Consideration
70 The respondents' strike-out application is based on claims of Anshun estoppel and abuse of process. The respondents have the onus to establish an Anshun estoppel and/or abuse of process: see ASIC v Lindberg (No 2) (2010) 26 VR 355 at p 366.
71 Relevantly, the Court has the power to strike out pleadings in accordance with r 16.21 of the Federal Court Rules, which provides as follows:
Application to strike out pleadings
(1) A party may apply to the Court for an order that all or part of a pleading be struck out on the ground that the pleading:
(a) contains scandalous material; or
(b) contains frivolous or vexatious material; or
(c) is evasive or ambiguous; or
(d) is likely to cause prejudice, embarrassment or delay in the proceeding; or
(e) fails to disclose a reasonable cause of action or defence or other case appropriate to the nature of the pleading; or
(f) is otherwise an abuse of the process of the Court.
(2) A party may apply for an order that the pleading be removed from the Court file if the pleading contains material of a kind mentioned in paragraph (1)(a), (b) or (c) or is otherwise an abuse of the process of the Court.
72 Rule 16.21 must be interpreted and applied in the context of s 37M of the Federal Court of Australia Act 1976 (Cth), which states that the overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible.
73 The power to strike out pleadings is discretionary, and should be used sparingly: Gold Coast City Council v Pioneer Concrete (Qld) Pty Ltd (1998) 157 ALR 135.
74 In Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 the High Court examined forms of estoppel, and related abuse of process principles, in Australian law. French CJ, Bell, Gageler and Keane JJ observed:
20. An exercise of judicial power, it has been held, involves "as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons". The rendering of a final judgment in that way "quells" the controversy between those persons. The rights and obligations in controversy, as between those persons, cease to have an independent existence: they "merge" in that final judgment. That merger has long been treated in Australia as equating to "res judicata" in the strict sense.
21. Estoppel in relation to judicial determinations is of a different nature. It is a common law doctrine informed, in its relevant application, by similar considerations of finality and fairness. Yet its operation is not confined to an exercise of judicial power; it also operates in the context of a final judgment having been rendered in other adversarial proceedings. It operates in such a context as estoppel operates in other contexts: as a rule of law, to preclude the assertion of a right or obligation or the raising of an issue of fact or law.
22. Three forms of estoppel have now been recognised by the common law of Australia as having the potential to result from the rendering of a final judgment in an adversarial proceeding. The first is sometimes referred to as "cause of action estoppel". Estoppel in that form operates to preclude assertion in a subsequent proceeding of a claim to a right or obligation which was asserted in the proceeding and which was determined by the judgment. It is largely redundant where the final judgment was rendered in the exercise of judicial power, and where res judicata in the strict sense therefore applies to result in the merger of the right or obligation in the judgment. The second form of estoppel is almost always now referred to as "issue estoppel". Estoppel in that form operates to preclude the raising in a subsequent proceeding of an ultimate issue of fact or law which was necessarily resolved as a step in reaching the determination made in the judgment. The classic expression of the primary consequence of its operation is that a "judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies". The third form of estoppel is now most often referred to as "Anshun estoppel", although it is still sometimes referred to as the "extended principle" in Henderson v Henderson. That third form of estoppel is an extension of the first and of the second. Estoppel in that extended form operates to preclude the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding. The extended form has been treated in Australia as a "true estoppel" and not as a form of res judicata in the strict sense. Considerations similar to those which underpin this form of estoppel may support a preclusive abuse of process argument.
23. The present significance of the recognition of those three forms of estoppel is that each has the potential to preclude assertion of a right or obligation, or the raising of an issue of fact or law, between parties to a proceeding or their privies. Absent a principled basis for distinction - and none has been suggested - one principle must govern the identification of privies for the purpose of all forms of estoppel which result from the rendering of a final judgment in an adversarial proceeding.
