Land Enviro Corp Pty Ltd v HTT Huntley Heritage Pty Ltd

Background 1 This is an appeal from a decision of an Associate Judge refusing to dismiss summarily, or to strike out, certain of the claims advanced in a statement of claim filed on 16 March 2007 by the three persons who are the plaintiffs in the present proceedings 2005/07 ("the 2007 proceedings"). Those Plaintiffs are Mr Zdrilic, Mrs Zdrilic and a company I shall call "LEC". 2 It is the contention of the first, second and fifth defendants (respectively "HTT", "Renshall" and "Devubo"), who were the applicants before the Associate Judge and are the present appellants, that certain of the claims so advanced cannot be litigated while orders made in earlier proceedings remain extant. The existing orders were made in proceedings 5936/01 ("the 2001 proceedings"). 3 In the 2001 proceedings, LEC, the only plaintiff, sued nine defendants. The defendants included HTT and Hickie. There was no determination on the merits. The matter was settled and orders were made by consent. In the 2007 proceedings, the three plaintiffs I have mentioned (Zdrilic, Mrs Zdrilic and LEC ) sue seven defendants. These seven defendants include HTT and Hickie. Claims in the 2007 proceedings - first group 4 The claims for relief in the 2007 proceedings fall into four groups. The first group consists of claims attacking agreements of 2004 by which the 2001 proceedings were supposedly settled and seeking to overturn the settlement. The claims in this group are, in essence, claims to have set aside both the 2004 agreements and consent orders made in the 2001 proceedings. The consent orders were made on 1 September 2004 as follows: "By consent the court orders that: 1. The proceedings be dismissed against the fourth defendant, seventh defendant, eighth defendant and ninth defendant. 2. There be no order as to costs." 5 The affected defendants were HTT (fourth), Hickie (seventh), Anecon (eighth) and Ansell (ninth). It can thus be seen that the 2001 proceedings brought by LEC were, by consent, dismissed as against HTT and Hickie. The claims in the 2007 proceedings to have the settlement and consent orders set aside are maintained against HTT and Hickie only. Claims in the 2007 proceedings - second group 6 The second group of claims in the 2007 proceedings consists of claims for damages in respect of allegedly wrongful conduct on the part of several defendants in and about the supposed settlement of 2004 - in essence, that it was procured by various representations that were misleading, deceptive, false or otherwise of a quality such as to warrant the setting aside of the agreements and consent orders by which the settlement was carried into effect. It will be convenient to refer to the alleged conduct as "deceptive conduct", even though the allegations are wider than that. Claims in the 2007 proceedings - third and fourth groups 7 The plaintiffs in the 2007 proceedings (Zdrilic, Mrs Zdrilic and LEC) claim to have suffered loss and damage in various ways as a result of the deceptive conduct, including by reduction of their interest in the joint venture project with which the proceedings are concerned, loss of value of loans owed, loss of opportunity to participate in decision making and, in the case of LEC alone, loss of the opportunity to pursue its claim in the settled 2001 proceedings. 8 The third group of claims - mainly claims for an account of profits, equitable compensation and damages - is advanced by LEC against HTT alone, "subject to and conditional upon" the court granting the relief sought in the first set of claims, in other words, only if the plaintiffs in the 2007 proceedings are successful in their attempts to have the 2004 agreements and the consent orders set aside as against HTT and Hickie. 9 The fourth set of claims is advanced by LEC against Hickie alone on the same conditional basis, that is, if the plaintiffs achieve success in their claims to have the 2004 agreements and the consent orders set aside as against HTT and Hickie. Again, the relief sought, on this conditional basis, is mainly an account of profits, equitable compensation and damages. 10 The claims of the third and fourth groups advanced in this conditional way by LEC against HTT and against Hickie are, in substance, based on the proposition that LEC was a joint venture vehicle for a project to be undertaken by Zdrilic, Mrs Zdrilic and Hulley, among others, involving the rehabilitation and development of certain mining land; that Hulley became a director and general manager of LEC; that the joint venturers, by agreement, contributed certain resources to LEC to enable it to pursue the joint venture; that LEC entered into a contract to purchase the land; that Hulley and others formed HTT; that Hulley took certain steps to make it difficult for LEC to continue with the project and frustrated LEC's attempts to raise finance to complete the purchase of the land; that Hulley further took steps to enable HTT to pursue the commercial opportunities that LEC had been pursuing; that Hulley caused HTT to purchase the land in place of LEC; and that Hulley was accordingly in breach of fiduciary and statutory duties. The statement of claim goes on to plead conceptually similar matters against Hulley related to later periods - also against Hickie (also a director of LEC) - generally to the effect that information and opportunities that should have been turned to account for the benefit of LEC were instead applied to the benefit of HTT. 11 The general thesis on which the claims in the third and fourth groups is based is that Hulley and Hickie breached duties owed by them to LEC, that HTT was complicit in their breaches of duty and that LEC therefore has equitable claims against HTT and Hickie. The particular claims advanced are claims against HTT and Hickie only. There is no claim against Hulley. The claims for relief against HTT and Hickie are framed as follows: · "Subject to the Court granting the relief sought in paragraphs 1 to 5 above, HTT is liable to account to LEC for all profits arising from the acquisition of the Land, the transfer to it of the coal leases, the Assets and the project and the conduct of it after such acquisition of the business of HTT in relation to the project." · "Subject to the Court granting the relief