Keybridge Capital Limited v Molopo Energy Limited - [2024] NSWSC 779 - NSWSC 2024 case summary — Zoe

NSWNSWSC

Keybridge Capital Limited v Molopo Energy Limited

[2024] NSWSC 779

Supreme Court of NSW|2024-06-12|Before: Nixon J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2024-06-12

Before

Nixon J

Catchwords

[1998] HCA 21 Clayton v Bant (2020) 272 CLR 1
102 ER 630 Pollnow v Armstrong [2000] NSWCA 245 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
[1981] HCA 45 Re South American and Mexican Company
Ex parte Bank of England [1895] 1 Ch 37 Rogers v The Queen (1994) 181 CLR 251

Source

Original judgment source is linked above.

Catchwords

[1998] HCA 21 Clayton v Bant (2020) 272 CLR 1102 ER 630 Pollnow v Armstrong [2000] NSWCA 245 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589[1981] HCA 45 Re South American and Mexican CompanyEx parte Bank of England [1895] 1 Ch 37 Rogers v The Queen (1994) 181 CLR 251[1994] HCA 42 Spencer v Commonwealth of Australia (2010) 241 CLR 118[2010] HCA 28 The Bellcairn (1885) 10 PD 161 Timbercorp Finance Pty Ltd (in liq) v CollinsTimbercorp Finance Pty Ltd (in liq) v Tomes (2016) 259 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

Judgment (28 paragraphs)

[1]

[3]

JUDGMENT

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.
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.
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.
Keybridge is, and at all material times has been, a shareholder of Molopo.
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).
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.
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).
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.

[7]

Books and Records Proceeding

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 …"
That is, the Books and Records Proceeding sought documents relating to the various ASX announcements which had been made by Molopo regarding the need for shareholder approval for any major oil and gas investment (see paragraphs 11-14 above); documents relating to the entry into the Orient Transaction, including advice regarding the transaction and any valuation of Orient and its assets; and correspondence with ASX regarding the application of Chapter 11 of the ASX Listing Rules to the Orient Transaction. Chapter 11 includes Listing Rules 11.1 and 11.2 which, relevantly, provided as follows: "11.1 If an entity proposes to make a significant change, either directly or indirectly, to the nature or scale of its activities, it must provide full details to ASX as soon as practicable. It must do so in any event before making the change. The following rules apply to the proposed change. … 11.1.2 If ASX requires, the entity must get the approval of holders of its ordinary securities and must comply with any requirements of ASX including in relation to the notice of meeting. The notice of meeting must include a voting exclusion statement. … 11.2 If the significant change involves the entity disposing of its main undertaking, the entity must get the approval of holders of its ordinary securities and must comply with any requirements of ASX in relation to the notice of meeting. The notice of meeting must include a voting exclusion statement. The entity must not enter into an agreement to dispose of its main undertaking unless the agreement is conditional on the entity getting that approval. …"
The Books and Records Proceeding was subsequently transferred to the Supreme Court of Victoria, where it was given the proceeding number S CI 2017 04750.

[8]

First Keybridge Proceeding

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.
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."
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.

[10]

Points of Claim in First Keybridge Proceeding

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]).
In addition, the Points of Claim included allegations that the 22 August 2017 ASX announcement which was issued by Molopo in relation to the Orient Transaction contained various "future representations that Molopo had no reasonable grounds for making" and that Molopo thereby breached various Listing Rules (at [29]-[32]).

[11]

Drawbridge Transaction

On 8 May 2018, Molopo published an ASX announcement headed "Molopo de-risks by diversifying its oil and gas exploration portfolio".
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.
The transactions described in (1)-(3) above are collectively referred to in the current proceeding as the Drawbridge Transaction.
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."

[12]

Second Keybridge Proceeding

On 24 May 2018, the First Keybridge Proceeding was listed before Sifris J in the Supreme Court of Victoria.
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."
Sifris J indicated that any claim against Mr Johal should be brought in a fresh proceeding.
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.
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."
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."
It is plain that the reference in prayer 4 to "s. 1014H" is a typographical error and that this should be understood as a reference to section 1041H of the Corporations Act (which was identified as one of the provisions pursuant to which the Originating Process in the Second Keybridge Proceeding was brought).
The Originating Process stated that this relief was claimed on the facts stated in the supporting affidavit. The affidavit of Mr Sanders of 30 May 2018 included, relevantly, the following evidence: "3. Keybridge has filed and served points of claim in proceeding SCI 2017 04752 (the First Proceeding) in relation to oppression in the affairs of Molopo. In the points of claim, Keybridge sets out the details known to it at the time of filing of Molopo dissipating its assets, entering into worthless business ventures, failing to comply with ASX listing rules, breaching its constitution, denying Keybridge a role in Molopo's management, breaching the Corporations Act, making ASX disclosures without reasonable grounds, denying Keybridge access to Molopo company information, refusing to pursue directors for breaches of directors' duties, and otherwise destroying shareholder value in Molopo. 4. Since the service of those points of claim, Molopo has disclosed to the ASX that it has paid very significant sums beyond those previously announced, in transactions related to the Orient project, as referred to in the points of claim. Evidence filed by Keybridge shows the Orient project to have little to no value. 5. Subsequent ASX disclosures have revealed that vast sums have been dissipated under the control of Molopo's current Board, constituted by the second to fourth defendants. Molopo has transferred some $30m to offshore entities in the first quarter of 2018, being more than half of the assets it owned as at I January 2018. 6. Affidavits recently filed in the First Proceeding reveal Molopo's contraventions of the listing rules, failure to comply with continuous disclosure obligations, misleading disclosures to the ASX, breach of Molopo's undertaking given to the Supreme Court of Western Australia, and misleading evidence given by the second defendant. 7. Keybridge seeks an order consolidating this proceeding with the First Proceeding, so that points of claim can be filed consolidating the oppressive conduct identified in the First Proceeding while Molopo was controlled by its former Board, with the claims of oppressive arising under the new Board, which came to Keybridge's notice after those points of claim were filed."

[13]

July 2018 Settlement

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.
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."
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."
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."
On 12 July 2018, Keybridge and Molopo entered into an agreement, the terms of which are recorded in a letter of that date (the July 2018 Settlement). This letter refers to the First Keybridge Proceeding and the Second Keybridge Proceeding (which are defined as the "Proceedings") and continues as follows: "I confirm that Keybridge agrees to the following arrangements as between Keybridge and Molopo in relation to the Proceedings on the basis that Molopo is substituted as the plaintiff in the Proceedings: 1 Keybridge dismisses all claims in the Proceedings against Molopo. 2 Keybridge's costs of the Proceedings to be paid by Molopo on the basis set out below. 3 The quantum of costs payable by Molopo are to be agreed between Keybridge and Molopo or in default of agreement to be determined by a cost assessor appointed jointly by Keybridge and Molopo. 4 Keybridge's costs will be paid out of any funds recovered by Molopo from any source (including but not limited to the Proceedings). 5 To the extent that Molopo does not recover sufficient funds (from any source) to cover both Keybridge's costs and Molopo's legal costs of the Proceedings incurred after Molopo is substituted as plaintiff in the Proceedings, Keybridge agrees to be paid out of the funds recovered by Molopo pari passu with those legal costs incurred by Molopo, on the condition that the quantum of legal costs incurred by Molopo that Molopo wish to rank pari passu with Keybridge's are to be agreed between Keybridge and Molopo or in default of agreement to be determined by a cost assessor appointed jointly by Keybridge and Molopo. 6 If Molopo intends to discontinue the Proceedings, Molopo must provide reasonable notice to Keybridge of that intention so Keybridge has sufficient time to make an offer to enter into an agreement with Molopo to fund Molopo's costs of continuing the Proceedings, indemnify Molopo in respect of adverse costs orders and/or provide any form of support to Molopo it considers relevant at the time (Keybridge Funding Agreement). Molopo must give reasonable consideration to any proposed Keybridge Funding Agreement but shall retain an unfettered and exclusive discretion in respect of the dismissal or discontinuance of the Proceedings (including but not limited to a dismissal or discontinuance on terms of settlement with the defendants). Keybridge and Molopo agree that any Keybridge Funding Agreement, if entered into, will provide (among other things) that legal costs and other expenses paid by Keybridge on behalf of Molopo after entering into the Keybridge Funding Agreement will be reimbursed in priority to any other distributions from any funds realised by Molopo in, or in connection with, the Proceedings."

[14]

Events following July 2018 Settlement

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."
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."
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".
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]"
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]).
Molopo's claim of loss was based on allegations that the Orient Project was unlikely to be unprofitable and that there was no reasonable prospect of Molopo generating any return on its investment in Orient. In this regard, Molopo particularised a report of Mr Ian Cockerill dated 17 April 2018. This report had been obtained by Keybridge for the purpose of its claims against Molopo and the directors, and was provided to Molopo after the substitution order was made in the Second Keybridge Proceeding. In this report, Mr Cockerill expressed the opinion that the oil and gas exploration rights held by Orient were high risk (with a less than 10% chance of success) and ascribed a value range of US$0 to US$395,000 for those rights.
The defendants in the Second Keybridge Proceeding (the Directors) filed their defences in October 2018; Molopo gave discovery in February and March 2019; Molopo filed and served its expert evidence between July and November 2019; an unsuccessful mediation was held in February 2020; and the Directors served their lay witness statements in July 2020.
On 13 July 2020, Keybridge wrote a letter of demand to Molopo. This letter made substantially the same claims as are now advanced in the current proceeding. In short, Keybridge referred to ASX announcements by Molopo between November 2015 and May 2016 to the effect that shareholder approval would be required for any material investment in the oil and gas sector; stated that Keybridge had relied on those statements in acquiring and continuing to hold its shares in Molopo; claimed that Molopo had breached its continuous disclosure obligations under the Listing Rules and section 674 of the Corporations Act by delaying the disclosure of its entry into the Orient and Drawbridge Transactions until after those Transactions had completed; claimed that Molopo had engaged in misleading conduct in contravention of s 1041H of the Corporations Act by failing to correct or qualify its statements that any material investments would be the subject of shareholder approval; claimed that, as a result of the transactions, Keybridge had suffered substantial loss because its shares are worth considerably less than the amounts paid for them; and claimed that Keybridge had lost its ability to sell its shares for a profit to Aurora or WAM as a result of Molopo's conduct.
In October 2020, Molopo joined the Directors' insurers to the Second Keybridge Proceeding, as the sixth to eleventh defendants (the D&O Insurers).
On 4 November 2020, Molopo filed an Amended Statement of Claim which pleaded, relevantly, that as a result of the Orient Transaction, Molopo acquired shares which had no value or alternatively a value far less than the US$7m paid for them; that Orient had no assets other than its interest in Drawbridge pursuant to the Drawbridge Transaction, and this interest was highly unlikely ever to generate profits; and that a fair value of the shares in Drawbridge at the time they were acquired was in the range of $2.8m-$3.9m, most of which was attributable to the cash transferred to Drawbridge by Orient US.
In October 2021, Molopo resolved its claims against the Directors and the D&O Insurers, and the Second Keybridge Proceeding was dismissed. The terms of the settlement were contained in a confidential deed. It is sufficient for present purposes to refer to the statement regarding this settlement which was made to Molopo's shareholders: "The settlement comprised a payment to Molopo in the sum of AU $12 million nett to Molopo without admission of liability and mutual releases between Molopo as plaintiff and the D&O Insurers and former directors as defendants. Following the three-year legal action the Board agreed to settle the proceedings after having due regard to all relevant matters including their protracted nature, escalating legal costs which would be exacerbated by a lengthy court hearing, the position of the D&O Insurers on exclusions under the D&O insurance policies and the personal circumstances of the former directors. The Board is satisfied that despite the significant loss incurred by Molopo and shareholders from the various transactions associated with the Orient/Drawbridge investments in 2017 and 2018 that it is in the interests of shareholders to have settled the proceedings on the terms agreed."
In October 2022, Keybridge sought payment from Molopo of its costs of the First Keybridge Proceeding and the Second Keybridge Proceeding, pursuant to the terms of the July 2018 Settlement. Molopo and Keybridge agreed on a figure for those costs of $395,000 plus GST, and this amount was paid by Molopo on 25 October 2022.
The current proceeding was commenced on 18 August 2023.

[15]

Claims by Keybridge in the current proceeding

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."
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).
The Commercial List Statement refers to the making of the First Aurora Offer, the Second Aurora Offer and the WAM Offer. Keybridge alleges that: 1. in its decisions to acquire shares in Molopo, and in its decisions not to accept these offers to sell its shares, Keybridge relied on the Molopo Representations, and on the absence of any correction or qualification to those representations; 2. by reason of the Material Disclosure Contravention, the Significant Change Contravention and the Misleading Conduct Contravention, each of the offers was withdrawn; 3. but for Molopo's contravening conduct, Keybridge would have accepted an offer for its shares, and further or alternatively, the offers would not have been withdrawn; 4. further or alternatively, but for Molopo's contraventions, Molopo would have sought shareholder approval for the Orient Transaction and Drawbridge Transaction, and those Transactions would not have been approved, or Keybridge would have obtained injunctive relief to prevent those Transactions from proceeding, or Keybridge would have requested a general meeting for the purpose of removing the directors of Molopo and a resolution to that effect would have been passed, such that the Transactions would not have proceeded; and 5. the value of Keybridge's interest in its shares in Molopo declined substantially during the period from around July 2017 to April 2022. The particulars to this allegation include that the Orient Transaction and the Drawbridge Transaction had the effect of depleting Molopo's cash reserves from A$66.2m as at 30 June 2017 to A$15m as at 30 June 2018, and that in August 2018 Molopo's then board reported that they "cannot see any logical or commercial reason for entering into these transactions".
The pleading concludes with the following allegation of loss and damage: "By reason of the matters pleaded herein, Keybridge has suffered loss and damage by reason of Molopo's contravening conduct. Particulars of loss and damage (i) Keybridge lost the opportunity to accept an offer for its shares. (ii) Keybridge lost some or all of the value of its shares in Molopo. (iii) Damages by way of interest to compensate Keybridge for the loss of the use of that money, calculated from the date Keybridge's sale of its Molopo Shares would have settled. (iv) Further particulars of loss will be provided after the service of evidence in chief and expert reports."

