Plaintiffs v Defendant

CONTRACT - Whether manager of partnership entered into deed of settlement on behalf of partners with an entitlement - Whether authorised to enter into deed - Whether intention to enter into deed as agent for principal.

ABUSE OF PROCESS - Whether proceeding should be stayed on abuse of process grounds - Whether second action unduly or oppressively burdensome to defendant - Whether defendant faces double jeopardy - Johnson v Gore Wood [2002] AC 1 - Walton v Gardiner (1993) 177 CLR 378 - Chickabo Pty Ltd v Zphere Pty Ltd [2019] VSC 73 - Chickabo Pty Ltd v Zphere Pty Ltd (No 3) [2020] VSC 464.

1 This proceeding is complex. It is convenient to offer a short summary at the outset. Given that the proceeding involves intricate issues of legal personality and the law of partnership, such a summary is likely to be as imprecise as it is clear.

2 Four years ago, a partnership brought a proceeding in this Court against one of its partners. The defendant partner was alleged to have made a wrongful gain in the course of partnership business. The partnership sought equitable relief, among other things.

3 The proceeding was tried in three successive stages. First, primary liability was made out. Secondly, following a successful appeal, accessorial liability was not immediately made out and was set down for determination in a later trial. Thirdly, an entitlement to an account of profits and a corresponding constructive trust was made out, at least as against the primarily liable defendants.

4 Before final orders were entered, the partnership entered into a deed of settlement with the defendants, including those entities subject to claims of accessorial liability. In the result, the defendant partner agreed to pay a substantial sum to the plaintiff partners and to relinquish his partnership equity in settlement of the claims. The proceeding was dismissed by consent. Several contemporaneous side deeds were also entered into with retired partners who had elsewhere alleged an entitlement.

5 Now, another retired partner has come forward and claims against the defendant partner. Though a partner at the time of the wrongdoing, he had resigned from the partnership prior to the original proceedings and executed a deed of release. He has commenced a new proceeding where he alleges that he is not bound by the deed of settlement that concluded the original proceeding; certainly, he was not in terms a party to it. He seeks an account of profits and a corresponding constructive trust in proportion to his partnership equity at the time of the wrongdoing. He also advances alternative claims in statute and contract.

6 By a separate proceeding the defendant partner seeks to restrain the latecomer from taking action. The defendant partner pleads variously that the latecomer is bound by the deed of settlement in the original proceeding; that the latecomer is estopped from bringing the claim as it is res judicata; and that the new proceeding is an abuse of process. He also alleges that the latecomer's deed of release prevents him from bringing the claim.

7 The former issues were carved out for determination in a separate trial, which I heard in March 2022. The latter issue has been deferred.

8 With the exception of one of his breach of contract claims, I have concluded that the latecomer is estopped from bringing the claim under the doctrine of res judicata. I have rejected the claim that he is barred by the deed of settlement and have rejected the abuse of process claim.

The Moore Stephens partnership, its deed, and the alleged wrongful gain

9 From about 1 January 2004, Moore Stephens (Vic) operated as a chartered accountancy practice ('the Partnership'). Each stakeholder controlled a private corporate entity ('the partnership entities') which became party to a partnership deed entered into in 2006 ('the 2006 Partnership Deed'). Each stakeholder was a director of their controlled corporate entity, and was referred to as a 'principal' in a schedule to the Partnership Deed ('the principals'). In some instances the partnership entities were trustees, often of trusts of which the principals were beneficiaries; though nothing turns on this. Except where context demands, I refer to the principals of the partnership entities and the partnership entities themselves generally as 'partners'.

10 Glenaldon Pty Ltd ('Glenaldon') was a partnership entity and a party to the 2006 Partnership Deed. Later, Zphere Pty Ltd ('Zphere') was substituted for Glenaldon. Gary Graco ('Mr Graco') controlled both Glenaldon and Zphere. Both Glenaldon and Zphere nominated Mr Graco as principal while a party to the 2006 Partnership Deed. For ease of reading, in what follows I refer to both Glenaldon and Zphere as 'Zphere'.

11 Pursuant to the 2006 Partnership Deed, the partners appointed Moore Stephens (Vic) Pty Ltd ('MSV') as manager of the Partnership. Each of the principals was also appointed as a director of MSV.

12 In 2012, GP5 Holdings Pty Ltd ('GP5') and George Pakis ('Mr Pakis') executed a deed of adoption in respect of the 2006 Partnership Deed and became a member of the Partnership. Mr Pakis controlled GP5 and was its nominated principal. He was consequently appointed as a director of MSV.

13 Swisse Wellness Group Pty Ltd ('Swisse') was a client of the Partnership. Whilst a partner and in the course of legitimate partnership business, Mr Graco became a director of Swisse. In his capacity as a director, he was invited to subscribe for shares in Swisse ('the Opportunity'). Mr Graco took advantage of the Opportunity, subscribing for shares in Swisse to a value of some $283,780 ('the Investment') through an entity controlled by him, GFBR Pty Ltd ('GFBR'). A little under 12 months later, GFBR sold the Investment for about $11,593,544.71 ('the Sales Proceeds'). Some time later, Zphere received a direct payment of $4,861,000 ('the Payment') from Fiske Pty Ltd, a company controlled by a director of Swisse. It is not disputed that the Payment was provided to Mr Graco in connection with the Investment as a 'top-up'. It is convenient to refer to the Sales Proceeds and the Payment collectively as 'the Gain'.

14 Mr Pakis was also a partner at the time of the Opportunity, the Investment, the Payment and the Gain.

15 In 2018 the then-partners of the Partnership, which included Chickabo Pty Ltd ('Chickabo'), commenced proceedings in this Court ('the Chickabo Proceeding') against, among others, Mr Graco, GFBR, Glenaldon and Zphere ('the Graco Parties'). In broad terms, the fourteen plaintiffs ('the Chickabo Plaintiffs') alleged that Mr Graco had breached fiduciary, contractual, and statutory obligations owed to the Partnership and to the partners in taking advantage of the Opportunity by making the Investment and receiving the Payment. The Chickabo Plaintiffs sought, among other things, a declaration that Mr Graco and the Graco Parties held the Gain and its traceable proceeds on constructive trust, and an associated account of the dealings with regard to the Gain and all profits arising therefrom.

16 Importantly, Mr Pakis was not a plaintiff in the Chickabo Proceeding: GP5 had resigned from the Partnership on 30 September 2016, and Mr Pakis and GP5 had entered into consequent heads of agreement setting out the terms of the exit ('the Pakis Heads of Agreement'). Mr Pakis not aware of the Chickabo Proceeding.

17 Nevertheless, Mr Pakis was referred to in the statement of claim in the Chickabo Proceeding. The relevant plea alleged, among other things, that at all material times the Partnership included[1] the Chickabo Plaintiffs and their principals; Mr Graco and Zphere; and GP5 and Mr Pakis. Also pleaded was the membership of Grant Rose Investments Pty Ltd ('GRI') and Philip Grant ('Mr Grant'); and of DRP Consulting Pty Ltd ('DRP') and Daniel Polonsky ('Mr Polonsky'). Each pair comprised a partnership entity and principal who had exited the Partnership prior to the commencement of the proceeding, but after the Opportunity and the Investment.[2]

18 Further, the statement of claim alleged that with effect from 30 September 2016 GP5 and Mr Pakis had resigned from the Partnership and released any claims in relation to it. A relevantly identical plea was made in respect of GRI and Mr Grant with a resignation date of 1 July 2015. Those allegations were not admitted in the defence and no determination was made on those issues. DRP and Mr Polonsky, who resigned on 23 November 2017, were themselves joined as defendants. The Chickabo Plaintiffs accepted that DRP and Mr Polonsky had an entitlement to the Gain, but took issue with the proportion of the Gain claimed.

19 Importantly, GP5 and Mr Pakis were never joined to the proceeding.

20 In November 2018, the Chickabo Proceeding was tried before the Honourable Justice Sifris. On 22 February 2019, Sifris J delivered reasons for judgment on the liability issues in favour of the Chickabo Plaintiffs ('Chickabo (No 1)').[3] No final orders were made at that time.

21 By orders made 5 March 2019 and on the application of the Chickabo Plaintiffs, several parties related to Mr Graco, including his wife Frana Graco ('Mrs Graco'), other members of Mr Graco's family, and the corporate entity FBR Fund Administration Pty Ltd ('FBR'), were joined to the proceeding ('the Added Defendants') to facilitate an anticipated claim to trace the Gain and its proceeds into assets allegedly held by them.

22 By orders made 3 May 2019 and on the application of the Chickabo Plaintiffs, MSV was joined as the fifteenth plaintiff. The affidavit in support of the joinder application, made by Polat Siva ('Mr Siva'), a partner of HWL Ebsworth ('HWLE'), the firm with conduct of the proceeding on behalf of the Chickabo Plaintiffs, disclosed that the purpose of the joinder was:

... so that MSV can hold, on behalf of the partners with an entitlement, any amounts or assets ordered by the Court to be paid or transferred by the defendants.

23 On 31 July and 1 August 2019, Sifris J heard an application by the Added Defendants to set aside the reasons as against them and to hold a retrial on the issue of their accessorial liability. On 30 August 2018, his Honour delivered judgment dismissing the retrial application ('Chickabo (No 2)').[4] That judgment was successfully appealed[5] and a separate trial of the claims against the Added Defendants was ordered to take place before Almond J.

24 On 24 June 2020, Sifris J heard and determined issues between the parties as to quantum and remedies. On 31 July 2020, his Honour delivered reasons for judgment on the remedies issues ('Chickabo (No 3)').[6]

25 In Chickabo (No 3), Sifris J held that:[7]

... orders will be made against Graco and Zphere jointly and severally for an account of profits in the amount of $17,756,733.64 being the full amount of the Gain[8] less the initial Investment.

26 Prior to final orders being made, the Chickabo Proceeding was settled on terms set out in a settlement deed dated 30 October 2020 ('the Chickabo Settlement Deed'). The terms required, among other things, that the Graco Parties, along with Mrs Graco and FBR, pay a settlement sum in the amount of $7,250,000 into the trust account of MSV.

27 In addition to the payment of the settlement sum, the Chickabo Settlement Deed required Zphere to assign its interest in the Partnership to the remaining Partnership entities, and for Zphere and Mr Graco to relinquish any entitlement to any proportion of the settlement sum that might arise through a right to share in the Partnership's profits.

28 The Chickabo Settlement Deed expressly referred to two other contemporaneously executed side deeds: the 'Grant Side Deed' and the 'DRP Side Deed'.

29 The Grant Side Deed is a deed executed between MSV, GRI and Mr Grant in respect of separate proceedings commenced by GRI and Mr Grant in the Supreme Court of Victoria on 23 May 2019 against the Graco Parties ('the Grant Rose Proceeding'). GRI and Mr Grant were also parties to the Chickabo Settlement Deed, where they gave releases in favour of the Graco Parties.

30 Pursuant to the Grant Side Deed, MSV agreed to pay to GRI a proportion of the net proceeds, after deducting costs and expenses of the Chickabo Proceeding and Grant Rose Proceeding, of (1) the sum paid to the Chickabo Plaintiffs under the Chickabo Settlement Deed and (2) the value of Zphere's interest in the Partnership assigned to the remaining Partnership entities under the Chickabo Settlement Deed (valued at $1,157,199).

31 The DRP Side Deed is a deed executed between the Chickabo Plaintiffs, DRP and Mr Polonsky.

32 The DRP Side Deed has two components. The first is a deed of settlement between MSV, DRP and Mr Polonsky ('the DRP Settlement Deed'). The second is an agreement between the same parties in the form of a letter from Strongman and Crouch to HWLE dated 24 July 2019 ('the DRP Letter Agreement'). DRP and Mr Polonsky were also parties to the Chickabo Settlement Deed, where they gave releases in favour of the Chickabo Defendants.

33 Pursuant to the DRP Settlement Deed and the DRP Letter Agreement, the Chickabo Plaintiffs agreed to pay DRP a proportion of the net proceeds, after deducting costs and expenses of the Chickabo Proceeding and the Grant Rose proceeding (1), the sum paid to the Chickabo Plaintiffs under the Chickabo Settlement Deed; and (2), the value of Zphere's interest in the partnership assigned to the other partners under the Chickabo Settlement Deed (valued at $1,157,199) after deducting costs and expenses of the Chickabo Proceeding.

34 The DRP Letter Agreement preceded the DRP Settlement Deed; the latter in part varied the terms of the former. The DRP Letter Agreement included a mechanism for varying the respective entitlements of the Chickabo Plaintiffs as against DRP and Mr Polonsky to the net proceeds of any judgment or settlement of the Chickabo Proceeding, to take account of any further claims that might be made by third parties, including former partners of the Partnership. The DRP Side Deed appears to have overtaken this mechanism and fixed the ultimate entitlement of the Chickabo Plaintiffs as against DRP and Mr Polonsky.

35 On 28 January 2021, Almond J made final orders in the Chickabo Proceeding by consent that the proceeding be dismissed with no order as to costs ('the Chickabo Proceeding Final Orders'). Though made in accordance with the Chickabo Settlement Deed, that deed was not referred to in the Chickabo Proceeding Final Orders.

36 On 31 August 2021, Mr Pakis commenced proceedings against the Graco Parties by way of writ and statement of claim ('the Pakis Proceeding').

37 The matters the subject of the Pakis Proceeding are considered in greater detail below. Broadly, it is alleged that Mr Graco breached fiduciary, contractual, and statutory obligations owed to Mr Pakis and to the Partnership by taking advantage of the Opportunity; by making the Investment; by receiving the Payment; and by failing to account to the partnership for the Gain.

38 There is a dispute between Mr Graco and Mr Pakis as to the extent of the similarities between the Pakis Proceeding and the Chickabo Proceeding. Nevertheless, it cannot be disputed that the controversies in each proceeding arise out of the same set of facts: in both proceedings the plaintiffs allege that Mr Graco and Zphere were partners of the Partnership, and failed to account to the Partnership for the Gain.

39 In response to the commencement of the Pakis Proceeding, the Graco Parties commenced this proceeding on 12 October 2021 ('the Zphere Proceeding'). The Graco Parties seek, among other things, declarations that:

(a) The Pakis Heads of Agreement operated to release and forever discharge the Graco Parties from the claims made against them by Mr Pakis in the Pakis Proceeding;

(b) alternatively, on a proper construction of the Chickabo Settlement Deed, the Graco Parties are released and forever discharged from the claims made against them by Mr Pakis in the Pakis Proceeding ('the Chickabo Settlement Deed Issue');

(c) alternatively, by reason of the dismissal of the Chickabo Proceeding by the Chickabo Proceeding Final Orders, Mr Pakis is estopped from bringing the Pakis Proceeding by operation of the doctrine of res judicata ('the Res Judicata Issue');

(d) alternatively, the Pakis proceeding is an abuse of process ('the Abuse of Process Issue').

40 By consent, I made orders on 6 December 2021 for the determination of a separate question in the following form ('the Separate Question'):

By reason of the matters pleaded in paragraphs 19 to 44 of the plaintiff's statement of claim in the Zphere Proceeding, and on the assumption that the release given by [Mr] Pakis and GP5 in clause 3.1(b) of the [Pakis] Heads of Agreement dated 5 October 2016 did not release the Moore Stephens Partnership or any of its partners or principals, including Zphere Pty Ltd and Mr Graco, from any claims in respect of the subject matter of the Pakis proceeding, are the plaintiffs entitled to the relief they seek in paragraph C, D, and /or F(i) of the prayer for relief in the Zphere proceeding?

41 I also made orders in the Pakis Proceeding that Mr Graco was not required to file a defence to the statement of claim filed in the Pakis Proceeding pending the determination of the Separate Question.

42 The parties assume for the purposes of the trial of the Separate Question that the Pakis Heads of Agreement did not give rise to a release and discharge of the Graco Parties from any claims brought against them in the Pakis Proceeding ('the Assumption'). In effect, the parties have put the Pakis Heads of Agreement to one side.

43 Mr Pakis and GP5 were partners at the time of any wrongful exploitation of the Opportunity. The effect of the Assumption is that without more they have an action in respect of Mr Graco's breach and some entitlement to the Gain derived therefrom.

44 Accordingly, on the premise that any cause of action which arises was not defeated by any release by Mr Pakis or GP5 contained in the Pakis Heads of Agreement, those issues that remain have the general character of defences to the action: the Chickabo Settlement Deed Issue, the Res Judicata Issue and the Abuse of Process Issue.

45 At the core of each issue is the extent of overlap or similarity between the claims made by the Chickabo Plaintiffs in the Chickabo Proceeding and those made by Mr Pakis in the Pakis Proceeding. Accordingly, before determining the three issues it is necessary to analyse the pleadings in each proceeding in some detail.

A comparison of the claims made in the Chickabo Proceeding and the Pakis proceeding

46 The Chickabo Plaintiffs' pleadings, in their final form, took the form of a Further Amended Statement of Claim dated 15 May 2019 ('the Chickabo FASOC'). Mr Pakis' pleadings in the Pakis Proceeding take the form of a Statement of Claim dated 31 August 2021 ('the Pakis SOC'). Different counsel settled each of the Chickabo FASOC and the Pakis SOC.

47 A close comparison of the pleadings reveals a number of differences.

48 First, in paragraphs [11] and [14] the Chickabo FASOC pleads:

11 At all material times, the partners of the Partnership were:

...

(j) Mr George Pakis (until 30 September 2016).

...

14 With effect from 30 September 2016, GP5 Holdings Pty Ltd and Mr Pakis resigned from the Partnership and released any claims in relation to the Partnership.

49 The Pakis SOC is relevantly identical insofar as paragraph [9] pleads the same composition of the Partnership until 30 September 2016. However, the Pakis SOC makes no allegation as to the composition of the Partnership after that date, and does not plead with respect to the resignation of GP5 and Mr Pakis or any releases given by them.

50 Secondly, in paragraphs [15] to [18] of the Chickabo FASOC the Chickabo Plaintiffs plead:

Duties owed by Zphere

1. As a partner, Zphere owed a fiduciary duty to the Partnership and to each other partner:

(a) to exercise its powers and discharge its duties:

(i) in good faith;

(ii) for a proper purpose; and

(iii) in the interests of the Partnership;

(b) not to place itself in a position where its interests conflicted with the interests of the Partnership and, if a conflict did arise, not to prefer its own interests to those of the Partnership;

(c) not to make a profit out of its position as partner without the informed consent of the Partnership;

(d) to render full accounts to the Partnership;

(e) to give the Partnership full information of all things affecting the Partnership;

(f) to account to the Partnership for any benefit derived by it without the consent of the other partners:

(i) from any transaction concerning the Partnership or

(ii) from any use by it of the Partnership's property, name, or business connexion.

The duties arise as a matter of law. In the case of the duties specified in sub-paragraphs (d) to (f), they arise as a matter of law by reason of ss 32 and 33 of the Partnership Act 1958 (Vic) (the Act).