sought in paragraphs 1 to 5 above, HTT is liable to make equitable compensation to LEC." · "Subject to the Court granting the relief sought in paragraphs 1 to 5, Hickie is liable to account to LEC for all profits arising from the acquisition of the Land by HTT, the transfer to HTT of the coal leases, the Assets and the project and the conduct of HTT after such acquisition of the business of HTT in relation to the project." · "Subject to the Court granting the relief sought in paragraphs 1 to 5, Hickie is liable to make payment to LEC for the profits and the loss or damage occasioned by his said breaches of the Corporations Law." 12 The "relief sought in paragraphs 1 to 5" to which reference is made in each of these passages is the relief involved in what I have called the first group of claims, that is, relief said to be warranted by the deceptive conduct, being relief by way of declarations and orders, based on general law principles and provisions of the Trade Practices Act 1974 (Cth), having the effect of recognising rescission of or the invalidity of, or actually avoiding or setting aside (or enjoining assertion of rights under), the 2004 agreements and the 2004 consent orders. (It was accepted, in the course of the hearing before me, that it is meaningless to speak of the consent orders having been "validly rescinded by LEC" - a form of words used in one of the prayers for relief referring also to the 2004 agreements - and that this would need appropriate adjustment in due course). The claims in the 2001 proceedings 13 I need not go through the alleged causes of action advanced in the 2001 proceedings. It was conceded by Mr Jucovic QC, who appeared for the respondents (plaintiffs) on the present appeal, that the underlying facts pleaded in the paragraphs of the statement of claim in the 2007 proceedings concerning the claims in the third and fourth groups are facts which are the same underlying facts pleaded in the 2001 proceedings. Mr Jucovic added, however, that those facts are also relevant to the events of 2004 against the parties to the 2001 proceedings and against other parties who were not parties to the 2001 proceedings. 14 At all events, as regards actions of Hulley and Hickie and complicity of HTT in alleged breaches of duty by them, the case pleaded in the 2001 proceedings was in substance the same as that which, in the 2007 proceedings, is advanced by LEC against HTT and Hickie in the claims of the third and fourth groups. 15 There is not, of course, precise correspondence between the parties to the 2001 proceedings and the parties to the 2007 proceedings. But, so far as the claims in the third and fourth groups are concerned, it remains the case that, in the 2007 proceedings as in the 2001 proceedings, those claims are advanced by LEC alone against HTT and against Hickie. The case before the Associate Judge 16 It is in this context that the present appellants made application before the Associate Judge, by amended notice of motion filed on 15 August 2007, to have the statement of claim in the 2007 proceedings struck out under rule 14.28 of the Uniform Civil Procedure Rules 2005 or dismissed under rule 13.4 - either to the extent that it seeks relief beyond the setting aside of the 2004 agreements and consent orders or to the extent that it seeks relief against relevant defendants. 17 The case that the appellants advanced before the Associate Judge was that the 2007 proceedings should be allowed to continue only as to the claims in the first group, that is, the claims to have the 2004 agreements and consent orders set aside. Beyond that, they said, the claims in the statement of claim could not be entertained by the court. The claims in the second group were said to be unavailable while the 2004 consent orders remain operative. The claims in the third and fourth groups were said to have been laid to rest by those consent orders. To allow the claims in the third and fourth groups to be progressed in the 2007 proceedings would, it was said, be to cause the relevant defendants to be "twice vexed with the same claim". 18 The response of the plaintiffs, as respondents to the motion before the Associate Judge, was, in essence, that they sought to advance the claims in the third and fourth groups solely on the conditional basis stated, that is, so that those claims would fall to be determined only if the consent orders disposing of the 2001 proceedings had been set aside. They did not, they emphasised, attempt to ignore the effect of those orders or to re-agitate the 2001 claims despite them. Furthermore, the plaintiffs said, it would be inconsistent with the objective of avoiding multiplicity of proceedings for the plaintiffs to be forced to run two actions in succession, one attacking the 2004 agreements and consent orders and the other - initiated and pursued only if the first were successful - pursuing the claims concerning the procuring of the 2004 agreements by the alleged deceptive conduct and the principal claims concerning breaches of duty in relation to the joint venture. The Associate Judge's decision 19 In his judgment of 24 August 2007, the Associate Judge dismissed the claims of the applicants (present appellants) to have the relevant parts of the 2007 statement of claim struck out or dismissed. He began by referring to the settlement of the 2001 proceedings: "Eventually there was a resolution of the matter which included the parties entering into a deed of agreement dated 13 May 2004 and a non-dilution and merger deed dated 27 August 2004, and those agreements dealt with the conclusion of those earlier proceedings. In clause 2.1 of the Heads of Agreement it was provided: 'In consideration for Zdrilic partially releasing the debt due by LEC to Zdrilic secured by a charge over assets of LEC, and at the request of Zdrilic, LEC shall discontinue the proceedings against HTT and Hickey and Grant and receive mutual releases in respect of the subject matter of the proceedings.' There were also in clause 2.3 releases granted of claims, various indemnities in clause 2.4 and the withdrawal of the caveat which prompted the litigation in the first place." 20 His Honour later referred to the fact that, although the quoted paragraph of the parties' agreement had provided for discontinuance of the 2001 proceedings by HTT, the operative order actually made was an order of dismissal. 