Batterham v Clayton Utz Partnership - [2022] FCA 360 - FCA 2022 case summary — Zoe

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Batterham v Clayton Utz Partnership

[2022] FCA 360

Federal Court of Australia|2022-04-07|Before: Halley J

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Court

Federal Court of Australia

Decision date

2022-04-07

Before

Halley J

Source

Original judgment source is linked above.

Judgment (37 paragraphs)

[1]

Introduction 1 By separate interlocutory applications filed on 10 September 2021, each of the first respondent (Clayton Utz), second respondent (Turner Freeman) and third respondent (Mr Rush) seek orders for summary judgment against the applicant (Mr Batterham), a discharged bankrupt, dismissing the proceedings. In the alternative, the respondents seek orders striking out the proceedings, the amended originating application (AOA) and the amended statement of claim (ASOC). The respondents variously rely on r 26.01 of the Federal Court Rules 2011 (Cth) (FCR) and s 31A of the Federal Court of Australia Act 1976 (Cth) (FCA Act) for the summary judgment applications and r 16.21 of the FCR for the strike out applications. 2 These proceedings were commenced by Mr Batterham in the wake of his bankruptcy and a series of proceedings that both he and the trustee of his self-managed superannuation fund, the Batterham Retirement Fund (BRF) have brought in the Industrial Relations Commission of New South Wales (IRC), the Supreme Court of New South Wales and the Federal Court against Mr Marcel Nauer and his related companies. The trustee of the BRF in the period to 27 June 2018 was Maylord Equity Management Pty Ltd (Maylord) and thereafter it was Finsec Pty Ltd (Finsec). 3 Mr Batterham sought in the various proceedings commenced against Mr Nauer and his related companies to recover an alleged diminution in value of shares held by BRF in Ztrata Capital Limited (ZCL). Any future proceedings against Mr Nauer are now precluded because an order was made on 19 March 2020 in the Equity Division of the Supreme Court that he be prohibited under s 8(7) of the Vexatious Proceedings Act 2008 (NSW) (VPA) from instituting any further proceedings against Mr Nauer in New South Wales. 4 In addition to the proceedings commenced against Mr Nauer and his related companies, Mr Batterham unsuccessfully applied to set aside his bankruptcy notice in the Federal Circuit Court (as it then was) and then subsequently on appeal before the Full Court of the Federal Court. The bankruptcy notice was based on a judgment of the Local Court of New South Wales for unpaid legal costs. Mr Batterham also unsuccessfully commenced proceedings in the District Court of New South Wales, out of time, seeking to appeal the judgment of the Local Court for unpaid legal costs. 5 In these proceedings, Mr Batterham now seeks to recover from the respondents the alleged diminution in the value of the shares held by the trustee of the BRF in ZCL (ZCL Shares). He also seeks compensation for a personal costs order made against him in one of the proceedings commenced by Maylord against Mr Nauer and compensation for both stress and anxiety and for lost future income as a promoter of private equity opportunities by reason of his bankruptcy. 6 Mr Batterham contends that the causes of action that he advances against the respondents in these proceedings are interrelated, each of the respondents has acted wrongfully, and it is up to the Court to determine how best to apportion responsibility between them for the losses that he alleges that he has suffered. 7 Broadly speaking, Mr Batterham seeks to contend in these proceedings that his lack of success in the proceedings brought against Mr Nauer and his related companies was attributable to, first, his bankruptcy, for which Clayton Utz and Turner Freeman was responsible and, second, the conduct of Mr Rush in acting for Mr Nauer in those proceedings. 8 The respondents contend that the claims sought to be advanced by Mr Batterham in these proceedings disclose no reasonable causes of action, are an abuse of process, time barred, had vested in his trustee in bankruptcy and are variously precluded by a deed of release, res judicata and issue estoppel. 9 For the reasons that follow, I am satisfied that the proceedings must be dismissed. 10 I am satisfied that the claims pleaded by Mr Batterham in the AOA and the ASOC disclose no reasonable cause of action, fail to articulate any coherent basis on which the loss and damage alleged can be attributed to the respondents, can fairly be characterised as an abuse of process, are time barred, precluded by the doctrines of res judicata and issue estoppel and in the case of Clayton Utz are also precluded, at least in part, by a deed of release. Further, I am satisfied that to the extent that any cause of action might have been available to Mr Batterham in respect of the alleged loss of future income as a promoter of private equity opportunities it would have vested in his trustee in bankruptcy on the making of the sequestration order against him.

[6]

Costs assessment of Mr Kenzie QC's fees 23 On 1 June 2009, Turner Freeman provided a bill of costs to Mr Batterham that included the fees of Mr Kenzie QC for the High Court Appeal from November 2005. 24 As Turner Freeman did not have a costs agreement with Mr Batterham and Maylord, it applied for a costs assessment of Mr Kenzie QC's fees. Mr Kenzie was named as a co-applicant with Turner Freeman. 25 On 10 May 2011, Turner Freeman wrote to the Manager of the Costs Assessment Unit of the Supreme Court of New South Wales (Costs Assessment Unit): We note that Turner Freeman and Richard Kenzie QC were instructed by Mr Batterham at the relevant time and the documents served in respect of the costs assessment package show this. Further, Mr Batterham paid Turner Freeman. If Turner Freeman was not acting, presumably he would not have paid. Similarly Mr Kenzie QC was briefed and instructed by Mr Batterham for and at the hearing. Mr Batterham was present when Mr Kenzie appeared for him in the High Court. Clayton Utz were not there. 26 On 15 June 2011, the Manager of the Costs Assessment Unit rejected the application in its initial form. This was on the basis that there was no jurisdiction to entertain an application by Mr Kenzie QC against Mr Batterham. The Manager did not accept the proposition that Mr Kenzie had been instructed by Mr Batterham and indicated that he was of the view that Mr Kenzie had been instructed by Turner Freeman. 27 A revised application was then made to the Costs Assessment Unit (removing Mr Kenzie QC as a co-applicant) and it was referred to Ms Alexandra Hutley (Costs Assessor) to undertake the costs assessment of Mr Kenzie's fees (Costs Assessment). 28 On 23 November 2011, the Costs Assessor issued a certificate requiring Mr Batterham to pay Turner Freeman the sum of $42,625 (Costs Certificate). The Costs Assessor concluded that "it was reasonable for senior counsel to rely on the credit of his instructing solicitors, the costs applicant, who in turn relied on the credit of the costs respondent, the client". The Costs Assessor rejected a submission by Mr Batterham that Mr Kenzies's fees were entirely a matter between him and Clayton Utz, and thus should have been included as part of the settlement with Clayton Utz and he was therefore not liable for any fees claimed by Mr Kenzie QC as against Turner Freeman. 29 On 24 February 2012 the Costs Certificate was sent to Mr Batterham. 30 The Cost Certificate was then filed in the Sydney Registry of the Local Court of New South Wales, with the result that pursuant to what was then s 368 of the Legal Profession Act 2004 (NSW), it took effect from 8 October 2013 as a judgment entered in that Court in favour of Turner Freeman against Mr Batterham and Maylord (Local Court Judgment).

[8]

Application to set aside Bankruptcy Notice 32 Mr Batterham then filed an application in the Federal Circuit Court to have the Bankruptcy Notice set aside on two grounds. First, he contended that his liability for Mr Kenzie QC's fees was governed by Chapter 5 of the High Court Rules 2004, such that it was not open to Turner Freeman to invoke the Legal Profession Act 2004 (NSW) to obtain a costs assessment with respect to those fees. Second, he contended that Turner Freeman was not the proper creditor in relation to those fees and thus was not entitled to apply for the issue of the Bankruptcy Notice. 33 On 13 February 2014, the Federal Circuit Court dismissed Mr Batterham's application: Batterham v Goldberg trading as Turner Freeman & Ors (2014) 285 FLR 370; [2014] FCCA 302. In dealing with the second of the grounds stated above, Judge Raphael said: 8 … It appears, from the evidence that I have seen in affidavits filed in the matter that after Mr Batterham dispensed of the services of Clayton Utz and took on the services of Turner Freeman, he instructed Turner Freeman to continue to involve Mr Kenzie. He attended the hearing of the matter in the High Court in which Mr Kenzie appeared, and then attended a conference with Mr Kenzie after the hearing. As Ms Hutley says at 3.4 of her decision: I did not accept that the costs respondent was not liable to the costs applicant for senior counsel's fair and reasonable fees. The costs respondent is a sophisticated businessman and would understand if work is performed for him, he is responsible for the costs of that work. The costs respondent did not inform the costs applicant that he was not going to be responsible for senior counsel's fees. In all the circumstances, it was reasonable for senior counsel to rely on the credit of his instructing solicitors, the costs applicant, who in turn relied on the credit of the costs respondent, the client. I do not accept that senior counsel should look to the first respondent for his fees, the subject of this application as they relate solely to the work he performed for the costs respondent after he withdrew instructions from that firm. … 10 … It is argued that the creditor is not a proper party to the bankruptcy notice. I propose to deal with that point very shortly. Although Mr Kenzie is the person who performed the work and although that work was performed for Mr Batterham, in the absence of a negotiated agreement between Mr Batterham and Mr Kenzie, either evidenced by a costs agreement and disclosure statement or in some other way that would establish a contract between them directly, the usual situation that has applied in excess of 100 years would apply in this case. Namely, counsel looks to the solicitor for payment of his fees and the solicitor looks to his client. 34 Mr Batterham then appealed to the Full Court of this Court (Jacobson, White and Gleeson JJ) against the decision of Judge Raphael (Full Court Appeal). 35 On 15 October 2014, the Full Court Appeal was dismissed: Batterham v Goldberg and Others (2014) 226 FCR 166; [2014] FCAFC 136. 36 In his reasons for judgment, White J (with whom Jacobson J agreed) relevantly observed that: 61 The FCC Judge found as a fact at [10] that there was no contract between the appellant and Mr Kenzie and that the conventional arrangement by which counsel is retained by a firm of solicitors for a client applied, namely, that it is the solicitor retaining counsel who is responsible for payment of counsel's fees and for the solicitor to recover those fees from the client. The appellant did not establish any basis upon which this Court could hold that the FCC Judge had been in error in so holding. 62 … Mr Kenzie QC was originally a co-applicant with the second respondent for the costs assessment. However, by letter dated 15 June 2011, the Manager of the Costs Assessment Unit in the Supreme Court of New South Wales rejected that application on the basis of the evidence that Mr Kenzie had been instructed by Turner Freeman, and not the appellant. Turner Freeman then lodged an amended application to which Mr Kenzie was not a party. The appellant did not seek any review of the Manager's decision and, as noted earlier, did not exercise any review or appeal rights in respect of the later assessment by Ms Hutley. It appears therefore that the appellant is now seeking, inappropriately, to make a collateral challenge to the decision of the Manager of the Costs Assessment Unit, despite the subsequent costs assessment now having merged into a judgment of the Local Court.

