FEDERAL COURT OF AUSTRALIA

HPM Pty Ltd v Fear [2002] FCAFC 403

APPEAL – proceeding dismissed as abuse of process – whether dismissal order final or interlocutory – whether leave to appeal should be granted

Corporations Act 2001 (Cth) ss 236, 237, s 471A(1), s 471A(1A)

Federal Court Rules O 4 r 14(2), O 20 r 2(1), O 52 r 10

Licul v Corney (1976) 8 ALR 437 cited

Carr v Finance Corporation of Australia Limited (No 1) (1981) 147 CLR 246 cited

Brouwer v Titan Corporation Ltd (1997) 73 FCR 241 cited

Wilson v Official Trustee in Bankruptcy [2000] FCA 304 cited

Palm Springs Ltd v Darling (2002) 192 ALR 763 cited

Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 cited

Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346 cited

Yooralla Sponsors Club v JABI Nominees Pty Ltd (1980) 49 FLR 86 cited

Sea Culture International v Scoles (1991) 32 FCR 275 cited

HPM PTY LTD (IN LIQUIDATION) (ACN 008 679 481) v CHARLES ANTHONY CANDLIN FEAR and RESI STATEWIDE MORTGAGE CORPORATION

(ACN 005 083 394) and ROBERT CLAUDE COOK, TERENCE CORNELIUS McMANUS, ROBERT HENRI DE BUF, PATRICIA ANNE DE BUF, REGINALD SARSFIELD FINN, ELIZABETH ROSE FINN, DONALD GEORGE LYSTER, LEONE BEATRICE LYSTER, JOHN SELSMARK, ROGER LLOYD GEORGE RICHARD-COOMBES, IDA ELEANOR RICHARD-COOMBES, GRAEME CAMPBELL REYNOLDS, LESLEY HANNAH REYNOLDS, JOSEPH COCI, HELEN JOY COCI, ERNEST RAMPELLINI, JENNIFER ANNE RAMPELLINI, PETER JOE CHITTENDEN, MICHAEL SKUBA, MICHAEL CYRIL HALPIN, GEORGE HUGH MARGETTS, GWENDOLINE MARY MARGETTS, TOLEEN NOMINEES PTY LTD, LAVIN NOMINEES PTY LTD, TUDOR COURT INVESTMENTS PTY LTD, MacDOUGALL PTY LTD and OREGON NOMINEES PTY LTD

W91 OF 2002

APPLICATION FOR LEAVE TO APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.         The application for extension of time to apply for leave to appeal be dismissed.

2.         The applicant and Mr Blakeley pay the 1^st and 2^nd respondents’ costs of the application.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

APPLICATION FOR LEAVE TO APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

LEE J:

1                     The applicant, a company in respect of which an order for winding-up was made by this Court on 21 December 1995, seeks to appeal from the order of a Judge of this Court (HPM Pty Ltd v Fear [2002] FCA 202) that proceedings instituted by the applicant on 23 November 2001 against the first respondent (“Fear”), the second respondent (“the mortgagee’s successor”) and the third respondents (“the owners”) be dismissed “as an abuse of process”. 

2                     Although, in practical terms the order of the learned primary Judge terminated the applicant’s attempt by a proceeding in this Court to obtain orders that the respondents compensate the applicant for damage the applicant claimed to have suffered by reason of alleged wrongs committed by the respondents, the dismissal of the proceeding did not finally determine the rights of parties to that proceeding.  Accordingly the orders made by his Honour should be treated as interlocutory and not final.  (See:  Licul v Corney (1976) 8 ALR 437; Carr v Finance Corporation of Australia Limited (No 1) (1981) 147 CLR 246, 248; Brouwer v Titan Corporation Ltd (1997) 73 FCR 241, 242; Wilson v Official Trustee in Bankruptcy [2000] FCA 304 (Full Court) at [18]; Palm Springs Ltd v Darling (2002) 192 ALR 763 at [5].)

3                     A “Notice of Appeal” was lodged by the applicant within the time provided by O 52 r 15 of the Federal Court Rules (“the Rules”) but no application for leave to appeal from an interlocutory order was filed within the time provided in O 52 r 10(2)(b).  The “Notice of Appeal” was taken to include such an application and, therefore, the extension of time sought by the applicant was until the filing of the “Notice of Appeal”.  An extension of time to bring an application for leave to appeal would normally be granted in the circumstances described, subject to it being demonstrated that there was an arguable case that the decision below involved error and that the applicant would suffer prejudice if leave were refused.

4                     The applicant was not represented by a solicitor at either the hearing before the learned primary Judge or at the hearing of this application.  On each occasion, pursuant to O 4 r 14(2) of the Rules, leave was granted to Mr Blakeley, as major shareholder and managing director of the applicant, to appear on behalf of the applicant.

