Canberra Advance Bank Limited (Merger) Act 1992 (ACT)

Gahahan Pty Limited (In liquidation) & Ors v Advance Bank of Australia Limited & Ors, ACTSC 118, 30 November 2001

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

Gahahan Pty Ltd v Dibeek Holdings Pty Ltd, unreported, Whitlam J, 21 October 1997

Stewart Maiden, Recent steps in the evolution of res judicata, cause of action estoppel and the Anshun doctrine in Australia, (2004) 25 (2) Aust Bar Rev 130

Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630

Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 at 360

In the matter of an appeal by Gaye Alexandra Mary Luck [2003] HCA 70, McHugh ACJ, Gummow and Heydon JJ, 4 December 2003

The Honourable Justice K R Handley: Res Judicata General Principles and Recent Developments (1999) 18 (3) Aust Bar Rev 214

Clairs Keeley (A firm) v Treacy [2004] WASCA 277

D A Christie Pty Ltd v Baker [1996] VicRp 89; [1996] 2 VR 582

National Parks & Wildlife Service v Pierson (2002) 55 NSWLR 315

Nominal Defendant v Manning [2000] NSWCA 80; (2000) 50 NSWLR 139

Latec Investments Limited v Hotel Terrigal Pty Ltd (In liq) [1965] HCA 17; (1965) 113 CLR 265

Forsyth v Blundell [1973] HCA 20; (1973) 129 CLR 477

Royal Brunei Airlines Sdn Bhd v Tan Kok Ming [1995] UKPC 4; [1995] 2 AC 378

Burger King Corp v Hungry Jack's Pty Ltd, NSWCA, unreported, 21 June 2001

1. The notice of motion of 8 April 2003 be dismissed with costs.

1. By a notice of motion filed on 8 April 2003, George Notaras and Anna Notaras, the first and second plaintiffs in these proceedings, seek to further amend their statement of claim in these proceedings. They also seek leave to bring proceedings on behalf of Gahahan Pty Ltd (Gahahan) and that Gahahan be added as a party to the proceedings. By a notice of motion filed on 8 October 2002, Dibeek Holdings Pty Ltd and Leda Holdings Pty Ltd, the second and third defendants, seek to have the proceedings dismissed as against them on the ground that the proceedings are vexatious and/or constitute an abuse of process that they have a good defence to the proceedings and/or the amended statement of claim (and the proposed further amended statement of claim) discloses no reasonable cause of action.

2. The proceedings giving rise to these applications were originally commenced by Gahahan as the first plaintiff, George Notaras as the second plaintiff and Anna Notaras as the third plaintiff against Advance Bank Australia Limited as first defendant, Dibeek Holdings Pty Limited (referred to as "Dibeek" or as the second defendant) and Leda Holdings Pty Limited (referred to as "Leda" or as the third defendant). By reason of the Canberra Advance Bank Limited (Merger) Act 1992 (ACT), the successor to Advance Bank Australia Limited is St George Bank Limited (referred to as either "the Bank" or as the first defendant).

3. On 30 November 2001, on the application of the second and third defendants, Miles CJ ordered that the proceedings insofar as they were brought by Gahahan be struck out and that the name of Gahahan be removed from the record (Gahahan Pty Limited (In liquidation) & Ors v Advance Bank of Australia Limited & Ors, ACTSC 118, 30 November 2001). George Notaras and Anna Notaras remained as plaintiffs and became the first and second plaintiffs in the action. The purpose of the plaintiffs' application before me is to reinstate Gahahan as a plaintiff. The second and third defendants (supported by the first defendant) say that such an application should not be permitted because of the doctrines of res judicata and issue estoppel. Alternatively, it is said that it would be an abuse of process for Gahahan to be added as a party. The second and third defendants also say that if Gahahan is not reinstated, it would be vexatious and oppressive and constitute an abuse of process for the proceedings to continue against them.

4. The plaintiffs' approach is to argue on the material before me the plaintiffs and Gahahan have a reasonable cause of action and they should be permitted to pursue it. That is done by referring to the extensive material by way of affidavit evidence and tender of documents that was placed before me detailing the circumstances surrounding the claims. This comprised affidavits of the first and second plaintiffs, solicitors acting for and on behalf of the first and second plaintiffs, the brother of the first plaintiff, a certified practicing valuer, a property consultant, licensed agent and valuer, solicitors acting for and on behalf of the first defendant, and various officers of the Bank. I also had placed before me various correspondence and documents, which were tendered by the parties for the purpose only of this application. At no stage was it put that the material placed before me could not, with the exercise of reasonable diligence, have been put before Miles CJ although some of the material was identified as not having been placed before him and some of the material, such as the valuations, were not brought in existence until after he had heard the matter.

