FEDERAL COURT OF AUSTRALIA

Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited; In the Matter of Treasury Wine Estates Limited (No 2) [2017] FCA 449

ORDERS

THE COURT ORDERS THAT:

1.    The application made by the plaintiff to reopen its case in answer to the claims for relief made by the defendant in the Interlocutory Application filed by the defendant on 31 March 2015 by the tender of further evidence and the making of further submissions based upon that further evidence be refused.

2.    The Interlocutory Application filed by the plaintiff on 11 July 2016 be dismissed.

3.    The plaintiff pay the defendant’s costs of and incidental to that Application.

4.    The Interlocutory Application filed by the defendant on 21 July 2016 be dismissed.

5.    There be no order as to the costs of that Interlocutory Application.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

FOSTER J:

1    On 5 July 2016, I delivered a judgment in this matter as a result of which I made an order permanently staying the whole of this proceeding as an abuse of the process of the Court (Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (2016) 243 FCR 474) (the principal judgment). I will assume that a reader of this judgment will also have read the principal judgment. For that reason, I will not address in these Reasons matters covered in the principal judgment except to the extent that it is necessary to do so.

2    Although it is correct to describe the order which I made on 5 July 2016 as interlocutory (as to which, see Re Luck (2003) 203 ALR 1 at 2–4 [3]–[9] and Tampion v Anderson (1973) 3 ALR 414 at 416–417), the order nonetheless had the effect of terminating the present proceeding.

3    The plaintiff, Melbourne City Investments Pty Ltd (MCI) did not seek leave to appeal from the permanent stay order. The period allowed by the Federal Court Rules 2011 (FCR) for applying for such leave expired long ago.

4    Rather than taking steps to appeal from the permanent stay order, on 11 July 2016 MCI filed an Interlocutory Process dated 8 July 2016 in this proceeding (MCI’s revocation application) in which it claimed the following relief:

1.    An order setting aside or revoking order 1 made by Hon. Justice Foster on 5 July 2016 in this proceeding.

2.    Such further or other orders as the Court considers appropriate.

5    MCI’s purpose in making its revocation application is to add to the evidence that was before the Court when I heard the stay application which had been made by the defendant (TWE) and then to make further submissions, based upon that new evidence, as to why I should set aside the permanent stay order and allow this proceeding to remain on foot.

6    It was accepted by MCI at the hearing of its revocation application that, with one exception, all of the evidence which it now seeks to tender and rely upon was available to it at the time when I heard TWE’s stay application. The one exception is the evidence of Mr Zita’s additional experience of acting in class actions in the period from 8 May 2015 to 8 July 2017. Mr Zita is MCI’s solicitor.

7    The substance of MCI’s contentions made in support of its revocation application is captured in the following propositions:

(a)    Prior to the day when TWE’s stay application was heard (viz 8 May 2015), TWE had not alerted MCI to the fact that one of the allegations which it proposed to make in support of its permanent stay application was that Mr Elliott, the sole director of MCI, had some arrangement or understanding with Portfolio Law whereby he would derive some share or other financial benefit from the costs earned by Portfolio Law in conducting the proceeding on behalf of MCI.

(b)    Such an allegation was made, for the first time, during the oral address to the Court by Senior Counsel for TWE on 8 May 2015.

(c)    MCI and its legal representatives were taken by surprise when that allegation was made.

(d)    Senior Counsel for MCI formed the view that there was no evidentiary foundation for the making of such an allegation. For that reason, the only step which he took to meet it was to submit that it should be rejected because there was no evidence to support it.

(e)    In the principal judgment, I inferred that it was more probable than not that Mr Elliott was concerned in the affairs of Portfolio Law in some fashion designed to bring him or MCI financial reward. That inference was contrary to the true position which was that Mr Elliott had no such interest.

(f)    The inference which I drew concerning Mr Elliott’s involvement with Portfolio Law was fundamental to my abuse of process finding. Therefore, because the inference which I drew was contrary to the true position, the permanent stay order should be set aside.

8    The arguments advanced by Senior Counsel for MCI which I have endeavoured to summarise at [7] above are contested by TWE.

9    In addition to the contentions which I have recorded at [7] above, MCI submitted that I had denied it procedural fairness by accepting the allegation made by TWE concerning Mr Elliott’s involvement with Portfolio Law and by not giving MCI an opportunity to respond to it. This argument is a curious one. It might be the type of argument that could have been advanced to a Full Court hearing an appeal from the principal judgment and the permanent stay order but seems to me to have little or no relevance to the present application. In any event, I consider that I did afford a reasonable opportunity to MCI to address the subject matter of the findings which I ultimately made at 512–514 [156] of the principal judgment. At Transcript pp 11–13 of 8 May 2015, Senior Counsel for TWE made a number of submissions to the effect that Mr Elliott must be deriving a financial benefit from the present proceeding in addition to recovering damages for MCI and that that financial benefit might include some costs sharing arrangement with Portfolio Law. He submitted that the evidence before the Court called for an explanation from Mr Elliott and from Mr Zita and that none had been given. The only answer made to these submissions by Senior Counsel for MCI was in the following terms (Transcript p 28 ll 7–26):