5                     The material before the Court indicated that the liquidator appointed by the Court in December 1995 to wind-up the applicant gave notice to Mr Blakeley in January 2001 that he intended to “take the necessary steps to retire as Official Liquidator”.  What the present position is in that regard is unknown.  It is to be assumed that no order has been made by the Court under s 480 of the Corporations Act 2001 (Cth) (“the Act”) releasing the liquidator and directing ASIC to de-register the applicant as a corporation registered under the Act.

6                     The following is a summary of relevant background facts.  The applicant was the owner of the Peninsula Hotel at Mandurah, a town located on an estuary south of Perth.  The hotel was situated on a prominent site on land adjacent to the estuary.  The land and hotel had been owned by the “Blakeley family” for many years.  In May 1990 the hotel business began to experience financial difficulties.  Repayment of funds that had been advanced to the applicant by The Bank of Melbourne (“the mortgagee”), presumably to be used as capital in the business, was secured by mortgages registered against the land.  The applicant, through Mr Blakeley, sought advice from BPM Pty Ltd (“BPM”), a firm of accountants trading as “Bird Cameron”, on how best to manage the land, hotel business and assets of the applicant.  BPM advised the applicant to appoint BPM as the business manager of the hotel for six months to undertake the day-to-day running of that business.  The applicant accepted that advice and entered into a written management agreement with BPM. 

7                     In July and August 1990 the mortgagee served notices of demand on the applicant calling up the monies advanced and secured by the mortgages.  On 14 December 1990 the mortgagee acted under the mortgages to appoint Fear as receiver and manager of the secured property.  In June 1991 Fear sold the land and hotel business to the owners. 

8                     In December 1994 the applicant commenced proceeding 2236/94 in the Supreme Court of Western Australia against BPM, the mortgagee, Fear and the owners.  The applicant alleged that BPM had made misrepresentations, managed the hotel business negligently and had breached the management agreement in various respects, occasioning the applicant loss and damage.  With respect to the claims against the mortgagee, Fear and the owners, the applicant contended that the appointment of Fear was invalid and the sale of the applicant’s assets by Fear improper in that Fear had no power to sell those assets.  The applicant also alleged that Fear owed a duty to the applicant to act in good faith and not disregard the interests of the applicant when exercising the power of sale.  It was alleged that those duties were breached and further that Fear, through negligent conduct, allowed the hotel business to degenerate, thereby reducing its saleability and value.  It was alleged that the owners had participated in a dishonest scheme in which the assets of the applicant were sold to the owners by Fear at less than true value.  The applicant sought to recover from the defendants to that proceeding the loss the applicant claimed to have suffered as a result of the alleged breaches.

9                     The order made in this Court in December 1995 that the applicant be wound-up was an order made on an application filed by the mortgagee.  In October 1995 the mortgagee’s successor had been substituted for the mortgagee as a defendant in proceeding 2236/94.  Upon the order for winding-up being made, conduct of the litigation by the applicant in the Supreme Court passed to the liquidator who thereafter experienced problems in obtaining funds to proceed with the action.

10                  In April 1996 Blakeley commenced proceeding 1314/96 in the Supreme Court against BPM, Fear, the mortgagee’s successor and the owners.  The statement of claim in that proceeding was substantially the same as that filed in 2236/94.  By July 1996, proceeding 1314/96 had been terminated by being discontinued or dismissed.

11                  Meanwhile, in June 1996 the Supreme Court ordered the applicant to provide security for the costs of Fear and the mortgagee’s successor in proceeding 2236/94.  In March 1997 the chose-in-action that was the subject of proceeding 2236/94, was assigned by the liquidator to Blakeley.  Progress in that proceeding remained stayed whilst the order that the applicant provide security for costs remained unsatisfied.  Blakeley entered a litigation-funding arrangement with the “McLernon Group” in June 1997 and became substituted as plaintiff in the proceeding as assignee of the applicant’s rights.  It was part of that arrangement that proceeding 2236/94 be discontinued against parties other than BPM.  The proceeding was discontinued against those parties accordingly in about October 1998.  Later, apparently sometime in 1999 and after Blakeley had re-assigned the chose-in-action to the liquidator and pursuant to an arrangement made between BPM, the liquidator and the McLernon Group, proceeding 2236/94 was dismissed against BPM by consent. 

12                  In about October 1999 Blakeley sought leave to re-join Fear and the mortgagee’s successor as defendants to proceeding 2236/94.  Obviously Blakeley then had no standing in respect of the applicant’s affairs and the application was dismissed in November 1999.

13                  In July 2000 Blakeley commenced proceeding 1985/00 in the Supreme Court against the respondents.  On the application of those parties Templeman J, on 12 January 2001, struck-out the statement of claim and dismissed the proceeding, finding that Blakeley had no personal cause of action against the respondents.  His Honour added, as an alternative, that an abuse of process of the court arose because the statement of claim was vexatious in that “it would work a considerable injustice” on the respondents by depriving them of the benefit of the security for costs order they had obtained in proceeding 2236/94.  His Honour said proceeding 1985/00 enabled that order to be circumvented and that, in his view, such a circumstance constituted an abuse of process.  Given that proceeding 1985/00 purported to be a personal action by Blakeley and not a proceeding by the applicant or by Blakeley as assignee of the applicant’s rights against the respondents, the alternative basis may not have been a strong ground to rely upon to dismiss the proceeding.  Furthermore, it appeared that only Fear and the mortgagee’s successor had the benefit of an order that the applicant provide security for costs.