1. Pursuant to clause 9 of the Deed, Zphere owed a duty to the Partnership and to each other partner to:

(a) be just and faithful to the other partners and to the Partnership in all transactions relating to the Partnership (clause 9(a));

(b) devote the whole of its time and attention to the practice of the Partnership and not, without the consent of 75% in number of the other partners, to engage in or be concerned or interested in any way whatsoever in any other business or enter into any employment or hold any office or appointment otherwise than for the benefit of the Partnership (clause 9(b));

(c) at all times give to the other partners a full and faithful account of all transactions relating to the Partnership and upon every reasonable request furnish a full and correct explanation to the other partners and afford every assistance in its power in conducting the Partnership to their mutual advantage (clause 9(c));

(d) forthwith pay all moneys cheques and negotiable instruments received by it in connection with or on account of the Partnership (including any directors' fees) into the Partnership account (clause 9(f));

(e) duly and punctually make full and proper entries of all business transacted by it on account of the Partnership (clause 9(g)).

Each of the duties arose pursuant to the Deed. Further, the duties were fiduciary duties imposed on Zphere as a matter of law.

1. Pursuant to clause 11.2(b) of the Deed, Zphere owed a duty to the Partnership and to each other partner not without the consent of 75% in number of the other partners to engage directly or indirectly in any business other than the practice or hold any honorary office or appointment.

The duty arose pursuant to the Deed. Further, the duty is a fiduciary duty imposed on Zphere as a matter of law.

1. Pursuant to clause 11.4 of the Deed, Zphere owed a duty to the Partnership and to each other partner to:

(a) obtain the formal approval by a special majority vote of the Partnership prior to making any investment in association with a client of the practice or with any entity in which a client of the practice has an interest or with parties to whom the partners was introduced through its involvement with the practice or in holding any office in any entity in which a client of the practice has an interest (clause 11.4(a)); and

(b) offer to all other partners every opportunity of which it has knowledge to invest with a client of the practice or with an entity in which a client of the practice has an interest. No partner shall be compelled to enter into any such investment opportunity (clause 11.4(b)).

The duties arose pursuant to the Deed. Further, the duties were fiduciary duties imposed on Zphere as a matter of law.

19 As a partner within the meaning of the Deed, Graco owed:

(a) to each partner of the Partnership, and

(b) further or in the alternative, to each principal of the Partnership

the fiduciary, contractual and statutory duties of a partner of the Partnership set out in paragraphs 15 to 18 above.

51 In the Pakis SOC, precisely the same matters are pleaded in paragraphs [12] to [15], save that 'Graco' is in each instance substituted for 'Zphere'. Likewise, paragraph [16] of the Pakis SOC is almost identical to paragraph [19] of the Chickabo FASOC, save that 'Zphere' is substituted for 'Graco' and the alternative claim in sub-paragraph (b) has been removed.

52 In other words, the pleadings as to the existence of the duties in the Chickabo FASOC and the Pakis SOC are relevantly identical, save that the duties of Zphere and Graco are pleaded in the opposite order and thus with minor differences.

53 Thirdly, in paragraphs [24] to [29] of the Chickabo FASOC under the subheading 'The Partnership's Relationship with Swisse', various matters are pleaded as to the relationship between the Partnership and Swisse. The Pakis SOC makes substantially similar allegations in paragraphs [17] to [22] under an identical subheading.

54 Fourthly, in paragraphs [30] to [40] of the Chickabo FASOC various matters are pleaded with respect to the Investment in Swisse; the sale of the Investment by GFBR; and Graco's incomplete disclosure to the Partnership. Paragraphs [23] to [26] of the Pakis SOC plead substantially similar though abbreviated allegations: relevantly, the Pakis SOC does not replicate allegations in the Chickabo FASOC of an incomplete disclosure by Graco to the Partnership in the period from 16 March 2016 to May 2016. Nor does it replicate a plea that the Partnership had requested Mr Graco account to the Partnership for the payment, and that Mr Graco had failed or refused to do so. The Pakis SOC refers in terms to Chickabo (No 1) and Chickabo (No 3) as material facts.

55 Fifthly, in paragraphs [41] to [48] of the Chickabo FASOC the Chickabo Plaintiffs plead:

(a) failing to disclose the Opportunity to the Partnership;

(b) causing GFBR to make the Investment;

(c) failing to account to the Partnership for the Investment;

(ca) receiving the benefit of the Payment; and

(d) failing to account to the Partnership for the Payment,

Graco breached his fiduciary duties to the Partnership, alternatively to the other principals of the partners, in that he:

(e) failed to act in the interests of the Partnership;

Graco acted in his own interests, alternatively in the interests of GFBR and/ or Glenaldon.

(f) placed himself in a position where his interests conflicted with the interest of the Partnership;

The conflict was between Graco's private financial interest, and the interests of the Partnership as a whole; alternatively, between Graco's interest as directing mind and will of GFBR and Glenaldon, and the interests of the Partnership as a whole.

(g) preferred his own interests to those of the Partnership;

(h) profited from his position as a partner (alternatively, the principal of a partner) without the informed consent of the Partnership;

As directing mind and will of GFBR and Glenaldon, and as a member of the George St Group Super Fund, Graco profited from the receipt by GFBR of the proceeds of the Investment, and from the receipt by Glenaldon of the Payment.

(i) failed to render full accounts to the Partnership;

(j) failed to give the Partnership full information of all things affecting the Partnership;

The Opportunity, the Investment and the Payment were each things affecting the Partnership.

(k) failed to account to the Partnership for a benefit derived by him without the consent of the other partners from:

(i) a transaction concerning the Partnership, or

(ii) the use by him of a business connexion of the Partnership.

The Opportunity, the Investment and the Payment were each transactions concerning the Partnership because (1) Grace was the Partnership's relationship partner for Swisse, (2) Swisse was a longstanding and valuable client of the Partnership, (3) Mr Ring was a longstanding and valuable client of the Partnership, and (4) Fiske Pty Ltd was a client of the Partnership, a major shareholder in Swisse and a company under Mr Ring's control.

The Investment and the Payment each arose from use by Graco of a business connexion of the Partnership, namely (1) Swisse's status as a longstanding and valuable client of the Partnership, (2) Mr Ring's status as a longstanding and valuable client of the Partnership, (3) Graco's status as the Partnership's relationship partner for Swisse, (4) Graco's status as a director of Swisse, and (5) the status of Fiske Pty Ltd as a client of the Partnership, a major shareholder in Swisse and as a company under Mr Ring's control.

(a) failing to disclose the Opportunity to the Partnership;

(b) causing GFBR to make the Investment;

(c) failing to account to the Partnership for the Investment;

(d) receiving the benefit of the Payment; and

(e) failing to account to the Partnership for the Payment,

Graco breached his contractual and statutory duties to the Partnership, alternatively to the other principals of the Partnership, under the Deed and the Act in that he:

(f) failed to be just and faithful to the other partners and to the Partnership in a transaction relating to the Partnership, contrary to clause 9(a);

Particulars

The Opportunity, the Investment and the Payment were each transactions relating to the Partnership because (1) Graco was the Partnership's relationship partner for Swisse, (2) Swisse was a longstanding and valuable client of the Partnership, (3) Graco was a director of Swisse, (4) Mr Ring was a longstanding and valuable client of the Partnership, and (5) Fiske Pty Ltd was a client of the Partnership, a major shareholder in Swisse and a company under Mr Ring's control.

(g) failed to give the other partners a just and faithful account of a transaction relating to the Partnership, and failed to furnish a full and correct explanation to the other partners, contrary to clause 9(c) and s 32 of the Act;

(h) failed forthwith to pay money received by him in connection with or on account of the Partnership, contrary to clause 9(f) and s 33 of the Act;

The proceeds of the Investment and the Payment were money received by him in connection with or on account of the Partnership because (1) Graco was the Partnership's relationship partner for Swisse, (2) Swisse was a longstanding and valuable client of the Partnership, (3) Graco was a director of Swisse, (4) Mr Ring was a longstanding and valuable client of the Partnership, and (5) Fiske Pty Ltd was a client of the Partnership, a major shareholder in Swisse and a company under Mr Ring's control.

(i) failed duly and punctually to make full and proper entries of business transacted by him on account of the Partnership, contrary to clause 9(g);

(j) failed to obtain formal approval by special majority vote of the Partnership before making the Investment, contrary to clause 11.4(a); and

(k) failed to offer the Opportunity to all the other partners, contrary to clause 11.4(b).

(a) failing to disclose the Opportunity to the Partnership;

(b) failing to account to the Partnership for the Investment; and

(c) failing to account to the Partnership for the Payment,

Zphere breached its fiduciary duties to the Partnership in that it:

(d) failed to act in the interests of the Partnership;

Zphere acted in its own interests, alternatively in the interests of Graco, GFBR or Glenaldon.

(e) placed itself in a position where its interests conflicted with the interest of the Partnership;

The conflict was between the private financial interest of Zphere's directing mind and will (Graco), and the interests of the Partnership as a whole; alternatively, between the interest of Zphere's directing mind and will (Graco) in his capacity as directing mind and will of GFBR and Glenaldon on the one hand, and the interests of the Partnership as a whole on the other.

(f) preferred its own interests to those of the Partnership;

(g) permitted, without the informed consent of the Partnership, GFBR and Glenaldon to profit from Zphere's position as partner;

The unauthorised profit derived by GFBR was the proceeds of sale of the Investment.

The unauthorised profit derived by Glenaldon was the Payment.

The Investment and the Payment were derived from Zphere's position as partner because (1) Zphere's directing mind and will (Grace) was the Partnership's relationship partner for Swisse, (2) Swisse was a longstanding and valuable client of the Partnership, (3) Grace was a director of Swisse, (4) Mr Ring was a longstanding and valuable client of the Partnership, and (5) Fiske Pty Ltd was a client of the Partnership, a major shareholder in Swisse and a company under Mr Ring's control.

(h) failed to render full accounts to the Partnership;

(i) failed to give the Partnership full information of all things affecting the Partnership; and

The Opportunity, the Investment and the Payment were each things affecting the Partnership.

(j) failed to account to the Partnership for a benefit derived by it without the consent of the other partners from:

(i) a transaction concerning the Partnership, or alternatively

(ii) use by it of a business connexion of the Partnership.

The Opportunity, the Investment and the Payment were each transactions concerning the Partnership because (1) Zphere's directing mind and will (Grace) was the Partnership's relationship partner for Swisse, (2) Swisse was a longstanding and valuable client of the Partnership, (3) Graco was a director of Swisse, (4) Mr Ring was a longstanding and valuable client of the Partnership, and (5) Fiske Pty Ltd was a client of the Partnership, a major shareholder in Swisse and a company under Mr Ring's control.

The Investment and the Payment each arose from use by Zphere of a business connexion of the Partnership, namely (1) Swisse's status as a longstanding and valuable client of the Partnership, (2) Mr Ring's status as a longstanding and valuable client of the Partnership, (3) the status of Zphere's directing mind and will (Grace) as the Partnership's relationship partner for Swisse, (4) the status of Zphere's directing mind and will (Grace) as a director of Swisse, and (5) the status of Fiske Pty Ltd as a client of the Partnership, a major shareholder in Swisse and as a company under Mr Ring's control.

(a) failing to disclose the Opportunity to the Partnership;

(b) failing to account to the Partnership for the Investment; and

(c) failing to account to the Partnership for the Payment,

Zphere breached its contractual and statutory duties to the Partnership under the Deed and the Act in that it:

(d) failed to be just and faithful to the other partners and to the Partnership in a transaction relating to the Partnership, contrary to clause 9(a);

Particulars

The Opportunity, the Investment and the Payment were each transactions relating to the Partnership because (1) Zphere's directing mind and will (Graco) was the Partnership's relationship partner for Swisse, (2) Swisse was a longstanding and valuable client of the Partnership, (3) Zphere's directing mind and will (Graco) was a director of Swisse, (4) Mr Ring was a longstanding and valuable client of the Partnership, and (5) Fiske Pty Ltd was a client of the Partnership, a major shareholder in Swisse and a company under Mr Ring's control.

(e) failed to give the other partners a just and faithful account of a transaction relating to the Partnership, and failed to furnish a full and correct explanation to the other partners, contrary to clause 9(c) and s 32 of the Act;

(f) failed duly and punctually to make full and proper entries of business transacted by it on account of the Partnership, contrary to clause 9(g);

(g) failed to obtain formal approval by special majority vote of the Partnership before making the Investment, contrary to clause 11.4(a); and

(h) failed to offer the Opportunity to all the other partners, contrary to clause 11.4(b).

Accessorial liability of Graco

45 Graco knew:

(a) the content of his duties to the Partnership, alternatively to the other principals of the Partnership, set out in paragraphs 19 to 23 above;

(b) the content of Zphere's duties to the Partnership set out in paragraphs 15 to 18 above;

(c) of the existence of the Opportunity;

(d) of the making of the Investment by GFBR; and

(e) of his and Mrs Graco's receipt of the benefit of the Payment, alternatively the receipt of the Payment by Glenaldon.

Particulars

Graco's knowledge is to be inferred from his being (1) a signatory to the Deed; (2) a principal of a partner; (3) the directing mind and will of Zphere, GFBR and Glenaldon; (4) a director of Swisse; (5) the signatory to the Swisse application for shares by GFBR; and (6) the contact person named in Mr Ring's instruction to make the Payment, which instructions were given by email from Mr Ring to Mr Don Wijeratne of Goldman Sachs dated 4 November 2015. A copy of the email is in the possession of the solicitors for the plaintiffs and may be inspected at their offices by appointment.

Graco's knowledge is also to be inferred from the content of the letter dated 27 February 2018 from Sophie Payton of Freehills (solicitors for Graco) to Stephen Kerr of HWL Ebsworth ( solicitors for the plaintiffs). A copy of the letter is in the possession of the solicitors for the plaintiffs and may be inspected at their offices by appointment.

46 Graco:

(a) failed, as a principal of the Partnership, alternatively as directing mind and will of Zphere, to disclose the Opportunity to the Partnership;

(b) caused GFBR to make the Investment;

(c) failed, as a principal of the Partnership, alternatively as directing mind and will of Zphere or of GFBR, to account to the Partnership for the Investment;

(d) failed, as a principal of the Partnership, alternatively as directing mind and will of Zphere or of Glenaldon, to account to the Partnership for the Payment; and

(e) preferred, as a principal of the Partnership, alternatively as directing mind and will of Zphere, his own private financial interests to the interests of the Partnership as a whole.

47 By reason of the matters set out in paragraphs 45 to 46 above, Graco:

(a) knew that;

(b) shut his eyes to the obvious fact that;

(c) wilfully and recklessly failed to make such inquiries as an honest and reasonable person would make, which would establish that; or

(d) had knowledge of circumstances which would indicate to an honest and reasonable person that,

Zphere was in breach of fiduciary duty.

Particulars

The particulars to paragraph 45 are repeated.

48 In the premises, Graco:

(a) knowingly induced or procured Zphere's breaches of fiduciary duty set out in paragraphs 43 to 44 above;

(b) is accountable to the Partnership for his knowing inducement or procurement of breaches of fiduciary duty; and

(c) is accountable to the Partnership as a constructive trustee; and

(d) is accountable to the Partnership for his knowing receipt of property in breach of fiduciary duty.

Particulars

On 13 November 2015 Graco received the Payment. Fiske Pty Ltd transferred $4,861,000 to the account of Glenaldon for and on behalf of Graco and Mrs Graco.

Separately from receipt of the Payment. Graco received a total of about $254,868 from GFBR being the traceable proceeds of the Investment or the Payment purportedly by way of pension drawings.

56 By comparison, paragraphs [29] to [36] of the Pakis SOC read:

Breach of duty by Graco

29 By:

(a) failing to disclose the Opportunity to the Partnership;

(b) causing GBFR to make the Investment;

(c) failing to account to Pakis for the proceeds of the Investment;

(d) receiving the benefit of the Payment; and

(e) failing to account to the Partnership for the Payment,

Graco breached his fiduciary duties to Pakis and GP5, in that he:

(f) failed to act in the interests of the Partnership;

(g) placed himself in a position where his interests conflicted with the interest of the Partnership;

(h) preferred his own interests to those of the Partnership;

(i) profited from his position as a partner (alternatively, the principal of a partner) without the informed consent of the Partnership;

(j) failed to render full accounts to the Partnership;

(k) failed to give the Partnership full information of all things affecting the Partnership;

(l) failed to account to the Partnership for a benefit derived by him without the consent of the other partners from:

(i) a transaction concerning the Partnership; and

(ii) the use by him of a business connexion of the Partnership.

(a) failing to disclose the Opportunity to the Partnership;

(b) causing GBFR to make the Investment;

(c) failing to account to Pakis for the proceeds of the Investment;

(d) receiving the benefit of the Payment; and

(e) failing to account to the Partnership for the Payment,

Graco breached his contractual and statutory duties to Pakis and GP5, under the Deed and the Partnership Act, in that he:

(f) failed to be just and faithful to Pakis and GP5 and to the Partnership in a transaction relating to the Partnership, contrary to clause 9(a) of the Deed;

(g) failed to give the other partners a just and faithful account of a transaction relating to the Partnership, and failed to furnish a full and correct explanation to the other partners, contrary to clause 9(c) and s.32 of the Partnership Act;

(h) failed forthwith to pay money received by him in connection with or on account of the Partnership, contrary to clause 9(f) and s.33 of the Partnership Act;

(i) failed duly and punctually to make full and proper entries of business transacted by him of account of the Partnership, contrary to clause 9(g);

(j) failed to obtain formal approval by special majority vote of the Partnership before making the Investment, contrary to clause 11.4(a); and

(k) failed to offer the Opportunity to all the other partners, contrary to clause 11.4(b).

Breach of duty by Zphere

1. By failing to render true accounts and full information (including failing to disclose the existence of the Opportunity and the facts of the Investment, the sale of the Investment and the Payment), Zphere breached its fiduciary duties to Pakis and GP5 in that it:

(a) placed itself in a position where its interests conflicted with the interest of the Partnership;

(b) permitted, without the informed consent of the Partnership, GFBR and Glenaldon to profit from Zphere's position as partner;

(c) failed to render full accounts to the Partnership;

(d) failed to give the Partnership full information of all things affecting the Partnership; and

(e) failed to account to the Partnership for a benefit derived by it without the consent of the other partners from:

(iii) a transaction concerning the Partnership; alternatively

(iv) use by it of a business connexion of the Partnership.

1. Further and alternatively, by failing to render true accounts and full information (including failing to disclose the existence of the Opportunity and the facts of the Investment, the sale of the Investment and the Payment), Zphere breached its contractual and statutory duties to GP5 and Pakis under the Deed and the Partnership Act in that it:

(a) failed to be just and faithful to the other partners and to the Partnership in a transaction relating to the Partnership, contrary to clause 9(a);

(b) failed to give the other partners a just and faithful account of a transaction relating to the Partnership, and failed to furnish a full and correct explanation to the other partners, contrary to clause 9(c) and s.32 of the Act; and

(c) failed duly and punctually to make full and proper entries of business transacted by it on account of the Partnership, contrary to clause 9(g).

Accessorial liability of Graco

33 Graco knew:

(a) the content of his duties to the Partnership, alternatively to the other principals of the Partnership, set out in paragraphs 12-15 above;

(b) the content of Zphere's duties to the Partnership set out in paragraph 16 above;

(c) of the existence of the Opportunity;

(d) of the making of the Investment by GFBR; and

(e) of his receipt of the benefit of the Payment, alternatively the receipt of the Payment by Glenaldon.

