Keybridge Capital Limited v Molopo Energy Limited

CLR 212; [2016] HCA 44 Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 Trawl Industries of Australia Pty Ltd (in liq) v Effem Foods Pty Ltd (1992) 36 FCR 406; [1992] FCA 272 Trustees for the Roman Catholic Church for the Diocese of Bathurst v Hine [2016] NSWCA 213 UBS AG v Tyne (2018) 265 CLR 77; [2018] HCA 45 Zetta Jet Pte Ltd v Ship Dragon Pearl (No 2) (2018) 265 FCR 290; [2018] FCAFC 132 Texts Cited: PA Keane, Spencer Bower and Handley: res judicata (6th ed, 2024, LexisNexis Butterworths) Category: Procedural rulings Parties: Keybridge Capital Limited (Plaintiff) Molopo Energy Limited (Defendant) Representation: Counsel: A Broadfoot KC with C Middleton (Plaintiff) R Scuby SC with L Hulmes (Defendant)

Solicitors: Gadens (Plaintiff) Henry William Lawyers (Defendant) File Number(s): 2023/263798 Publication restriction: Nil

JUDGMENT

1. By a Notice of Motion filed on 10 April 2024, the Defendant, Molopo Energy Limited, seeks an order that the proceeding brought by the Plaintiff, Keybridge Capital Limited, be permanently stayed or summarily dismissed, or that the Commercial List Statement be struck out, on the basis of res judicata, issue estoppel, Anshun estoppel or because the proceeding constitutes an abuse of process.
2. Further or alternatively, Molopo seeks the dismissal of the proceeding, or the striking out of the Commercial List Statement, on the basis that Keybridge's claim for compensation does not disclose any reasonable cause of action.
3. By an Amended Notice of Motion filed on 12 June 2024, Keybridge seeks leave to amend its Commercial List Statement, by adding a new claim for breach of a settlement agreement, referred to below as the July 2018 Settlement.
4. Keybridge is, and at all material times has been, a shareholder of Molopo.
5. Keybridge's claims in the proceeding, as currently pleaded, concern two transactions which Molopo entered in 2017 to 2018, which are referred to respectively as the Orient Transaction and the Drawbridge Transaction (the Transactions).
6. There was previously litigation between Keybridge and Molopo concerning the Transactions in 2017 and 2018. This litigation led to the July 2018 Settlement, as a result of which Keybridge's claims against Molopo were dismissed by consent.
7. Molopo contends that the claims advanced by Keybridge in the current proceeding are ones which were advanced (or, alternatively, which could and should have been advanced) in the previous litigation, and on that basis submits that Keybridge is either precluded from advancing those claims or that the current proceeding is an abuse of process. In addition, Molopo submits that Keybridge's claims for compensation in the current proceeding are doomed to fail, as the only loss claimed is "reflective loss" (being a claim by a shareholder for loss suffered as a result of a diminution in the value of the company's assets).
8. These reasons deal with the following matters: 1. the factual background, including: 1. the Orient Transaction and the Drawbridge Transaction; 2. the prior litigation between Molopo and Keybridge regarding the Transactions; and 3. the July 2018 Settlement and the steps taken by Molopo and Keybridge following that settlement; 1. the claims advanced by Keybridge in the current proceeding; 2. whether Keybridge is precluded from raising the claims in the current proceeding by reason of res judicata or issue estoppel; 3. whether there is an Anshun estoppel or an abuse of process; 4. whether Keybridge's claim for loss ought to be summarily dismissed or struck out; and 5. Keybridge's application to amend its List Statement to add a claim for breach of the July 2018 Settlement.

Factual Background

1. Molopo is a company registered in Australia. In the period, relevantly, from March 2014 to April 2021, Molopo was included in the official list of the financial market operated by Australian Securities Exchange (ASX).
2. Between 2014 and early 2017, Keybridge acquired around 18% of the shares in Molopo.

Announcements between November 2015 and July 2016

1. On 6 November 2015, Molopo released an ASX announcement which included the following statements: "The Directors are considering opportunities in its current mandated area of activity being oil and gas. Other sectors are also being studied but as of now no decision has been made to expand the investment mandate."
2. On 31 March 2016, Molopo published to ASX its annual report for the year ended 31 December 2015. The Chairman's letter in that report included the following statements: "During the financial year, the Board has received approx. 30 oil and gas opportunities and this process has continued into the new financial year. Any major investment transaction is likely to require shareholder approval."
3. On 30 May 2016, Molopo released to ASX a copy of the Chairman's Address at the Annual General Meeting on that date, which included the following statements: "Oil and Gas Opportunities - consistent with the announced strategic direction, Brent Bonadeo has reviewed over 50 opportunities. Any transaction would be subject to shareholder approval."
4. On 29 July 2016, Molopo published to ASX a quarterly report for the three months ended 30 June 2016, which included the following statements under the heading "Company Strategy": "… Molopo continues to assess opportunities in the oil & gas sector. During the quarter, Molopo's Independent Adviser reviewed a number of oil and gas opportunities in stable geographies in either the development or production phase resulting in the Company entering into ongoing confidential discussions with a selected investment candidate. While those discussions are ongoing, the Directors are mindful that any material investment in the oil and gas sector or any other sector will require careful consideration of the Board prior to seeking shareholder approval."

Orient Transaction and suspension of trading on ASX

1. On 25 July 2017, Molopo executed a share sale agreement with Dr Gil Feiler for the acquisition by Molopo of 50% of the shares in Orient FRC Ltd for US$7m (the Orient Transaction). Orient was a company registered in the British Virgin Islands which had a participation interest in a project with Kerogen Florida Energy Company LP for oil and gas exploration in southern Florida in the United States (the Orient Project).
2. Molopo did not seek shareholder approval for the Orient Transaction prior to its being entered or completed.
3. On 25 July 2017, Molopo asked ASX for a trading halt pending the announcement of a strategic investment.
4. From 27 July 2017, Molopo's shares were suspended from trading on the market operated by ASX. On the same day, Molopo issued an announcement that it had completed a strategic investment transaction and was currently finalising an announcement regarding this transaction. Also on the same day, Aurora Funds Management Limited (Aurora) made an off-market takeover bid for all of the issued shares in Molopo at a bid price of $0.18 per share (the First Aurora Offer).
5. On 22 August 2017, Molopo issued an ASX announcement in relation to the Orient Transaction. The announcement stated that the Orient Transaction had been entered and completed, gave an outline of the transaction, and described the nature of Orient's business.
6. On the same day, Molopo issued a further ASX announcement stating that: 1. ASX had advised Molopo that it needed to demonstrate a level of oil and gas operations sufficient, in ASX's opinion, to warrant the continued quotation of its securities; and 2. the Orient Transaction did not meet the ASX requirement to have a sufficient level of operations and, as such, Molopo's shares would continue to be suspended. This suspension remained in place until Molopo was subsequently delisted from the market operated by ASX in April 2021.

Books and Records Proceeding

1. On 1 September 2017, some 10 days after Molopo's ASX announcement concerning the Orient Transaction, Keybridge commenced a proceeding against Molopo in the Supreme Court of Western Australia (COR 216 of 2017) (the Books and Records Proceeding). In this proceeding, Keybridge sought an order under section 247A of the Corporations Act 2001 (Cth), authorising it to inspect and make copies of the documents listed in Schedule A of the Originating Process. The material to which access was sought included, relevantly, the following documents: "1 All Board minutes of the defendant that relate to public statements concerning shareholder approval for material transactions made by the defendant on the following dates: 1.1 6 November 2016; 1.2 29 January 2016; 1.3 31 March 2016; 1.4 30 May 2016; 1.5 29 July 2016. … 3 All documents concerning the transaction wherein the defendant acquired 50% of the shares in Orient FRC Ltd (Orient Transaction) and the Indigo Oil and Gas Lease the subject of the Orient Transaction including but not limited to: 3.1 Board minutes; 3.2 advice received from external advisers (including accounting, financial or technical advice; 3.3 correspondence with any of Dr Gil Fieler, Orient FRC Limited and Kerogen Florida Energy Company LP (including by or to advisers for the defendant and any of those parties 3.4 correspondence with ASX by or on behalf of the defendant; 3.5 contractual documents in relation to the Orient Transaction, Orient FRC Limited and the Indigo Oil and Gas Lease, including but not limited to the: 3.5.1 Share Sale Agreement between Dr Gil Feiler and the defendant; 3.5.2 Shareholders Agreement between Dr Gil Feiler and the defendant; 3.5.3 Exploration and Development Agreement between Orient FRC Ltd and Kerogen Florida Energy Company LP. 3.6 any valuation of: 3.6.1 Orient FRC Limited or its assets; 3.6.2 the Indigo Oil and Gas Lease. 3.7 correspondence with the defendant's bankers or the bankers for Dr Gil Feller; 3.8 documents disclosing the person or persons to whom the defendant paid the purchase price pursuant to the Share Sale Agreement and the bank account or accounts into which such payment or payments were made; 3.9 all documents disclosing any other payments made by the defendant 3.10 all documents concerning Orient FRC Limited including but not limited to documents concerning the incorporation of Orient FRC Limited and the accounting and financial records of Orient FRC Limited. 4 All correspondence with ASX by or on behalf of [the] defendant in relation to: … 4.2 the application of Chapter 11 of the ASX Listing Rules to the Orient Transaction …"

First Keybridge Proceeding

1. On 12 September 2017, Keybridge commenced a proceeding in the Supreme Court of Western Australia against Molopo and Mr Ronnen Rosengart who was, at that time, a director of Molopo (COR 220 of 2017) (the First Keybridge Proceeding). This proceeding was also subsequently transferred to the Supreme Court of Victoria in November 2017, where it was given the proceeding number S CI 2017 04752.
2. The Originating Process in the First Keybridge Proceeding stated that Keybridge's application was made under sections 233, 793C and 1324 of the Corporations Act. In particular, the relief sought in the Originating Process against Molopo (the first defendant) included the following orders: "1 A declaration pursuant to section 233(1) of the Act that the conduct of the affairs of the first defendant is and has been: 1.1 contrary to the interests of the member as a whole; and 1.2 oppressive to, unfairly prejudicial to or unfairly discriminatory to the interests of the plaintiff as a shareholder. … 3 An order that pursuant to section 233(1)(f) the first defendant institute proceedings against the directors responsible for the first defendant entering the transaction to acquire shares in Orient FRC Ltd announced by the first defendant to the ASX on 22 August 2017 (Orient Transaction). … 7 An order pursuant to 793C requiring the first defendant to comply with ASX Listing Rule 11.1.2 and get approval of holders of its ordinary securities for: 7.1 the Orient Transaction, being a transaction that represents a significant change to the nature or scale of the first defendant's activities; 7.2 any other transaction that the first defendant enters into or seeks to enter into that represents a significant change to the nature or scale of the first defendant's activities. … 11 An order pursuant to section 1324(1) of the Act requiring the first defendant to comply with ASX Listing Rule 11.1.2 and get approval of holders of its ordinary securities for: 11.1 the Orient Transaction, being a transaction that represents a significant change to the nature or scale of the first defendant's activities; 11.2 any other transaction that the first defendant enters into or seeks to enter into that represents a significant change to the nature or scale of the first defendant's activities."
3. The Originating Process claimed this relief "[o]n the facts stated in the supporting affidavits of David Grant Sanders and Farooq Khan and the documents exhibited thereto". Mr Sanders was Keybridge's solicitor in the First Keybridge Proceeding. His affidavit of 11 September 2017 essentially attaches various company records, including the ASX announcements described in paragraphs 11-19 above. Mr Khan was a consultant to Keybridge. His affidavit of 11 September 2017 set out a number of conversations between himself and Mr Sam Belzberg, a director and a substantial shareholder of Molopo, in which Mr Belzberg is said to have expressed concerns about the Orient Transaction.

Further Offers

1. On 12 September 2017 (being the day the First Keybridge Proceeding was commenced), Aurora withdrew the First Aurora Offer and made a further off-market takeover bid for all of the issued shares in Molopo at a bid price of $0.135 per share (Second Aurora Offer). That is, the bid price under the Second Aurora Offer was 75% of the bid price under the First Aurora Offer.
2. On 8 November 2017, a competing off-market takeover bid was made by WAM Capital Limited (WAM) for all of the issued Molopo shares at a price of $0.135 per share (WAM Offer).
3. Keybridge pleads in the current proceeding that each of the Second Aurora Offer and the WAM Offer had bid defeating conditions to the effect that Molopo not incur or commit to any capital expenditure or liability for one or more related items of greater than $2m (unless it was an expenditure or liability which had previously been announced or to which consent had previously been given).
4. On 11 December 2017, Molopo announced to ASX that it had advanced US$4.5m (representing around 11% of Molopo's cash balance) to Orient by way of a shareholder loan, to be used to pay certain costs in relation to the oil and gas exploration project in southern Florida (the US$4.5m Loan) and that the total budget for the Orient Project was estimated to be approximately US$20m.
5. On 24 January 2018, WAM withdrew the WAM Offer.

Points of Claim in First Keybridge Proceeding

1. On 23 February 2018, Keybridge filed Points of Claim in the First Keybridge Proceeding. Relevantly, the Points of Claim: 1. alleged that Molopo had made, in the period from November 2015 to July 2016, "a series of announcements on the ASX platform representing, in substance, that it would seek shareholder approval for any future material investments" (at [4]); 2. referred to the suspension of Molopo's shares from trading in the period from 25 July 2017 onwards, and the circumstances giving rise to this suspension (at [16]-[19], [21]); 3. described the Orient Transaction, and pleaded that the US$7m paid to Dr Feiler for the shares in Orient represented approximately 13.5% of Molopo's cash at 30 June 2017 "in circumstances where Molopo's only asset at that time was cash" (at [22]-[26]); 4. made the following allegation in respect of the Orient Transaction (at [27]): "In entering into the Share Sale Agreement and acquiring 50% of Orient: 27.1 Molopo failed to seek shareholder approval for the investment despite the representations made by Molopo referred to in paragraph 4 above 27.2 Molopo failed to seek and obtain prior confirmation from ASX that the acquisition of 50% of Orient and the drilling by Orient of commitment wells pursuant to the Exploration and Development Agreement would constitute a level of oil and gas operation sufficient, in ASX's opinion, to warrant the continued quotation of its securities and continued listing, and would thereby prevent Molopo's shares being suspended on 31 July 2017. 27.3 Molopo acquired shares in Orient which had no value, or alternatively no material value, in circumstances where there was no reasonable prospect of Molopo generating any return on its investment in Orient." 1. pleaded in paragraphs [29] and [31] as follows: "[29] On 22 August 2017 Molopo announced that it had acquired 50% of the shares in Orient pursuant to the Share Sale Agreement. … [31] … by reason of the matters set out in paragraph 29 above, in releasing the announcement Molopo breached ASX Listing Rule 3.1." (Listing Rule 3.1 provides that: "Once an entity is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity's securities, the entity must immediately tell ASX that information"); 1. under the heading "Further destruction of value in Molopo", referred to the First Aurora Offer, the Second Aurora Offer and the WAM Offer, and pleaded that the First Aurora Offer was withdrawn as a consequence of Molopo's acquisition of a 50% interest in Orient (at [36]-[37] and [41]); 2. pleaded that the reduction in amount offered by Aurora (between the First Aurora Offer and the Second Aurora Offer) "was attributable to the reduction in the value of Molopo shares that was caused by its entry into the Orient transaction" (at [38]), and that the WAM Offer was withdrawn in early January 2018, as a result of Molopo's ASX announcement on 11 December 2017 regarding the US$4.5m Loan and the size of the budget for the Orient Project (at [42]-[44]); and 3. pleaded that Molopo had refused to commence proceedings against the directors who were responsible for Molopo's entry into the Orient Transaction (who were said to be Mr Rosengart and Mr Gabovich) "to recover losses suffered by reason of their contraventions of their statutory directors' duties, in entering into the Orient Transaction", and that the conduct of Molopo was contrary to the interests of the members of Molopo as a whole and oppressive, unfairly prejudicial, or unfairly discriminatory to the interests of Keybridge as a shareholder of Molopo (at [46]-[48]).

Drawbridge Transaction

1. On 8 May 2018, Molopo published an ASX announcement headed "Molopo de-risks by diversifying its oil and gas exploration portfolio".
2. This announcement included statements that: 1. on 30 January 2018, Orient redeemed all of the shares in Orient which were held by ESGM Investments Limited (described as Dr Gil Feiler's special purpose vehicle) for a redemption amount of US$7m (the effect of which was to make Molopo the sole shareholder of Orient); 2. during the first quarter of 2018, Molopo provided total funding of US$23.5m to Orient, in addition to the US$4.5m Loan. Of this total amount of US$28m, US$7m was used to fund the redemption of the shares held by ESGM and the remaining US$21m was used to fund an intercompany loan by Orient to its wholly owned subsidiary, Orient FRC (US) LLC (Orient US); and 3. on 21 February 2018, Orient entered into and completed a contribution agreement with Drawbridge Holdings Ltd pursuant to which it agreed: 1. to assign Orient's interest in the Orient Project to Orient US; 2. to transfer its 100% interest in Orient US to Drawbridge; and 3. to receive, in consideration, a 30% non-voting interest in Drawbridge.
3. The transactions described in (1)-(3) above are collectively referred to in the current proceeding as the Drawbridge Transaction.
4. On 11 May 2018, ASX issued a written notice to Molopo (the ASX May 2018 Notice). The ASX May 2018 Notice referred to Molopo's announcement of the Drawbridge Transaction, describing the transaction in paragraph (1) above as the "Orient Redemption"; the transaction in paragraph (2) above as the "Assumption of Full Funding Responsibility"; and the transaction in paragraph (3) above as the "Contribution Agreement". The ASX May 2018 Notice summarised a series of communications between ASX and Molopo, and announcements by Molopo, from 10 February 2017 through to 10 May 2018. The ASX May 2018 Notice then continued as follows: "In all of the interactions mentioned above between 30 January 2018 (the date of the Orient Redemption and the Assumption of Full Funding Responsibility for the Orient Project) and 8 May 2018 (the date of the Drawbridge Announcements), [Molopo] omitted to advise ASX of the Orient Redemption or the Assumption of Full Funding Responsibility for the Orient Project, even though they were directly relevant to the matters being discussed in those interactions. Similarly, in all of the interactions mentioned above between 21 February 2018 (the date Orient entered into the Contribution Agreement) and 8 May 2018 (the date of the Drawbridge Announcements), [Molopo] omitted to advise ASX of the fact that its now wholly owned subsidiary Orient had entered into the Contribution Agreement. Based on the information provided by [Molopo] to date, including the Drawbridge Announcements and the response provided to the Chapter 11 Letter, ASX considers the Orient Transaction (including the modifications outlined in the Drawbridge Announcements) to be a significant change to the nature or scale of [Molopo]'s activities. ASX has determined that it should exercise its discretion under Listing Rules 11.1.2 to require that transaction to be approved by [Molopo]'s shareholders. ASX has also determined that, in the particular circumstances of this case, it should exercise its discretion under Listing Rule 11.1.3 to require [Molopo] to satisfy the requirements in Chapters 1 and 2 of the Listing Rules as if it were applying for admission to the official list ("Re-admission"). Further, based on the above, ASX considers that [Molopo] has committed serious breaches of the Listing Rules, including: • Listing Rule 11.1 for failing to notify ASX of the original Orient Transaction, the Assumption of Full Funding Responsibility for the Orient Project and the Orient Redemption before they were completed; and • Listing Rule 3.1 for delaying the notification of the original Orient Transaction, the Assumption of Full Funding Responsibility for the Orient Project, the Orient Redemption and the Contribution Agreement until after they had been completed. [Molopo] may also have breached sections 1041H and 1309 of the Corporations Act for making misleading disclosures to ASX."