14                  Blakeley appealed from the order of Templeman J.  On 23 July 2001 the appeal was dismissed by the Full Court of the Supreme Court on the ground that the applicant did not have a cause of action against the respondents.  No determination was made by the Full Court on the correctness of his Honour’s determination that proceeding 1985/00 may have been dismissed as an abuse of process for the reasons stated by his Honour.

15                  On 16 February 2001 Blakeley obtained leave from a Master of the Supreme Court “to bring proceedings on behalf of [the applicant] pursuant to [s] 236 of the Australian Corporations and Securities Legislation 2000”.  Purportedly pursuant to that leave the applicant, by Blakeley, commenced proceeding 1256/01 in the Supreme Court against the respondents.  The causes of action relied upon were the same as those pleaded in proceeding 2236/94.  On 7 May 2001 Wheeler J dismissed proceeding 1256/01 on the ground that it was an abuse of process for the reason identified by Templeman J in his reasons for dismissing proceeding 1985/00 commenced by Blakeley.  That is to say, Wheeler J found that if proceeding 1256/01 continued against the respondents, it would have been vexatious in that it deprived Fear and the mortgagee’s successor of the benefit of the order for security for costs they had obtained against the applicant in proceeding 2236/94 before that proceeding was discontinued against them in October 1998.  As noted earlier, if that was so in respect of those parties it would not appear to have been the situation in respect of the prosecution of a proceeding by the applicant against the owners.

16                  On 9 September 2002 an appeal from the decision of Wheeler J was dismissed by the Full Court.  The ground for dismissing the appeal was not a ground relied upon by her Honour.  The Full Court held that proceeding 1256/01 had been irregularly commenced and continued by Blakely on behalf of the applicant and for that reason the appeal was incompetent.  Pursuant to the Rules of the Supreme Court a proceeding by a body corporate in that court cannot be carried on “otherwise than by a solicitor”.  The learned primary Judge did not have before him the reasons of the Full Court which were delivered after the hearing of this application.

17                  The proceeding commenced by the applicant in this Court in November 2001 was dismissed by the learned primary Judge on 6 March 2002 on the ground that the institution of a proceeding was an abuse of process in that, as stated by Wheeler J in the Supreme Court proceeding, it sought to avoid the effect of “adverse decisions” of the Supreme Court.

18                  As noted above, if the proceeding in this Court “circumvented” the benefit of an order for security for costs  against the applicant obtained in a previous proceeding in the Supreme Court in respect of like causes of action, it would not appear to have been an order for the benefit of the owners.

19                  The notable point that arises from the foregoing summary of facts is that at no time has there been any determination on the merits of the applicant’s claims against the respondents.  Furthermore, it does not appear that any facts have been found to show that the applicant discontinued proceeding 2236/94 against Fear and the mortgagee’s successor in October 1998 for the purpose of commencing another proceeding against those parties to avoid being subject to the order for the provision of security for costs made in proceeding 2236/94.

20                  Furthermore, it is to be noted that in the reasons provided by Templeman J in dismissing the personal action by Blakeley in proceeding 1985/00 his Honour’s comments on the “circumvention” of an order for security for costs were restricted, necessarily, to the conduct of Blakeley.  As noted above, in the reasons provided by the Full Court on the appeal from the decision of Templeman J, the Full Court upheld his Honour’s finding that Blakeley had no personal cause of action.  No determination was made on the issue whether commencement of the proceeding could be vexatious and an abuse of process by “circumvention” by Blakeley of an order made against the applicant in a proceeding no longer extant.

21                  When the applicant commenced proceeding 1256/01 against the respondents in February 2001 it was, as the Full Court held on the appeal from the dismissal of that proceeding, a proceeding that at all times had been irregularly commenced and continued in the Supreme Court.

22                  Although the reasons provided by Wheeler J in dismissing proceeding 1256/01 expressed the view that the “aim” of proceeding 1256/01 was to “avoid previous decisions of this Court in respect of identical matters by bringing a fresh action without the need to challenge the correctness of those previous decisions by way of appeal”, the determination by the Full Court that the proceeding dismissed by Wheeler J had been irregularly commenced and continued made the foregoing finding of abuse of process unnecessary.  Of course, that conclusion by her Honour is entitled to be given considerable weight in determining the issue before this Court.  It is to be assumed that where her Honour refers to “previous decisions” of the Supreme Court, her Honour had in mind the order that had been in force in proceeding 2236/94 before that proceeding was terminated, that the applicant provide security for the costs of Fear and the mortgagee’s successor in that proceeding.  No other “decision” appears to have been identified as the object of circumvention by the applicant. 

