Phillip Morris Limited v Attorney-General for the State of Victoria & Lindsey [2006] VSCA 21

Phillip Morris Limited v Attorney-General for the State of Victoria & Lindsey [2006] VSCA 21 | Case summary | Zoe

[58]

"Leave has thus far been denied to the applicant because he has not produced a statement of claim that discloses a case of substance. In particular he has foundered on the issue of causation in the sense of linking any and what smoking a product of Phillip Morris to the suffering of lung disease or otherwise the condition from which he suffers. In addition the proposed statements of claim have been deficient or contained unnecessary or embarrassing material such that judges have suggested the applicant obtain legal assistance in the drafting of the claim. It is a suggestion I would repeat."[17]

His Honour said later:

"It seems to me, as it did to Morris, J., that although the damage suffered by the applicant from smoking is likely to have been caused, or contributed to, by the fact that he smoked cigarettes over a long period of 30 years, it seems improbable, and there is no evidence to establish it, that the damage to his health is the result of the smoking that took place before the introduction of Government health warnings in early 1973. This goes to the critical issue of causation and to this there is the related and fundamental allegation that the plaintiff became addicted and was not able to exercise a choice to not smoke.

... I note that in the statement of claim Morris, J. was considering the applicant proposed to allege that he used Marlboro cigarettes from later 1972/early 1973 through to 1987 and then a different brand from 1987 to 1999. In the present proposed statement of claim the applicant has wound back the period when he commenced to smoke Marlboro by one year, to late 1971/early 1972. It is reasonably apparent that the purpose of doing so is to seek to establish a case of addiction prior to the introduction of government health warnings on cigarette packets. This suggests a refashioning of the case to meet a point discussed by Morris, J. in his judgment. Morris, J. said that he was troubled by the prospect of the applicant being able to establish a causal connection between his smoking before 1973 and the alleged tortious conduct of Phillip Morris."[18]

His Honour concluded as follows:

"In my view, regarding the matter overall, the probability is not merely that the case would fail but that it would never really get off the ground because of procedural, factual, legal and evidentiary difficulties. It is likely that it would require a substantial devotion of time and resources of the proposed defendant and the court. In the circumstances I am unable to be satisfied that the proceeding is not or would not be an abuse of the process of the court."[19]

[61]

44 It is important to point out that these submissions are, in terms, directed at showing that the ninth application for leave was itself an abuse of process. That question is, of course, separate and distinct from the question which arises under s.21(4) of the Act, namely, whether the proposed proceeding (to which the leave application related) is or would be an abuse of process. It is also an anterior question since, if the leave application is itself an abuse of process, the application should be stayed or dismissed in limine. In those circumstances, the court would have no occasion to address the merits of the leave application, that is, whether the proposed proceeding would be an abuse of process.

45 It follows, in my opinion, that the submission that the ninth application was an abuse of process should properly have been made to the learned Judge who was to hear the application. As I have said, it would have been a submission that the application should be stayed or dismissed in limine, without the Court needing to proceed to consider the merits: compare r.23.01(c).

46 The decision of this Court in Christie v Baker[22] illustrates the point. There, an application had been made under s.23A of the Limitation of Actions Act 1958 for an extension of time within which to bring an action in respect of an alleged injury. The application failed because of a lack of explanation for a period of delay. A second application was made, to a different judge of the County Court, supported by further evidence giving an explanation for the delay. That application was granted. On appeal, this Court (by majority) held that the second application should have been stayed as an abuse of process (in which case it would not have proceeded to a determination on the merits).

47 The transcript of the hearing before the Judge on 4 March 2005 reveals that the submissions advanced on behalf of Phillip Morris dealt exclusively with the merits of the application for leave, that is, with the question whether the proposed proceeding would be an abuse of process. No submission was advanced, nor was it at any stage suggested, by Phillip Morris that the leave application was itself an abuse of process, not even after the following exchange had taken place between the Judge and Mr Lindsey:

[83]

62 In my view, the decision in Christie v Baker[40] is distinguishable, on two grounds. First, there is a crucial difference between an application by a vexatious litigant for leave to proceed and an application for extension of time under s.23A - and, for that matter, most other interlocutory applications. It is that a leave application by a vexatious litigant is made ex parte. There being no respondent, the making of successive applications does not - cannot - "vex" or "oppress" any other party. The burden imposed on the Court itself cannot be ignored, but this is a matter over which the Court has a large measure of control.

63 Secondly, the present case does not involve what Hayne, J.A. in Christie described as "hawking" the same application from judge to judge in a search for a successful outcome. Had that been the true nature of Mr Lindsey's conduct, it would undoubtedly have been an abuse of process. Moreover, I have no doubt that it would have been identified as such by one or other of the Judges in the Practice Court. Given that on each occasion there was full disclosure by Mr Lindsey of what had occurred on the previous unsuccessful applications, each successive judge was well placed to decide whether the application before him/her was an abuse of process as an exercise in "judge shopping". The larger the number of previous failed applications, the more likely it was that the next judge would have formed that view - had it been open to do so.

