87 The majority held that the critical issue was whether the case was within the "extended principle" expressed by Sir James Wigram VC in Henderson v Henderson (1843) 3 Hare 100; 67 ER 313 at 319:
where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.
88 The majority considered that, in applying the extended principle, the proper approach was that (at 602-603; emphasis added):
In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it . Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few.
89 The majority stated at 603-604 that:
The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgments is obviously an important factor to be taken into account in deciding whether the omission to plead can found an estoppel against the assertion of the same matter as a foundation for a cause of action in a second proceeding. By "conflicting" judgments we include judgments which are contradictory, though they may not be pronounced on the same cause of action. It is enough that they appear to declare rights which are inconsistent in respect of the same transaction.
90 The majority applied the principles set out above in concluding that the stay was properly granted (at 604):
The matter now sought to be raised by the Authority was a defence to Anshun 's claim in the first action. It was so closely connected with the subject matter of that action that it was to be expected that it would be relied upon as a defence to that claim and as a basis for recovery by the Authority from Anshun . The third party procedures were introduced to enable this to be done. If successful, the indemnity case would have obviated an inquiry into contribution. If reserved for assertion in a later action, it would increase costs and give rise to a conflicting judgment.
91 The Full Federal Court considered the operation of Anshun in Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287. The Court (at 297) approved and adopted the statement of principle set out by Priestley JA (with Meagher and Hope JA agreeing) in Rahme v Commonwealth Bank of Australia (unreported, NSW Court of Appeal, 20 December 1991):
In Rahme v Commonwealth Bank of Australia (20 December 1991, not reported) the New South Wales Court of Appeal had to consider the application of Anshun in a case that was the converse of the present. The appellants, Mr and Mrs Rahme, had previously brought an action in this Court claiming damages in relation to arrangements for a foreign currency loan. They relied on an assortment of causes of action including negligent advice, breach of a contractual duty of care, contravention of the Trade Practices Act 1974, fraud and breach of fiduciary duty. The action failed. They then instituted a second action, in the Supreme Court of New South Wales, in which they claimed relief under the Contracts Review Act 1980 (NSW). The bank pleaded the Anshun principle. This plea was determined, favourably to the bank, as a preliminary point. In dismissing the appeal, Priestley JA, with whom Meagher JA and Hope A-JA agreed, analysed Anshun to be authority for the following propositions:
"1, that Wigram VC's extended principle as stated in Henderson is accepted as good law by the High Court; 2, that that principle applies, inter alia, to category (3) cases, that is to a proceeding in which a party is asserting a cause of action which could have been raised, but was not, in a previous proceeding in which the same party was asserting a different cause of action based on substantially the same facts against the same party as the second proceeding is being brought; and 3, that the extended principle of Henderson will be applied to the second proceeding when it was unreasonable for the party asserting the cause of action in that second proceeding to refrain from raising it in the earlier proceeding against the same opponent party."
Priestley JA said that the relevant question was:
"whether the claim sought to be raised in the Supreme Court under the Contracts Review Act (a) could have been raised in the Federal Court proceedings and (b) raised matters so clearly part of the subject matter of the Federal Court proceedings that it was unreasonable on the part of the appellants not to have raised that claim in those proceedings."
He said that question (b) should not be answered by reference to any verbal formula. He accepted a submission that the Court should ask itself "was it unreasonable of the appellants to have refrained from raising the claims now made in the proceedings before the Federal Court?" Answering this question in the affirmative, it followed that the appeal failed.
It seems to us that the approach taken in Rahme should be followed in this Court. It is not inconsistent with anything stated in Anshun ; indeed it is consonant with the High Court's placing emphasis on looking at the substance of the issue sought to be raised in the later case, rather than on its form.
Whether the claim sought to be raised in the Supreme Court under the Contracts Review Act (a) could have been raised in the Federal Court proceedings and (b) raised matters so clearly part of the subject matter of the Federal Court proceedings that it was unreasonable on the part of the appellants not to have raised that claim in those proceedings.
92 Madgwick J in Stuart v Sanderson (2000) 175 ALR 681 sets out a comprehensive analysis and discussion of the Anshun case. (See especially at 686-689). At 686 his Honour said:
The [ Anshun ] principle is thus not founded only upon the need to restrain costs between parties in dispute, although that is one of its purposes ( Bryant at 298, and Trawl Industries v Effem Foods (1992) 36 FCR 406 at 423 per Gummow J). It is also founded upon the need to avoid 'conflicting' judgments ( Anshun at 603 - 604), to ensure finality of litigation ( Anshun at 609, per Brennan, and Bryant at 299), to prevent parties from gaining an advantage in the use of the Court's time (Handley at 938) and, in the more global expression of Murphy J "to preserve the orderly administration of justice" ( Anshun at 605); that expression might include, for example, the maintenance of the appearance of good order, so as to sustain public confidence in curial disposition of disputes.
93 There are a number of suggestions in the authorities and secondary sources that the Anshun principle, at least to the extent that it adopts the "extended principle" in Henderson, should be applied with caution. In Cross on Evidence, 6th Australian Edition Heydon J notes that the principle in Henderson has been applied in Australia "with great caution" ([5170], p 181). In Rogers v The Queen (1994) 181 CLR 275, Deane and Gaudron JJ suggested (at 275) that the "extended principle" in Henderson, if it was a principle at all, was to be "treated with caution". See also Ling v Commonwealth (1996) 68 FCR 180 at 182; 139 ALR 159. Mr Moses, quite fairly and properly, referred the Court to the judgment of Master Malpass in Orbit Travel Services Pty Limited v The Australian Federation of Travel Agents Limited [2000] NSWSC 127 where it was said:
10 During the course of argument, I expressed my reservations as to the appropriateness of the procedures for summary relief where the defence was founded on Anshun . Whilst it will undoubtedly depend on the issues agitated by the parties, it seems to me that Anshun considerations may rarely lead to summary dismissal. Apart from the unclear state of the law, an Anshun defence may throw up a number of questions (including the question of "unreasonableness") which may not be appropriate for determination on a summary basis. The court may also have to form a view as to the result of a potential exercise of discretion. As these matters were not the subject of argument, I put them aside.