21 After referring in the claims in the 2007 proceedings to have the 2004 agreements and consent orders set aside, the Associate Judge said: "As becomes apparent from the factual pleading that appears later in the document, this is a claim which is made for damages and it is independent of the claim to set aside the agreements. It is a claim for damages based upon the fraud alleged in the misrepresentations that were made and said to have induced the relevant agreements. The pleading is quite specific in terms of relief because it goes on in these terms: 'The first plaintiff LEC claims against the first defendant subject to and conditional upon this honourable court granting any of the relieve [sic] sought in paragraphs 1 to 5 above, the following relief." There are then set out claims for accounts, equitable damages etc. A similar type of conditional claim is made against the third defendant, Mr Hickey, who has not brought proceedings yet to seek to strike the matter out. The basic thrust of the amended notice of motion is that the claims which are made in paragraphs 1 to 24 of the pleadings, which are basically claims that were made in the earlier proceedings which were dismissed pursuant to the agreement, should be struck out. From paragraph 25 on in the amended statement of claim one comes across the other claims relating to the misrepresentation that found both the fraud claim and also the claim to set aside the agreement." 22 His Honour then referred to the basis on which the application before him was advanced: "The basis for setting aside paragraphs 1 to 24 is simply that there is res judicata in that the same issues were raised in the earlier proceedings and that, therefore, one cannot raise the issues again until such time as the order for the dismissal of the proceedings has been set aside. The terms of the agreement I have quoted above provided for the earlier proceedings to be discontinued. In fact, it appears there was a dismissal, but the substance of the claim is that because of the existence of the dismissal, and it being by consent, there is in fact res judicata." 23 The Associate Judge went on to say that there were "problems" with that claim and that he had been referred to many authorities that would indicate that consent orders for dismissal "may lead to res judicata". He then said: "Whether it does in this instant case might depend upon a finding relating to the consideration of the circumstances surrounding it, but at least it is plain that there is a substantial argument that there would be res judicata at this stage until such time as the judgment is set aside. That may well be so, but the argument for the defendants on the strike out application is in effect that no such claim to which there might be an answer of res judicata can be raised in the present proceedings and that any such raising of such matters should await until the conclusion of the present proceedings seeking to set aside that earlier decision." 24 His Honour then quoted a passage from the judgment of Giles JA (with whom Santow JA and Ipp JA agreed) in Markisic v Department of Community Services of New South Wales (No 2) [2006] NSWCA 321 to which it will be necessary to return. 25 The Associate Judge considered "very superficial" the proposition that, in the present case, there was an attempt to impugn the 2004 orders otherwise than by challenging their validity. He continued: "Plainly, if there is to be a claim for relief which has been forgone in the earlier proceedings, the earlier proceedings have to be set aside on the basis of fraud. In my view there are a number of good reasons why it is appropriate to incorporate that claim to set aside, along with the claims which may be made consequent upon that being set aside. One of the matters is, of course, that the proceedings are wider than between the original parties. The second and third plaintiffs were not plaintiffs to the original proceedings, and there would be no res judicata in that regard. It also seems to me that section 63 of the Supreme Court Act is relevant, and it provides: The Court shall grant, either absolutely or on terms, all such remedies as any party may appear to be entitled to in respect of any legal or equitable claim brought forward in the proceedings so that, as far as possible, all matters in controversy between the parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of those matters avoided. The other reason why it might be important to also have the claims brought on a conditional basis is that there may be statutes of limitation running, and it would seem to me there may be good reasons why as a matter of principle, if one does intend to set aside the judgment and seek the same relief again, that one ought to do it in the same proceeding. There are, of course, other parties involved other than those defendants who have brought the present motion and, accordingly, that also has an effect. The difficulties which the plaintiffs could face if they do not bring the additional claims consequent on the setting aside of the orders in the present case also arise because they may be subject to a claim for Anshun estoppel. It could be said afterwards if they only brought the proceeding to set aside the judgment that they could have followed the course that they are following now. That may well be the position that might be taken by Mr Hickey, he not having brought this present motion. I think that having regard to these procedural matters that it is better for the proceedings to deal with all of the matters at once, and this means that I should not address the helpful and somewhat extensive argument on nature of res judicata in the present circumstances. In my view it would be quite inappropriate to strike out the balance of the proceedings other than the claim to set aside the agreement. It is said that there will be a substantial burden on the defendants because they will have to plead to the case. The substantive case that is also made relates to the claim that is made for setting aside. In this case, where virtually the same claims are made as were made before, I do not see that is any substantial burden. The parties are aware of the issues in the earlier case and there