25 The vendor and the covenantors might have raised cross-claims against the accountants for damages for professional negligence and negligent misrepresentation to cover any liability to the purchasers. The accountants would then have been parties to the proceedings and entitled to the benefit of res judicata estoppels arising from the judgment of Brownie J. See Sandtara Pty Ltd v Abigroup Ltd (1997) 42 NSWLR 5. Those estoppels would have been a complete answer to these proceedings.
26 The vendor now has no liability to the purchasers for misleading and deceptive conduct or negligent misrepresentation for which it could claim indemnity from the accountants. Its success in the Supreme Court proceedings thus operated for the benefit of the accountants and this further emphasises the close connection between the two proceedings."
40 In finding the existence of an abuse of process in the proceedings against the accountants, Handley JA's reasoning is found in the following:
"28 The present proceedings are an attempt to litigate or re-litigate issues which were either decided in or are barred by the earlier proceedings. In substance, ignoring the camouflage, the purchasers are attempting to re-litigate the issue of reliance on the 1991 figures which they lost. If they cannot succeed against anyone in respect of the 1991 figures because they did not rely on them, they could hardly succeed in establishing reliance on the earlier figures.
29 The Judge also held that the issue of reliance on the expertise of the accountants had not been litigated in the Supreme Court and that a finding of reliance on that expertise would not conflict with the findings of Brownie J. This is true enough but ignored the fundamental fact that the purchasers would first have to prove that they relied upon the figures themselves before the question of reliance on that expertise could even arise. If they did not rely on the figures, they could not possibly have relied on the expertise required for their production.
30 The substance of the matter therefore is clear. The purchasers, disappointed with their bargain, sued their vendor in contract and in misrepresentation. They lost their case in misrepresentation and were disappointed with their modest recovery in contract. A few weeks before the expiration of the limitation period they sued the accountants for what is in substance the same misrepresentations. In the first proceedings they had to prove that they relied upon those misrepresentations. This turned on the evidence of Mr Hoefl, the contemporary documents, and the surrounding circumstances. The purchasers lost that issue and seek to re-litigate it against the accountants on substantially the same evidence in the hope that this time Mr Hoefl will be believed."
41 In my view, that line of reasoning does not result in a conclusion that these proceedings represent an abuse of process. I think that is made clear by the fact that it is possible for I-Achieve to succeed in these proceedings consistently with the findings made in the prior proceedings by Bergin J. To the extent that I-Achieve puts in issue in these proceedings matters that are the subject of findings adverse to it in the prior proceedings, it is capable of succeeding in its present case whether or not the re-litigated issues are determined in its favour.
42 Using sub pars 38(a)-(c) of the defence in these proceedings, again, as an illustration of the point: it would be open to I-Achieve to successfully establish that it would not have entered into the transaction if Barton/Wong had informed it of (a) the possibility of the principal shareholders in Satellite "dumping" their shares: (b) the fact that the transaction was being carried out in breach of the Foreign Acquisitions and Takeovers Act 1975 (Cth), or (c) the fact that Barton/Wong was in receipt of a secret commission in relation to the transaction. Such a case could stand in the face of findings in terms of sub pars 38(a)-(c).
43 In my view these proceedings do not constitute a mere "changing [of] the form of the proceedings [so as] to set up the same case" as was raised in the prior proceedings, to adopt a phrase from the speech of Lord Halsbury in Reichel v Macgrath (1889) 14 App Cas 665.
44 The concept of abuse of process as expressed by Lord Halsbury is not a novel concept and it has been the subject of frequent reference by the courts. In Walton v Gardiner (1993) 177 CLR 378 at 392 the joint judgment of Mason CJ, Deane and Dawson JJ placed this kind of abuse of process in the following context:
"None of the members of the Court of Appeal accepted the Department's narrow view of the extent of the jurisdiction of the Supreme Court to order a stay of proceedings on abuse of process grounds. Gleeson CJ and Kirby P considered that the Court of Appeal has power to make an order staying proceedings if it is satisfied that the continuation of the proceedings would be "so unfairly and unjustifiably oppressive" as to constitute an abuse of process. Their Honours made plain that the court would only be so satisfied in an exceptional or extreme case. Mahoney JA adopted a similar approach, while formulating the appropriate test in slightly different words. His Honour considered that the question for the Court of Appeal was whether, in all the circumstances, the continuation of the proceedings before the Tribunal would involve unacceptable injustice or unfairness. In our view, the approach adopted by the members of the Court of Appeal was correct.
The inherent jurisdiction of a superior court to stay its proceedings on grounds of abuse of process extends to all those categories of cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness. Thus, it has long been established that, regardless of the propriety of the purpose of the person responsible for their institution and maintenance, proceedings will constitute an abuse of process if they can be clearly seen to be foredoomed to fail. Again, proceedings within the jurisdiction of a court will be unjustifiably oppressive and vexatious of an objecting defendant, and will constitute an abuse of process, if that court is, in all the circumstances of the particular case, a clearly inappropriate forum to entertain them. Yet again, proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings. The jurisdiction of a superior court in such a case was correctly described by Lord Diplock in Hunter v. Chief Constable of the West Midlands Police as "the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people."
(at 392-393) (emphasis added)
45 I do not regard these proceedings as an attempt "to litigate anew a case which has already been disposed of by [the prior] proceedings." I think that conclusion flows from the fact that it is open to I-Achieve to succeed in these proceedings in the face of findings made in the prior proceedings.
46 This wider concept of abuse of process was also considered by French J in Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275 as follows:
"The court is empowered by O 20, r 2 to stay or dismiss a proceeding where it appears to the court that it is an abuse of its process. Even without the benefit of that rule there is little doubt that the court has an implied incidental power to control its own process and to prevent misuse of it. It is a power which ought to be very sparingly exercised and only in exceptional cases: see Lawrance v Lord Norreys (1890) 15 App Cas 210 at 219, per Lord Herschell; Burton v Shire of Bairnsdale (1908) 7 CLR 76 at 95, per Isaacs J. The possible varieties of abuse of process are only limited by human ingenuity and the categories are not closed. An unmeritorious claim brought merely in order to put pressure on a respondent for commercial or other reasons would no doubt be treated as an abuse. Such a claim might also be attacked as frivolous or vexatious or as disclosing no reasonable cause of action. Those designations are not mutually exclusive. An attempt to litigate in the court a dispute or issue which has been resolved in earlier litigation in this or another court or tribunal may also, according to the circumstances, constitute an abuse of process even if not attracting the doctrines of res judicata or issue estoppel ."
(at 279) (emphasis added)
47 The Full Court of the Federal Court in Coffey v Secretary Department of Social Security (1999) 86 FCR 434 at 443 referred to the inherent power of the Court to prevent re-litigation of issues where it constitutes an abuse of process "even though the earlier proceedings did not give rise to a res judicata or issue estoppel", citing Sea Culture and Walton.
48 In Rippon the Court of Appeal recognised the limitations on the application of this concept of abuse of process in citing with approval the judgment of Hunt CJ at CL in Haines v Australian Broadcasting Corporation (1995) 43 NSWLR 404 in the following passage: