Practice And Procedure - The Anshun estoppel - whether applies to failure to raise a cross-claim - whether claims now made should reasonably have been raised in earlier proceedings - whether there were "special circumstances" excluding the application of the Anshun principle.

Estoppel - The Anshun estoppel - whether applies to failure to raise a cross-claim - whether claims now made should reasonably have been raised in earlier proceedings - whether there were "special circumstances" excluding the application of the Anshun principle.

Port of Melbourne Authority v Anshun [1981] HCA 45; (1981) 147 CLR 589

Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21; (1988) 164 CLR 502

Tanning Research Laboratories Inc v O'Brien [1990] HCA 8; (1990) 169 CLR 332

Trawl Industries v Effem Foods Pty Ltd [1992] FCA 272; (1992) 36 FCR 406

Henderson v Henderson [1843] EngR 917; (1843) 3 Hare 100 at 115 [1843] EngR 917; (67 ER 313)

Yat Tung Investment Co Ltd v Dao Heng Bank Ltd (1975) AC 581

Dallal v Bank Mellat (1986) QB 441

Arnold v National Westminster Bank (1990) 1 Ch 573

Rahme v The Commonwealth Bank of Australia, New South Wales Court of Appeal,

Commonwealth Bank of Australia v Bryant Supreme Court of New South

Wales, Levine J, unreported 27 October 1993

Re Bryant: Bryant v The Commonwealth Bank of Australia, Federal Court of

Counsel and Solicitors W.H. Nicholas QC with D.R.

for respondent: Fredericks instructed by

Shaw McDonald

1. The appeal be dismissed.

2. The appellant pay the respondent's costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

BEAUMONT, WILCOX AND MOORE JJ This is an appeal from orders made by a Judge of the Court (Einfeld J) dismissing a proceeding instituted in this Court after the final determination of two proceedings between the same parties in the Supreme Court of New South Wales. In order to determine the issues that arise in the appeal, it is necessary to consider the history of the proceedings in the Supreme Court and in this Court.

2. The respondent, the Commonwealth Bank of Australia, ("CBA") commenced two separate proceedings against the appellant, Joseph Richard Bryant, in the Supreme Court. The first proceeding was an action for possession of premises mortgaged to the bank. This proceeding was commenced by a summons filed on 4 March 1992 in the Common Law Division of the Court. By its statement of claim filed on 2 June 1992 CBA alleged that Mr Bryant was indebted to it in a sum exceeding $2 million. The other proceeding was commenced in the Commercial Division of the Court on 5 May 1992. The CBA claimed to be owed $1,842,691.52 by the appellant, together with interest, in accordance with the terms of certain guarantees. These proceedings were subsequently transferred to the Common Law Division.

3. The appellant filed defences and cross-claims in each proceeding. He claimed, amongst other things, that CBA breached a contract between it and him; that CBA made representations intending that they be accepted and acted upon by him; that he relied upon such representations when he executed the guarantees; that the representations were misleading and deceptive conduct in breach of s.52 of the Trade Practices Act 1974; that reliance by him upon such representations created a fiduciary relationship between the parties; and that CBA acted in breach of that fiduciary duty.

4. During the hearing before us, Mr Bryant, appearing in person, explained that he wishes to contend that, in or about July 1990, CBA agreed to put part of his companies' overdraft on a bill facility, in addition to three bills then in operation. He wishes to claim that it was an express term of the agreement that he would "stay on the bills" as long as he or his companies could service the interest. Alternatively, he wishes to say that it was an implied term of the agreement that reasonable notice would be given of any intention to terminate the bills; or (as a further alternative) that, on making the agreement of July 1990, CBA represented that his companies could use bill facilities for as long as the interest could be serviced. He further wishes to claim that, on 8 November 1990, CBA, unilaterally and without notice, terminated all the bills held by him, and his group of companies, and transferred all amounts outstanding to fully drawn loan accounts, demanding repayment at a time when he was meeting his obligations in respect of the bills; and that this termination and transfer of the amounts was in breach of the July 1990 agreement.

(b) The interlocutory hearings in the Supreme Court

5. On 21 June 1993 the proceedings came before Badgery-Parker J as list Judge. The appellant appeared in person and informed the Court that he had terminated the retainer of his legal representatives.