[10]

Nauer Proceedings 41 Maylord, as the trustee of the BRF, has been involved in a number of proceedings relevant to the claims now before the Court. The first proceedings commenced by Maylord against Mr Nauer and his related companies in the Supreme Court of New South Wales were concluded when the parties entered into a deed of settlement dated 4 July 2011 (Deed of Settlement). 42 On 19 December 2014, however, Maylord commenced further proceedings in the Supreme Court against Mr Nauer and his related companies raising essentially the same issues as in the earlier proceedings. These proceedings were dismissed on 24 April 2015 by Hammerschlag J by reason of a failure to comply with directions but the dismissal was on terms that it was without prejudice to it recommencing the proceedings within 12 months. 43 On 22 April 2016, two days before the expiry of the 12 month period permitted by Hammerschlag J, Maylord, in its capacity as trustee of the BRF, recommenced the proceedings against Mr Nauer and his related companies (Nauer Proceedings). 44 Mr Batterham alleged, inter alia, in the Nauer Proceedings that he had, or was to have, a minority interest through corporate entities in a joint venture with Vesture Limited (Vesture) and others in a strata property management business conducted through an entity called Victorian Body Corporate Services Pty Limited (VBCS). Mr Nauer, who was associated with Vesture, was also a director of ZCL, a special purpose company incorporated in the British Virgin Islands to implement the proposed joint venture. Mr Batterham alleged that Mr Nauer breached his fiduciary duties as a director of ZCL, breached of the Corporations Act 2001 (Cth) (Corporations Act) and the ASX Listing Rules, engaged in unconscionable conduct, and claimed that Mr Nauer gained a financial advantage by deception arising from the joint venture. 45 On 24 October 2016, Bergin CJ in Eq made orders refusing leave for Maylord to file an amended commercial list statement and granted leave to Maylord to make an application to file an amended commercial list statement, subject to the payment of $25,000 to Mr Nauer, and otherwise adjourned an application by Mr Nauer for security for costs. 46 On 6 February 2017, Hammerschlag J dismissed with costs a notice of motion filed by Maylord seeking to set aside the costs order made by Bergin CJ in Eq on 24 October 2016 but granted leave to Maylord to reinstate the motion on the same papers on 14 days' notice provided this was done within six months. 47 Maylord duly filed a reinstatement motion that was originally listed for hearing on 28 March 2017 but was stood over, by consent, for hearing on 7 April 2017. 48 On 7 April 2017, there was no appearance by Maylord and the reinstatement motion was dismissed. 49 On 22 May 2017, Ward CJ in Eq (as her Honour then was), dismissed a further notice of motion filed by Maylord seeking to set aside the costs order made by Bergin CJ in Eq on 24 October 2016, ordered that the costs of the proceedings since 24 October 2016 be paid by Maylord in a gross sum amount of $55,000, and stayed the Nauer Proceedings until all costs orders made to date had been satisfied: Maylord Equity Management Pty Ltd as trustee of the Batterham Retirement Fund v Nauer [2017] NSWSC 634 (Nauer No 1). 50 Her Honour declined to dismiss the Nauer Proceedings because, although she did not consider them to be properly commenced by Maylord, it was "not inconceivable that Maylord may be able to rectify the irregularities in its commencement of the proceedings as trustee of the BRF". Her Honour explained: 9 Relevantly, s 17A(2)(a) of the SIS Act provides that, if the trustee of the fund is a body corporate, a superannuation fund with only one member (ie, a fund such as the BRF) is an SMSF if and only if: the member is one of only 2 directors of the body corporate, and the member and the other director are relatives … 11 The complication arising in the present case is that Mr Batterham was placed into bankruptcy on 13 November 2014. As an undischarged bankrupt, not only is he automatically disqualified from being a director of any corporation (s 206B(3) of the Corporations Act 2001 (Cth)), but he is also a disqualified person under s 120 of the SIS Act and cannot be a director of a body corporate that is a trustee of an SMSF (s 126K of the SIS Act). … 18 The effect of s 17A(10) of the SIS Act, on its face, is that notwithstanding that Mr Ohlson holds an enduring power of attorney to act on behalf of Mr Batterham (which would otherwise satisfy the requirements of s 17A(1) and (2) by reference to s 17A(3)), for so long as Mr Batterham is a disqualified person this will not satisfy the requirements of the SIS Act for an SMSF. Accordingly, the BRF does not satisfy the definition of an SMSF and has not done so since before the commencement of the present proceedings. 51 On the second motion brought by Mr Nauer, Ward CJ in Eq found that, by virtue of his bankruptcy, Mr Batterham was disqualified from acting as a director of Maylord. As a result, Maylord did not satisfy the requirements of the SIS Act to qualify as an SMSF. As Maylord could not be the trustee of the BRF, Ward CJ in Eq stayed the Nauer Proceedings to allow Maylord an opportunity to rectify the position, and pending payment by Maylord of the costs order made against it. 52 By May 2017, Maylord had therefore become liable to pay Mr Nauer a total of $80,000 under the two costs orders that had been made against it in October 2016 and May 2017. Maylord failed to comply with either costs order. 53 On 6 November 2017, Slattery J allowed a motion by Mr Nauer to dismiss the Nauer Proceedings for want of due dispatch. Justice Slattery found that Maylord did not, at the time, have the financial resources to pay the $80,000 owed to Mr Nauer under the costs orders, and Mr Batterham remained an undischarged bankrupt: Maylord Equity Management Pty Ltd as trustee for the Batterham Retirement Fund v Nauer (No. 2) [2017] NSWSC 1467 (Nauer No 2) at [22]-[23]. 54 Relevantly, Slattery J found that proceedings were likely to remain in paralysis for the foreseeable future even if Mr Batterham was discharged from bankruptcy the following month. His Honour concluded that Maylord had been unable to trace out any viable path that demonstrated it would ever be in a position to advance the proceedings, and specifically could neither show that it was in a present position to, or had plans to, pay the costs orders nor that it had some realistic prospect of appealing against the costs orders. His Honour considered that waiting until 3 December 2017, when Mr Batterham was to be discharged from bankruptcy, would not ameliorate the situation in circumstances where Mr Batterham had not demonstrated to the Court what course of action he planned for the period after 3 December 2017 to remove the stays over Maylord's conduct of the proceedings: Nauer No 2 at [44]. 55 Despite Maylord's "casual approach to its own financial planning", Slattery J stayed the order dismissing the proceedings for 10 days after Mr Batterham ceased to be a bankrupt. This stay was ultimately extended until 15 February 2018 to permit Maylord, if so advised after the conclusion of Mr Batterham's bankruptcy, to commence appeal proceedings: Maylord Equity Management Pty Ltd as trustee of the Batterham Retirement Fund v Nauer (No. 3) [2017] NSWSC 1783. 56 The Court also made a costs orders against Mr Batterham personally in an amount of $168,595.52 (Personal Costs Order). I return to the Personal Costs Order later in these reasons.

[13]

Other Proceedings 59 Mr Batterham, Maylord and Finsec have also been involved in other related proceedings. 60 These include proceedings commenced by Finsec in the Supreme Court of New South Wales on 30 October 2019 (Finsec Proceedings) (Finsec having replaced Maylord as trustee of the BRF) and proceedings brought by Mr Batterham in the Federal Court being proceedings NSD 982 of 2018 (Further Bankruptcy Proceedings) and NSD 990 of 2018 (FCA Nauer Proceedings). 61 In concluding that it was not appropriate to grant leave to allow Finsec to conduct the Finsec Proceedings by Mr Batterham, without a legal practitioner on the record, Hammerschlag J noted that the proceedings arose out of substantially the same matrix of facts and sought to assuage the same basic complaint as the Nauer Proceedings as well as additional Federal Court proceedings: Finsec Pty Limited as Trustee of the Batterham Retirement Fund v Marcel Andre Nauer [2019] NSWSC 1831 at [5]. 62 As explained above, Hammerschlag J subsequently made an order against Mr Batterham under s 8(7) of the VPA although that order does not, in its terms, extend to these proceedings: Marcel Andre Nauer v Peter James Batterham [2020] NSWSC 240. That order was upheld on appeal in Batterham v Nauer [2020] NSWCA 204. 63 On 11 April 2019 an application to set aside a bankruptcy notice that Mr Nauer had caused to be served on Mr Batterham by reason of his failure to pay the Personal Costs Order was dismissed and the FCA Nauer Proceedings, that had been relied upon to support a counter-claim by Mr Batterham, were summarily dismissed: Batterham v Nauer, in the matter of Peter James Batterham [2019] FCA 485 (Gleeson J) (Batterham v Nauer). The FCA Nauer Proceedings were dismissed on the particular basis that Mr Batterham does not have a claim against Mr Nauer by reason of his status as the sole beneficiary of the BRF or otherwise on behalf of the BRF and, further, that any cause of action Mr Batterham might have had against Mr Nauer is personal to him, accrued prior to his bankruptcy in November 2014 and did not re-vest in Mr Batterham after his discharge from bankruptcy: Batterham v Nauer at [12]-[14]. 64 A notice to appeal with respect to the dismissal of the application to set aside the bankruptcy notice in the Further Bankruptcy Proceedings was struck out and an application for extension of time and leave to appeal the summary dismissal of the Batterham Nauer Proceedings was refused: Batterham v Nauer, in the matter of Peter James Batterham [2019] FCA 1648 (Flick J).

[15]

Summary judgment and strike out 66 Section 31A(2) of the FCA Act provides that: (2) The Court may give judgment for one party against another in relation to the whole or part of a proceeding if: (a) the first party is defending the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. 67 Further, s 31A(3) states that: (3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success. 68 The power to dismiss the whole or part of a proceeding summarily is not to be exercised lightly. Further, s 31A concentrates upon "reasonable" prospects as compared with "fanciful" or "merely arguable" prospects: Webster (Trustee) v Murray Goulburn Co-Operative Co. Limited [2017] FCA 995 (Webster) at [33] (Beach J). 69 In Spencer v Commonwealth (2010) 241 CLR 118; [2010] HCA 28, French CJ and Gummow J found, at [22], that s 31A authorises summary disposition of proceedings on a variety of bases, including: where the pleadings disclose no reasonable cause of action and their deficiency is incurable; a case in which there is unanswerable or unanswered evidence of a fact fatal to the pleaded case and any case which might be propounded by permissible amendment; and the class of case in the longstanding category of cases which are "frivolous or vexatious or an abuse of process". However, the application of s 31A is not limited to those categories. 70 Similarly, under r 26.01 of the FCR, the Court may make an order for summary judgment if the applicant has no reasonable prospect of successfully prosecuting the proceeding (in whole or in part), the proceeding is frivolous or vexatious, no reasonable cause of action is disclosed or the proceeding is an abuse of process. 71 Further, r 16.21 of the FCR provides that a party may apply to the Court for an order that all or part of a pleading be struck out on the ground that the pleading, inter alia: contains frivolous or vexatious material; is likely to cause embarrassment; fails to disclose a reasonable cause of action or defence or other case appropriate to the nature of the pleading; or is otherwise an abuse of the process of the Court. 72 Leave to replead ought not be granted if the Court takes the view that no reasonable amendment can cure the alleged defect and if there is no reasonable question to be tried: Crowley v Worley Parsons Limited [2017] FCA 3 at [61], citing Polar Aviation Pty Ltd v Civil Aviation Safety Authority (2012) 203 FCR 325; [2012] FCAFC 97 at [43] (Perram, Dodds-Streeton and Griffiths JJ).