Summary of the circumstances giving rise to the proceedings

5. Gahahan is owned and was controlled by the first and second plaintiffs. Gahahan was the owner of the Crown Lease of the Tuggeranong Markets (the Markets). That interest was mortgaged on 8 January 1990 to Civic Advance Bank Limited, one of the predecessors of the first defendant. The mortgage secured advances by the first defendant to Gahahan from time to time. The plaintiffs guaranteed the payment to the first defendant of monies owed to it. Gahahan defaulted in its obligations to make repayments of the loan and, by 1996, was indebted to the Bank for approximately $7m. The Markets are immediately adjacent to the Tuggeranong Hyperdome which is owned and operated by the third defendant. From 1994, some discussions took place between Gahahan and the third defendant with a view to selling the Markets to the third defendant. In September 1995, Gahahan had reason to believe that the third defendant might be prepared to purchase their property for a price of around $7m. In April 1996, Gortran Pty Limited (Gortran), a nominee company of the plaintiffs and other members of the Notaras family, entered into a contract with the first defendant to purchase the Markets for a sum of $3m in full discharge and satisfaction of the monies due and owing under the mortgage and guarantees. The contract included a provision for a 50/50 split of any profit arising from an on-sale to the third defendant in excess of $4.5m. That contract was rescinded on 26 April 1996. On 3 June 1996, the first defendant entered into possession of the Markets and appointed a managing agent. That appears to have provoked a number of offers from the family for either $2m or $3m plus 50% of the sale price to the third defendant above $4.5m. On 13 September 1996, the first defendant entered into a conditional contract for the sale of the Markets with the third defendant for $6m. A due diligence period of 150 days was provided and there were other conditions to be fulfilled. The first defendant's solicitors informed the plaintiffs' solicitors of this contract by letter dated 18 September 1996. On 16 October 1996 a proposal was made by the plaintiffs in association with Emmanuel Notaras that support would be given to the third defendant's application for the development of the Hyperdome and the withdrawal of claims in relation to leases over parts of the market on the payment of $3m together with the forgiveness of the residual debt owing under the mortgage. After this proposal it is understandable that the Bank did not seek to further treat with either the plaintiffs or the Notaras family. Further negotiations took place between the first defendant and the third defendant ratcheting down the amount that the third defendant was prepared to pay for the Markets to $4m but always subject to conditions. On 9 December 1996 the third defendant rescinded the conditional contract to purchase the Markets for $6m. No advice of this was given to the plaintiffs. In January 1997, without informing the plaintiffs, the third defendant negotiated on the basis of sale to its nominee, the second defendant, undertaking the purchase and after pressure from the first defendant that negotiations would be reopened with the Notarases and another party. On 5 February 1997 the first defendant entered into, and completed a contract for the sale of the Markets to the second defendant. It also assigned the guarantees given by the first and second plaintiffs to the second defendant.

6. On 8 April 1997, Dibeek served a statutory demand on Gahahan as the assignee of the debt owed to the Bank under the mortgage. The amount owing under the mortgage less the sale proceeds left a residual debt of $3,725,671.41. In proceedings SC 281 of 1997, Gahahan claimed an order setting aside that demand. Those proceedings were filed on 28 April 1997. On 11 June 1997, Dibeek commenced an action by writ of summons and statement of claim against George and Anna Notaras to recover under the guarantees that had been assigned by the Bank, SC 407 of 1997. By originating application and statement of claim filed on 18 July 1997, these proceedings, SC 523 of 1997, were commenced. On 21 October 1997, Whitlam J determined Gahahan's proceedings to set aside the statutory demand (Gahahan Pty Ltd v Dibeek Holdings Pty Ltd, unreported, 21 October 1997). The ground upon which Gahahan sought to have the notice of demand set aside was the claim that there was a genuine dispute as to the existence or the amount of the debt. That dispute was said to arise out of these proceedings, SC 523 of 1997. Whitlam J had before him the originating application and the statement of claim filed on 18 July 1997. It should be noted that the originating application gave as particulars of the application the Bank's exercise of its power of sale as mortgagee in bad faith, the Bank's breaches of its duties of confidentiality and Leda's inducement of the Bank's breaches of duty. The statement of claim purported to give particulars of those matters. As well, there was what Whitlam J described as a "voluminous tender" of material. It is fair to say that much of the material put before me was before Whitlam J. Of significance was the internal email and file notes of the Bank's manager, Mr May, for the period preceding the sale. That material is particularly relevant to the allegations of bad faith that are made against the Bank. That material was given careful and detailed consideration and I do not see any need to repeat it here or to see that any of the material placed before me would cause me to differ from Whitlam J's conclusion in respect of it. In reaching the conclusion that he did that there was no genuine dispute, Whitlam J observed, at pp 18 and 19,

There is, however, not the slightest evidence that the Bank has sold at an undervalue. This case is the antithesis of a case such as Forsyth and Blundell [1973] HCA 20; (1973) 129 CLR 477, where Mason J said (at 510) that the mortgagee "determined willy nilly on a sale to [the purchaser] for a price which would cover the moneys owing to it". Mr May was plainly anxious to obtain the highest price that he could for the bank, which suffered a mighty loss on the loan. All of the matters raised in paragraph 21 of Mr Martin's affidavit in support of the application for preliminary discovery have now been clarified, and the additional evidence suggests no possible basis upon which the sale could be characterised as improper or irregular by reference to the particulars furnished in the statement of claim in proceedings number SC 523 of 1997. [my emphasis]

7. By notice of motion of 22 August 2001 the second and third defendants applied for an order that in respect of Gahahan the proceedings be dismissed on the ground that they are vexatious and/or constitute an abuse of process. That application relied upon the decision of Whitlam J as raising an issue estoppel, the Anshun principle (Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589) or an abuse of process. In the end, Miles CJ did not determine whether or not there was a res judicata or issue estoppel operating as far as Gahahan was concerned but he determined that the proceedings, if continued by Gahahan, would be an abuse of process. He said in Gahahan Pty Limited (In liquidation) & Ors v Advance Bank of Australia Limited & Ors (supra) at 4 [19],

In the end I have come to the conclusion that the proceedings, if continued by Gahahan, would be an abuse of process, since the decision of Whitlam J has already considered and decided in an authoritative but not binding way that Gahahan's claim against Dibeek has no substance.