Second Keybridge Proceeding

1. On 24 May 2018, the First Keybridge Proceeding was listed before Sifris J in the Supreme Court of Victoria.
2. Counsel for Keybridge in the First Keybridge Proceeding, Mr Mitchell, indicated that Keybridge sought to add another director of Molopo, Mr Baljit Johal, as a defendant and to amend their Points of Claim. When asked about the nature of the proposed amended claim, Mr Mitchell responded as follows: "Breach of duties to the company, that's the factual basis of it, but what that has given rise to is conduct of the affairs of the company that is prejudicial to the shareholders. In substance, what it appears to us is through some pea and thimble trick about $30 million has been sent offshore and will never be seen again and it's been directly caused by the current directors. So, whichever hat you put on it, the company can bring that as a breach of duty claim; the shareholder can bring it as an oppression claim."
3. Sifris J indicated that any claim against Mr Johal should be brought in a fresh proceeding.
4. Shortly afterwards, on 30 May 2018, Keybridge commenced a proceeding in the Supreme Court of Victoria numbered S ECI 2018 00120 (the Second Keybridge Proceeding). This proceeding was brought against Molopo (as first defendant), Mr Johal (as second defendant), Mr Richard Matthews (as third defendant) and Mr Matthew Cudmore (as fourth defendant). At the time this proceeding was commenced, Mr Johal, Mr Matthews and Mr Cudmore were directors of Molopo. Mr Rosengart had ceased to be a director on 28 December 2017, prior to the Drawbridge Transaction.
5. The Originating Process in the Second Keybridge Proceeding stated that Keybridge's application was made under sections 232, 233, 237, 674, 793C, 1041H, 1041I and 1101B of the Corporations Act. The nature of the proceeding was described as follows: "Oppression proceeding, derivative action application, breach of continuous disclosure obligations, contravention of listing rules."
6. The relief claimed in the Originating Process was as follows: "1. The plaintiff be given leave pursuant to s. 237 of the Corporations Act 2001 to bring proceedings on behalf of Molopo Energy Limited (Molopo) against Baljit Singh Johal (Johal), Richard Matthews (Matthews) and Matthew Edward Cudmore (Cudmore) arising out of their conduct as directors of Molopo in breach of ss. 180, 181 and 182, 1041H of the Corporations Act 2001. 2. A declaration that the affairs of Molopo have been conducted in a manner contrary to the interests of the members as a whole. 3. Orders pursuant to s. 232 and 233 of the Corporations Act 2001 that Johal, Matthews and Cudmore are removed as directors of Molopo. 4. A declaration that, in contravention of s. 1014H [sic] of the Corporations Act 2001, Molopo, in relation to a financial product, engaged in misleading or deceptive conduct or conduct that is likely to mislead or deceive. 5. A declaration pursuant to ss. 674, 793C and/or 1101B of the Corporations Act 2001 that Molopo failed to meet its obligations under the ASX Listing Rules, as alleged in the letter from ASX to Molopo dated 11 May 2018. 6. A direction pursuant to s. 793C of the Corporations Act 2001 that Molopo, Johal, Matthews and Cudmore do all things necessary to comply with the ASX Listing Rules. 7. A declaration that within the meaning in s. 1041I of the Corporations Act 2001, Johal, Matthews and Cudmore were involved in Molopo's misleading or deceptive conduct. 8. Damages. 9. Costs. 10. Such further or other orders as the Court deems appropriate."

July 2018 Settlement

1. On 31 May 2018, being the day after the Second Keybridge Proceeding was commenced, Molopo's shareholders voted to remove each of Mr Johal, Mr Cudmore and Mr Matthews as a director of Molopo and to appoint a new board of directors.
2. On 18 June 2018, Keybridge's solicitors sent to Molopo's solicitors a memorandum of advice from Keybridge's counsel, Mr Mitchell, in which Mr Mitchell gave his views on the next steps that Keybridge should take in the Proceedings in the Supreme Court of Victoria. This advice included, relevantly, the following statements: "Substitution of Keybridge as a plaintiff 4. If Keybridge is to cease prosecuting the claims, the best way for it to do so would be for the proceeding to continue with Molopo as plaintiff. That avoids the prospect of an adverse costs order against Keybridge, and allows Molopo to take advantage of the steps that have already been taken in the proceeding. 5. Molopo would need to amend the claims made to remove any relief against the company, and it may wish to add new claims. That can all happen after the substitution has taken place. 6. Although unusual, there is no procedural impediment to Molopo being substituted as plaintiff, if it is no longer a defendant. The draft orders following this memorandum set out a basis on which this can be done."
3. Mr Mitchell's advice annexed a "Draft Form of Order to be made in each Proceeding". This document included, relevantly, the following draft orders: "1. The plaintiff's (Keybridge) claims against the first defendant (Molopo) are dismissed without adjudication on the merits. 2. Molopo pay Keybridge's costs of and incidental to the proceeding on an indemnity basis up to and including the date of this order. 3. Keybridge be removed as a party to the proceeding. 4. Molopo be removed as first defendant to the proceeding and be substituted for Keybridge as plaintiff."
4. On 25 June 2018, Keybridge wrote to the new Chairman of Molopo, Mr Roger Corbett. This letter included, relevantly, the following statements: "As a result of the recent board changes at Molopo's AGM on 31 May 2018, Keybridge understands that the current Board of Molopo is now supportive of taking action against the former Directors of Molopo in respect of the Orient and Drawbridge transactions. It seems therefore that Molopo and Keybridge no longer disagree on the inadequate disclosure and the failures of the previous Molopo Directors that motivated Keybridge's proceedings and Molopo wishes to make similar complaints against those persons. It therefore makes sense for Molopo and Keybridge that: (1) Keybridge and Molopo settle the current proceedings as between themselves; and (2) Molopo effectively be substituted for Keybridge as the plaintiff in these proceedings and pursue the former Directors directly."