[17]

Unconscionable conduct 78 Section 21 of the ACL provides that: (1) A person must not, in trade or commerce, in connection with: (a) the supply or possible supply of goods or services to a person; or (b) the acquisition or possible acquisition of goods or services from a person; engage in conduct that is, in all the circumstances, unconscionable. … (4) It is the intention of parliament that: (a) this section is not limited by the unwritten law relating to unconscionable conduct; … 79 Section 21 requires conduct to be measured against norms of commercial behaviour guided by a business conscience "permeated with accepted and acceptable community values": Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50; (2015) 236 FCR 199 (Paciocco) at [298] (Allsop CJ). 80 As stated by the Full Court in Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd (2021) 285 FCR 133; [2021] FCAFC 40 (Quantum Housing Group) at [4] (Allsop CJ, Besanko and McKerracher JJ): Whilst some form of exploitation of or predation upon some vulnerability or disadvantage of people will often be a feature of conduct which satisfies the characterisation of unconscionable conduct under s 21, such is not a necessary feature of the conception or a necessary essence in the embodied meaning of the statutory phrase. 81 In relation to the meaning of "unconscionable", at [88] the Full Court in Quantum Housing Group quoted with approval Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 266 FCR 631; [2018] FCAFC 155 at [155] (Allsop CJ, Middleton and Mortimer JJ): … To behave unconscionably should be seen, as part of its essential conception, as serious, often involving dishonesty, predation, exploitation, sharp practice, unfairness of a significant order, a lack of good faith, or the exercise of economic power in a way worth of criticism. None of these terms is definitional. The Shorter Oxford Dictionary on Historical Principles (1973) gives various definitions including "having no conscience, irreconcilable with what is right or reasonable". The Macquarie Dictionary (1985) gives the definition "unreasonably excessive; not in accordance with what is just or reasonable". (The search for an easy aphorism to substitute for the words chosen by Parliament (unconscionable conduct) should not, however, be encouraged: see Paciocco at [262]). These are descriptions and expressions of the kinds of behaviour that, viewed in all the circumstances, may lead to an articulated evaluation (and criticism) of unconscionability. It is a serious conclusion to be drawn about the conduct of a business person or enterprise. It is a conclusion that does the subject of the evaluation no credit. This is because he, she or it has, in a human sense, acted against conscience. The level of seriousness and the gravity of the matters alleged will depend on the circumstances. Courts are generally aware of the character of a finding of unconscionable conduct and take that into account in determining whether an applicant has discharged its civil burden on proof. [Emphasis in Quantum Housing Group.] 82 In Paciocco, Allsop CJ explained, at [296]-[299], that the values and considerations that inform the answer to a question whether conduct is against business conscience will be drawn from the value and considerations that one finds in the text, structure and context of the statute, and in particular those in s 22. See also Quantum Housing Group at [89].

[18]

Causation 83 Section 236 of the ACL provides that: (1) If: (a) a person (the claimant) suffers loss or damage because of the conduct of another person; and (b) the conduct contravened a provision of Chapter 2 or 3; the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention. (2) An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued. 84 The use of the words "because of" should be understood to import the traditional notion of causation as a question of fact to be determined by reference to common sense and experience into which policy considerations and value judgments necessarily enter: see Wardley Australia Limited v The State of Western Australia (1992) 175 CLR 514 at 525 (Mason CJ, Dawson, Gaudron and McHugh JJ) (discussing the use of "by" in the analogous s 82 of the Trade Practices Act 1974 (Cth) (TPA)). 85 The approach to causation in a statutory cause of action is necessarily affected by the subject-matter, scope and purpose of the Act: Travel Compensation Fund v Tambree (2005) 224 CLR 627; [2005] HCA 69 at [30] (Gleeson CJ), [49] (Gummow and Hayne JJ), [79] (Callinan J). 86 In Henville v Walker (2001) 206 CLR 459; [2001] HCA 52, both Gleeson CJ at [14] and Hayne J at [163]-[164] said that it was not essential that the contravention of the statute be the sole cause of the loss or damage to satisfy the requirements of s 82(1) of the TPA, being the analogue to s 18 of the ACL. Rather, it was sufficient if the contravening conduct was a cause. Further, at [61] Gaudron J observed that the common-sense approach requires no more than that the act or event in question should have materially contributed to the loss or injury. Justice McHugh stated at [106]: If the defendant's breach has "materially contributed" to the loss or damage suffered, it will be regarded as a cause of the loss or damage, despite other factors or conditions having played an even more significant role in producing the loss or damage. As long as the breach materially contributed to the damage, a causal connection will ordinarily exist even though the breach without more would not have brought about the damage. In exceptional cases, where an abnormal event intervenes between the breach and damage, it may be right as a matter of common sense to hold that the breach was not a cause of damage. But such cases are exceptional. [Footnote omitted.] 87 By reference to the analogous s 82 of the TPA, which uses the language "by conduct of another person" (emphasis added), where loss is not sufficiently connected with the contravening conduct of the defendant so that it was caused "by" the conduct, causation is not established: I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109; [2002] HCA 41 (I & L Securities) at [86] (McHugh J), citing Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd [1987] ATPR 40-822. 88 Justice McHugh, at [88] to [89] of I & L Securities, discussed Tefbao Pty Ltd v Stannic Securities Pty Ltd (1993) 118 ALR 565 at 575, in which Hodgson J said: If some part of the damage would not have occurred but for negligent conduct of the claimant, or failure to mitigate, then it may be appropriate to apply notions of reasonableness in assessing how much was in truth caused by the contravention. [Emphasis added.] 89 Justice McHugh noted that the italicised phrase demonstrated a crucial distinction between part of the loss, "in the sense of a distinct and separate portion of the whole loss," and playing a part in the occurrence of the entire loss: at [89]. 90 In relation to the phrase in s 236(2) of the ACL, "the day on which the cause of action that relates to the conduct accrued", by reference to s 82(2) of the TPA, Davies, Burchett and Hill JJ in Jobbins v Capel Court Corporation Limited (1989) 25 FCR 226 stated: There is every reason to understand this language in the sense in which it has come to be understood in statutes of limitations. … In the first place, where the incurring of damage is an essential element of a cause of action, the suffering of some damage (the other elements of the cause of action having already occurred) will, in general, start time running even although the damage continues to grow. The running of time is not suspended until all the damage which will be suffered has ceased to flow, nor does further damage constitute a fresh cause of action.

[19]

Res judicata, issue estoppel and abuse of process 91 The distinction between the doctrine of issue estoppel and res judicata was explained by Dixon J in Blair v Curran (1939) 62 CLR 464 at 532 in the following terms: 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. 92 In Tomlinson v Ramsey Food Processing Pty Limited (2015) 256 CLR 507; [2015] HCA 28 the majority (French CJ, Bell, Gageler and Keane JJ) provided the following explanation of the interrelationship between the doctrines of abuse of process and issue estoppel: 24 To explain contemporary adherence to the comparatively narrow principle in Ramsay v Pigram, it is appropriate also to explain the relationship between the doctrine of estoppel and the doctrine of abuse of process as it has since come to be recognised and applied in Australia. The doctrine of abuse of process is informed in part by similar considerations of finality and fairness. Applied to the assertion of rights or obligations, or to the raising of issues in successive proceedings, it overlaps with the doctrine of estoppel. Thus, the assertion of a right or obligation, or the raising of an issue of fact or law, in a subsequent proceeding can be simultaneously: (1) the subject of an estoppel which has resulted from a final judgment in an earlier proceeding; and (2) conduct which constitutes an abuse of process in the subsequent proceeding. 25 Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel. 26 Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel. [Footnotes omitted.] 93 In State Bank of New South Wales Ltd v Stenhouse Ltd (1997) Aus Torts Reports 81-423 at 64,089, Giles CJ Comm D identified the following list of non-exhaustive factors relevant to the determination of whether there had been an abuse of process: The guiding considerations are oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice, and amongst the matters to which regard may be had are - (a) the importance of the issue in and to the earlier proceedings, including whether it is an evidentiary issue or ultimate issue; (b) the opportunity available and taken to fully litigate the issue; (c) the terms and finality of the finding as to the issue; (d) the identity between the relevant issues in the two proceedings; (e) any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceedings; (f) the extent of the oppression and unfairness to the other party if the issue is relitigated and the impact of the relitigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and (g) an overall balancing of justice to the alleged abuser against the matters supportive of abuse of process. 94 This statement was subsequently endorsed by the Court of Appeal in Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198; [2001] NSWCA 142 at [32] (Handley JA) and applied, inter alia, in Spalla v St George Motor Finance Ltd (ACN 007 656 555) (No 6) [2004] FCA 1699 at [70] (French J, as his Honour then was); McDonald v State of South Australia [2011] FCA 297 at [43] (Besanko J); Quall v Northern Territory (2011) 286 ALR 374; [2011] FCA 1441 at [42] (Reeves J); Kitoko v University of Technology Sydney [2021] FCA 360 at [74] (Griffiths J).