64 No such thing happened. Quite the opposite, in fact. On five of the eight occasions which preceded the ninth - successful - application, the Judge in dismissing the leave application recommended that Mr Lindsey obtain legal assistance. It is particularly significant that the Judge who dismissed the eighth application, and was critical of what he described as the "refashioning" of the claim, nevertheless endorsed the view expressed by his various predecessors, that Mr Lindsey should seek legal advice. On none of these eight occasions did the Judge suggest (for example) that the Court's patience was running out or that Mr Lindsey would be given "one last chance".

65 The consistency of the Court's response, over the course of such a large number of failed applications, is very striking. The response is, I think, to be explained by two considerations. The first is that, after the failure of the first application, each subsequent judge apparently accepted that Mr Lindsey was making "a genuine endeavour to repair the deficiencies" identified on the previous occasion.[41] In dismissing the fifth application, for example, Smith, J. said:

[103]

84 In the event, his Honour was satisfied that the statement of claim disclosed a cause of action and that Mr Lindsey's claim "had substance". I am of the same view.

85 With respect to his Honour, however, I see no justification for reading into s.21(4) a second pre-condition to the grant of leave, of the kind which appears in the English legislation but not in the Victorian equivalent. The only pre-condition in s.21(4) is that the Court be satisfied that the proposed proceedings "are not or will not be an abuse of the process". As noted earlier, the principles developed with respect to abuse of process require the Court to consider, so far as it is possible on such an application, the prospects of success of the proposed proceeding. But this examination is not for the purpose of deciding whether there are "reasonable grounds" for the proceeding, or whether the case "has substance", but in order to decide whether the proceedings are "foredoomed to fail". Once the Court has concluded that the proposed proceedings are not foredoomed to fail, s.21(4) in my view neither requires nor authorises the Court to go further. Had Parliament intended there to be a separate investigation of the merits of the proposed proceeding, by reference to "reasonable grounds", "prima facie case" or some such test, it could have said so.

86 The conclusion that the proposed proceeding has substance precludes a finding that it is foredoomed to fail. Indeed, as noted earlier, Phillip Morris made no such submission. It follows, in my view, that the Phillip Morris submission - that the proposed proceeding is an abuse of process because it has insufficient prospects of success - must be rejected.

87 I should add for completeness that the learned trial Judge paid proper regard to the characterisation of Mr Lindsey's past conduct before the courts as "habitual and persistent" and so on. Plainly, this is a factor relevant to the determination of the question of abuse of process in relation to the proposed proceedings. But it will hardly ever be determinative. After all, it is in consequence of that prior conduct that the litigant is already in the - quite exceptional - position of having to seek leave before being free to litigate.[50] What really matters on an application under s.21(4) is the Court's assessment of the form, content and likely conduct of the proposed proceeding, having regard to the relevant indicia of abuse of process.

"The outstanding costs principle"

88 Counsel for Phillip Morris argued that there was a legal principle, identified as "the outstanding costs principle", to the following effect:

[132]

115 On this appeal I have reached the same conclusion, as has the learned President, that the appeal should be dismissed, substantially for the reasons he has stated but subject to the matters which appear below.

116 As to abuse of process I agree that it has not been demonstrated that the learned judge erred in reaching the conclusion that he was satisfied "that the proceedings are not or will not be" an abuse of process, as is required under sub-s.(4) of s.21 of the Supreme Court Act 1986 ("the Act"). The expression "abuse of process" has been the subject of much authority but I agree generally with what the President has said on this subject, save to emphasise, as has been stated on many occasions,[63] that the concept cannot be confined to fixed categories. Clearly the onus rested on the respondent Mr Lindsey, as the person declared a vexatious litigant, to establish that the condition as to its absence had been satisfied. Nevertheless, although the decision on this issue may be said to be one which does not involve the exercise of a discretion and therefore one in which an appellate court is said to be in as good a position to reach conclusions as the trial judge, I am impressed by the fact that the learned judge of the Trial Division, who has had great experience in conducting and

hearing common law claims, reached the conclusion that the proceeding as presently constituted was not an abuse of process. Although in strictness such a decision does not involve the exercise of a discretion, it nevertheless requires the making of a value judgment or a series of value judgments of a kind frequently employed in the exercise of a discretion. Here the judge looked at the totality of the material, especially that which had led to the rejection of the earlier eight applications, but was prepared to conclude that the proceeding was not an abuse of process. It has not been demonstrated to me, on the argument put to the Court, that he was wrong in that conclusion.

117 Two principal aspects were relied upon by the appellant, the first being that the proceeding would be an abuse of process "for pleading, evidentiary, factual procedural and other reasons", which are set out in para.[23] of the President's judgment. Particular reliance was placed on the series of earlier applications for leave to bring proceedings of an almost identical kind, which had all failed, but I agree entirely with what the President has said on that subject. I also agree with what the President has said as to the appellant's contention that the claim had been refashioned deliberately to overcome a previously perceived deficiency.

118 However, on one small issue, referred to in paragraph [42] of the President's judgment, I would place a caveat. I agree that on applications of an interlocutory kind such as those brought under s.21(3) of the Act, it is ordinarily not practicable to decide questions of substantive fact raised on the application. In broad terms that is a general rule for all interlocutory applications but it is a rule which is subject to exceptions in appropriate circumstances. There may be questions of fact, especially of a straightforward kind, where a proposed plaintiff seeks to bring proceedings based on an allegation which can be demonstrated incontrovertibly to be wrong. In my experience that has occurred from time to time. The Court should be free to halt in limine a claim dependent on a patently false fact, notwithstanding that it will be necessary to reach that factual conclusion before characterising the claim as an abuse of process. Such an answer may not be put forward on many occasions but the Court should not be restricted in its capacity to shut out a vexatious or oppressive proceeding which will have no real chance of success.