[16]

Res Judicata, Cause of action estoppel and Issue estoppel

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].
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]).
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]).
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).
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."
In Jackson v Goldsmith (1950) 81 CLR 446 at 467; [1950] HCA 22, Fullagar J noted that "it follows from the very nature of the difference between the plea of res judicata and the plea of issue estoppel that different materials are relevant in each case": "Where the plea is of res judicata, only the actual record is relevant. Where the plea is of issue estoppel, any material may be looked at which will show what issues were raised and decided."
Although Fullagar J was in dissent in the result in Jackson, his Honour's reasoning at 466-467 was cited with apparent approval in Tomlinson (at [20]-[22], see footnotes), and has been cited with approval in intermediate appellate decisions subsequent to Tomlinson: see, for example, Zetta Jet Pte Ltd v Ship Dragon Pearl (No 2) (2018) 265 FCR 290; [2018] FCAFC 132 at [23] (Allsop CJ, Moshinsky and Colvin JJ); and Mandeville v Better Lending Pty Ltd [2021] SASCA 28 at [66] (Doyle, Livesey and Bleby JJA).

[18]

Dismissal by consent

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.
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).
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].
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)."
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].
In Zetta Jet at [34], the Full Court observed that "care may need to be taken to ensure that an order expressed as a dismissal was, in substance, to be taken as a final adjudication of underlying causes of action", adding that the term "dismissal" may be "used inaccurately to describe an instance where a party is being allowed to discontinue", or the "dismissal" may be "on terms that the party is at liberty to bring fresh proceedings, in which case it will not be a final adjudication of the causes of action in the proceedings".
In the present case, the order dismissing Keybridge's claims in the Second Keybridge Proceeding was expressed as follows: "The plaintiff's [Keybridge's] claims against the first defendant [Molopo] are dismissed without adjudication on the merits". In contrast, the corresponding order in the First Keybridge Proceeding was that "the proceedings be dismissed".
I was not referred to any rules or decisions of the Supreme Court of Victoria to the effect that an order for dismissal of claims "without adjudication on the merits" has an effect similar to an order granting leave to discontinue or otherwise does not give rise to res judicata. As the Full Court explained in Zetta Jet, a judgment or final order gives rise to res judicata irrespective of whether there has been a determination of the merits. There is no apparent reason why a final order dismissing a proceeding which is expressed to be made "without adjudication on the merits" should be treated any differently from a final order dismissing a proceedings which is in fact made without adjudication on the merits.

[19]

Substantial correspondence between rights asserted?

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.
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?"
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).
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".
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.
In the First Keybridge Proceeding, Keybridge's application was made under sections 233, 793C and 1324 of the Corporations Act. The Originating Process sought a declaration that the conduct of Molopo's affairs had been oppressive, unfairly prejudicial or unfairly discriminatory to the interests of Keybridge as a shareholder, and contrary to the interest of members as a whole, and sought an order under section 233(1)(f) that Molopo institute proceedings against the directors responsible for Molopo's entry into the Orient Transaction. Keybridge also sought orders under either section 793C or section 1324 requiring Molopo to get approval from shareholders for the Orient Transaction or any other transaction which Molopo "seeks to enter into that represents a significant change to the nature or scale of the first defendant's activities". The Originating Process did not seek any damages or statutory compensation.
The Points of Claim in the First Keybridge Proceeding referred to various ASX announcements made by Molopo to the effect that shareholder approval would be sought for any significant investment in gas or oil, but did not allege that these announcements were misleading or deceptive, or claim that Keybridge suffered any loss as a result of such announcements. The Points of Claim did not allege that Molopo failed to comply with its continuous disclosure obligations under s 674 of the Corporations Act, or that such conduct had caused Keybridge any loss. There was an allegation that Molopo had, by announcing the Orient Transaction, breached Listing Rule 3.1, but there was no articulation of the basis of the breach allegation (see paragraph 32(5) above). In particular, the pleading did not identify the information which Molopo failed to disclose or when Molopo became aware of that information. Nor was there any claim for loss or damage as a result of such breach. Further, the Points of Claim did not refer to the Drawbridge Transaction (which had not yet been announced when the Points of Claim was prepared).
Having regard to those matters, I am not satisfied that the rights and obligations asserted in the current proceeding are the same, or substantially the same, as those which were advanced in the First Keybridge Proceeding.
In the Second Keybridge Proceeding, the relief sought in the Originating Process included: "4. A declaration that, in contravention of s. [1041H] 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, … 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. … 8. Damages."
Molopo submitted that by these prayers for relief, Keybridge asserted substantially the same rights and obligations as are asserted in the current proceeding, in which it seeks declarations that Molopo contravened sections 674 and 1041H of the Corporations Act, and seeks compensation for loss suffered as a result of those contraventions.