is no reason why those issues cannot now be addressed. It is plain, of course, that one would expect the defendants to preserve their position in respect of the argument about res judicata by pleading matters of defence in the event that the Court does not set aside the agreement. In my view that is the most expeditious way for the matter to proceed. It may be there is a separate case for determining the issue about setting aside the judgment, but I think that is a matter the parties can addressed [sic] at a later stage. I think that can occur when the pleadings are closed and no doubt at that time the parties can address that issue." The approach on appeal 26 Before proceeding to consider the grounds of appeal and the submissions advanced on appeal, I should note that the appeal is, by virtue of s 75A of the Supreme Court Act 1970, by way of rehearing. There is, in the particular context, the important point that it is an appeal challenging a discretionary decision made by an Associate Judge on a matter of practice and procedure. The discretion his Honour exercised was one that fell to be exercised having regard to all the circumstances of the case. The guiding principle in appeals of this kind is stated in the judgment of Santow J in Westpac Banking Corporation v Abemond Pty Ltd (unreported, NSWSC, 3 November 1994): "In this regard there is no dispute as to the applicable principles for such a review, namely that an appeal from the Master to a single Judge is not a re-trial in any sense but an appeal. Further that upon the appeal the normal and usual principles as to review of findings of fact or exercise of discretion are applicable so that, on such an appeal, if no fresh evidence is called to warrant a departure from a Master's primary finding of fact, those findings of fact are binding on the Court hearing the appeal. This is unless those findings, or the inferences drawn from them, are so flawed as to lead to their being set aside, in the same way and with the same limitations, as the Court of Appeal would examine the exercise of a discretion by a Judge, that is to say in the manner set out in House v R (1936) 55 CLR 499 at 504 , 505." 27 The passage in House v R [1936] HCA 40; (1936) 55 CLR 499 (at CLR 504-5) thus referred to is the following passage in the judgment of Dixon, Evatt and McTiernan JJ: "The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred." 28 The fact that the discretionary decision is a decision on a matter of practice and procedure makes particularly pertinent the following observations of Gibbs CJ, Aickin, Wilson and Brennan JJ in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 (at CLR 177): "Nor is there any serious dispute between the parties that appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure. Counsel for Brown urged that specific cumulative bars operate to guide appellate courts in the discharge of that task. Not only must there be error of principle, but the decision appealed from must work a substantial injustice to one of the parties. The opposing view is that such criteria are to be expressed disjunctively. Cases can be cited in support of both views: for example, on the one hand, Niemann v Electronic Industries Ltd [1978] VR 431 at p 440; on the other hand, De Mestre v A D Hunter Pty Ltd (1952) 77 WN (NSW) 143 at p 146. For ourselves, we believe it to be unnecessary and indeed unwise to lay down rigid and exhaustive criteria. The circumstances of different cases are infinitely various. We would merely repeat, with approval, the oft-cited statement of Sir Frederick Jordan in In re the Will of F B Gilbert (dec) (1946) 46 SR (NSW) 318 , at p 323: … I am of opinion that, … there is a material difference between and exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal. See also, Brambles Holdings Ltd v Trade Practices Commission 28 ALR, at p 193; Dougherty v Chandler (1946) 46 SR (NSW) 370, at p 374. It is safe to say that the question of injustice flowing from the order appealed from will generally be a relevant and necessary consideration." 29 These principles have been frequently and consistently applied. Reference may be made to, for example, the decision of the Court of Appeal in Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd [2005] NSWCA 331 where Handley JA said: "The claimant has not established that the Judge's exercise of discretion miscarried. The errors that have been identified are not material and do not vitiate his exercise of discretion. The principles in House v R (1936) 55 CLR 499, governing appellate review of the exercise of a judicial discretion, apply with special stringency in appeals, such as the present, from a discretionary judgment in a matter of practice and procedure: Adam P Brown Male Fashions Pty Ltd v Phillip Morris Incorporated (1981) 148 CLR 170 , 176-7. In my judgment the claimant has failed to establish error and this Court is not entitled to interfere and re-exercise the discretion." 30 It is significant that, in this passage, Handley JA says that the appellate tribunal is "not entitled to interfere and re-exercise the discretion" where the appellant fails to establish error. By "error", he obviously meant error other than any which he said were "not material and do not vitiate his exercise of discretion". The appellants' case on appeal 31 The appellants contend that, in declining to confine the 2007 proceedings to the question whether the 2004 agreements and the consent orders should be set aside, the Associate Judge erred because (a) he failed to recognise and accept that the claims in the second group, that is, the claims for damages based on the alleged deceptive conduct said to have attended the making of the 2004 agreements and consent orders, could not be advanced while those orders remain extant; (b) he failed to recognise and accept that any right or ability of LEC to advance the claims against HTT and Hickie based on alleged breach of duty by Hulley and Hickie (and complicity therein of HTT), that is, the claims in the third and fourth groups, is precluded by the order of dismissal made in the 2001 proceedings; and (c) by taking into account the circumstance that the 2007 proceedings are "wider" than the 2001 proceedings (because there are more defendants), he acted upon a consideration that was misplaced. 