King v Lintrose Nominees Pty Ltd & Ors; Hopkins v King [2001] VSCA 140

Court of Appeal (Vic)|2001-08-29|Before: CALLAWAY, BATT and BUCHANAN, JJ.A.

Judgments and orders - Res judicata - Anshun estoppel - Proceeding in 1992 for rescission of contract - Breach of fiduciary duty alleged against second and third defendants - No relief ultimately sought against them except as to costs - Order for equitable compensation later sought both in original proceeding and in fresh proceeding - Relief no longer available in either proceeding.

By a contract of sale made on 22nd September 1989 Peter John King agreed to purchase the freehold of certain commercial premises in Moonee Ponds from Lintrose Nominees Pty Ltd ("Lintrose") for $449,500. Mr King entered into the contract in reliance on investment advice given to him by an estate agent, John Hopkins & Co. Pty Ltd ("Hopkins & Co.") through James Barrie Stuart Hopkins and his father, Donald Gray Hopkins. The Messrs Hopkins were directors of Lintrose and 51% of the shares in Lintrose were ultimately held by companies controlled by them. Hopkins & Co. was acting as agent for both the vendor and the purchaser. Mr King was unaware of the relationship of the Messrs Hopkins to Lintrose and of the dual role of Hopkins & Co., but the contract was completed and he became registered as the proprietor of the land.

In 1992 Mr King brought proceedings in the Supreme Court against Lintrose seeking a declaration that each of the Messrs Hopkins acted in breach of his fiduciary duty to Mr King in failing to disclose his interest in Lintrose and failing to make available to Mr King all the information he had in relation to the proposed purchase, a declaration that Mr King had rescinded the contract and that the contract was void ab initio, an order that Lintrose refund all monies paid by Mr King under the contract and an order for costs. The Messrs Hopkins were later added as defendants. Minor changes were then made to the allegations in the statement of claim but no change was made to the prayer for relief.

The trial took place before Hayne, J. on 21st, 22nd and 26th April 1993. His Honour concluded, among other things, that, whether or not the Messrs Hopkins in fact undertook to act on behalf of Mr King, neither they nor Lintrose could now be heard to say that they did not. They were subject to the same fiduciary duty as Hopkins & Co. and breached that duty by failing to disclose their interest in Lintrose. His Honour's reasons concluded as follows:

"Counsel for the defendants expressly disclaimed any arguments that rescission of the contract could not be ordered if I found that there had been a breach of duty. In particular, it was not suggested that restitution could not be effected. Accordingly there will be judgment for the plaintiff. I will hear counsel about the precise form that that judgment should take."

On 17th May 1993 judgment was pronounced in accordance with the following minutes:

"1. Judgment for the plaintiff with costs, including the costs ordered to be paid by the plaintiff to John Hopkins & Co. Pty Ltd by order made on 18 December 1992. 2. Declare that the contract of sale made on 22 September 1989 between Lintrose Nominees Pty Ltd as vendor and Peter John King as purchaser was rescinded by Peter John King on 8 October 1992. 3. Declare that Lintrose Nominees Pty Ltd is bound to repay to Peter John King all moneys paid by or on behalf of King to Lintrose Nominees Pty Ltd under that contract of sale, and order and adjudge accordingly. 4. Remit the matter to a Master to inquire into and determine the amount of money so paid under the contract. 5. Reserve liberty to apply further as the parties may be advised."

The authenticated judgment[1] was as follows:

"THE JUDGMENT OF THE COURT IS THAT: 1. There is judgment for the Plaintiff. 2. The Defendants pay the Plaintiff's costs, including the costs ordered to be paid by the Plaintiff to John Hopkins & Co. Pty. Ltd. pursuant to the order of the Honourable Mr Justice Ormiston made on 18 December 1992. THE COURT ORDERS AND DECLARES THAT: 1. The Contract of Sale made on 22 September 1989 between Lintross [sic] Nominees Pty. Ltd. as vendor and Peter John King as purchaser was rescinded by Peter John King on 8 October 1992.

2. Lintrose Nominees Pty. Ltd. repay to Peter John King all moneys paid by or on behalf of King to Lintrose Nominees Pty. Ltd. under the contract of sale.

3. This proceeding be remitted to a Master to inquire into and determine the amount of moneys so paid under the contract.