6. Senior counsel for CBA informed the Court of a discovery dispute between the parties. He said that discovery had initially been given in the form of files and the appellant had objected to the lack of an itemised list. Subsequently, CBA had given discovery in the form of an itemised list. Following this, the appellant had made a further application for supplementary discovery. This had resulted in correspondence between the parties in relation to the adequacy of the discovery. Senior counsel for CBA said that he was unaware of any outstanding issue in relation to discovery. He mentioned that the commercial bills, the subject of the dispute, had not been discovered, and that they were not immediately available, since they covered a period of over ten years and had not been filed together.

7. His Honour inquired as to the relevance of the commercial bills. The appellant claimed that activity by CBA in relation to the bill transactions had been fraudulent. Counsel for CBA said that the appellant had not pleaded this issue, although, in the appellant's defence, the quantum of the debt was not admitted.

8. The appellant then applied for an adjournment. His Honour refused that application, on the basis that the production of the commercial bills was not required on the issues before the Court. He refused to order verified discovery and directed that the principal proceedings be heard on the following day. However, as it happened, the proceedings were "not reached" in the list that day. They were put back into the list for the allocation of another hearing date.

9. On 1 September 1993 the proceedings were listed before Abadee J in order to set a hearing date. The appellant again applied for an adjournment of the final hearing on the basis that discovery had not been completed. Abadee J refused that application and declined to order verified discovery. He set the matters down for final hearing on 12 October 1993.

10. On 23 September 1993 the appellant sought to subpoena CBA for the commercial bills which had been the subject of the verified discovery dispute. It is not clear to us what happened about this subpoena. Mr Bryant did not call on the subpoena at the final hearing.

11. On 13 October 1993 both Supreme Court proceedings came before Levine J for hearing. CBA was represented by Mr W H Nicholas QC and Mr D R Fredericks of counsel. Mr Bryant again appeared for himself.

12. After outlining the issues raised by the pleadings, Mr Nicholas mentioned that Mr Bryant had indicated that he wished to amend his defences and cross-claims. Mr Bryant then handed up a document setting out the proposed amendments. Discussion ensued, in the course of which Mr Bryant said:

"What I wish to do is ask the Court to determine

whether there was a contract or series of contracts

and who breached those contracts and to compensate the

injured party and my defence or cross claim has been

altered to deal with those specific issues. The other

issues I will argue in another court and I have

removed them from this. It should make the

plaintiff's job easier, it is a simple process of

establishing whether there was a contract and who

breached the contract and who should be compensated

for that breach."

"I have no dispute with the guarantee or the fact the

moneys were borrowed. I have some dispute that when

the bank took action and the money then accrued as a

result of my having contract with the bank so the

guarantees I really have no dispute with, the dispute

is with who breached the contract, did we have a

contract with the bank."

14. Levine J asked Mr Nicholas about his client's attitude to the application to amend. Mr Nicholas said this caused him no problem. But he added:

"For the record and to assist Mr Bryant we wish to

make it perfectly plain that if the amendments are

allowed obviously it has taken away from these

proceedings a number of issues upon which Mr Bryant

has relied up until now. From what he says he

suggests that he may wish to agitate those matters in

another place at another time and in another set of

proceedings.

We wish to make it clear to the Court that we until

this moment have had no forewarning of that and as far

as we are aware no process has been instituted which

deals with the matters indicated by Mr Bryant. It has

this importance, that if the matters which are

abandoned by these amendments are raised in some other

proceedings then that course will be objected to and

defences opened to the plaintiff in these proceedings

with regard to certain authorities would obviously be

taken.

We do not want Mr Bryant to be under any apprehension

that by his assenting to the amendments and the case

being fought before you on a reduced set of issues,

that we are in some way taken to be assenting to them

being agitated elsewhere in another set of proceedings

so as to foreclose us from taking whatever course we

see fit to take in light of anything raised in the new

proceedings and I should say in light of him choosing

to abandon in these proceedings the various issues he

has indicated. I am not asking your Honour to do

anything but for the record we want to make it quite

plain." (Emphasis added)

15. After some further comments by Mr Nicholas, the following exchange occurred:

"HIS HONOUR: Mr Bryant, so far the way I see it is

that the bank's case for possession and the bank's

case on the guarantees is fundamentally, (1) very

formal, and (2) very simple. They have to prove the

matters Mr Nicholas has outlined. Assuming that

follows its normal course and from what the documents

and you say there appears to be no issue about those

formal matters. Let's assume the bank does prove

them, what are you going to say against the bank in

relation to that?