The difficulty with this submission is that, while accepting that each proceeding arises out of the same factual background and refers to the same statutory provisions, it is difficult to identify the specific factual basis on which these claims for relief were made in the Second Keybridge Proceeding and therefore whether this corresponds to the basis on which similar relief is claimed in the current proceeding.
Dealing first with the claim for contravention of section 1041H, the Originating Process in the Second Keybridge Proceeding does not identify the conduct of Molopo which is said to have contravened this provision.
The claims as between Keybridge and Molopo resolved shortly after the Second Keybridge Proceeding was commenced, and thus no Statement of Claim was filed by Keybridge in that proceeding.
The affidavit filed by Keybridge in the Second Keybridge Proceeding in support of the relief in the Originating Process is brief. The only reference to misleading conduct in that affidavit is as follows (emphasis added): "Keybridge has filed and served points of claim in proceeding SCI 2017 04752 (the First Proceeding) in relation to oppression in the affairs of Molopo. In the points of claim, Keybridge sets out the details known to it at the time of filing of Molopo … breaching the Corporations Act, making ASX disclosures without reasonable grounds …"
In the Points of Claim in the First Keybridge Proceeding, there is only one allegation that Molopo made "ASX disclosures without reasonable grounds". It concerns the ASX announcement on 22 August 2017 by which Molopo disclosed the Orient Transaction and described the Orient Project. In particular, Keybridge alleged that this ASX announcement contained various "future representations that Molopo had no reasonable grounds for making" and that Molopo thereby breached various Listing Rules (at [29]-[32]). The specific statements which were alleged to lack reasonable grounds were statements regarding the month when the spudding of the first well by Orient would occur, the average cost of each well, and the estimated finding and development cost per barrel of oil. That is distinct from the claim of misleading conduct which is advanced in the current proceeding, namely, that Molopo engaged in misleading conduct by making representations to ASX between November 2015 and August 2017, which it did not qualify or correct, 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. Accordingly, even if the claim of misleading conduct advanced in the Second Keybridge Proceeding is to be understood (by reason of the terms of the supporting affidavit) by reference to the Points of Claim in the First Keybridge Proceeding, I am not satisfied that there is any substantial correspondence between the claim for misleading conduct that was advanced in the Second Keybridge Proceeding and the claim for misleading conduct sought to be advanced in the current proceeding.
Turning next to the claim for contravention of section 674 of the Corporations Act, the Originating Process in the Second Keybridge Proceeding identifies the basis for this claim as follows: "Molopo failed to meet its obligations under the ASX Listing Rules, as alleged in the letter from ASX to Molopo dated 11 May 2018" (being the May 2018 ASX Notice). Where a pleading refers to and adopts allegations made in another document, it is necessary to have regard to that document in order to determine the allegations made by the pleading.
The May 2018 ASX Notice states that "ASX considers that [Molopo] has committed serious breaches of the Listing Rules" including, relevantly: "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."
The "Assumption of Full Funding Responsibility for the Orient Project, the Orient Redemption and the Contribution Agreement" comprise the elements of the Drawbridge Transaction, as defined in the current proceeding. This, therefore, amounts to an allegation that Molopo breached its continuous disclosure obligations by failing to disclose either the Orient Transaction or the Drawbridge Transaction until some time after they had been completed. That is substantially similar to the allegation of contravention of section 674 of the Corporations Act which is advanced in the current proceeding.
However, it is not clear that Keybridge advanced, in the Second Keybridge Proceeding, any cause of action against Molopo for statutory compensation in respect of damage suffered as a result of any such contravention. The Originating Process includes a prayer for "Damages". I accept that this could be read as short-hand for statutory compensation under section 1317HA of the Corporations Act (particularly since the Originating Process does not identify any common law claim such as would give rise to an entitlement to damages). The difficulty is that it is not clear from whom such compensation is sought.
The Originating Process seeks leave for Keybridge to bring a derivative claim against the director defendants "arising out of their conduct as directors of Molopo in breach of ss 180, 181 and 182, 1041H of the Corporations Act". In those circumstances, it is open to read the Originating Process as advancing the allegation that Molopo contravened the Corporations Act as a step towards establishing the claim that the directors of Molopo breached their statutory duties to Molopo, and therefore to read the prayer for "Damages" as a claim, in the proposed derivative proceeding, for statutory compensation from the directors in respect of such breaches.
In addition, Keybridge sought a declaration that the directors of Molopo were, within the meaning of section 1041I of the Corporations Act, involved in Molopo's misleading or deceptive conduct (prayer 7 of the Originating Process). In that context, the allegation in the Originating Process that Molopo contravened section 1041H may have been raised by Keybridge as a step towards establishing the claim that the directors were involved in such a contravention, and the prayer for relief seeking "Damages" could therefore be read a claim for statutory compensation from the directors pursuant to section 1041I.
Having regard to those matters, I am not satisfied that the claim for statutory compensation which is brought against Molopo in the current proceeding is substantially the same as the claim for "Damages" which was brought by the Originating Process in the Second Keybridge Proceeding.
For those reasons, Molopo has failed to establish that the principle of res judicata operates to preclude Keybridge from bringing the claims advanced in the current proceeding.