4. Liberty to apply as the parties may be advised is reserved."

Lintrose and the Messrs Hopkins appealed.[2] Mr King cross-appealed. Both the appeal and the cross-appeal were dismissed on 6th May 1994[3]. Ormiston, J. held that the Messrs Hopkins were fiduciaries who had failed to disclose a conflict of interest, but Tadgell and Fullagar, JJ. found it unnecessary to consider whether the Messrs Hopkins were, or whether Lintrose was estopped from denying that they were, fiduciaries of Mr King. They upheld the decision below because of the dual role of Hopkins & Co. I shall refer later to the relief sought in the cross-appeal and to the unanimous reasons for its being refused.

In the meantime Master Wheeler had made an order by consent assessing the amount paid under the contract at $449,266. Shortly thereafter Lintrose was ordered to be wound up by the Court. The land was sold and the liquidator paid Mr King $206,926.80, leaving a shortfall of $242,339.20. Mr King funded the liquidator to make further recoveries and a preference was set aside. That resulted in a payment to him of $27,281.29. Mr King then turned his attention again to the Messrs Hopkins, causing a summons to be filed on 5th February 1999 in the proceeding that had been determined by Hayne, J., to which I shall hereafter refer as "the 1992 proceeding".

The summons, addressed to the Messrs Hopkins, sought an order that they each pay equitable compensation to Mr King in the amount by which his loss remained unsatisfied by reason of Lintrose's "non-compliance with paragraph 2 of the orders and declarations of Hayne J made on 20 May 1993"[4]. When the matter came on before Mandie, J., his Honour suggested that a fresh proceeding might be initiated so that, one way or another, the real issues would be decided. A writ was then filed with a statement of claim seeking equitable compensation from the Messrs Hopkins. I shall refer to that proceeding as "the 1999 proceeding". The application by summons and the 1999 proceeding came on before Byrne, J., who refused an application that the latter be stayed as an abuse of process and proceeded to hear the two, parallel cases on their merits.

His Honour refused the relief sought in the summons but granted the relief sought in the 1999 proceeding[5]. The substantive order in the 1992 proceeding was that the application made by Mr King by his summons filed on 5th February 1999 be dismissed. The substantive orders in the 1999 proceeding were a declaration that the Messrs Hopkins were liable to pay equitable compensation to Mr King for "breach of fiduciary duty found to have been committed by them [in Hayne, J.'s reasons for judgment]", a reference to a Master to enquire into and determine the amount of that compensation and an order that the Messrs Hopkins pay the amount so ascertained to Mr King. Mr King has appealed against the orders made by Byrne, J. in the 1992 proceeding and the Messrs Hopkins have appealed against the orders made in the 1999 proceeding.

Both appeals were brought in the belief that they lay as of right. That is probably true in the case of the 1999 proceeding, but the question is not entirely free from doubt.[6] Accordingly, when the appeals were called on for hearing, we granted leave to appeal in the 1999 proceeding so far as that might be necessary. On the second day of the hearing it became apparent that leave was required in the 1992 proceeding too, on the footing that the orders made by Byrne, J. were interlocutory.[7] Mr Garratt then applied for leave to appeal, which was opposed by Mr Sher. We reserved our decision on that application but permitted the appeal to be argued. Accordingly we have before us an appeal in No. 2052 of 1999 and an application for leave to appeal in No. 2222 of 1992.

Byrne, J. identified four issues to be decided in the 1999 proceeding[8]: first, whether the claim asserted should be dismissed on the ground that it was res judicata in the narrow sense of that expression[9]; secondly, whether it should be dismissed because of the broader principle associated with Port of Melbourne Authority v. Anshun Pty Ltd[10]; thirdly, whether the relief sought should be refused on account of laches or delay; and, fourthly, whether the heads of damage claimed were recoverable. We are concerned only with the first and second of those issues.[11] The Messrs Hopkins no longer assert that relief should be refused on account of laches or delay and the grounds of appeal do not call in question the guidance that his Honour gave to the Master for the purpose of assessing equitable compensation.[12]

The critical question is whether Mr King, having joined the Messrs Hopkins as defendants to a proceeding in 1992 in which it was alleged that they were guilty of breach of fiduciary duty and a declaration to that effect was sought, could make a fresh claim against them in 1999 on the same cause of action[13] but claiming a different species of relief, namely equitable compensation as opposed to a declaration. Byrne, J. decided that question in favour of Mr King. It will be as well to set out his Honour's reasons in relation to the first and second issues in full:

"21 It was next submitted that the relief sought in the 1999 proceeding should be refused as the matter was res judicata. This cannot be correct. No substantive judgment was given against the Hopkins in the 1993 proceeding. There is, therefore, no judgment into which Mr King's causes of action against them have merged 22 The submission based on the rule expounded by the High Court in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589, fastens upon the other aspect of the finality of court judgments, the avoidance of multiplicity of proceedings. It is that a party should not be permitted to return to the court to raise an issue which had not been but which ought properly to have been raised in the earlier proceeding. The applicable principle depends upon unreasonableness. `There will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it': Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 at 602, per Gibbs CJ, Mason, Aickin JJ. The principle has been applied equally to cases where it is the claimant and not the defendant who seeks to raise an issue in the later proceeding. See Terry v Permanent Trustee Australia Ltd (1995) 6 BPR 14,091 at 14,103 and the cases there cited. In Bill Gibbs & McAllion Lloyd Pty Ltd v Kinna [1998] VSCA 52, Ormiston JA at [2] and Kenny JA at [23] applied to such a case the test whether or not it was unreasonable for the plaintiff asserting a cause of action in the second proceeding not to have asserted it in the earlier proceeding. It was not necessary for Kenny JA to determine whether the test was a narrower one, as to which see also Phillips JA at [6]. 23 In this case, the difficulty is that, in his statement of claim, Mr King did assert as a cause of action against the Hopkins that they were in breach of fiduciary duty. Why he did so, seeking only declaratory relief, is not altogether clear. Hedigan J was asked on 4 December 1992 to permit the joinder of the Hopkins, as defendants, on the basis that this was necessary because Lintrose as sole defendant denied that either of the Hopkins was its officer or employee. The transcript of the application made on that date was in evidence but it does not shed much light on this matter. It seems likely that the plaintiff's claim against Lintrose was then seen as depending upon proof of breach of fiduciary duty by Hopkins & Co. with whom Mr King had a contract and that Lintrose was the knowing recipient of the benefit of this breach. As originally pleaded, it was apparently not thought necessary to have Hopkins & Co. as a defendant, perhaps because there was no doubt about the retainer. But when the association of the Hopkins with Hopkins & Co. was put in issue, those advising Mr King must have thought it prudent to have them as parties, against whom similar breaches were alleged, again with the substantive relief sought only against Lintrose. 24 The question which counsel for the Hopkins would raise about the decision of Mr King at this time not to seek equitable compensation against their clients is this. Was this relevant to the subject matter of the 1992 proceeding? Was it unreasonable for Mr King not to seek and obtain such an order? To my mind each question must be answered in the negative. His claim in the 1992 proceeding was to undo the contract of sale which had been procured by the breach of fiduciary duty by the Hopkins. As things then stood, there is, subject to one matter, no evidence to suggest that such an order obtained and implemented would not have provided a satisfactory result. The matter I have referred to is the cross-appeal. Whatever its prospects of success, the fact that it was brought on 15 June 1993 suggests that, on that date, Mr King wanted more than the mere reversal of the sale. Notwithstanding this, I am not satisfied that Mr King acted unreasonably in pursuing Lintrose alone in the first proceeding. The submission based on the Anshun estoppel must, likewise, fail."

The Messrs Hopkins were joined in the 1992 proceeding because that was thought necessary having regard to the relief sought. Although the statement of claim was later amended, it already alleged breach of fiduciary duty by the Messrs Hopkins. Counsel for Mr King, applying for leave to join them, submitted that "[s]imply on first principles, James Barrie Stuart Hopkins and Donald Gray Hopkins, in respect of the declaratory relief that is sought, should be added as defendants". He submitted that the declaration was necessary in order to obtain rescission against Lintrose. It may be that they were unnecessarily joined if the only relief Mr King really desired at that stage was relief against Lintrose. In the event no orders were made against them except as to costs, but it is not as if they had not been joined at all. For better or worse, Mr King did join the Messrs Hopkins as defendants in a proceeding in which the prayer for relief sought a declaration against them. He could have sought equitable compensation, or more appropriately an indemnity[14], but he did not. In the absence of fraud or other unconscionable conduct on their part, he must abide the consequences of the procedural step that he took.

The reference to fraud or unconscionable conduct brings me to another matter. It was argued before Byrne, J. and again before us that the Messrs Hopkins misled Hayne, J. or at all events concealed from his Honour the inability of Lintrose to satisfy the judgment. Before Byrne, J. the following exchange in the course of counsel's final addresses to Hayne, J. was relied on:

"His Honour: There being no factual disclosure, then breach of duty, breach of duty gives rescission, there is here no case mounted against you that rescission cannot go in the circumstances. Mr McEwen: That is so, Your Honour. His Honour: That is right, is it not, Mr Anderson, there is no separate point about rescission? Mr Anderson: No, Your Honour."