BRYANT: The first thing is I have not abandoned

anything, I have asked for an amendment. The issues

that have been struck out of this defence will be

dealt with in another court and a writ has been issued

in the other court.

HIS HONOUR: Pausing there, if I allow you to make the

amendment the effect is that in these cases you have

abandoned them as issues in these cases. It is open

to you to institute proceedings in the Federal Court

and Mr Nicholas has made clear that, in so far as the

bank is concerned, all those issues are still and

will, even in that court, be vigorously alive (sic)

and defended.

BRYANT: I understand that. I am concerned about the

word 'abandon'. I do not want to get trapped with any

word that will leave me exposed in not being able to

run my case in another court.

HIS HONOUR: If you do not like the word 'abandoned',

then you have just taken them out of this case for

consideration by this Court.

BRYANT: That is correct.

HIS HONOUR: That is one technical way of saying that

they have been abandoned. The bank's position is as

Mr Nicholas has stated it and we all know your

position as you have stated it in the context of your

concern about the word 'abandoned'. What are you

going to do before me in this Court, what are you

going to allege?

BRYANT: That there were contracts which varied from

time to time and regularly between myself, my

corporate entities and the bank, and that the bank

breached those contracts and that the Court is being

asked to compensate the innocent party. I would have

thought this would have simplified the matter, in fact

helped the plaintiff in return for his help for me

earlier. This is a simpler process and should be

resolved in the shortest possible time."

16. After further discussion the amendments sought by the appellant were allowed. The trial proceeded and Levine J reserved judgment.

17. On 27 October 1993 his Honour delivered a judgment in which he said that the appellant had no dispute with the guarantees as such, or with the the fact that the money secured by the guarantees had been borrowed; the appellant had admitted that he owed the Bank money, but disagreed on the quantum. His Honour, noting that the quantification of the debt, while in issue, was not challenged by evidence, concluded that CBA was entitled to judgment on the guarantees. The cross claims were dismissed. Levine J ordered judgment to be entered in the sum of $2,427,329.34 and, in respect of the matter commenced in the Common Law Division, ordered that possession of the properties be given to CBA.

18. The formal judgment was entered on 10 November 1993. It was amended by the substitution of a new folio identifier on 25 November 1993. Mr Bryant filed a notice of appeal to the New South Wales Court of Appeal against the decision. The appeal has not yet been heard.

19. Mr Bryant filed an application and statement of claim in this Court on 11 October 1993. On 2 December 1993 he filed an amended application claiming $20,000,000 damages. He filed an amended statement of claim on 23 December 1993.

20. By the amended statement of claim, the appellant alleged breach of fiduciary duty, reliance on representations made by the Bank, breach of duty of care, breach of contractual duties owed to him and breaches of ss.51AA, 52 and 60 of the Trade Practices Act 1974. The appellant further claimed that he lacked the capacity to understand the guarantees and alleged unconscionable conduct on the part of the Bank. He claimed, inter alia, an amount of $25,000,000 for loss or damages arising out of such breaches.

21. By its defence dated 15 April 1994 CBA alleged, inter alia, that the matters pleaded in the amended statement of claim were the subject of proceedings in the Supreme Court and pleaded res judicata and issue estoppel accordingly. It also pleaded that it was, in the circumstances, unreasonable of the appellant not to rely in the Supreme Court on the causes of action alleged by him in this Court, so that he was estopped from raising those causes of action.

22. By notice of motion dated 20 April 1994, CBA sought an order that the amended application and amended statement of claim be dismissed, or, alternatively, permanently stayed. This application came before Einfeld J on 12 May 1994. It appears that, on that day, his Honour was taken to the evidence and heard some submissions, but not full argument. He directed that written submissions be filed.