24. To explain contemporary adherence to the comparatively narrow principle in Ramsay v Pigram, it is appropriate also to explain the relationship between the doctrine of estoppel and the doctrine of abuse of process as it has since come to be recognised and applied in Australia. The doctrine of abuse of process is informed in part by similar considerations of finality and fairness. Applied to the assertion of rights or obligations, or to the raising of issues in successive proceedings, it overlaps with the doctrine of estoppel. Thus, the assertion of a right or obligation, or the raising of an issue of fact or law, in a subsequent proceeding can be simultaneously: (1) the subject of an estoppel which has resulted from a final judgment in an earlier proceeding; and (2) conduct which constitutes an abuse of process in the subsequent proceeding.
25. Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel.
26. Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel. Similarly, it has been recognised that making such a claim or raising such an issue can constitute an abuse of process where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to that earlier proceeding, nor the privy of a party to that earlier proceeding, and therefore could not be precluded by an estoppel.
27. The final element of the legal context relevant to explaining continuing adherence to the comparatively narrow principle in Ramsay v Pigram is the continuing existence of the distinct rule, equitable in origin, which prevents a person from actually recovering more than once for a given loss that results from breach of a given obligation. The rule applies irrespective of the part, if any, which the person might have played in a proceeding which would otherwise facilitate the double recovery against which it guards. Its distinct operation was noted more than two centuries ago in the seminal explanation of issue estoppel. There it was explained that "a finding upon title in trespass not only operates as a bar to the future recovery of damages for a trespass founded on the same injury, but also operates by way of estoppel to any action for an injury to the same supposed right of possession" and that "it is not the recovery, but the matter alleged by the party, and upon which the recovery proceeds, which creates the estoppel". The explanation continued:
The recovery of itself in an action of trespass is only a bar to the future recovery of damages for the same injury: but the estoppel precludes parties and privies from contending to the contrary of that point, or matter of fact, which having been once distinctly put in issue by them, or by those to whom they are privy in estate or law, has been, on such issue joined, solemnly found against them.
(Emphasis added; citations omitted.)
75 The High Court in Timbercorp Finance Pty Ltd (in liquidation) v Collins (2016) 259 CLR 212; [2016] HCA 44 cited Tomlinson with approval. The majority in Timbercorp noted at [43]:
… the State has an interest in preventing re-litigation of common issues of fact and law so far as it can be done consistently with the requirement of justice to all parties.
76 In Re AWB Ltd; Australian Securities and Investments Commission v Lindberg (No 10) (2009) 76 ACSR 181; [2009] VSC 566, Robson J relevantly discussed principles relating to Anshun estoppel at [263] as follows:
(1) The Anshun principle gives rise to an estoppel distinct from abuse of process principles: Anshun.
(2) A second proceeding may be estopped under the Anshun principle where the cause of action raised is one which could have been raised in a previous proceeding where the same or substantially the same facts will arise for consideration in the second proceeding as in the first proceeding: Anshun; Gibbs v Kinna and Zavodnyik v Alex Constructions Pty Ltd.
(3) Such a proceeding will only be estopped, however, if it was unreasonable to defer reliance upon the cause of action: Anshun; Gibbs v Kinna.
(4) Anshun estoppel is not limited to circumstances where there may be conflicting judgments, although the risk of conflicting judgments would generally speaking satisfy the criterion of unreasonableness: Gibbs v Kinna; Zavodnyik v Alex Constructions Pty Ltd.
(5) In considering whether it was unreasonable for a plaintiff not to have relied on the cause of action raised in the second proceeding, the court should consider all the relevant facts, including the character of the previous proceeding, the scope of any pleadings, the length and complexity of the trial, any real or perceived difficulties in raising the relevant claim earlier and any other explanation for the failure to raise the claim previously: Gibbs v Kinna.
(6) The greater the extent of the overlap between the facts underlying each claim, the easier it is to argue that it was unreasonable not to raise the matter in the first proceeding: Zavodnyik v Alex Constructions Pty Ltd.