Mr. McEwen was counsel for Mr King and Mr Anderson was counsel for Lintrose and the Messrs Hopkins.

It was said that Mr Anderson thereby led Hayne, J. to believe that Lintrose could satisfy the judgment[15]. Byrne, J. rejected that submission and so do I. The words "there is here no case mounted against you" show that his Honour had in mind an assertion by the defendants that rescission should be refused because restitution could not be effected by Mr King. The passage from his Honour's reasons quoted at [3] above is directed to the same topic. His enquiry, and counsel's response, were concerned with what would otherwise have been a bar to the relief sought by the plaintiff. The financial capacity of Lintrose to satisfy the judgment is qualitatively different. Other passages in the transcript were referred to before us. In my opinion they were directed to the same topic.

The point of substance is that Mr King now seeks to rely on the same cause of action to obtain relief that he omitted to ask for in the 1992 proceeding. I do not overlook the fact that he sought only a declaration against the Messrs Hopkins in respect of that cause of action and I accept Mr Garratt's submission that there was no implied refusal by Hayne, J. of the declaration sought in the statement of claim. I also accept his submission that we should draw the inference that counsel for Mr King, believing the declaration to be unnecessary by the time of the trial, did not pursue it.

Mr Garratt contends that, in the circumstances I have described, there is nothing into which Mr King's cause of action against the Messrs Hopkins has merged and that such merger is an essential component of res judicata. The argument is elaborated in written submissions that were filed by leave after the hearing. I need not decide its correctness because, respectfully differing from Byrne, J., I think that Mr King is on the horns of a dilemma: either the claim he asserts in the 1999 proceeding is res judicata or it is so close to being res judicata that that very consideration shows that its assertion offends the principle in Anshun's case. It may well be, as Samuels, J.A. suggested in Boles v. Esanda Finance Corporation Ltd[16] and Kenny, J.A. suggested in Gibbs v. Kinna[17], that, where it is contended that a plaintiff should have asserted a claim in an earlier proceeding, it is not always helpful to ask whether the claim was relevant to the subject matter of that proceeding. In the present case, however, it is the same claim.[18] All that Mr King is doing is seeking a different species of relief. He is like the plaintiff in Serrao v. Noel[19], who believed that an order for delivery up of shares would be sufficient but, when they were sold at a loss, tried to recover damages for their detention.

In Dillon v. Macdonald[20] the plaintiff had sued for specific performance of a contract for the sale of land, raising no question as to damages for its breach. The proceeding was dismissed. She later brought an action for damages. The New Zealand Court of Appeal said[21]:

"We therefore agree with Mr. Justice Edwards's opinion in the Court below, that every remedy that can be claimed in respect of the same cause of action must, under our present procedure, be claimed in the one action, and that, as the plaintiff could in the former action have made her present claim, she cannot now, because she chose to limit her prayer for relief in that action, take a second proceeding claiming another remedy in respect of the same cause of action sued on in the former suit."

Those words are directly in point except that in Dillon v. Macdonald judgment had been entered in the former suit.[22]

Let it be supposed that, to adapt the words of Diplock, L.J. in Thoday v. Thoday[23], the cause of action asserted against the Messrs Hopkins was determined to exist but, as Mr Garratt submits, judgment was not given upon it and res judicata does not apply. It would be surprising if the 1999 proceeding were not, in that event, barred by the principle in Anshun's case, for the better view is that neither res judicata nor that principle depends on niceties but rather that they are both rules of public policy based on the principles expressed in the maxims interest reipublicae ut sit finis litium and nemo debet bis vexari pro eadem causa.[24] We are not concerned at present with the question whether further relief may be sought in the 1992 proceeding but only with the question whether a fresh proceeding may be brought on the same cause of action where the earlier proceeding went to trial, the plaintiff's representative was invited to make submissions on the form of the judgment[25], he confined those submissions to the question of costs and what must be taken to have been a final judgment was then entered.[26]