23. The written submissions of counsel for CBA were filed later than the stipulated date. This default resulted in the appellant filing a notice of motion seeking an order summarily dismissing CBA's motion. Einfeld J held that the delay, while regrettable, had not caused any prejudice to the appellant. He refused to accede to the appellant's application and, on 14 July, made an order dismissing his notice of motion. On the same day, acceding to CBA's motion, Einfeld J ordered that the principal proceeding be dismissed.

24. The appeal to this Court went to both orders of Einfeld J. However, after discussion before us, the appellant accepted that it would have been inappropriate for Einfeld J to dismiss CBA's motion merely because CBA was late in filing its written submissions. In effect, he abandoned this issue. We need say no more about it.

The judgment now under appeal - the decision of Einfeld J on CBA's application

25. Dealing with the main issue before him, Einfeld J stated that the action in this Court sought to raise claims withdrawn from the defences and cross-claims in the Supreme Court proceedings. He noted that CBA submitted that the appellant was estopped from raising those matters by reason of the extended notion of estoppel described in Port of Melbourne Authority v Anshun Proprietary Limited [1981] HCA 45; (1981) 147 CLR 589. Apparently, CBA did not press arguments based on res judicata or issue estoppel, in the traditional sense.

"to determine, as a matter of substance rather than

form, whether if they had been pressed and argued in

the Supreme Court proceedings, the subject matters of

the present application would have amounted to

defences to the action of the bank, or cross-claims".

He then referred to the orders sought in the appellant's amended application in this Court dated 2 December 1993 as follows:

"1. An order varying the contracts, arrangements and

guarantees between the (appellant) and (CBA) to a just

and equitable basis having regard to,

1.1 the financial power of (CBA) in advancing credit

to business compared to the vulnerable position

of the (appellant) dependent upon that credit

for economic survival,

1.2 the misleading, deceptive and unconscionable

conduct of (CBA) in its dealings with the

(appellant), such order to operate from such

time as the court thinks fit.

2. An order refusing to enforce any or all of the

provisions of the contracts, arrangements and

guarantees between the (appellant) and (CBA) as the

court thinks fit.

3. An interim and permanent injunction restraining (CBA)

from taking any further action on any writ of

possession upon any of the (appellant's) real

property.

4. An order directing that CBA pay the (appellant) for

loss or damage in the amount of $20,000,000.

5. Unspecified damages in respect of,

5.1 loss of professional business reputation

5.2 stress and suffering,

5.3 exemplary damages."

27. Einfeld J summarised the allegations made in the statement of claim in this Court in these terms:

"1. The bank made certain misrepresentations to (the

appellant) relating to its competence and reliability

as a financial adviser, as a result of which (the

appellant) came to rely on the bank.

2. By fostering a relationship of reliance, the bank

'assumed a fiduciary duty to the applicant', and also

owed him a 'tortious duty of care'.

3. The personal guarantees and mortgages were executed by

(the appellant) in reliance on the bank's misleading

representations, and by the Bank in breach of its

fiduciary and other duties.

4. An acknowledgment that certain advances secured by the

mortgages were unenforceable for lack of

consideration.

5. To the knowledge of the bank, the agreements between

the parties 'were signed or executed (by the

appellant) in the absence of independent advice,

without the opportunity or capacity to fully

comprehend the significance thereof'.

6. The foreclosure on the mortgages and subsequent legal

action on the mortgages and guarantees constituted a

breach of duty ('fiduciary, tortious and contractual')

to (the appellant).

7. Certain bank bills, secured by the guarantees and

mortgages, were terminated in breach of the

agreements."

28. His Honour said that it appeared from the judgment of Levine J that "in substance all these points were at least raised if not argued in the Supreme Court". Without making any finding on the point, he expressed the opinion that "many of them may be subject to issue estoppel".

29. Einfeld J then turned to two other assertions in the statement of claim:

"8. In relation to a proposed further loan from the bank

for the purchase of heavy equipment, the bank

represented that the loan would be approved. When it

was not, allegedly in breach of `tortious, fiduciary

and contractual duties', (the appellant) suffered

loss.