Events following July 2018 Settlement

1. On 18 July 2018, Justice Sifris made orders by consent in the Second Keybridge Proceeding. These orders included: "1. The plaintiff's (Keybridge) claims against the first defendant (Molopo) are dismissed without adjudication on the merits. 2. Keybridge be removed as a party to the proceeding. 3. Molopo be removed as first defendant to the proceeding and be substituted for Keybridge as plaintiff. 4. Molopo have leave, on or before 4:00pm on 10 August 2018, to file and serve an amended originating process and statement of claim against the defendants. 5. The defendants file and serve any defence on or before 4:00pm on 7 September 2018. 6. The further hearing of the matter is adjourned to 14 September 2018. 7. Costs reserved."
2. On 19 July 2018, Justice Sifris made the following orders by consent in the Books and Records Proceeding: "1. The proceeding is dismissed without adjudication on the merits. 2. No order as to costs."
3. On 10 August 2018, the Second Aurora Offer was withdrawn. Keybridge pleads in the present proceeding that it "was withdrawn in circumstances where it was … not free from its defeating conditions".
4. On 24 August 2018, Justice Riordan made the following orders in the First Keybridge Proceeding: "THE COURT ORDERS BY CONSENT THAT the proceeding is dismissed. AND THE COURT ORDERS THAT the parties' costs of the proceeding are reserved to the trial judge in [the Second Keybridge Proceeding]"
5. On 27 August 2018, Molopo filed an Amended Originating Process and a Statement of Claim in the Second Keybridge Proceeding. The Amended Originating Process added Mr Rosengart as a defendant, deleted the various prayers for relief that had been sought by Keybridge, and replaced them with a claim by Molopo against its former directors for compensation orders pursuant to section 1317H of the Corporations Act and a claim for damages. The Statement of Claim filed by Molopo pleaded, among other things, that: 1. Molopo did not conduct thorough commercial, legal and financial due diligence on the Orient Transaction (at [22]); 2. Mr Rosengart breached his duties to Molopo by voting in favour of the Orient Transaction without undertaking appropriate due diligence (at [23]-[24]); 3. as a result of the Orient Transaction, Molopo acquired shares in Orient which had no value, or alternatively a value far less than the US$7m purchase price, in circumstances where there was no reasonable prospect of Molopo generating any return on its investment (at [25]); 4. Mr Johal, Mr Matthews and Mr Cudmore breached their duties to Molopo by approving the Orient Redemption transaction (by which Dr Feiler's shareholding was redeemed), without Molopo obtaining legal or commercial advice (at [38]-[43]); 5. Mr Johal, Mr Matthews and Mr Cudmore breached their duties to Molopo by approving the advances of US$28m to Orient and its subsidiaries without appropriate advice and due diligence regarding the likely return from the advances (at [55]-[57]); 6. Mr Johal, Mr Matthews and Mr Cudmore breached their duties to Molopo by approving the contribution agreement with Drawbridge without appropriate advice and due diligence (at [58]-[63]); and 7. each of the elements of the Drawbridge Transaction (in paragraphs (4)-(6) above) was individually and in combination contrary to the best interests of Molopo and had caused it to suffer loss (at [67]).

Claims by Keybridge in the current proceeding

1. The relief claimed in the Summons in the current proceeding is as follows: "1 On the facts pleaded in the accompanying Commercial List Statement, a declaration that the Defendant contravened s 674 of the Corporations Act 2001 (Cth) (Act). 2 An order under s 1317HA of the Act that the Defendant pay to the Plaintiff compensation that resulted from the contraventions in (1). 3 On the facts pleaded in the accompanying Commercial List Statement, a declaration that the Defendant engaged in conduct in contravention of s 1041H of the Act, s 12DA(1) of the ASIC Act 2001 (Cth) (ASIC Act) and s 18 of the Australian Consumer Law. 4 Orders under s 1041I of the Act, s 12FG and/or s 12GM of the ASIC Act and/or s 236 of the Australian Consumer Law that the Defendant pay to the Plaintiff compensation that resulted from the contraventions in (3). 5. Interest. 6. Costs. 7. Such other order as the Court thinks fit."
2. The Commercial List Statement pleads the Orient Transaction and the Drawbridge Transaction; the announcement of those transactions by Molopo on 22 August 2017 and 8 May 2018 respectively; the terms of the ASX May 2018 Notice; and the suspension of Molopo shares from trading on the market operated by ASX from 27 July 2017 onwards, and their subsequent delisting on 1 April 2021. The Commercial List Statement contains allegations that: 1. by reason of a series of announcements to ASX between November 2015 and August 2017 (including, but not limited to, those referred to at paragraphs 11-14 above), Molopo made the following representations to Keybridge, each of which was a continuing representation: 1. that it would not enter into any substantial transactions or change the principal activity of its business without first seeking shareholder approval; 2. that it had not entered into or completed, and would not enter into or complete, any substantial transactions, where such transactions had not been approved by its shareholders and disclosed to ASX; 3. that it was, and would be, in compliance with its continuous disclosure obligations; (the Molopo Representations) 1. Molopo contravened its continuous disclosure obligations under Listing Rule 3.1 and section 674 of the Corporations Act, by failing to disclose in respect of each of the Orient Transaction and the Drawbridge Transaction, upon becoming aware of the information, its intention to enter into the transaction, its entry into the transaction, its completion of the transaction, or the financial impact of the transaction on its balance sheet (referred as to the Material Disclosure Contravention); 2. Molopo contravened Listing Rules 11.1 and 11.2 by failing, prior to entry into each of the Orient Transaction and the Drawbridge Transaction, to inform ASX of its intention to enter into the transaction and to seek the approval of its shareholders (referred to as the Significant Change Contravention); and 3. Molopo engaged in misleading or deceptive conduct by making, maintaining and/or failing to correct or qualify the Molopo Representations, and thereby contravened sections 1041E and 1041H of the Corporations Act, s 12DA(1) of the Australian Securities and Investments Commission Act 2001 (Cth), and s 18 of the Australian Consumer Law (referred to as the Misleading Conduct Contravention).

Res Judicata, Cause of action estoppel and Issue estoppel

1. The distinction between res judicata, cause of action estoppel and issue estoppel was explained by French CJ, Bell, Gageler and Keane JJ in Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 at [20]-[22].
2. Res judicata in the strict sense refers to the principle that, where a final judgment is given, the rights and obligations which were in controversy as between the parties to the proceeding "merge" in the judgment and "cease to have an independent existence" (at [20]).
3. Cause of action estoppel operates to preclude the assertion in a subsequent proceeding of a claim to a right or obligation which was determined in an earlier proceeding. Its operation is not confined to an exercise of judicial power, but also "operates in the context of a final judgment having been rendered in other adversarial proceedings" (at [21]). Where there is an exercise of judicial power, cause of action estoppel is largely redundant, because in such circumstances res judicata in the strict sense will apply to result in the merger of the right or obligation in the judgment (at [22]).
4. Issue estoppel "operates to preclude the raising in a subsequent proceeding of an ultimate issue of fact or law which was necessarily resolved as a step in reaching the determination made in the judgment" (at [22]). The classic expression of the primary consequence of its operation is that a "judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies" (at [22], quoting Blair & Perpetual Trustee Co Ltd v Curran ('Adams' Will) (1939) 62 CLR 464 at 531 per Dixon J; [1939] HCA 23).
5. Because the orders which disposed of the First and Second Keybridge Proceedings were made by the Supreme Court of Victoria, cause of action estoppel is redundant. The question which therefore arises for determination is whether, by reason of those orders in the earlier Proceedings, either res judicata or issue estoppel operates to preclude the claims raised by Keybridge in the current proceeding. In Blair v Curran, Dixon J observed (at 532) that: "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."