I am conscious that the scope of the principle in Anshun's case is not settled. The controversy was referred to by Phillips, J.A. and by Kenny, J.A. in Gibbs v. Kinna[27] and Ormiston, J.A. emphasised that, even on the wider view, the issue was whether it was unreasonable to defer reliance on a defence or cause of action. In my opinion it was unreasonable to defer all claims against the Messrs Hopkins, and not to pursue the claim for a declaration, in a case in which they had been made defendants because of allegations against them in the statement of claim.[28] It is one thing to defer the assertion of a cause of action; it is another thing to bring parties to court, asserting that they are in breach of duty, and to content oneself with a silent judgment. Even if a narrower view should be taken, I do not think that avails Mr King in the circumstances I have described. The analogy with res judicata, and the public policy considerations, are too close.[29]

For these reasons I would allow the appeal, set aside the orders made by Byrne, J. in No. 2052 of 1999 and, in lieu thereof, order that there be judgment for the defendants in that proceeding.

Leave to appeal from an interlocutory order is ordinarily granted only where the applicant shows (1) that the decision below was attended with sufficient doubt to warrant its being reconsidered on appeal and (2) that substantial injustice would be caused if the order made were allowed to stand.[30] If the 1999 proceeding is dismissed, the second requirement is satisfied: substantial injustice would be caused to Mr King if Byrne, J.'s orders in the 1992 proceeding were allowed to stand. The only question that need be addressed is whether his Honour's decision is attended with sufficient doubt. (Generally speaking, it is the decision to which attention is directed and not the reasons for the decision. A moment's reflection will show why any other general rule would be against the interests both of the parties and of the Court.) In the circumstances of this case I shall depart from the usual practice[31]. I shall give fuller reasons than is customary, but they are reasons for refusing leave, not reasons for dismissing an appeal where leave has been granted.

Mr Garratt wisely concentrated on his best point. He did not contend that the relief sought in the summons could be obtained pursuant to the liberty to apply reserved in the judgment of 17th May 1993.[32] Instead he relied on the line of cases of which, in this jurisdiction, McKenna v. Richey[33] is the best known example. The plaintiff in that case had obtained a decree for specific performance but it later became inequitable to enforce the contract specifically. By motion in the existing proceeding she was then permitted to rescind the contract and to obtain damages for its breach. O'Bryan, J. held that, whether or not they were available under the Victorian derivative of Lord Cairns' Act[34], she was entitled to damages at common law. His Honour's decision was applied by the House of Lords in Johnson v. Agnew[35]. Again it was accepted that damages could be recovered at common law[36], but it was said that, once a matter had been placed in the hands of a court of equity, including one exercising equity jurisdiction, the subsequent control of the matter would be exercised according to equitable principles.[37]

I do not accept Mr Sher's submission that the success of the Messrs Hopkins in the appeal necessarily entails the failure of Mr King in the 1992 proceeding. If the correct analysis is in terms of res judicata, that means only that a fresh proceeding cannot be brought. If the correct analysis is in terms of the principle in Anshun's case, that means that it was unreasonable not to claim, or at all events pursue, any relief against the Messrs Hopkins in the 1992 proceeding, but the question of reasonableness is judged in the context of two separate proceedings. It was unreasonable not to claim appropriate relief then by contrast with vexing the defendants in a separate and subsequent proceeding on the same cause of action. Put simply, just because it is not open to Mr King to bring a fresh proceeding, non constat that it is not open to him to seek further or supplemental relief of the kind exemplified by McKenna v. Richey. Mr Sher's objection goes not so much to the jurisdiction or power of the Court to grant such relief as to the exercise of its discretion to do so.

The distinction is illustrated by the decision of the New Zealand Court of Appeal in Neylon v. Dickens[38]. The purchasers of a farm property brought an action against the vendors seeking specific performance but not damages. That action was successful. Three years later they tried to recover damages by filing a motion in the first action and bringing a second action. Each proceeding was considered separately. The relevant claim in the second action was held to be barred by the rule in Henderson v. Henderson[39] as understood in New Zealand, but the motion was denied because the jurisdiction exemplified by McKenna v. Richey was not enlivened on the facts.