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Rights vesting in the Trustee 95 Section 58 of the Bankruptcy Act provides: 58 Vesting of property upon bankruptcy - general rule (1) Subject to this Act, where a debtor becomes a bankrupt: (a) the property of the bankrupt, not being after-acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee; and (b) after-acquired property of the bankrupt vests, as soon as it is acquired by, or devolves on, the bankrupt, in the Official Trustee or, if a registered trustee is the trustee of the estate of the bankrupt, in that registered trustee. 96 Section 60 of the Bankruptcy Act relevantly provides: (2) An action commenced by a person who subsequently becomes a bankrupt, is upon him or her becoming bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action. … (4) Notwithstanding anything contained in this section, a bankrupt may continue, in his or her own name, an action commenced by him or her before he or she became a bankrupt in respect of: (a) any personal injury or wrong done to the bankrupt, his or her spouse or de facto partner or a member of his or her family; or (b) the death of his or her spouse or de facto partner or of a member of his or her family. 97 Further, s 116(1) of the Bankruptcy Act provides: 116 Property divisible among creditors (1) Subject to this Act: (a) all property that belonged to, or was vested in, a bankrupt at the commencement of the bankruptcy, or has been acquired or is acquired by him or her, or has devolved or devolves on him or her, after the commencement of the bankruptcy and before his or her discharge; and (b) capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his or her own benefit at the commencement of the bankruptcy or at any time after the commencement of the bankruptcy and before his or her discharge; and (c) property that is vested in the trustee of the bankrupt's estate by or under an order under section 139D or 139DA; and (d) money that is paid to the trustee of the bankrupt's estate under an order under section 139E or 139EA; and (e) money that is paid to the trustee of the bankrupt's estate under an order under paragraph 128K(1)(b); and (f) money that is paid to the trustee of the bankrupt's estate under a section 139ZQ notice that relates to a transaction that is void against the trustee under section 128C; and (g) money that is paid to the trustee of the bankrupt's estate under an order under section 139ZU; is property divisible amongst the creditors of the bankrupt. 98 However, the vesting of property of a bankrupt in their trustee is subject to exceptions. Section 116(2) provides: (2) Subsection (1) does not extend to the following property: … (d) subject to sections 128B, 128C and 139ZU: … (iii) the interest of the bankrupt in: (A) a regulated superannuation fund (within the meaning of the Superannuation Industry (Supervision) Act 1993); or (B) an approved deposit fund (within the meaning of that Act); or (C) an exempt public sector superannuation scheme (within the meaning of that Act); (iv) a payment to the bankrupt from such a fund received on or after the date of the bankruptcy, if the payment is not a pension within the meaning of the Superannuation Industry (Supervision) Act 1993; … (g) any right of the bankrupt to recover damages or compensation: (i) for personal injury or wrong done to the bankrupt, the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt … … and any damages or compensation recovered by the bankrupt (whether before or after he or she became a bankrupt) in respect of such an injury or wrong or the death of such a person …" 99 In Moss v Eaglestone (2011) 83 NSWLR 476; [2011] NSWCA 404 (Moss), Allsop P, as his Honour then was, after explaining the distinctions drawn in the authorities between damage to property and injuries done personally to a bankrupt, such as injuries to reputation, character, feelings and personal harm, stated at [64]: Thus, when one comes to the words of s 60(4) and s 116(2)(g) it is to be recognised that the background and context are, through various Colonial and State, and later Commonwealth provisions, reflective of, and embodying, the notions within the common law of bankruptcy. That assists in appreciating that the distinction (in s 60(4) and s 116(2)(g)) between person and property is a substantive one. It was a distinction made by courts and judges of the highest authority who declared it to be unjust and harsh that the estate of the bankrupt and the participating creditors should be swelled and advantaged by a wrong to the person or reputation of the bankrupt. 100 A claim for damages for personal injury or wrong that is inseverable from or directly consequential upon interference with property rights does not survive the stay pursuant to s 60(2) of the Bankruptcy Act: Moss at [77]. 101 In Mannigel v Hewlett Phelps and Ors [1991] NSWCA 186 (Mannigel), Handley JA with whom Kirby P, as his Honour then was, generally agreed and Meagher JA agreed, stated at 189: The meaning of the expression "personal injury or wrong" in s 60 subs 4(a) and equivalent: provisions is well settled. In Daemar v The Industrial Commission of New South Wales and Ors (No.1) (1988) 90 FLR 469 at 479 this Court referred to and applied the statement by Dixon J in Cox v Journeaux and Ors (No. 2) (1935) 52 CLR 713 at 721 that: "The test appears to be whether the damages or part of them are to be estimated by immediate reference to pain felt by the bankrupt in respect of his mind body or character and without reference to his rights of property." The plaintiffs claimed damages in the proceedings in the manner particularised in par 17(e), (i) and (g) of their amended statement of claim but these claims were consequential upon alleged breaches of professional duty owed to them by the defendants in relation to the purchase of the land and the contract by the vendor to erect a dwelling house on it. The plaintiffs claims for damages for loss of credit, for mental distress, inconvenience and for injury to their physical and mental health therefore were not claims "without reference to their rights of property" within the principle stated by Dixon J On the contrary those claims were consequential on damages to the plaintiff's financial and property interests as a result of alleged breaches of professional duty by the solicitors. 102 The distinction between injuries or wrongs to a person and injuries or wrongs to the property of a person and the potential relationship between them was addressed by the Full Court of the Supreme Court of South Australia in Sands v State of South Australia (2015) SASR 195; [2015] SASCFC 36 (Sands). The Full Court (Blue, Stanley and Nicholson JJ) stated: 94 Some torts involve injuries or wrongs done to the person. Examples are assault, battery, trespass to the person and false imprisonment. Other torts involve injuries or wrongs done to property of a person. Examples are trespass to goods, conversion and detinue. 95 Torts involving injuries or wrongs done to the person such as assault can give rise to damages for non-economic loss such as pain and suffering, distress and loss of amenities of life; but they can also give rise to economic loss flowing from the wrong to the person such as loss of wages or earning capacity. The mere fact that they also give rise to economic loss does not detract from their proper characterisation as wrongs to the person. Conversely, breaches of contract involving injuries or wrongs done to the property or economic interests of a person might in special circumstances give rise to damages for distress. The mere fact that they give rise to such non-economic loss does not detract from their proper characterisation as not being wrongs to the person. [Footnotes omitted.]

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Overview 103 It is now necessary to outline the claims that Mr Batterham seeks to advance in these proceedings against each of the respondents. 104 The ASOC is a discursive document drafted by Mr Batterham. At times it reads more in the nature of a submission than a pleading. It contains many serious allegations and is often expressed in emotive terms. It seeks to combine three disparate claims against Clayton Utz, Turner Freeman and Mr Rush into two interrelated causes of action. As submitted by Mr Batterham: The first cause of action arose on 6 November 2017 when the Batterham Retirement fund (SMSF) was unable to proceed with a claim filed in 2016 after it was dismissed prior to being heard for want of due dispatch arising from Batterham's bankruptcy. The second cause of action arose on 3 September 2020 when an application for leave to appeal the dismissal of a claim made in October 2019 without being heard, on the basis that it was vexatious. 105 The ASOC commences with an introductory background at [1] to [10]. The introductory background includes the following contentions: 1. The Applicant is inextricably linked to the trustee of the Batterham Retirement Fund (SMSF) as Batterham is the sole beneficiary of SMSF and the sole director of the trustee of SMSF, Finsec Pty Ltd (formerly Maylord Equity Management Pty Ltd), 2. The cause of action in these current proceedings dates from 6 November 2017 when proceedings instigated by SMSF on 22 April 2016 were dismissed for want of due dispatch caused by Batterham's bankruptcy in November 2014 relating to proceedings in the High Court in November 2005, nine years before. 3. All three Respondents all had roles in causing SMSF being denied justice as outlined in this Amended Statement Of Claim. 106 The alleged denial of justice would appear to be a reference to the numerous unsuccessful attempts that Mr Batterham has made to recover the alleged wrongful diminution in the value of the ZCL Shares and to overturn the Personal Costs Order and his bankruptcy. 107 The same relief is ultimately sought in the ASOC against each of the three respondents in the following terms, immediately following [95] of the ASOC: Relief claimed (a) The loss of $1,653,758 for the value of SMSF's ZCL shares for which SMSF received no compensation, plus the imputed increase in value of these shares since September 2013 or interest, whichever is the greater. (b) Compensation for costs orders in the amount of $168,595.52 that remain outstanding and cannot be paid. (c) Compensation for stress and anxiety the respondents imposed on the Applicant over many years by their wrongdoing and the loss of future income as a promoter of private equity opportunities after Batterham became bankrupt. The Court to apportion the relief claimed among the three respondents as appropriate.

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Clayton Utz 108 The causes of action pleaded against Clayton Utz focus on Mr Batterham's decision to commence the QSR Proceedings and pursue the High Court Appeal. 109 The case against Clayton Utz is advanced in the ASOC at [11] to [21]. 110 It is principally alleged by Mr Batterham in the ASOC that: (a) he commenced the QSR Proceedings on the advice of Clayton Utz that he could challenge the stated levels of return in the Option Deed on the basis that they were unfair, harsh or unconscionable or contrary to the public interest; (b) Clayton Utz never disclosed to Mr Batterham prior to 2 November 2005, that if he were successful in the High Court that it would merely mean that the QSR Proceedings would be remitted in the IRC and may still be lost in the IRC for lack of jurisdiction to address the fairness of the Option Deed; (c) Clayton Utz never disclosed to Mr Batterham the advice they had received from Mr Kimber SC prior to the hearing of the High Court Appeal that the QSR Proceedings had little prospect of success on jurisdictional grounds; (d) the High Court dismissed the appeal in the QSR Proceedings on the basis that the IRC lacked jurisdiction to hear the claim with respect to the Option Deed and observed that the case advanced was that there was a disconformity between what had been represented in the prospectus and the terms of the Option Deed as to the stated level of return, but Mr Batterham had not sought any rectification of the Option Deed; (e) Clayton Utz never disclosed to Mr Batterham that seeking rectification of the Option Deed was an option available to him; (f) at the time that he signed the Deed of Release he was ignorant that he could be made bankrupt in November 2014 by reason of costs invoiced to him by Turner Freeman on behalf of counsel engaged and briefed by Clayton Utz to attend the hearing of the High Court Appeal in November 2005; (g) by reason of the findings in the High Court judgment and the contentions advanced by Hunt & Hunt Lawyers in their letter dated 14 December 2007, Clayton Utz breached ss 18 and 21 of the Competition and Consumer Act 2010 (this is presumably intended to be a reference to ss 18 and 21 of the ACL; and (h) that the loss or damage attributable to the ultimate dismissal by the High Court of the QSR Proceedings would extend to cost liabilities incurred with respect to the conduct of those proceedings can readily be accepted. It might also extend to an unexplored prospect of success and recovery of damages if a claim for rectification of the Option Deed had been made and was successful.