9. Damage was also sustained through loss of reputation,

stress and suffering, and `exemplary damages'. These

are referred to as `unspecified damages' and indeed

there is no real indication in the statement of claim

as to how they were suffered."

30. His Honour said that, if these claims were sustainable, they were better characterised as cross-claims than defences. In relation to all the matters of defence, Einfeld J noted that the appellant did not dispute that he could have agitated these issues in the Supreme Court, and that he specifically chose not to rely on them by amending his pleadings so as to remove them from consideration by the Supreme Court.

31. His Honour noted that, in bankruptcy proceedings involving these same parties (Re Bryant: Bryant v. The Commonwealth Bank of Australia, unreported 4 May 1994), Hill J had held that, in substance if not in form, the matters omitted from the defences correlated closely to those pleaded in the appellant's application to this Court. Einfeld J said that, having made his own examination of the pleadings in the two Courts, he agreed with this view. He said that the matters pleaded in this Court could have been raised in the Supreme Court proceedings. He said it was "clearly unreasonable" of the appellant not to "raise these issues as defences in the Supreme Court and thereby dispose of the whole dispute". The case, his Honour said, was "a classic case of the application of an Anshun estoppel".

32. Einfeld J added that, if this Court entered judgment for the appellant pursuant to the claims made in this Court, the effect of its order would be to vary substantially the rights of the parties under the mortgage and guarantee agreements and to conflict directly with the judgment in the Supreme Court. This was because the two judgments would have declared inconsistent rights in respect of the same transaction.

33. Einfeld J held that there was no strict limitation of the Anshun principle to defences, as opposed to cross-claims, and that a cross-claim could form the basis of an Anshun estoppel; however, only in an exceptional case would a cross-claim satisfy the well-known test enunciated by Wigram VC in Henderson v Henderson [1843] EngR 917; (1843) 3 Hare 100 at 115; [1843] EngR 917; 67 ER 313 at 319. Einfeld J thought the matters of cross-claim satisfied that restricted test. He said:

"If the claims are sustainable at all, they relate

intimately and exclusively to the circumstances

surrounding the contractual relationship between the

parties, specifically the guarantees and mortgages at

issue in the Supreme Court proceedings".

He said that the first allegation amounted to no more than a claim that the bank had not performed one of its obligations arising from the contractual relationship between the parties litigated in the Supreme Court; and it was clear from the judgment of Levine J that evidence of the circumstances surrounding the allegation was led in the Supreme Court proceeding, despite the appellant's failure to plead it in the amended cross-claim.

34. In relation to the second allegation, his Honour found that it related to the loss and damage caused by the alleged breaches of the contracts by the bank, and its allegedly wrongful foreclosure on the mortgages and action for recovery under the guarantees. He said these matters were also intimately connected with the subject matter of the Supreme Court proceedings and could, and should, have been litigated there.

35. The appellant's notice of appeal contains numerous grounds. However, when the argument commenced, it quickly became apparent that there was really only one issue for our determination: whether or not the Anshun doctrine applies to the case. This issue has two aspects: whether or not Anshun is capable of application at all, bearing in mind that some of the matters relied on by Mr Bryant in this Court were raised in the Supreme Court by way of cross-claims, as distinct from defences; and whether or not the course of the proceedings before Levine J constituted "special circumstances" excluding the application of Anshun, if it would otherwise apply. We will deal separately with these two matters.

36. Anshun develops a principle expressed by Wigram VC, in Henderson v Henderson, in these terms:

"where a given matter becomes the subject of

litigation in, and of adjudication by, a Court of

competent jurisdiction, the Court requires the parties

to that litigation to bring forward their whole case,

and will not (except under special circumstances)

permit the same parties to open the same subject of

litigation in respect of matter which might have been

brought forward as part of the subject in contest, but

which was not brought forward, only because they have,

from negligence, inadvertence, or even accident,

omitted part of their case. The plea of res judicata

applies, except in special cases, not only to points

upon which the Court was actually required by the

parties to form an opinion and pronounce a judgment,

but to every point which properly belonged to the

subject of litigation, and which the parties,

exercising reasonable diligence, might have brought

forward at the time."