23                  It is to be noted that there has been no finding in proceedings commenced by the applicant that the causes of action sought to be litigated by the applicant are so lacking in substance as to make further proceeding on those causes of action an abuse of process.

24                  Blakeley informed the Court that the applicant expected that provision for security for the costs of Fear and the mortgagee’s successor would be made in the proceeding in this Court, although the applicant reserved the right to present argument for the imposition of a less onerous order than the order that had been made in proceeding 2236/94 in the Supreme Court.  Blakeley indicated that the applicant would abide by any order made by this Court in that regard.  It is not clear whether the applicant made the same concession before his Honour on the hearing of the application of the respondents to strike-out the statement of claim and dismiss the proceeding.

25                  At the time the applicant commenced the proceeding in this Court, proceeding 1256/01 in the Supreme Court had already been dismissed and, as noted above, the subsequent decision of the Full Court on the appeal from that decision held that, at all material times, that proceeding had been irregular.

26                  Therefore, the “leave” granted to Blakeley in February 2001 to bring proceedings on behalf of the applicant may be said to have remained on foot and not to have been exhausted at the time the proceeding was commenced in this Court.  The leave granted was not confined to a defined proceeding nor to a proceeding in a particular court.

27                  At the time the proceeding was commenced in this Court jurisdiction in respect of the proceeding had been conferred on this Court by s 58AA of the Act.

28                  It was suggested by counsel for the respondents that the grant of leave by the Supreme Court was beyond power in that the provisions of ss 236 and 237 of the Corporations Law, as it then was (nowtheAct), were not to be construed as extending to the officer or former officer of a company in liquidation.  Counsel conceded that it was not an argument to be determined on this application.  In any event, it may be said that, for the reasons stated by the Full Court in dismissing the appeal from the decision of Wheeler J, the order of the Master is to be treated as being in full force and effect, no step having been taken by any party to have it set aside. 

29                  With regard to the construction of ss 236 and 237 of the Act, an issue discussed by the Full Court in that appeal, it is true that the sections do not include expressly a company in respect of which a winding-up order has been made.  However, until a company is wound-up and de-registered it remains a company as defined in s 9 of the Act and there is no reason to read into ss 236 and 237 some other definition.  Such a company is controlled by a liquidator who in turn is an officer of the court which made the order that the company be wound-up.  For the purpose of an application made by an officer, or former officer, of a company under s 237 of the Act, it may be said that it is within the contemplation of s 471A(1) of the Act that the written approval of a liquidator to  make such an application may be obtained  by such an officer pursuant to s 471A(1A)(c) of the Act.

30                  It was not part of the case of the respondents put to the learned primary Judge that the commencement of a proceeding in this Court by the applicant was vexatious by reason of the fact that the applicant had commenced and discontinued a proceeding in the Supreme Court against the respondents on the same causes of action some years ago and that the applicant had put the respondents to expense and inconvenience in another proceeding incompetently instituted in the Supreme Court.  It was not submitted that prejudice had been suffered by the respondents by the effluxion of time or by the occurrence of events that now made the proceeding in this Court an abuse of process.

31                  On the face of the application and the statement of claim in the instant matter, causes of action justiciable in this Court have been pleaded. Therefore, particular facts had to be established by the respondents to demonstrate that the proceeding in this Court constituted an abuse of process to be summarily dismissed.  It follows from the foregoing that, in my opinion, the real question that had to be resolved on the application to strike-out the statement of claim and dismiss the proceeding as an abuse of process was what was said to be conduct designed to circumvent an order of the Supreme Court that bound the applicant.  It was relevant to that issue that the applicant had discontinued a proceeding in the Supreme Court on the same causes of action in which an order for security for costs had been made in favour of several of the respondents to the proceeding in this Court.  But it did not follow, necessarily, that a proceeding on like causes in this Court had to be an abuse of process merely because no order for security then bound the applicant in this Court.  The respondents, if so minded, could apply for such an order. 

32                  This was not a case where the commencement of the proceeding in this Court could be said to have circumvented or avoided the effect of a “decision” of the Supreme Court and nor could it be said that it was plain that the proceeding commenced in this Court was incompetent as a proceeding brought in the applicant’s name by an officer or former officer without the leave of “the Court”.

33                  The proceeding should not have been summarily dismissed as an abuse of process and substantial injustice would be caused to the applicant if the order is allowed to stand.  (See:  Palm Springs Ltd at [36].)

34                  I would extend time for an application for leave to appeal, grant leave to appeal from the interlocutory order of the learned primary Judge, allow the appeal and set aside the order dismissing the proceeding.

Associate:

Dated:              9 December 2002

APPLICATION FOR LEAVE TO APPEAL FROM A JUDGE OF THE

FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

CARR J:

INTRODUCTION

35                  On 6 March 2002, a Judge of this Court made orders that the applicant’s application be dismissed as an abuse of process and that he pay the costs of the first respondent and the second respondent.  On 25 March 2002, the applicant lodged a document headed “Notice of Appeal”. 