34 Graco:

(a) failed, as a principal of the Partnership, alternatively as directing mind and will of Zphere, to disclose the Opportunity to the Partnership;

(b) caused GFBR to make the Investment;

(c) failed, as a principal of the Partnership, alternatively as directing mind and will of Zphere or of GFBR, to account to the Partnership for the Investment;

(d) failed, as a principal of the Partnership, alternatively as directing mind and will of Zphere or of Glenaldon, to account to the Partnership for the Payment; and

(e) preferred, as a principal of the Partnership, alternatively as directing mind and will of Zphere, his own private financial interests to the interests of the Partnership as a whole.

35 By reason of the matters set out in paragraphs 33 and 34 above, Graco:

(a) knew;

(b) shut his eyes to the obvious fact;

(c) wilfully and recklessly failed to make such inquiries as an honest and reasonable person would make, which would establish; or

(d) had knowledge of circumstances which would indicate to an honest and reasonable person,

that Zphere was in breach of fiduciary duty.

36 In the premises, Graco:

(a) knowingly induced or procured Zphere's breaches of fiduciary duty set out in paragraphs 31 and 32 above;

(b) is accountable to GP5 and Pakis for his knowing inducement or procurement of breaches of fiduciary duty; and

(c) is accountable to GP5 and Pakis as a constructive trustee.

57 Thus, the breaches of duty pleaded in the Pakis SOC are nearly identical to those pleaded in the Chickabo FASOC. They differ only in that the Pakis SOC pleads that the breaches of duty by Zphere and Graco are as against Pakis and GP5 whilst the Chickabo FASOC pleads that the breaches of duty by Zphere and Graco were variously against the Partnership or as against the principals of the other partners.

58 Sixthly, in paragraphs [49] to [56] of the Chickabo FASOC, under the subheadings 'Knowing participation and knowing receipt by GFBR' and 'Knowing participation and knowing receipt by Glenaldon', various allegations are pleaded as to the participatory liability of GFBR and Glenaldon. Paragraphs [37] to [44] of the Pakis SOC are identical.

59 Seventhly, in paragraphs [57] to [78] of the Chickabo FASOC various allegations of material fact are pleaded with respect to claims of knowing receipt against the Added Defendants, which are not reproduced in the Pakis SOC and can be put to one side.

60 Eighthly, the Chickabo FASOC concluded with a prayer for relief against the Graco Parties (among others) that reads:

1. A declaration that they hold the Investment, the Payment and any part of the traceable proceeds thereof on constructive trust for the Partnership.

B An account of their respective dealings and transactions with regard to:

1 The Investment; and

2 The Payment;

and of all profits made from the receipt of any part of the Investment and the Payment.

C Equitable compensation.

D Damages.

E Costs.

F Interest.

G Such further or other alternative orders as the court sees fit.

(underlining added)

61 By contrast, the Pakis SOC concludes with a series of pleadings as to the material facts with reference to Chickabo (No 1) and Chickabo (No 3) and the Chickabo Proceeding Final Orders[9] as well as a plea that:

At all times Graco, Zphere, GFBR and Glenaldon have failed or refused to account to Pakis and GP5 for the profits and benefits received by them in breach of their duties by reason of the sale of the Investment and the receipt of the Payment (the Profits and Benefits).

62 The prayer for relief in the Pakis SOC then reads:

And the plaintiffs claim against the defendants:

1. A declaration that they hold 9.8% of the Profits and Benefits, and any part of the traceable proceeds thereof, on constructive trust for Pakis (in his personal capacity and as trustee for the GP5 practice trust.

2. An account of their respective dealings and transactions with regard to the investment and the payment and the profits and benefits.

C Equitable compensation.

D Damages.

E Interest.

F Costs.

G Such further or other order as the court considers appropriate.

(underlining added)

63 The reference to the 9.8% of 'Profits and Benefits' corresponds to the percentage entitlement in the Partnership assets that Mr Pakis held prior to his retirement.

64 Overall, the claims in the Chickabo Proceeding and the Pakis Proceeding are largely the same, save for arguably important differences as to how the duties and their breaches are pleaded.

(i) in pleading the duty, are pleaded as owed by Zphere to the Partnership and each other partner; and

(ii) in pleading the breach, are pleaded as owed by Zphere to the Partnership;

(iii) in pleading the duty, are pleaded as owed by Mr Graco to each partner of the Partnership and to each principal of the Partnership; and

(iv) in pleading the breach, are pleaded as owed to the Partnership and to the other principals of the partners.

(i) in pleading the duties, are pleaded as owed by Zphere to each partner of the Partnership; and

(ii) in pleading the breach, are pleaded as owed by Zphere to Pakis and GP5;

(iii) in pleading the duty, are pleaded as owed by Mr Graco to the Partnership and each other Partner; and

(iv) in pleading the breach, are pleaded as owed by Mr Graco to Pakis and GP5;

67 Nevertheless, though the duties and their breach are pleaded in different ways, the critical facts that generated the controversy with Mr Graco pleaded in the Pakis Proceeding are nearly identical to those pleaded in the Chickabo Proceeding. In each, the plaintiff (or plaintiffs as the case may be) pleads that it (or they) was a partner in the Partnership; that Mr Graco breached his fiduciary, contractual, and statutory duties to the Partnership or each partner in making the Investment in the Opportunity; and that Mr Graco has failed to account for his consequent Gain.

Submissions of the parties and summary of conclusions

68 As mentioned above, the effect of the Assumption is that Mr Pakis and GP5 were partners at the time of the exploitation of the Opportunity and as such have a prima facie entitlement to bring an action for the Gain.

69 However, as mentioned above, Mr Graco pleads a series of matters which on his submission restrain Mr Pakis and GP5[10] from bringing an action in respect of the Gain:

(a) The Chickabo Settlement Deed Issue - Mr Graco submits that Mr Pakis bound by the Chickabo Settlement Deed and as such his claim is foreclosed. Mr Pakis contests this, maintaining that he is not a party to the Chickabo Settlement Deed and that no party executed the deed as agent on his behalf.

(b) The Res Judicata Issue - Mr Graco also submits that the Chickabo Proceeding Final Orders determined the rights and liabilities of the parties to the Chickabo Proceeding and their privies, which relevantly include Mr Pakis. Mr Pakis denies that he is a privy of the Chickabo Plaintiffs, including because he was unaware of the Chickabo Proceeding and as a consequence had no opportunity to be heard.

(c) The Abuse of Process Issue - Mr Graco further contends that if either of those arguments are not accepted, the Pakis Proceeding should be stayed as an abuse of process.

70 In my opinion, Mr Pakis is estopped from bringing the claim in the Pakis Proceeding (save for one of his breach of contract claims) by reason of the doctrine of res judicata. Mr Pakis, as a privy in interest with the Chickabo Plaintiffs, is precluded by the Chickabo Proceeding Final Orders from asserting or prosecuting the claims made in the Pakis Proceeding with that singular exception.

71 I do not consider that Mr Pakis is bound by the Chickabo Settlement Deed. Mr Pakis has not released his claims against the Graco Defendants and the deed does not operate to preclude Mr Pakis from prosecuting the claims in the Pakis Proceeding.

72 If I had found that Mr Pakis was not a privy of the Chickabo Plaintiffs, and accordingly that he was not barred from prosecuting the claim by reason of res judicata, I would not have held that the prosecution of the Pakis Proceeding was an abuse of process.

73 It is convenient to deal first with the ground on which Mr Graco succeeded, turning then to those grounds which have not been made out.

74 The doctrine of res judicata precludes the assertion in a subsequent proceeding of a claim to a right or obligation which has been asserted in an earlier proceeding and determined by judgment.[11]

75 If a cause of action was held to exist so that judgment was given upon it, the cause of action merges in the judgment and no longer maintains an independent existence.[12] Conversely, if the cause of action was held not to exist, the unsuccessful plaintiff can no longer assert that it does; he or she is estopped from doing so per rem judicata.[13] A classic statement of res judicata is found in Carl Zeiss Stiftung v Rayner & Keeler Ltd [No 2],[14] where Lord Guest stated (in the context of the subsidiary doctrine of issue estoppel):[15]

The requirements of issue estoppel still remain (1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel is final; and (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel was raised or their privies.

76 This formulation was endorsed by the High Court of Australia in Kuligowski v Metrobus.[16]

77 In the present case, the Chickabo Proceeding Final Orders dismissed the Chickabo Plaintiffs' claims for breaches of fiduciary duties owed to the Partnership and to each partner (and like breaches of statutory duties under the Partnership Act 1958 (Vic) ('Partnership Act') and duties owed pursuant to the 2006 Partnership Deed) by failing to disclose the Opportunity to the Partnership and failing to account to the partners for the Investment or the Gain. Mr Graco argues that the doctrine of res judicata precludes any other partner, including Mr Pakis, from bringing the same claims.

78 The submission raises two key questions for consideration.

Are the Chickabo Proceeding Final Orders a final order or judgment on the merits?

79 The first is whether the Chickabo Proceeding Final Orders, being orders for dismissal made by consent, constitute a final order or judgment on the merits. This issue was not seriously disputed and is easily disposed of.

80 The characterisation of the Court's formal determination as an 'order' (as opposed to a judgment) is immaterial to the operation of res judicata.[17]

81 A consent disposition may still be a judgment made on the merits. In Re South American and Mexican Co,[18] Herschell LC stated:[19]

The truth is, a judgment by consent is intended to put a stop to litigation between the parties just as much as is a judgment which results from the decision of the Court after the matter has been fought out to the end. And I think it would be very mischievous if one were not give a fair and reasonable interpretation to such judgments, and were to allow questions that were really involved in the action to be fought over again in subsequent action.

82 Moreover, in Daniel v Minister for Immigration and Multicultural and Indigenous Affairs ('Daniel'),[20] Goldberg J held that:[21]

The fact that the application for review was dismissed by consent is not a bar to the Minister being able to raise a claim of res judicata. An order made or a judgment given by consent binds the parties to the judgment or order as effectively as if the judgment had been given or the order made after a fully contested hearing. ... the only difficulty that can arise in determining whether a consent order raises an issue of res judicata, is in specifying the 'res', or the matter, or the cause of action which has already been determined by the Court.

83 In the present case, there is no difficulty in determining the 'res' or cause of action that was determined by the Court in the Chickabo Proceedings Final Orders. In examining the record to determine what causes of action are res judicata,[22] the Chickabo FASOC and the Chickabo Proceeding Final Orders make it clear that the matter determined (ie, that was dismissed by consent) was the claim by the Chickabo Plaintiffs for the relief set out in the Chickabo FASOC.

Is Mr Pakis a privy of the Chickabo Plaintiffs?

84 The second question raises thornier issues. It is not in issue that the doctrine of res judicata applies not only to parties but to their privies. Here Mr Graco asserts that Mr Pakis is a privy in interest of the Chickabo Plaintiffs. He contends that as a partner in the Partnership, Mr Pakis had the same interest in the outcome of the Chickabo Proceeding as his fellow partners (some of whom were plaintiffs or, in the case of DRP and Mr Polonsky, defendants).

85 The question of who is a privy has been described as a 'potentially complex enquiry' and has been the subject of much judicial consideration.[23]

86 The complex enquiry as to whether one person is the privy of another has been expressed in various ways.

87 Mr Graco emphasises that the claims brought by the Chickabo Plaintiffs were claims brought on behalf of the Partnership. He submits, therefore, that Mr Pakis is privy in interest with the Chickabo Plaintiffs because as one of the partners, he had a legal interest in the claims brough by the Partnership in the Chickabo Proceeding which was represented by the Chickabo Plaintiffs. He argues that the justice of binding Mr Pakis to the estoppel arises because Mr Pakis stood to benefit from the claim made by the Chickabo Plaintiffs.[24] Mr Graco emphasises that the representation of Mr Pakis' interest by the Chickabo Plaintiffs was subject to fiduciary duties imposed on them which guard against collateral risks which arise from binding Mr Pakis to an outcome in a proceeding to which he was not party.

88 Mr Pakis, in contrast, emphasises his lack of awareness of the Chickabo Proceeding and relatedly the absence of control on his part with the prosecution of the claim. He emphasises the core principle that a party claiming or denying the existence of legal rights or obligations should have an opportunity to present evidence and argument to advance the evidence, the facts and the law on which the claim or denial is based. Relatedly, he submits that it is no part of the doctrine of res judicata that a party to a later proceeding will be denied the opportunity to prosecute a claim on the basis of a prior determination of a proceeding to which they were not party absent an awareness or opportunity to participate in that proceeding.

89 Evaluation of the competing submissions starts with Ramsay v Pigram.[25] In that case, A brought proceedings to recover damages for negligence arising out of a motor vehicle accident with a car driven by a police officer in the course of his employment in the service of a government department. As a consequence of the capacity in which the police officer was acting, the claim by A was brought against the nominal defendant pursuant to the Claims against the Government and Crown Suits Act 1912. Before that action was commenced, the police officer had brought a separate action in his personal capacity against A arising as a result of the same accident. The police officer obtained a verdict against A on the basis that A's negligence had caused the accident. A's claim that the police officer was contributorily negligent was dismissed.

90 In the later action, the nominal defendant argued that the verdict in the prior action estopped A from asserting that it was the police officer's negligence which caused the accident. The High Court held that no estoppel arose, including on the ground that there was no privity of interest between the nominal defendant and the police officer such as would enable the nominal defendant to rely upon the findings in the latter's action. Barwick CJ said the following:[26]

... But it is said that the Government was a privy of the police officer who in its service drove its vehicle on the occasion out of which the claims of the parties arose. The question in this case therefore at this point is simply whether there was relevant privity between the Government and the police officer.

Of the three classes of privies of blood, of title and of interest, the only one which is submitted and indeed could be submitted to be relevant is that of a privy in interest. But I am unable to conclude that the Government or the Police Department was in this sense a privy of the police officer. The basic requirement of a privy in interest is that the privy must claim under or through the person of whom he is said to be a privy. Here it is quite clear that the Government had no interest in the action between the respondent and the police officer: nor can it be said that the action brought by the police officer was brought by him in any sense on behalf of the Government or that in relation to the defence of contributory negligence the respondent could have been treating the Government as the real "defendant" to that claim. In every respect the action between the respondent and the police officer was personal to each of them, neither being in any sense in relation to the action or any of the issues involved in it, representative of another. Nor can it be said that the Government in any sense claims under or in virtue of the police officer or of any right of his, or that it derives any relevant interest through him.

91 The High Court returned to the notion of a claim being 'under or through' in Tomlinson v Ramsey Food Processing ('Tomlinson'):[27] That case arose after workers in an abattoir had been told that their employment with the defendant company ('RFP') had been discontinued and instead they would thereafter be employed by a labour hire company, which would provide their services to RFP. Two years later, the workers were told that the labour hire company was no longer providing labour to RFP and could not offer them ongoing employment. The Fair Work Ombudsman ('the FWO') brought proceedings against RFP in the Federal Court of Australia to enforce provisions in the Fair Work Act 2009 (Cth) ('the FWA') and awards made under the Workplace Relations Act 1996 ('the WRA'). The WRA conferred power on the Federal Court to order that a person found to be an employer pay an amount to a person found to be an employee. The FWO successfully obtained orders that RFP was the employer and obtained an additional order that certain entitlements be paid to the workers, which included Mr Tomlinson.

92 Mr Tomlinson later brought proceedings against RFP claiming damages in negligence for personal injuries sustained by him. He alleged that the labour hire company (not RFP) was his employer, but that RFP as the controller of the workplace owed him a duty of care. If RFP had been the employer, legislation in New South Wales concerning workplace injury claims would have prevented the claim.

93 RFP pleaded that the worker was estopped by the orders made in the Federal Court from disputing that RFP had been his employer at the time. The Court of Appeal in New South Wales upheld its plea.

95 The critical issue in the case was whether Mr Tomlinson was privy in interest with the FWO. Although the case involved issue estoppel, not res judicata, that was of no consequence as the same principle applies as it governs the identification of privies for all forms of estoppel which result from the rendering of a final judgment in an adversarial proceeding.[28]

96 The majority (French CJ, Bell, Gageler and Keane JJ) held that no estoppel arose. So too did Nettle J, who provided separate reasons.

97 The majority explained the privity principle as being informed by the high level principle that one who takes the benefit ought also to bear the burden.

98 The majority referenced Barwick CJ's 'pithy' statement in Ramsay v Pigram[29] by emphasising the importance of recognising that Barwick CJ's application of the principle had two limbs:[30]

... A party to a later proceeding (A) can be privy in interest with a party to an earlier proceeding (B) on either of two bases. One basis is that A might have had some legal interest in the outcome of the earlier proceeding which was represented by B, or that B has some legal interest in the outcome of the later proceeding which is represented by A. The extent to which the representation by A or B will be sufficient to bind the other is the critical issue which will be explored later in these reasons. The other basis is that, after that earlier proceeding was concluded by judgment, A might have acquired from B some legal interest in respect of which B would be affected by an estoppel which A then relies on in the later proceeding.

99 As is the case here, the critical question in Tomlinson was whether A had a legal interest in the outcome of the earlier proceeding which was represented by B.

100 The majority further emphasised that the interest of the privy must in each case be a legal interest and that an economic or other interest on the part of A in the outcome of the earlier proceeding is insufficient.

101 The majority stated that the mere lawful assertion of a claim which, if accepted, would have resulted in a determination enhancing or enforcing a legal interest, would not have the effect of binding a person to an estoppel.[31]

102 The Court explained why that was so:[32]

... It is a principle at the core of our legal system that a party claiming or denying the existence of a legal right or obligation should have an opportunity to present evidence and arguments to establish the facts and law on which the claim or denial is founded. There are countervailing considerations, some of which operate to create exceptions to that principle. Finality and fairness, including maintaining the certainty of past adjudicated outcomes and ensuring the predictability of future adjudicated outcomes, are amongst those countervailing considerations, and the estoppels informed by those considerations are amongst the exceptions to the principle. The operation of an estoppel, it must be remembered, is to preclude the assertion in a subsequent proceeding of what is claimed to be the truth.

The justice of binding to an estoppel a person who was a party to an earlier proceeding is readily apparent: the person has already had an opportunity to present evidence and arguments. The justice of binding to an estoppel a person whose legal interests stood to benefit from the making or defending of a claim by someone else in an earlier proceeding will often also be apparent. With the benefit of the claim or defence also comes the detriment of the estoppel. That, at least, is the underlying theory. But it is a theory which has limitations. It would be quite unjust for such a person to be precluded from asserting what the person claims to be the truth if the person did not have an opportunity to exercise control over the presentation of evidence and the making of arguments in the earlier proceeding and if the potential detriment to the person from creating such an estoppel was not fairly taken into account in the decision to make or defend the claim in the earlier proceeding or in the conduct of the earlier proceeding.

Traditional forms of representation which bind those represented to estoppels include representation by an agent, representation by a trustee, representation by a tutor or a guardian, and representation by another person under rules of court which permit representation of numerous persons who have the same interest in a proceeding. To those traditional forms of representation can be added representation by a representative party in a modern class action. Each of those forms of representation is typically the subject of fiduciary duties imposed on the representing party or of procedures overseen by the court (of which opt-in or opt-out procedures and approval of settlements in representative or class actions are examples), or of both, which guard against collateral risks of representation, including the risk to a represented person of the detriment of an estoppel operating in a subsequent proceeding outweighing the benefit to that person of participating in the current proceeding.