[20]

Issue Estoppel

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."
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."
In Isaacs v The Ocean Accident and Guarantee Corporation Ltd (1957) SR (NSW) 69 at 75, Street CJ and Roper CJ in Eq observed that: "It is clear that the mere fact that the judgment is by consent does not detract from the conclusive effect upon the issues determined by it … But a judgment operates by way of estoppel only as to those matters which are necessarily decided by it … 'Though consent judgments and orders are undoubtedly in every case decisions in the sense that the actual mandatory or prohibitive parts of the judgment or order are conclusively binding upon … the parties … It may often be a matter of legitimate doubt and debate as to what, if any, particular questions or issues of right, title or liability were, expressly or impliedly, the subject of the consent, and of the decision. For this purpose, as for all other purposes connected with the ascertainment of the subject-matter of a decision, the court will closely examine all such evidence, if any, as is available and admissible, and, by the aid of such materials, will ascertain whether any and what adjudication of matters in dispute was expressed, or necessarily involved, in the actual decision assented to.' (Spencer Bower on Res Judicata, p. 24, par. 34)"
In Mould v Canale [2017] VSC 793 at [119], Macaulay J held that a "consent order dismissing a proceeding without an adjudication on the merits does not give rise to an issue estoppel", referring to Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (No 2) (ACCC v Safeway (No 2)) (2001) 119 FCR 1; [2001] FCA 1861 at [1154] per Goldberg J. The Victorian Court of Appeal referred to Macaulay J's finding without comment in Canale v GW & R Mould Pty Ltd [2018] VSCA 346 at [27] (Tate, Whelan and McLeish JJA), although it should be noted there was no challenge to this particular finding on appeal (see at [30]).
In the passage of ACCC v Safeway (No 2) at [1154] to which Macaulay J referred, Goldberg J was not considering the effect of an order dismissing proceedings which is expressed to be "without adjudication on the merits", but was instead considering the effect of an order dismissing proceedings in circumstances where there are no reasons given for the order, and where the causes of action dismissed depended on a number of distinct elements being established. His Honour said that: "in order for an issue estoppel to arise in relation to a judgment dismissing a proceeding, one must be able to identify from the judgment itself, or the reasons for the judgment, the issues necessarily and conclusively determined in favour of the party in whose favour the proceeding was dismissed. If the cause of action was dismissed without reasons being given, and the causes of action were based on the need to prove a number of elements so that it is not able to be established which element was not proved in the dismissed proceeding, then no issue estoppel will arise in relation to any of the elements required to establish the causes of action in respect of which the proceeding was dismissed."
In this regard, Goldberg J approved (at [1152]) as "good law" the following proposition from Spencer Bower, Turner and Handley: The Doctrine of Res Judicata, (3rd ed, 1996) at 56-57: "A dismissal of an action which could succeed on establishing either x or y, is a decision negativing both, but if the action is found on x plus y, its dismissal does not necessarily involve a decision as to either, since the action may have failed because x had not been established, though y had been, or vice versa, or because neither had been established."
The same proposition is found in section [2.29] of the current edition of Spencer Bower and Handley: Res Judicata (6th ed, 2024). It is the logical corollary of the principle stated by Dixon J in the passage from Blair v Curran which is quoted above, namely, that: "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" (emphasis added).
Where it is not possible to isolate the "actual ground" on which the right's existence was negatived, because an order dismissing the claim was made by consent before adjudication on the merits, no issue estoppel can arise in respect of any particular "ingredient or ultimate fact" upon which the claim depended.
This proposition can be illustrated by considering a claim for misleading or deceptive conduct by a plaintiff shareholder against a defendant company along the following lines: the defendant company made statements to the ASX which conveyed certain representations; those representations were misleading, having regard to the company's state of knowledge at the time about particular transactions; a plaintiff shareholder relied on those misleading representations; and the plaintiff shareholder thereby suffered loss and damage. If the proceeding is settled on the basis that, by consent, a judgment for damages will be entered against the defendant company, then it might be concluded that each element of that claim has been necessarily resolved in favour of the plaintiff shareholder. That is because success on each such element was necessary for the success of its claim. However, if (as is the case here) the proceeding is settled on the basis that, by consent, an order dismissing the proceedings is made, it does not follow that each and every element of the misleading conduct claim has been resolved adversely to the plaintiff shareholder. That is because failure on each such element is not necessary for the failure of its claim. Instead, failure on one such element is sufficient to bring about this result. Accordingly, if a claim is subsequently brought by the plaintiff shareholder which agitates some elements of the previous claim (for example, regarding the representations allegedly made by the defendant company, or regarding the matters known to the company about the relevant transactions at particular points in time, or regarding the economic impact of the transactions on the value of the company's shares), I do not consider that the consent dismissal provides a basis for concluding that every such issue was "necessarily resolved" adversely to the plaintiff shareholder by reason of the dismissal, by consent, of the prior proceedings.
In any case, there is a significant difficulty in identifying the "ingredients or ultimate facts" upon which Keybridge relied in seeking relief in the Second Keybridge Proceeding. As previously noted, the Originating Process in the Second Keybridge Proceeding asserted that Molopo had engaged in misleading or deceptive conduct in contravention of section 1041H of the Corporations Act. However, there was no pleading filed by Keybridge in that proceeding, and the supporting affidavit did not identify the conduct of Molopo which is alleged to have been misleading, or the material facts relied upon to establish that it was misleading, or the basis on which it is alleged that Keybridge suffered loss as a result of such conduct, or the nature of the damage suffered.
Keybridge did file Points of Claim in the First Keybridge Proceeding, but there nonetheless remains a difficulty in matching issues raised in that proceeding with issues raised in the current proceeding. For example, the Points of Claim referred to the fact that Molopo had made various representations to the effect that it would seek shareholder approval for certain types of transaction, but Keybridge did not advance a claim in the First Keybridge Proceeding that Molopo had engaged in misleading conduct by making, and by not qualifying or subsequently correcting, those earlier representations, or that any such misleading conduct had caused Keybridge to suffer loss. In addition, the Points of Claim in the First Keybridge Proceeding asserted that Molopo had breached its continuous disclosure obligations under Listing Rule 3.1, without identifying the basis for the allegation and, in particular, without pleading the matters which were known to Molopo which it failed to disclose, and the time when such disclosure ought to have occurred, and without pleading that any such breach by Molopo caused Keybridge to suffer any loss and damage.
It is also relevant to have regard to the objective intention of the parties in agreeing to the relevant orders, as disclosed by the court record. In Isaacs, the terms of settlement which gave rise to the consent orders made clear that those orders were the result of a compromise in which the defendant was prepared to allow judgment to be entered against him for an agreed amount while still asserting that he did not admit his liability. Accordingly, in that earlier proceeding, judgment was entered on the footing that this liability was left unascertained and undetermined. Street CJ and Roper CJ in Eq found that, in those circumstances, no estoppel was established on the issue of liability: "In effect, the parties, by their compromise of the action, agreed that the issue of liability should not be submitted to the adjudication of the court, and the judgment, when entered, was not to be taken as establishing that the [defendant in the prior proceeding] was in fact liable to [the plaintiff]. All these matters appear in the court's record, and this particular issue of liability having been, by consent, excluded from adjudication, it seems impossible to hold that that issue has been concluded adversely to [the defendant in the prior proceeding], by the fact that a judgment 'in naked and general form' has been entered. So to hold would make an estoppel operate in a manner contrary to the clear intention of the parties as disclosed by the record…"
In the present case, order 1 of the consent minute of order signed on behalf of Keybridge, Molopo and the Directors in the Second Keybridge Proceeding, proposed that Keybridge's claim be dismissed "without adjudication on the merits". In addition, orders 2 and 3 provided for Keybridge to be removed as a party, and for Molopo to be removed as first defendant and to be substituted for Keybridge as plaintiff; order 4 provided for Molopo to have leave to file and serve an amended originating process and statement of claim against the Directors; order 5 provided for the Directors to file and serve a defence; and order 6 provided for the further hearing of the matter to be adjourned.
Having regard to the terms of those orders, it is tolerably clear that the parties to the Second Keybridge Proceeding did not intend that, as a result of these orders (and in particular, the dismissal of Keybridge's claims "without adjudication on the merits"), any of the critical factual allegations in the Second Keybridge Proceeding would be taken to have been conclusively determined. That is because the evident intent of orders 2-6 was that Molopo would be substituted for Keybridge as plaintiff, and Molopo would prosecute the claims in the Second Keybridge Proceeding against the Directors.
Although the orders made in the First Keybridge Proceeding were to the effect that the proceedings be dismissed (in this case, without recording the absence of any adjudication on the merits), the settlement of each of the First and Second Keybridge Proceedings was on the basis that Molopo would pursue the claims in those two Proceedings; and Molopo in effect consolidated the First Keybridge Proceeding with the Second Keybridge Proceeding, by joining the sole director defendant in the First Keybridge Proceeding (Mr Rosengart) to the Second Keybridge Proceeding, and pleading out claims against him regarding the Orient Transaction.
A key allegation in the First Keybridge Proceeding was that, by the Orient Transaction, "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". It was not the intent of the July 2018 Settlement that this allegation be taken to have been conclusively determined in the First Keybridge Proceeding (to which each of Molopo and Mr Rosengart was a party), given that the settlement was expressly based upon Molopo pursuing claims against the Directors (including Mr Rosengart) in relation to the Transactions.
For those reasons, I do not consider that the orders made in the First Keybridge Proceeding or the Second Keybridge Proceeding give rise to any issue estoppel.

[21]

