bankwest, because you don't have any existing liability to FMA, do you? KUMAR: That is right. HIS HONOUR: The only way that FMA is relevant is for Bankwest to say that even if their contract was unjust, "Well, we have paid out FMA for Mr and Mrs Tannous so they should at least give us back that money". KUMAR: Yes, your Honour. HIS HONOUR: Is that the only way that FMA's loan contract is relevant? KUMAR: Yes, your Honour. HIS HONOUR: Well, aren't you able to lead evidence to meet that claim from Bankwest that you didn't sign that document with FMA, it wasn't a liability that you had that they paid out, because documents were forged and so on in the same way as they were with Bankwest? KUMAR: Yes, your Honour. We really may be able to do that but I though because there were issues arising, there was another reason they should remain as a party. HIS HONOUR: Yes, what is that? KUMAR: Your Honour would make a finding in relation to the issues between FMA and the Tannouses.' HIS HONOUR: But why should they be a party to a determination about that, because it does not affect your rights, they have been paid out completely? KUMAR: I don't press that, your Honour. HIS HONOUR: I am just trying to understand this, because they say, in effect, "We don't care because we have got all our money." It is all over and done with as far as they are concerned and what has been established in relation to your liability to Bankwest, they don't care about. That is my understanding. KUMAR: That is correct, your Honour." 25On 3 December 2010, Davies J delivered reasons for judgment. In respect of the claims made against Firstfolio, his Honour concluded at [43]-[45]: "43 Where there is an issue about the unjustness of a contract or mortgage paid out by an incoming mortgagee who is the Plaintiff in proceedings, the issue is not determined by joining that prior mortgagee as a party to the proceedings. Rather, the issue is determined in the context of the discretionary order at the second stage of the Contracts Review Act proceedings. That is so, because the issue forms part of the controversy between the Plaintiff and the Defendants. The justiciable issue is what order should be made in circumstances where the contract made between the Plaintiff and the Defendants is held to be unjust. There is no justiciable issue between the Defendants and the mortgagee/lender whose contract has been completed and whose mortgage has been discharged. 44 Additionally, s 148 Credit Act 1984 cannot apply to FMA for the reasons I gave in respect to ING. Nor can s 74 of the Consumer Credit Code apply, both because of the time limit contained in s 73 and because FMA is not "a person other than a credit provider or a mortgagee ". 45 The problem with the claims made by the Defendants against FMA are not matters of pleading. They are matters of substance. There is no claim, and can be no claim, against FMA arising out of the facts pleaded. Again, the matter easily satisfies the test in General Steel Industries." 26His Honour then made the following orders: "(1) Judgment for the Second Cross-Defendant [FMA] on the First Cross-Claim dated 11 August 2009. (2) Judgment for the First Cross-Defendant [ING] on the Second Cross-Claim dated 1 July 2010. (3) Judgment for the Second [FMA.] and Third [ING] Cross-Defendants on the Third Cross-Claim (wrongly entitled First Cross-Claim) dated 1 July 2010. (4) The Second Defendant/Cross-Claimant [Mrs Tannous] is to pay the costs of the Second Cross-Defendant to the First Cross-Claim [FMA] and the First Cross-Defendant to the Second Cross-Claim [ING]. (5) The First Defendant/Cross-Claimant [Mr Tannous] is to pay the Second [FMA] and Third [ING] Cross-Defendants costs of the Third Cross-Claim." 27As discussed, on 29 August 2011, after Davies J's judgment, Bankwest filed an amended statement of clam. It additionally pleads at [20] to [26] and [31]: "20. On or about 6 February 1998, the first and second defendants granted a mortgage over the Property in favour of Fiduciary Services Limited ("Fiduciary"), which became registered mortgage number XXXXXXXXB, in consideration for advances pursuant to a loan agreement ("Fiduciary Mortgage"). 21. On or about 28 February 2005, the amount secured by the Fiduciary Mortgage was the sum of approximately $37,688.95. 22. On or about 2 March 2005, the first and second defendants entered into a loan agreement with Australian Wholesale Lending Mortgages Pty Limited ("AWL Agreement") [now Firstfolio] which was secured by registered mortgage number ABXXXXXXXX dated 10 March 2005, over the Property ("AWL Mortgage"). 