119 As to the contention that the respondent Lindsey had hawked the application from judge to judge and had merely sought to relitigate an application which had already been determined, I agree with the President's conclusions and reasoning as to why these matters have not been made out. In essence, there had been changes in the case made by Mr Lindsey of a kind recognised by the judges to whom the earlier applications had been made and in particular by the learned judge who granted the application.

120 On the other hand I am not so convinced that the appellant was not now entitled to raise matters of that kind by reason of the fact that they went to the issue whether the application itself was vexatious or an abuse of process, as opposed to the issue whether the proposed proceeding could be so characterised. The truth of the matter is that it would be highly unlikely that a proposed defendant would participate on the primary hearing on an application pursuant to s.21(3) of the Act, for a vexatious litigant requires leave even to file a proceeding. The defendant's right can only be to seek to set aside the order after the event, so that there can and will normally be no separate preliminary application by a defendant to prevent the application pursuant to s.21(3) being heard. The judge will have to resolve the setting-aside application having regard to all matters which might otherwise have been taken into account to reject it. I believe it would ordinarily be unrealistic to divide that application into two parts and to confine a defendant accordingly. It is, however, a quite separate issue whether an appellant will be allowed to raise issues which were not raised before the judge in the Trial Division and that must depend upon ordinary principles relating to the right of appellants to raise unpleaded issues or issues that were not relied upon below. Moreover I would prefer to express no opinion as to the extent to which Christie v. Baker[64] should be applied in relation to applications such as the present. I would say only that it must be remembered that the rules relating to res judicata and issue estoppel frequently are inapplicable to matters decided on interlocutory applications such that, if there be no firm rules relating to the relitigation of matters on interlocutory applications, there might well be a rush of applications from unsuccessful applicants mending their hand in the light of unfavourable interlocutory decisions.

121 As to the test under s.21(4), I agree with what the President has said as to the application in this State of Becker v. Teale[65]. The relevant English legislation at the time required that an applicant show also that there be "prima facie ground for the proceedings". The section here requires only that it be shown that the proposed proceedings "are not or will not be" an abuse of process. I was at first concerned because the words "or will not be" were first inserted in the 1986 Act and clearly were intended to add something to the provision. On the other hand, the test is now expressed in the alternative so that there is on the face of it no additional bar to satisfy. I am inclined to the view that it is intended to overcome a lack of particularity in what an applicant puts forward, such that one can only test the claim by what one can forecast "will be" the nature of the case in the future. It is of course not irrelevant to showing that a case is an abuse of process to show that from the outset it "can be clearly seen to be foredoomed to fail".[66] That characterisation of an abuse of process, however, would suggest that the decision should be made by reference to what is known or stated, whereas the English legislation necessarily required the factual basis to be made out so that the Court could be satisfied that the proceeding had a prima facie basis. That is not what the present Victorian section requires so that I agree with the conclusion of the President as to the applicability of cases resting on the English legislation. Nevertheless, I would suggest that some such requirement might well be added to the Victorian section so as to make it clear that an applicant must put forward some basic factual material to demonstrate a prima facie case. In essence that is what has been done in the present case and, I believe, in most cases in the past, for doubtless the need for a vexatious litigant to prove a negative with respect to an abuse of process has prompted them to provide factual support for their allegations in order to get leave. The clear rejection of the Becker v. Teale test may change that perception and in my opinion the legislature should clearly consider whether it is necessary to protect the courts from applications of a less meritorious kind by a vexatious litigant by inserting some such requirement as to proof of a prima facie case into s.21. It should be noted that, at least in my experience now over many years, orders under s.21 are comparatively rare and the Supreme Court has been very cautious in declaring persons vexatious litigants.

Effect of failure to pay costs of unsuccessful earlier action

122 The final matter for present purposes is what has been called the "outstanding costs rule". As to the application of the relevant rules I do not have any disagreement as to the outcome in the present case. The rules themselves, however, if so they may be described, depend on a number of factors which have led the courts over the last two centuries to express them in somewhat different terms according to the circumstances in which the question has arisen.

123 Some general considerations must first be mentioned. If one is dealing with the outcome of an earlier proceeding raising the same matter, then ordinarily principles relating to res judicata or issue estoppel will preclude the relitigating a matter which has been finally disposed of.[67] It is only where those principles do not apply, in particular where a matter has not been dealt with on the merits or in the course of some interlocutory application, that a defendant will wish to invoke the Court's power to stay a proceeding by reason of the plaintiff's failure to pay the costs of an earlier proceeding. This kind of application may be contrasted with those made where a party, not necessarily the plaintiff, has failed to pay the costs of an interlocutory application but another party wishes to be paid its costs before the offending party takes any further step in the proceeding. More often than not it will be a defendant who seeks such a remedy and the order customarily made is that the proceeding be stayed until the costs have been paid, but the Court's powers are more extensive and may result in the proceeding being permanently stayed. A considerable number of the latter applications have been brought in this Court in recent years and, as a result of a seemingly narrow interpretation of the Court's powers in respect of interlocutory orders for costs in Exell v. Exell[68], the Supreme Court (General Civil Procedure) Rules were amended so as to express the Court's power more clearly, as may be seen from the terms of Order 63.03. Recently I had occasion to consider a number of unreported decisions concerning the application of that rule: see Gao v. Zhang[69].