103 In applying that reasoning, the majority drew a distinction between a claim brought by a person who owed another fiduciary duties and a claim brought by a statutory office holder.

104 After making those observations, the majority considered that the FWO did not enforce Mr Tomlinson's interest 'under or through', or 'on behalf of' (Mr Tomlinson). Rather, the FWO acted pursuant to its own statutory powers.

105 Relatedly, the majority held that the pursuit of the statutory function to enforce awards could not be interpreted as requiring the FWO to consider the legal interests of employees beyond the legal interests specifically protected by the enforcement action.

106 As such, the majority concluded that the FWO did not represent the legal interests of Mr Tomlinson in the sense that gives rise to an estoppel.[33]

107 Nettle J reached the same conclusion, but provided separate reasons. Like the majority, his Honour's analysis built upon the notion of privies essayed by Barwick CJ in Ramsay v Pigram, commencing with the concept of a claim 'under or through' a privy.[34]

108 His Honour noted that the concept of 'under or through' was redolent of the party's claim either 'deriving from' or otherwise depending on the party's title before observing that the concept now extended to instances where the putative privy of a party to a subsequent proceeding has sued or defended 'on account of or for the benefit of' the party to the subsequent proceeding. His Honour then observed that the 'precise content of that concept is not yet settled'.[35]

109 Next, his Honour noted established authority that privity of interests existed 'where party and privy share the same interest in the sense that they are equally entitled to assert a discrete legal right', or 'where they share an interest by reason of an established legal or equitable relationship such as agency or trusteeship'.[36]

110 Next, Nettle J referred to an extension of the concept to cases where the privy claims 'under or through' or 'on account of or for the benefit of' a party in a manner which is sufficiently analogous to one or other of the same interest or established legal or equitable relationship cases to warrant its inclusion. His Honour noted that the difficulty lay in deciding what is sufficiently analogous.

Plainly, "on account of or for the benefit of" includes cases where a trustee has sued or defended on behalf of a beneficiary and where a party to a proceeding relies on the putative privy's title. But it also extends to cases where a party has employed a servant or agent in an attempt to re-litigate an issue already determined against the principal in a previous proceeding and where an action has been brought by a party at the direction and with the authority of the putative privy; and, in England, it has been held to extend to a case where a party to litigation is "the corporate embodiment" of a natural person in the sense that the natural person made decisions and gave instructions on behalf of the corporation.

In England, it has also been said that it is enough that there be "a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party". But in contrast, in this country, that formulation has been judicially criticised for its evident circularity...

The approach in this country, therefore, remains one of identifying characteristics of a relationship between party and privy which, although not amounting to a shared same interest or established legal or equitable relationship like agency or trusteeship, are sufficiently analogous to the established categories of sufficient connection to warrant inclusion in the concept. And, for present purposes, the important characteristics of the established forms of representation which emerge from the decided cases appear to be that a principal is generally able to control the conduct of an agent, and that the imposition of fiduciary duties on certain kinds of representatives has the effect of guiding the representative's conduct and providing remedies to the principal on default.

112 His Honour then considered the question of identity of interest. Like the majority, his Honour emphasised that 'a mere economic interest is not a sufficient indicium of privity in successive or mutual relationships'[37]. Relatedly, his Honour emphasised that a party does not have an interest in a putative privy's claim merely because the claim of the party and the putative privy in respect of different legal interests are productive of a unity of outcome. His Honour emphasised that it was necessary that they share the same legal interest.[38]

113 His Honour emphasised that notwithstanding that the FWO obtained an order that Mr Tomlinson be paid his entitlement, this did not mean that the FWO and Tomlinson had the same legal interest. The fact that a vindication of Mr Tomlinson's interest would produce the same result did not make him privy in interest with the FWO.

114 Of interest to the present case, his Honour next said:[39]

Comprehension of that point may perhaps be assisted by reference to a more prosaic example of its application. If for good consideration A covenants with B, and also for good consideration covenants severally with C, that A will pay benefits to C, B obtains a contractual entitlement to performance of A's covenant with B and a legal interest in performance of that covenant which is separate and distinct from C's contractual entitlement to performance of A's covenant with C and C's legal interest in the performance of the latter covenant. Thus, despite the evident mutuality of B and C's economic interests in the performance of A's covenants with B and C, they do not have the same interest for the purposes of issue estoppel. And, in those circumstances, if A fails to pay C, and B brings a proceeding for specific performance of A's covenant with B to pay C, then, unless C is joined as party to the proceeding, C will not be bound by the outcome of the proceeding or by any of the essential issues decided in the proceeding.

Arguably, it would be different if, instead of entering into several covenants with B and C, A covenanted with B and C jointly. In the case of a joint covenant, there is only one covenant, to the benefit of which each of the covenantees is jointly entitled, and it might be said that there is sufficient mutuality of interest to render each of the covenantees privies in interest. If so, C would be bound by the outcome of B's proceeding against A, regardless of whether C were joined as party to the proceeding, at least if C had notice of the proceeding and chose not to become involved. But where covenants are several, the legal interest of each of the covenantees is separate and distinct.

115 What emerges from the above is that the critical question is whether the legal interest of the party asserted in the later proceeding was shared with and represented by the party in the former proceeding. Secondly, the concept extends to established legal or equitable relationships such as agency or trusteeship where the party to the former proceeding can be said to bring the claims on behalf of the latter. Thirdly, the concept extends beyond recognised relationships such as agency or trusteeship to analogous circumstances where fiduciary obligations are owed by the party advancing the claim with respect to the prosecution of the claim.

116 Mr Pakis denies that he had the same interest in the outcome of the Chickabo Proceeding as his fellow partners; nor that the Chickabo Plaintiffs enforced his interest 'under or through' or 'on account of or for the benefit of' Mr Pakis.

117 First, Mr Pakis submits that for a person not a party to the original proceeding to be bound by the doctrine of res judicata, he or she must be shown to have been aware or had notice of the original proceeding.

118 The evidence establishes that Mr Pakis was unaware of the Chickabo Proceeding until April 2021, well after the making of the Chickabo Proceeding Final Orders. If that submission is correct, then Mr Pakis cannot be a privy of the Chickabo Plaintiffs.

119 In short, the question raised by this submission is whether a person who was unaware of a prior proceeding can nevertheless be a privy of a party which conducted the prior proceeding. It is convenient to deal with this question at the outset.

Can Mr Pakis be a privy in interest of the Chickabo Plaintiffs if he did not have notice of the Chickabo Proceeding?

120 Mr Pakis submits that res judicata does not have any application to a person 'who did not have some measure of control of the proceedings in question'.[40] In order for a person to be bound by a previous judgment, Mr Pakis submits that 'it must be proved clearly that he had, or must be deemed to have had, notice that the relevant question was in issue and would have to be decided'.F[41] To hold otherwise he submits would offend the fundamental concern of the Courts to give natural justice to a person before determining his or her rights.

121 Mr Pakis draws attention to the High Court's judgment in Tomlinson where the majority said:[42]

The justice of binding to an estoppel a person who was a party to an earlier proceeding is readily apparent: the person has already had an opportunity to present evidence and arguments. The justice of binding to an estoppel a person whose legal interests stood to benefit from the making or defending of a claim by someone else in an earlier proceeding will often also be apparent. With the benefit of the claim or defence also comes the detriment of the estoppel. That, at least, is the underlying theory. But it is a theory which has limitations. It would be quite unjust for such a person to be precluded from asserting what the person claims to be the truth if the person did not have an opportunity to exercise control over the presentation of evidence and the making of arguments in the earlier proceeding and if the potential detriment to the person from creating such an estoppel was not fairly taken into account in the decision to make or defend the claim in the earlier proceeding or in the conduct of the earlier proceeding.

122 To similar effect, Mr Pakis relied upon the judgment of the Court of Appeal in the United Kingdom in House of Spring Gardens Ltd v Waite & Ors ('House of Spring Gardens'),[43] and in particular to that part of the reasons of Stuart-Smith LJ where his Lordship held that a party was a privy because he was 'well aware of the (earlier) proceeding'.[44]

123 The observation of Stuart Smith LJ in House of Spring Gardens that the estopped party was 'content to sit back and leave others to fight his battles with no expense to himself (which was) sufficient to make him privy to the other persons' must be placed in context.[45] The putative privy was one of three joint tortfeasors who were unsuccessful defendants in a judgment obtained against them in Canada described as 'a joint and several' judgment.[46] Two of the three tortfeasors had made application in Canada to set aside the judgment on the ground of fraud. If that application had succeeded it would have resulted in the judgment being set aside in toto; that is, against all the defendants, not just the two who had made the application.

124 In the proceeding before the Court of Appeal, the judgment creditor had sought to register the judgment. The judgment debtor who had not made application in Canada resisted registration, arguing that it had been obtained by fraud. In that context, the Court of Appeal held that the judgment debtor's argument was res judicata. Both the judgment debtor in the appeal, and the judgment debtors who had made application in Canada, had a mutual interest in the same right; viz the right to set aside (or analogously to resist registration) of a judgment said to have been procured by fraud.

125 I do not take House of Spring Gardens, and in particular the comments of Stuart-Smith LJ, as establishing a requirement that a party estopped under the doctrine of res judicata must be 'well aware' of the original proceeding. The substance of his Lordship's reasoning was directed at the identity of interest between the parties. Moreover, consideration of a claimant's knowledge of the original proceeding is distinct from the stipulation of that knowledge as a requirement.

126 Similarly, the relevant extract in the reasons in Tomlinson must also be placed in context.[47] I do not take that passage as establishing an irreducible requirement that a person must personally have had the opportunity of presenting evidence in the earlier proceeding to be estopped under the doctrine of res judicata. In the sentence immediately following, their Honours adverted to the detriment that might result in holding a person who was not a party to an earlier proceeding to the outcome in that proceeding where that person's legal interest 'stood to benefit from the earlier claims'. Each should be viewed as separate and sufficient rationales for the operation of res judicata in a given case.

127 Mr Pakis' submission gives insufficient attention to the second part of the last sentence in the extract:[48]

'It would be quite unjust for such a person to be precluded from asserting what the person claims to be the truth if the person did not have an opportunity to exercise control over the presentation of evidence and the making of arguments in the earlier proceeding and if the potential detriment to the person from creating such an estoppel was not fairly taken into account in the decision to make or defend the claim in the earlier proceeding or in the conduct of the earlier proceeding.'

(underline added)

128 Additionally, the submission overlooks the immediately following paragraph where their Honours stated:[49]

Traditional forms of representation which bind those represented to estoppels include representation by an agent, representation by a trustee, representation by a tutor or a guardian, and representation by another person under rules of court which permit representation of numerous persons who have the same interest in a proceeding. To those traditional forms of representation can be added representation by a representative party in a modern class action. Each of those forms of representation is typically the subject of fiduciary duties imposed on the representing party or of procedures overseen by the court (of which opt-in or opt-out procedures and approval of settlements in representative or class actions are examples), or of both, which guard against collateral risks of representation, including the risk to a represented person of the detriment of an estoppel operating in a subsequent proceeding outweighing the benefit to that person of participating in the current proceeding.

129 In my view, a proper analysis of the Court's reasoning in context is that in cases where it is just to bind a person to the outcome in the earlier proceeding, that person's interests have in fact been represented in the earlier proceeding; for example, 'representation by a trustee', 'representation by a tutor or guardian', or 'representation by another person under rules of court which permit representation of numerous persons who have the same interest in the proceeding'.

130 In that respect, the person said to be estopped does have the opportunity to be heard by reason of the prosecution of the action on his or her behalf by the representative. Moreover, the fiduciary duties imposed on the representative (or various rules of the Court) protect that person from the detriment of the estoppel otherwise applying: presumably, any detriment suffered would found an action for breach of fiduciary duty or amount to an irregularity under the rules of Court.

131 On this aspect of the definition, Mr Pakis was represented by the Chickabo Plaintiffs. The Chickabo Plaintiffs as partners of the Partnership (and for that matter MSV, their alleged agent) brought the claims on behalf of the Partnership and each of them owed fiduciary obligations to all other partners (which by virtue of the Assumption included Mr Pakis), such that Mr Pakis had a measure of control of the proceeding. If his interests had been impermissibly cast aside by the other partners, they are required to account to him for the default in their duties.

132 Moreover, if the doctrine of res judicata requires a defendant to establish that the claimant had or had been deemed to have notice of the original proceeding, this raises difficulties and would appear to be inconsistent with instances involving the prosecution of claims by a class of litigants who are undoubtedly privies: beneficiaries, who are privies of their trustees, are often part of a large class of potential beneficiaries to whom notice may not always reasonably be given. To stipulate an awareness requirement for the doctrine of res judicata would considerably reduce its scope.

133 I therefore reject the submission that Mr Pakis cannot be a privy in interest of the Chickabo Plaintiffs on the ground that he had no notice of the Chickabo Proceedings.

134 Mr Graco argued that the conclusion that Mr Pakis and the Chickabo Plaintiffs are privies in interest is supported by relevant authority. He relied in particular on Shiels v Blakeley,[50] a decision of the Court of Appeal of New Zealand which held that a member of a union was bound as a privy by a determination in proceedings brought by the trade union of which he was a member against the trustees of a superannuation fund. The Court of Appeal said:[51]

We conclude that there must be shown such a union or nexus, such a community or mutuality of interest, such an identity between a party to the first proceeding and the person claimed to be estopped in the subsequent proceeding, that to estop the latter will produce a fair and just result having regard to the purposes of the doctrine of estoppel and its effect on the party estopped.

135 The question of res judicata arose in the contest of an earlier action having determined the validity of amendments to a trust deed establishing an industry superannuation fund for waterside workers, which affected members' interests. The parties to the earlier action were three members of the Waterside Workers Union and the union itself. On appeal, the amendment was held to be invalid because of non-compliance with a proviso in the trust deed which required the approval of the Government Actuary. In a separate action, it was held that the amendment did not adversely affect members' interests. An appeal against that determination was dismissed. Nine months later, the trust deed was amended in the same form but after the relevant approval had been made. In a subsequent action, another member of the union, Mr Shiels, sought declarations of invalidity on the ground that the members' interests were adversely affected. On the hearing of an application to stay the proceeding, Counsel for Mr Shiels accepted that there was no circumstance which distinguished his position from the plaintiffs in the first action. The Court of Appeal concluded accordingly that:[52]

[Mr Shiels'] interest in the Fund was identical with those of the individual plaintiffs with whose objections to the amendment he had a common interest. The joinder of the Union as a plaintiff [in the earlier proceeding] was in order to represent the views of the majority of the its members who objected to the amendment and the Union was held to be representing its members all of whom were members of the Fund. That included Mr Shiels.

136 I do not obtain much assistance from Shiels v Blakely; the legal interests were conceded to be identical and there was a finding that the Union's role in the earlier proceeding was to represent its members in that hearing. The identity or otherwise of the legal interests is the very thing in dispute here and the relationship between the Union and its members in the earlier proceeding was not the subject of any detailed analysis in Shiels v Blakely. In any event it is not sufficiently similar to the relationship between the Chickabo Plaintiffs (or any of them) and Mr Pakis to transpose across the reasoning and conclusions to the present case.

137 Page v McKensey & Ors,[53] a decision of Gzell J of the Supreme Court of New South Wales is more closely on point. In that case, his Honour held that partners are privies of each other, stating that there was sufficient identity between a partner who had brought a subsequent action and the partners who were parties to the earlier action so as to render him a privy.

138 Mr Pakis sought to distinguish his Honour's reasons in Page v McKensey & Ors on the basis that Page v McKensey & Ors rested on the principle in Executor Trustee and Agency Company of South Australia Ltd v The Deputy Federal Commissioner of Taxes (SA) ('Executor Trustee'),[54] the application of which, beyond limited circumstances, was rejected by the Court of Appeal of this Court in FBR Fund Administration Pty Ltd v Chickabo Pty Ltd.54F[55] On my reading of his Honour's reasons, the principle in Executor Trustee related to his Honour's reasons on the abuse of process question, not res judicata.[56]

139 The second basis upon which Mr Pakis sought to distinguish Page v McKensey & Ors was that the question of privies was not fully argued in that case. The full extent of the arguments is not entirely clear from the reasons. However, it would appear that the existence of fiduciary obligations between the partners was an important aspect of his Honour's reasoning.[57]

140 It remains to be determined whether Mr Pakis' interest in the Pakis Proceeding was claimed 'under or through' or 'on account of or for his benefit by' the Chickabo Plaintiffs in the relevant sense. The critical questions are whether the claims now brought by Mr Pakis are claims in the same legal interest as those brought by the Chickabo Plaintiffs, or whether the claims of the Chickabo Plaintiffs for his benefit are sufficiently analogous to recognised instances giving rise to the privy relationship such as agency or trusteeship, and are the subject of attendant fiduciary obligations owed by the Chickabo Plaintiffs to, inter alia, Mr Pakis. It is useful to divide this analysis into two stages, recognising two broad types of relief Mr Pakis claims: the gain-based claim for the Gain; and the loss-based claim for equitable compensation or for breaches of the 2006 Partnership Deed.

The Gain-based claim: the account of profits and constructive trust in the Gain and its traceable proceeds

141 Mr Pakis submits that he is not a privy of the Chickabo Plaintiffs in respect of the Gain as:

(a) His claim is only that Mr Graco account for a specific percentage of the Gain (9.8%) corresponding to Mr Pakis' equity in the Partnership at the relevant time. He argues that, by contrast, the claims of the Chickabo Plaintiffs were for the whole of the Gain.

(b) His claim is for breaches of fiduciary duties (and analogous statutory duties) owed to him as a partner, whereas the Chickabo Plaintiffs' claims were for breaches of duties owed to the Partnership.

142 The effect of both of these submissions is that Mr Pakis' claims are several or individual claims and are, on his submission, for relief to be awarded to him separately. The necessary extension of this submission is that they are not claims in respect of the same legal interest as the claims of the Chickabo Plaintiffs, and nor are they claims which were brought by the Chickabo Plaintiffs in any sense analogous to claims brough by that of an agent or trustee.

143 Mr Graco submits that it makes no difference whether the claim brought by Mr Pakis is framed as a claim for a specific sum, arguing that the claim in the Chickabo Proceeding for the entirety of the Gain must necessarily have included or overtaken any claim for Mr Pakis' 9.8% share. Whilst that may be so, it is still necessary to examine Mr Pakis' claims in order to determine whether they are in the same legal interest. Acceptance of this aspect of Mr Graco's submission without considering this question, runs the risk of equating unity of outcome with the question of same legal interest, an approach frowned upon by Nettle J in Tomlinson.

144 The competing submissions require consideration of the nature of Mr Pakis' claims and the attendant relief available.

145 In my view, Mr Pakis' claim for relief referable to 9.8% of the Gain, however framed, misconceives the essential nature of his 9.8% interest in the Partnership. Mr Pakis does not have a 9.8% interest in the assets of the Partnership as if he was a tenant in common: he does not hold a fixed 9.8% interest in either the assets of the Partnership or its profits. Properly characterised, a partnership interest is not an immediate entitlement to any proportion of a partnership's assets or profits.