23. An amount of approximately $543,750 was advanced pursuant to the AWL Agreement, which included the sum of approximately $37,688.95 which was paid to Fiduciary for and in consideration of a discharge of the Fiduciary Mortgage. ... 25. On or about 20 March 2007, the plaintiff advanced sums pursuant to the First and Second Agreements totaling an amount of approximately $622,631 ("Advances"), which included the sum of $571,171 paid to ING Bank (Australia) Limited ("ING") at the direction of the first and second defendants for an in consideration of the discharge of the AWL Mortgage. 26. For and in consideration of the Advances, the defendants granted the Mortgage over the Property. ..." Claims arising from the First and Second Defendants' Allegations 31. If and to the extent that the Court holds that any of the First or Second Agreements or the Mortgage are void or are to be set aside, or makes findings to the effect of the matters set out in paragraphs 27(a) to 30 above (which are not admitted by the plaintiff and are set out herein for the sole purpose of the alternative claims against the defendants), then in the premises set out above: (a) The plaintiff paid the Advances in the mistaken belief that the First and Second Agreements and the Mortgage were valid and enforceable; (b) The Advances were monies had and received to the use of the first and second defendants; (c) The plaintiff is entitled to restitution from the first and second defendants in the amount of Advances; (d) The third defendant fraudulently and deceitfully procured the Advances. Particulars (i) The third defendant forged the first and second defendants' signatures on the AWL [Firstfolio] Agreement and the AWL Mortgage and all associated loan application documentation without their knowledge; (ii) The third defendant induced the first defendant to execute the First and Second Agreements and the Mortgage by representing to him that they related to a loan in the sum of $60.000.00 with the dishonest intention of procuring for his own benefit the Advances; and (iii) The third defendant, with the same dishonest intention, took steps to ensure that the second defendant did not become aware of the First and Second Agreements and the Mortgage including that he asked that the first defendant to provide him with all correspondence from the plaintiff. (e) The first defendant fraudulently and deceitfully procured the Advances. Particulars (i) The first defendant forged the second defendant's signature on the relevant loan application forms; (ii) The first defendant forged the second defendant's signature on the First and Second Agreements; and (iii) The first defendant induced the second defendant to execute the Mortgage by telling her that it was a bank withdrawal form for the sum of $3.000.00 with the dishonest intention of obtaining the sum of $60.000.00 from the plaintiff. (f) The third defendant engaged in conduct that was misleading and deceptive or was likely to mislead or deceive in breach of s.42 of the Fair Trading Act 1987 (NSW); Particulars (i) The plaintiff repeats the particulars to sub-paragraph (d) above. (g) The first defendant engaged in conduct that was misleading and deceptive or was likely to mislead or deceive in breach of s.42 of the Fair Trading Act 1987 (NSW); Particulars (i) The plaintiff repeats the particulars to sub-paragraph (e) above. (h) The first and third defendants' conduct set out in sub-paragraphs (f) and (g) above took place in trade or commerce: (i) The plaintiff sustained loss or damage by reason of each of the matters set out in sub-paragraphs (d) to (o) above; and (j) The plaintiff is entitled to the relief set out above." 28Bankwest now pleads that it is entitled to restitution for Mr and Mrs Tannous for the amount of advances, two of which were paid to ING at the direction of Mr and Mrs Tannous for the discharge of the Firstfolio mortgage. 29On 13 December 2011, by consent, Registrar Bradford ordered at [1] that the defendants file and serve their defence and any cross claims by 13 January 2012. Senior counsel for Mrs Tannous pointed out that the fourth cross claim was filed with the leave of the Court and if it otherwise discloses a reasonable cause of action, Mrs Tannous is entitled to a trial of her claim on its merits. Leave was granted to file a cross claim, however, that does not mean that the leave given overcomes any Anshun estoppel or res judicata problems