Your Honour will recall some weeks ago granting an order ex parte that Treasury have subpoenas issued, which were issued. Treasury has not tendered a single document to support the proposition which my learned friend stood up and asserted that there exist such a purpose, that Mr Elliott will share in some benefit from the law firm that’s acting for him. That’s illegal. It’s an extraordinary thing for senior counsel to assert, knowing as senior counsel does there is no evidence whatsoever to support it. None. Despite the fact that subpoenas were obtained and delivered to all the persons in respect of whom your Honour ordered the subpoenas would be obtained. Not a single shred of evidence is tendered by Treasury to support that most extraordinary allegation made only from the bar table. And frankly, your Honour, I submit it’s an outrage that that should happen.

But leaving aside that outrage, your Honour, it doesn’t change the fact that the burden of proof is a serious burden. It has been on Treasury from start to finish. Not a shred of evidence is cited in support of it, and in those circumstances there is no possibility, we would submit, of Jones v Dunkeld [sic] having any work to do in this case whatsoever. Jones v Dunkeld [sic] is enlivened only when there is something in the evidence which calls upon a party to respond. There is nothing. There is no evidence which calls for MCI to respond in this case. Can I deal, then, your Honour, with those propositions.

10    Senior Counsel for MCI did not apply for an adjournment in order to gather and present evidence to meet TWE’s contentions and did not complain on 8 May 2015 or at any other time before judgment about being taken by surprise. He made a forensic choice to meet these allegations by confining himself to the submissions which I have extracted above.

11    By an Interlocutory Application filed on 21 July 2016, TWE sought an order summarily dismissing or permanently staying MCI’s revocation application upon the basis that that application is an abuse of the process of the Court; is vexatious and oppressive; was brought by MCI in breach of its duty under s 37N(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act); and/or is otherwise not in the interests of justice.

12    TWE sought to have its summary dismissal application heard before I heard MCI’s revocation application. In large part, TWE’s summary dismissal application relied upon notions of issue estoppel and abuse of process.

13    I declined to deal with TWE’s summary dismissal application separately from and prior to hearing MCI’s revocation application. Given the conclusions to which I have come in respect of MCI’s revocation application, it is not necessary for me to deal with TWE’s summary dismissal application. That application will be dismissed with no order as to the costs thereof.

MCI’S Supplementary Evidence

14    The additional evidence which MCI would seek to place before the Court in the event that I was persuaded to allow it to reopen is found in the affidavit of Anthony Zita sworn on 8 July 2016 and the affidavit of Mark Edward Elliott sworn on 19 July 2016.

15    In his affidavit, at par 2, Mr Zita said:

… Mark Elliott is not now and has never been a member, partner or otherwise involved financially or in any other way in the firm [Portfolio Law]. He and companies associated with him, including the plaintiff, are simply clients of the firm.

16    Mr Zita then referred to subpoenas that had been issued by the Court at the request of TWE in April 2015 and to the circumstance that, apart from the costs agreement between Portfolio Law and MCI, no other documents had been produced in answer to those subpoenas. It would appear that the purpose of this material is to bolster or emphasise the evidence which Mr Zita gave at par 2 of his affidavit.

17    No attempt was made to tender the subpoenas in question at the abuse of process hearing which took place on 8 May 2015 nor was any attempt made at that time to prove that there was a nil return in answer to those subpoenas in respect of certain classes of documents.

18    Mr Zita then went on to describe his additional experience in the period after the abuse of process hearing.

19    Paragraph 6 of Mr Zita’s affidavit is in the following terms:

Mr Elliott’s instructions to me are that he intends that MCI will pursue its legal rights against the defendant in the interests of itself and all of the members of the class which it represents, namely all of the shareholders who suffered loss as a result of the wrongdoing which is alleged in the statement of claim. Mr Elliott has also instructed me that, in the event that the proceeding concludes successfully, it is his intention that MCI will apply pursuant to s.33ZF of the Federal Court of Australia Act for an amount to be paid to MCI to compensate it for the risks it has undertaken and the efforts to which it has gone in acting as representative plaintiff. In the event that there is a need to engage a litigation funder in this case, Mr Elliott has instructed me that approaches will be made to appropriately qualified litigation funders, including BSL Litigation Partners Limited, a litigation funding firm connected with Mr Elliott. Similar arrangements were made in the Bolitho v Banksia Securities Limited litigation in Victoria, which is being funded by BSL Litigation Partners Limited. If litigation funding is required to conduct this case, I expect that it will be available to the plaintiff on normal commercial terms.

20    In par 6 of his affidavit, Mr Zita does not descend into any detail concerning Mr Elliott’s plans to arrange for litigation funding. The evidence is vague and speculative.