(7) In considering whether a proposed amendment to a statement of claim is necessary to avoid multiple proceedings, the court may be able consider whether the proposed claim could be brought by another proceeding and in doing so consider whether that proceeding would be met by an Anshun estoppel or an abuse of process claim: Aon.
(8) Where the first proceeding has been determined, the second proceeding has usually been challenged on the Anshun principle. Where the two proceedings are on foot at the same time, the second proceeding has normally been challenged on an abuse of process basis and it is doubtful that the Anshun principle applies.
(Emphasis added; citations omitted.)
77 In relation to abuse of process principles, Robson J in Re AWB Ltd; Australian Securities and Investments Commission v Lindberg (No 10) (2009) 76 ACSR 181; [2009] VSC 566 at [264] summarised as follows:
…
(8) The rationale underlying the principle against double jeopardy, in that an individual should not be vexed twice for the same cause, is a factor properly to be taken into account in the weighing exercise: Walton v Gardiner.
(9) It is prima facie vexatious to bring two extant civil actions where one will lie: Moore v Inglis; Thirteenth Corporation Pty Ltd v State.
(10) This prima facie rule applies whether or not the two proceedings are in separate courts or one: Branir Pty Ltd v Wallco Pastoral Co Pty Ltd.
(11) The prima facie rule applies where the issues overlap or significantly overlap or there is a similarity of subject matters of the proceedings.
(12) The fact that the parties may not be identical, or the relief different, does not necessarily disentitle relief under this principle: Moore v Inglis.
(13) In considering whether the rule should apply, the court should consider whether there was no reasonable justification for the second proceeding based on legitimate considerations of convenience, cost or the like: Thirteenth Corporation Pty Ltd v State.
(Citations omitted.)
78 Applying these principles, I am satisfied that:
Given Oliver Hume's concessions concerning cause of action estoppel and Mr Barclay - paras 6, 7, 9, 10, 11, 12, 13, 15, 15A, 15B, 16, 17, 18, 19, 20, 21, 22, 24, 25, 26, 27, 27A, 69, 69A, 70, 110B(a), 110C(a), 110D, paras 1 and 1A on p 113 - should be struck out of the SFASOC.
Even if cause of action estoppel did not require the strike out of these paragraphs in relation to Mr Barclay - these paragraphs of the SFASOC should be struck out on the basis of either Anshun estoppel or abuse of process.
Paras 101, 103A, 103B and para 1 on p 115 (in respect of Mrs Barclay) and paras 109, 109A, 109B and para 154 on p 116 (in respect of Louvre Holdings) should be struck out of the SFASOC on the basis of either Anshun estoppel or abuse of process.
Paragraphs 80, 110H and 110I of the SFASOC should be struck out to the extent that they refer to Mr Barclay and Lot 170 or the lots into which Lot 170 was subdivided.
79 Paras 4, 79B, 79C, 79D, 79E, 79F, 79G, 79H, 79I, 79J, 110J, 111, 112 and 112A, para 5 on p 114, para 6A on p 116 of the SFASOC do not offend principles of estoppel or abuse of process to which I have referred.
80 I have formed these views for the following reasons.
81 First, in relation to Mr Barclay and Oliver Hume's claims in its SFASOC concerning Lot 170 and breach of fiduciary obligation: Oliver Hume clearly anticipated (in their written reply submissions at para 4(c)(i) dated 15 February 2019) that, should I refuse an order for consolidation of the two sets of proceedings, I would dismiss Oliver Hume's cross-claim against Mr Barclay in QUD 231 of 2011 for want of proof of loss on the part of Oliver Hume. This anticipation is well-founded. Indeed, although I have not yet made a formal order to that effect (and will need to list QUD 231 of 2011 to finally deal with the cross-claim and associated costs), I consider at this stage that the dismissal of Oliver Hume's cross-claim is almost inevitable.