Res Judicata

1. Molopo contended that the rights and obligations which were in controversy in the First Keybridge Proceeding and in the Second Keybridge Proceeding merged in the orders made by the Supreme Court of Victoria in each of those Proceedings, which dismissed Keybridge's claims against Molopo. The result was said to be that Keybridge could not assert the same rights and obligations in the current proceeding.
2. This gives rise to two issues: first, whether a consent order dismissing a proceeding can give rise to res judicata; and secondly, if it can, whether the rights and obligations asserted by Keybridge against Molopo in the current proceeding are the same as those which were asserted by Keybridge against Molopo in either the First Keybridge Proceeding or the Second Keybridge Proceeding.

Dismissal by consent

1. The principle of res judicata applies where a judgment is entered by consent: Chamberlain v Deputy Commission of Taxation (ACT) (1988) 164 CLR 502 at 508 per Deane, Toohey and Gaudron JJ; [1998] HCA 21.
2. An order by consent is as effective as an order of the court made otherwise than by consent: Kinch v Walcott [1929] AC 482 at 493 (Privy Council). When the court gives a judgment by consent of the parties, it is a binding judgment of the court: The Bellcairn (1885) 10 PD 161 at 165 per Lord Esher MR (Cotton and Lindley LJJ agreeing).
3. Res judicata arises when a cause of action passes into a judgment, so that it is merged and no longer has an independent existence and no other proceedings can be maintained on it: Rogers v The Queen (1994) 181 CLR 251 at 272 per Deane and Gaudron JJ; [1994] HCA 42. The reasons for the principle include that judicial determinations must be final, binding and conclusive; that injustice would occur if a party is required to relitigate matters which have already been determined by the courts; and that there is a need for decisions of the courts, unless quashed or set aside, to be accepted as incontrovertibly correct: ibid at 273. These propositions apply irrespective of the circumstances in which a final judgment is entered, and would "be substantially undermined if some types of final judgments gave rise to res judicata and others did not according to some form of inquiry as to whether there was a decision on the merits in the sense of a judicial assessment based upon an evaluation of the facts and application of legal principles": Zetta Jet at [22].
4. In Zetta Jet at [32], the Full Court of the Federal Court observed that, since Blair v Curran, there has been no qualification in the High Court "as to the effect that is to be given to a final judgment that determines in any way an underlying cause of action that may be said to merge in the judgment": "there is no suggestion that res judicata depends upon the circumstances in which a final adjudication of a cause of action occurred (whether that be by default, consent or the absence of attendance by a party at a hearing where notice has been given that an order for judgment may be made or by reason of a failure by a party to advance any case at trial or final hearing)."
5. Whether a claim is allowed or dismissed by consent, default or after a contested hearing, the need for finality is the same in each instance: Zetta Jet at [33]. Accordingly, it is not necessary that there must be a final judgment on the merits, "in the sense of some form of reasoned adjudication of the merits", in order for res judicata to arise: ibid at [27].

Substantial correspondence between rights asserted?

1. In order to establish that res judicata operates to preclude a cause of action being raised, it is necessary to establish that "the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment": Blair v Curran at 532 per Dixon J.
2. This does not require "absolute identity", but rather "substantial correspondence" between the sources and incident of rights asserted in each set of proceedings, such that it is sufficient that "the rights are of a substantially equivalent nature and cover substantially the same subject matter": Clayton v Bant (2020) 272 CLR 1; [2020] HCA 44 at [34] per Kiefel CJ, Bell and Gageler JJ. For example, in Trawl Industries of Australia Pty Ltd (in liq) v Effem Foods Pty Ltd (1992) 36 FCR 406 at 422; [1992] FCA 272, Gummow J held that a previous judgment in respect of a statutory claim for misleading or deceptive conduct prevented claims being brought both for misleading conduct and in negligence, on the basis that the "gist of the recovery sought both in negligence and for contravention of the TP Act is the same; the question is how much worse off is Trawl as a consequence of the acts and omissions of Effem?"
3. As noted above, "only the actual record is relevant" when considering res judicata: Jackson at 467; Zetta Jet at [23]. That is, the Court is "restricted to the examination of the plaintiff's pleadings and the Court's orders": Pollnow v Armstrong [2000] NSWCA 245 at [13] per Meagher JA (Priestley and Sheller JJA agreeing).
4. Where a final order is made by consent, "care must be taken in determining exactly what has been concluded by the judgment": Zetta Jet at [27]. In Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543 at 559, Clarke JA said that what is necessary is "an examination of the factual circumstances relied upon to establish the right to relief in each case in order to determine whether there is a sufficient identity between them to found the conclusion that the same cause of action was in question in both cases".
5. The Books and Records Proceeding can be put to one side, as it only sought access to documents and information of Molopo pursuant to section 247A of the Corporations Act, and did not otherwise seek to vindicate any asserted right of Keybridge.

Issue Estoppel

1. In Jackson at 466, Fullagar J cited a statement by Lord Ellenborough in Outram v Morewood (1803) 3 East 346 at 355; 102 ER 630 at 633, that an issue estoppel precludes the parties and their privies "from contending to the contrary of that point, or matter of fact, which having been once distinctly put in issue by them … has been, on such issue joined, solemnly found against them". With respect to factual questions, issue estoppel applies only to what are described as "ultimate" facts and does not extend to "mere evidentiary facts": Jackson at 467 per Fullagar J. This distinction was explained by Dixon J in Blair v Curran at 532: "Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. Where the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived. But in neither case is the estoppel confined to the final legal conclusion expressed in the judgment, decree or order. … the judicial determination concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide and which was actually decided on the groundwork of the decision itself, though not then directly the point at issue. Matters cardinal to the latter claim or contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous. ... But matters of law or fact which are subsidiary or collateral are not covered by the estoppel. Findings, however deliberate and formal, which concern only evidentiary facts and not ultimate facts forming the very title to rights give rise to no preclusion."
2. These principles apply to judgments and orders made by consent: Trustees for the Roman Catholic Church for the Diocese of Bathurst v Hine [2016] NSWCA 213 at [23] per Meagher JA (Leeming and Simpson JJA agreeing). In Re South American and Mexican Company; Ex parte Bank of England [1895] 1 Ch 37 at 45, Lord Herschell LC, Lindley and AL Smith LJJ approved the following statement made by Vaughan Williams J at first instance: "It has always been the law that a judgment by consent or by default raises an estoppel just in the same way as a judgment after the Court has exercised a judicial discretion in the matter … if [the parties] agree upon a result, or upon a verdict, or upon a judgment, or upon a verdict and judgment, as the case may be, an estoppel is raised as to all the matters in respect of which an estoppel would have been raised by judgment if the case had been fought out to the bitter end."