36                  The first and second respondents contend that the “appeal” should be dismissed as incompetent because the applicant has not sought or obtained leave to appeal pursuant to Order 52 rule 10. 

37                  In my view, the judgment of 6 March 2002 was interlocutory in accordance with well-settled authority.  But it is of a type of interlocutory judgment which has, subject to the application of the usual discretionary considerations, perhaps more than the usual potential to be the subject of a grant of leave.  By that I mean to say that the orders are not to do with practice and procedure. 

38                  The applicant did not, until the appeal was called on, seek leave to appeal.  It has maintained that it does not require such leave.  But when the hearing started Mr H T J Blakeley (a former managing director and principal shareholder of the applicant who was granted leave to appear on its behalf) asked that leave to appeal be granted to the applicant.  Implicitly (by asking for whatever leave he needed) he asked that time be extended to apply for leave.  The first and second respondents opposed the grant of such leave.

factual and procedural background

Supreme Court of Western Australia Action No CIV 2236 of 1994

39                  On 14 September 1990 the first respondent (a chartered accountant) was appointed to be receiver and manager of the applicant under the terms of a mortgage and charge held by the second respondent over the applicant’s property.  Eventually the first respondent sold to the third respondents one of the applicant’s assets, being a property known as the Hotel Peninsula at Mandurah. 

40                  On 20 December 1994 the applicant commenced proceedings in the Supreme Court of Western Australia in action number CIV 2236 of 1994 against BPM Pty Ltd, trading as Bird Cameron, Accountants.  Their role in the matter is described below.  The first respondent and the third respondents were named as defendants to that action together with The Bank of Melbourne.  On 17 October 1995 the second respondent was substituted for The Bank of Melbourne by order of a Master and an amended statement of claim dated 18 October 1995 was filed. 

41                  In that statement of claim the applicant alleged that the appointments of the first respondent as receiver and manager were invalid as the applicant was not in default under the terms of the mortgages when the appointments were made.  The bases for that contention were that, first, notices of demand issued by the mortgagee did not specify the amounts owing to it under the relevant securities, and, secondly, that those notices of demand were “nullified” by an agreement made between the applicant and the second respondent on 23 August 1990.  The substance of that agreement was said to be that the applicant would continue to trade, on certain conditions.  The first respondent was said to have failed to make certain of the validity of his appointment, to have acted without power, to have failed to act in good faith and to have breached a statutory duty under s 229(2) of the Companies (Western Australia) Code to exercise a reasonable degree of care and diligence in exercising his power of sale.  He was said to have been negligent and in breach of his duties in failing to take reasonable care to obtain either a proper price or the true market value of the hotel and other property sold under the relevant mortgages.  The applicant alleged that the first respondent had allowed its hotel business to degenerate through lack of proper management, care and maintenance, thereby reducing its saleability and value.  He was also said to have failed to advertise and present the property in a proper and adequate manner prior to public auction.  There were a number of other respects in which he was said to have failed to discharge his duty of care. 

42                  The claim against BPM Pty Ltd related to its alleged failure to act carefully and diligently in the provision of advice to the applicant pursuant to an oral agreement said to have been made between it and Mr Blakeley, as a director of the applicant.

43                  Then it was alleged that the first respondent entered upon the applicant’s lands and took possession of its property and caused it to be sold thereby converting it to his own use or to that of the mortgagee.  The applicant claimed to have suffered loss and damages as a result.  The second respondent was alleged to be liable jointly with the first respondent for that loss and damage.  Both the first and second respondents, so the applicant pleaded, were said to have knowledge of the defect in the first respondent’s appointment and thereby to have become constructive trustees for the applicant and liable to account to the applicant for all the proceeds of the sale.  It was also alleged that the first respondent acted fraudulently in effecting that sale.  This was based upon an allegation of his collusion with the third respondents pursuant to which he conspired to sell the hotel at a grossly undervalued price.  The applicant claimed damages (including exemplary damages for fraud against the second defendant) against the first respondent, the second respondent and the third respondents, declarations, an account and interest. 

44                  On 21 December 1995 the applicant was wound up by order of the District Registrar of this Court.  Mr Gary John Trevor of Messrs Ferrier Hodgson & Co was appointed liquidator.  On 14 March 1997, the liquidator entered into a deed with Mr Blakeley by which he assigned to Mr Blakeley all of the applicant’s rights in the action in the Supreme Court.  This was done pursuant to a resolution of a meeting of creditors held on 5 September 1996 and a direction given by Lee J in this Court on 25 February 1997. 

45                  In the meantime, on 14 June 1996 an order was made by a Master that the applicant provide $75,000 as security for its costs in relation to its claim against the first respondent and the second respondent.  $10,000 was to be paid within 30 days of service of the order upon the applicant and the balance upon entry for trial.  The action was to be stayed if the applicant failed to pay either sum by the specified date.  The applicant made no payments pursuant to that order. 