The reasons for denying the motion are instructive. Cooke, P., delivering the judgment of the Court, said[40]:

"There is a line of decisions at first instance in England, Victoria and New Zealand to the effect that, once a Court of Equity has control over a contract of sale as a result of the bringing of an action for specific performance, it may in some circumstances, at a stage later than the making of a decree for specific performance, make a supplemental order for an inquiry into additional[41] damages: Ford-Hunt v. Raghbir Singh [1973] 2 All ER 700 (Brightman, J.); Easton v. Brown [1981] 3 All ER 278 (Goulding J., despite seeing `certain theoretical difficulties'); McKenna v. Richey [1950] VicLawRp 64; [1950] VLR 360 (O'Bryan, J.); Cowan v. Cavanagh [1978] VicRp 61; [1978] VR 665 (Menhennitt, J.); Universal Homes Ltd v. Kloet [1976] 1 NZLR 246 (Chilwell, J.). Granting that the jurisdiction exists and is beneficial and could properly be invoked under the former Supreme Court Code rule as to an inquiry into damages (R 108) or the new High Court Rule 384, we accept Mr Penlington's proposition that to justify relief in the exercise of this jurisdiction there must be either facts occurring after the date of the decree for specific performance or facts occurring before but discovered afterwards. Within that concept it seems to us wrong to include continuing loss on a head of damage well known to the plaintiff before decree but not made by him the subject of a claim or the reservation of a claim at the time of the decree." (Emphasis added.)

See also, as to the requirement of "new facts", the decision of Brightman J. in Ford-Hunt v. Raghbir Singh[42].

To ask whether a decision is attended with sufficient doubt to warrant the grant of leave to appeal is the same thing as asking whether the proposed appeal has sufficient prospects of success. For the appeal against Byrne, J.'s orders in the 1992 proceeding to succeed, Mr King would have to show that -

(a) the jurisdiction or power that he invokes is not limited to cases where a court of equity has control over a contact of sale as a result of the bringing of a suit for specific performance and, more importantly, extends to a case where all that the court has done is to declare that a contract for the sale of land has been rescinded and order repayment of monies paid under the contract and relief is now sought against persons who were not parties to the contract and against whom no declaration was made[43] or substantive relief granted; and (b) the inability of Lintrose to satisfy the judgment is a "new fact" within the meaning of the authorities, notwithstanding the fact that Lintrose's impecuniosity was an existing fact of which Mr King was unaware but which was readily foreseeable and as to which he had made no enquiries; and (c) it would have been just and equitable, in all the circumstances, for a judge of the Trial Division[44] to exercise his or her discretion to order that the Messrs Hopkins pay equitable compensation and to direct the requisite enquiry as to its amount.[45]

Although it is distinguishable, the decision of the Full Court of the Federal Court in Caboolture Park Shopping Centre Pty Ltd v. White Industries (Qld) Pty Ltd[46] might assist Mr King at the first stage[47], but he would have to succeed at every stage. His difficulties at the second stage are not to be underestimated. In evaluating his prospects of success at the third stage, I do not forget that the Messrs Hopkins no longer rely on laches and delay, but they do rely on the unreasonableness of their having been brought to court accused of breach of fiduciary duty, the plaintiff's seeking no judgment against them except as to costs and his having second thoughts. Moreover, a judge of the Trial Division would have been influenced, and so would this Court now, by the fate of Mr King's cross-appeal to the Full Court.

Tadgell, J., with whose reasons on this branch of the case, both Ormiston and Fullagar, JJ. agreed, said[48]:

"There was a cross-appeal by Mr King designed to obtain a more favourable judgment than that pronounced by the judge. So far as relevant the order made was that `Lintrose Nominees Pty Ltd repay to Peter John King all moneys paid by or on behalf of King to Lintrose Nominees Pty Ltd under the contract of sale'. That was what had been sought in the statement of claim. The cross-appeal (as it was explained to us by counsel) seeks a further or expanded order to require Lintrose in effect to indemnify King for all moneys paid by him or on his behalf in relation to interest or borrowings or other expenses incurred by him arising out of his purchase or ownership of the subject property, less any amount received by him arising out of his ownership of the property. The judge had given the parties an opportunity to speak to the form of order he should make and submissions were made after his reasons were handed down. It is said for the cross-appellant that the matter now complained of was then overlooked. The proceeding has already been remitted to a Master, in accordance with the judge's order, to determine an amount payable to Mr King and the Master has made a determination accordingly. No facts were pleaded in the statement of claim to provide a foundation for the further or expanded order now sought and no leave was sought, even before this Court, to amend the statement of claim to incorporate any such facts. Nor were any facts proved at the trial (so far as appears) by reference to which this Court could know what an order of the kind now sought would entail, if it were made. It is not acceptable to be asked, at this stage, to make an order without having any conception of the consequences of it. Apart from that, Lintrose is entitled to know the exact facts upon which the cross-appellant relies to sustain the further or expanded order. Without knowing them it can neither fairly meet the cross-appeal nor itself know the consequences of the Court's allowing it. In the circumstances I think it is impossible to allow the cross-appeal. It should be dismissed."