In the result, Miles CJ ordered that the proceedings insofar as they are brought by Gahahan, be struck out and that the name of Gahahan be removed from the record.

8. The law has developed principles to ensure that issues once determined between the parties should not be relitigated. There is a need based on public policy for judicial determinations to be final, binding and conclusive. There is a recognised injustice in requiring individuals to litigate afresh matters already determined by the courts. The forms by which these principles are given effect are described by Stewart Maiden in an article, Recent steps in the evolution of res judicata, cause of action estoppel and the Anshun doctrine in Australia, (2004) 25 (2) Aust Bar Rev 130 at 132 as estoppel by judgment,

The term `estoppel by judgment' encompasses three principles which prevent a party to litigation in which a final judgment was given (or that party's privy) from raising in subsequent litigation an issue or cause of action which was, or which should have been, raised in the first proceedings (see, generally, Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 at 597-603 per Gibbs CJ, Mason and Aickin JJ; [1981] HCA 45; 36 ALR 3 (Anshun)). Those three principles are:

(a) estoppel by judgment (or res judicata);

(b) issue estoppel; and

(c) the `extended doctrine of res judicata' (known in Australia as the doctrine in Anshun, or Anshun estoppel).

9. In determining, as he did, that there was not a genuine dispute as to the amount of the debt owed by Gahahan to the second defendant arising from the power of sale exercised by the first defendant, Whitlam J expressly found no basis upon which the sale could be characterised as improper or irregular by reference to the particulars in the statement of claim in these proceedings. Those particulars which were said to support the claim of the sale being made in bad faith provided,

(a) in bad faith and, or in the alternative,

(b) in convention of Section 420A Corporations Law_._

Particulars of bad faith and contravention

(1) By reason of the breach of its duty of confidentiality any subsequent sale would be in bad faith.

(2) Selling at an undervalue.

(3) Not taking necessary and reasonable steps to obtain a proper price.

(4) Not advertising the property for sale.

(5) Failing to make any or any adequate attempt to obtain a purchaser other than Leda.

(6) Precluding itself from being able to obtain a purchaser other than Leda.

(7) Failing to attempt to make any proper attempt to obtain a price which it knew or ought to have known Leda was prepared to pay.

(8) Failing to get any or any proper advice in relation to the proposed sale.

(9) Failing to heed advice given in relation to the proposed sale.

(10) Taking advice from Jones Lang Wootton who were not and were known by it not to be independent of Leda.

(11) Sacrificing the interests of Gahahan and the Notaras' by dealing with Leda in secrecy and in haste.

(12) Sacrificing the interests of Gahahan and the Notaras' by not enabling Gortran Pty Limited or any other entity associated with the Plaintiffs the opportunity to purchase and take an assignment of the benefits of the mortgage and guarantees on the same terms as proposed by Leda.

(13) Sacrificing the interest of Gahahan and the Notaras' by enabling Leda to enjoy an exclusive and superior bargaining position with respect to the proposed sale.

(14) Sacrificing the interest of Gahahan and the Notaras' by accepting a lower price for its own internal accounting reasons.

(15) Failing to manage the Markets so as to maintain its attractiveness to purchasers other than Leda.

(16) Managing the Markets so as to suit the requirements of Leda.

...

10. It can be seen that the comprehensive nature of those particulars, if at all supported by any of the material before Whitlam J, could justify a triable issue on the allegation of bad faith. For this reason at least Miles CJ in Gahahan v Advance Bank (supra) at [17] took the view that he could take Whitlam J's decision into account in the following way,

At the very least, as I see it, the decision of Whitlam J is a matter of substance to be taken into consideration in two respects: first, as to deciding whether the proceedings, if allowed by Gahahan to progress, would amount to an abuse of process in the broadest sense, and, if so, secondly, in exercising the discretion whether to strike out or stay the claim by Gahahan (on which issue Dibeek and Leda bear the onus) or alternatively to order that the proceedings continue by Mr and Mrs Notaras in the name of or on behalf of Gahahan (on which issue they bear the onus).

11. Miles CJ chose to found his decision on the question of whether it was an abuse of process for Gahahan to maintain these proceedings in light of Whitlam J's decision. In Gahahan v Advance Bank at [15] he said,

Dibeek and Leda relied upon the decision of Whitlam J to raise what is called variously an issue estoppel, the Anshun principle (see Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1980-1981) 147 CLR 589 or an abuse of process. My attention was drawn to A-PAK Plastics Pty Ltd v Merhone Pty Ltd (1995) 17 ACSR 176, and other authorities, to support the submission that the decision of Whitlam J was final rather than interlocutory, alternatively that even if interlocutory, the decision nevertheless decided the issue or an issue that is determinative of the present applications. Alternatively again, it was submitted that even if no issue estoppel arises, the situation that has arisen is such that the present proceedings are an abuse of process as that concept has been developed in such decisions as Walton v Gardiner (1992-1993) 177 CLR 378.

