Consideration
48 In the Supreme Court proceedings, the bank put in issue whether any of the misrepresentations alleged in the defendants' Cross-Claim had been made by it. In the case of those representations which were said to have been made orally, the bank denied making them. As far as any representations were said to be written or partly written, the bank contested the interpretation placed upon the relevant documents by the defendants. There is, therefore, no doubt that the entire damages case advanced by Webuildem in the Supreme Court proceedings based upon misleading and deceptive conduct alleged to have been engaged in by the bank vis-à-vis the defendants was challenged and put in issue by the bank in those proceedings.
49 There is also no doubt that the damages case sought to be litigated in this Court in the present proceeding is precisely the same damages case which was pleaded and contested in the Supreme Court proceedings. Counsel for Webuildem conceded as much. In both proceedings, Webuildem seeks damages for contraventions by the bank of s 4 and s 18 of the ACL based upon precisely the same pleaded facts. While it is true that Webuildem and the other defendants raised additional matters in the Supreme Court proceedings, the misleading and deceptive conduct case in each set of proceedings based upon misrepresentations allegedly made by officers of the bank to Mr Rahme and others during the course of negotiations in February and March 2008 in connection with the loans which were ultimately made by the bank to Webuildem and secured by the securities, is precisely the same in each proceeding. In addition, the substance of that case as pleaded in the defendants' Cross-Claim was picked up and repeated in the defendants' Points of Defence filed in the Supreme Court proceedings in answer to the bank's claims for judgment in debt and for possession of the properties secured by the securities which the bank made in the Interlocutory Process filed by it in the Supreme Court proceedings on 27 January 2012. Presumably, Webuildem intended to plead its damages as a set-off against the bank's claim in debt.
50 The settlement agreement among the parties to the Supreme Court proceedings which is primarily reflected in par 8 of the orders made on 8 March 2012 (including the terms of the Escrow Orders) resolved all issues in dispute between Webuildem and the bank in those proceedings. The substance of that agreement was:
(a) Webuildem was to be given more time to repay its debt to the bank. The revised deadline was 12 June 2012.
(b) The bank was to procure the immediate retirement of the receivers.
(c) All of the defendants released the bank and the receivers from all claims. The releases are expressed in very wide terms and cover more than the claims made in the Supreme Court proceedings.
(d) The defendants acknowledged that all of the loan facility agreements and all of the securities were valid and enforceable.
(e) The defendants promised to withdraw their complaints about the bank which they had made to Financial Ombudsman Services Limited and not to make any further complaint to that organisation in relation to their dealings with the bank.
(f) If the defendants refinanced by 12 June 2012 and Webuildem repaid its debt to the bank in full by that date, the Supreme Court proceedings would be dismissed in their entirety. If not, the Escrow Orders would be made if the bank chose to have them made and thereafter those orders would be available to be enforced by the bank. No further consent to these steps was required from any of the defendants. But, come what may, the whole of the proceedings would be dealt with by a final judgment.
51 At the hearing before me, the bank submitted that:
(a) The settlement agreement made on 7 March 2012 and reflected in the orders of 8 March 2012 resolved all matters in dispute between the parties. It was and is valid and enforceable. By that agreement, Webuildem substituted the benefits which it obtained under the settlement agreement for any relief to which it may have been entitled based upon the causes of action pleaded in the defendants' Cross-Claim.
(b) Alternatively, the 16 July 2012 orders constituted a binding judicial determination of the issues raised by the defendants in their Cross-Claim in the Supreme Court proceedings which determination precluded them, or any of them, from seeking to raise the same or substantially the same issues in any subsequent proceedings. The principle of res judicata holds good in respect of judgments by consent. A judgment by consent has conclusive effect upon the issues determined by it (see Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 508; and Isaacs v Ocean Accident & Guarantee Corporation Ltd (1958) 58 SR (NSW) 69 at 75).
(c) The present proceeding is an abuse of process because it constitutes an attempt by Webuildem to re-litigate a dispute which has already been judicially determined.
(d) The claim for a declaration is misconceived. No basis for the making of the declaration has been advanced. In any event, the whole of the settlement agreement has now merged in the 16 July 2012 orders.
52 Webuildem submitted:
(a) The defendants' Cross-Claim was not a pleading by which the defendants claimed final relief.