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Mr Rush 114 The case against Mr Rush is advanced in the ASOC at [34] to [72] and under the heading "Legal Actions Against Nauer" at [73] to [95]. In these paragraphs of the ASOC references are made to the conduct of both Mr Rush and Esplins. It is not readily apparent whether Mr Batterham is using the terms interchangeably to refer to Mr Rush or is seeking to draw a distinction between Mr Rush and Esplins. Given that Esplins is not named as a respondent and Mr Rush is identified in the ASOC as "Stephen Rush Director Esplins Pty Ltd" I have proceeded on the basis that the conduct alleged against Esplins is also alleged against Mr Rush. 115 I also note that throughout his submissions and in the ASOC, Mr Batterham typically refers to the trustee of the BRF, whether it was Maylord or Finsec at the relevant time, as "SMSF". This can be confusing because the BRF is Mr Batterham's self-managed superannuation fund, not Maylord or Finsec. 116 The claims made against Mr Rush are alleged to arise by reason of his conduct as a director of Vesture and as a legal adviser to the company (ASOC at [34]). I note that Mr Batterham at times refers to Vesture as "VES" in the ASOC. 117 Various allegations are advanced against Mr Rush during the period between 2008 and 4 July 2011. 118 It is alleged that "before and after 17 February 2011" Mr Rush, while he was a shadow director of Vesture and a director of ZCL, conspired with Mr Nauer to draft two agreements that "knowingly financially disadvantaged" the BRF and Mr Batterham (ASOC at [54]). More specifically it is alleged that: 55. Rush, firstly conspired with Nauer and Zuellig to draft agreements to transfer the proceeds from VES purchasing an asset of ZCL to Zuellig, thereby depriving SMSF of its equitable interests in such assets as a known shareholder of ZCL. 56. Rush, secondly drafted a shareholder agreement between VES and ZCL to exclude SMSF as a party despite that the agreement disclosed that SMSF was a shareholder. Esplins also, knowing that SMSF was a minority shareholder in ZCL and its subsidiary ZL, drafted a clause at Para 4.2 of the agreement that provided "To the extent permitted by law a director may make a decision in the interests of a shareholder appointing him or her without being required to have regard to other shareholders". Under the terms of this agreement Vesture controlled by Nauer appointed 2 out of 3 directors. Additionally, the definition of "shareholder" drafted by Esplins was defined as "Means a person who holds shares from time to time and who agrees in writing to be bound by the terms of this agreement and initially includes Vesture and ZCL". SMSF as a shareholder was not given any opportunity to agree in writing as it was excluded as a party to the agreement and was not included in the definition as a shareholder. The shareholder agreement also demonstrated that the claim made as outlined in Para 50 above was misleading and deceptive. [Emphasis in original.] 119 It is alleged that the above actions by Mr Rush contravened s 184 of the Corporations Act (ASOC at [57]) on the basis that by those actions: Rush assisted Nauer to secretly cause agreements to be entered into that knowingly disadvantaged SMSF by depriving SMSF of its equitable interest in the proceeds of VES purchasing assets of ZCL and intentionally removing any bargaining power for SMSF in the shareholder agreement secretly entered into between VES and ZCL drafted by Esplins. 120 Allegations are also advanced against Mr Rush in connection with the alleged drafting of a document by Esplins described as a settlement deed of claims made against Vesture on 21 January 2011 in relation to arrangements made with Vesture in 2008 (Settlement Deed) (ASOC at [66]). The date of the Settlement Deed is identified in the particulars to [72] as 4 July 2011. It is alleged that: 67. Esplins engaged in subterfuge in drafting the settlement deed that did not disclose any dispute with Nauer or ZCL but attempted to hide the intention of the deed to provide immunity for Nauer as an undisclosed past director of ZCL for any future claim against him for his misbehaviour as a partner in the joint venture and a director of ZCL. 68. By drafting the shareholder agreement and the agreements to transfer proceeds to Zuellig from VES acquiring assets of ZCL in secret, Esplins knowingly conspired with Nauer for him to intentionally and wilfully, cause financial disadvantage to SMSF and Batterham. 69. By Esplins actions in conspiring with Nauer and others to financially disadvantage the SMSF to the benefit of Nauer, Esplins breached s 18, s21 and s 236 of the Competition and Consumer Act 2010 and aided and abetted his client to breach s 184 of the Corporations Act 2001. Using subterfuge in drafting the Settlement Deed to attempt to secretely [sic] provide immunity for Nauer for his wrongdoing was unconscionable. 121 After quoting passages from Grant v John Grant & Sons Proprietary Limited [1954] HCA 23; (1954) 91 CLR 112 (Grant) directed at the scope of releases and from Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65 concerning the elements necessary to establish involvement in a contravention, it is then alleged in the ASOC that: 72. Rush had knowledge of the contravention and actively assisted in creating documents to enable it as detailed in this amended SOC. Stephen Rush and Esplins breached s 18, s21 and s236 of the Compensatin [sic] Act 2010 by their actions since 2010. 122 The references to the legislative provisions in [72] of the ASOC are presumably intended to be references to s 236 of the Competition and Consumer Act 2010 (Cth) and ss 18 and 21 of the ACL. 123 The alleged consequences of adding Mr Nauer to the Settlement Deed are pleaded at some length in the ASOC at [73] to [95]. 124 It is also alleged at [83] that Mr Batterham's intention was never to set aside the Settlement Deed, only the "claimed addition" of Mr Nauer to the deed in February 2015 in order to obtain "immunity as an undisclosed past director of ZCL". 125 Allegations are then advanced in the ASOC at [89] to [95] with respect to the proceedings commenced by Finsec in the Commercial List of the Supreme Court of New South Wales on 30 October 2019. It is alleged that: 91. The 30 October 2019 claim was effectively dismissed without being heard as SMSF was not legally represented and leave was not granted for Batterham to represent SMSF. The Court never heard arguments why the Settlement Deed did not apply to Nauer as detailed in Para 70 above. The Court merely accepted submissions from Nauer's barrister that it did. 126 The relevance of the allegations concerning Mr Nauer and the dismissal of the proceedings against him is sought to be explained in the following paragraphs of the ASOC: 94. The bankruptcy of Batterham resulted in the April 2016 proceedings being dismissed for want of due dispatch before being heard and costs were awarded against Batterham personally in the amount of $168,595.52. The claim that Nauer was immune from prosecution arising from the Settlement Deed signed with VES in July 2011 has no legal standing. However, had the Third Respondent not breached s 18, s 21 and s 236 of the Competition and Consumer Act 2010 and aided and abetted his client to breach s 184 of the Corporations Act 2001 to gain a financial advantage by assisting his client to remove any bargaining power for SMSF and Batterham, this issue would never have arisen. 95. The Competition and Consumer Act 2010 at s 236 provides that a claimant may recover the amount of the loss or damage by the action against another person or against any person involved in the contravention. This includes Rush as a director of Esplins.

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Clayton Utz 127 Clayton Utz advances the following principal submissions in support of its contention that the proceedings brought by Mr Batterham against it should be summarily dismissed. 128 First, Clayton Utz submits that the proceedings should be summarily dismissed with costs as no cause of action is disclosed in the ASOC as against it and therefore there is no reasonable prospect of Mr Batterham succeeding in his claim. It submits that the ACL was not in force at the time of its alleged conduct in advising Mr Batterham in respect of the High Court Appeal and the Deed of Release, there is no articulation of the facts alleged to give rise to the causes of action alleged, the apparent breach of an implied term claim advanced in Mr Batterham's submissions is not pleaded in the ASOC and the content of the implied term is not identified. Further, it submits that there is no relationship between the claimed loss of $1,653,758 with respect to the value of the ZCL Shares and the conduct of Clayton Utz, and the claim with respect to the Deed of Release must fail because conduct in connection with the settlement of a dispute is not conduct in "trade or commerce". 129 Second, Clayton Utz submits that Mr Batterham is precluded by the Deed of Release from bringing the claims against it. It submits that the Deed of Release includes a wide release in clause 3 and covers all claims that Mr Batterham or Maylord may have against Clayton Utz in respect of the work undertaken by Clayton Utz for them whether or not they were then known to the parties. Further, it submits that the alleged misconduct of Clayton Utz was the very matter that the parties agreed should be the subject of the Deed of Release, and that although Mr Batterham may not have foreseen all future costs and consequences that might arise from the High Court Appeal, that does not take the present claim outside the Deed of Release. 130 Third, Clayton Utz submits that the claims sought to be advanced by Mr Batterham against it are statute barred. Clayton Utz submits that although it is unclear precisely what conduct is alleged against it and what loss or damage is alleged to have been sustained by that conduct, there are the following possibilities as to when that loss or damage was first sustained, each of which first arose more than six years before the current proceedings were commenced: (a) on the date on which Clayton Utz gave Mr Batterham certain advice relating to the High Court Appeal. On any view, this must have occurred before Mr Batterham terminated the retainer on 2 November 2005; (b) on or before the date when Mr Batterham entered into the Deed of Release with Clayton Utz, being 21 December 2007; (c) on the date on which Mr Batterham became liable to pay Mr Kenzie QC's fees, namely the date when he received the invoice from Turner Freeman, being 1 June 2009; (d) on the date on which the costs assessment was sent to Mr Batterham, namely 24 February 2012; (e) on the date on which Mr Batterham claims he first became aware that the costs assessor determined that he was liable to pay Mr Kenzie QC's fees, being the date on which he was served with a bankruptcy notice "at the end of 2013" (see ASOC [29]); or (f) on the date on which he was officially declared bankrupt, 3 November 2014 (see ASOC [33]). [Emphasis in original.] 131 Clayton Utz also submits in response to Mr Batterham's purported reliance on the dismissal of the Nauer Proceedings on 6 November 2017 as the relevant date for limitation purposes, that the relevant date is not the date when all alleged damage has ceased to flow but rather when some damage is first suffered, and the incurring of subsequent damage does not constitute a fresh cause of action. 132 Clayton Utz accepts that summary judgment may be entered or a statement of claim summarily dismissed because of limitation issues in only the clearest of cases but for the reasons outlined above they submit that this is such a case. 133 Fourth, Clayton Utz submits that Mr Batterham is making a collateral attack on concluded proceedings by seeking to relitigate his claims that he was not liable for Mr Kenzie QC's fees and that Turner Freeman was not entitled to bankrupt him by reason of his failure to pay those fees. Clayton Utz submits that those matters were litigated and determined in the Costs Assessment, the Bankruptcy Proceedings and the Full Court Proceedings and the contention that Mr Kenzie QC's fees should have been included in the settlement with Clayton Utz on the basis that it had instructed him in the High Court Appeal was raised in the Costs Assessment but rejected by the Costs Assessor. 134 Fifth, Clayton Utz submits that in addition to the matters outlined above, the ASOC should be dismissed because it is embarrassing and vague. It submits that the claims in misleading and deceptive conduct and unconscionable conduct are not articulated. It also submits that it is not possible to discern any causal link between the conduct pleaded against it and the pleaded loss, nor is it clear what the pleaded loss is alleged to encompass. Clayton Utz further submits that no alleged implied term breach is pleaded and that in all the circumstances it does not understand the claims made against it and the whole of the ASOC should be struck out in whole or at least as against Clayton Utz. 135 Sixth, in the course of oral submissions, senior counsel for Clayton Utz, Ms Mirzabegian SC, also embraced the contentions advanced by Turner Freeman with respect to the vesting of the claims sought to be advanced by Mr Batterham in his trustee in bankruptcy.

[26]

Turner Freeman 136 Turner Freeman advances two principal submissions in support of its application for summary dismissal of this proceeding, or alternatively, the striking out of the AOA and the ASOC. 137 First, Turner Freeman submits that Mr Batterham is foreclosed by the related doctrines of res judicata, issue estoppel and abuse of process, to relitigate issues that were determined: (a) as part of the Costs Assessment, which assessment has the effect as a judgment entered against Mr Batterham by reason of the Local Court Judgment; and (b) in proceedings in the Full Court of this Court concerning the validity of the Bankruptcy Notice served upon Mr Batterham in reliance upon the Local Court Judgment. 138 Turner Freeman submits that the case that Mr Batterham seeks to advance against it proceeds on the contention that the outcome of the Costs Assessment was incorrect and that Turner Freeman was not a creditor of Mr Batterham and therefore not entitled to seek the issue of the Bankruptcy Notice. It observes, however, that Mr Batterham has not alleged that the Local Court Judgment was given or entered "irregularly, illegally or against good faith" within the meaning of r 36.15 of the UCPR, and no attempt has been made to set aside the judgment. It submits that whatever claim Turner Freeman may have had with respect to the fees of Mr Kenzie QC merged in the Local Court Judgment and in the absence of any attempt to set aside that judgment "there is simply no basis for concluding that Turner Freeman was anything other than a creditor of Mr Batterham and thus entitled to seek the issue of the Bankruptcy Notice". 139 Turner Freeman further submits that Mr Batterham is precluded by the doctrine of issue estoppel from contending that Turner Freeman did not instruct Mr Kenzie QC. It submits that this was contrary to the basis on which the Manager of the Costs Assessment Unit determined Mr Kenzie was not entitled to be a co-applicant of the costs assessment, the Cost Assessor's finding that Turner Freeman was Mr Kenzie's instructing solicitor and the findings by Judge Raphael that adopted the Cost Assessor's findings, and which in turn were affirmed by White J (with whom Jacobson J agreed) in the Full Court Appeal. 140 In addition, Turner Freeman submits that the continuation of these proceedings would involve an abuse of process given that the nature of the relationship between Turner Freeman and Mr Kenzie QC is an issue that has been litigated and determined on four separate occasions - before the Costs Assessor, in the Bankruptcy Proceedings, the Full Court Appeal and in the Sequestration Stay Proceedings - in circumstances where Mr Batterham had legal representation in each of those proceedings. 141 Second, Turner Freeman submits that Mr Batterham has no standing to bring the proceedings. It submits that whatever cause of action Mr Batterham might have had against the partners of Turner Freeman vested in his trustee in bankruptcy after the Sequestration Order was made against his estate on 13 November 2014, and did not subsequently re-vest in Mr Batterham following his discharge from bankruptcy. 142 Turner Freeman submits that the principal loss sought to be recovered by Mr Batterham is the loss of an ability to generate income from a mergers and acquisition business, and that is not a loss that could be characterised as a right to recover damages or compensation for "personal injury or wrong done to the bankrupt" pursuant to the exemption in s 116(2) from property vesting in the Official Trustee on a debtor becoming bankrupt. It submits that any stress or anxiety for which Mr Batterham seeks relief was consequential upon the damage to his economic interests and therefore cannot be divisible from such damage. 143 Finally, Turner Freeman further submits that any cause of action against it must have accrued after the making of the Sequestration Order on 13 November 2014 because it was the very fact of his bankruptcy that underpinned Mr Batterham's contention that he had been impeded his conduct of his mergers and acquisitions business and prevented him from earning an income. It submits that such cause of action was thus after-acquired property for the purposes of s 58 of the Bankruptcy Act, it did not re-vest in him after his discharge from bankruptcy on 3 December 2017, and there is no evidence that he took any assignment of after-acquired property from his trustee.