146 In Commissioner of State Revenue v Rojoda ('Rojoda'),[58] Bell, Keane, Nettle and Edelman JJ gave an authoritative statement of the nature of the interest of partners in partnership property:[59]

The interests of partners in relation to partnership assets is not an interest in any particular asset but is an indefinite and fluctuating interest in relation to the assets, being the right to a proportion of the surplus after the realisation of the assets and payment of the debts and liabilities of the partnership.

...

However, unlike a beneficiary of a fixed trust, it was well established that a partner's interest was not an interest in, or in relation to, any specific asset other than an entitlement to the partner's share of the net proceeds from the sale of each asset at the completion of winding up. In other words, the only right that the partners have, both before and after dissolution, in relation to each asset is a right to the account and distribution after sale of the proceeds of that asset - "not to an individual proportion of a specific article, but to an account: the property to be made the most of, and divided". Hence, a partner's equitable interest is not accurately expressed as a "beneficial interest", at least in the sense of being a right to any proportion of, or for the personal use of, or for the benefit from, any particular asset.

In a famous description that encapsulated the equitable principles, Lindley described a partner's interest as "his proportion of the partnership assets after they have been all realised and converted into money, and all the debts and liabilities have been paid and discharged". Lindley added that "[t]his it is, and this only, which on the death of a partner passes to his representatives". Lindley's famous description was copied from the third edition of his text, with attribution, by Pollock, who acknowledged Lindley's work as "the guide and foundation of my own", and directed a "reader desiring fuller information" to Lindley's work.

The description by Lindley emphasised that although the partners have an existing equitable interest in relation to each and every asset for the payment of their share after winding up is complete, that interest can fluctuate during trading and is not ascertained until the assets are realised in a fund upon winding up. Hence, despite some contrary authority, where the partnership property was land the equitable interest was described as a "personal estate" in relation to the land to signify that there was no vested or ascertainable right in relation to the particular legal estate in the land.

...

The Partnership Act also preserved equity's unique treatment of the interest of partners under the trust. The partner's unascertained interest in relation to all of the partnership property is an equitable interest, not a mere equity, but the "partner's share" is defined in s 33 [of the WA Act] as being only "the proportion of the then existing partnership assets to which he would be entitled if the whole were realised and converted into money, and after all the then existing debts and liabilities of the firm had been discharged".

...

Although the peculiar nature of the fluctuating, unascertained, non-specific interest of partners in relation to partnership assets may have led Fullagar J, in dissent in Maslen v Perpetual Executors Trustees & Agency Co (WA) Ltd, to doubt whether partners had an interest in partnership assets that was capable of assignment, s 33 of the Partnership Act reflects the position, long established in equity, that partners do have an interest in relation to partnership property although, as this Court has constantly reiterated, the interest "can be finally ascertained only when the liquidation has been completed" and until then it is a non-specific interest. That is all that could have been meant by Rich J when he said, in dissent in Sharp v The Union Trustee Co of Australia Ltd, that the unascertained interest of a partner "is in proportion to his share in the ultimate surplus coming to him if at that moment the partnership were wound up and its accounts taken". As Dixon and Evatt JJ said in Bakewell v Deputy Federal Commissioner of Taxation (SA), a partner's share in a partnership consists "not of a title to specific property, but of a right to his proportion of the surplus after the realization of the assets and payment of the debts and liabilities of the partnership".

147 Gageler J in a minority judgment similarly stated:[60]

Unless varied by the partnership agreement or otherwise by the consent of all partners, each partner has a right against all other partners to have all of the partnership property held and applied exclusively for the purposes of the partnership in accordance with the partnership agreement and, on dissolution of the partnership, to have the debts and liabilities of the partnership paid out of the partnership property and then to have the surplus applied in payment of what is due to the partners respectively under the partnership agreement. That right which a partner has against the other partners is itself property of the partner: it is an equitable chose in action.

148 The right which Mr Pakis has is an equitable chose of action to have partnership property applied exclusively for benefit of the Partnership. There is no doubt that, in some senses, a partnership interest is an individual right. It is assignable[61] and chargeable[62] by an individual. On a similar basis, an individual partner may have standing to bring an action in his or her own name to enforce the proper application of the partnership assets.[63] However, the object of the action and the relief in which it issues will necessarily comprehend the interests of the Partnership as a whole.

149 In the present context, then, Mr Pakis' partnership interest takes the form of an equitable right to apply (whether actionable at the suit of one partner alone or the Partnership at large) for relief as against the Graco Defendants to have the Gain applied exclusively to the benefit of the Partnership. The benefit of that relief, directed as it is to the proper application of the partnership assets, is necessarily enjoyed by each and every partner, not by any one partner in a manner reflective of that partner's proportionate share. It is only after accounts are taken in dissolution that Mr Pakis can call for his proportion of the surplus to be distributed to him. Crucially, and in a marked contrast to a scenario where the Graco Defendants are ordered to account directly to Mr Pakis, if the Gain forms part of a surplus on dissolution, it will necessarily have been netted against the debts and liabilities of the Partnership for the relevant period. It is only in the event of a dissolution that Mr Pakis' equity interest of 9.8% could be appropriately viewed as a proportion of the Partnership assets.

150 On this analysis, then, it is not open for Mr Pakis to seek relief relating to only a particular portion of Partnership property. Where there are wrongful profits which a partner wishes to see restored to the Partnership, the partner can facilitate the bringing by the firm of an action for account of those profits. Alternatively, the partner might be able to bring such an action on his or her own account: such a right of action nonetheless requires the defaulting partner to bring to account the wrongful profits for the benefit of a partnership as a whole. It would be a suit for the entirety of the Gain, even if maintained by a single partner or a subset of the partners with a defined percentage interest in the Partnership equity. On no account is Mr Graco required to account to Mr Pakis directly for 9.8% of the Gain.

151 It does not to my mind matter much whether the fiduciary obligations breached by Mr Graco, and the resulting causes of action accruing therefrom, are characterised as shared or separate entitlements. Whatever their characterisation, those actions will issue in the same relief regardless of the party who brings them. This follows from the nature of the partnership interest as a non-specific interest in the assets (and consequently, the profits) of the firm.

152 Nonetheless, if they are properly regarded as shared entitlements then the Chickabo Plaintiffs in bringing claims for the whole of the partnership did so in the same legal interest as Mr Pakis. In my view the better characterisation of the fiduciary obligations and the corresponding causes of action for breach and its attendant remedy of an account of profits is that it is a shared entitlement of the Partnership as a whole. In an action for account of profits, the amount of the wrongful gain necessarily places a cap on the relief that can be awarded against the defendant. Where an account of profits is awarded to any claimant, then the entirety of the wrongful profits could (and should) be disgorged to the claiming party. Alternatively, if the claims are regarded as several in the sense that the claim can be brought by one only, then the fact that the relief obtainable is for the whole of the Gain and necessarily would be held by the claimant party for the benefit of the Partnership as a whole means that the claimant brings such a claim in much the same way as and relevantly analogous to, a trustee with attendant fiduciary obligations.

153 On the analysis favoured by Mr Pakis, if Mr Graco had accounted to the Chickabo Plaintiffs for the entirety of the Gain, it would nonetheless be open to Mr Pakis to approach Mr Graco again and demand that he disgorge. This would be so despite the fact that the Chickabo Plaintiffs were not (and should not be) required to show at the time of the Chickabo Proceeding that no other persons had an entitlement to an account in respect of the Gain (or its traceable proceeds). If Mr Pakis' approach was to prevail and the entitlement to an account of profits were regarded as divisible, then such claims would of necessity involve an element of double recovery, or result in an unworkable situation whereby courts are required to pre-emptively adjust such claims to guard against actions by later claimants. The better view is that a claimant has a right to disgorgement of the entirety of a defaulting fiduciary's profits; latecomers who are disadvantaged by an entire recovery may apply as against the earlier claimant to have those disgorged profits properly applied like any other form of partnership property.

154 The characterisation of the action for account as being a shared interest of the partners constituting the Partnership is consistent with s 33 of the Partnership Act which provides:

Accountability of partners for private profit

(1) Every partner must account to the firm for any benefit derived by him without the consent of the other partners from any transaction concerning the partnership or from any use by him of the partnership property name or business connexion.

155 Though the Chickabo Plaintiffs and Mr Pakis plead separate breaches by Mr Graco of his fiduciary and statutory partnership duties, s 33 is unlikely to differ in content from the rules of equity preserved by s 4 of the Partnership Act. In Birtchnell v Equity Trustees, Execution and Agency Co Ltd, Isaacs J stated:[64]

The three grounds of the appellants' claim previously mentioned are covered by several sections. For my purpose I rely on part of sec. 33 and on the rules of Equity saved by sec. 4, which enable us properly to understand and apply sec. 33. Section 33 enacts that - "(1) Every partner must account to the firm for any benefit derived by him without the consent of the other partners from any transaction concerning" the business of the firm. The section is not new law (see, per Lindley, LJ, in Aas v. Benham, since that case, as pointed out in Pollock's Digest of the Law of the Partnership p. 95, was commenced before the Act was passed.)

156 In Aas v Benham,[65] Lindley LJ stated:

It is clear law that every partner must account to the firm for every benefit derived by him without the consent of his co-partners from any transaction concerning the partnership or from any use by him of the partnership property, name or business connection...

(underline added)

157 The wording of 'to the firm' is significant and reflects the rationale for an account of profits against a defaulting partner: namely, that the profits retained by that partner are properly characterised as profits earned in the scope of the partnership business, to be held as partnership property and distributed in accordance with the profit-sharing arrangement which underpins all partnerships.

158 Mr Pakis pointed out in oral argument that the phrase 'to the firm' in s 33 should be read in the context of s 8 of the Partnership Act, which defines 'firm' as:

Persons who have entered into partnership with one another are for the purposes of this Act called collectively a firm and the name under which their business is carried on is called the firm name.

159 Mr Pakis also relied on the definition of 'the partnership' in the 2006 Partnership Deed:

'Partnership' means the relationship of the partnership constituted between the partners as set out in this deed.

160 It is trite to say that a partnership is comprised of its partners or refers to the relationship between the partners. Under Australian law a firm does not have a separate personality to its members; the 'partnership' is the effect of the contract between the partners, as supplemented by rules of equity which can at times operate to give the partnership the superficial appearance of a separate existence. Nonetheless, the proper way to refer to the partnership is always to refer all the partners. In that context, language such as 'every partner' or 'each partner' or 'the partners' still refers to the partnership. Whilst language such as 'a partner' or 'any partner' may in certain contexts indicate an intent to refer to the partners in their several capacities, such interpretation should always be tempered by a consideration of the purpose of any partnership, which is the joint pursuit of profit.

161 Decisively for present purposes, the learned author of Lindley and Banks on Partnership state that:F[66]

It should be emphasised that, where [s 33] applies, the obligation is to account to the firm, not merely to the other partners. It follows that a partner will, in the normal way, be entitled to share in the profits etc. in respect of which the account arises.

162 A similar conclusion follows for any allegation of a breach by Mr Graco of s 32 of the Partnership Act. Mr Pakis points to the wording of the section, which on its face is worded severally:

Duty of partners to render accounts etc.

Partners are bound to render true accounts and full information of all things affecting the partnership to any partner or his legal representative.

163 It is true that on its face s 32 seems to insist that each partner has a several action to compel any other partner to account to him or her.

164 This notwithstanding, where s 32 is breached, the proper remedy is still a taking of partnership accounts:[67] In The Law of Partnership in Australia, the learned author states:[68]

... in pursuance of this right to full disclosure of the accounts, any partner is entitled to have partnership accounts taken, if necessary by the court.

165 To similar effect is Wilson v Carmichael,[69] where Griffiths CJ said:[70]

If, then, there was a partnership, either party is entitled to have the accounts of the partnership taken, and the right continues until an end is put to it by release, or by settled accounts, or by the lapse of such time as may induce the Court to refuse to interfere.

166 Secondly, s 32 is likely a codification of the original equitable rules as to account which, as noted above, involve the Partnership as a whole and simply recognised the right of any partner to seek such an account from his or her partner. Section 4 expressly saves any rules at law or equity except insofar as they are inconsistent and the Partnership Act generally is seen as a declaration and partial codification of the existing general law on partnerships.[71]

167 The wording of the rule now expressed in s 32 was first formulated by Sir Frederick Pollock in A Digest of the Law of Partnership in which he called the principle 'a fundamental rule for which it would be idle to cite specific authority'.[72]

168 Moreover, in the circumstances of the present case, it is difficult to conceive of a situation where s 33 would apply but not s 32: both sections appear to be directed towards the same end, but are phrased at odds with one another. A partner accounting for a profit gained in the course of the Partnership is necessarily also rendering true accounts and full information.

169 The appearance of a several right in s 32, and a shared right in s 33, is likely a product of the history of the procedure to account. The phrase 'account of profits' is a shorthand: it is in fact a two-step process, involving the taking of accounts and, at the claimant's election, a disgorgement of the wrongful profits to the plaintiff.[73] In the first step, 'accounts' has its ordinary meaning: to render accounts of the firm is to provide information as to the true state of affairs of the assets and business of the firm. In the second step, 'accounts' refers to the act of disgorgement, whereby the fiduciary makes good the accounts he has rendered. The double meaning here is a product of the long history of the action of account in equity, where:

(a) the rendering of accounts in the sense of acknowledging and defining a profit which should form part of the firm or trust assets; and

(b) the rendering of accounts in the sense of making good deficiencies that emerged on the face of those accounts;

170 In that context, it is true that any partner can compel any other partner to render true accounts at his or her own individual action. But it is also true that, if following the rendering of accounts, the claimant elects to have the accounting party make good the deficiency in the accounts, the profits must be returned to the partnership as a whole. In my view, s 32 of the Partnership Act is directed towards the former obligation, of providing full information regarding the firm and access to its accounts; s 33 of the Partnership Act is directed towards (one aspect of) the latter obligation, of ensuring that wrongful profits are restored to the partnership. The difference in emphasis between the two sections is further brought out by the mention of the rendering 'full information' also contained in s 32; it goes some way to explaining the acknowledged uses of s 32 as an alternative means of discovery or interrogatory.[75]

171 Given the above and having regard to the nature of the breach of fiduciary duty claims and the foundation of the claims in a partnership context in the profit sharing arrangement inherent in such a relationship, in my view s 32 does not create a separate, several liability to account for a portion of the Gain. Rather, if it recognises any entitlement to the Gain, it reaffirms the equitable chose of action vested in each partner to seek such relief on behalf of the partnership as a whole. As such, the claim by Mr Pakis for breach of the statutory obligations is to be assessed in the same way as the claim for breach of the fiduciary obligations. On the reasoning outlined above in respect of the fiduciary obligations, Mr Pakis is a privy in interest of the Chickabo Plaintiffs in respect of any such claim.

172 In my view, insofar as Mr Pakis' claim proceeds upon a separate entitlement on his part to an account of 9.8% of the Gain, it lacks foundation. Mr Pakis has no entitlement at law or equity to 9.8% of the Gain. The only entitlement Pakis might have had is subject to res judicata, because the claim brought by the Partnership was a claim in vindication of a shared legal interest which has already been determined by a judgment on the merits.

173 At times, this conclusion could be glimpsed in Mr Pakis' own submissions. Counsel for Mr Pakis accepted in argument that if the Chickabo Plaintiffs had obtained final orders from the Court in terms of the Chickabo (No 3) Reasons (ie, that in terms directed him to account to the Partnership as a whole), that such orders might operate to preclude Mr Pakis' present claim. However, counsel qualified that proposition by arguing that a bar would only arise in the event that Mr Graco complied with the orders: in that event there would, so Mr Pakis submitted, be no extant failure to account. If Mr Graco was yet to perform or was in default of his obligations under orders directing an account to the Partnership, then his retention of the Gain in breach of duty might leave open a claim by Mr Pakis. In my view this latter qualification is misconceived.

174 On entry of judgment by the Court, the equitable right to seek an account merges in, or is extinguished by, the judgment.[76] The claimant's entitlement to the remedy is replaced by the right to enforce the judgment. In the hypothetical example above, if Mr Pakis was a privy if final orders had been made consequent on judgment, the application of res judicata could not be contingent on whether the final orders had been complied with: the cause of action would have merged in the final orders, and there would be no residual claim that Mr Pakis could press.

175 Mr Pakis' submission implicitly acknowledges that had final orders been entered consequent on Chickabo (No 3), the benefit of Mr Graco's compliance would have enured to Mr Pakis (and also to the other partners). Such acknowledgement recognises the shared or mutual legal interest in the underlying claim extinguished by the Chickabo Final Orders.

176 Alternatively the claim of the Chickabo Plaintiffs was a claim brought by them on behalf of the partnership, and in a manner sufficiently analogous to that of a trustee with attendant fiduciary obligations.

177 In Gleeson v J Wippell and Co Ltd,[77] (referred to in Page v McKensey) Megarry VC stated that for privity in interest to apply there must be:[78]

... a sufficient degree of identity between the [previous litigant] and the third party [who now brings a claim]. I do not say that one must be the alter ego of the other: but it does seem to me that, having due regard to the subject matter of the dispute, there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party. It is in that sense that I would regard the phrase "privity of interest." Thus in relation to trust property I think there will normally be sufficient privity between the trustees and their beneficiaries to make a decision that is binding on the trustees binding on the beneficiaries, and vice versa.

178 The partnership interest is analogous to a trust. As in a trust, the legal title of the individual partners is constrained in its application by the equities of the other partners. Indeed, at several points in Rojoda, the High Court recognised that legal title to partnership property may be held on behalf of all the partners, which language is analogous to that of a trustee on behalf of beneficiaries.[79] Insofar, then, as the position of partners is analogous to an accepted category of privies in interest, namely trustees, this suggests that partners are also privies in interest with one another.

179 On the above analysis, Mr Pakis' interest in the Gain is shared with the firm in the relevant sense. That interest can only be claimed 'under or through' or 'on account of or for the benefit of' the other partners. Insofar as Mr Pakis seeks to prosecute an interest that he shares with the Partnership, he is estopped from doing so by the doctrine of res judicata.

The loss-based claims: section 32 of the Partnership Act, equitable compensation, and damages for breach of the deed

180 Having concluded that the action for account of profits is res judicata, it remains to be determined whether Mr Pakis' claims for equitable compensation, or for damages for breaches of the 2006 Partnership Deed, are similarly foreclosed. In contrast to the claims relating to an account of profits, these claims are directed not towards restitution of the Gain but towards compensation for loss suffered.

181 Arising as a result of the breach of fiduciary obligations, the claim for equitable compensation is only advanced by Mr Pakis in the prayer for relief and there are no material facts alleged by which Mr Pakis would be entitled to such compensation over and above those material facts which would entitle him to 9.8% of the Gain.

182 By casting his claim in that way, Mr Pakis is framing his claim in an identical fashion to that which the Chickabo Plaintiffs did in the Chickabo Proceeding and which was dismissed by the Chickabo Proceeding Final Orders.