82 Oliver Hume conceded that a dismissal of Oliver Hume's cross-claim in QUD 231 of 2011 for want of proof of loss on the part of Oliver Hume would give rise to a cause of action estoppel in relation to the Lot 170 claims against Mr Barclay, and that the respondents' strike-out application as to Lot 170 claims against Mr Barclay would succeed (see transcript p 43 ll 40-41). I consider that this is a proper concession. The paragraphs to which I have referred in the SFASOC relating to claims of Mr Barclay's breach of fiduciary obligation and Lot 170 - namely paras 6, 7, 9, 10, 11, 12, 13, 15, 15A, 15B, 16, 17, 18, 19, 20, 21, 22, 24, 25, 26, 27, 27A, 69, 69A, 70, 110B(a), 110C(a), 110D, paras 1 and 1A on p 113 - should be struck out on this basis.
83 However secondly, even if these paragraphs were not struck out on the basis of cause of action estoppel, I consider they should be struck out:
by reference to principles of Anshun estoppel, because Oliver Hume's claims of breach of fiduciary obligation to it by Mr Barclay in relation to Lot 170 were so connected with the subject matter of QUD 231 of 2011, as to have made it unreasonable in the context of that proceeding for Oliver Hume's current claims concerning Lot 170 not to have been made in that proceeding; or
as an abuse of process, as claims Oliver Hume could have made in QUD 231 of 2011, and which ought reasonably have been made in those proceedings.
84 Oliver Hume submitted that a factor weighing against a finding of Anshun estoppel or abuse of process in this respect was that Oliver Hume was not in control of conduct of litigation in QUD 231 of 2011 referable to potential liabilities and losses of Oliver Hume. Rather, Oliver Hume submitted that its insurer, Vero Insurance, had assumed that control.
85 There is evidence before the Court that Vero Insurance agreed to indemnify Oliver Hume in QUD 231 of 2011 in respect of the Investa claim, and that the same law firm and Counsel acted on behalf of both Oliver Hume and Vero Insurance in QUD 231 of 2011 in respect of Oliver Hume's defence, Oliver Hume's cross-claim against Mr Barclay, and Mr Barclay's cross-claim against Vero Insurance: affidavit of Patrick John O'Shea sworn 1 December 2016.
86 I accept that Oliver Hume relinquished its conduct of the litigation in QUD 231 of 2011 to its insurer. Indeed in the Professional Indemnity Insurance Policy between Vero Insurance and Oliver Hume, the General Conditions include:
Claims Conduct
The Insurer shall be entitled to take over and conduct in the name of the Insured the defence or settlement of any Claim and shall have full discretion in the conduct of any proceedings and in the settlement of any Claim.
87 "Claim" is defined in the Vero Insurance policy as:
… any demand made by a third party upon the Insured for compensation, however conveyed, including a writ, statement of claim, application or other legal or arbitral process.
88 As I observed earlier in this judgment, the litigation strategy of Oliver Hume in QUD 231 of 2011 appeared primarily concerned with defending itself against the claims of Investa. This is not surprising in circumstances where Oliver Hume was insured for claims against it, such as that commenced by Investa. In its submissions in the current proceedings, Oliver Hume submits that the commercial interest of Vero Insurance in QUD 231 of 2011 was in defeating Investa's claim, or alternatively making out a claim against Mr Barclay for compensation by way of indemnity against any liability of Oliver Hume to Investa. Indeed, Oliver Hume further submits that Vero Insurance was not interested in pursuing restitutionary remedies against Mr Barclay or his associates for, inter alia, an account of profits. This is consistent with the terms of the insurance policy I have set out, which are referable to defensive conduct in respect of claims brought against Oliver Hume as an insured.