[28]

Mr Batterham 149 Mr Batterham filed an eleven page submission in response to the written submissions of Clayton Utz, Turner Freeman and Mr Rush. 150 The following principal propositions are advanced by Mr Batterham, by express or necessary implication, in his written submissions. 151 First, Mr Batterham contends that the causes of action that he advances against the respondents are interrelated, each of the respondents has acted wrongfully and it is up to the Court to determine how best to apportion responsibility between them for the losses alleged to be suffered by him. 152 The submissions commence at [1], under the heading "Legal Principles", with the proposition that: Common law is derived from prior decisions of Courts to achieve justice. New law is created by courts to reflect what is just in circumstances that have not been previously tested in a court 153 It is then submitted at [2] that: There are two causes of action that are interrelated. The first cause of action arose on 6 November 2017 when the Batterham Retirement fund (SMSF) was unable to proceed with a claim filed in 2016 after it was dismissed prior to being heard for want of due dispatch arising from Batterham's bankruptcy. The second cause of action arose on 3 September 2020 when an application for leave to appeal the dismissal of a claim made in October 2019 without being heard, on the basis that it was vexatious. 154 At [22] Mr Batterham submits that: The current proceedings are against three respondents whose wrongful actions overlapped to cause losses claimed and it is up to the court to apportion any damages among them. 155 Second, Mr Batterham contends that Mr Kenzie QC was at all times instructed by Clayton Utz in the High Court Appeal. At [18], Mr Batterham submits that: It is claimed in Para 29 that Clayton Utz ceased to instruct Kenzie after the meeting Batterham with Clayton Utz and Kimber on 2 November 2005, 6 days before the hearing that included a weekend. Clayton Utz engaged Kenzie in May 2005 to prepare for and appear at the hearing in November, a period of over 5 months, and as such, for all practical purposes Clayton Utz were the instructing solicitor. Also, Mr Catanzarity, the Clayton Utz partner who instructed Kenzie was present at the hearing. After 2 November 2005 Kenzie had no discussions with either Batterham or Turner Freeman regarding the conduct of the matter. 156 He concedes that shortly before the hearing of the High Court Appeal, he terminated the retainer of Clayton Utz, but claims that he nonetheless procured the agreement of Mr Kenzie QC and Mr Kimber SC to continue to act for him on the basis that he would "organise to have a lawyer available at the hearing in case they … required some administrative assistance". It was against this background that Mr Batterham is said to have requested Turner Freeman, which he had retained in an unrelated matter, to make available a junior associate with whom he had previously dealt to provide the required assistance. He claims that this retainer to provide "some administrative assistance" did not extend to instructing counsel at the hearing of the High Court Appeal. 157 Third, Mr Batterham contends that it was an implied term of the Deed of Release that the release would extend to any subsequent claims made by a third party engaged by Clayton Utz to prepare for and attend the hearing of the High Court Appeal. At [19] he alleges that: When the 2007 settlement was agreed Batterham had no outstanding invoices concerning Kenzie from Clayton Utz or Turner Freeman. The fact that Kenzie issued an invoice two years later to Turner Freeman with whom he had no commercial arrangement, is not some vague circumstance that may arise. Kenzie knew or ought to have known that his co-counsel had previously provided advice to Clayton Utz and as such was complicit in the deception and as such, it was reasonable for Batterham to conclude that the settlement release included all third parties that Clayton Utz had engaged for the purpose of the High Court appeal. As such the Kenzie fee issue goes to the heart of the dispute that led to the settlement. 158 Fourth, Mr Batterham contends that there was no basis for Turner Freeman to claim that it was under any legal obligation to pay Mr Kenzie QC's fees or for Mr Batterham to reimburse Turner Freeman for those fees. Mr Batterham submits at [23] that: Turner Freeman knew that there was no legal obligation to pay any fees to Kenzie as they no verbal or written agreements with him concerning the conduct of the proceedings leading up to and at the hearing. When Batterham was informed in mid 2009 that an invoice was received by Turner Freeman from Kenzie, Batterham informed them of the settlement with Clayton Utz two years before and told them to refer Kenzie to Clayton Utz. 159 Mr Batterham submits that Mr Magner, the solicitor from Turner Freeman present in the High Court Appeal, could not have instructed Mr Kenzie QC because the only knowledge that he had of the proceedings "was a verbal outline of the proceedings given to him by Batterham while travelling together by car to Canberra" and Turner Freeman never had access to the extensive file in the IRC proceedings that would have been necessary for them to advise on reasonable prospects of success. 160 Fifth, Mr Batterham contends that Mr Rush had assisted Mr Nauer in the wrongdoing alleged against him in the various proceedings commenced by Mr Batterham against Mr Nauer. This wrongdoing is alleged to have included a secret transfer to a shareholder of ZCL of funds received from Vesture for the sale of an asset of ZCL without informing Maylord, which had the effect of depriving Maylord of its equitable interest in those funds, the exclusion of Maylord and Mr Batterham as a shareholder from a shareholder agreement between Venture and ZCL notwithstanding that Maylord was a shareholder in ZCL, and the addition of Mr Nauer to a settlement deed in order to enable him to obtain the benefits of the release provisions as an "undisclosed director" of ZCL. 161 Finally, in the course of his oral submissions Mr Batterham contended that his causes of action had not vested in his trustee on the making of the Sequestration Order because the loss he was seeking to recover was the reduction in value of the ZCL Shares held in the BRF. He submitted that as the ZCL Shares were "owned by the superannuation fund" they are therefore an "exempt asset", and ownership of those shares did not vest in his trustee on the making of the sequestration order.

[30]

Retainer of Mr Kenzie QC 165 It is convenient to commence with the retainer of Mr Kenzie QC. 166 The question of who was instructing Mr Kenzie QC in the High Court Appeal after Clayton Utz's instructions were withdrawn on 2 November 2005 is central to Mr Batterham's contentions against both Clayton Utz and Turner Freeman. 167 Given the withdrawal of Clayton Utz's instructions, it must follow that they could not have been instructing Mr Kenzie QC in the High Court Appeal after 2 November 2005. The issue thus becomes whether Mr Kenzie was instructed by Turner Freeman, or whether he was appearing on a direct access basis and was instructed by Mr Batterham at the hearing of the High Court Appeal. 168 The Costs Assessor determined that Mr Kenzie QC was instructed by Turner Freeman after Clayton Utz's instructions were withdrawn. That finding was clearly open to the Costs Assessor given the withdrawal of Clayton Utz's instructions, the retainer of Turner Freeman and the absence of any direct access costs agreement between Mr Kenzie QC and Mr Batterham. 169 Mr Batterham's contention that Mr Kenzie QC's fees for services rendered after the withdrawal of Clayton Utz's instructions was entirely a matter between him and Clayton Utz was not accepted by the Costs Assessor. Contrary to the position advanced by Mr Batterham, the absence of a detailed knowledge of the proceeding did not preclude Turner Freeman from instructing counsel in the hearing of the High Court Appeal. In any event, the finding by the Costs Assessor was not appealed and subsequently merged in the Local Court Judgment. 170 Mr Batterham's belated challenge to the finding on the basis that Turner Freeman failed to disclose to the Costs Assessor the alleged "admission" in their 11 May 2011 letter to the Manager of the Costs Assessment Unit, that Mr Kenzie QC had been instructed by Mr Batterham, is misconceived. The alleged admission was in truth a submission that, in the absence of any direct access costs agreement or other evidence of any agreement to accept a direct access brief, was incorrect and was rejected by the Costs Assessor. It certainly could not be an admission by Mr Kenzie QC that he had accepted a direct access brief. 171 The alleged admission was inconsistent with Mr Kenzie QC's explanation of his retainer in his letter of 5 May 2009 to Turner Freeman in which he stated: 10. Around 2 November 2005, immediately prior to the hearing in the High Court, Mr Batterham terminated the services of Clayton Utz and instructed your firm in the proceedings. … 13. Following this, in further compliance with the High Court's procedural requirements, submissions in reply were prepared by myself (and Mr Kimber) and filed by your firm on 3 November 2005. Enclosed is a copy of the written submissions in reply signed by myself and Mr Kimber and filed on Mr Batterham's behalf. 14. I appeared with Mr Kimber as my junior counsel at the hearing of Mr Batterham's appeal before the High Court on 8 and 9 November 2005. His appeal was heard together with the appeal in Fish v Solution 6 Holdings (2006) 225 CLR 180 and Old UGC Inc v Industrial Relations Commission (NSW) (2006) 225 CLR 274. I was instructed on these days by Mr Aaron Magner of your office. During the proceedings, I spoke to Mr Batterham in the courtroom and reported to him on the ongoing progress of the submissions. Mr Batterham refers to this in his email (annexed and marked with the letter "I") of 15 March 2006. … 16. Mr Batterham's assertion in the abovementioned email that he thought Mr Kimber was representing him is correct in the sense that Mr Kimber was appearing with me as junior counsel. But the suggestion that Mr Batterham was unaware that I was representing him in the High Court proceedings is disingenuous. 17. Following the High Court hearings, the Court requested further submissions on the statutory amendments to s. l06 and I was instructed by your firm to draw further submissions in respect of this matter. These submissions were drafted and filed and were the subject of my subsequent memorandum of fees of 23 February 2006. 18. Following this there was a further conference in my chambers on 24 May 2006 in the immediate aftermath of the High Court's decision of 18 May 2006. Apart from myself, Mr Kimber, Mr Batterham and yourself were present. The conference concerned, inter alia, the possible future course of Mr Batterham's proceedings in the Industrial Relations Court that were unaffected by the prohibitive orders. 19. Needless to say, at no stage in any of these matters did Mr Batterham suggest that I was not, nor had I been, properly instructed to act on his behalf. 20. In your email to me of 16 April 2009 you reiterated the view that it would be best if I issued your firm with an invoice relating only to the period from when you commenced acting in the matter - so that an invoice could be sent to Mr Batterham for this amount. In the circumstances, I agree that this is the appropriate course and I enclose a memorandum of fees in respect of the period from 2 November 2005 when your firm assumed conduct of the matter continuing to retain me on behalf of Mr Batterham. 172 Independently of limitation, res judicata, issue estoppel and abuse of process considerations, I am satisfied that the finding that Mr Kenzie QC was retained by Turner Freeman in the High Court Appeal from 2 November 2005 was plainly correct and Mr Batterham has not established any basis on which it should now be disturbed.