21    At pars 1 to 4 of his affidavit, Mr Elliott described in general terms the way in which he understands securities class actions in Australia had been conducted.

22    At pars 5 and 6, Mr Elliott said:

I incorporated MCI in late 2012 for the purpose of ensuring that meritorious class actions could be commenced in the interests of smaller shareholders in cases where I observed or was advised that breaches of Australia’s corporations and securities laws had occurred, particularly the laws which forbid misleading or deceptive conduct and which mandate continuous disclosure of price sensitive information by listed companies.

So that it would be in a position to represent small shareholders in cases of this nature, MCI has at different times purchased shares in many companies listed on the Australian Securities Exchange. On 5 occasions since 2012, when cases of apparent breaches of the law have occurred, MCI has stood willing to commence and to maintain to their conclusion proceedings to recover the losses suffered by it and other small shareholders in these companies, as a result of a listed company’s alleged failure to comply with the law.

23    In cross-examination, Mr Elliott informed the Court that, in 2012, he had acquired a small parcel of shares in every company in the top 200 ASX-listed companies.

24    At par 8 of his affidavit, Mr Elliott referred to MCI’s costs agreement with Portfolio Law. He then said:

… Apart from this legal costs agreement, there is no other agreement, arrangement or understanding that I have or MCI has with Portfolio Law in respect of the legal costs of this proceeding. I have never received and will never receive directly or indirectly any financial benefit of any kind whatsoever from Portfolio Law in connection with their provision of legal services to MCI in this or any other case.

25    Mr Elliott accepted that, if the permanent stay is lifted, MCI might also apply for remuneration for acting as the lead plaintiff and might engage its parent company, BSL Litigation Partners Limited (BSL), to act as a litigation funder in respect of this proceeding.

26    Mr Elliott told the Court during his cross-examination that BSL owns all the shares in MCI. Mr Elliott had transferred all of those shares to BSL prior to July 2016. He also told the Court that he owns 80% of BSL.

A Brief Synopsis of the Principal Judgment

27    At 476–477 [2] of the principal judgment, I made a number of observations by way of introduction to my later consideration of the likely financial benefit that Mr Elliott either directly or indirectly expected to achieve by causing MCI to institute the present proceeding. I said:

… In this proceeding, the solicitor on the record for MCI is, and always has been, Mr Anthony Zita of Portfolio Law Pty Ltd (Portfolio Law). There is no direct evidence before me which establishes that Mr Zita or Portfolio Law has made any agreement or arrangement with Mr Elliott in relation to the professional fees likely to be earned by Portfolio Law from representing MCI and the group in and in connection with this proceeding. On the face of things, Portfolio Law does not appear to have any connection with Mr Elliott other than as the solicitor for MCI in this proceeding and as the solicitor for MCI in other proceedings.

28    At 479–481 [14]–[27], I described the conduct of MCI which I considered to be relevant to TWE’s claim that this proceeding should be permanently stayed as an abuse of process. At 481 [27], I said:

By letter dated 26 March 2015 sent to Portfolio Law, TWE’s solicitors sought information about Mr Elliott’s role (if any) in connection with this proceeding and information about the involvement of a litigation funder (if any). That letter was ignored.

29    The evidence before me did not include any response to the letter dated 26 March 2015 to which I referred at [27] of the principal judgment. MCI wishes to now place before the Court a letter dated 1 April 2015 from Portfolio Law to TWE’s solicitors in which Portfolio Law said it would respond to the letter of 26 March 2015 in due course.

30    At 481–489 of the principal judgment, I recounted the history of MCI’s proceedings in the Supreme Court of Victoria and in the High Court. At 489 [60], I began a discussion of the parties’ contentions and the relevant legal principles in respect of abuse of process. At 510–511 [147], I set out a number of propositions which I considered could be distilled from the discussion of the relevant authorities which I had undertaken at 496–510.

31    At 511–514 [153]–[158] of the principal judgment, I said:

TWE’s abuse of process application must be considered in the class action context which I have briefly described at [148]–[152] above.

As already noted, TWE relies upon all three of the broad categories of abuse of process identified by the High Court in PNJ at [3].

The main focus of TWE’s submissions was on the first category of abuse, namely, the invoking of the Court’s processes for an illegitimate or collateral purpose.

In order to address TWE’s arguments in support of their broad contention that the present proceeding has been brought for an illegitimate or collateral purpose, I make the following findings:

(a)    Mr Elliott’s purpose in causing MCI to bring this proceeding may be safely attributed to MCI as its purpose for bringing this proceeding. This is because Mr Elliott is the sole director and sole shareholder of MCI and because there is no evidence to suggest that any other person has any say in the affairs of MCI.

(b)    Mr Elliott did not give evidence before me. Thus, there is no direct evidence from Mr Elliott explaining his purpose in causing MCI to behave as it has done in bringing this proceeding. However, for reasons which I will outline below, I consider that, in the circumstances of this case, it was incumbent upon Mr Elliott to proffer an explanation for MCI’s conduct in evidence given to the Court. In particular, in my view, he was obliged to explain his purpose in bringing this proceeding. In all of the circumstances, his failure to do so provides a basis for the Court to draw certain adverse inferences against MCI.