12. It is clear that his approach was to take the latter course to which he referred and determine the matter on the question of whether the maintenance of the proceedings by Gahahan was an abuse of process. In Walton v Gardiner (1992-1993) 177 CLR 378 at 393, Mason CJ, Deane and Dawson JJ said,

Yet again, proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings.

It was maintained before me that the decision of Whitlam J constituted a final judgment "and probably itself gave rise to a res judicata". Having regard to the fact that Miles CJ based his decision on a consideration of the decision of Whitlam J, I consider that the proper approach that I should take is to have regard to Miles CJ's decision and its effect on the plaintiffs' present application rather than determine any possible issue of res judicata that could have been, but was not, determined by Miles CJ.

13. The first and second defendants say that the order made by Miles CJ is a final order which creates a res judicata or issue estoppel against Gahahan and precludes the bringing of any claim against the Bank's exercise of the power of sale.

14. The first and second defendants took the view that Miles CJ had dismissed the proceedings and that this action had the necessary degree of finality to found an estoppel. Reference was made to what Diplock LJ said in Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630 at 642,

Where the issue separately determined is not decisive of the suit the judgment upon that issue is an interlocutory judgment and the suit continues. Yet I take it to be too clear to need citation of authority that the parties to the suit are bound by the determination of the issue. They cannot subsequently in the same suit advance an argument or adduce further evidence directed to showing that the issue was wrongly determined.

A passage cited by Gleeson CJ, Gaudron, McHugh, Gummow, Hayne & Callinan JJ in Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 at 360 [57]. However, what was determined by Miles CJ was not an issue related to the final disposition of the proceedings, but rather a determination as to the course of the proceedings. The actual order made was that "the proceedings so far as they are brought by [Gahahan] be struck out" and that "the name of [Gahahan] be removed from the record". The language employed by Miles CJ can be said to be appropriate where what was intended was an order of dismissal or of a stay of the proceedings consequent upon an application that the proceedings were an abuse of process.

15. It is now clear that where a court stays or dismisses an action because the action is frivolous, vexatious or an abuse of the process of the court, that order is an interlocutory order. This matter was settled by McHugh ACJ, Gummow and Heydon JJ in In the matter of an appeal by Gaye Alexandra Mary Luck [2003] HCA 70, 4 December 2003 at [6] to [9]. The court said,

6. For more than a century, courts, including courts of the highest authority, have consistently held that an order staying an action on the ground that it is frivolous, vexatious or an abuse of process is an interlocutory order (In re Page; Hill v Fladgate [1910] 1 Ch 489; Hunt v Allied Bakeries Ltd [1956] 1 WLR 1326; [1956] 3 All ER 513; Tampion v Anderson [1973] VicRp 82; (1973) 48 ALJR 11; 3 ALR 414. And see Price v Phillips (1894) 11 TLR 86). In 1956 in Hunt v Allied Bakeries Ltd ([1956] 1 WLR 1326 at 1328; [1956] 3 All ER 513 at 514) Lord Evershed MR said:

"After consulting with the Chief Registrar and looking at the case[s], and also after consultation with my colleagues, I am left in no doubt at all that, rightly or wrongly, orders dismissing actions - either because they are frivolous and vexatious, or on the ground of disclosure of no reasonable cause of action - have for a very long time been treated as interlocutory."

7. The long line of cases to which Lord Evershed referred was confirmed in Tampion v Anderson ((1973) [1973] VicRp 82; 48 ALJR 11 at 12; [1973] VicRp 82; 3 ALR 414 at 416), a decision of the Judicial Committee of the Privy Council on a petition for special leave to appeal against orders of the Supreme Court of Victoria. In Tampion, the Judicial Committee held that orders staying actions for defamation and misfeasance of office on the ground that they were frivolous, vexatious and an abuse of process were interlocutory orders. Lord Kilbrandon, giving the advice of the Judicial Committee, said ((1973) [1973] VicRp 82; 48 ALJR 11 at 12; [1973] VicRp 82; 3 ALR 414 at 416) that "a consistent line of authority" left "no doubt" that such orders were interlocutory. His Lordship said ((1973) [1973] VicRp 82; 48 ALJR 11 at 12; [1973] VicRp 82; 3 ALR 414 at 417) that the "matter is really put beyond doubt" by Hunt ([1956] 1 WLR 1326; [1956] 3 All ER 513) and cited the above statement of Lord Evershed. When Tampion was decided, the Judicial Committee of the Privy Council was the final court of appeal for Australia for matters such as those involved in that case. Consequently, the advice of the Judicial Committee in Tampion was binding on all Australian courts including this Court.