124 The power here under consideration, however, appears to have been invoked so as to ensure that a further proceeding be stayed because of the failure to pay the costs of an earlier proceeding or proceedings "in respect of the same or substantially similar subject matter". For this purpose there is no rule of court and the Court's inherent common law powers are called in aid.[70]

125 Although the appellant relied on statements as to the Court's powers which have been expressed in one or other of a number of judgments at first instance[71] in Victoria, New South Wales and England in, respectively, Boase v. Jones[72], Hutchinson v. Nominal Defendant[73] and Thames Investment and Securities Plc v. Benjamin[74], the principles there stated were expressly said to have been derived from appellate decisions in the United Kingdom and New South Wales. Both Cussen, J. in Boase[75] and Isaacs, J. in Hutchinson[76] placed reliance on the decision of the House of Lords in M'Cabe v. Bank of Ireland[77]. Their Lordships[78] in turn placed reliance on an earlier decision of the Court of Appeal in Martin v. Earl Beauchamp[79], where it was said that, "The rule is established that where a plaintiff having failed in one action commences a second action for the same matter the second action must be stayed until the costs of the first action have been paid", to which Lord Herschell added the observation[80] that, "even although the actions were not between precisely the same parties or persons suing in the same capacity, the case was held to be within the rule inasmuch as the plaintiff there was 'suing substantially by virtue of the same alleged title'."

126 The rule so stated on appeal from the Chancery Division was seemingly reflected also in the Queen's Bench Division in Morton v. Palmer[81], where, in the context of an application for a stay until payment of the costs of an interlocutory application, Cave, J. said[82]:

[144]

Nevertheless the costs in question had been ordered by the Court of Appeal in the course of granting a rule nisi for a new trial because of an earlier misdirection and it was for that reason that neither of the two judges thought that the plaintiff was in effect seeking to have tried a second time a substantive matter on which he had previously failed. Moreover reliance was particularly placed by Mathew, J. on the fact that the Court of Appeal in making its order for costs had imposed no special term by way of stay.

131 Morton v. Palmer has been referred to on a number of occasions since that time but usually only for the purpose of showing that the broader discretion described by Cave, J. was exercisable where the relevant costs were incurred in an interlocutory proceeding. The decisions of the Court of Appeal which followed thereafter relating to non-payment if costs in an earlier action were, for the most part, expressed in more rigid terms. The leading case for this purpose seems to have been Martin v. Earl Beauchamp[103]. That decision was the only case relied on by the House of Lords in M'Cabe and has frequently been referred to as one of the leading statements of the rule[104]. Their Lordships' statement of principle appears above at para.[125]. With that may be contrasted those cases which clearly depended upon the failure to pay the costs of interlocutory motions or applications which, consistently with Morton v. Palmer, seem always to have been expressed in terms of the exercise of a discretion. Subsequent cases taking that approach include Re Youngs; Dogge[105]v. Revett105 and Re Wickham; Maro[106]v. Taylor106, where a Court of Appeal consisting of Cotton and Lindley, L.JJ. again examined the reason for the application of the rule with respect to interlocutory costs. It is clear that the earlier Chancery principles with respect to contempt were no longer to be invoked under the Judicature Act 1873 but, according to [107]ton, L.J.107, "the principle that [formerly] existed subsists still", so that if a court thought it "unreasonable that proceedings should be allowed to go on, then the jurisdiction still remains and ought to be exercised in a proper case". His Lordship clearly appeared to believe that that depended on the "power of restraining vexatious or unreasonable proceedings".[108]e thought108 Morton v. Palmer strictly had no bearing on the case before the Court because that related to the costs of an order made by the Court of Appeal. Lindley, L.J. was of a similar opinion with respect to the insignificance by that time of the Chancery rules relating to contempt,[109]t he said109:

[146]

132 Subsequently, in Graham v. Sutton, Carden & Co.[110] the Court of Appeal, though disapproving any reliance on the law of contempt which may have been exemplified in Re Youngs, accepted that in relation to orders for costs on interlocutory applications there was a discretionary power to stay proceedings for non-payment of costs applicable in both the Chancery and Queen's Bench Divisions and that, according to Lindley, L.J.,[111] it should be exercised whenever a plaintiff has been "guilty of oppressive conduct in a suit, that with non-payment of costs is a sufficient guard for staying proceedings till the costs are paid". Lopes, L.J. considered[112] that, if the action were "vexatious, or if the plaintiff in the course of it acts vexatiously towards the defendant", then the Court had jurisdiction to stay the proceedings until the costs were paid. For this purpose Chitty, L.J. remarked[113] that as a judge in the Chancery Division he did not order a stay where only the costs of a single application were outstanding, but that "if several orders had been made for payment of costs by a plaintiff, and the costs remained unpaid, I used to stay proceedings until they were paid, on the ground that a succession of orders for payment of costs by him showed that he was conducting the litigation vexatiously." But of course all this was said in the context of a failure to pay costs with respect to interlocutory orders which is now in this State the subject of an explicit rule in Order 63.03.