The present cross claim by Mrs Tannous against Firstfolio 30On 13 January 2012, (after the amended statement of claim was filed) Mrs Tannous filed this fourth cross claim. By this cross claim, Mrs Tannous seeks firstly declarations against Firstfolio that the loan agreement purported to be made between Firstfolio and Mrs Tannous on or about 10 March 2005 is void and of no effect to the extent it applies to Mrs Tannous; secondly, that the mortgage purported to be executed by Mrs Tannous in favour of Firstfolio in respect of her interest in the property on or about 10 March 2005 is void and of no effect against Mrs Tannous to the extent it applies to Mrs Tannous; thirdly, that no monies are payable by Mrs Tannous pursuant to the loan agreement and the memorandum of mortgage to Firstfolio; fourthly, that purported directions to Bankwest as to payment to ING on or about 20 March 2007 purported to be instructions of Mrs Tannous in favour of Firstfolio or ING is void and of no effect against Mrs Tannous to the extent it applies to the interest in funds held by Mrs Tannous; fifthly, she also seeks relief that the "contract" be set aside or an order varying the agreement in such manner as the Court thinks fit pursuant to s 87 of the Trade Practices Act 1974 (Cth) or s 72 of the Fair Trading Act 1987; sixthly, and order that Firstfolio pay Mrs Tannous damages under s 82 of the Trade Practice Act 1974 (Cth) or s 68 of the Fair Trading Act 1987; seventhly, relief or damages under s 12GF and s 12GM of the Australian Securities and Investments Commission Act 2001 (Cth) and s 1041L and s 1101B(1)(d) of the Corporations Act 2001 (Cth); and finally, Firstfolio cause rectification of records with Land and Property Information. 31The first four declarations sought in this fourth cross claim are identical or substantially similar to the relief sought by Mrs Tannous in her previous first cross claim. Paragraphs five and seven of the fourth cross claim seek monetary remedies. 32It is fair to say that the causes of action now pleaded by Mrs Tannous against Firstfolio in the fourth cross claim, are in the nature of claim for misleading or deceptive conduct. The contravening conduct is alleged to have been the making of representations by Firstfolio to Bankwest at the time of refinancing in 2007. It is alleged that Firstfolio made representations broadly to the effect that Firstfolio had a binding loan and mortgage with Mr and Mrs Tannous, and that Mr and Mrs Tannous had duly executed those instruments, that the amount necessary to payout the loan and discharge the mortgage was $571,171, together with a wide variety of related matters: [11]-[13], [15], [22]. It is alleged that these representations were misleading or deceptive ([14], [16], [19], [23]-[24]) and that they caused Bankwest to act to Mrs Tannous's disadvantage by advancing funds to discharge the Firstfolio loan and the Firstfolio mortgage: [18], [25], [29]. The causes of action in the nature of misleading and deceptive conduct were not pleaded in the prior cross claims. 33However, Firstfolio submitted that the fourth cross claim pleads allegations of fact that are either identical, or substantially similar, to allegations of fact pleaded by Mrs Tannous in the first cross claim and the second cross claim. In particular: (a) The fourth cross claim (at [7]), like the first cross claim (at [5]) pleads that Mrs Tannous had no dealings with Firstfolio, has not executed any mortgages in favour of Firstfolio and did not authorise any person to act on her behalf to deal with Firstfolio. (b) The fourth cross claim (at [9]), like the first cross claim (at [7]) pleads that Mrs Tannous has little grasp of, and does not read or write, English. (c) The fourth cross claim (at [14], [16]), in a similar fashion to the first cross claim (at [18]-[21], [26]. [28]) pleads that Mrs Tannous had not executed any mortgage in favour of Firstfolio, had not requested the discharge of the Firstfolio mortgage and had not authorised either the mortgage or its discharge. 34I agree that the fourth cross claim does not plead any new facts or transactions that were not contained in the first cross claim. 35Firstfolio submitted that all that is involved in the fourth cross claim is a different legal construct applied to the same facts, matters and circumstances as those pleaded against Firstfolio in the earlier cross claims. What is different is that now there is a claim whereby Bankwest is seeking restitution from Mrs Tannous for the sum it paid though ING to discharge the Firstfolio mortgage. As a response, Mrs Tannous claims that Firstfolio engaged in misleading and deceptive conduct in relation to the representation Firstfolio made to Bankwest and that the Firstfolio loan agreement and mortgage should be set aside.