Some of those observations are to be understood in the context of an appeal, where different considerations apply from a fresh application to the trial judge, but

many of them are pertinent. An order for equitable compensation travels outside the statement of claim. (Moreover, unlike the order sought in the cross-appeal, it is not an order against the party against which substantive relief had already been granted in 1993.) The judge gave the parties an opportunity to speak to the form of the judgment. Mr King's advisers overlooked the matter the subject of the cross-appeal, just as the advisability of seeking equitable compensation or an indemnity was overlooked. There was no allegation of loss or damage in the statement of claim.[49]

There is the further difficulty that the majority in the Full Court decided the case on a different basis from Hayne, J. Tadgell and Fullagar, JJ. found it unnecessary to consider whether the Messrs Hopkins were, or whether Lintrose was estopped from denying that they were, fiduciaries of Mr King.[50] The question whether the Messrs Hopkins were estopped no longer arose.[51] Their Honours could not have taken that course and that question would have arisen, if substantive relief had been obtained against the Messrs Hopkins at trial and been the subject of appeal.

Taking all these matters into account, I am not persuaded that the proposed appeal has sufficient prospects of success to warrant the grant of leave. Accordingly I would refuse the application and, in consequence, dismiss the appeal in the 1992 proceeding.

I have had the benefit of reading in draft the reasons for judgment of Callaway, J.A. I agree with his Honour's reasons and conclusion in relation to the

appeal in the 1999 proceeding. With regard to the application for leave to appeal in the 1992 proceeding, I would grant leave to appeal because I think that the decision below is attended with sufficient doubt for that purpose, particularly bearing in mind the substantial injustice that Mr. King would clearly suffer if the orders made below were allowed to stand. I consider that Mr. King has a reasonably arguable case that he should succeed at each of the three stages identified by Callaway, J.A. in paragraph [27]. I would, however, dismiss any appeal brought pursuant to leave on the ground that I consider in the final analysis that it would not be just and equitable to order the Messrs. Hopkins to pay equitable compensation. I reach that conclusion because of the unreasonableness of Mr. King alleged by the Messrs Hopkins as referred to by his Honour in paragraph [28] and because of the considerations mentioned in paragraphs [30] and [31]. I need not express a concluded view on the other two points.

I have had the advantage of reading drafts of the reasons for judgment prepared by Callaway and Batt, JJ.A.

In my opinion the appeal in the 1999 proceeding should be allowed for the reasons stated by Callaway, J.A. I also agree with Callaway, J.A. that the application for leave to appeal against the orders made by Byrne, J. in the 1992 proceeding should be refused as the decision is not attended by sufficient doubt to warrant the grant of leave.

I certify that the preceding 18 pages are a true copy of the reasons for judgment of Callaway, J.A. and Batt, J.A. and Buchanan, J.A. respectively of the Court of Appeal of the Supreme Court of Victoria delivered on 29th August 2001.

[1] Except where the context indicates otherwise, I shall use "judgment" to refer to the judgment given, and the orders and declaration made, on 17th May 1993 as authenticated.

[2] I do not stay to consider whether the Messrs Hopkins required leave under s.14(1)(b) of the Supreme Court Act 1986 as then in force or to enquire whether they obtained such leave either from Hayne, J. or from the Full Court.

[3] Lintrose Nominees Pty Ltd v. King [1995] VicRp 35; [1995] 1 V.R. 574.

[4] This is a mistaken reference to the date on which the judgment of 17th May 1993 was authenticated.

[5] King v. Lintrose Nominees Pty Ltd [1999] VSC 340.

[6] See and compare the cases discussed in National Australia Bank Ltd v. Maher (No. 2) [1999] VSCA 189; [1999] 3 V.R. 589. It was not suggested that a similar doubt attended Hayne, J.'s judgment in the 1992 proceeding. One way or another, there was finality by the time the Master made the consent order and the case came before the Full Court.

[7] See s.17A(4)(b) of the Supreme Court Act 1986, as explained in Border Auto Wreckers (Wodonga) Pty Ltd v. Strathdee [1996] VSC 55; [1997] 2 V.R. 49. An interlocutory order may come after, as well as before, a final judgment: see National Australia Bank Ltd v. Maher (No. 2) at [18]. The cases referred to in Caboolture Park Shopping Centre Pty Ltd v. White Industries (Qld) Pty Ltd [1993] FCA 471; (1993) 45 F.C.R. 224 at 235 are examples.