Relevant Principles

1. In Tomlinson at [22], French CJ, Bell, Gageler and Keane JJ stated that Anshun estoppel "operates to preclude the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding".
2. An Anshun estoppel "is not based upon degrees of similarity, which may be a matter of impression"; rather, it is necessary to show 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": Timbercorp Finance Pty Ltd (in liq) v Collins; Timbercorp Finance Pty Ltd (in liq) v Tomes (2016) 259 CLR 212; [2016] HCA 44 at [56] per French CJ, Kiefel, Keane and Nettle JJ (with emphasis added by their Honours to a quotation from Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 602; [1981] HCA 45).
3. In Tomlinson at [22], French CJ, Bell, Gageler and Keane JJ observed that considerations similar to those which underpin Anshun estoppel may support a preclusive abuse of process argument.
4. That is not to say that if a claim could have been raised in earlier proceedings, the raising of it in later proceedings is an abuse of process. Instead, it is to recognise that in some circumstances the bringing of a claim which should have been litigated in an earlier proceeding will be an abuse and this may be so notwithstanding that the later proceeding is not precluded by an estoppel: UBS AG v Tyne (2018) 265 CLR 77; [2018] HCA 45 at [43] per Kiefel CJ, Bell and Keane JJ.
5. Abuse of process is inherently broader and more flexible than estoppel: Tomlinson at [25]. It is capable of application in any circumstances in which the use of the court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute: ibid.
6. In Tomlinson at [26], French CJ, Bell, Gageler and Keane JJ observed that: "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. Similarly, it has been recognised that making such a claim or raising such an issue can constitute an abuse of process where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to that earlier proceeding, nor the privy of a party to that earlier proceeding, and therefore could not be precluded by an estoppel."

Molopo's Submissions

1. Molopo submitted that the legal and factual issues raised in the current proceeding are, if not substantially the same, so closely related to those raised in the First and Second Keybridge Proceedings that Keybridge could have and should have brought those claims in the earlier proceedings. This was said to be sufficient in and of itself to preclude Keybridge from running the current litigation by operation of Anshun principles.
2. Further and alternatively, Molopo contended that the current proceeding is unjustifiably oppressive to Molopo and will bring the administration of justice into disrepute, and therefore is an abuse of process. Molopo placed particular reliance on the following matters. 1. As a result of the July 2018 Settlement, Keybridge obtained significant benefits, including that Keybridge's past costs of some $400,000 were paid by Molopo; that Molopo took over the proceeding against the Directors and bore the risk of future costs; and that Keybridge, as a shareholder, stood to benefit from the proceeding if Molopo obtained a favourable judgment. In contrast, if Keybridge had continued the proceedings as a derivative action, it would have had to pay its own costs, and would have had to indemnify Molopo in the event that it obtained leave to bring derivative proceedings. 2. As a result of the July 2018 Settlement, Molopo assumed the burden of prosecuting the claims against the Directors (and, subsequently, the D&O Insurers as well), and assumed the risks of doing so. Molopo's costs of the proceedings were in the order of $2m. 3. Keybridge gave no indication to Molopo, at the time of the July 2018 Settlement, of its intention to bring, or to reserve for itself the right to bring, the claims advanced in the current proceeding regarding the Orient and Drawbridge Transactions. Instead, Keybridge offered Molopo the use of its solicitors, counsel and expert for the purpose of Molopo's pursuit of the claims against the Directors in relation to those Transactions. 4. Molopo settled its claims against the Directors and the D&O Insurers, on the basis that Molopo released claims against them in relation to the Transactions. The effect is that Molopo cannot now bring cross claims against those parties in the current proceeding, and is accordingly prejudiced as a result of Keybridge's decision to delay commencing this proceeding until after that settlement was finalised. Molopo pointed out that, given that the Originating Process in the Second Keybridge Proceeding alleged that the Directors had accessorial liability in respect of Molopo's contravention of section 1041H of the Corporations Act, it must have been apparent to Keybridge that, if it advanced a claim against Molopo that it had contravened this provision, Molopo would have available cross claims against the Directors. 5. Keybridge delayed in commencing the current proceeding. The Orient Transaction was announced in August 2017 and the Drawbridge Transaction was announced in May 2018. Keybridge did not bring the current proceeding until a period of around 6 years after the announcement of the Orient Transaction, and then delayed further by not serving the Commercial List Statement on Molopo until almost six months after it was filed. Molopo submitted that Keybridge "has demonstrated no urgency in the commencement or conduct of the Proceedings and Molopo is now faced with litigating (again) in relation to the transactions that were entered into, and the subject of litigation, years ago".

Keybridge's submissions

1. In response, Keybridge advanced a number of submissions as to why there was no Anshun estoppel or abuse of process.
2. First, Keybridge relied on the fact that no allegation made on Keybridge's behalf in the earlier Proceedings was ever tested, and that no orders were made in those Proceedings or adverse to Keybridge's direct interests prior to Molopo taking control of the proceedings for its own benefit.
3. However, as UBS AG v Tyne illustrates, it is not necessary for the earlier proceeding to "have been concluded by a judgment on the merits" in order to establish the "undue vexation which a stay of proceedings is concerned to prevent" (at [46] per Kiefel CJ, Bell and Keane JJ). Depending on the circumstances of the case, an abuse of process can be established where the earlier proceeding has been discontinued prior to judgment (ibid).
4. Secondly, Keybridge submitted that, to the extent that it sought relief directly against Molopo in the First and Second Keybridge Proceedings, "emphasis was placed on requiring Molopo to comply with its statutory obligations" and such relief "is in a different category to compensatory relief" (which is pursued in the current proceeding) and "was pursued on a different basis".
5. As noted above, there is ambiguity in the Originating Process in the Second Keybridge Proceeding as to whether the "damages" sought included statutory compensation for contraventions by Molopo of sections 674 and 1041H of the Corporations Act (being the same relief sought by the Summons in the current proceeding in this Court). Assuming, in favour of Keybridge, that the "damages" prayer in the earlier proceeding did not include such a claim, it does not follow that there can be no Anshun estoppel or abuse of process. The issue is not whether the precise claims now advanced were made in the earlier proceedings against Molopo, but whether those claims could have been, and should have been, advanced in those earlier proceedings and whether, in the circumstances of this case, the advancing of such claims in a later, separate proceeding against the same entity is an abuse of process.
6. In that regard, Keybridge has not led any evidence to explain why it did not advance the claims for compensation which it now brings against Molopo in either the First or Second Keybridge Proceeding. It is not suggested by Keybridge that there was any juridical disadvantage to it advancing those claims in the earlier Proceedings. It is not suggested that any matters came to light between the July 2018 Settlement and the commencement of the current proceeding which led Keybridge to identify the claims which it now seeks to bring. Senior Counsel for Keybridge acknowledged that he could not advance a submission that the claims raised in the current proceeding were unable to be raised in the earlier proceeding: "I can't say they couldn't have been raised, your Honour. I think that's about as high as I can put it, although if one is bringing a derivative claim it would be unusual - we would have thought it would have had to be a separate proceeding". However, the Originating Process in the Second Keybridge Proceeding did seek relief directly against Molopo, since it sought declarations that Molopo had contravened sections 674 and 1041H of the Corporations Act. It is common, where such a claim is made by a shareholder, for the shareholder also to seek compensation for loss suffered as a result of the contraventions (and, on one reading of the Originating Process, that is what was in fact sought by the prayer for "Damages").