133 Thus the practice in England by the end of the nineteenth century clearly differed according to whether the stay was sought with respect to the costs of an earlier action or merely with respect to the costs of earlier interlocutory applications, the need for a discretionary basis being, in a sense, obvious in the latter case, but the rule apparently being stated in almost dogmatic, unqualified terms in respect of unpaid costs of earlier actions, subject to the need to show that the subject matter of each action, as well as the parties, were the same or substantially[114] the same. Thus, in M'Cabe Lord Herschell described the rule as requiring that "the second action must be stayed"[115]. Lord Fitzgerald stated his experience in Ireland of the practice in granting stays thus[116]: "It was quite a matter of course, and a part of the jurisdiction of the Court, and never quarrelled with."

134 Before dealing with the later cases in England, in particular with the decision in Hines v. Birkbeck College in which the distinction was emphasised, it is necessary to see how the rule was transplanted into Australian practice. Boase v. Jones is the only reported Victorian case to my knowledge and depends entirely on M'Cabe. In New South Wales, however, there have been a number of decisions both at first instance and on appeal which appear also to have adopted the English practice, but to have applied the relevant authorities with respect to the non-payment of costs of previous actions in a way which has resulted in a restatement of the rule in somewhat less emphatic terms, in essence reflecting that the power is discretionary and that the object is to avoid vexation.

135 For practical purposes one may start with a decision of the New South Wales Full Court in 1874 in Contest v. Croxton[117]. Perhaps because of the newspaper source of the report, no authorities appear to have been cited directly to or by the Court, though one may argue that it was consistent with Cobbett v. Warner. Whatever be the reason, the Court, consisting of Sir James Martin, C.J. and Hargrave and Faucett, JJ., expressed the rule in broad discretionary terms as follows[118]:

[152]

In the result they held[131] that the respondent had been "entitled to the relief sought unless the plaintiff appellant [could] show that there [were] some special circumstances which would justify relaxation of the normal rule," but no such circumstances were shown in the particular case.

138 It is unfortunate that neither of these last two cases were cited to or referred by Isaacs, J. in Hutchinson v. Nominal Defendant when he considered the practice in 1972. So his Honour expressed the rule[132] in terms set out in paragraph [91] of the judgment of the learned President herein, but the difficulty is that they express the relevant principles in different terms from those which had recently been stated by the Full Court in that State. Thus, although accepting M'Cabe as giving what might appear to be a prima facie right to an order for a stay, Isaacs, J.[133] said that it was "not an absolute right, but is in reality an exercise of the discretion of the Court to stay proceedings which are either vexatious, unjust, oppressive, malicious or frivolous in the particular circumstances". Another aspect, he said,[134] which is a relevant consideration for a judge, in exercising the discretion, is that it should be seen "whether the plaintiff in any event has any merits and whether the action may be said to be vexatious [etc.] because of the lack of any such merits." As to the possible impecunious condition of a plaintiff his Honour appeared to take a more benevolent approach, accepting the passage previously cited from the newspaper report of Contest v. Croxton but, most unfortunately if I may say so with respect, not examining what the Full Court had said on the subject in Bowen v. Hickey.

139 Until the recent series of cases involving, and "reported"[135] under the name Idoport Pty. Ltd. v. National Australia Bank Ltd., there has been no subsequent consideration in Australia of the rule, to the best of my knowledge. The issue was looked at a number of times by judges at first instance and on one brief occasion by the Court of Appeal, but because reference was at this later stage made to more recent English decisions, it is preferable to leave any analysis of this group of cases until the recent English decisions have been examined.

140 This matter of payment of the costs of a previous unsuccessful action has arisen several times in the last 20 years or so in England but again, if I may say so with respect, there has been a similar tendency for decisions to be made as if they were ships passing in the night, with a failure to refer to one group or another of some of the earlier decisions. This cannot be said in strictness of the first of those decisions, Thames Investment and Securities Plc v. Benjamin[136], for it was a case in which Goulding, J. was considering the relevant remedy to give to defendants who had successfully resisted some two notices of motion in the same action and sought to have their costs paid before the action proceeded further. His Lordship granted the relief sought but expressed[137] the rule in terms that there was "no rigid and inflexible rule that dictates what the Court must do" and that the matter was "one for the Court's discretion to be judicially exercised on the facts of the particular case". The full passage, and a further proposition as to what prima facie ought to occur, appear in the judgment of the President at para.[93]. In my opinion, however, what his Lordship said was essentially confined to cases where the costs were outstanding by reason of the failure of the plaintiff to succeed on some interlocutory motion or application[138].