8. Privy Council decisions no longer bind this Court. Moreover, no case in this Court has expressly decided that interlocutory orders include an order dismissing an action because it is frivolous, vexatious, an abuse of process or because it fails to disclose a reasonable cause of action. But a number of cases decided in this Court before and after Tampion are consistent with the view that an order falling within any of these categories is an interlocutory order. In Pye v Renshaw ((1951) [1951] HCA 8; 84 CLR 58 at 77), the Court held that an order dismissing a suit if no amendment were made to the statement of claim within 21 days was an interlocutory order. In Hall v Nominal Defendant ((1966) [1966] HCA 36; 117 CLR 423), the Court held that an order refusing an extension of time in which to sue was an interlocutory order. Taylor J referred ((1966) [1966] HCA 36; 117 CLR 423 at 440) with evident approval to the rule, established in England, that an order striking out a claim on the ground that it was frivolous, vexatious or an abuse of process or that it disclosed no cause of action was interlocutory in nature. In Carr v Finance Corporation of Australia Ltd [No 1] ((1981) [1981] HCA 20; 147 CLR 246), the Court held that an order of the Supreme Court of a State refusing to set aside a judgment obtained upon the default of the defendant in delivering a defence was an interlocutory order. In Bienstein ((2003) [2003] HCA 7; 195 ALR 225), the Court found that orders made by a single Justice (a) to dismiss an application to disqualify himself from hearing the application for removal, and (b) to remove particular causes pending in the Family Court into the High Court, were interlocutory orders.

9. Given the long established English rule, the decision in Tampion and our decisions in Pye, Hall, Carr and Bienstein, we see no valid reason for departing from the rule laid down in Tampion. An order is an interlocutory order, therefore, when it stays or dismisses an action or refuses leave to commence or proceed with an action because the action is frivolous, vexatious, an abuse of the process of the court or does not disclose a reasonable cause of action.

16. I consider that this decision of the High Court authoritatively determines the issue of whether Miles CJ's decision is interlocutory rather than final. I regard the application before Miles CJ to dismiss Gahahan from the proceedings and the order striking out the proceedings insofar as they were brought by Gahahan, a matter of practice and procedure. Subject to the abuse of process doctrine, the present application may be made as the decision of Miles CJ may be regarded as an interlocutory decision to which estoppel by judgment is not available (cf The Honourable Justice K R Handley: Res Judicata General Principles and Recent Developments (1999) 18 (3) Aust Bar Rev 214 at 215-216).

17. In this matter there are additional difficulties which apply to Gahahan as a consequence of its being a company in liquidation. To overcome these difficulties, the plaintiffs sought an assignment from the liquidator of any cause of action that Gahahan might have. As well, the plaintiffs sought leave to bring the proceedings on Gahahan's behalf. The second and third defendants would wish to challenge the assignment of any cause of action and that leave be given. These are matters that the parties agreed to defer until the issue be determined as to whether the application to amend should be permitted to proceed. I was, in effect, put on notice as to these issues in the event that the plaintiffs be given leave to amend and I do not need to consider them at this stage.

18. Although this present application may be made, there are important aspects of public policy to be considered having regard to the fact that, after a hearing on the merits, the plaintiffs have already had the opportunity to put the matters that are now said to be determinative of the present application.

19. In Clairs Keeley (A firm) v Treacy [2004] WASCA 277, the Full Court of Western Australia, Steytler, Templeman and McKechnie JJ, reviewed the law concerning an application to lift a stay of proceeding. The court said at [7] to [14],

[7] Because the order made by the Court in December 2003 was interlocutory, it is open to the plaintiffs to apply to lift the stay. However, on an application to vary an interlocutory order it is not generally permissible for the party against whom the order was made to re-argue the original application on the basis of material which was available then, but which was not put before the Court. As was said by the majority of the High Court in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170, at 178:

A further order will be appropriate whenever, inter alia, new facts come into existence or are discovered which render its enforcement unjust ....

[8] In Brimaud v Honeysett Instant Print Pty Ltd, unreported; SCt of NSW; Library No 3059; 19 September 1988, McLelland J said:

In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the Court on the hearing of the original application ...

[9] In Wentworth v Rogers, unreported; SCt of NSW; 9228 of 1982; 28 April 1995, noted in (1996) 70 ALJ 613, Sperling J expressed the point in the following way:

I hold that, as a general rule, an interlocutory order made after a hearing at which each side has the opportunity to put its case should not be set aside, varied or discharged, except to accommodate a change of circumstances or where evidence has become available which was not available at the earlier time. By the same token, where an application for interlocutory relief has failed, a further application for the same relief should, as a general rule, not be entertained, subject to the same qualifications, at least after a hearing on the merits, particularly where the application is designed to finalise the principal proceedings, such as an application for summary judgment or for a permanent stay.

[emphasis added]

[10] The principle was considered by the Court of Appeal in New South Wales in Nominal Defendant v Manning [2000] NSWCA 80; (2000) 50 NSWLR 139, where Mason P at [12] referred to the principle stated by McLelland J (and Sperling J to the same effect), as "a rule of practice".

[11] Mason P was of the view that where a second interlocutory application fell foul of the rule, there would be an abuse of process. Heydon JA, who agreed with Foster AJA, took a more relaxed view. Thus, Foster AJA regarded as "too extreme", the submission that:

...no second interlocutory application can be entertained unless there is a change of circumstances or unless evidence is relied on which could not reasonably have been obtained earlier.[at [72]]

[12] However, Foster AJA went on to say that the deliberate non-tender of evidence for use in a second interlocutory application, should the first fail might be "fatal to success"; and:

... even the non-deliberate ... failure to tender evidence is extremely risky.