46                  On 3 June 1997, Mr Blakeley was substituted for the applicant as plaintiff in the action by order of a Master of the Supreme Court.  Mr Blakeley applied for a variation of the orders for security for costs previously made, but that application was dismissed by Wheeler J on 2 February 1998.  Mr Blakeley did not appeal against that order. 

47                  On 25 September 1998 Mr Blakeley obtained leave to discontinue the proceedings against the first respondent and the second respondent and was ordered to pay their costs of that action.  On a date which does not appear from the papers (nor did the applicant inform us of the date) the applicant’s claim against BPM Pty Ltd was dismissed by consent. 

48                  On 10 November 1998, Mr Blakeley filed a chamber summons in the discontinued proceedings seeking to reinstate them against the first respondent and the second respondent.  That application was dismissed by Wheeler J on 18 November 1999. 

Supreme Court of Western Australia Action No CIV 1314 of 1996

49                  On 2 April 1996 Mr Blakeley commenced proceedings in the Supreme Court of Western Australia in his own name against BPM Pty Ltd, the first respondent, the second respondent and the third respondents.  The claims made were similar to those made in Action No CIV 2236 of 1994.  The defendants applied for summary disposition of the proceedings or for the statement of claim to be struck out.  That application was never heard, but the action was discontinued as against BPM Pty Ltd, the first respondent and the second respondent on 8 July 1996.  We were told that orders were subsequently made that the action be dismissed for want of prosecution and for failure to provide security for costs.  We were also told that those orders were the subject matter of an appeal to the Full Court of the Supreme Court of Western Australia which was dismissed and that there is currently pending an application to the High Court of Australia for special leave to appeal from the Full Court’s decision. 

Supreme Court of Western Australia Action No CIV 1985 of 2000

50                  On 27 July 2000, Mr Blakeley commenced new proceedings in the Supreme Court of Western Australia against the first respondent, the second respondent and the third respondents.  Again the claims made were similar to those made in the earlier actions.  On 12 January 2001, Templeman J ordered that the statement of claim in that action be struck out and that the action be dismissed.  Mr Blakeley was ordered to pay the costs of the first respondent, the second respondent and the third respondents on a solicitor/client basis.  He was refused leave to appeal against those orders.  Nevertheless, a notice of appeal was filed against the orders of Templeman J and the appeal was heard on 12 June 2001.  On 23 July 2001, the Full Court of the Supreme Court of Western Australia dismissed that appeal.  The applicant applied to the High Court of Australia for special leave to appeal against the judgment of the Full Court.  That application was dismissed on 24 October 2002 (since the hearing of this application). 

Supreme Court of Western Australia Action No CIV 1256 of 2001

51                  On 16 February 2001, on Mr Blakeley’s application, he was granted leave by a Master to commence proceedings on behalf of the applicant purportedly under s 236 of the Australian Corporations and Securities Legislation (2000).  One of the bases upon which Mr Blakeley had failed in action CIV 1985 of 2000 was that the first respondent, as receiver and manager, owed no duty to Mr Blakeley but rather to the applicant. 

52                  Following that grant of leave, Mr Blakeley commenced fresh proceedings in the name of the applicant in action CIV 1256 of 2001.  The writ named the applicant as plaintiff and the first respondent, the second respondent and the third respondents as defendants.  Once again the causes of action pleaded were substantially the same as in the three previous Supreme Court actions.

53                  On 7 May 2001, Wheeler J ordered that the statement of claim be struck out and the action dismissed.  Mr Blakeley was ordered to pay the costs of all of the defendants.  Her Honour held that the statement of claim and the action were an abuse of the process of the Court, having regard to the previous proceedings.  Its aim, she said, was:

“… to avoid previous decisions of this Court in respect of identical matters by bringing a fresh action without the need to challenge the correctness of those previous decisions by way of appeal.”

54                  A notice of appeal to the Full Court of the Supreme Court of Western Australia was filed on 25 May 2001.  At the hearing of this appeal, Mr Blakeley told us that the Full Court had heard that appeal about two weeks previously and had reserved judgment.  After we reserved judgment in this matter, the solicitors for the first and second respondents forwarded to us a copy of the judgment and reasons for judgment of the Full Court of the Supreme Court of Western Australia in that appeal.  The Full Court unanimously dismissed the appeal on the grounds that the proceedings both at first instance and on appeal had been irregularly commenced otherwise than by a solicitor, contrary to Order 4 rule 3(2) of the Rules of the Supreme Court (WA).  Their Honours held that that requirement could not be waived.  In a letter dated 23 September 2002 addressed to the associate to the presiding Judge in this matter, Mr Blakeley informed us that the Full Court’s decision “… is being appealed to the High Court of Australia ...”.  

the present proceedings at first instance

55                  On 23 November 2001 Mr Blakeley caused an application to be filed in this Court.  The applicant was named as applicant.  The respondents were the defendants in the various Supreme Court proceedings referred to above, save that BPM Pty Ltd is not a party to these proceedings. 