141 The next decision, Hines v. Birkbeck College (No. 2) is of some considerable importance, albeit that it has not been frequently cited except on questions of issue estoppel. There was extensive citation of authority to the Court, albeit that many relevant authorities were cited by the appellant in person, being a former professor of economics. Although the defendant's claims of res judicata and issue estoppel were rejected with respect to the outcome of an earlier proceeding, an application had been successfully brought to stay the new proceeding until the costs of the first had been paid. Nourse, L.J., with whom Balcombe, L.J. and McCowan, L.J. concurred, sought to analyse at least the principal earlier authorities being Morton, Martin, Wickham and M'Cabe. His Lordship observed[139] that the second and fourth of those authorities, namely Martin and M'Cabe, were cases where the plaintiff, having failed in one action, brought a second action for the same matter. As to these authorities the trial judge (Mervyn Davies, J.) had said that a stay for non-payment of costs would be "ordered as of course; unless no doubt there are some wholly exceptional circumstances".[140] Nourse, L.J. said that the plaintiff had sought to argue for a "less stringent rule" relying primarily on Morton and Wickham but as to these cases he said[141]:

[154]

But he did continue by stating that the trial judge had "correctly extracted the principle" of M'Cabe and he had not erred in applying it, from which I would infer that he accepted, although there was no direct statement to that effect appearing in M'Cabe, that the rule would not be applied if there were "wholly exceptional circumstances". One may observe that that statement of the principle, slightly qualified as it is in comparison with the bold words used in M'Cabe, has considerable similarity to the "special circumstances" exception referred to by the Full Court in Bowen v. Hickey. I suggest, with respect, that each court was aware that rules of that kind import an element of discretion, albeit that in the statement of principle the strong predilection of the court was that the making an order in the ordinary case and "as of course" should mean that the plaintiff who has refused to pay the costs of a former action must show special circumstances in order to avoid the making of a stay order.

142 There is one subsequent properly reported decision of the Court of Appeal which has sought to lay down principles relating to the stay of proceedings for failure to pay costs of an earlier action, namely Sinclair v. British Telecommunications Plc[142]. Regrettably the only cases cited to that Court on the issue were cases relating to stays sought with respect to interlocutory motions and applications, namely Morton v. Palmer and Thames Investment and Securities. With the greatest of respect, therefore, I find the analysis therein contained unsatisfactory because it proceeds upon the basis that the various dicta relating to the latter kind of application, many of which have been set out earlier, were used as the basis for qualified statements of principle which are not consistent with the earlier decision of the Court of Appeal in Hines v. Birkbeck College (which was neither cited nor discussed), nor are they consistent with the line of authority in New South Wales represented by Bowen v. Hickey. For example, Ferris, J., who seems to have given the principal judgment, took as his starting point[143] the principles stated by Goulding, J. in Thames Investment and Securities, which in turn were reliant on the statements in Morton v. Palmer. So he merely considered that "generally speaking, the plaintiff ought not to be allowed to apply for further identical or equivalent relief", although it might seem that his primary concern was as to jurisdiction at that stage.[144] But it is clear that he thought that the jurisdiction is merely "discretionary"[145], albeit that he considered that the stay order was correctly made. More doubtfully, as the case dealt with non-payment of costs of an earlier action, Judge, L.J., in whose judgment also Peter Gibson, L.J. agreed, took as the appropriate standard for exercising the discretion the statement in Morton v. Palmer to the effect that the problem should be approached "with an appropriate degree of caution".[146] Moreover his Lordship appeared also to accept[147] that the discretion involved a consideration as to whether "the proceedings would be stifled". Nevertheless he concluded that there was no sufficient evidence to support that contention, so that he likewise agreed that the stay order had been properly made. It may be observed that it is perhaps fortunate, having regard to the paucity of authority cited to the Court, that more was not said as to the Court's power in such circumstances, but it cannot be denied from a general reading of the judgments that they saw the power as essentially discretionary in the widest sense and with no predilection towards the making of such orders of the kind described in judgments such as Hines v. Birkbeck College.

143 The first of only two subsequent English appellate decisions of which I am aware is Societe Eram Shipping Co. Ltd. v. Compagnie Internationale De Navigation[148] in which Rix, L.J., exercising the jurisdiction of the Court of Appeal, dealt with an application to stay an appeal on the ground of non-payment of the original judgment costs. Clearly it was an unusual application and one which his Lordship identified as one involving the costs of part of the continuing proceeding. Finally there is the judgment last month of the Court of Appeal in Investment Invoice Financing v. Limehouse Board Mills Ltd. This case was, of course, not cited to us in argument but it is sufficient to say that it does not appear to differ from the recent English cases cited to the Court, including Hines v. Birkbeck College, as well as the earlier judgments in Martin and M'Cabe. An attempt was valiantly made by Moore-Bick, L.J. to apply also the observations in Sinclair v. British Telecommunication, but it seems, with respect, that in this most recent appeal the distinction carefully drawn in Hines v. Birkbeck College was again overlooked, although I do not think anything was said by the Court which was contrary to the propositions earlier stated. Brief reference was in fact made to Hines v. Birkbeck College[149] but, for reasons which are not apparent, the conflict between that case and Sinclair v. British Telecommunication were not addressed. In the result his Lordship, with whom Tuckey, L.J. agreed, stated the relevant rule in terms of the Court having "a discretion to stay the second proceedings until the cost of the first proceedings have been paid and will normally do so."[150] It was further said[151] that the principle is concerned with preventing abuse of the Court's process so that the purpose of making an order is "to do substantial justice between the parties". Finally it was said by his Lordship[152] that the ground for making the order in that case was that it was "unfair to put the defendant to the expense of fresh proceedings while his costs of the previous proceedings remain unpaid".