(c)    In the period between November 2012 and May 2014, Mr Elliott caused MCI to purchase a small parcel of shares in each of 157 corporations listed on the ASX. Mr Elliott did not cause MCI to make those purchases because he was interested in investing in each of the corporations in which shares were purchased either as a long-term investor or as a trader.

(d)    As found by Ferguson J in TWE No 1, MCI was created by Mr Elliott as a vehicle for bringing class actions against listed corporations alleging (inter alia) breaches of continuous disclosure obligations by those corporations.

(e)    Mr Elliott caused MCI to make the share purchases which it made in order to enable MCI to position itself to move quickly to commence a class action as the lead plaintiff against any one or more of the corporations in which the shares were purchased and, to the extent possible, to enable Mr Elliott himself to earn legal fees from the exercise. By positioning MCI in this way, Mr Elliott intended that MCI would be best placed to initiate class actions as the lead claimant in the event that opportunities to do so presented themselves in the future. MCI would then be well-placed to negotiate with other relevant parties in relation to such actions for its own financial benefit. These parties would include class action lawyers, litigation funders and, of course, the proposed defendants themselves.

(f)    The causes of action pleaded in this proceeding are immaterial to MCI’s purpose in commencing it. The question of ultimate success is also immaterial to MCI’s purpose. As found by Ferguson J in TWE No 1, MCI had no interest in recovering the insignificant amount of $700 when it launched this proceeding. Its purpose was to gain a financial benefit for itself which was likely to exceed that amount to a very significant degree. MCI’s purpose is not altruistic. It has not positioned itself in the manner which I have described in order to champion at its own cost and risk shareholders who have suffered losses at the hands of defaulting corporations.

(g)    These findings are broadly in line with the findings made by Ferguson J and the Court of Appeal in the first MCI proceeding although the focus of the Court in that proceeding was on Mr Elliott’s role as the solicitor for MCI.

(h)    Given the reasons for MCI’s purchases of shares which I have found, it is very difficult, if not impossible, for Mr Elliott to contend in the present proceeding that MCI actually relied upon the various positive statements made by TWE to the ASX said to constitute contraventions of the Corporations Act or that MCI actually relied upon the integrity of the share market including adherence by TWE to its statutory obligations to make accurate ongoing material disclosures from time to time. Furthermore, it would be very difficult for MCI to persuade the Court at a final hearing that, in the circumstances to which I have referred, it should be able to rely upon market-based causation theory to establish an indirect basis for reliance by it on the alleged contraventions committed by TWE. In blunt terms, Mr Elliott and MCI almost certainly did not rely upon anything TWE said or failed to say or do when it purchased the 140 ordinary fully paid shares in TWE which it purchased on 1 November 2012. This was the very first parcel of shares acquired by MCI. That circumstance is suggestive of the possibility that Mr Elliott may, by 1 November 2012, already have formed the view that there may be grounds for MCI to mount a class action against TWE alleging contraventions of the type now incorporated in the Statement of Claim filed by MCI in this proceeding.

(i)    MCI’s efforts to dissociate Mr Elliott from the present proceeding began immediately after Ferguson J gave judgment in TWE No 1. Very soon after that judgment was delivered, MCI took steps to replace Mr Elliott as the solicitor on the record in the first MCI proceeding with Tan and Partners.

(j)    In late August 2014, Portfolio Law was incorporated. Those who appear to stand behind that incorporated legal practice have no experience in running class actions and have ongoing connections with other practices. Neither Mr Zita nor Mr Sica gave evidence before me. Although TWE did not establish by direct evidence that Mr Elliott was involved in the management of Portfolio Law or that he stood to gain financially from its operations, I think that it is more probable than not that Mr Elliott is concerned in the affairs of Portfolio Law in some fashion designed to bring him or MCI financial reward. No-one came forward to explain the circumstances in which Portfolio Law came to be incorporated nor did anyone explain why it was incorporated when it was. No-one came forward to deny that Mr Elliott was involved in the affairs of Portfolio Law. Evidence of these matters could easily have been brought forward but it was not.

(k)    The insignificant amount sought to be recovered for itself by MCI in the present proceeding does not, on any rational basis, justify the commencement and maintenance of this proceeding. The costs of litigating the issues raised and the risk of an adverse costs order clearly militate against pursuing this proceeding to judgment or settlement. There is no evidence that MCI is being funded by an established litigation funder nor is there any evidence which would otherwise support the proposition that MCI has the capacity both to maintain the present proceeding and meet any adverse costs order.