89 I do not consider it surprising that Oliver Hume would have been content to leave its conduct of what developed into lengthy, complex and no doubt expensive litigation to Vero Insurance. However, this was a forensic choice on the part of Oliver Hume. There is no material before me to warrant a finding that Oliver Hume was prevented - by Vero Insurance or anyone else, or for any other reason - from commencing separate proceedings against Mr Barclay (or his associates) for claimed breaches of fiduciary obligation by Mr Barclay to Oliver Hume.
90 As Adamson J observed in Buses + 4WD Hire Pty Limited v Oz Snow Adventures Pty Limited [2016] NSWSC 1017:
33. There are several situations in which a party might seek two sets of representation. The issues that can arise between an insurer and an insured in an action brought in the latter's name for the benefit of the former include the following:
(1) The insurer does not insure a loss which its insured wishes to claim against a third party.
(2) The insured brings a cross-claim on a different issue unrelated to the subrogated claim.
(3) The insurer and its representatives (which have conduct of the proceedings on behalf of the named insured) are faced with a conflict of interest as between the rights of the insured and the rights of the insurer.
34. In situation (1), the position is relatively clear. The insurer is obliged to include the claim which the insured wishes to bring in its pleading against the third party (which includes the subrogated claim). The reason for this is that otherwise the insured would be prejudiced in that the insured could be subject to an issue estoppel or Anshun estoppel in respect of the insured's own claim. This situation is not regarded as creating any conflict of interest between an insured and an insurer (although their interests do not coincide) and does not give rise to any need for separate representation.
35. Situation (2) is also relatively clear in that the obligation of the solicitors instructed by the insurer on the subrogated claim is to act in good faith and in the interests of the insured. In this situation, the cross-claim could be brought and, since it is on a separate issue, the interests of the insurer and the insured would be unlikely to conflict.
91 As his Honour continued, and of particular relevance in circumstances where Oliver Hume and Vero Insurance were represented by one firm of lawyers:
37. The obligations of a solicitor instructed by an insurer in proceedings where the insured is the named party were summarised in Conducting an Action on Behalf of the Insurer in the Name of the Insured (A Case for Schizophrenia) (1991) 4 Insurance Law Journal 83 at 87 as follows:
(1) The insurer may not act arbitrarily in deciding tactics or the conduct of the action. It must act bona fide in the best interests of both insurer and insured.
(2) The insurer is not entitled to pursue some advantage outside the litigation in question.
(3) The solicitor nominated by the insurer must act reasonably in the interests of both insurer and insured.
(4) As the insured is the litigant, the solicitor is his solicitor and owes him duties as such.
(5) The solicitor is also solicitor for the insurer and owes it corresponding duties.
(6) The insured is deprived of his right to control the action to the extent that the insurer is entitled to give instructions to the solicitor pursuant to the policy.
(7) However, to the extent that the insurer requires the solicitor to do something not empowered under the policy, the solicitor cannot do so without the insured's consent.
92 There is no evidence before me that the lawyers acting for both Oliver Hume and Vero did not act in the interests of both of these parties in QUD 231 of 2011.
93 The principle that all issues in dispute between the parties ought be decided in a single proceeding is well-settled. For example, in Sheahan, in the matter of Atsikbasis Nominees Pty Ltd (in Liquidation) (No 2) [2013] FCA 724 Besanko J observed:
5. It is desirable where there are common issues of fact in relation to a claim and a cross-claim that all parties be bound by one determination in relation to those facts. The possibility of there being inconsistent findings of fact is to be avoided (Barclays Bank v Tom [1923] 1 KB 221 at 224 per Scrutton LJ).
94 Similarly, in Martech International Pty Ltd v Energy World Corporation Ltd [2004] FCA 1470, French J (as his Honour then was) noted:
29. The objective of the requirement that a cross-claim involving a non-party cross-respondent be related to, or connected with, the subject matter of the proceedings is to allow, so far as possible, all aspects of a matter or controversy before the Court to be resolved. …
95 In QUD 231 of 2011, the issue of breach of fiduciary obligations by Mr Barclay in respect of his conduct concerning Lot 170 was squarely before the Court. A claim to that effect was brought against Mr Barclay by Investa. Oliver Hume brought a cross-claim against Mr Barclay. I can only infer on the material before me that, in QUD 231 of 2011, it was Oliver Hume's choice not to pursue such an obviously available claim as that of breach of fiduciary obligations owed by Mr Barclay to it.