56                  The statement of claim filed in this application and the relief sought are in substance the same claims and relief sought in action CIV 2236 of 1994.  There are also allegations that the respondents used financial oppression or engaged in unconscientious dealing to nullify that action. 

57                  On 30 January 2002, the solicitors for the first and second respondents filed a motion for summary dismissal of the application, under Order 20 of the Federal Court Rules, as disclosing no reasonable cause of action, as frivolous or vexatious or as an abuse of process.  Alternatively, orders were sought for the statement of claim to be struck out under Order 11 or for the application to be stayed generally until solicitors were appointed by the applicant.  At the time of the decision at first instance the third respondents had not been served. 

The decision at first instance

58                  The learned primary Judge set out in his reasons the procedural history of the matter.  He observed that the present proceedings were nothing less than an attempt to re-open in this Court proceedings which have been instituted and had thus far failed in the Supreme Court of Western Australia.  His Honour noted that it was apparent from the applicant’s written submissions that he was seeking to avoid, by proceeding in this Court, the effect of the adverse decisions of the Supreme Court of Western Australia.  Amongst other things, the applicant argued that the imposition of the security of costs order was unconscionable conduct.  His Honour concluded:

“In my opinion the application invokes the jurisdiction of this Court in order to circumvent or avoid the effect of decisions of the Supreme Court of Western Australia.  As I explained to Mr Blakeley at the hearing of the motion to dismiss this application, the Court and the Supreme Court are both superior courts of co-ordinate jurisdiction.  It is no part of the function of either court to review, expressly or by implication, decisions of the other in matters of which the other court is seized.  The history of the proceedings in the Supreme Court make it plain that the present application is an abuse of the process of this Court.  In so finding, I make no determination on the question whether the proceedings are time barred as contended by the respondents.  I have no doubt, in any event, that the leave granted in the Supreme Court does not cover this action.  In my opinion the application should be dismissed as an abuse of process.  Mr Blakeley should pay the respondents’ costs of the application.”

59                  Mr Blakeley filed lengthy written submissions on behalf of the applicant.  He also made short oral submissions at the hearing of the appeal.  It is not necessary to review to them in any detail.  The submissions included a contention that the application was not an action to review, expressly or by implication, matters which have been heard by the Supreme Court of Western Australia but was, so it was submitted, “… an action to allow this matter to progress, by assessing appropriate security for costs, assess relief for unconscientious dealing/financial oppression which is in the public interest, and assess the statute of limitations”. 

my reasoning

60                  It is well-established by the authorities that when considering whether to grant leave to appeal, the court normally has regard to two factors.  They are, first, whether in all the circumstances the decision below is attended with sufficient doubt to warrant its reconsideration on appeal; and, secondly, whether substantial injustice would result if leave were refused, supposing the decision to be wrong: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 400. 

61                  I have formed the clear view that the decision is not attended with any doubt.  It is certainly not, in my opinion, attended with sufficient doubt to warrant its reconsideration on appeal.   

62                  Mr Blakeley acknowledged that the proceedings in respect of which the Full Court of the Supreme Court has recently delivered judgment are substantially the same as the claims which he seeks to agitate in these proceedings.  He told us that if he were successful in that appeal, he would seek to transfer those proceedings to this Court. 

63                  The situation is that the applicant’s identical claims have been dismissed by a Judge of the Supreme Court on 7 May 2001.  The appeal from that decision has been decided on a procedural point.  Nevertheless, in my view, those proceedings at first instance in that court were clearly an abuse of process.  Similarly, in my opinion, it is equally clear that the applicant by seeking to litigate the same claims in this Court is engaging in an abuse of process. 

64                  It is not, in my view, necessary to explore the possible defect in the leave granted to Mr Blakeley on 16 February 2001 purportedly under s 236 of the Australian Corporations and Securities Legislation 2000.  Steytler J, in the course of giving his reasons for dismissing the appeal from Wheeler J, referred to the fact that the proceedings which were the subject of the order granting leave were not identified as being a problem which he put to one side, and then referred to what his Honour considered to be a real question whether s 236 and s 237 of what is now the Corporations Act 2001 have any application to a company in liquidation.  [The other members of the Full Court expressed no view on the point, but Malcolm CJ said that he was in entire agreement with the reasons published by Steytler J.  Murray J agreed that for the reasons given by Steytler J the appeal was not competent and should be dismissed.]  I do not think that this is an appropriate occasion to visit that question.  I note that French J, in the passage set out above, had no doubt that the terms of the grant of leave did not extend to the application which was before him. 

65                  I would refuse the application for an extension of time on the basis that there is no arguable ground on which leave to appeal might be granted.  The purported appeal should be struck out as incompetent.  I would order the applicant and Mr Blakeley to pay the first and second respondents’ costs of the appeal. 