144 As I said earlier, it is necessary briefly to refer to some more recent unreported cases in New South Wales, although it will be seen that they add little to the general picture. In the one decision which went to the Court of Appeal, Idoport Pty. Ltd. v. National Australia Bank Ltd.[153], Mason, P., in whose judgment for this purpose Stein and Giles, JJ.A. concurred, a brief mention was made of the effect of an order for costs as a result of the dismissal of an appeal in that very long drawn out litigation. In dealing with the issue of costs generally the learned President observed[154] that, if and when the appellant commenced fresh proceedings, "it will, in the normal course, have to pay or secure the respondent's costs of the dismissed proceedings before being allowed to prosecute those proceedings", for which Bowen v. Hickey and Sinclair v. British Telecommunications were cited, although the page reference and the discussion in the latter case would not seem to support the proposition. In general terms that appears to be an endorsement of the Bowen v. Hickey test. The matter was referred to again in the same litigation at different stages thereafter. In one judgment under the same name but reported in [2005] NSWSC 752 Bergin, J. referred[155] to both Martin and M'Cabe, without dealing with subsequent authorities. Earlier Burchett, A.J. in another stage of the proceeding reported in [2004] NSWSC 212, had made general reference to cases such as Morton, Thames Investment, Bowen v. Hickey and Sinclair v. British Telecommunication, before citing in extenso a number of paragraphs from the judgment of Mason, P. including para.[83]. I would infer from the references to both Thames Investment and Sinclair that Burchett, A.J. took a broader view of the discretion than that accepted in cases such as Hines v. Birkbeck College.

Conclusion

145 It is by no means easy to draw conclusions as to the correct principles applicable on an application for a stay of proceedings based on failure to pay the costs of an earlier, concluded court proceeding. The answer is relevant in the present case inasmuch as it would be foolish to grant leave to the respondent in circumstances where the defendant, the present appellant, could seek such a stay on the basis of the relevant principle relying on admitted failures to pay costs in certain other proceedings.

146 It must be accepted that there are several decisions, including those of appellate courts, in which the relevant test is expressed in terms of a lesser or greater discretion and with that approach I have some sympathy, as may be seen from my discussion of the principles relevant in a cognate area, which has also been discussed here, where a stay is sought by reason of non-payment of costs in interlocutory stages of the subject proceeding: see Gao v. Zhang. Nevertheless it is obvious, at least from the authorities I have cited, that the courts have tended to take a more stringent view of the conduct of a plaintiff who has failed in an earlier proceeding relating to the same or substantially similar subject matter and has failed to pay the consequential costs ordered against that party. In substance it would appear that many courts have taken the view than an order for a stay would be granted "as of course". That may have been the product of a more rigorous approach to the conduct of parties in the nineteenth century and into the twentieth century, especially in courts of Chancery, but I have not traced why that should have been the case. Nor can I be satisfied that the consistent dicta I have quoted flowed from a misunderstanding of existing authority. On the other hand, although the principle is stated frequently in unqualified terms, it seems to have become accepted that a court may refuse to make such an order in cases where it can be shown that there are "some special circumstances which would justify relaxation of the normal rule", as the Full Court stated in Bowen v. Hickey[156]. A similar qualification would appear to have been accepted by Nourse, L.J. in Hines v. Birkbeck College although it can be argued that he expressed it more stringently.

147 There is no binding authority in this State but the solution, I suggest, lies in two directions. Undoubtedly the power should be seen to be a discretionary power but one ordinarily exercised if the relevant conditional facts are made out. No court power can be considered to be immutable, let alone one which brings to an end the right of a plaintiff to seek redress in the courts. What I believe has occurred is that there has been a confusion in earlier years between the circumstances in which a party could rely on res judicata or issue estoppel and those in which an unsuccessful party in respect of a similar claim had refused to pay costs. Unless the proceeding was terminated in exceptional circumstances, if the new one related to a claim in which the parties were identical and the issue was truly the same, then there can be little doubt that, if the relevant order were final, the party would be barred a second time by reason of the doctrines of res judicata or issue estoppel. The rule must therefore be directed to circumstances in which the order was not "final" or in which the proceedings are not identical or the parties are not identical, whatever the language used in the past. The Court therefore must look very carefully at what has been claimed and what has not been claimed and furthermore as to who makes the claim and who is subject to the claim. The closer the subject and the parties are to those of the original proceeding, the more reasonable it will be to treat the proceeding as a vexatious means of litigating the same question twice. The more closely the later proceeding resembles the first, the more obvious will be its vexatious character, but that factor will not be so clear if the first proceeding was defeated by reason of jurisdictional or other technical objections not going to the heart of the issues raised. But in a number of cases the elements of resemblance will be clear and the rule ought therefore to apply. The question remains as to how the rule should now be expressed.