183 Recognising that Mr Pakis does not have a claim for 9.8% of anything other than the surplus of the Partnership assets after liabilities and expenses are brought to account on a winding up (or for a distribution of profit consistent with the profit sharing mechanisms implicit in the 2006 Partnership Deed) the claim by Mr Pakis for equitable compensation is therefore necessarily derivative of any compensation entitlement made or forgone, as the case may be, by the Partnership as a whole. Equitable compensation, like an account of profits, also derives from the procedure of accounting in equity. It is fundamentally concerned with the defendant making good a loss suffered on the partnership accounts.[80] Accordingly, just as with an account of profits, any equitable compensation awarded would necessarily form part of the partnership assets in general: for the same reasons that Mr Pakis is not directly entitled to a 9.8% portion of the Gain, as the Gain is an asset of the Partnership as a whole, he is not directly entitled to a 9.8% portion of any loss suffered on the partnership accounts, as they would be assets of the partnership as a whole.

184 As a result, Mr Pakis' claim for equitable compensation suffers the same fate as his claim for the Gain. Both proceed from an alleged breach of fiduciary obligations. The better view is that the obligation breached is owed jointly to the Partnership and to the individual partners. Insofar as any one of the latter can bring an action in his own name, the individual partner is doing so to recover the loss of the Partnership and in that respect is doing so in a manner analogous to that of a trustee with attendant fiduciary obligations. The interest asserted by Mr Pakis therefore is the same legal interest asserted by the Chickabo Plaintiffs in the Chickabo Proceeding on behalf of the Partnership (which by reason of the Assumption included Mr Pakis). As such, Mr Pakis is a privy of the interest of the Chickabo Plaintiffs in the relevant sense.

185 Moreover and in any event, it is very difficult to see what role equitable compensation could play, whether brought by the Chickabo Plaintiffs on behalf of the Partnership as a whole or by Mr Pakis assuming a several entitlement on his behalf. This is not a case where the Partnership as a whole suffered loss as a result of the act or omissions of Mr Graco; rather, the gist of the Partnership's complaint is that the Gain which enured to the benefit of Mr Graco and his interest was a gain which should have enured to the benefit of the Partnership.

186 In submissions, Mr Pakis emphasised that the claim was also one brought for common law damages for breach of contract, specifically of clauses 9(a), (c), (g) and 11.4(a) and (b) of the 2006 Partnership Deed.

187 Clause 9 of the 2006 Partnership Deed states that each partner must:

a) be just and faithful to the other partners and to the partnership in all transactions relating to the partnership;

...

c) at all times give to the other partners a just and faithful account of all transactions relating to the Partnership and upon reasonable request furnish a full and correct explanation to the other partners and afford every assistance in his power in conducting the Partnership for their mutual advantage;

...

g) duly and punctually make full and proper entries of all business transacted by him on account of the Partnership and in every respect comply with all legislation and standards related to chartered accountants and to the business and practice of chartered accountants.

188 Mr Pakis also emphasises that clause 1.2(h) of the 2006 Partnership Deed provides that:

an agreement, covenant, representation, obligation, undertaking or warranty on the part of or in favour of two or more persons binds each of them or is for the benefit of each of them jointly and severally.

189 Thus, Mr Pakis argues that each of these contractual obligations imposed upon Mr Graco and said to have been breached by him is for the benefit of the partners jointly and severally. He argues therefore that any claim to common law damages for breach of those covenants enures to him severally.

190 The commercial purpose of the deed must be considered in its construction. That purpose is to earn profits collectively as a partnership. Such a purpose suggests that the promises in clause 9 are owed to the Partnership jointly.

191 On the other hand, an analysis of the text of the clauses, in particular of clause 9(a) where the reference to the 'other partners' is immediately followed by 'to the Partnership' is, on one reading of it, suggestive of an intention to create both a joint obligation and a several obligation. Also relevant for present purposes is clause 1.2(h) of the Deed, noted above, which provides that the covenants in clause 9 are for the benefit of the partners jointly and severally.

192 In oral argument, Mr Pakis submitted that the promises in clause 9 were not joint and several, at least as regards the co-promisees (of which Mr Pakis was one). Rather, he argued that the covenant must either be joint, several, or comprise a separate joint promise and a separate several promise. Mr Pakis referred to Smith v Rynne,[81] where Hodgson JA stated:[82]

On the question of interpretation, it would seem that one covenant cannot, as regards two covenantees, be both joint and several. So unless each of the covenants in question here can be taken to be two covenants, one joint and one several, they must be either joint or several. The words used can make it clear whether the covenant is joint or several; but otherwise regard will be had to whether the interests of the covenantees are joint or several. In my opinion, it would be relevant to this question whether each of the covenantees provided separate consideration, and whether a breach would necessarily affect both covenantees, or could affect only one of them. In the present case, the words tend to suggest joint entitlement, though not unmistakeably so; the consideration was provided jointly; and although loss or damage could be caused to one covenantee and not the other, the clause certainly, and perhaps primarily, relates to loss or damage to the property and thus to both jointly. In my opinion, these are covenants in favour of the opponent and his wife jointly.

(citations omitted).

193 Hodgson JA, with Allsop P and Macfarlane JJ agreeing , went on to affirm this point in Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service ('Macquarie International Health Clinic'):[83]

It is said that a promise in favour of two promisees cannot be both joint and several. A test for whether such a promise is joint or several is that it is joint where breach of it to one promisee is necessarily a breach of it to all.

(citations omitted).

194 The last line references the reasons of Santow JA in Smith v Rynne, who emphasised that an indicium for determining whether an obligation is joint is whether a breach of it to one promisee is necessarily a breach of it to all.[84] Mr Graco emphasised this aspect of the reasons: on this submission, that indicium suggested that the obligations under clause 9 were joint, as a breach by one partner of any of the covenants therein would likely be a breach as against all the partners.

195 Mr Pakis submitted that if the Court properly reconciles the wording and context of the text of clause 9 itself, clause 1.2(h) of the 2006 Partnership Deed, and their Honours' statements in Smith v Rynne, the correct construction of the 2006 Partnership Deed is that it creates an obligation that enures for the benefit of the Partnership as a whole (that is a joint obligation) as well as separate promises that enure to the benefit of each partner. This, he submitted, avoided the vice adverted to in Smith v Rynne. On this construction, he submits that the sub-clauses of clause 9 must each be taken as creating more than one promise.

196 In Joint Obligations, Glanville Williams explained[85] that a joint obligation is solidary; each promisor is liable in full (in solidum) on the single promise. There is the one non-cumulative obligation. He contrasts this with two several promises from A and B which involves two cumulative promises, with performance of one no discharge of the duty to perform of the other. Williams explained that 'joint and several obligations' sit intermediately between cumulative several promises and joint promises with the similarity to the latter being that they are non-cumulative.

197 Assuming in Mr Pakis' favour that the same analytical approach is followed viewed from the perspective of the obligee (and not the obligor), a joint promise must give rise to a single non-cumulative obligation and the several promises must give rise to cumulative obligations. The necessary extension of Mr Pakis' submission therefore that there is both a joint promise and a series of separate promises, must be that the promises are cumulative. If they are not, then they amount to nothing more than a joint and several promise, which is the very vice identified in Smith v Rynne.

198 Cumulative promises of the nature the subject of clause 9 however make little sense. The defaulting partner is not obliged to account once to the Partnership collectively, then again to each individual partner. Moreover, an accounting to one only would be a breach of the obligation to account to all. In the language of their Honours in Macquarie International Health Clinic, 'breach of it to one promisee is necessarily a breach of it to all'.[86] The substance of the obligation in clause 9 along with the remedies available in breach all point to an obligation imposed on the defaulting partner owed jointly to the partners as a whole.

199 Once it is recognised that an action for the benefit of the Partnership is recognised in historical partnership principles, the 'several' benefit, such as it is, is viewed properly as a right to bring an action for the benefit of the Partnership as a whole.

200 In contrast to Smith v Rynne, Halsbury's Laws of Australia ('Halsbury's')[87] notes that although the common law did not originally recognise that co-promisees might hold the benefit of a promise as joint and several promisees, effect will be given to an intention that co-promisees be joint and several promisees. The cited extract in Halsbury's quotes the case of Thompson v Hakewill[88] in support.

201 The only contemporary reference to this case is BHP Coal Pty Ltd and Ors v O & K Orenstein & Koppel AG and Ors (No 2),F[89] where McMurdo J stated:

The question of whether the promisees are joint promisees, meaning that there is but one promise made to them jointly, or several promisees, meaning that there is a promise made to each of them severally, depends upon the wording of the contract and on the interest of the parties in enforcing it. In this case the joint venturers had the same interest in the performance of the contract although they had separate interests in the property which was affected. The position is analogous to a covenant to repair given by a tenant in favour of a number of lessors who hold the reversion as tenants in common, for which it has been held that the lessors are jointly entitled to performance.

202 In the instant case there is something to said for the proposition noted in Halsbury's. The 2006 Partnership Deed arises in a context of the law of partnership, being one where there are recognised equitable and statutory rights and obligations. The parties contracted in that context, and the deed should be interpreted in light of it . One such recognised doctrine, as discussed above, is the right of one partner to seek remedies on behalf of the Partnership at large, which will then be held by the claimant partner on trust for the partnership.

203 Nonetheless, it is not necessary to reconcile any potential inconsistency between what was said in Smith v Rynne and that adverted to in Halsbury's for the purpose of resolving the present controversy.

204 The breach of clause 9 alleged by Mr Pakis is the same breach alleged by the Chickabo Plaintiffs. If that clause was breached, it was either breached as against the Chickabo Plaintiffs and Mr Pakis or not at all. It is difficult to conceive of, and Mr Pakis has not alleged a breach of clause 9 that affected him directly. If the breached obligations in clause 9 are viewed, as they should be, as owed to the Partnership at large, but as actionable at the suit of one or more of the partners, it does not matter for the purposes of res judicata, whether the obligation is characterised as joint, as several or as some combination of the two. The same facts giving rise to a breach actionable by one partner will give rise to a breach actionable by any other, and the consequence of those actions will be the same, whether at the suit of any one partner for the benefit of the Partnership or at the suit of all partners. In those circumstances, any claim for breach of the 2006 Partnership Deed will be in vindication of an interest 'under or through' or 'on account of or for the benefit of' the interests of all other partners.

205 This is the same right advanced by the Chickabo Plaintiffs. In that sense therefore, the Chickabo Plaintiffs represented the same legal interest as that brought by Mr Pakis.

206 Conversely, if the several right to bring an action for breach of clause 9 is not the same right as the shared right prosecuted by the Chickabo Plaintiffs, because the prosecution of the right by the latter was brought to give rise to a shared benefit, and because of the nature of partnership and the remedies available upon prosecution of that action, subject to fiduciary obligations it is analogous to a claim by a trustee.

207 Here, unlike in Tomlinson, the relevant legal interest asserted by the Chickabo Plaintiffs is the same as that now asserted by Mr Pakis (as properly characterised) and was one brought by partners on behalf of those members of the Partnership at the relevant time and with an entitlement. In Tomlinson, in contrast, the FWO was advancing a legal interest consistent with its statutory responsibilities. The fact that vindication of those interests resulted in an outcome which benefitted Mr Tomlinson did not mean that he and the FWO had a shared legal interest. Moreover, and again in contrast to the present case, there was no question of the FWO owing fiduciary obligations to Mr Tomlinson.

208 Similarly, if one conducts the analysis by reference to whether the clause 9 promises are joint or several, in my view the same conclusion follows. In Tomlinson, Nettle J by way of obiter dictum posited that the interest of joint covenantees 'might' be such that there is sufficient mutuality of interest to render them privies in interest but he appeared to qualify that observation by continuing 'at least if C had notice of the proceeding and chose not to become involved'. His Honour then observed that in the case of several covenants, the interest of the co-promisees is separate and distinct, and no question of them being privies in interest arises.

209 There are two features of clause 9 which distinguish this case from the example cited by his Honour. First, in the examples cited, the several covenants were different albeit the same in their effect; on the first covenant A promised B that he would pay benefits to C; on the second covenant, A promised C that he would pay C benefits. Here, the clause 9 promises are the same regardless of whether they are said to be owed severally to each partner or jointly to the partners. Secondly, in the example cited by his Honour, there is no suggestion that the co-promisees were fiduciaries. Here they are, and as such as co-promisees subject to fiduciary obligations, they may properly be regarded as sufficiently analogous to trustees, such as to make them privies even if the clause 9 covenants are regarded as several, which with respect I do not agree is the appropriate analysis in any event.

210 Mr Pakis and the Chickabo Plaintiffs are therefore privies in interest with respect to any claim arising in respect of the breach of clause 9 of the 2006 Partnership Deed. That same claim was determined finally and on the merits by the Chickabo Proceeding Final Orders.

211 This analysis is more problematic, with respect to the alleged breach of clause 11 of the 2006 Partnership Deed. The consequence of a breach of that clause, clause 11.4(b) in particular, presents as one more likely to give rise to an individual entitlement and individual direct loss.[90]

212 Clause 11.4 of the 2006 Partnership Deed headed 'Permitted Activities' reads:

(a) Each Partner must obtain the formal approval by Special Majority Vote of the Partnership prior to making any investment in association with a client of the Practice or with any entity in which a client of the Practice has an interest or with parties to whom the Partner was introduced through his involvement with the Practice or in holding any office in any entity in which a client of the Practice has an interest.

(b) Each Partner must offer to all the other Partners every opportunity of which he has knowledge to invest with a client of the Practice or with an entity in which a client of the Practice has an interest. No Partner shall be compelled to enter into any such investment opportunity.

213 In the case of the breaches of fiduciary and statutory obligations and clause 9, the relevant conduct amounts to breaches owed to the Partnership as a whole and the benefit of such remedies as follow from such conduct enure for the benefit of the Partnership as a whole. This is true despite the fact that the individual economic interest of each partner derives from and reflects their portion of the equity share held in the Partnership.

214 A breach of clause 11.4(b) however operates in a different way. That clause appears to require that all (the other) partners be given the opportunity to invest but contemplates that some may but others may not choose to invest in the relevant opportunity. There is no clear (or indeed, any indication) that the investment is then to be taken up in a manner reflective of the profit sharing arrangements implicit in the 2006 Partnership Deed. In that sense therefore, the loss potentially suffered by a partner is in his or her personal capacity: a loss of an opportunity to effect an investment of that kind would not be partnership property. On this analysis, it is not so clear that Mr Pakis and the Chickabo Plaintiffs are privies in interest. Any loss suffered by reason of a breach of clause 11.4(b) is not the loss of an investment opportunity belonging to the Partnership, but a loss by those partners personally who would have sought to invest had Mr Graco complied with the obligation in the deed.

215 In that respect, clause 11.4(b) operates to confer an opportunity to invest to those who are partners at the relevant time not in their capacity as partners as such but because they happen to be partners. Whilst they are afforded the opportunity because of that status, the clause contemplates that the opportunity may or may not be taken by the partners (or some of them). Analysed in this way, the structure of the obligation is one far more amenable to analysis as giving rise to a several right with the loss suffered by reason of the breach, not one suffered by the partnership (and borne effectively by the partners in accordance with the usual profit sharing mechanism implicit in the partnership) but rather as a loss suffered individually by those partners likely to have invested but not by those who would not.

216 If clause 11.4(b) is analysed in this way, then the claim advanced by the Chickabo Plaintiffs for damages for breach of that clause was not a claim advanced by them in the name of or for the benefit of the partnership as a whole, but rather amounted to individual claims advanced in their respective several interests. I am not persuaded therefore that the claim of the Chickabo Plaintiffs for breach of clause 11.4(b) was a claim for the same legal interest now sought to be prosecuted by Mr Pakis.

217 Further, and because the loss suffered is necessarily individual, the claim brought by the Chickabo Plaintiffs was not a claim relevantly analogous to those brought by a trustee (on behalf of a beneficiary) and more particularly the prosecution of such an individual claim is not accompanied by fiduciary obligations owed by one Chickabo Plaintiff to the other, much less by them to Mr Pakis.

218 Accordingly, because the claim for damages for breach of clause 11.4(b) is more properly regarded as a several claim and because the loss suffered as a result of that breach is not a loss suffered by the Partnership as a whole but a loss suffered individually by those who would have otherwise invested, the claim is not a claim in the same legal interest or a claim made in sufficiently analogous circumstances to claims brought by accepted privies. Mr Pakis and the Chickabo Plaintiffs are not privies in interest with respect to Mr Pakis' claim for damages for breach of clause 11.4(b) of the 2006 Partnership Deed. The claim for damages for breach of clause 11.4(a) is less clearly analysed in this way. It is however arguable that clause 11.4(a) and (b) need to be considered together in the sense that Mr Graco was required to comply with both (a) and (b) and that any approval required under 11.4(a) will also be accompanied by the requirement to offer all partners the opportunity in accordance with clause 11.4(b). In circumstances where the claim for breach of clause 11.4 has not been fully pleaded out, where clause 11.4(b) in my view gives rise to a breach of a clause for the several benefit of the individual partners and where it is arguable that clause 11.4(a) should be considered in the same context, the appropriate course at this point is to take the same approach to clause 11.4(a) and (b).

219 Having regard to the above, by reason of the dismissal of the Chickabo Proceeding by the Chickabo Proceeding Final Orders, the claims by Mr Pakis in the Pakis Proceeding are estopped by reason of the doctrine of res judicata, save for the claim for breach of clause 11.4 of the 2006 Partnership Deed.

220 In case I am wrong as to that conclusion, I will now consider the Chickabo Settlement Deed Issue.

221 Mr Graco submits that MSV was authorised by all partners in the Partnership (as at the time of the alleged wrongdoing by the Graco Defendants) to settle or compromise claims on their behalf. As such, Mr Graco argues that the release given by MSV in favour of the Graco Defendants in the Chickabo Settlement Deed binds Mr Pakis and precludes his bringing the Pakis Proceeding.

222 In particular, Mr Graco relies on clause 5.5(b) of the Chickabo Settlement Deed, which reads:

Upon receipt of the Settlement Sum in full, the Plaintiffs [inc MSV] ... irrevocably and unconditionally release and forever discharge the Original defendants, FBR and Mrs Graco and any of their directors officers and employees from all Claims arising out of or in connection with the subject matter of the Proceeding and Grant Rose proceeding, other than any Claims for breach of this deed.'

223 'Claims' is defined widely in the Chickabo Settlement Deed to mean:

... any claim, demand, costs (including legal costs and expenses), debts, causes of action, liabilities, damages and losses whether past present or future, fixed or unascertained, actual or contingent.

(a) first, that MSV had no legal entitlement to bring a claim on behalf of the partners of the nature advanced, and thus no legal entitlement to compromise such a claim, such that the release of those claims as against Mr Pakis has no legal effect;

(b) secondly, that the question of whether MSV had authority is to be determined by reference to the relevant partnership deed as at the date of the entering into of the Chickabo Settlement Deed and not at the time of the wrongdoing, which is submitted to be narrower and does not so confer authority on MSV; and

(c) thirdly, that there are no objective indications of any intention of Mr Pakis (or MSV) that MSV entered into the Chickabo Settlement Deed as Mr Pakis' agent.

225 Mr Graco argues that the claims made by Mr Pakis in the Pakis Proceeding are 'claims arising out of or in connection with the subject matter of the Chickabo Proceeding' and that Mr Graco has been released and forever discharged from the claims made against him by Mr Pakis in the Pakis Proceeding.