Associate:

Dated:              9 December 2002

APPLICATION FOR LEAVE TO APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

RD NICHOLSON J:

66                  I have had the benefit of reading in draft the reasons of Lee J and of Carr J.  Those reasons make it unnecessary for me to restate the relevant facts.  They reach differing conclusions on this application for leave to appeal (and, implicitly, for an extension of time) from the order of French J made on 6 March 2002 dismissing an application by the applicant.  Thereby, French J allowed a motion to strike out the proceedings on the ground that they were an abuse of process. 

67                  The power to stay or dismiss a proceeding generally or a claim of relief in a proceeding on the ground that it is an abuse of process of the Court arises pursuant to O 20 r 2(1)(c) of the Federal Court Rules.  In Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346, at 355 Bowen CJ said:

“It appears to me that justice and good sense require that there should so far as practicable be an end to litigation and that the law should strive against permitting multiplicity of proceedings in relation to similar issues.”

Although Bowen CJ was there addressing the issue of a stay, it is apparent that the reasoning is equally applicable in relation to the concept of abuse of process.

68                  That reasoning was reflected in similar reasoning of Smithers J in Yooralla Sponsors Club v JABI Nominees Pty Ltd (1980) 49 FLR 86 at 89 where he said:

“… in some sense the public interest may be involved in deciding whether two cases claiming the same damages and involving substantial issues of fact, which are the same in each case, should be allowed to proceed simultaneously in the State and federal systems of justice.  This would certainly open the way to tactical manoeuvres in which the appearance might well be presented to the public of two court systems competing to see who determined the common facts first.  It would be unfortunate if we adopted practices and procedures which facilitated this.”

In his reasoning Smithers J expressly relied upon the principles enunciated by Bowen CJ in Hughes at 355.

69                  Of the power to stay or dismiss a proceeding as an abuse of process French J said in Sea Culture International v Scoles (1991) 32 FCR 275 at 279:

“The court is empowered by O 20, r 2 to stay or dismiss a proceeding where it appears to the court that it is an abuse of its process.  Even without the benefit of that rule there is little doubt that the court has an implied incidental power to control its own process and to prevent misuse of it.  It is a power which ought to be very sparingly exercised and only in exceptional case:  see Lawrance v Lord Norreys (1890) 15 App Cas 210 at 219, per Lord Herschell; Burton v Shire of Bairnsdale (1908) 7 CLR 76 at 95, per Isaacs J.  The possible varieties of abuse of process are only limited by human ingenuity and the categories are not closed.  An unmeritorious claim brought merely in order to put pressure on a respondent for commercial or other reasons would no doubt be treated as an abuse.  Such a claim might also be attacked as frivolous or vexatious or as disclosing no reasonable cause of action.  Those designations are not mutually exclusive.  An attempt to litigate in the court a dispute or issue which has been resolved in earlier litigation in this or another court or tribunal may also, according to the circumstances, constitute an abuse of process even if not attracting the doctrines of res judicata or issue estoppel.”

He continued:

“Underlying the power that courts have assumed to stay or dismiss proceedings for abuse of process is a policy of preventing waste of judicial resources and their use for purposes unrelated to the determination of genuine disputes.  There is, in my opinion, another element to be considered and that is the necessity to maintain confidence in and respect for the authority of the courts.  If a party in litigation in this Court makes a formal and public allegation by way of its pleading which is inconsistent with a formal and public allegation in another forum, then such an issue may arise.”

70                  It follows for me that the notion of “abuse of process”, while dependent entirely upon the particular circumstances of the particular proceeding, is capable of being satisfied by the parallel character of proceedings in courts of coordinate jurisdiction.  It is not necessary to satisfy the notion of abuse of process that there should have been a determination on the merits of the claims made in each of the parallel proceedings or that avoidance of orders in one of the proceedings is sought by institution of the other proceeding.  Those will be relevant circumstances to the exercise of the discretion in relation to the dismissal of the proceeding but they will not be determinative factors.  Nor does the qualification of the cause of action in the second coordinate jurisdiction as a reasonable cause of action (O 20 r 2(1)(a)) save the proceeding from constituting an abuse of process if factors otherwise make it such. 

71                  French J found in the present proceeding that there was an abuse of process because it was no part of the function of either this Court or the Supreme Court to review, expressly or by implication, decisions of the other in matters of which the other court was seized.  In my view that foundation of his decision is supported by the above authority.

72                  Consequently I do not consider the decision below is attended with sufficient doubt to warrant its reconsideration on appeal and nor do I consider that substantial injustice would result if leave were refused, supposing the decision to be wrong:  Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 400. 

73                  If follows, therefore, that I agree with the conclusion reached by Carr J and would refuse the application for an extension of time on the basis there is no arguable ground on which leave to appeal might properly be granted. 

I certify that the preceding eight (8)

numbered paragraphs are a true

copy of the Reasons for Judgment

herein of the Honourable Justice RD

Nicholson

Associate:

Dated:              9 December 2002