37. The principle is allied to, but not co-extensive with, the principles of res judicata and issue estoppel, as traditionally understood. Its operation is not confined to circumstances where those principles operate: see, for instance, Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd [1992] FCA 272; (1992) 36 FCR 406 at 423, but noting that in Tanning Research Laboratories Inc v O'Brien [1990] HCA 8; (1990) 169 CLR 332 at 345 Brennan and Dawson JJ raise the question whether the Anshun principle may merely be a case of issue estoppel. In Anshun, after quoting the expression of principle in Henderson v Henderson set out above, Gibbs CJ and Mason and Aickin JJ at 598-602 referred to a number of cases in which the principle had been affirmed, including four decisions of the Judicial Committee of the Privy Council and various English and American authorities. They noted that some of these authorities distinguish between a matter that could have been pleaded in bar of the earlier claim and a matter appropriately raised by a plea of confession and avoidance. Their Honours thought this distinction was not now useful, having regard to the abandonment of the old form of pleadings. At 602-603 they formulated the principle in this way:

"... 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."

38. Their Honours added that it "has generally been accepted that a party will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment".

39. One of the Privy Council cases mentioned by Gibbs CJ and Mason and Aickin JJ was Yat Tung Investment Co Ltd v Dao Heng Bank Ltd (1975) AC 581. The Judicial Committee there considered whether proceedings brought by the owner of a property against a bank should have been struck out. The property was acquired by the owner from the bank. It was mortgaged back to the bank to secure a loan. The owner defaulted under the mortgage. The bank thereupon sold the property, as mortgagee, to a third party. It did not recoup all the moneys owing under the mortgage. In anticipation of an action to recover the deficiency, the owner sought a declaration that the property was conveyed to it as a nominee or trustee of the bank. The bank traversed this allegation and counter-claimed for the deficiency. The owner's claim failed and the bank's counter-claim was sustained. One month later the owner commenced a fresh action in which it claimed that the sale of the property to it by the bank should be set aside as fraudulent. The Judicial Committee decided that the primary judge was correct in striking out the second proceeding. Their Lordships said (at 590):

"The shutting out of a 'subject of litigation' - a

power which no court should exercise but after a

scrupulous examination of all the circumstances - is

limited to cases where reasonable diligence would have

caused a matter to be earlier raised; moreover,

although negligence, inadvertence or even accident

will not suffice to excuse, nevertheless 'special

circumstances' are reserved in case justice should be

found to require the non-application of the rule."

40. They were not concerned at the fact that the second action, like the first, was instituted by the owner, not the bank. Although, no doubt, the claim of fraud advanced in the second action would also have constituted a defence to the bank's counter-claim in the first action, as distinct from being only what their Lordships called a potential "counter claim to the counter claim", their Lordships did not trouble to make any distinction. Agreeing with what was said by the Hong Kong judge, they thought it sufficient that the matter sought to be raised in the second action was "so clearly a matter necessary and proper to be litigated at the same time with all the other issues between the parties" as to make it wrong to allow it then to be raised.

41. The other interesting aspect of Yat Tung concerns the concept of "special circumstances". The passage set out above demonstrates that their Lordships thought that "special circumstances" comprehended situations where, for broad discretionary considerations relating to notions of justice, Henderson v Henderson should not be applied with full rigour.

42. 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."

"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."

43. 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.

44. 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. It is true that, in Tanning Research Laboratories at 346, Brennan and Dawson JJ stated that the Anshun principle will ordinarily not apply to cross-claims. They made an exception of cases where the relief claimed in the second proceedings is inconsistent with the judgment in the first. In making this distinction, their Honours may have had in mind a situation, such as the one before them in that case, where the cross-claim depended on facts remote from those of the principal claim. Questions of substantive degree may be involved; and in contrast to defences, many cross-claims may have little or no connection with the principal claim in the action; there may be no more than an identicality of parties. Where that is so, there may be no policy justification for forcing defendants to litigate their claims as cross-claims rather than as principal claims in separate actions in the forum of their choice. But, where, as here, a defendant's claim is intimately connected with that of the plaintiff, in the sense that each arises, substantially, out of the same matters of fact, there is every reason to require that both be litigated at the one time; thereby minimising costs and avoiding the possibility of inconsistent judgments (cf. Federal Court of Australia Act 1976, s.22).