The Court should not permit MCI to institute and maintain this class action when, as I have found, it is not doing so in order to obtain a remedy which the law provides either for itself as an individual claimant or for the members of the class which it purports to represent. In addition, it plainly does not have the capacity to fund this proceeding itself and has not attempted to satisfy the Court that it has put in place secure litigation funding which will cover its own costs and the amount of any adverse costs order. MCI’s claims are, at best, very weak if not hopeless. Its causation theory is problematic. MCI commenced this proceeding knowing that the Jones proceeding was on foot. It also commenced this proceeding with the intention of using it as a “fallback” or “failsafe” against the possibility that the first MCI proceeding would remain permanently stayed as an abuse of process.

The purposes of MCI identified and discussed at [156]–[157] above demonstrate that this proceeding has been brought for an illegitimate or collateral purpose. For that reason, it constitutes an abuse of process and should be permanently stayed. It is also oppressive and vexatious vis-à-vis TWE and, if allowed to be maintained, will bring the administration of justice into disrepute. Nonetheless, I note that the claims made by MCI in this proceeding on its own account will be able to be litigated in due course in the Jones proceeding if MCI does not opt out of that proceeding. For this reason, the orders which I propose to make will not deny to MCI any legitimate remedy to which it may be entitled.

32    At 514–515 [159]–[162], I briefly stated my conclusions in relation to TWE’s arguments concerning issue estoppel.

33    In support of its revocation application, MCI focussed upon the findings which I made at 512–513 [156(f)] and [156(j)] of the principal judgment. As I have already mentioned, Senior Counsel for MCI submitted that, if I were to permit MCI to reopen its case and tender the evidence which it now seeks to tender, I would be compelled to accept that the finding which I made at 513 [156(j)] could not stand thereby destroying one of the fundamental planks in the reasoning process leading to my ultimate conclusion that the commencement of this proceeding was an abuse of process.

Consideration

The Relevant Legal Principles

34    In the present case, MCI relies upon r 39.05 FCR. In particular, it relies upon subr (c) which provides that the Court may vary or set aside a judgment or order after it has been entered if the order is interlocutory.

35    Rule 39.05 FCR provides that:

39.05     Varying or setting aside judgment or order after it has been entered

The Court may vary or set aside a judgment or order after it has been entered if:

(a)    it was made in the absence of a party; or

(b)    it was obtained by fraud; or

(c)    it is interlocutory; or

(d)    it is an injunction or for the appointment of a receiver; or

(e)    it does not reflect the intention of the Court; or

(f)    the party in whose favour it was made consents; or

(g)    there is a clerical mistake in a judgment or order; or

(h)    there is an error arising in a judgment or order from an accidental slip or omission.

36    As MCI has relied upon r 39.05, I will assume that it is the appropriate rule to be considered in the present case.

37    In Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 (Dyason), the unsuccessful respondents in an appeal to the High Court applied to that Court after judgment in the appeal had been delivered on the ground that, without fault on their part, they had had no opportunity to be heard on three issues involved in or decided by the Court in the appeal.

38    In his judgment, Dawson J held that, contrary to the respondents’ submissions, the unsuccessful respondents had been given a reasonable opportunity of addressing the issues about which they now sought to complain.

39    At 317, Dawson J said:

Whilst the Court has jurisdiction to entertain an application to vacate orders which it has made, at all events before those orders have been perfected by the entry of judgment [cf. University of Wollongong v. Metwally [No.2] (1985), 59 A.L.J.R. 481, at p. 482; 60 A.L.R. 68, at p.70] (that not having occurred in this case), it is a jurisdiction to be exercised cautiously, bearing in mind the public interest in the finality of litigation [See State Rail Authority of N.S.W. v. Codelfa Construction Pty. Ltd. (1982), 150 C.L.R. 29, at pp. 38, 45–46]. In Wentworth v. Woollahra Municipal Council [(1982) 149 C.L.R. 672, at p. 684], the Court said:

“[T]he circumstances in which this Court will reopen a judgment which it has pronounced are extremely rare. The public interest in maintaining the finality of litigation necessarily means that the power to reopen to enable a rehearing must be exercised with great caution. Generally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard.”

And it should be added that even though a party fails to present his case in a manner which is open on the pleadings and on the facts, a final appellate court with responsibility to determine the law cannot be precluded from disposing of a case upon the basis which appears to it to be correct. This is particularly so where matters not raised on appeal have been raised in the courts below. “Judges are more than mere selectors between rival views – they are entitled to and do think for themselves.” [Saif Ali v. Sydney Mitchell & Co., [1980] A.C. 198, at p. 212, per Lord Wilberforce.]