Relevant Principles

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".
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).
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.
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.
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.
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."
In Benton v QBE Worker Compensation (NSW) Ltd [2015] NSWCA 101 at [63], Ward JA (with whom Meagher JA and Adamson J agreed) observed that the exercise of powers summarily to terminate proceedings, including where such disposition is sought on the basis that the action is an abuse of process, "must always be attended with caution" (referring to Spencer v Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28 at [24] per French CJ and Gummow J).
Whether conduct rises to the level of an abuse of the processes of the court is a determination that requires consideration of all the circumstances: UBS AG v Tyne at [7], Kiefel CJ, Bell and Keane JJ. As Lord Bingham explained in Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1 at 31 (in a passage quoted with approval in UBS AG v Tyne at [7]), this consideration requires the court to make: "a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not."
The determination of whether the bringing or continuance of proceedings is an abuse of the process of the court must take into account the procedural law administered by the court whose processes are engaged: UBS AG v Tyne at [34]. Relevantly, this includes the following provisions of the Civil Procedure Act 2005 (NSW): 56 Overriding purpose (1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule. (3) A party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court. … 57 Objects of case management (1) For the purpose of furthering the overriding purpose referred to in section 56 (1), proceedings in any court are to be managed having regard to the following objects - (a) the just determination of the proceedings, (b) the efficient disposal of the business of the court, (c) the efficient use of available judicial and administrative resources, (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties. (2) This Act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1). 58 Court to follow dictates of justice (1) In deciding - (a) whether to make any order or direction for the management of proceedings, including - … (ii) any order granting an adjournment or stay of proceedings, and … the court must seek to act in accordance with the dictates of justice. (2) For the purpose of determining what are the dictates of justice in a particular case, the court - (a) must have regard to the provisions of sections 56 and 57, and (b) may have regard to the following matters to the extent to which it considers them relevant - (i) the degree of difficulty or complexity to which the issues in the proceedings give rise, (ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities, (iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties, (iv) the degree to which the respective parties have fulfilled their duties under section 56 (3), (v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings, (vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction, (vii) such other matters as the court considers relevant in the circumstances of the case.
As reflected in section 57(1) of the Civil Procedure Act, the timely, cost effective and efficient conduct of modern civil litigation takes into account wider public interests than those of the parties to the dispute: UBS AG v Tyne at [38]. Integral to the "just resolution" of a dispute is the minimisation of delay and expense: ibid.
Although a party has "a right to bring proceedings", a party who exercises that right makes "choices … respecting what claims are made and how they are framed": ibid, referring to Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 213; [2009] HCA 27 at [98] per Gummow, Hayne, Crennan, Kiefel and Bell JJ. The "just determination of the dispute" involves "parties having a sufficient opportunity to identify the issues that they seek to agitate": ibid, referring to Aon at [112] (emphasis in original). Abuse of process principles may be invoked "to litigate a claim that should have been litigated in earlier proceedings": UBS AG v Tyne at [39], referring to Aon at [33] per French CJ.
The "just resolution" of a controversy may be the permanent stay of the proceeding notwithstanding that the merits of the plaintiff's claim have not been decided: UBS AG v Tyne at [40]. The circumstance that there has been no hearing on the merits of the plaintiff's claim in an earlier proceeding, and that a fair trial may still be had, cannot be determinative of whether the later proceeding is unjustifiably oppressive or whether its continuance would bring the administration of justice into disrepute: ibid at [44]. Kiefel CJ, Bell and Keane JJ observed (at [45]) that: "The courts must be astute to protect litigants and the system of justice itself against abuse of process. It is to hark back to a time before the Court's decisions in Aon and Tomlinson and the enactment of s 37M of the FCA to expect that the courts will indulge parties who engage in tactical manoeuvring that impedes the 'just, quick and efficient' resolution of litigation. To insist, for example, on 'inexcusable delay' as a precondition of the exercise of the power to stay proceedings as an abuse of process is to fail to appreciate that any substantial delay is apt to occasion an increase in the cost of justice and a decrease in the quality of justice. And other litigants are left in the queue awaiting justice."
In that case, Mr Tyne and two entities which were controlled by him (one being the corporate trustee of the Argot Trust and the other being an entity called Telesto Investments Ltd) had brought a proceeding in this Court against UBS. The claims made by Mr Tyne and the corporate trustee were discontinued, without any determination on the merits. The claims made by Telesto were pursued in the proceeding, but failed on the basis that Telesto was seeking to relitigate causes of action which had been determined in proceedings in the High Court of Singapore.
Subsequently, Mr Tyne became the trustee of the Argot Trust (the "Trust") and brought a proceeding in the Federal Court against UBS, which arose out of the same facts and made essentially the same claims as had been previously made on behalf of the Trust in the earlier proceeding. UBS applied to have the Federal Court proceeding stayed on grounds which included that it constituted an abuse of process. Dowsett J held that the Trust's claims could and should have been brought in the earlier proceeding and that Mr Tyne had failed to give a proper explanation of why this had not occurred, and his Honour permanently stayed the Federal Court proceeding. On appeal, a majority of the Full Court of the Federal Court held that it had not been open to the primary judge to find that the Federal Court proceeding constituted an abuse of process, including on the basis that the Trust's claims had not been decided on their merits.
Kiefel CJ, Bell and Keane JJ (at [41]) accepted that the appeal was to be determined on the basis that the Trust's claims were arguable, that UBS had not been called upon to defend them, and that the delay had not made their fair trial impossible. Their Honours nonetheless found (at [58]) that permitting the Trust's claims to proceed would subject UBS to unjustifiable oppression. Their Honours said (at [58]-[59]) that: "That oppression is found not only in the significant delay in the resolution of the dispute and the inevitability of increased costs to UBS. At its core is the vexation of being required to deal again with claims that should have been resolved in the SCNSW proceedings. The fact that UBS has not been required to admit or defend the Trust's claim does not lessen that vexation. Between December 2010 and May 2013, when the SCNSW proceedings were finally determined, UBS was engaged in litigation with a party controlled by Mr Tyne, arising out of its alleged dealings with Mr Tyne in respect of the loss that is claimed by the Trust in these proceedings. On the final determination of the SCNSW proceedings, it was reasonable for UBS to order its affairs upon the understanding that the dispute between it and Mr Tyne, and the entities that he controlled, arising out of those dealings was at an end. For the Federal Court to lend its procedures to the staged conduct of what is factually the one dispute prosecuted by related parties under common control with the attendant duplication of court resources, delay, expense and vexation, as Dowsett J found, is likely to give rise to the perception that the administration of justice is inefficient, careless of costs and profligate in its application of public moneys. The primary judge was right to permanently stay the proceedings as an abuse of processes of the Federal Court."
The other member of the majority, Gageler J, noted (at [73]) that the primary judge's conclusion that there was an abuse of process was based on four key considerations: "…The first was that Mr Tyne was at all times the controlling mind both of the trustee of the Trust and of Telesto. The second was that the Trust's claims against UBS raised complex questions of fact and law which arose out of the same substratum of facts as those on which Telesto had relied to pursue its claim in the SCNSW proceedings. The third was that there was no juridical disadvantage to the trustee advancing those claims in the SCNSW proceedings. The fourth was that there was 'no proper explanation of why it chose not to do so."
Gageler J held (at [77]) that the first three of the considerations were sufficient to justify the conclusion that the Federal Court proceeding constituted an abuse of process in the absence of Mr Tyne giving an explanation "which justified his conduct as not unduly impacting on the interest of UBS and as not inconsistent with the timely and efficient resolution of the totality of the claims which the entities under his control sought to bring".
His Honour noted that Mr Tyne had given an explanation that, inter alia, Telesto's success in the proceeding in this Court would have seen the Trust made whole, thereby obviating the need for the Trust's claims to have been pursued at all, and that the pursuit of those claims would have been expensive and time-consuming, and would have required the trustee to prove everything that Telesto needed to prove and more. Gageler J accepted that, gauged by reference to the interests of the Trust, this explanation was not unreasonable. However, his Honour said that it was necessary also to have regard to the interests of UBS and the public interest in the timely and efficient administration of justice, and found (at [81]) that: "What was not reasonable having regard to the totality of the private and public interests involved was for Mr Tyne to take it upon himself to hold the claims of the Trust in abeyance with a view to pursuing them in separate proceedings if it turned out that Telesto's claims were for some reason not successful."
Gageler J observed (at [75]) that it was not necessary for the effect of the Federal Court proceeding on UBS to rise to the level denoted by language such as "unfairness" or "oppression": "Rather, UBS's private interest was sufficiently engaged by UBS being compelled by the coercive authority of the Federal Court to respond to a process designed to vindicate a claim which should have been brought in the SCNSW proceedings, which UBS had already gone to the time and expense of bringing to completion. With that private interest was to be weighed the public interest in the timely and efficient resolution of claims within the integrated Australian legal system of which the Supreme Court and the Federal Court each form part."

[22]

Molopo's Submissions

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.
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".