[13] But ultimately, as McLelland J said in Brimaud v Honeysett Instant Print Pty Ltd (supra):

... the Court should do whatever the interests of justice require in the particular circumstances of the case.

[14] The rule was considered in Todd v Novotny [2000] WASC 308, where Parker J heard a renewed application for a Mareva injunction. The application was based on evidence which had been available when the first application was made, but which was not then adduced. His Honour said, at [18]:

... The formulation of the rule of practice propounded by McLelland J in the Brimaud decision, ... is expressly directed to interlocutory orders of a substantiative nature, although there is no elaboration which makes clear whether an application for a costs (sic, assets) preservation order is within his Honour's appreciation of such an order. The formulation of Sperling J in Wentworth v Rogers, which Mason P in Nominal Defendant v Manning at [12] did not see to involve any material difference from the formulation of McLelland J in Brimaud, referred initially to interlocutory orders made after a hearing inter partes but went on to regard the rule of practice as `a general rule ... particularly where the application is designed to finalise the principal proceedings, such as an application for summary judgment or for a permanent stay'. While this formulation does not confine its possible application to such applications designed to finalise the principal proceedings it appears to contemplate that the rule of practice might more readily not be applied to some other interlocutory applications. The view of the majority in Nominal Defendant v Manning would appear to leave it open as a matter of general discretion whether or not to allow a renewed interlocutory application.

[emphasis supplied]

20. I consider that the above extensive citation sets out the matters to which I should have regard for the purposes of determining this application. In particular, it indicates the considerations to which I should have regard in determining what the interests of justice might require in the particular circumstances of this case.

21. I add that in D A Christie Pty Ltd v Baker [1996] VicRp 89; [1996] 2 VR 582 at 605, which was an application to bring a second application for extension of time to bring an action, Hayne JA proposed that there be a limitation on such applications. He said,

So far as presently relevant that limitation is to be imposed by an application of principles concerned with abuse of process and in at least most cases may be resolved by concluding that a second application is an abuse unless there is proof of fraud or it is sought to adduce fresh evidence, "fresh", that is, in the sense in which that expression is used in connection with the admission of evidence on appeals.

22. In Nominal Defendant v Manning [2000] NSWCA 80; (2000) 50 NSWLR 139, the majority, Heydon JA and Foster AJA, declined to follow Christie (supra). Heydon JA said at 156,

The Nominal Defendant's proposition that no second interlocutory application can be entertained unless there is a change of circumstances or unless evidence is relied on which could not reasonably have been obtained earlier is too extreme, but a litigant bringing a second application where circumstances have not changed on evidence available earlier is facing serious and self-created risks of an adverse exercise of judicial discretion. The real evils to which Hayne JA referred in D A Christie Pty Ltd v Baker (at 602-603) - the risk of conflicting decisions, the unnecessary vexing of respondents, judge-shopping and the diminution of certainty in the conduct by respondents of their affairs - and others - damaging public confidence in the integrity of judicial decisions, expending time and money on litigation unnecessarily - are evils which each court in its individual discretion will rightly strain to avoid.

23. In Manning (supra), Mason P dissented preferring to agree with reasoning of Hayne J in D A Christie and his conclusion as evidencing a rule of practice. In National Parks & Wildlife Service v Pierson (2002) 55 NSWLR 315, Palmer AJA remarked at 318,

It should be remembered that the majority in Nominal Defendant v Manning differed from the President only to the extent that they would not, without more, hold it an abuse of process for an applicant to make a second interlocutory application on the basis of evidence which could reasonably have been adduced in the first application. But nothing said by their Honours could be construed as indicating a permissive or relaxed attitude of the Court to the bringing of more than one interlocutory application for the same order - indeed, quite the contrary: see, eg, per Heydon JA (at 156 [72]).

24. It may also be said that the denial of an extension of time in the circumstances of Manning's case would prevent any judicial examination of the applicant's subsequent claim. That was a strong factor in Heydon JA's view (at 156) when he said,

But the risk of the evils must be balanced against all the circumstances of the case relevant to whether it is fair and just that leave should be granted, and in particular whether a trial which is just and fair for all parties can be held.

In the case before me, the issue is whether Gahahan has a substantive claim at all and that seems to me to be a further factor in determining whether the plaintiffs should succeed in their application to amend in the face of objection that the application is an abuse of process.

25. In his submissions as to why I should entertain the application in the face of contentions as to it being an abuse of process, Mr Higgs SC, counsel for the plaintiffs, did not seek to rely upon a material change of circumstances or the discovery of new material which could not have reasonably been put before either Whitlam J or Miles CJ. Initially he referred to the valuation evidence that he had placed before me. In his decision in Gahahan Holdings v Dibeek (supra), I have already referred to Whitlam J's comment that "there is ... not the slightest evidence that the Bank has sold at an undervalue". That comment would seem to put the plaintiffs on direct notice to address that issue. That they did not do so in the proceedings before Miles CJ remains unexplained in the proceeding before me and I do not consider that justifies my reconsideration of that aspect. The fact is that all the valuation evidence at the time available to the Bank did not support a proposition that the Bank sold at an undervalue. Any later valuations do not alter that fact.