40    Justice Brennan, who was also in the majority, expressed the relevant law in the following terms (at 308):

This Court has undoubted jurisdiction to recall a judgment which it has pronounced, at least prior to the formal entry of the judgment, if the judgment has been pronounced against a person who, without fault on the part of that person, has not had an opportunity to be heard as to why that judgment should not be pronounced [State Rail Authority of N.S.W. v. Codelfa Construction Pty. Ltd. (1982), 150 C.L.R 29; Wentworth v. Woollahra Municipal Council (1982), 149 C.L.R. 672, at p. 684]. The jurisdiction is exercised sparingly for it is important to bring litigation to finality in this Court [The approach of Courts from which an appeal lies is not so strict, for it may be preferable to recall an unperfected but erroneous judgment rather than allow it to stand until it is quashed on appeal: see, e.g., In re Harrison’s Share under a Settlement, [1955) Ch. 260, at pp, 282–284]. Nevertheless, natural justice would be denied if, in a case in which the stated conditions are satisfied, the judgment were not vacated.

It is desirable to add in the context of the present case a further observation about the opportunity to be heard. A court should not pronounce a judgment against a person on a ground which that person has not had an opportunity to argue [Pantorno v. The Queen (1989), 166 C.L.R. 466]. However, a sufficient opportunity to argue a ground is given when the ground is logically involved in a proposition that has been raised in the course of argument before the court or is to be considered by the court as an unconceded step in determining the validity of a conclusion for which one of the parties contends [University of Wollongong v. Metwally [No.2) (1985), 59 A.L.J.R. 481, at p. 483; 60 A.L.R. 68, at p. 71]. Of course, the precise ground which a court or judge assigns for a decision will frequently be formulated in terms different from the terms of a submission by counsel but, provided the ground has arisen in one of the ways mentioned, the court or judge may properly proceed to judgment without requiring the case to be relisted for further argument and without inviting supplementary submissions to be made.

41    His Honour continued (at 309–310):

It is one thing to reopen an appeal after judgment if the Court has reached a conclusion by adopting a proposition of fact or law which the unsuccessful party has not had an opportunity to argue. In that event, natural justice is denied and it can be said that the Court’s jurisdiction to hear and determine the matter is not exhausted. But that is not the present case. Here the ground on which the appeal was determined had been argued in the courts below and had been the subject of submissions in this Court. The appeal was determined after it was fully heard. That being so, I find no jurisdiction to set aside the judgment already pronounced merely because it is submitted by the unsuccessful party that, on further argument, the Court would be satisfied that it had reached the wrong conclusion in law. In University of Wollongong v. Metwally [No. 2] [(1985) 59 A.L.J.R., at p. 483; 60 A.L.R., at p. 71. Similarly, it has been held that a party may be shut out from raising a claim or defence if that party, through negligence, inadvertence or even accident has failed to raise that claim or defence in prior proceedings when the failure was unreasonable: Port of Melbourne Authority v. Anshun Pty. Ltd. (1981), 147 C.L.R. 589, at pp. 598, 602] this Court said:

“Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.”

The decision of this Court in the present case was not given in ignorance or forgetfulness of some statutory provision [The kind of mistake which might make a decision per incuriam. Cf. Morelle Ltd. V. Wakeling, [1955] 2 Q.B. 379, at p. 406] or of some critical fact. To entertain an application to reopen an appeal after judgment in order to consider further argument on an issue already decided would be to subvert the finality of litigation and to invite interminable arguments about the importance of the legal questions to be recanvassed and the correctness of the answers to those questions already given.

42    Justice Gaudron, the third member of the majority in Dyason, commenced her judgment with the following remarks (at 322):

This is an application by the unsuccessful respondents in Autodesk Inc. v. Dyason [(1992) 173 C.L.R. 330] (“Autodesk No. 1”) (“the respondents”) to vacate the judgment given in that matter on the ground that, without fault on their part, they had no opportunity to be heard on three issues involved in or decided by it. Judgment has not yet been entered and, in my view, should be set aside if the interests of justice so require [Smith v. N.S.W. Bar Association (1992), 176 CL.R 256]. However, the circumstances in which justice requires that course are, in practice, extremely rare, particularly if there has been an opportunity for full argument [Wentworth v. Woollahra Municipal Council (1982), 149 CL.R. 672, at p. 684; State Rail Authority of N.S.W v. Codelfa Construction Pty. Ltd. (1982), 150 C.L.R. 29, at pp. 38, 48]. In order to make clear my reasons for holding that the interests of justice do not require that course in this case, it is necessary for me to repeat, at least to some extent, the facts involved in Autodesk No. 1.

43    Although dissenting in the result, Mason CJ said the following (at 301–303):

… The exercise of the jurisdiction to reopen a judgment and to grant a rehearing is not confined to circumstances in which the applicant can show that, by accident and without fault on the applicant’s part, he or she has not been heard. It is true that the jurisdiction is to be exercised with great caution [Wentworth v. Woollahra Municipal Council (1982), 149 C.L.R. 672, at p. 684; State Rail Authority of N.S.W. v. Codelfa Construction Pty. Ltd. (1982), 150 C.L.R. 29, at p. 38], having regard to the importance of the public interest in the finality of litigation. It is equally true, as this Court said in Wentworth v. Woollahra Municipal Council [(1982) 149 C.L.R., at p. 684], that “[g]enerally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard.”