[23]

Keybridge's submissions

In response, Keybridge advanced a number of submissions as to why there was no Anshun estoppel or abuse of process.
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.
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).
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".
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.
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").
Thirdly, Keybridge submitted that, if it had claimed such loss from Molopo, "it may have reduced the likelihood that Molopo would pursue the proper and expedient course of maintaining its own litigation against the former directors".
Again, this may be accepted. It may well be the case that Molopo would not have agreed to the July 2018 Settlement, and would not have pursued the claims against the Directors in relation to the Orient and Drawbridge Transactions, if Molopo was aware that Keybridge would or might subsequently sue Molopo in respect of those same Transactions, raising similar allegations against Molopo as those which Molopo itself proceeded to raise against the Directors.
But that highlights the problem with what has occurred. As set out in the opening words of the letter of 12 July 2018, which recorded the terms of the July 2018 Settlement, the agreement to those terms was expressly "on the basis that Molopo is substituted as the plaintiff in the Proceedings". That is, the settlement was predicated on Molopo becoming plaintiff, and continuing the First and Second Keybridge Proceedings against the Directors, alleging, inter alia, that the Orient Transaction and Drawbridge Transaction were not in the best interests of Molopo and had led to a substantial diminution in the assets of Molopo without any significant commercial benefit. Keybridge provided its lawyers, its counsel and its expert evidence to Molopo, in order to pursue those proceedings. In those circumstances, it was reasonable for Molopo to conclude that its dispute with Keybridge in relation to those Transactions was at an end, and that its interests were aligned with those of Keybridge in pursuing those claims against the Directors in relation to those Transactions for the benefit of all shareholders (including Keybridge).
Further, it may be accepted that, gauged solely by reference to the interests of Keybridge, it was not unreasonable for Keybridge to withhold the assertion of its claims against Molopo while the proceeding against the Directors and the D&O Insurers was being pursued, since there was a prospect that a favourable outcome for Molopo in that proceeding might have obviated the need for Keybridge to pursue such claims. In addition, it was in Keybridge's interests not to take any step which might discourage Molopo from pursuing, at its own risk and cost, those claims against the Directors.
However, consistently with Gageler J's observations in UBS AG v Tyne at [80]-[81], it is necessary not only to consider Keybridge's interests, but also to have regard to the interests of Molopo and the public interest in the timely and efficient administration of justice; and, having regard to the totality of the private and public interests involved, it was not reasonable for Keybridge to hold its claims against Molopo in abeyance with a view to pursuing them by way of a separate proceeding, some years after the conclusion of the Second Keybridge Proceeding, if it turned out that Molopo's claims against the Directors and the D&O Insurers were not successful or did not result in a sufficient level of recovery to compensate Keybridge for the loss which it is said to have suffered as a result of the Orient and Drawbridge Transactions.
In that regard, Keybridge submitted that although it did not tell Molopo, at the time of the July 2018 Settlement, that Keybridge would or might subsequently bring the claims advanced against Molopo in the current proceeding, it did not say that it would not do so.
That is true. Nonetheless, the bringing of the current proceeding is still capable of amounting to an abuse. In UBS AG v Tyne at [76], Gageler J acknowledged that the possibility of the trustee of the Trust pursuing claims against UBS in later proceedings "remained legally open" once the trustee had withdrawn from the earlier proceeding, but noted that "there was no intimation to UBS that the trustee was likely to do so", adding that: "this is not a case in which earlier proceedings were brought to completion against the background of a communicated likelihood of later proceedings being commenced". Those comments are equally applicable here.
Further, the fact that Molopo might have sought releases as part of its settlement of the earlier Proceedings with Keybridge, but failed to do so, does not mean that the disruption and extra costs incurred by Molopo, when confronted by the current proceeding, is irrelevant to whether an abuse of process is being perpetrated: UBS AG v Tyne at [56]. "An abuse of process is no less an abuse because the party adversely affected might have, by greater diligence in its own interests, prevented the abuse": ibid.
Fourthly, Keybridge submitted that any allegations of unfairness or oppression are "diminished given that Keybridge put [Molopo] on notice of the claims it maintains in this proceeding in 2020, well prior to Molopo engaging in settlement discussions to compromise" the proceeding against the Directors and the D&O Insurers.
I accept that Keybridge, by its letter to Molopo dated 13 July 2020, asserted substantially the same claims as are now advanced in the current proceeding, and made a demand for the loss said to have been suffered as a result of Molopo's contravening conduct, and that Molopo was aware of those matters at the time that it determined to settle the proceedings with the Directors and the D&O Insurers, and to provide releases, in return for a payment of $12m.
It does not, however, follow that Molopo is unable to establish that it is prejudiced by Keybridge's delay in raising its claims.
By the time the July 2020 demand was made by Keybridge, Molopo had already decided to prosecute the claims against the Directors in relation to the Orient and Drawbridge Transactions, and had done so for a period of two years, with the encouragement and assistance of Keybridge. By this conduct, Molopo had committed itself to a position in respect of the Orient and Drawbridge Transactions which was, from the perspective of claims which might be advanced by Keybridge against Molopo concerning those same Transactions, adverse to Molopo's interests. This was in effect acknowledged by Keybridge in its July 2020 letter of demand, which noted that the claim advanced by Keybridge in that letter was supported by the position which Molopo had adopted in the proceedings against the Directors and the D&O Insurers.
In particular, the July 2020 letter included the following statements: "It is Keybridge's belief that the Orient transaction and the assumption of full funding responsibility and subsequent consequential transactions have very substantially diminished the value of Molopo's assets… We understand that Molopo now agrees with Keybridge's assessment of the Orient transaction, and in particular Molopo is now pursuing claims against its former directors in the Supreme Court of Victoria. In those proceedings, we understand that Molopo contends that its former directors: 1. breached their duties and the Corporations Act in causing Molopo to enter into the Orient transaction, and subsequent transactions; 2. caused Molopo to breach the ASX Listing Rules and continuous disclosure obligations, and that as a result of those transactions Molopo's shareholder funds were depleted by around US$35 million plus ancillary costs."
That is, in circumstances where the July 2018 Settlement was expressly premised on the basis that Molopo would pursue claims in the Second Keybridge Proceeding against the Directors in relation to the Orient and Drawbridge Transactions, and where Keybridge provided assistance to Molopo in pursuing those claims in that Proceeding, Keybridge then held back from advancing a claim against Molopo in relation to those Transactions until a point in time where, via that Proceeding, Molopo had advanced a position which was adverse to its interests so far as Keybridge's claim against Molopo was concerned. Further, Keybridge then relied, in its letter of demand, on the assertions which Molopo had advanced its former directors in relation to the Orient and Drawbridge Transactions as support for Keybridge's own claim against Molopo in respect of the same Transactions.
Further, Keybridge did not commence a new proceeding against Molopo shortly after this demand was sent. If it had done so, any such proceeding could have been case managed in circumstances where the Second Keybridge Proceeding against the Directors remained on foot. Instead, Keybridge delayed for several more years before bringing a claim against Molopo. It offered no explanation for this delay, particularly given that the claims now advanced are on all fours with those raised by the July 2020 letter.
Finally, Keybridge submitted that Molopo is not prejudiced by being required to answer allegations which have not previously been litigated, and that justice between the parties is best achieved if Keybridge's claims are heard and determined.
I accept that there has not previously been any determination of the claims now advanced against Molopo, and that there is no evidence, or submission by Molopo, that Keybridge's delay in prosecuting those claims has made their fair trial impossible. However, those matters cannot be determinative of whether the current proceeding is "unjustifiably oppressive" or "whether its continuance would bring the administration of justice into disrepute": UBS AG v Tyne at [44]-[45] per Kiefel CJ, Bell and Keane JJ.