32 The appellants say, in essence, that the Associate Judge treated the application before him as involving matters of case management whereas, in reality, it was concerned with a prior adjudication and its effect. Ground (a) 33 I deal first with the proposition that, because the 2004 consent orders remain extant, there can be no claim for damages based on the allegedly deceptive conduct said to have induced consent to the making of those orders. The appellants say that such claims for damages (being the claims in the second group) may be pursued only if and when the 2004 consent orders have been set aside, so that the claims in the first group must be determined before those in the second group. 34 In addressing this proposition, it is necessary to refer to a number of decided cases. The first is the decision of the High Court in Cabassi v Vila (1940) 64 CLR 130. A plaintiff had maintained an action for damages for assault in a Magistrates Court. Judgment was given for the defendant. An appeal to the Supreme Court of Queensland was dismissed with costs. The unsuccessful plaintiff then brought a new action in the Supreme Court against certain persons who had been witnesses in the Magistrates Court. She alleged that they had given false evidence and had conspired to cheat and defraud her, in consequence of which the judgment in the Magistrates Court had been obtained by fraud. She sought a declaration to that effect, an order setting aside the judgment and related orders, damages for fraud and, in respect of the alleged assault, either damages or an order that there be a new trial. 35 The Full Court of the Supreme Court allowed a demurrer and ordered judgment for the defendant in the new action. The plaintiff appealed to the High Court. The leading judgment was delivered by Williams J. He regarded it as essential to the plaintiff's cause of action for damages for fraud that she allege in her statement of claim that the proceedings terminated in her favour. Williams J referred to The Metropolitan Bank Ltd v Pooley (1885) 10 App Cas 210. The headnote to the report of that case reads: "A bankrupt whose adjudication in bankruptcy has not been set aside cannot maintain an action for maliciously procuring the bankruptcy; and such an action may be summarily dismissed upon summons as frivolous and vexatious." 36 The Lord Chancellor drew an analogy with malicious prosecution (at 216-217): "An action for malicious prosecution cannot be maintained until the result of the prosecution has shewn that there was no ground for it. If a man has been tried and convicted on that prosecution, and there is no writ of error brought and no reversal of the decision, such an action will not lie. And it is manifestly a matter of high public policy that it should be so; otherwise the most solemn proceedings of all our Courts of justice, civil and criminal, when they have come to a final determination settling the rights and liabilities of the parties, might be made themselves the subject of an independent controversy, and their propriety might be challenged by actions of this kind. It is therefore clear (and the learned counsel for the respondent found a difficulty in denying it in the course of his argument) that on that ground, namely, causing the plaintiff to be fraudulently and without reasonable cause adjudicated a bankrupt, there can be no pretence for the action." 37 Williams J, in Cabassi v Vila, applied the same principles. He said (at CLR 148): "When the statement of claim was filed there was in existence a binding judgment against the appellant in favour of Ferrando. Until rescinded the appellant could not have taken any civil proceedings against Ferrando which impugned the judgment except to challenge its validity. The appellant claims to have suffered damage because the judgment was procured by the false evidence of the defendant and his witnesses, but it is a maxim that actus legis nemini facit injuriam. While the judgment stood no averment could be permitted against it, otherwise the judgment would be 'blowed off by a side wind' ( Vandenbergh v. Blake [157] ; Barber v. Lesiter [158] ; Huffer v. Allen [159] ; Wildes v. Russell [160] , at p. 746)." 38 I refer also to Cachia v Westpac Financial Services Ltd [2005] NSWCA 239, where leave to appeal was refused in respect of an order of summary dismissal of proceedings alleging that a Federal Court judgment that proceedings be dismissed with costs had been procured by fraud and seeking damages for the loss of the Federal Court cause of action and the damage occasioned by the adverse costs order. Hodgson JA (with whom Giles JA agreed) said (at [2]): "The claimant says the Master was mistaken in his reasons for dismissing the proceedings, because the Master said incorrectly that he was attacking the Federal Court decision whereas he was not doing so. However, the difficulty with that submission is that the claimant cannot obtain damages on the basis that he has lost the value of his Federal Court cause of action or that he should not have been ordered to pay the costs of those proceedings, without having the Federal Court decision set aside, because unless and until that decision is set aside it conclusively establishes that his cause of action had no value and that he was properly ordered to pay costs. Furthermore, aggravated punitive and exemplary damages cannot be recovered in a cause of action for fraud unless some ordinary compensatory damages are established." 39 Both Cabassi v Vila and Cachia v Westpac Financial Services Ltd were referred to in Markisic v Department of Community Services of New South Wales (No 2) (above). In that case, a plaintiff alleged that conduct leading to the making of certain orders by the Family Court had been wrongful as regards him. On that basis, he sued for damages for harm suffered by him in consequence of the orders. Giles JA said (at [45]): "The orders of the Family Court were valid unless and until set aside, and if what was done was authorised by the orders Mr Markisic could not collaterally attack them by complaining of conduct whereby they were obtained, or say that any harm he suffered was caused by wrongfulness in the conduct leading to the making of the orders." 