[31]

Causation 173 It is convenient then to address causation. By reason of s 236 of the ACL, Mr Batterham must establish that the alleged loss of damage that he has suffered was a result of the conduct of the respondents. 174 A fundamental difficulty that Mr Batterham faces in pursuing these proceedings is the lack of any apparent connection between the conduct complained of against the respondents and the first two categories of loss and damage that he now seeks to recover in these proceedings, namely the alleged diminution in the value of the ZCL Shares and the Personal Costs Order. 175 It is not apparent how the alleged conduct of any of the respondents materially contributed to the alleged wrongful loss in the value of the ZCL Shares. It was the alleged conduct of Mr Nauer that led to the alleged loss. Mr Batterham's lack of success in pursuing Mr Nauer for the alleged loss in the value of the ZCL Shares cannot be attributed to Clayton Utz and Turner Freeman on the basis that they were "responsible" for his bankruptcy or in the case of Mr Rush, no material facts are alleged that could, if proved, establish that he materially contributed to the alleged wrongful loss in value of the ZCL Shares. 176 More specifically, the causes of action advanced against the respondents with respect to the alleged loss in the value of the ZCL Shares suffer from the following causation hurdles. 177 First, it was Maylord, not Mr Batterham, which had unsuccessfully sought to recover the alleged loss in the value of the ZCL Shares in the Nauer Proceedings. Any cause of action with respect to that alleged loss was a cause of action that could be pursued by the trustee of the BRF, not Mr Batterham. Mr Batterham's submission is that he is "inextricably linked to the trustee" of the BRF because he is the sole beneficiary of the BRF and the sole director of Maylord and thereby able to bring this proceeding in his name to recover the alleged loss in the value of the ZCL Shares. This submission is misconceived. Maylord and Mr Batterham are distinct legal entities and it is Maylord (or its successor Finsec), as the trustee of the BRF, not Mr Batterham, who has standing to bring proceedings to recover any losses or damage suffered by the BRF. 178 Second, the reason that Maylord did not succeed in the Nauer Proceeding was because Maylord was not able to act as the trustee of the BRF because the BRF did not satisfy the requirements of the SIS Act for a self-managed superannuation fund, as explained by Ward CJ in Eq in Nauer No 1 at [9]-[18]. As a fund with a single member, Mr Batterham or a relative of Mr Batterham was required to be a director of Maylord in order for the BRF to comply with s 17A(1)(d) of the SIS Act. Mr Batterham could not act as a director during his bankruptcy, as he was a disqualified person for the purposes of the SIS Act and neither Ms Nica, the director that had been appointed shortly prior to his bankruptcy, nor Mr Ohlson, who was subsequently also appointed as a director, were relatives of Mr Batterham. In addition, there were outstanding costs orders that had not been satisfied by Maylord. 179 It was those matters, not any events leading up to the bankruptcy of Mr Batterham, which precluded the recovery of the alleged diminution in the value of the ZCL Shares by reason of the impugned conduct of Mr Nauer. There is no relevant causal link between the allegations made in the AOA and the ASOC against the respondents and the diminution in the value of the ZCL Shares. 180 I then turn to the claim for compensation for the costs the subject of the Personal Costs Order that "remain outstanding and cannot be paid". 181 An initial hurdle to this claim for relief is that self-evidently the Personal Costs Order has not in fact been satisfied by Mr Batterham. 182 More fundamentally, the Personal Costs Order was made by reason of the extent of Mr Batterham's direct and personal involvement in the improperly constituted Nauer Proceedings brought in the name of the impecunious Maylord. As explained by Slattery J in Nauer No 2: 52 The law relating to the liability of third parties for costs orders made in proceedings may be shortly stated. Orders for costs may be made against non-parties where the unsuccessful party to the litigation is at an insolvent person or "a man of straw" and when the non-party has played an active role in the conduct of litigation and where the non-party has an interest in the subject of the litigation: Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 192-193 and FPM Constructions v Council of the City of Blue Mountains [2005] NSWCA 340 at [210]. The role of the non-party will commonly include the sourcing of funds for the litigation. But the mere funding of litigation on its own will not permit the ordering of costs against the funder: Jeffrey & Katauskas Pty Ltd v SST Consulting Pty Limited (2009) 239 CLR 75; [2009] HCA 43 at [43]. The non-party will usually have an interest in the litigation which is equal to or greater than that of the party, or at least a substantial interest in it. 53 Mr Batterham should be made personally liable for the costs of the present application. Mr Batterham generally satisfies the requirements for a costs order against a third party. He has shown himself to be substantially in control of Maylord's actions and has been initiating and directing the impecunious Maylord's steps on this application. He alone stands to benefit from any success Maylord has against Mr Nauer, as the sole beneficiary of the BRF. 54 Mr Batterham effectively ran the hearing on 1 September 2017. Mr Ohlson made short submissions and then deferred to Mr Batterham. Mr Batterham claimed to know more than Mr Ohlson about the underlying facts and history of the proceedings. Mr Batterham put himself forward as the person who could speak not only in his own interests as respondent to the motion, but on behalf of Maylord at the oral hearing. Mr Ohlson signed Maylord's submissions on the application dated 21 August 2017 but Mr Batterham prepared them, as they declare. 55 But beyond the 1 September hearing, there is much objective evidence to support the conclusion that Mr Batterham ran aspects of these proceedings before Bergin CJ in Eq and Ward CJ in Eq for his own benefit, through Maylord, a company without financial substance. Mr Batterham was then too the sole member of the BRF and the person for whose financial benefit Maylord acted as trustee for BRF in conducting the litigation. 56 It is also obvious from the transcript of the previous applications before Bergin CJ in Eq and Ward CJ in Eq that Mr Batterham has appeared and has interrupted whilst Mr Ohlson was appearing on behalf of the plaintiff to provide Mr Ohlson with instructions, or to try and speak to the Court directly, just as he did in the application on 1 September 2017. On several occasions Bergin CJ in Eq and Ward CJ in Eq had to make clear to Mr Batterham that only one person should speak on behalf of the company. Even Mr Batterham himself declared that Mr Ohlson is merely "standing in his shoes," while he remains an undischarged bankrupt. Mr Batterham has declared his intention to become the sole director of the plaintiff once he is discharged from bankruptcy. Mr Batterham has paid all ASIC fees on Maylord's behalf despite his bankruptcy and has paid filing fees and transcript fees in the current proceedings and arranged the mediation fees, and which mediation he alone attended on Maylord's behalf rather than Mr Ohlsen. 57 This is enough in my view to support the conclusion that Mr Batterham is responsible for driving this litigation before Bergin CJ in Eq, Ward CJ in Eq, in the mediation and on the present application. More detailed analysis would be required for the Court to conclude that Mr Batterham should be responsible for all costs awarded against Maylord in these proceedings, although the evidence points in that direction. 183 It is readily apparent from the reasons of Slattery J that the Personal Costs Order was made against Mr Batterham because of his own actions and not the alleged misleading and deceptive conduct and unconscionability claims that he now seeks to advance against the respondents.

[32]

Deed of Release 184 I turn now to consider the reliance placed by Clayton Utz on the Deed of Release. 185 The recitals to the Deed of Release recorded that: Batterham and Maylord allege that in representing them in the IRC proceedings and the appeal proceedings, and in acting for them in relation to the dispute, Clayton Utz breached the duty of care it owed to each of them and failed to act in accordance with their retainer. 186 It was stated in Recital F to the Deed of Release that the parties "wish[ed] to resolve all issues between them without the need of any litigation". 187 Clause 1 of the Deed of Release provided that Clayton Utz had agreed to pay Mr Batterham and Maylord the amount of $110,000 in full and final settlement of the matters set out in the Deed of Release. 188 Clause 3 of the Deed of Release provided a general release in favour of Clayton Utz from: all suits, demands, claims and causes of action of every description whatsoever which a party now has or at any time hereafter may have or which but for the execution of this Release could or might have had against any other party for or by reason or arising out of the matters recited herein 189 As a general proposition at common law, a release expressed in general terms will be read down to be limited by reference to the express recitals or the matters that were in specific contemplation at the time that the release was given: Grant at 123-4 (Dixon CJ, Fullager, Kitto and Taylor JJ); Sarina v Fairfax Media Publications Pty Ltd (2018) 365 ALR 15; [2018] FCAFC 190 (Sarina) at [20] (Rares, Markovic and Bromwich JJ). 190 The claims now sought to be advanced by Mr Batterham - the alleged failure by Clayton Utz to disclose that any "successful result in the High Court would merely mean that the matter went back to the IRC and may be lost in the IRC for lack of jurisdiction" (ASOC at [14]), a failure to advise that rectification should be sought of the option deed (ASOC at [16]), and a failure to provide the written advice on prospects from Mr Kimber SC (ASOC at [17]) - are specifically directed at the conduct of Clayton Utz in acting for Mr Batterham and Maylord in the High Court Appeal. They fall within the scope of the matters contemplated by the parties at the time of their entry into the Deed of Release. I am satisfied that the Deed of Release provides a complete answer to these claims now sought to be advanced by Mr Batterham against Clayton Utz. 191 I am not satisfied, however, that any claims with respect to the liability of Mr Batterham to pay Mr Kenzie QC's fees invoiced to him by Turner Freemen would be precluded by the Deed of Release. Mr Batterham contends that he did not appreciate at the time he executed the Deed of Release that he might subsequently be made bankrupt by reason of a failure to pay Mr Kenzie QC's fees as a "barrister engaged and briefed by Clayton Utz to attend the High Court hearing in November 2005". Nor is there any suggestion that Clayton Utz ever contemplated that it might be liable for fees for services rendered by Mr Kenzie QC in the High Court Appeal after their instructions were withdrawn and any such contemplation would objectively have been erroneous. Hence it follows that at the time that the Deed of Release was entered into it would not have been in the contemplation of either party that any dispute in relation to the payment of Mr Kenzie's fees after the withdrawal of Clayton Utz's instructions might arise. 192 Nor do I consider that the general release in the Deed of Release could preclude the claim that is now sought to be advanced by Mr Batterham in his submissions to the effect that there was an implied term in the Deed of Release that the release would extinguish any liability Mr Batterham might have to Clayton Utz, including to any third party engaged by them. 193 I do not accept, however, that a term can be implied into the Deed of Release that any liability that Mr Batterham may have had to fees for services rendered by Mr Kenzie QC after Clayton Utz's instructions were withdrawn would be extinguished. The payment of such fees was a matter to be resolved between Mr Batterham, Turner Freeman and Mr Kenzie QC. The implication of a term concerning liability for fees owed to persons other than Clayton Utz and incurred by those persons at a time when they were no longer instructed by Clayton Utz was a term that was plainly not necessary to give business efficacy to the Deed of Release, even less was it obvious to both parties or capable of clear expression: Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24 at 355-6; Terkol Rederierne v Petroleo Brasileiro SA and Frota Nacional de Petroleiros (The Badagry) [1985] 1 Lloyds Rep 395. 194 I am therefore satisfied that any claim that such a term could be implied into the Deed of Release has no reasonable prospects of success.