Whether the fourth cross claim gives rise to an Anshun estoppel 36So far as Mrs Tannous is concern, as yet she has not been afforded a trial on the merits. 37UCPR 36.11(2) reads: "(2) Unless the court orders otherwise, a judgment or order is taken to be entered when it is recorded in the court's computerised court record system." 38Senior counsel for Firstfolio submitted that the Court did not merely strike out or dismiss the cross claims, it went one step further, the Court entered judgment in favour of Firstfolio on the cross claims. I accept that no question of leave to replead arose because the problem with Mrs Tannous's claims in the earlier cross claims went to matters of substance, which could not be cured by amendment. 39Firstfolio submitted that the entry of judgment on a primary claim or a cross claim is fundamentally different in character to an order for dismissal and this can been seen by reference to s 90 Civil Procedure Act 2005 ("CPA") and UCPR 36.1. 40Section 90 of the CPA reads: "(1) The court is, at or after trial or otherwise as the nature of the case requires, to give such judgment or make such order as the nature of the case requires. (2) If there is a claim by a plaintiff and a cross-claim by a defendant, the court: (a) may give judgment for the balance only of the sums of money awarded on the respective claims, or (b) may give judgment in respect of each claim, and may give judgment similarly where several claims arise between plaintiffs, defendants and other parties." UCPR 36.1 reads: "At any stage of proceedings, the court may give such judgment, or make such order, as the nature of the case requires, whether or not a claim for relief extending to that judgment or order is included in any originating process or notice of motion." 41UCPR 36.15, 36.16 and 36.17 circumscribe the circumstances in which a party may apply for the setting aside, variation or correction of a judgment. 42Pursuant to UCPR 36.11(2) the orders made by Davies J on 3 December 2010 were taken to be immediately entered when recorded in the court's computerised court record system. 43Firstfolio submitted that s 90 of the CPA expressly provides that the dismissal of any proceedings, either generally or in relation to any cause of action, or the whole or any part of a claim for relief in any proceedings, does not, subject to the terms on which any order for dismissal was made, prevent the plaintiff from bringing fresh proceedings or claim in the same relief in fresh proceedings. The CPA does not provide for this result with respect to the distinct juridical process of the entry of judgment. 44While judgment has been entered in relation to the prior three cross claims, no judgment has been entered in relation to the fourth cross claim. 45Firstfolio submitted that in any event, the concept of a final order for the purposes of an Anshun estoppel is different to, and wider than, the category of final orders, which attract a right of appeal. There is a long line of authority which establishes that an estoppel may arise from an order or judgment which, although interlocutory for the purpose of appeal provisions, as a matter of substance finally determined the relevant issue between the parties. 46Senior Counsel Mrs Tannous submitted that the orders made by Davies J on 3 December 2010 were interlocutory in character, related to a different factual circumstances than presently pertains; and did not relate to the causes of action relied on by Mrs Tannous in the fourth cross claim arising out of Bankwest's amended statement of claim, namely, a case of misleading and deceptive conduct pleaded under Commonwealth and New South Wales legislation and a case of breach of Corporations Act obligations. She also submitted that the orders made by Davies J were not final in character as "finality" is judged for the purpose of res judicata and, accordingly, they cannot support any form of res judicata or issue estoppel: Spencer, Bower and Handley, Res Judicata (London, 4th ed, 2009). As there has been a change of circumstances in the principal proceedings, with the filing of the amended statement of claim. Mrs Tannous asserts that the subject matter of the proceedings has changed and the Court is required to address the facts of the case. 47Mrs Tannous disputes that the Anshun principles apply to the fourth cross claim because that principles incorporates a qualification that permits the Court to decline to apply it in "special circumstances" where the interests of justice so required: Wong v Minister for Immigration [2004] FCA 51 at [49]; S394 of 2003 v Minister for Immigration [2004] FCA 1421 at [38]. She submitted that the Court should decline to apply the principle in these proceedings because of the changed circumstances arising out of Bankwest's amendment of the statement of claim. 