96 I reject Oliver Hume's submission that the role of Vero Insurance in conducting the litigation concerning potential liabilities of Oliver Hume in QUD 231 of 2011 was a factor militating against findings of Anshun estoppel or abuse of process in the current proceedings.
97 Third, in relation to para 101 and para 1 on p 115 (in respect of Mrs Barclay) and paras 109, 109A, 109B and 154 on p 116 (in respect of Louvre Holdings), I am satisfied that these paragraphs should be struck out of the SFASOC as an abuse of process, on the basis that:
Oliver Hume's claims against Mrs Barclay and Louvre Holdings in these paragraphs concern Lot 170;
The claims are reliant on Mr Barclay's alleged breaches of fiduciary duty to Oliver Hume in relation to Lot 170;
The claims also rely on identical factual issues to those in dispute in QUD 231 of 2011, relating to conduct of Mr Barclay in respect of the sale and/or development of Lot 170;
Determination of these claims against Mrs Barclay and/or Louvre Holdings would require determination of the question whether Mr Barclay had breached his fiduciary obligations to Oliver Hume in respect of the sale and/or development of Lot 170. As I have already observed, Oliver Hume concedes there is a cause of action estoppel once the cross-claim against Mr Barclay is dismissed, or alternatively I consider (for reasons I have given) that this issue would be the subject of an Anshun estoppel or would be an abuse of process; and
Similarly, claims against Mrs Barclay and/or Louvre Holdings, relating to assistance to Mr Barclay in respect of his alleged breaches of fiduciary duty to Oliver Hume concerning Lot 170 or benefit from those breaches, ought reasonably to have been made or raised for determination in QUD 231 of 2011 when conduct of Mr Barclay in respect of Lot 170 was squarely in proceedings before the Court, and Oliver Hume had in fact brought a cross-claim against Mr Barclay in respect of that very same conduct.
98 I consider the same reasoning applies to paras 80, 110H and 110I of the SFASOC to the extent that these paragraphs plead facts referable to Lot 170. I also note, however, that paras 80, 110H and 110I of the SFASOC also plead facts potentially beyond the scope of Lot 170, and in that respect should not be struck out.
99 Finally, I am satisfied that paras 4, 79B, 79C, 79D, 79E, 79F, 79G, 79H, 79I, 79J, 110J, 111, 112 and 112A, para 5 on p 114, and para 6A on p 116 of the SFASOC do not offend principles of estoppel or abuse of process. This is because:
While pleadings referable to Louvre Holdings, its relationship with Mr Barclay and Lot 170 should be struck out, para 4 simply pleads the legal status of Louvre Holdings and its relationship with Mrs Barclay;
Paras 79B to 79J plead claims by Oliver Hume against Mr Barclay for economic loss, by reference to the loss of a contract with a former client of Oliver Hume and costs incurred by Oliver Hume in hiring staff to replace Mr Barclay following the termination of his employment contract. These paragraphs are not exclusively referable to Lot 170;
Oliver Hume pleads generally in para 110J that Mrs Barclay holds each of the Hope Island Properties on constructive trust for Oliver Hume. This alleged relationship is also potentially referable on the pleadings to Lot 246 (see para 110B(c)) and Lot 71 (see paragraph 110C(b)) both of which were outside the scope of the claims in QUD 231 of 2011. The same reasoning applies to paragraph 6A on p 116 of the SFASOC;
Similarly, paras 111, 112 and 112A, and para 5 on p 114 are referable to Mr Barclay's alleged conduct concerning Lots 246 and 71 which were outside the scope of the claims in QUD 231 of 2011.