226 Plainly, the release extends to claims brought by MSV: MSV was one of the plaintiffs, and was described in paragraph 3A of the Chickabo FASOC as the manager of the Partnership. There was otherwise no reference to MSV in the Chickabo FASOC, save that by necessary inference MSV was one of the plaintiffs who sought the relief as claimed in the prayer for relief.

227 Mr Graco relies upon the conferral of authority on MSV by clause 2.1(d) of the 2006 Partnership Deed, which provides that:

the partnership shall be managed on behalf of the partners by MSV.

228 Mr Graco argues that in the role of manager as outlined in clause 2.1(d), MSV brought claims on behalf of the Partnership and was authorised to compromise those claims, including by giving the release in the Chickabo Proceeding Settlement Deed.

229 I accept Mr Pakis' submission that, in the absence of some statutory enabling provision, the proper person to enforce an alleged right is the person whose right has been violated. In Spellson v George,[91] Powell J of the Supreme Court of New South Wales stated the following:[92]

But, even if I had felt able to accept the view that the plaintiff could have independently of, and without consulting, his former wife in relation to a matter affecting the rights or welfare of their children, I could not, and do not, accept that that would enable him to bring proceedings - at least in this court - in his own name, but for the purpose of enforcing what is said to be the children's rights. The reason for my inability to accept this second step in the argument is quite fundamental - in the absence of some statutory enabling provision the proper person to enforce an alleged right is the person whose right has been violated ... and this is so even in cases where the person whose right has been violated has purported to authorise another to sue in that other person's name to enforce the right in question ...

230 In Urquhart v Lanham,[93] Young CJ in Equity stated that the proposition that an action must be brought in the name of the principal is one established by 'clear authority', and that to the extent that older authorities suggested that an agent may sue in his or her own name, those authorities were 'no longer good law'.[94]

231 In response to this submission, Mr Graco drew the Court's attention to Tomlinson, where Nettle J stated:[95]

[on account of or for the benefit of] extends to cases where a party has employed a servant or agent in an attempt to re-litigate an issue already determined against the principal in a previous proceeding ...

232 In context, the statement by his Honour in Tomlinson was directed to instances where the principal the subject of the earlier determination employs another to bring a subsequent proceeding otherwise open to be brought by that person but with the objective of re-litigating an issue for the benefit of the principal, adversely determined against the interests of the principal in a prior proceeding.

233 I do not accept that this statement gainsays settled principle that the proper person to bring an action is the person whose right has been violated.[96] If that were the case, then litigants would not need to be troubled by rules relating to the joinder of co-plaintiffs or representative actions; it would be enough for potential plaintiffs to authorise an agent to bring a claim on their behalf but in the agent's name.

234 However, acceptance of that submission only takes Mr Pakis so far. It would mean that had MSV alone sought to bring the claims on behalf of the partners, it would not have been competent for it to do so.

235 However, the question now is not whether MSV alone was the proper plaintiff in the proceeding. The relevant question is whether MSV was authorised by the Partnership as its manager to give a release on the Partnership's behalf; and, if so, what follows as a consequence.

236 Mr Pakis argues that Mr Graco's cannot rely on the 2006 Partnership Deed as a conferral of authority. He argues that MSV's authority is to be assessed against the operative partnership deed at the time of the Chickabo Plaintiffs entry into of the Chickabo Proceeding Settlement Deed. That deed, executed in 2017 ('the 2017 Partnership Deed') and to which Mr Pakis was not party, confers a narrower authority on MSV.

237 Mr Pakis draws attention to clause 7.1 of the 2017 Partnership Deed, which describes MSV's role in the following terms:

(a) act as representative and agent for the Partners in their dealings with clients and third party suppliers to the Partnership;

(b) open and maintain the bank account/s held with the Partnership's banker including recording all expenses paid from and receipts paid into those accounts on behalf of the Partnership;

(c) through the chief executive officer and the chairman organise Partners' meetings and compile all data and information required by the Partners for those meetings; and

(d) subject to the outcome of resolutions passed at Partners' meetings to action agreed strategies such as acquisition or divestment strategies, financial matters for the Partnership and policies for employees of the Partnership.

238 Mr Pakis submits these heads of authority circumscribe the kinds of dealings which MSV is permitted to engage in to interactions with third parties; (save for sub-paragraph (d), which requires a separate and express conferral of authority by a partners' meeting).

239 In my view, the relevant deed against which to consider the question of MSV's authority is the 2006 Partnership Deed. That is the deed which was current at the time of Mr Graco's alleged wrongdoing, and it is that Deed and any conferrals of authority within it that govern the partners' conduct of the Chickabo Proceeding.

240 Mr Pakis accepted that the proper plaintiffs for the Chickabo Proceeding were the partners at the time of the contravention, but submitted that as the 2006 Partnership Deed had been terminated and replaced by the 2017 Partnership Deed before the commencement of the Chickabo Proceeding, the 2017 Partnership Deed now governed the conduct of the litigation.

241 When it was suggested to Mr Pakis that the Partnership as at the time of the 2017 Partnership Deed was a different partnership (including because Mr Pakis was not a party to the 2017 Partnership Deed), he submitted that the better description is that the Partnership was differently constituted at different points in time. This is a convenient figure of speech, but it cannot evade a central proposition of partnership law: every time a partner joins or retires, a new partnership is formed.

242 Section 42 of the Partnership Act provides:

After the dissolution of a partnership the authority of each partner to bind the firm and the other rights and obligations of the partners continue notwithstanding the dissolution so far as may be necessary to wind up the affairs of the partnership and to complete transactions begun but unfinished at the time of the dissolution but not otherwise.

243 Properly characterised, the Gain is a profit of the Partnership as it was constituted at the time of Mr Graco's wrongful retention of it. The Partnership as it was constituted at that time is a separate Partnership_;_ it was necessarily dissolved as soon as there was a change in its composition. With that in mind, the transaction under which the Gain was earned should be seen as having begun, but not having concluded, at the time of dissolution of that Partnership. It is an asset of the Partnership in dissolution which is yet to be got in and distributed to the relevant partners.

244 The Gain is therefore distributed through the profit-sharing mechanisms, express or implied, in the 2006 Partnership Deed. The fact that Mr Pakis is no longer a partner is no barrier to this: he was a partner at the time of the default, and it is the 2006 Partnership Deed, which was in place at that time, under which the action for the account is brought. So much is consistent with the wording of r 17.01 of the Supreme Court (General Civil Procedure) Rules ('the Rules'), which provide that where two or more persons carry on business as partners within Victoria, a proceeding may be commenced by or against them in the name of the firm (if any) of which they were partners when the cause of action accrued. Of course, the present case is not one where the proceeding was brought in the firm name; but it indicates that, where an action is to be brought in the firm name, it should encompass only those who were partners at the time the cause of action arose.

245 In Atwell v Roberts,[97] Pullin JA summarised the applicable principles to a partner leaving a partnership:[98]

The legal propositions and authorities supporting the trial judge's conclusion and the dismissal of ground 1 are as follows:

(a) it is an axiom of partnership law that any change in the membership of a partnership occurring, whether by reason of the retirement, expulsion, death or otherwise of a partner has the consequence of dissolving the partnership ...

(b) after dissolution, the next step is to wind up the affairs of the partnership by realising the assets and paying the debts and liabilities of the firm before distributing the surplus, if any, among the partners according to their rights and interests ...

(c) winding up in that way may be avoided if the parties agree on a sale to one or more of the remaining partners of the share of the outgoing partner or if there is a provision in the partnership agreement to that effect. This is sometimes described as a technical or notional dissolution which is something of a misnomer because it is not the dissolution, but rather the winding up, that is notional. In those circumstances, the partnership or firm itself is dissolved as soon as there is a change in membership, but the assets and, as between the partners, responsibility for the liabilities of the partnership are taken over by the remaining partners ...

(d) a share in a partnership, even if designated by reference to 'units', does not enjoy a corporate or quasi‑corporate existence apart from the members who comprise it ...

(e) it is not possible to avoid the legal propositions set out above by terms of a partnership agreement ...

246 The relevant profits the subject of the action (or the loss suffered by the partnership) were those of the Partnership at the time of the default. The Partnership at that time was governed by the terms of the 2006 Partnership Deed, and it is with respect to that deed that the question of MSV's authority is to be assessed.

247 In that respect, the conferral of authority on MSV in the 2006 Settlement Deed could hardly be cast in wider terms: it authorises MSV to manage the Partnership on behalf of the partners. 'Partnership' is in turn defined as 'the relationship of partnership constituted between the partners as set out in this Deed'. Clause 2.1 recognises that the partners (of the Partnership) carry on the practice of chartered accountants under the relevant firm name. In this context, the defined meaning of partnership makes it clearer that MSV's express authority extends to managing the relationship or partnership between the partners, as well as by necessary implication the management of the practice as a component of the Partnership business. In that context, the making of claims (as opposed to their prosecution in court proceedings as the named plaintiff), as well as more pertinently the entry into of an agreement in compromise of a claim, falls within the ambit of MSB's authority to manage the Partnership on behalf of the Partners.

248 Assuming in favour of Mr Graco that a deed stands in the same position as a contract, in addition to the question of authority to enter into the agreement (or deed) on behalf of a principal (or principals), Mr Graco must additionally establish that MSV intended to contract on behalf of the partners collectively as an agent,[99] and equally pertinently that the partners on whose behalf it intended to bind, included Mr Pakis.

249 Here, there is no direct evidence of any such intention on behalf of MSV. Moreover, Mr Pakis argues that the Deed itself infers otherwise: the Chickabo Settlement Deed does not say that MSV entered into it as agent for the partners at the time of the relevant wrongdoing. Nor is the release stated in terms that would indicate it was intended to extend beyond the disclosed parties to the Deed. Moreover, Mr Pakis notes that a release was also given by each of the Chickabo Plaintiffs, the DRP Parties and the Grant Parties, and so expressly extended to each of those persons described as the partners of the Partnership at the relevant time, aside from GP5 and Mr Pakis.

250 In those circumstances, Mr Pakis argues that an intention by MSV to give a release on behalf of those partners who held an entitlement at the relevant time, and that this included Mr Pakis and GP5 as undisclosed principals, runs counter to the evident care taken to ensure that every other partner gave an express release in their own name, and the objective indicia at the time that all actors considered that Mr Pakis and GP5 had no such entitlement and was not therefore a member of the class. Mr Pakis points to the non-joinder of himself and GP5 as parties, and the plea in the Chickabo FASOC that Mr Pakis and GP5 had exited the partnership and released any claims in relation to it.

251 Moreover, Mr Pakis submits that in circumstances where all members of the Partnership had given their own releases, MSV had no need to give, as agent, a release to any partner and accordingly should not be considered as intending to release the partners generally (let alone Mr Pakis specifically) in its entry into the Deed.

252 No person sought to join GP5 or Mr Pakis to the proceeding as necessary parties, though they expressly joined DRP Consulting and Mr Polonsky. It seems clear enough that this is because no relevant actor considered that Mr Pakis had an entitlement to the relief sought, no doubt because, on the Chickabo Plaintiffs' case, he had ceased to be a member of the Partnership from 30 September 2016. On the Chickabo Plaintiffs' case Mr Pakis had exited the Partnership pursuant to the Pakis Heads of Agreement and he released Mr Graco from any extant claims. Mr Pakis submits that when the Chickabo Plaintiffs' belief that Mr Pakis had no entitlement is borne in mind, it is clear they neither they, nor MSV (which they controlled), intended to or otherwise take itself to settle the proceeding on Mr Pakis' behalf. An agent could not intend to settle a claim which, on its belief, does not exist or is otherwise precluded.

253 In response, Mr Graco submitted that the release given by MSV should be construed so as to give it operative effect: if MSV was not acting as an agent, then there would be no reason why it would be a party to the Chickabo Settlement Deed, having been joined to the Chickabo Proceeding only nominally to act as a depository for an anticipated disgorgement of the Gain for the benefit of all partners with an entitlement.[100] Mr Graco submits that it is obvious that MSV itself had no claim personally against Mr Graco, and thus that the purpose MSV being made a Party to the Deed was to provide, as an agent, for a release by all those members of the Partnership who might otherwise have had an entitlement.

254 Further, Mr Graco gave evidence that he believed the release by MSV was specifically included in the Chickabo Settlement Deed to provide him with a release by those who partners who might otherwise have had an entitlement. He also deposed to his personal belief that Mr Pakis and GP5 had released the Partnership in respect of the subject matter of the claims made in the Chickabo Proceeding in the Pakis Heads of Agreement.

255 Mr Graco's understanding is not said to have been communicated to anybody. No evidence is given as to any particular representation made in the course of negotiating the Chickabo Settlement Deed, by or to him, that might ground that belief; and, in any event, such a representation would be inadmissible for the purposes of determining whether the intention of MSV was to give the release on behalf of the Partnership.

256 Putting the irrelevance of any evidence as to Mr Graco's intention to one side, in my view there is insufficient evidence in general to establish that MSV, assuming it had the authority to act as an agent for those partners not named in the Deed, intended to give the release on behalf of members of the Partnership generally. First, the release given by MSV does not purport to be given on behalf of the Partnership as a whole, and no admissible extratextual evidence has been led to suggest it did; secondly, whilst it is true that MSV did not in fact have any claims against Mr Graco in the sense that it (as opposed to the partners of the Partnership) was not a beneficiary of any of the fiduciary duties, statutory obligations or contractual obligations reposed upon Mr Graco, MSV had in fact advanced such claims in the Chickabo FASOC, ostensibly on its own behalf. Certainly, the Chickabo FASOC makes no reference to any claim being made by MSV in its capacity as manager of the Partnership.[101] Rather, it is more probable that MSV was made a party to the Chickabo Settlement Deed simply because it was one of the Chickabo Plaintiffs who made the claims in the Chickabo FASOC. I very much doubt that its inclusion as a releasing party was prompted by anything other than this; certainly, I do not accept that there was a requisite intention to give a release on behalf of latecomers such as Mr Pakis and GP5 who might subsequently make a claim. Had that been the fear, there were simpler and clearer means of achieving this.

257 Accordingly, I do not consider that on the proper construction of the Chickabo Settlement Deed, each of the Graco Defendants was released and forever discharged from the claims made against them by Mr Pakis in the Pakis Proceeding by reason of the release provided by MSV.

258 Mr Graco did not advance any argument to the effect that the releases given by the remaining Chickabo Plaintiffs (that is to say, the partners at the time of the relevant wrongdoing by Mr Graco) constituted a release by one co-promisee such as to amount to a release of the claim by all other co-promisees (Mr Pakis and GP5). If the obligations owed by Mr Graco to the partners (including Mr Pakis and GP5) is properly characterised as joint, the question of whether a release given by a joint promisee releases the claims of another joint promisee raises interesting questions.[102]

259 In the alternative, Mr Graco also seeks an order that the Pakis Proceeding be permanently stayed on the ground that it is an abuse of process.

260 Mr Graco relies upon the observations of French CJ, Bell, Gageler and Keane JJ in Tomlinson[103] to the following effect:

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.

Accordingly, it has been recognised that making a claim or raising an issue which was made or raised or 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 could constitute an abuse of process where the parties seeking to make the claim or to raise the issue in the later proceedings 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.

(citations omitted).

261 Once again, Mr Graco submits that the decision in Page v McKensey & Ors is instructive. Although Gzell J decided the case on the basis of res judicata, his Honour also held that if he was wrong that res judicata estoppel applied, the proceeding should also be stayed on abuse of process grounds. Mr Graco relies upon the following passage in his Honour's reasoning:[104]

In the second appeal, the nature of the payments under retirement agreement and the lack of fiduciary obligation with respect to disclosure of it were defined with respect to the partnership of which the appellant was a member. In those circumstances, it is not open to the appellant to seek redefinition of the rights and obligations into say the response with respect to those issues.

262 Thus, Mr Graco submits that the issue as to whether Mr Graco breached fiduciary, contractual or statutory duties was defined with respect to the Partnership in the course of the disposition of the Chickabo Proceeding.

263 He submits therefore that it is not open to Mr Pakis to seek a redetermination of the rights and obligations with Mr Graco with respect to those issues. Mr Graco also points to two further factors.

264 First, he submits that the relief sought against Mr Graco in the Chickabo Proceeding was in respect of the full amount of the Gain, such that any further claim against the Gain would be a claim for a liability which has already been determined. He submits that as Mr Graco settled those claims pursuant to the terms of the Chickabo Settlement Deed, Mr Pakis now seeks to recover (effectively for a second time) his 'share of the proceeds of the claims that have already been made on behalf of the Partnership in the Chickabo Proceeding and settled by the terms of the Chickabo Proceeding Settlement Deed'. He submits that this exposes him to the prospect of double recovery, which is unfair and unjustifiably oppressive to him, and with no corresponding unfairness to Mr Pakis.

265 Secondly, Mr Graco submits that it would be unjustifiably oppressive to him and inconsistent with the overarching purpose under s 7 of the Civil Procedure Act 2010 (Vic) to be subjected to a further contested hearing on the issues raised in the Pakis proceeding where those issues have already been litigated and determined in the Chickabo Proceeding, which was conducted over a period of almost three years between 10 April 2018 and 28 January 2021 and involved two witness trials.

266 Mr Pakis submits that the Pakis Proceeding does not constitute an abuse of process and emphasises that he does not seek to depart from the findings made in Chickabo (No 1) and Chickabo (No 3). He argues that, to the contrary, his claims are consistent with Chickabo (No 1) and Chickabo (No 3), and that all he seeks to do is rely on those findings to establish his own personal entitlement to relief, a question which he submits has not been judicially determined. Rather, Mr Pakis argues that the principle sought to be relied upon by Mr Graco applies not to any claim by Mr Pakis, but rather to any attempt by Mr Graco to depart from the findings Sifris J made in Chickabo (No 1) and Chickabo (No 3).[105]

267 Secondly, Mr Pakis argues that Mr Graco is not exposed to the risk of double recovery because it is acknowledged that the amount that Mr Graco ultimately had to pay under the Chickabo Settlement Deed was significantly less than the amount for which Sifris J stated in Chickabo (No 3) that he would order Mr Graco to account. Thirdly, Mr Pakis submits that there is no authority to the effect that it is unjustifiably oppressive for a party to be required to defend a second proceeding in circumstances where a prior proceeding involving common issues had already been defended (unsuccessfully, so submitted by Mr Pakis).

268 The question of whether the Pakis Proceeding constitutes an abuse of process arises only where Mr Graco's alternative bases upon which he seeks a permanent stay of the Pakis Proceeding are rejected. Its premise is that Mr Pakis and the Chickabo Plaintiffs are not privies in interest and that the Chickabo Settlement Deed does not amount to a release of the claims now sought to be advanced by Mr Pakis.