[33]

Limitations issues 195 It would appear that Mr Batterham seeks to overcome limitations issues with the claims that he seeks to advance against the respondents in these proceedings by characterising them as causes of action that arose on 6 November 2017 when Maylord's claim against Mr Nauer in the Nauer Proceedings was dismissed and in October 2019 when an application to appeal the dismissal of the Nauer Proceedings was dismissed on the basis that it was vexatious. In doing this he has ignored or overlooked that the alleged conduct upon which he relies would have first given rise to loss or damage more than six years before he commenced this proceeding on 5 August 2021. 196 The foundation for the case that Mr Batterham seeks to advance with respect to the diminution in the value of the ZCL Shares is the conduct of Mr Nauer and Mr Rush in the period leading up to the entry into the Settlement Deed. Mr Batterham alleges that Maylord accepted an offer of $450,000 payable over three years for the ZCL Shares compared with alleged admissions made by Esplins in March 2011 that the ZCL Shares were worth $843,048 and on 19 May 2011 that they were worth $534,110 and that by the second half of 2013 the audited accounts of Vesture recorded that the value of the ZCL Shares had increased to $1,653,758: ASOC at [65]. 197 The diminution in the value of the ZCL Shares crystallised on the execution of the Settlement Deed on 4 July 2011 and on that date any cause of action in respect of that loss was complete, irrespective of any further losses that might have arisen by reason of the entry into the Settlement Deed. 198 A subsequent dismissal of proceedings seeking to recover that loss from Mr Nauer in 2017 and an unsuccessful appeal from the dismissal of those proceedings in 2019 cannot restart the limitation period with respect to proceedings seeking to recover the same loss from Clayton Utz, Turner Freeman and Mr Rush. 199 I am satisfied that any causes of action sought to be advanced against the respondents directed at the diminution in the value of the ZCL Shares are time barred. 200 The alleged loss of an opportunity to earn future income as a promoter of private equity opportunities is alleged in the ASOC to have arisen "after Mr Batterham became bankrupt". It must follow that any cause of action directed at recovering this alleged loss was complete immediately after the making of the Sequestration Order because from that date it is alleged that Mr Batterham was unable to promote the alleged private equity opportunities. 201 Similarly, the stress and anxiety that it is alleged the respondents "imposed on the Applicant over many years by their wrongdoing" must have arisen by no later than the making of the Sequestration Order. No other subsequent conduct of the respondents giving rise to any "stress" or "anxiety" is identified in the ASOC. 202 I am therefore also satisfied that any claims sought to be advanced against the respondents directed at the lost opportunity to promote private equity opportunities or stress or anxiety imposed on Mr Batterham by his bankruptcy or the earlier conduct of Mr Rush in relation to the events leading up to the entry into the Settlement Deed are time barred.

[34]

Vesting of causes of action in Mr Batterham's trustee 203 I now turn to consider the contention advanced by each of the respondents that the causes of action that Mr Batterham now seeks to advance in these proceedings vested in his trustee on the making of the Sequestration Order. 204 At the outset it is important to distinguish between a bankrupt's interest in a regulated superannuation fund for the purposes of s 116(2)(d)(iii) and a cause of action that the trustee of a regulated superannuation fund might have in respect of the diminution in the value of assets held in the fund. 205 Mr Batterham's contention that the BRF was an "exempt asset" for the purposes of s 116 of the Bankruptcy Act because the ZCL Shares were owned by his superannuation fund is therefore misconceived. Maylord's cause of action with respect to the diminution in the value of the ZCL Shares is distinct from Mr Batterham's interest as a beneficiary in the BRF. Nor could it be characterised as a right to recover damages or compensation for any personal injury or wrong done to him. Any cause of action that Mr Batterham might have had with respect to the diminution in the value of the ZCL Shares would not have been an "exempt asset". 206 I am satisfied that to the extent that Mr Batterham had any cause of action with respect to the diminution in the value of the ZCL Shares such cause of action existed as at the date of his bankruptcy, was not an exempt asset and vested in his trustee in bankruptcy on the making of the Sequestration Order pursuant to s 58(1) of the Bankruptcy Act. 207 Finally, I turn to the claim for compensation for stress and anxiety "imposed on" Mr Batterham "over many years" by the respondents' alleged wrongdoing and the alleged loss of future income as "a promoter of private equity opportunities" after he became bankrupt. 208 The loss of income is alleged to be attributable to Mr Batterham's bankruptcy. It follows that whatever causes of action that Mr Batterham might have had in this respect must have accrued to him after the making of the Sequestration Order. The causes of action thus comprised after acquired property for the purposes of s 58 of the Bankruptcy Act. Any such claims with respect to loss of income were property claims and not personal claims and therefore vested in Mr Batterham's trustee on the making of the Sequestration Order. Further, the alleged stress and anxiety was consequential upon the damage to his economic interests and therefore is not divisible from the damage to those interests: Mannigel at 189; Sands at [95]. 209 On his discharge from bankruptcy, any such causes of action could not re-vest in Mr Batterham in the absence of any evidence that he took any assignment of any causes of action that had vested in his trustee as after acquired property. 210 In the circumstances, Mr Batterham is precluded from seeking compensation for any alleged loss of income or consequential "stress and anxiety" caused by the loss of such income as a result of his bankruptcy, irrespective of any alleged conduct of the respondents.

[35]

Res judicata, issue estoppel and abuse of process 211 The interrelated principles of res judicata, issue estoppel and abuse of process provide further reasons why the claims now sought to be advanced by Mr Batterham against the respondents cannot succeed. 212 The extent of the various proceedings that have been commenced by Mr Batterham and the appeals that he has pursued are set forth above in the Factual Background. 213 In substance, Mr Batterham is seeking in these proceedings to relitigate his unsuccessful challenges to his liability for Mr Kenzie QC's fees which led to his bankruptcy and his claims against Mr Nauer. 214 Mr Batterham's liability for Mr Kenzie QC's fees were litigated and determined in the Costs Assessment that merged in the Local Court Judgment, the Bankruptcy Proceedings and the Full Court Appeal. The contention that Clayton Utz remained liable for the fees of Mr Kenzie after the withdrawal of their instructions was expressly raised and rejected by the Costs Assessor and that rejection was endorsed in both the Bankruptcy Proceedings and in the Full Court Appeal. The acceptance of the proposition that Turner Freeman instructed Mr Kenzie in the High Court Appeal following the termination of the retainer of Clayton Utz was an essential element to the Local Court Judgment and the subsequent decisions in the Bankruptcy Proceedings and the Full Court Appeal. Mr Batterham is precluded by an issue estoppel from seeking to challenge the correctness of that proposition in these proceedings. 215 Similarly to the extent that Mr Batterham seeks to recover the loss he alleges he suffered as a result of Mr Nauer's conduct, namely the diminution in the value of the ZCL Shares, those claims have been sought to have been litigated and determined in numerous proceedings, including the Nauer Proceedings and the FCA Nauer Proceedings, culminating in the making of a vexatious litigant order on 19 March 2020 prohibiting Mr Batterham from launching any further proceedings against Mr Nauer. 216 I am satisfied that these proceedings constitute a collateral attack on concluded proceedings and amount to an abuse of process.

Parties

Applicant/Plaintiff:

Batterham

Respondent/Defendant:

Clayton Utz Partnership

Legislation Cited (12)

Federal Court of Australia Act 1975(Cth)

Uniform Civil Procedure Rules 2005(Cth)r 13

Legal Profession Act 2004(NSW)s 368

Trade Practices Act 1974(Cth)

Federal Court Rules 2011(Cth)rr 16.21, 26.01

Bankruptcy Act 1966(Cth)ss 58, 60, 116

Competition and Consumer Act 2010(Cth)

Corporations Act 2001(Cth)s 184

Federal Court of Australia Act 1976(Cth)s 31A

Superannuation Industry (Supervision) Act 1993(Cth)s 26

Industrial Relations Act 1996(NSW)s 106

Vexatious Proceedings Act 2008(NSW)s 8

Cases Cited (76)

y Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 Grant v John Grant & Sons Proprietary Limited [1954] HCA 23; (1954) 91 CLR 112 Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109; [2002] HCA 41 Jobbins v Capel Court Corporation Limited (1989) 25 FCR 226 Kitoko v University of Technology Sydney [2021] FCA 360 Mannigel v Hewlett Phelps and Ors [1991] NSWCA 186 Maylord Equity Management Pty Ltd as trustee of the Batterham Retirement Fund v Nauer [2017] NSWSC 634 Maylord Equity Management Pty Ltd as trustee for the Batterham Retirement Fund v Nauer (No. 2) [2017] NSWSC 1467 Maylord Equity Management Pty Ltd as trustee of the Batterham Retirement Fund v Nauer (No. 3) [2017] NSWSC 1783 Marcel Andre Nauer v Peter James Batterham [2020] NSWSC 240 McDonald v State of South Australia [2011] FCA 297 Moss v Eaglestone (2011) 83 NSWLR 476; [2011] NSWCA 404 Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50; (2015) 236 FCR 199 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 Polar Aviation Pty Ltd v Civil Aviation Safety Authority (2012) 203 FCR 325; [2012] FCAFC 97 Quall v Northern Territory (2011) 286 ALR 374; [2011] FCA 1441 QSR Ltd v Industrial Relations Commission of New South Wales and Others (2004) 208 ALR 368; [2004] NSWCA 199 Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198; [2001] NSWCA 142 Sands v State of South Australia (2015) SASR 195; [2015] SASCFC 36 Sarina v Fairfax Media Publications Pty Ltd (2018) 365 ALR 15; [2018] FCAFC 190 Spalla v St George Motor Finance Ltd (ACN 007 656 555) (No 6) [2004] FCA 1699 Spencer v Commonwealth (2010) 241 CLR 118; [2010] HCA 28 State Bank of New South Wales Ltd v Stenhouse Ltd (1997) Aus Torts Reports 81-423 Tefbao Pty Ltd v Stannic Securities Pty Ltd (1993) 118 ALR 565 Terkol Rederierne v Petroleo Brasileiro SA and Frota Nacional de Petroleiros (The Badagry) [1985] 1 Lloyds Rep 395 Tomlinson v Ramsey Food Processing Pty Limited (2015) 256 CLR 507; [2015] HCA 28 Travel Compensation Fund v Tambree (2005) 224 CLR 627; [2005] HCA 69 Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 266 FCR 631; [2018] FCAFC 155 Wardley Australia Limited v The State of Western Australia (1992) 175 CLR 514 Webster (Trustee) v Murray Goulburn Co-Operative Co. Limited [2017] FCA 995

Cited By (5)

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