[24]

Determination

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.
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.
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".
It is no answer to such delay to indicate that it may have been in Keybridge's own interests to settle the claims brought against Molopo in the First and Second Keybridge Proceedings in return for payment of its substantial pasts costs of that litigation, to let Molopo take over the claims in the First and Second Keybridge Proceedings and its own cost and risk, to encourage and assist Molopo in those claims, and to await the outcome of those claims (and some years more) prior to deciding to pursue a claim against Molopo that could have been brought in the First and Second Keybridge Proceedings six years earlier. Instead, this only highlights why, considered from the perspective of Molopo's own interests and the public interest in the timely and efficient administration of justice, Keybridge's conduct was unreasonable.
If this Court were to lend its procedures to the staged conduct of a dispute between the same parties, arising from the same transactions, with the associated delay and expense, it is likely to give rise to the perception that the administration of justice is inefficient, careless of costs and profligate in its application of public moneys (see UBS AG v Tyne at [59] per Kiefel CJ, Bell and Keane JJ), and would therefore bring the administration of justice into disrepute.
Such a course would be unjustifiably oppressive to Molopo not only because of the resultant protracted delay in the resolution of its dispute with Keybridge regarding the Orient and Drawbridge Transactions, but also because it is now required to deal again with claims regarding those Transactions which could have and should have been brought in the Supreme Court of Victoria some six years ago. Further, it would be prejudicial and unjustifiably oppressive for Molopo to face a fresh proceeding by Keybridge which advances claims regarding the Orient and Drawbridge Transactions in circumstances where: 1. Keybridge previously brought claims against Molopo in relation to those Transactions in the First and Second Keybridge Proceedings, and agreed to orders dismissing those claims, on the basis, as recorded in the July 2018 Settlement, that Molopo would pursue claims against the Directors concerning those Transactions in the Second Keybridge Proceeding; 2. Molopo then pursued claims against the Directors in relation to the Transactions in that Proceeding, with Keybridge's assistance, and advanced contentions to the effect that those Transactions were not in the best interests of its members as a whole and had led to a substantial diminution in the value of its assets; and 3. some years after the conclusion of the Second Keybridge Proceeding, Keybridge now seeks to advance claims against Molopo, which could and should have been brought by Keybridge in that earlier Proceeding, making allegations against Molopo regarding the Transactions similar to those which Molopo itself had advanced against the Directors in accordance with the terms of its settlement with Keybridge.
I acknowledge that the exercise of the power summarily to terminate proceedings, including for abuse of process, must be attended with caution (Benton v QBE Workers Compensation at [63]) and that "only an exceptional case justifies the exercise of the power of a court to permanently stay proceedings" (GLJ v The Trustees of the Roman Catholic Church for Diocese of Lismore [2023] HCA 32 at [3] per Kiefel CJ, Gageler and Jagot JJ).
However, having regard to the principles and the matters which have been outlined above, I am satisfied that that the continuation of the proceeding would be unfairly oppressive and prejudicial to Molopo, would bring the administration of justice into disrepute and would be inconsistent with the dictates of sections 56-58 of the Civil Procedure Act, and that therefore the proceeding is an abuse of process and should be permanently stayed. It also follows that Keybridge should pay Molopo's costs of the proceeding.

[25]

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

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.
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.
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).
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"
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.
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.
There are three main reasons why, if it were necessary to decide, I would not have accepted Molopo's alternative contention.
First, the relevant principle, as stated in the passage from Garner quoted above, is that a shareholder does not have standing to sue for breach of a duty owed to the company or for breach of a contract to which the company is a party, seeking to make good any diminution in the value of its shareholding. In the present proceeding, the shareholder does not sue a third party for breach of a duty owed to the company, or for breach of a contract to which the company was a party, but instead sues the company itself, alleging that the company engaged in conduct which was in contravention of the Corporations Act and seeking statutory compensation for loss allegedly suffered as a result of that company's contravening conduct, including as a result of the shareholder's reliance on the company's misleading statements. That is a claim of a type commonly pursued in shareholder class actions.
Secondly, the issue whether a shareholder's claim for loss is barred by reflective loss principles is generally not one which is apt for summary determination. In that regard, I refer to the observations in Johnstone v HIH Limited [2004] FCA 190 at [66] (Tamberlin J); Harris v Milfull [2002] FCAFC 442 at [40] (Drummond, Cooper and Dowsett JJ); and Carey v Freehills [2013] FCA 954 at [449] (Kenny J).
Thirdly, as acknowledged by Molopo, there is a lack of clarity regarding the basis on which loss is alleged in the pleading. When asked for his response on the issues raised about the pleading of loss, Senior Counsel for Keybridge responded as follows: "I am not sure your Honour noticed my instructing solicitor came onto the record I think two or three days ago, we haven't had a chance to think in detail about the loss and we can certainly provide some particulars, but we would have thought it's the value of the offers, the offers that were not accepted, and no doubt we would have to give credit for the value of the shares that we still retain, but that's not a case that relies upon diminution in the value of Molopo shares from one point in time to another because we are not looking at the share price on day one was 25 cents and a year later it was five cents, it's looking at the value of the offer and then saying we give credit for the value of the shares that we retain. So that's as best as I can put it now your Honour."
If it has been necessary to determine this issue, I would not have addressed the deficiency in the pleading of loss in the current List Statement by summarily dismissing Keybridge's claim, but would instead have required Keybridge to replead its loss in order to expose the material facts on which it relied to assert loss and damage.

[26]

Keybridge's amendment application

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.
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.
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."
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.
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".
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.
Senior Counsel for Keybridge accepted that the pleading was deficient in this respect: "BROADFOOT: … If your Honour goes to page 45 of the affidavit, which is the proposed draft pleading … Page 71 to 72 plead the breach of that agreement and we will have to do something with the particulars-- HIS HONOUR: It's not so much the particulars of the loss in terms of the quantum it's more the pleading of causation. BROADFOOT: Yes the conceptualising of it, we accept that, yes."
Given this patent and acknowledged deficiency in the pleading of causation, I reject the application for leave to amend the Commercial List Statement in the form proposed by Keybridge.
It is difficult to determine whether or not this deficiency in the pleading of causation and loss is able to be cured by a reformulation of the proposed claim, in circumstances where no causation case has been articulated by Keybridge in its submissions or its evidence in support of the amendment application. Since I have determined that the pursuit by Keybridge of the claims in the existing form of the Commercial List Statement is an abuse of process, and that the additional claim in the proposed Amended Commercial List Statement does not disclose a reasonable cause of action, the appropriate course is to dismiss Keybridge's amendment application and to grant a permanent stay of the proceeding. It will then be a matter for Keybridge whether it seeks to advance a claim regarding the alleged breach of the July 2018 Settlement in a new proceeding, on the basis of a properly articulated pleading.

Keybridge Capital Limited v Molopo Energy Limited

At a glance

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