269 Whilst I accept that the doctrine of abuse of process is informed by considerations of finality and fairness, that it may be invoked in areas where estoppels do not apply and has a more flexible sphere of operation, the jurisdiction to stay a proceeding on abuse of process grounds should be exercised with caution, and that 'the onus of establishing that a proceeding is an abuse of process lies upon the party alleging it' and that 'the onus is a heavy one'.[106] To similar effect, in Walton v Gardiner,[107] the majority (Mason CJ, Deane J and Dawson J) endorsed the observations by the Court of Appeal in that case that it would only be satisfied that the continuation of proceedings would be 'so unfairly and unjustifiably oppressive' so as to constitute an abuse of process in an exceptional or extreme case.[108]

270 The passage in Tomlinson relied upon by Mr Graco cites cases in support of his submission which are nothing like the present. Walton v Gardiner is far removed from the present case, as is O'Shane v Harbour Radio Pty Ltd ('O'Shane').[109] In O'Shane, the Court of Appeal in New South Wales noted that Walton v Gardiner cited inter alia, Reichel v Magrath.[110] In Reichel v Magrath, Lord Halsbury said:[111]

... it would be a scandal to the administration of justice, if the same question having been disposed of by one case, the litigant to be permitted by changing the form of the proceeding to set up the same case again ... There must be an inherent jurisdiction in every court of justice to prevent such an abuse of its procedure.

271 Reichel v Magrath was an unusual case; the appellant brought an action against a bishop and the patrons of the benefice, claiming a declaration that he was a vicar of the benefice and that an instrument of resignation which he had executed was void and seeking an injunction to restrain the bishop from instituting, and the patrons from presenting, any other person to the benefice. The appellant lost the action. Afterwards, the bishop appointed a successor to the benefice. The successor brought an action against the appellant seeking, inter alia, an injunction restraining the appellant from depriving the respondent of the use and occupation of the house and lands occupied by the vicar of the benefice. In his defence, the appellant set up the same case on which he had been defeated in the action in which he was plaintiff.

272 There was no argument advanced to the effect that the successor vicar was a privy in interest with the bishop and the patrons of the benefice. Moreover, given that the replacement vicar was not appointed until after the determination of the first action, there was no opportunity for that person to be joined as a party to the first action. Such a case is far removed from the present.

273 Further, the relevant extract in Tomlinson also referred to Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd ('Virgin Atlantic').[112] This case, too, is far removed from the present. The relevant passage in Virgin Atlantic simply recognises that the juridical basis for res judicata and abuse of process are quite different, but nevertheless overlap, recognising that 'estoppel per rem judicatam, whether cause of action estoppel or issue estoppel, is essentially concerned with preventing abuse of process'.[113]

274 In R v O'Halloran,[114] the Court of Appeal in New South Wales rejected an appeal from a conviction of a company officer of an offence against the corporations law on various grounds. Amongst the grounds of appeal rejected was an allegation that the subsequent criminal proceeding was an abuse of process by reason of the earlier disposition of a civil action. In the course of that part of the appeal, Heydon JA, noting that the parties to the criminal proceeding were not the same as those in the earlier civil claim, observed that, 'Though the position in relation to parties is not by itself the reason why I reject the appellant's argument, it does create certain difficulties for the appellant'.[115] In the result, the Court of Appeal rejected the ground of appeal on the basis that the question for determination in the criminal appeal was not the same as that the subject of the earlier civil hearing and, in that context, the determination in the civil proceeding created no res judicata or issue estoppel.

275 By deciding the matter on that ground, I do not take the Court of Appeal's reasoning to establish as an irrefutable proposition (and nor was it submitted as such) that the converse proposition is true; that is, to say that it would constitute an abuse of process if the same issue as that which was decided in the earlier proceeding was called upon for decision in a subsequent proceeding involving (some) different parties.

276 Further, whilst I have taken the same approach as Gzell J in Page v McKensey & Ors to the question of whether the partner in this case has privity of interest with the partners in the earlier proceeding, I would not reach the same conclusion that his Honour did in relation to the question of the alternative abuse of process estoppel.

277 It is plain from his Honour's reasoning that the passage from Page v McKensey & Ors relied upon by Mr Graco and set out above 'that it was not open to the appellant to seek redefinition of the rights and obligations inter se the respondents'[116] arose because of his Honour's earlier conclusion that 'there are circumstances in which a person, not a party to proceedings, is affected by the litigation, not as the result of estoppel, but as a consequence of being compelled to accept facts'.[117] The reference to a party being compelled to accept facts then referred to Executor Trustee.[118]

278 The Court of Appeal of this Court, however, confirmed in FBR Fund Administration Pty Ltd v Chickabo Pty Ltd[119] that the principle in Executor Trustee is confined to the taxation context in which it arose. In support of that conclusion, the Court of Appeal noted that if Executor Trustee were applied expansively, it could produce outcomes which were inconsistent with a fundamental principle of the common law; being the right to a hearing, as well as with the principles of res judicata and issue estoppel.

279 In the end, Mr Graco's argument that it is an abuse of process for Mr Pakis to prosecute the Pakis Proceeding rests essentially on two bases; first, that there is a prospect of inconsistent outcomes between the earlier determination in the Chickabo Proceeding; and secondly, that Mr Graco would be unfairly prejudiced if compelled to re-litigate a claim which he had no doubt honestly (and, for that matter, reasonably) believed had been concluded.

280 The fact that the outcome in the second proceeding may be different to that in the first proceeding does not itself render the later proceeding an abuse of process. The possibility of inconsistent outcomes is the very reason for provision in the Rules for joinder of parties. The vice of inconsistent outcomes could have been avoided if Mr Pakis and GP5 were joined as parties to the Chickabo Proceeding. Absent them being privies in interest with the Chickabo Plaintiffs, inconsistency alone, in my view, does not establish an abuse of process.

281 In Johnson v Gore Wood & Co (a firm),[120] the House of Lords allowed an appeal against the decision of the Court of Appeal staying a proceeding on abuse of process grounds. W Limited had earlier commenced a proceeding against its former solicitors. After six weeks of trial, the proceeding settled on terms involving a substantial payment to W Limited. Subsequently W Limited's managing director, effectively 'the corporate embodiment of W Limited',[121] commenced proceedings against the solicitors for damages and negligence arising out of the same conduct. There are a number of factors present in the case which distinguish it from this one, but nevertheless Lord Bingham of Cornhill accepted that it would be a rare case of abuse of process absent 'unjust harassment' of a party often (but not necessarily found) in circumstances giving rise to 'a collateral attack on a previous decision or some dishonesty'.[122]

282 No such elements are present here where Mr Pakis had no knowledge of the Chickabo Proceeding. Further, any payments made by Mr Graco pursuant to the Chickabo settlement deed and in respect of which Mr Pakis may have some entitlement as against the partners who received that money, can be relied upon by Mr Graco in reduction or extinction of any claim that Mr Pakis might otherwise have.

283 Whilst I accept that it would be burdensome on Mr Graco for him to be subjected to a further trial involving substantially the same issues as those which were the subject of the Chickabo Proceeding and believed by Mr Graco to have been resolved by the entering into the Chickabo Settlement Deed, in my view, it cannot be an abuse of process for Mr Pakis to pursue such claims, assuming, as I do for the purposes of this aspect of the argument, that Mr Pakis is not precluded from doing so by reason of the operation of the doctrine of res judicata or otherwise prevented from doing so by the terms of the Chickabo Settlement Deed. It would have been easy enough for Mr Graco to have obtained protection against the vice which now arises by the joinder of Mr Pakis as a party to the Chickabo Proceeding or by an indemnity being given as a term of settlement by the Chickabo Plaintiffs in his favour with respect to any claim subsequently brought by persons who were members of the Partnership at the relevant time.

284 In my view therefore, and on the dual premise that Mr Pakis is not a privy of the Chickabo Plaintiffs (which I do not accept) and that the release given by MSV under the Chickabo Settlement Deed does not operate so as to give Mr Graco a release of Mr Pakis' claim (which I do accept), the Pakis Proceeding is not such an exceptional or extreme case such as to warrant it being stayed on abuse of process grounds. Mr Graco has not discharged the heavy onus that he bears in establishing this.

285 By way of conclusion, I return to a basal proposition advanced by Mr Pakis in opposition to the argument that the Pakis Proceeding should be stayed as an abuse of process. Mr Pakis submitted that there was no abuse of process as he did not seek to depart from the findings made in Chickabo (No 1) or Chickabo (No 3) Further, he argued that it would only be if Mr Graco sought to relitigate or otherwise depart from the issues determined against him in the Chickabo Proceeding that questions of abuse of process would arise.

286 There is some irony in the submission that the Pakis Proceeding is not subject to res judicata, but that at the same time Mr Pakis relies on Chickabo (No 1) and Chickabo (No 3). Estoppels binding as between parties and their privies 'must be available to and operative in respect of each party; or, as it is said, estoppels must be mutual'.[123]

287 The submission by Mr Pakis that he is entitled to rely upon Chickabo (No 1) and Chickabo (No 3) is consistent with the conclusion that the claims sought to be advanced in the Pakis Proceeding are claims in respect of which Mr Pakis is a privy in interest of the Chickabo Plaintiffs and which he is estopped per rem judicatam from prosecuting.

288 Secondly, the submission that Mr Pakis is entitled to rely on the findings in Chickabo (No 1) and Chickabo (No 3) assumes that they constitute findings of fact or law which give rise to an issue estoppel. Mr Graco disputed this, submitting that only those facts which involve a determination of a fact or matter which 'necessarily established as the legal foundation or justification of its conclusion',[124] give rise to such an estoppel. Mr Graco submits that the ultimate judicial determination was the Chickabo Proceeding Final Orders and the findings made in Chickabo (No 1) and Chickabo (No 3) are irrelevant to that determination. Whether Mr Pakis can rely on those findings or whether Mr Graco can depart from them does not arise in this proceeding and may be a matter for another day.

289 The emphasis on the breach of clause 11 of the Partnership Deed raising different questions arose late in oral argument. Mr Pakis submitted that if his argument as to the breach of clause 11 is accepted, then the Separate Question must be answered adversely to Mr Graco.

290 I do not agree. Whilst the answer to the Separate Question will not determine the Pakis Proceeding in full, it is open to answer the Separate Question in a manner which deals with the clause 11 breach separately.

291 In the Zphere Proceeding, the answer to the Separate Question is 'yes' in respect of the relief sought by Mr Graco in paragraph D of the prayer for relief save for the claim for breach of clause 11 of the 2006 Partnership Deed, but 'no' in respect of the relief sought in paragraphs C and F(i).

292 I shall hear the parties as to the form of order and as to costs and as to appropriate further directions in the Pakis Proceeding including for amendment to the statement of claim so as to confine the proceeding to a claim for damages for breach of clause 11 of the 2006 Partnership Deed.

[1] The statement of claim pleaded that both the partnership entities and the principals were partners on the 2006 Partnership Deed's proper construction.

[2] By contrast with GP5 and Mr Pakis and DRP and Mr Polonsky, GRI and Mr Grant were not partners at the time of the Payment.

[3] Chickabo Pty Ltd v Zphere Pty Ltd [2019] VSC 73 ('Chickabo No 1').

[4] Chickabo Pty Ltd v Zphere Pty Ltd (No 2) [2019] VSC 580 ('Chickabo No 2').

[5] FBR Fund Administration v Chickabo [2019] VSCA 314 ('FBR Fund').

[6] Chickabo Pty Ltd v Zphere Pty Ltd (No 3) [2020] VSC 464 ('Chickabo No 3').

[8] As defined in those reasons, the Gain represented the entire gain or profit made from the Investment and the Payment.

[10] For the purposes of this proceeding, nothing turns on the distinction between Mr Pakis and GP5. For ease of reading, on some occasions these reasons refer only to Mr Pakis.

[11] Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 256 CLR 507, 517 [22] (French CJ, Bell, Gageler and Keane JJ).

[12] Blair and Perpetual Trustee Co Ltd v Curran (Adams's Will) [1939] HCA 23; (1939) 62 CLR 464, 532 (Dixon J) ('Blair v Curran'); Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589, 597 (Gibbs CJ, Mason and Aickin JJ); Chamberlain v DCT [1988] HCA 21; (1988) 164 CLR 502, 507-8 (Deane, Toohey and Gaudron JJ), 512 (Dawson J).

[13] Trawl Industries of Australia Pty Ltd (in liq) v Effem Foods Pty Ltd [1992] FCA 272; (1992) 108 ALR 335, 338 (Gummow J); Macquarie Bank Ltd v National Mutual Life Assn of Australasia Ltd (1996) 40 NSWLR 543, 556-7 (Clarke JA); Thoday v Thoday [1964] P 181, 197-198 (Diplock LJ); Zeene v Zeene (No 2) [2015] NSWSC 1151, [40] (White J).

[16] [2004] HCA 34; (2004) 220 CLR 363, 373 [21] (Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ).

[17] Hill End Gold Ltd v First Tiffany Resource Corp [2010] NSWSC 375, [33] (Brereton J); Maganja v Arthur [1984] 3 NSWLR 561, 566 (Yeldham J).

[18] [1894] UKLawRpCh 184; (1895) 1 Ch 37.

[20] [2004] FCA 21.

[22] Rogers v The Queen [1994] HCA 42; (1994) 181 CLR 251, 263 (Brennan J).

[23] FBR Fund (n 5), [55] (Whelan, Beach and Niall JJA).

[25] [1968] HCA 34; (1968) 118 CLR 271.

[40] Timbercorp Finance Pty Ltd (in liq) v Collins [2016] FCA 44; (2016) 259 CLR 212, [54] (French CJ, Kiefel, Keane and Nettle JJ).

[41] Yates Property Corp Pty Ltd v Boland [2000] FCA 1106; (2000) 179 ALR 664, 695 [105] (Goldberg J).

[43] [1991] 1 QB 241.

[50] [1986] NZCA 445; [1986] 2 NZLR 262.

[51] Ibid, 268 (Cooke P, McMullin and Somers JJ).

[53] [2003] NSWSC 759.

[54] [1939] HCA 35; (1939) 62 CLR 545.

[56] Executor Trustee is discussed further at [277] below.

[57] Page v McKensey & Ors (n 53), [34].

[58] [2020] HCA 7.

[59] Ibid, [21]-[39] (citations omitted).

[61] In Victoria, this is recognised by s 35 of the Partnership Act.

[62] United Builders Pty Ltd v Mutual Acceptance Ltd [1980] HCA 43; (1980) 144 CLR 673, 688 (Mason J).

[63] There is some authority that a partner may bring an action founded in a partnership interest, but only after informing the other partners and, if those partners demur, joining them as defendants to the proceeding and indemnifying them for any costs incurred in the name of the partnership: see, eg, Whitehead v Hughes (1834) 2 C & M 318 , where it was held that one of several partners has a right to use the name of the firm in order to bring the action. See also the discussion of this point in A V Dicey, A treatise on the rules for the selection of the parties to an action (William Maxwell, 1870). I note in fairness that the status of Whitehead v Hughes may be diminished following the majority judgment in Australian Workers' Union v Bowen [1946] HCA 24; (1946) 72 CLR 575; though that case concerned a creditors petition for a joint debt, rather than an action in the context of a partnership.

[64] [1929] HCA 24; (1929) 42 CLR 384, 394.

[65] [1891] UKLawRpCh 57; [1891] 2 Ch 244, 255.

[66] R C I'Anson Banks, Lindley & Banks on Partnership (Sweet & Maxwell, 20th edition, 2017), [16-19].

[67] Keith L Fletcher, The Law of Partnership in Australia (Lawbook Co, 9th ed, 2007), [4.15].

[69] [1904] HCA 45; (1904) 2 CLR 190.

[71] See Cameron v Murdoch (1986) 60 ALJR 280, 286 (Lord Brandon of Oakbrook); Powell v Powell [1932] NSWStRp 42; (1932) 32 SR (NSW) 407, 413 (Long Innes J).

[72] Frederick Pollock, A Digest of the Law of Partnership (Stevens & Sons, 1877), 69.

[73] Town & Country Property Management Services Pty Ltd v Kaltoum [2002] NSWSC 166, [84] (Campbell J).

[74] See the helpful and in-depth discussion by Edelman J in Agricultural Land Management v Jackson (No 2) [2014] WASC 102; (2014) 48 WAR 1.

[75] See R C I'Anson Banks, Lindley & Banks on Partnership (n 66), [16-03] and the cases cited therein; with reference to the identically worded ancestor provision of s 32, s 28 of the Partnership Act 1890.

[76] See, eg, Blair v Curran (n 12), 531-2 (Dixon J).

[77] [1977] 1 WLR 510.

[79] Rojoda (n 58), [26], [30], [32], [36], [38], [76].

[80] See Agricultural Land Management v Jackson (n 74).

[81] [2005] NSWCA 77.

[83] [2010] NSWCA 268, [200].

[85] Glanville Williams, Joint Obligations: A treatise on joint and joint and several liability in contract, quasi-contract and trusts in England, Ireland and the common-law dominions (Butterworths, 1949), 33, 34.

[86] Macquarie International Health Clinic (n 83), [200].

[87] LexisNexis, Halsbury's Laws of Australia (online at 16 August 2022) 110 Contract, 'III Terms and Parties' [110-2985].

[88] [1865] EngR 669; (1865) 19 CBNS 713.

[89] [2009] QSC 64.

[90] As opposed to impermissible derivative loss.

[91] [1987] 11 NSWLR 300.

[93] [2002] NSWSC 119.

[96] Gray v Pearson [1870] UKLawRpCP 41; (1870) LR 5 CP 568, approved in Spellson v George [1987] 11 NSWLR 300, 313.

[97] [2013] WASCA 37; [2013] 43 WAR 507.

[99] G E Dal Pont, Law of Agency (LexisNexis, 4th ed, 2020), [19.28].

[100] Mr Graco submitted that this included Mr Pakis (by reason of the Assumption).

[101] In my view, it does not follow from the description of MSV as the manager of the Partnership in the formal introductory paragraphs of the Chickabo FASOC that the claims were thereby made in its managerial capacity. This, coupled with the fact that each of those members of the partnership who it is likely were considered by those partners who were parties to the Chickabo proceeding Settlement Deed (all those apart from Mr Pakis and GP5) considered that all those persons were parties as principal to the Chickabo proceeding Settlement Deed is such that I cannot conclude that there is sufficient evidence that MSV entered into the Deed on behalf of the partnership, including Mr Pakis.

[102] Glanville Williams' Joint Obligations (n 85) cites a US case, Larose v Ocean Accident and Guarantee Corporation [1918] 1 WWR 616 as authority for the proposition that a release by one joint creditor does not discharge the debt of the suit of the other co-creditor. Cf the obiter dictum of Starke J in dissent in Australian Workers Union v Bowen (n 63) and Lemiere J in Wright v David John Neale Lemon [2020] WASC 33.

[103] Tomlinson, (n 11), [25]-[26].

[104] Page v Mckensey & Ors (n 53), [44].

[105] No such attempt has been made yet including because Mr Graco has not yet filed a defence in the Pakis Proceeding.

[106] Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509, 529 (Mason CJ, Dawson, Toohey and McHugh JJ).

[109] [2013] NSWCA 315; [2013] 85 NSWLR 698.

[110] [1889] UKLawRpAC 20; (1889) 14 App Cas 665.

[112] [2013] UKSC 46; (2014) AC 160.

[113] Ibid, [25] (Lord Sumption JSC).

[114] [2000] NSWCCA 528.

[116] Page v McKensey & Ors (n 53), [44].

[119] FBR Fund (n 5), [58] (Whelan, Beach and Niall JJA).

[120] [2002] 2 AC 1.

[124] Blair v Curran (n 12), 531 (Dixon J).