Determination

1. The claims which are raised in the current proceeding could all have been made in the First or Second Keybridge Proceeding. In those proceedings, Keybridge brought claims against Molopo relating to the Orient and Drawbridge Transactions, which included allegations: 1. that Molopo had made a series of announcements to ASX to the effect that it would not enter into any substantial transactions or change the principal activity of its business without first seeking shareholder approval; 2. that Molopo proceeded to enter into the Orient and Drawbridge Transactions without obtaining shareholder approval; 3. that Molopo did not announce those Transactions to the market until they had completed, and thereby breached its continuous disclosure obligations; 4. that the Transactions were not in Molopo's commercial interests and had led to a decrease in the value of its assets; 5. that the Transactions occurred in a context where offers were being made by Aurora and WAM for all of the shares in Molopo, and led to those offers decreasing in value and being unable to be accepted; and 6. that Keybridge suffered loss and damage as a result.
2. The claims brought in the current proceeding arise out of the same factual matrix, and raise issues which are in some respects the same as, and in other respects closely related to, the issues raised in the First and Second Keybridge Proceedings. For example, in the Second Keybridge Proceeding, Keybridge alleged that Molopo contravened section 674 of the Corporations Act by reason of the matters alleged in the May 2018 ASX Notice. The allegations made by ASX in that notice included that Molopo had breached its continuous disclosure obligations by failing to announce the Orient and Drawbridge Transactions until they were completed. In the Second Keybridge Proceeding, Keybridge sought declaratory relief in respect of that contravention. In the current proceeding, Keybridge sues in respect of a contravention of the same provision arising from the same facts, and seeks both declaratory relief and statutory compensation. The matters relied upon by Keybridge in order to establish its claims in the current proceeding are so closely related to the subject matter of the First and Second Keybridge Proceedings that it was unreasonable for Keybridge not to raise and rely upon those matters in the earlier Proceedings.
3. There has been no explanation from Keybridge as to why those claims were not raised in the earlier Proceedings, or notified prior to the July 2018 Settlement, or brought shortly after the July 2020 letter of demand. As Kiefel CJ, Bell and Keane JJ observed in UBS AG v Tyne at [45], the courts "must be astute to protect litigants and the system of justice itself against abuse of process", and "any substantial delay is apt to occasion an increase in the cost of justice and a decrease in the quality of justice", while "other litigants are left in the queue awaiting justice".

Does Keybridge's claim disclose a reasonable cause of action?

1. In the alternative to seeking a permanent stay on the basis of res judicata, issue estoppel, Anshun estoppel or abuse of process, Molopo sought that the proceeding in this Court be summarily dismissed or struck out on the basis that the Commercial List Statement does not disclose any reasonable cause of action.
2. Molopo described the pleaded claim for loss as "somewhat obscure", but submitted that there are only two available conclusions: namely, "that Keybridge is, in reality, asserting that it has suffered loss because Molopo has suffered loss, or that its claim discloses no recoverable loss". Molopo said that, in either case, the proceeding should be dismissed.
3. Molopo submitted that Lord Bingham's statement of the rule as to reflective loss in Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1 at 35-36 represents the law in Australia, referring to Central Coast Council v Norcross Pictorial Calendars Pty Ltd [2021] NSWCA 75 at [107]-[119] per Bathurst CJ (with whom Macfarlan and Gleeson JJA agreed); and Garner v Central Innovation Pty Ltd [2022] FCAFC 64 at [107]-[108], [123]-[124] (Charlesworth, Stewart and Halley JJ).
4. In particular, Molopo relied on the following statement of principle by the Full Court in Garner at [123]: "if a company suffers loss by reason of the breach of duty owed to it or a breach of a contract to which it is a party, a shareholder has no standing to sue to seek to make good any diminution in the value of its shareholding, even in circumstances in which the company has determined not to pursue any action to seek to recover the loss it has suffered"
5. Molopo submitted that the only claim apparently advanced by Keybridge is a claim for the diminution of the value of its shareholding in Molopo and that, in accordance with these statements of principle, such a claim was doomed to fail.
6. Given that I have determined that the proceeding should be permanently stayed as an abuse of process, it is unnecessary to determine Molopo's alternative contention that Keybridge's claim for loss cannot succeed and should be summarily dismissed or struck out. In those circumstances, I will deal with this issue only briefly.
7. There are three main reasons why, if it were necessary to decide, I would not have accepted Molopo's alternative contention.

Keybridge's amendment application

1. By a Notice of Motion filed in Court at the hearing on 12 June 2024, Keybridge sought to amend its List Statement to introduce a claim that Molopo breached the terms of the July 2018 Settlement.
2. The proposed claim alleges that: 1. the July 2018 Settlement included terms that Molopo would be substituted for Keybridge as plaintiff in the Second Keybridge Proceeding and would pursue claims against the Directors in that Proceeding and that, if Molopo intended to settle the Proceeding with the Directors, it would provide reasonable notice of that intention to Keybridge; and 2. in around December 2021, Molopo settled the Second Keybridge Proceeding with the Directors and the D&O Insurers for $12m, without having given any reasonable notice to Keybridge.
3. Immediately after this allegation of breach, the proposed pleading concludes as follows: "By reason of the matters pleaded herein, Keybridge has suffered loss and damage by reason of Molopo's breach of the Agreement. Particulars of loss and damage Particulars of loss will be provided after the service of evidence in chief and expert reports."
4. This is, plainly enough, a claim which could not have been brought in the First or Second Keybridge Proceedings, since it only arose at a point in time well after Keybridge's claims in those Proceedings had been dismissed. Molopo did not contend that the proposed claim for breach of contract was barred by the operation of any principle of res judicata, issue estoppel, Anshun estoppel or abuse of process.
5. However, Molopo did contend, and I accept, that there are deficiencies in the pleading of the proposed claim. In particular, the proposed Amended Commercial List Statement does not articulate the basis on which it is alleged that the failure to provide reasonable notice of a settlement caused Keybridge to suffer loss and damage, particularly in circumstances where, as stated in Keybridge's proposed pleading, Molopo had "an unfettered and exclusive discretion in respect of the dismissal or discontinuance of the Proceedings".
6. The proposed pleading does not identify how damage was allegedly suffered, or the nature of the damage suffered, or any material facts relied on to establish a causal link between the breach and the damage. Nor did Keybridge, in its submissions, address these matters.

Orders

1. For those reasons, I make the following orders. 1. The proceeding be permanently stayed. 2. The Notice of Motion filed by the Plaintiff on 12 June 2024 be dismissed. 3. The Plaintiff pay the Defendant's costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 June 2024