26. The other matters to which it was said that I should have regard in respect of the plaintiffs' application not being an abuse of process were addressed in the plaintiffs' written reply. In that reply, the point is made that certain of the allegations in the proposed amended statement were not allegations made in the statement of claim before Miles CJ. There is no explanation as to why they were not put to Miles CJ nor even some demonstration of patent obviousness as to their existence as facts that should have been earlier considered. In essence, those allegations seek to characterise as impropriety on the part of the Bank the fact that the Bank kept a commercial confidence with respect to its negotiations for the sale of its interest as mortgagee in possession. It is also said that the allegations are relevant to the issue of the Bank failing to promote competition between prospective purchasers. The only prospective purchasers identified were those of the plaintiffs in conjunction with other family members. Given the attitude of those prospective purchasers in seeking that the Bank pay $3m to them together with the forgiveness of the residual debt as their offer to conclude the matter, it is hardly surprising that the Bank did not seek to promote competition with them.

27. The plaintiffs further relied upon there being "additional evidence" now before the court. That submission does not claim that the evidence before the court was not available at the time of the proceedings before Miles CJ. Further, no explanation is given as to why it was not put to Miles CJ. The evidence is particularised in the written submissions by way of reply. The second and third respondents have responded to each of the assertions concerning this evidence. I set out the submissions and the response seriatim,

(a) · A valuation of the property as at 5 February 1997 from Mr Hornby. As observed in the judgment there was no valuation evidence adduced by the Plaintiffs.

(a) The plaintiffs wish to set up the valuation of Mr Hornby and the opinions of Mr Scott about marketing. There is nothing in their evidence, nor is there any other evidence, which indicates (nor do the plaintiffs even suggest) that this evidence could not readily have been procured years ago, and certainly by the time of the proceedings before Miles CJ (when the adequacy of the evidence was directly in issue). It is not suggested, and obviously could not be, that any of the material to which the plaintiffs refer in paragraph 3.3 could not with reasonable diligence have been adduced before Miles CJ. The assertion that such material was not available at that time is incorrect.

(b) In these proceedings the directors have given evidence about substantive matters. There was no evidence from Mr & Mrs Notaras nor Mr Emmanuel Notaras in the proceedings before Miles CJ.

(b) There is no suggestion that Mr & Mrs Notaras and Mr Emmanuel Notaras were not available to give evidence in the proceedings before Miles CJ.

(c) The belief that the contract price of $6m would be the subject of a downward negotiation at the time of the exchange of the conditional contract on 13 September 1996.

(c) The "belief" as to the contract price of $6m was known to the plaintiffs when Mr May swore his affidavit of 18 April 2000.

(d) 4 October 1996 letter from Clayton Utz to Mallesons enclosing leases etc.

(d) The letter of 4 October 1996 from Clayton Utz to Mallesons was discovered by Leda as Document 27 in a list of documents verified and filed in these proceedings on 16 February 1998.

(e) Bank memorandum of 19 November 1996 in relation to a conversation between Mr May and Mr Notaras concerning Mr Notaras' enquiry about developments and the report that there had been no progress at that time.

(e) The Bank's memorandum of 19 November 1996 refers to a conversation to which Mr Notaras was himself a party, and in any event was discovered by the Bank as Document 154 in its list of documents verified and filed in these proceedings on 4 February 1999.

(f) Letter from Clayton Utz to Mallesons 4 December 1996 enclosing valuations.

(f) The letter of 4 December 1996 from Clayton Utz to Mallesons was discovered by Leda as Document 13 in a list of documents verified and filed in these proceedings on 16 February 1998.

(g) The Bill May memorandum of 17 December 1996 was discovered by the Bank as Document 131 in its list of documents of 4 February 1999, and is referred to in the affidavit of Mr May sworn in these proceedings on 18 April 2001.

(h) The "feasibility studies" of Mr Keast were discovered by Leda as Document 46 in its list of documents of 16 February 1998; Documents 67, 69, 70, 72, 75, 77, 78, 79, 81, 82 and 83 in a supplementary list of documents verified and filed on 7 May 2001; and Document 89 in a further supplementary list of documents verified and filed on 27 June 2001.

(i) Letter Clayton Utz to Henry Davis York dated 2 January 1997.

(i) The letter from Clayton Utz to Henry Davis York dated 2 January 1997 was exhibited to the affidavit of Mr May sworn on 18 April 2001.

28. I consider that the responses to the plaintiffs' advancement of this evidence adequately show that there is no substance in the contention that this material would have caused either Whitlam J or Miles CJ to come to a different conclusion. As well, there is nothing that has been put before me to demonstrate why this material, if put earlier, would have resulted in a different conclusion being reached. My own consideration of the extensive material put before Whitlam J supplemented by the further material does not alter the view that Whitlam J took as to "the extraordinary roundabout way" in which Gahahan sought to make its case. That observation holds good as to all of the material that I have reviewed.