48The principle behind Anshun estoppels, stated by Wigram VC in Henderson v Henderson (1843) 67 ER 313 at 319, is that: "... the Court requires the parties ...to bring forward their whole case, and will not... permit the same parties to open the same subject of litigation in respect of [a] matter which might have been brought forward as part of the subject in contest, but which was not brought forward..." The Court of Appeal has recently observed that this requirement is "an important part of the orderly and fair administration of justice." 49Henderson v Henderson was applied by the High Court in Port Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 at 602-602. 50A claim will be barred by an Anshun estoppel if the claim "was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it" in the earlier action. Generally speaking, it would be unreasonable not to plead a claim or defence if, having regard to the nature of the litigant's claim or defence and its subject matter, it would be expected that the litigant would raise the claim or defence and enable the relevant issues to be determined in the one proceeding. 51An Anshun estoppel may arise where an omission to plead a claim or defence will contribute to the existence of conflicting judgments, including those which are contradictory, though they may not be pronounced on the same cause of action, as long as they appear to declare rights which are inconsistent in respect of the same transaction. 52The Anshun doctrine is concerned with substance and not form. In determining whether an Anshun estoppel has been established, the Court inquires into realities and not mere technicalities. An Anshun estoppel may apply, to a proceeding in which a party is asserting a cause of action which could have been raised, but was not, in a previous proceeding in which the same party was asserting a different cause of action based on substantially the same facts against the same party as the second proceeding is being brought. If so, an estoppel will arise if it was unreasonable for the party asserting the cause of action in the second proceeding to refrain from raising it in the earlier proceeding against the same opponent party. 53The question of unreasonableness is derived significantly from the matter being so relevant to the subject matter of the first proceeding. The assessment is not to be made mechanistically; rather, there is "a value judgment to be made referable to the proper conduct of modern litigation". 54Firstfolio says firstly, it has been vexed with multiple proceedings and the Court has been burdened with the filing of a new claim arising out of the precisely the same facts and circumstances as those previously litigated; secondly, it is not a case where a new cause of action has arisen which could not have been litigated in the earlier cross claims. It says that, no event has occurred, between the first action and now, to give Mrs Tannous any different or better alleged rights against Firstfolio than she had at the time of the earlier cross claims; and finally, misleading or deceptive conduct claim of the kind now propounded in the fourth cross claim, if it exists, was extant at the time of the filing of the previous cross claims in 2009 the issue that Mrs Tannous now seeks to litigate was as ripe for determination at the time of the earlier cross claims as it is now. I do not agree. 55At the time Davies J heard the motion to dismiss the cross claims, there was no claim by Bankwest seeking restitution from Mrs Tannous in relation to the moneys paid to Firstfolio. Mrs Tannous and her legal advisers were not on notice that this restitution claim was to be made against her and did not draft her first cross claim against Firstfolio in the knowledge it had to meet this claim. It was not unreasonable for her not to plead false and misleading information against Firstfolio in the earlier cross claim as she could not have anticipated the changed in pleading by Bankwest. In my view an Anshun estoppel does not arise.