45. We agree with Enfield J that this is such a case. The matters sought to be raised by the appellant in this Court were all matters connected with the claims made by the bank. The appellant, and his former legal advisers, recognised this. They pleaded his claims as defences to the bank's two Supreme Court actions and as cross-claims to those proceedings. The appellant widened his defence and cross-claims, so as to abandon reliance on those matters in the Supreme Court, not because of a belief that they were insufficiently connected with CBA's claim but because he was dissatisfied with the extent of discovery accorded to him. Despite the appellant's answers to our questions on that subject, we still do not understand what prejudice (if any) was suffered by him because of the refusal of Badgery-Parker J and Abadee J to order discovery of the commercial bills.

46. What is clear is that any deficiencies in the Supreme Court discovery process did not, in our view, justify the appellant taking the course of splitting the case between two proceedings in different courts. We agree with Einfeld J that the facts of this case provide a classic example of the evil that the Anshun principle was intended to prevent.

47. We have already mentioned the comment of the Judicial Committee in Yat Tung. More recently, in Arnold v National Westminster Bank (1990) 1 Ch 573, the scope of "special circumstances" exception was considered by the United Kingdom Court of Appeal. A lessee had failed in proceedings arising from a 1983 rent review. A question arose whether, in proceedings arising from a 1988 rent review, he was able to put in issue the construction of the lease determined in the earlier proceedings. In the earlier proceedings, there had been a judicial pronouncement on the meaning of the lease. Subsequent decisions, including two of the Court of Appeal, held that pronouncement was wrong. The Court decided that the case fell within the "special circumstances" reservation in Henderson v Henderson and allowed the lessee to reagitate the meaning of the lease. It is unnecessary to refer to the detail of the judgments of the members of the Court, save to say that they refer to a number of English authorities linking "special circumstances" to notions of justice.

48. The basis of the claim of "special circumstances" in the present case is the comment made by Levine J, in the exchange quoted above, that "it is open to you (the appellant) to institute proceedings in the Federal Court and Mr Nicholas has made clear that, in so far as the bank is concerned, all these issues are still and will, even in that court, be vigorously alive (sic) and defended". The appellant told us that this comment misled him into supposing that, notwithstanding his abandonment of the issues in the Supreme Court, he would be able to litigate them on their merits in this Court. The suggestion is that, as a consequence, he followed a course in the Supreme Court he would otherwise not have followed. However, our attention has not been drawn to any evidence that could have enabled Einfeld J to make a finding to that effect. Indeed, there is nothing to indicate that he was invited to do so. The appellant did not state in any affidavit that he was misled or that he followed a course he would otherwise not have pursued. Had such an allegation been made, it could have been tested in cross examination. More important, it is clear that the appellant had decided on his course of action before the hearing by Levine J. He had already commenced his action in this Court and had prepared amendments to his Supreme Court defences and cross-claims. It is also apparent from the form of the documents that, although he appeared in person before Levine J, the appellant had received legal assistance at that time. It seems that he had already made a deliberate decision to take the course he did, apparently after discussing the matter with his legal advisers.

49. This case does not, in our opinion, raise special circumstances that would have justified the trial Judge in not applying the Anshun principle. In particular, the fact that the appellant believed that CBA's discovery in the Supreme Court proceedings was not as he had wished, was not a reason for departing from the application of the rule in Anshun. To the contrary, if the appellant had a grievance in that regard (a matter on which we have not expressed any opinion), that question should have been pursued in the Supreme Court. In particular, it was not appropriate for the appellant to seek to overcome any potential difficulties he may have faced in the Supreme Court litigation by instituting substantially similar claims in this Court. The remarks of Hobhouse J in Dallal v Bank Mellat (1986) QB 441 at 452 cited by the High Court in Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21; (1988) 164 CLR 502 at 510-11 are pertinent:

"There must be an end to litigation. A defendant must be

protected against the repeated bringing of actions by the

same person in respect of substantially the same subject

matter. Therefore, where this procedural abuse is

identified, the courts provide the defendant with the

procedural remedy of striking out."

50. In the result, the appeal should be dismissed, with costs.