40 His Honour also said (at [50]): "Mr Markisic did not claim as damages the loss of the value of a cause of action, but the damages he claimed all came back to his loss of Elena; and that loss, if authorised by the orders of the Family Court (and subject to their proper implementation), is not a loss of which he can complain. A cause of action for breach of a duty of care or statutory duty or other alleged wrongfulness in the conduct leading to the making of the orders can not be maintained while the orders remain." 41 All these cases were considered by the Queensland Court of Appeal in Schepis v Esanda Finance Corp Ltd [2007] QCA 263. The plaintiffs in that case sued in the Supreme Court of Queensland for damages for reduction in value of a business and losses incurred in meeting a judgment debt and legal expenses and costs. The consequences in respect of which the plaintiffs sued were the product of an action which had been prosecuted to judgment in a New South Wales Local Court. It was alleged that the judgment had been procured by fraudulently concocted evidence. The Court of Appeal dismissed an appeal against summary judgment for the defendants in the action. Holmes JA (with whom McKenzie J and Atkinson J agreed) said (at [16]): "[I]t cannot avail the appellants to say that the judgment might later be set aside; and in any event, there is nothing referred to which would suggest that any proceedings that might produce that result are on foot. Even if a judgment obtained by collusion may in theory be regarded as a nullity, it will still be necessary to prove the alleged collusion in separate proceedings." 42 It is clear from the decided cases that a court will not entertain the proposition that an extant judgment of another court was obtained by fraud and that the party adversely affected by the judgment is entitled to damages accordingly. An essential first step is that the judgment be set aside. 43 In the present case, the relevant prior adjudication (the 2004 consent orders) is an adjudication of this court; and it is in this court that the plaintiffs in the 2007 proceedings bring their action for damages for the alleged deceptive conduct said to have induced consent to and the making of the orders. The case is not one in which the court asked to entertain the action for damages has no power to set aside the earlier adjudication. On the contrary, this court has jurisdiction both to set aside the 2004 consent orders made in the 2001 proceedings and to award damages for any actionable wrongs by which the orders may have been procured. The question then is whether claims directed towards both those ends may be entertained and litigated together in the one action, or whether there must be two actions - one dealing with and determining an application for an order that the 2004 consent orders (and the agreements involved in the 2004 settlement) be set aside and another, commenced subsequently and only if the first is successful, in which the claim for damages is pursued. 44 There are clear indications that the two claims may be progressed together where, as here, a single court has jurisdiction in both. I quote again from the judgment of Hodgson JA in Cachia v Westpac Financial Services Ltd (above), at [3]: "It is possible to bring proceedings to claim relief on the basis that a previous judgment has been obtained by fraud, but it is necessary in those proceedings to apply to have that judgment set aside, for the reasons I have given; so that ordinarily such proceedings have to be in the Court that actually made the judgment, at least if that Court is a superior court as is the Federal Court." 45 The words "in those proceedings" should be emphasised. 46 There is a like indication in the judgment of Starke J in Cabassi v Vila (above), at CLR 141: "But I am not clear that the Judicature Act and the Rules of Court in Queensland are not flexible enough to justify a proceeding to set aside the judgment and for damages for the conspiracy charged in this action (if maintainable) being joined in one and the same action: See Judicature Act 1876 (Q.), 40 Vict. No. 6, sec. 4 (8); Rules, Order 3, rules 1 and 5; Order 4, rules 1, 7 and 10. However, this submission on the part of Vila does not, in the view I take of the case, call for decision and I refrain from expressing any concluded opinion upon it." 47 It may well be that, in chepis v Esanda, the Supreme Court of Queensland had jurisdiction to set aside an order of the Magistrates Court, being an inferior Queensland Court. The circumstances were thus different from those considered in Cachia, Markisic and Schepis where, clearly enough, the Supreme Court of a State had no jurisdiction to set aside an order of a federal court or a court of another State. Conclusion on ground (a) 48 My conclusion with respect to ground (a) at paragraph [31] above is accordingly that the claims in the second group directed towards obtaining an award of damages for alleged deceptive conduct in relation to the procuring of the 2004 settlement agreements and consent orders can properly be pursued in the same proceedings as claims to have the agreements and consent orders set aside. 49 An application to set aside a judgment or order on the ground that it was obtained by fraud should be made in proceedings separate from those in which the judgment or order was made: see Ritchie's Uniform Civil Procedure (NSW), para 36.15.20. Pursuit of the claims in the first and second groups in this present proceeding initiated in 2007 is permissible and appropriate and the Associate Judge was correct in taking that view. Ground (b) - the "merger" question 50 In approaching the balance of the appeal and the questions related to the claims in the third and fourth groups, I should deal at once with two preliminary matters. The first is the contention initially advanced by the appellants, but later abandoned, that the causes of action pleaded by HTT in the 2001 proceedings "merged" in the dismissal order made on 1 September 2004. 51 The true effect of an order of dismissal is that, because the plaintiff has failed to establish its cause of action, "there is nothing to merge in the judgment": Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543 at 556 per Clarke JA - a proposition accepted by Gummow J in Trawl Industries Pty Ltd v Effem Ford Pty Ltd (1992) 36 FCR 406. Because the cause of action has been found not to exist, it does not merge in the judgment: Thoday v Thoday [1964] P 181 per Diplock LJ at 197-198. As Clarke JA also said, "the doctrine of res judicata operates as a true estoppel". 