Abuse of process 56Firstfolio submitted that Mrs Tannous's impermissible attempt in the fourth cross claim to recanvass the final and binding determination of Davies J constitutes an abuse of process. 57Senior counsel for Mrs Tannous submitted Firstfolio's abuse of process case is misconceived because the principles in Anshun and Reichel v Mangrath (1889) 14 App Cas 665 related to attempts to relitigate in current proceedings claims that could reasonably have been made but were not made (in the case of Anshun), or claims which determined adversely to the claimant (in the case of Reichel v Macgrath), in earlier, different proceedings, where as all claims made by Mrs Tannous against Firstfolio relate to claims for relief made in the current proceedings. 58According to senior counsel for Firstfolio, it has been recognised since at least Reichel v Magrath, and is now well established, that an abuse of process will arise where a party seeks to relitigate, in substance, an issue already determined and success would contradict the earlier judicial determination. The classical formulation of the principle is that there can be an abuse of process, even though a plea of res judicata, cause of action or issue estoppel is not available, "if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceedings to set up the same case again." This is an aspect of the Court's general power to stay proceedings for an abuse of process, so as to safeguard the administration of justice, to protect the integrity of the court's process or to prevent serious and unjustified prejudice or harassment. 59However, whether there has been an abuse of process where a party seeks to relitigate an issue already decided depends upon the particular circumstances. The guiding considerations are oppression and unfairness to the other party and concern for the integrity of the system of administration of justice. Among the matters to which regard may be had include the importance of the issue to the earlier determination; the opportunity available and taken to fully litigate the issue; the terms and finality of the finding; the identity between the relevant issues in the two applications; the extent of the unfairness to the other party if the issue were relitigated; and the impact of the relitigation upon the principle of finality of judicial determination and public confidence in the administration of justice. 60Firstfolio submitted that in the present case, these considerations lead to the conclusion that Mrs Tannous should not be given another opportunity to advance a claim for orders setting aside the Firstfolio loan agreement and the Firstfolio mortgage or for monetary relief against Firstfolio consequent upon the Bankwest refinancing in 2007, because those issues were the central issues in the previous cross claims. According to Firstfolio, they were fully litigated in the previous cross claims, resulting in the judgment entered in Firstfolio's favour by Davies J on each of the previous cross claims. According to Firstfolio, success on the fourth cross claim would contradict the judgment entered by Davies J in Firstfolio's favour on the earlier cross claims. I do not think so. No claim for relief under the Trades practices Act 1974 (Cth) or the Fair Trading Act 1987 or ss 12GF and 12GM of the Australian Securities and Investment Commission Act 2001 (Cth) or ss 1041L and 1101B(1)(d) of the Corporations Act 2001 (Cth) was sought in those earlier cross claims. The issue of inconsistent judgments does not arise.

Whether the claim for misleading or deceptive conduct is doomed to fail 61Firstfolio submitted that the fourth cross claim should be summarily dismissed or struck out on the ground that it discloses no reasonable cause of action, is "so obviously untenable that it cannot succeed" or is "manifestly groundless" and is embarrassing, for four reasons. They are: (1) Firstly, any representations of the kind alleged, if made by Firstfolio at the time of the Bankwest refinancing in 2007, were not false or misleading. It was the fact that Firstfolio, as registered mortgagee, had the benefit of indefeasibility of title. Subject to fraud and certain other limited exceptions, the registration of the Firstfolio mortgage conferred upon Firstfolio a valid and enforceable security interest in the property: Real Property Act 1900 (NSW), s 42. Indeed, it would have been misleading or deceptive for Firstfolio to make any representation to the contrary, in circumstances where it was not on notice of any fraud. (2) Secondly, any representations by Firstfolio to Bankwest were no more than representations of opinion or belief as to the existence of a binding mortgage and loan which had been duly executed by Mrs Tannous. A statement, which is ordinarily and reasonably understood as a statement of opinion, is not apt to mislead if the opinion is genuinely and reasonably held by the maker of the statement. As representations of opinion or belief which were identifiable as such and were honestly held on reasonable grounds, the making