(b) It remained open to Webuildem to take steps to set aside or to rescind the settlement agreement and the consent orders subsequently made on 8 March 2012 and on 16 July 2012. There was no res judicata in the present case.
53 As I have already said (at [25] above), the defendants' Cross-Claim was, in substance, a claim for final relief. By that document, Webuildem sought damages under s 236 of the ACL and other relief directed to relieving the defendants from liability under the securities. Had Webuildem succeeded in obtaining a judgment or an order for payment of damages and interest, relief of that kind would have finally determined Webuildem's claims for pecuniary relief. The mere fact that the defendants' Cross-Claim was styled "Interlocutory Process" does not change the character of the claims made or the relief sought based upon those claims. The position is put beyond argument when the terms of r 2.2(1)(b) of the Supreme Court (Corporations) Rules are taken into account. Webuildem's positive claims were also relied upon by it in its Points of Defence filed in answer to the bank's claims.
54 What then is the legal effect of the settlement agreement, the orders made on 8 March 2012 and the 16 July 2012 orders?
55 The settlement agreement embodied in the orders made by the Supreme Court on 8 March 2012 comprised three broad elements.
56 These broad elements were:
(a) The procedural orders and directions designed to keep the proceedings on foot and within the control of the Court up to 18 June 2012 (pars 1, 2 and 7). 18 June 2012 was after the critical "make or break date" of 12 June 2012. These orders and directions were spent by 12 June 2012.
(b) The access directions (pars 3, 4, 5 and 6). These too had run their course by 12 June 2012.
(c) The compromise itself (par 8 and Annexure "A" viz the Escrow Orders). The substance of the compromise is set out at [50] above. The Escrow orders, once made and entered, gave possession to the bank of all of the properties mortgaged under the securities and a money judgment comprising the full amount of Webuildem's debt to the bank, interest and costs. Those orders also specified the daily amount of interest to be paid between 8 March 2012 and the date when the bank received payment in full of the debt and costs.
57 The settlement agreement was embodied in Short Minutes of Order dated 7 March 2012. This document was signed by Senior Counsel for the defendants and by Mr Rahme personally. On its face, that agreement appears to have been binding on Webuildem and enforceable against it. As at the date of the hearing before me and, as far as I am aware, as at the date of the publication of these Reasons for Judgment, no court of competent jurisdiction has made an order setting aside or rescinding that agreement. Nor indeed has any of the defendants in the Supreme Court proceedings made a substantive claim for such relief in such a court.
58 Upon their true construction, the orders made by the Supreme Court on 8 March 2012 relevantly provided that:
(a) Webuildem agreed that, in the event that Webuildem failed to repay in full its debt to the bank by 12 June 2012, the Escrow Orders could be made and entered at the instigation of the bank without the need for any further consent from any of the defendants and without the need to give any of them notice of the bank's intention to take those steps; and
(b) All matters in dispute between the bank and the defendants were resolved upon the terms set out therein. Webuildem exchanged any entitlement which it had to the relief that it had pleaded in the defendants' Cross-Claim and relied upon in its Points of Defence filed in the Supreme Court proceedings for the benefits it secured under the settlement agreement. The bank did likewise. It exchanged its entitlement to rely upon the existing 12 June 2012 deadline and thus to have judgment immediately, for the basket of benefits it secured under the settlement agreement.
59 The bank obtained a number of benefits in return for extending the date by which its debt had to be repaid in full. These were:
(a) Certainty of outcome. Either it would get its money or have a smooth pathway to judgment in its own name. That judgment would give to the bank everything to which it could possibly have been entitled in the case assuming that it secured complete victory.
(b) A comprehensive release from all relevant claims both present and future.
(c) The withdrawal of the defendants' complaint to Financial Ombudsman Services Limited.
(d) Protection for the receivers.
(e) Renunciation by the defendants of all possible future challenges to the bank's loan documents and the securities.
60 After 8 March 2012, neither the bank nor any of the defendants retained any of the rights reflected in the causes of action and claims for relief made by them in the Supreme Court proceedings up to that point in time.
61 Subsequently, in the events which happened, the settlement agreement was perfected by the making and entry of the 16 July 2012 orders. The parties' respective rights sought to be vindicated by them in the Supreme Court proceedings merged in the judgment and orders specified in the 16 July 2012 orders. At that point, those rights had lost their independent existence (Chamberlain v Deputy Commissioner of Taxation 164 CLR 502 at 508 per Deane, Toohey and Gaudron JJ).