52 In the present case, the causes of action advanced in the 2001 proceedings were not extinguished by the 2004 consent orders but the LEC, as the plaintiff in those proceedings, cannot recover judgment upon them while the orders remain in force. Ground (b) - provisions of the rules 53 The second preliminary matter concerns provisions of the Supreme Court Rules 1970 that were in force when the orders of 1 September 2004 were made. It is common ground, I think, that the effect of the orders is to be determined by reference to the law as it then stood. 54 The first provision of the rules to be considered is part 40 rule 8(1): "Where under section 46(1)(b) and (c) of the Act (which paragraphs relate to dismissal of certain proceedings by a Judge of Appeal) or section 108(2) of the Act (which subsection relates to an order of the Court of Appeal where a verdict cannot be supported) or under these rules, except Part 51 rule 24(a) and (b) and Part 51AA rule 17(a) and (b) (which paragraphs relate to dismissal of an appeal by the Court of Appeal), the Court makes an order for the dismissal of proceedings or for the dismissal of proceedings so far as concerns any cause of action or the whole or any part of any claim for relief, the order for the dismissal shall not, subject to any terms or conditions on which the order for dismissal is made, prevent the plaintiff or claimant from bringing fresh proceedings or claiming the same relief in fresh proceedings." 55 For present purposes, the various exceptions mentioned at the start of the provision just quoted may be disregarded and the rule may be taken to commence: "Where … under these rules …, the Court makes an order for dismissal of proceedings …" 56 In a case where an order for dismissal of proceedings is made "under these rules", the plaintiff or claimant may, because of part 40, rule 8(1), bring fresh proceedings or claim the same relief in fresh proceedings, except to the extent that the right or ability to do so is qualified by "any terms or conditions on which the order for dismissal is made". 57 In speaking of an order for dismissal made "under these rules", part 40 rule 8(1) obviously had in contemplation cases where proceedings are dismissed because they are frivolous or vexatious, or where the plaintiff does not appear or diligently prosecute the proceedings, as well as other cases explicitly dealt with by rules allowing dismissal. Such special cases dealt with by provisions of the rules are, clearly enough, cases in which an order for dismissal is made "under these rules". 58 The present case is not a special case of the kind to which I have referred. The dismissal order of 1 September 2004 was made, in essence, because all the parties affected by it wished it to be made and asked the court to make it. That, however, may, on one view, be sufficient to have caused the order to be one made "under these rules", for the purposes of part 40 rule 8(1). This is because of part 34 rule 6A: "The Court, on the application of any party making a claim for relief in any proceedings, may, at any time but, in the case of trial with a jury, before verdict, make an order, on terms, for the dismissal of the proceedings so far as concerns any cause of action or the whole or any part of any claim for relief made by him." 59 There arises from this rule a possibility that every order for dismissal, made by consent (and thus with the concurrence of the claimant) in relation to any cause of action or the whole or any part of any claim for relief, was, in terms of part 40 rule 8(1), made "under these rules", because made "under" part 34 rule 6A. That possibility was raised but not resolved by Hamilton J in Ferella v Otvosi [2005] NSWSC 678. His Honour said at [15]: "The only argument that occurs to me, that would avoid Part 40 r 8 having this effect, is that the dismissal was not a dismissal under the rules, and therefore not within the ambit of Part 40 r 8. However, Part 34 r 6A of the SCR provides that the Court on the application of any party making a claim for relief may at any time make an order for the dismissal of the proceedings so far as concerns any cause of action or any claim for relief. In my view the plaintiffs in this case, within the meaning of Part 34 r 6A, applied for the dismissal of the proceedings, so far as the subsequent prayers were concerned, by joining in asking the Court by the consent orders to dismiss the proceedings in relation to those prayers. In any event, this argument was not put to me." 60 I am not persuaded that part 34 rule 6A was activated or relied upon in the present case. The rule is concerned, in terms, with an application for a dismissing order made by "any party making a claim for relief". It deals, in my view, with the situation where the claimant alone decides not to press a particular claim and asks for it to be dismissed. A claimant in that position would often take steps to discontinue, a process which clearly leaves the relevant cause of action intact. But, as is pointed out at para 12.1.10 of Ritchie's "Uniform Civil Procedure (NSW)", an alternative, under the present Uniform Civil Procedure Rules 2005, is to resort to rule 29.8 which is in terms generally corresponding with those of the former part 34 rule 6A. The purpose of part 34 rule 6A was, it seems to me, to place a claimant seeking to withdraw unilaterally by means of an application for an order for dismissal in the same position as a claimant seeking to withdraw unilaterally by discontinuance. 61 It follows that, if an order for dismissal is made by consent of all affected parties (that is, the claimant and all parties against whom the relevant claim has been brought), the case is not within part 34 rule 6A. It is, rather, a case in which all those parties have agreed that the dismissal is to be of the same force and effect as if there had been a hearing on the merits. An order for dismissal after such a hearing is clearly capable of raising an estoppel despite part 40 rule 8: Newmont Pty Ltd v Laverton Nickel NL (No 2) [1981] 1 NSWLR 221. 