by Firstfolio of any representations of the kind alleged will not have been misleading or deceptive. (3) Thirdly, the "real, essential, substantial, direct, appreciable or effective" cause of Mrs Tannous's loss was the fraud and forgery by Michael in March 2005 and by Michael and Mr Tannous in March 2007, not any representations made by Firstfolio to Bankwest in early 2007. (4) Fourthly, the declaratory relief sought by Mrs Tannous in the fourth cross claim would be futile and should not be granted because Firstfolio does not seek recovery of any money from, and does not seek to enforce any mortgage or loan agreement against, Mrs Tannous and the liabilities of Mrs Tannous to Firstfolio were fully discharged in March 2007. In those circumstances, Firstfolio says that no purpose would be served by declarations as to the invalidity of the Firstfolio loan agreement or the Firstfolio mortgage. 62As to whether Mrs Tannous can succeed in her fourth cross claim largely depends on the knowledge of the facts and circumstances surrounding the loan documents and mortgage by officers of Firstfolio. Mrs Tannous did not sign the mortgage or loan agreements. It depends upon what they knew about Michael Tannous's role. Michael's evidence (the son) is that, as he wanted to borrow funds, he approached a person by the name of Ian Jarvis a finance broker in the Illawarra area, who introduced him to a finance broker by the name of Stefan Allen. He had a meeting with Stefan Allen at Parramatta, where Ian Jarvis was also present. Michael Tannous recalls that they had a conversation to the effect: Michael: "I need to borrow $500,000. Can you arrange finance?" Allen: "I can help you. What security have you got?" Michael: "I do not own any property but can use mu parents' home." Allen: "That is fine." 63After Michael provided Stefan Allen with the particulars of both his parents' home, he made a loan application on behalf of both his parents. He says that he understood that Stefan Allen submitted the loan application to what is known as Firstfolio. 64After Stefan Allen submitted the loan application to Firstfolio, Mr Allen started to send Michael documents regard the loan. Michael says he realised that the documents were in both his parents' names and he had a conversation with Stefan Allen to the effect: Michael: "Stefan, I think we have a problem. The documents you have sent me are in my parents' names. I do not think my parents would agree to sign these documents." Stefan: "Do not worry. Just sign the documents yourself. My brother is the person who will decide whether to approve the loan. I know he will approve it. I need you to provide me with income details of your parents." Michael: "Stefan, you know that my parents are pensioner They have no income other than the Centrelink benefit.": Stefan: "That is fine. I will send you 2 letters of employment. All you need to do is to sign them and fax them back to me." 65Michael says that after this Stefan Allen sent him two letters on the letterhead of Crew007 dated 10 February 2005 and created by him. At the behest of Stefan Allen, he signed the letters on behalf of Dolly Tannous, who was at the time a director of Crew007. There is evidence which, if accepted at trial, implicates Stefen's brother who knew the true situation and approved the loan. It is my view that where there are disputed facts, and here there is a factual web, it is only when the factual findings are actually made that it becomes clear whether Mrs Tannous is entitled to the relief she seeks. I am not satisfied that this claim is doomed to fail. It is my view that the fourth cross claim is not subject to an Anshun estoppel, nor is it an abuse of process, nor does it satisfy the test in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129-130. 66The last matter raised by Firstfolio is that, as a matter of pleading, the fourth cross claim at [11]-[13], [15] and [22] contains diffuse allegations, which fail to comply with the requirement for "a clear identification of the conduct said to be misleading or deceptive" nor does it state that the material facts establishing the necessary casual link should be pleaded. At the outset of this hearing senior counsel for Mrs Tannous foreshadowed that the case pleaded against Firstfolio in the fourth cross claim was defective in a matter of form and has sought leave to replead it. It is my view that because Mrs Tannous may lose at least her share of the matrimonial home in circumstances where it appears she was deceived at least by family members, she should have only this one further opportunity to replead the cross claim. 67Costs are reserved.

The Court orders that: (1) Leave is granted to the second defendant to file and serve an amended fourth cross claim within 14 days. (2) Costs are reserved.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 May 2012

Trade Practices Act 1974(Cth)

Trade Practice Act 1974(Cth)

Australian Securities and Investment Commission Act 2001(Cth)

At a glance

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