[8] King v. Lintrose Nominees Pty Ltd at [10]. A fifth issue related only to the 1992 proceeding.

[9] In this judgment I shall use "res judicata" only in that sense.

[11] The grounds of appeal do not refer to res judicata but Mr Sher applied to amend them. We reserved our decision on that application but the amendment should be allowed so that the point of substance may be addressed. Res judicata was an issue before Byrne, J. and, as argued by Mr Sher, does not depend on evidence of the way in which the case was run before Hayne, J.

[12] The evidence before Byrne, J. was by affidavit and no deponent was cross-examined. The findings of Hayne, J. were accepted by all parties notwithstanding the different basis on which the majority of the Full Court decided the case. I do not overlook this point in [31] below.

[13] In these reasons, as in National Australia Bank Ltd v. Maher (No. 2) at [8], I shall use "cause of action" to include cause of suit.

[14] See Hill v. Rose [1990] VicRp 13; [1990] V.R. 129 at 144.

[15] As I understood the submission, it was not that he did so knowingly but rather that his clients, who were present in court, permitted him to do so.

[18] Not in the sense of remedy, but in the sense of a claim that the Messrs Hopkins breached their fiduciary duty in relation to the purchase of the land.

[22] See especially 389-390. The cause of action was the relevant breach of contract, just as here the cause of action is the breach of fiduciary duty in relation to the purchase of the land.

[24] See Port of Melbourne Authority v. Anshun Pty Ltd at 597 in relation to res judicata and Boles v. Esanda Finance Corporation Ltd at 671 D in relation to the wider principle.

[25] It was not contended that Hayne, J.'s invitation referred only to matters of expression and the like, nor, as we shall see, was that view taken by the Full Court when it disposed of the cross-appeal, but it may be that it was too late to ask for equitable compensation or an indemnity from the Messrs Hopkins at that stage.

[28] I doubt, however, that unreasonableness is the best formulation in a case like the present, which is res judicata or the next best thing. The real objection is to the institution of a fresh proceeding on the same cause of action.

[29] The last four paragraphs should not be permitted to obscure my ratio decidendi: if this is not res judicata, it falls within the wider principle in Anshun's case.

[30] There is much authority to that effect. See, for example BHP Petroleum Pty Ltd v. Oil Basins Ltd [1985] VicRp 72; [1985] V.R. 756 at 758 and 764. I include the word "ordinarily" in the formulation, partly as a reminder that the grant or refusal of leave is ultimately a question of discretion and partly to take account of exceptional circumstances such as are illustrated by Composite Buyers Ltd v. J. C. Taylor Constructions Pty Ltd [1983] VicRp 91; [1983] 2 V.R. 311.

[31] See X v. Director of Public Prosecutions [1995] VICSC 195; [1995] 2 V.R. 622 at 623 and 626.

[32] I think counsel was correct not to advance that contention. This case does not require us to consider the statement by Tadgell, J. in Burke v. Gillett [1996] VicRp 11; [1996] 1 V.R. 196 at 198.

[34] The relevant provision was then s.62(4) of the Supreme Court Act 1928; it is now s.38 of the Supreme Court Act 1986.

[35] [1980] A.C. 367 at 397-398.

[41] As McKenna v. Richey illustrates, the damages are not always additional. See also Hall v. Burnell [1911] 2 Ch. 551.

[43] Compare Royal Insurance Co. Ltd. v. Mylius [1926] HCA 49; (1926) 38 C.L.R. 477 at 497.

[44] I have cast the question in terms of a judge of the Trial Division having regard to the history of the litigation. It is instructive to ask, for example, what would have happened if Mr King had gone back to Hayne, J. as soon as he discovered the impecuniosity of Lintrose in August 1994, but it is just an heuristic device. The discretion to be exercised now would, of course, be that of the Court of Appeal.

[45] Byrne, J. did not have to address this question, because he held that Mr King failed at the first stage: King v. Lintrose Nominees Pty. Ltd. at [19].

[47] That is sufficient for present purposes. I express no other opinion on that case.

[49] I do not attach too much weight to this last point. In one sense the loss had already been suffered but in another it had not yet materialized.

[50] At 578 per Tadgell, J. in whose reasons Fullagar, J. agreed at 581.

[51] Compare Hayne, J.'s finding at trial summarized in the second sentence of [3] above.

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Judgment (97 paragraphs)

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