62 I am thus of the opinion that the provisions of the Supreme Court Rules in force when the consent orders were made on 1 September 2004 did not affect the question whether the causes of action advanced in the 2001 proceedings could be re-asserted. That question is to be determined by reference to general law principles unaffected by those rules of court. Ground (b) - the capacity of consent orders to raise an estoppel 63 It is well established that orders made by consent may create an estoppel and that, in this respect, an order of dismissal is no different from any other order. In Re South American and Mexican Co; Ex parte Bank of England [1895] 1 Ch 37 at 45, Vaughan Williams J said: "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." 64 In Isaacs v Ocean Accident and Guarantee Corporation Ltd (1957) 58 SR (NSW) 69 at 75, Street CJ and Roper CJ in Eq said: "It is clear that the mere fact that the judgment is by consent does not detract from its conclusive effect upon the issues determined by it: Re South American and Mexican Co; Ex parte Bank of England . But a judgment operates by way of estoppel only as to those matters which are necessarily decided by it. (Cf Blair v Curran ; Jackson v Goldsmith .) '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, para 34). Again, at p 114, para 174, the learned author says: 'In the case of judgments and orders by consent … it is absolutely essential to refer to the pleadings or affidavits of the parties, if the judgment or order is in a naked and general form, in order to ascertain what, if any, decision of particular questions or issues was impliedly consented or submitted to by the party against whom such consent … judgment or order was made'." 65 Whether an order of dismissal in a proceeding acts as a bar to the pursuit of a later proceeding depends on whether the causes of action in the two are the same. In the Macquarie Bank case (above), Clarke JA said that what is necessary is: "… 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." Conclusion on ground (b) 66 The plaintiffs recognise that, while the 2004 consent orders stand, they cannot obtain the relief involved in the claims in the third and fourth groups. It is for that reason that those claims are advanced on the conditional basis: "Subject to the Court granting the relief in paragraphs 1 to 5 above …". The plaintiffs thus say, in effect, that if the settlement agreements and consent orders of 2004 are not set aside, they do not press the claims in the third and fourth groups; but if the agreements and orders are set aside, those claims are pressed. 67 This, it seems to me, gives rise to a fundamental difficulty. Let it be assumed that the plaintiffs succeed in their claims to have the agreements and consent orders of 2004 set aside. At that point, those consent orders will no longer have effect. The claims in the 2001 proceedings that were dismissed by the 2004 orders (that is, the claims by LEC against HTT and Hickie) will be seen to be unadjudicated and extant. It will be open to LEC to continue the 2001 proceedings and to prosecute them to judgment upon the causes of action there pleaded against HTT and Hickie. 68 In the meantime, however, LEC will have prosecuted to finality in the 2007 proceedings what are in substance and in reality the very same causes of action against HTT and Hickie; and they will have done so in circumstances where to 2004 orders remain operative as the source of an estoppel. 69 If the 2007 proceedings proceed to finality in the way the plaintiffs wish and those plaintiffs are wholly successful, the position will be that the 2004 consent orders are set aside and LEC recovers judgments for an account or equitable compensation or damages against HTT and Hickie upon the claims in the third and fourth groups - but the 2001 proceedings will be pending in such a way that claims by LEC for the same relief on the same grounds against the same persons are outstanding and unresolved. 70 The plaintiffs cannot be allowed to proceed in that way. The 2001 claims have been laid to rest by the 2004 orders. Those claims may be pursued again if the 2004 orders are set aside. But they may not be pursued again unless and until the 2004 orders are set aside. In particular, they cannot be pursued as new but equivalent or corresponding claims in the 2007 proceedings in the contingent way in which they are advanced. Only if the barrier, by way of estoppel, created by the 2004 orders is removed can the claims of the third and fourth groups in the 2007 proceedings be litigated. 71 I am accordingly of the opinion that the Associate Judge's discretion miscarried when he allowed the 2007 proceedings to continue on the footing that determination of the claims of the third and fourth groups should be allowed to progress in company with and contemporaneously with the determination of claims in the first and second groups. The claims in the first and second groups should proceed to trial without those in the third and fourth groups. Then, if the 2004 orders have been set aside so that the claims in the 2001 proceedings by LEC against HTT and Hickie are seen to be unadjudicated and extant, the 2001 proceedings may be prosecuted to a conclusion by LEC against HTT and Hickie. If, on the other hand, the 2004 orders are not set aside, they will remain as the prior adjudication of the matters now sought to be ventilated by way of the claims in the third and fourth groups. Ground (c) 72 In relation to the proposition that the Associate Judge was in error when he took into account the fact that there are more defendants in the 2007 proceedings than there were in the 2001 proceedings (see item (c) at paragraph [33] above), I merely say that I do not see that as having been a matter on which his Honour's decision depended. Disposition 73 The 2007 proceedings may continue as to the claims in the first and second groups, but the claims in the third and fourth groups should be struck out. To that limited extent, the appeal should be allowed. 74 I direct that agreed short minutes giving effect to this decision be filed by delivery to my Associate within fourteen days. 75 If there is no agreement on the matter of costs, the respective submissions on costs should be reduced to writing and delivered to my Associate within the same period. **********