62 The judgment and orders entered by means of the 16 July 2012 orders constitute a decision pronounced by the Supreme Court by consent, being a court which plainly had jurisdiction over the causes of action and the parties in the Supreme Court proceedings, which disposed once and for all of the fundamental matters decided by the entry of those orders so that, except on appeal, those matters cannot be re-litigated between Webuildem and the other defendants, on the one hand, and the bank, on the other hand. The 16 July 2012 orders constitute a res judicata as between the bank and the defendants. (See Chapter 1 of Spencer, Bower and Handley, Res Judicata, (4th edn, LexisNexis, 2009); Jackson v Goldsmith (1950) 81 CLR 446 at 466 per Fullagar J; and Blair v Curran (1939) 62 CLR 464 at 531-532 per Dixon J.)
63 It does not matter that the 16 July 2012 orders were made and entered by consent without any prior judicial determination of the relevant issues on the merits. The principle of res judicata holds good in respect of judgments by consent (Chamberlain v Deputy Commissioner of Taxation 164 CLR 502 at 508 per Deane, Toohey and Gaudron JJ; and Isaacs v Ocean Accident & Guarantee Corporation Ltd 58 SR (NSW) 69 at 75 per Street CJ and Roper CJ in Eq).
64 The 16 July 2012 orders determined the following issues on a final basis:
(a) The quantum of the debt owed by Webuildem to the bank;
(b) Whether the bank had overcharged interest on the amount owed by Webuildem to the bank; and
(c) Whether Webuildem was entitled to any relief (including relief by way of damages) as a result of allegedly acting in reliance upon various misrepresentations made by officers of the bank to its executives.
65 The 16 July 2012 orders had the effect summarised at [64] above notwithstanding that they did not include an express order dismissing the first defendants' Cross-Claim.
66 None of the issues or matters described in [64] above can now be re-litigated in this Court.
67 I now turn to address the declaration sought by Webuildem in the present proceeding.
68 The only material relied upon by Webuildem to support that declaration is found in pars 11 to 14 of its Statement of Claim. In par 14, Webuildem makes general unparticularised assertions to the effect that the releases given by the defendants in the Supreme Court proceedings in the settlement agreement were unjust and unconscionable and (possibly) should not be enforced because the bank is in breach of the settlement agreement in some unarticulated respect.
69 These claims cannot stand in this form. Furthermore, there is no evidence before me that could conceivably support a substantive attack on the settlement agreement or the releases given by the defendants as part of that agreement. Webuildem has had every opportunity to bring forward such an attack before now and has not done so. I conclude that it is unable to do so.
70 For all of the above reasons, Webuildem is precluded from seeking to re-litigate in this Court the claims made by it in the Supreme Court proceedings and ought not be permitted to press its claim for the declaration which it seeks in the present proceeding.
71 I am satisfied that Webuildem's Originating Application should be dismissed. The dismissal which I will order is founded upon the proposition that the 16 July 2012 orders are res judicata in respect of the claims now being sought to be made. That dismissal is also justified under r 26.01(1)(a), (b), (c) and (d) FCR because the claims now made cannot succeed and constitute an abuse of the process of the Court.
72 Finally, and in any event, the bringing and maintenance of the present proceeding by Webuildem is an abuse of the process of the Court because it is, and always was, doomed to fail (see the discussion in Spalla v St George Motor Finance Ltd (No 6) [2004] FCA 1699 at [58]-[70] per French J).
73 There is no need to consider whether Webuildem's Originating Application and Statement of Claim should be struck out under r 16.21(1)(f) FCR.
74 I therefore propose to dismiss Webuildem's Originating Application.
75 Costs should follow the event.
76 The present proceeding should never have been brought. In light of that fact and in light of the terms of the letter of demand dated 7 August 2012 sent by the bank's solicitors to Webuildem's lawyers, the bank's costs should be paid on an indemnity basis.
77 During oral argument, Counsel for Webuildem made application for an order that I transfer the present proceeding to the Supreme Court. This was a fallback position designed to keep Webuildem's case on foot. Such a transfer would achieve nothing. The difficulties standing in the way of Webuildem's attempt to re-litigate the claims which it made in the Supreme Court would remain. I decline to make an order for transfer.
78 There will be orders accordingly.
I certify that the preceding seventy-eight (78) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.