29. The plaintiffs' and Gahahan's claim has always been that the Bank exercised its power of sale in bad faith (see the originating application in these proceedings). The plaintiffs referred extensively to the judgments in Latec Investments Limited v Hotel Terrigal Pty Ltd (In liq) [1965] HCA 17; (1965) 113 CLR 265, Forsyth v Blundell [1973] HCA 20; (1973) 129 CLR 477, Royal Brunei Airlines Sdn Bhd v Tan Kok Ming [1995] UKPC 4; [1995] 2 AC 378 and Burger King Corp v Hungry Jack's Pty Ltd, NSWCA, unreported, 21 June 2001. No issue is taken with the principles established by those cases. It has always been open to the plaintiffs to plead the facts evidencing that the Bank acted in bad faith in not taking reasonable steps to obtain a proper price and, for these purposes, I take that concept to include recklessness (see Forsyth v Blundell (supra) per Mason J at 506). However, the facts reliant upon the material now before me and which the plaintiffs seek to plead, fall far short of establishing any allegation of bad faith, much less allegations of fraud or even any suggestion of collusive behaviour on the part of the defendants. The plaintiffs' difficulty in this case is in their complete failure to identify facts from which any such inferences may reasonably be drawn that the Bank acted in bad faith or that Leda or its nominee, Dibeek, colluded in the Bank so acting.

30. Although the plaintiffs sought to draw inferences from the extensive material before me to support what had originally been particularised as the Bank's exercise of the power of sale in bad faith, the gravamen of the plaintiffs' complaint is the alleged failure to communicate with the plaintiffs and other persons (referred to by the plaintiffs as the plaintiffs' family) as a prospective purchaser. That allegation is doomed to failure even if it is proper to consider such a grouping as a separate entity to Gahahan as the mortgagor. The extensive materials before me disclose no more than that some months after the Bank entered into possession of the property under the power of sale, the Bank had an offer from the mortgagor and those associated with it of $3m (probably requiring a bank loan of $1m) and an offer to pay the Bank 50% of any amount received from Leda, should there be a successful sale by those interests to Leda, within two years. That offer was conditioned upon the Bank discharging the mortgage which, at that stage, secured an indebtedness of upwards of $7m. In those circumstances, I do not see the question of competition between purchasers, that the plaintiffs place such store upon, as being an issue. The only "prospective purchaser" had made its offer and that offer was plainly inadequate. At the time, in face of that debt of $7m and the valuations of the property that the Bank had, the acceptance of an offer that was made by Leda in excess of those valuations and considerably in excess of the offer made by any prospective purchaser, just does not support allegations of bad faith or collusion in anything improper.

31. In all the circumstances, I am satisfied that it would be an abuse of process for the plaintiffs to amend their proceedings in the manner proposed joining Gahahan as a party to these proceedings and to make the allegations that are proposed to be made in the further amended statement of claim.

The plaintiffs' notice of motion of 19 December 2003

32. After this matter was argued on 13 November 2003, the plaintiffs filed a further notice of motion filed on 19 December 2003 seeking yet again to further amend their statement of claim. The amendments sought to deal with the liquidator's assignment of Gahahan's cause of action to the plaintiffs and to also deal with the objections that were made by the Bank to the allegations (not then particularised) of fraud and collusion made in the course of the plaintiffs' submissions. The defendants strongly objected to this course. A further document containing yet another amended statement of claim to that proposed by the notice of motion of 19 December 2003, was given to the parties just prior to the hearing of that notice of motion. The changes were, as far as I could see, an elaboration of the matters put to me in the earlier argument rather than the allegation of any new fact. In submissions before me on 31 May 2004, Mr Higgs accepted that the proper approach was to look to the further amended statement of claim, the subject of the notice of motion of 8 April 2003. He also accepted that no new fact was being pleaded that had not already been pleaded in that proposed amended statement of claim accompanying the motion of 8 April 2003. In those circumstances, I saw no utility in progressing the proposals made to substitute any of those documents for the proposed further amended statement of claim, the subject of the notice of motion of 8 April 2003. Accordingly, I dismissed the notice of motion of 19 December 2003 with costs.

The second and third defendants' notice of motion

33. As far as the second and third defendants' notice of motion of 8 October 2002 seeking that the proceedings be dismissed is concerned, it would seem that unless Gahahan has a cause of action against them, there is no cause of action between the plaintiffs and the second and third defendants. The success of Gahahan's action to set aside the sale under the mortgage would relieve the plaintiffs of this liability under the guarantees. Although I note that the statement of claim of 18 July 1997 claimed as against Leda, the third defendant, exemplary damages, a claim of that nature with supporting facts is not made in the proposed amended statement of claim. The claim for damages in the amended statement of claim is ambiguous in seeking an order for damages "whether at law, in equity, or pursuant to statute".

34. Further, I understand that in the event that the proceedings in SC 523 of 1997 are dismissed, the second and third defendants will not proceed in action SC 407 of 1997 to enforce the guarantees given by the plaintiffs and assigned to the second and third defendants. On 3 July 1998, those proceedings were consolidated with SC 523 of 1997. In light of the decision that I have now made, and in the event that the plaintiffs consent to proceedings SC 523 of 1997 being dismissed in total, I would also dismiss the second and third defendants' proceedings SC 407 of 1997 against the plaintiffs. Otherwise I will hear the parties further on this aspect.

35. I order that the notice of motion of 8 April 2003 be dismissed with costs. I will hear the parties further on the orders that I should make as to the second and third defendants' notice of motion of 8 October 2002.

I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Gray.

Counsel for the plaintiffs: Mr D Higgs SC with Mr F Assaf

Solicitor for the first defendant: Elrington Boardman Allport

third defendants: Mr M L D Einfeld, QC with Mr I M Neil