But these statements do not exclude the exercise of jurisdiction to reopen a judgment which has apparently miscarried for other reasons, at least when the orders pronounced have not been perfected by the taking out of formal orders. So much was acknowledged by Brennan, Dawson, Toohey and Gaudron JJ. in Smith v. N.S.W. Bar Association [(1992) 176 C.L.R. 256 at pp. 264–266] when their Honours said: “if reasons for judgment have been given, the power is only exercised if there is some matter calling for review.” It is sufficient to give three examples. In In re Harrison’s Share under a Settlement [[1955] Ch. 260], orders were set aside following a decision of the House of Lords which overruled authorities on the basis of which the orders had been made. In New South Wales Bar Association v. Smith [Unreported, 4 July 1991], the New South Wales Court of Appeal reconsidered orders previously made in view of an argument that the Court had mistakenly assumed that particular evidence had not been given at earlier hearings [The Court of Appeal refused to set aside its orders but an appeal to this Court was successful]. And, in Pittalis v. Sherefettin [[1986] Q.B. 868], a judge recalled orders the day after they were made upon determining that he had “erred in a material matter in his approach to the case” [ibid., at p. 880. The Court of Appeal upheld the decision to review the matter, though disagreeing with the judge’s ultimate conclusion].

These examples indicate that the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law. As this Court is a final court of appeal, there is no reason for it to confine the exercise of its jurisdiction in a way that would inhibit its capacity to rectify what it perceives to be an apparent error arising from some miscarriage in its judgment. However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to reargue their cases.

44    In Aktas v Westpac Banking Corporation Ltd [No 2] (2010) 241 CLR 570 at 573 [6], the High Court (French CJ, Gummow and Hayne JJ) said:

As Mason CJ rightly said in Autodesk Inc v Dyason [No 2] [(1993) 176 CLR 300 at 301–302], the exercise of the jurisdiction to reopen a judgment and to grant a rehearing “is not confined to circumstances in which the applicant can show that, by accident and without fault on the applicant’s part, he or she has not been heard”. The jurisdiction is, however, to be exercised with great caution [Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 302; Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 684; State Rail Authority (NSW) v Codelfa Construction Pty Ltd (1982) 150 CLR 29 at 38], having regard to the importance of the public interest in the finality of litigation. That Mason CJ dissented in the result in that case does not deny the accuracy of the propositions just made.

45    The discretion to reopen a judgment or order must be exercised with great caution. Exceptional circumstances must be shown. The discretion will be rarely exercised (see Metwally v University of Wollongong (1985) 60 ALR 68 at 71–72).

46    In D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at 17–18 [34]–[35], the plurality (Gleeson CJ, Gummow, Hayne and and Heydon JJ) said:

Finality

A central and pervading tenet of the judicial system is that controversies, once resolved, are not to be reopened except in a few, narrowly defined, circumstances. That tenet finds reflection in the restriction upon the reopening of final orders after entry [DJL v Central Authority (2000) 201 CLR 226] and in the rules concerning the bringing of an action to set aside a final judgment on the ground that it was procured by fraud [DJL v Central Authority (2000) 201 CLR 226 at 244–245 [35]–[38]]. The tenet also finds reflection in the doctrines of res judicata and issue estoppel. Those doctrines prevent a party to a proceeding raising, in a new proceeding against a party to the original proceeding, a cause of action or issue that was finally decided in the original proceeding [See, eg, Hoysted v Federal Commissioner of Taxation (1925) 37 CLR 290; Blair v Curran (1939) 62 CLR 464; Jackson v Goldsmith (1950) 81 CLR 446; Administration of Papua and New Guinea v Daera Guba (1973) 130 CLR 353]. It is a tenet that underpins the extension of principles of preclusion to some circumstances where the issues raised in the later proceeding could have been raised in an earlier proceeding [Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589].

The principal qualification to the general principle that controversies, once quelled, may not be reopened is provided by the appellate system. But even there, the importance of finality pervades the law. Restraints on the nature [Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan and Meakes (1931) 46 CLR 73] and availability of appeals, rules about what points may be taken on appeal [Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; O’Brien v Komesaroff (1982) 150 CLR 310; Coulton v Holcombe (1986) 162 CLR 1] and rules about when further evidence may be called in an appeal (in particular, the so called “fresh evidence rule” [Orr v Holmes (1948) 76 CLR 632; Ratten v The Queen (1974) 131 CLR 510 at 516–517 per Barwick CJ; Gallagher v The Queen (1986) 160 CLR 392; Mickelberg v The Queen (1989) 167 CLR 259]) are all rules based on the need for finality. As was said in the joint reasons in Coulton v Holcombe [(1986) 162 CLR 1 at 7]: “[i]t is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial”.