148 If it were not for the long line of reported cases on this issue, it might be easier to assimilate the so-called rule into the general test applied by courts in their inherent jurisdiction to prevent abuse of process, for that certainly is the source of the rule, at least on the Common Law side. On the other hand, those statements which would seek to place the rule on such a basis might be said to run counter to the more emphatic expression of the rule in appellate courts. Nor is it possible to say that the rule is merely a product of pre-Judicature Act practice; indeed on the Chancery side it was an unusually rigid practice based on long replaced rules relating to the recovery of costs by attachment. But the strict rule survived the Judicature Acts; indeed it has been re-stated in emphatic terms by the House of Lords and the English and New South Wales Courts of Appeal. The only Victorian case, Boase v. Jones, seems to have depended entirely on what was said by the House of Lords in M'Cabe, but the practice in New South Wales was not merely clearly laid down by the Full Court in Bowen v. Hickey, but the Court of Appeal less than four years ago in Idoport explicitly described the practice in Bowen v. Hickey as the "normal course". Thus, therefore, authority would support a strict view of the practice, subject only to the right of the plaintiff to establish special circumstances. I find the analysis of the cases, at least those of which I am aware, contained in cases such as Bowen v. Hickey and Hines v. Birkbeck more satisfactory as a matter of logic, for, unfortunately, those in recent years who have taken a broader view and have expressed the rule in essentially discretionary terms could not have considered appropriately, if I may say so with respect, the leading authorities on stays for non-payment of costs of past actions, as opposed to stays based on non-payment of costs in interlocutory proceedings.

149 In the end, I would prefer to view the authorities as permitting an understanding of the rule as requiring only the exercise of a discretion, being a discretion to prevent vexatious proceedings or otherwise to control abuse of process. Likewise I would view the more stringent authorities as depending too greatly on the Chancery practice, which had its own peculiar rationale which has become of no relevance at least since the passing of the Judicature Act. If one were to prefer the practice on the common law side, then it would be possible to turn to the last reported decision on this subject, to my knowledge, of a common law court sitting in banc, namely, Cobbett v. Warner, in particular the judgment of Mellor, J. Although, as I have said, it has only been followed once explicitly to my knowledge, in Morton v. Palmer in the Queen's Bench Division, but in respect to non-payment of costs of interlocutory motions, what his Lordship said has never been disapproved and in my opinion can lie consistently with the later authorities, if one assumes, as I think one fairly may, that they each implicitly recognise that such orders involve the

exercise of a discretion, however firmly that exercise is suggested in those later appellate authorities. Cave, J. in Morton v. Palmer recognised that the general common law rule had been laid down in cases such as Hoare and Cobbett v. Warner, but he perceived the power in the case with which he was dealing to be discretionary in the widest sense.

150 If, however, one might return to that last appellate decision of a common law court where the costs in question were those incurred by an unsuccessful plaintiff in an earlier action, i.e. Cobbett v. Warner, then, as Mellor, J. stated, that jurisdiction to order a stay is to be invoked in order to prevent one party harassing another. He would have denied that it was a course "to be adopted whenever costs of a former litigation are unpaid" and he properly emphasised[157] that: "This summary jurisdiction should be sparingly exercised, as it deprives the party whose action is stopped of the right to try his cause and if necessary to carry it to the highest tribunal." With this approach I agree.

151 Nevertheless, whatever view one should take of the authorities, I am in agreement that the matter should be resolved in this case in the way proposed by the learned President in his judgment. I would in any event not be satisfied that the present cause of action is the same as, or substantially similar to, those in the previous actions relied upon, but I would likewise conclude that no error has been demonstrated in the exercise of the relevant discretionary power.

[155]

152 I have had the considerable advantage of reading in draft the judgments of the President and Ormiston, J.A. and I agree with their Honours that the appeal should be dismissed. Subject to those matters arising out of the judgment of

Ormiston, J.A. which I discuss below, I agree with the reasons stated by the President in concluding that the appeal should be dismissed.

153 To the extent, if at all, the reasons of the President are inconsistent with those of Ormiston, J.A. on this question, I respectfully agree with the qualification made by Ormiston, J.A. to the statement of the President, at [33], as to the extent to which the Court is precluded from deciding factual disputes upon hearing an interlocutory application. Clearly there may be cases where it is not only possible for the Court to confidently decide questions of fact on such an application but where justice would dictate that a court should do so, if to refrain to so act would permit a plainly unmeritorious case to vex the proposed defendant and to abuse the processes of the court.

154 I agree with Ormiston, J.A. that, for the practical reasons his Honour has stated, the appeal by the appellant should not be treated as confined only to a complaint that the application for leave to bring proceedings was itself an abuse of process rather than as also embracing complaint that the proposed action would itself constitute an abuse of process. In any event, both arguments have been addressed by the President and I agree with his reasons for their rejection. I do not consider that his Honour's reasons cast doubt on the statements of principle made by the members of the Court in Christie v Baker[158]. Both the President and Ormiston, J.A. acknowledge that that decision cannot be applied without allowance being made for the important differences between an application under s.23A of the Limitations of Actions Act and an application by a vexatious litigant under s.21(3), in particular the fact that applications under s.21(3) will usually be heard ex-parte.

155 With his renowned thoroughness, Ormiston, J.A. has fully canvassed the authorities concerning the powers of the Court to stay proceedings for non-payment of costs of past actions. In light of his Honour's analysis of the authorities, I have no difficulty endorsing the suggested guiding principles which his Honour articulates in his judgment, at [149]-[150].

At a glance

Court

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Before

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Judgment (156 paragraphs)

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Cases Cited (7)