47    To similar effect were the statements of the plurality (Toohey, Gaudron, McHugh, Gummow and Kirby JJ) in De L v Director-General, New South Wales Department of Community Services [No 2] (1997) 190 CLR 207 at 215 and the observations of McLelland J in Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46–47 where his Honour said:

The private injustice and public undesirability of permitting the relitigation of matters already litigated once is recognised in a number of principles of law, notably the rules relating to res judicata and issue estoppel, the more flexible rules under the rubric of vexation and abuse of process illustrated in such cases as Stephenson v Garrett [1891] 1 QB 677 and Hunter v Chief Constable, West Midlands Police [1982] AC 529; [1981] 3 All ER 727, and the restrictive provisions governing the adducing of further evidence on the hearing of an appeal even by way of rehearing: see, for example s 75A(8) of the Supreme Court Act 1970 (NSW).

Interlocutory orders, of their very nature, create no res judicata or estoppel, and the court retains jurisdiction to set aside, vary or discharge an interlocutory order up to the time of the final disposition of the proceedings. However the general rationale of the principles last referred to applies even in the case of interlocutory orders. It would be conducive to great injustice and enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order relitigated at will.

The overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances of the case. In giving effect to that general principle, and in recognition of the public and private interests earlier referred to, rules of practice have been developed in accordance with which the discretionary power of the court to set aside, vary or discharge interlocutory orders will ordinarily be exercised. Not all kinds of interlocutory orders attract the same considerations. For present purposes one may put to one side orders of a merely procedural nature (as to which see for example Wilkshire & Coffey v Commonwealth (1976) 9 ALR 325) and injunctions (or undertakings) made or given by agreement and without contest “until further order” (as to which see for example Warringah Shire Council v Industrial Acceptance Corp (unreported, SC(NSW), McLelland J, 22 November 1979).

In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application: see Woods v Sheriff of Queensland (1895) 6 QLJ 163 at 164–5; Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 at 447–8; Chanel Ltd v F W Woolworth & Co [1981] 1 All ER 745; [1981] 1 WLR 485; Adam P Brown Male Fashions v Philip Morris (1981) 148 CLR 170 at 177–8; 35 ALR 625 at 629–30; Butt v Butt [1987] 1 WLR 1351 at 1353; Gordano Building Contractors Ltd v Burgess [1988] 1 WLR 890 at 894.

The following passages illustrate the point:

The defendants are seeking a rehearing on evidence which, or much of which, so far as one can tell, they could have adduced on the earlier occasion if they had sought an adequate adjournment, which they would probably have obtained. Even in interlocutory matters a party cannot fight over again a battle which has already been fought unless there has been some significant change of circumstances, or the party has become aware of facts which he could not reasonably have known, or found out, in time for the first encounter. The fact that he capitulated at the first encounter cannot improve a party’s position.

(Chanel v Woolworth & Co at All ER 751–2; WLR 492–3 per Buckley LJ.)

A court must remain in control of its interlocutory orders. A further order will be appropriate whenever, inter alia, new facts come into existence or are discovered which render its enforcement unjust … Of course the changed circumstances must be established by evidence

(Adam P Brown Male Fashions at CLR 178; ALR 630 per Gibbs CJ and Aickin, Wilson and Brennan JJ.)

48    In the present case, MCI not only has to persuade the Court to reopen the permanent stay order but requires leave to reopen the case which it put when resisting TWE’s application for such an order by tendering further evidence and making further submissions. This is not a case where a party seeks to reopen the judgment by putting additional submissions based upon the evidence already before the Court. Although the permanent stay order is interlocutory, it has the practical effect of finally bringing the present proceeding to an end. The abuse of process application was fully argued and detailed reasons were given by the Court for making the permanent stay order.

49    MCI cited the judgment of Hargrave J in Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd [2006] VSC 170. That was a case where the plaintiff made multiple applications to reinstate the proceedings after they were struck out by reason of some procedural default. The issue in that case was whether the Court had power to entertain successive interlocutory applications. I do not consider this case to be of any present relevance.

Decision

50    As I have already mentioned, the evidence which MCI now seeks to tender and rely upon was, with the exception of the additional experience undertaken by Mr Zita, all available to MCI at the time that I heard the abuse of process application by TWE.

51    TWE submitted (correctly) that the Written Submissions which it filed and served in support of its abuse of process application contained in a number of places a submission to the effect that this proceeding had been brought for the improper predominant purpose of Mr Elliott receiving some financial benefit in or resulting from the proceeding in the event that MCI is successful, other than via the recovery of the de minimis damages sought by MCI. In particular, at par 41(d) of those Written Submissions, TWE submitted that it was inherently improbable that MCI and Mr Elliott intended to give the legal fees which would be earned from conducting the present proceeding to Portfolio Law without Mr Elliott deriving some collateral benefit therefrom.

52    Paragraph 41 of TWE’s Written Submissions is in a section of those Submissions in which TWE contended that the Court should draw an adverse inference against Mr Elliott from the circumstance that he had not deigned to explain his involvement in the matter or the likely financial benefit that he would derive from the matter.

53    I consider that the substance of the submissions made by TWE in its Written Submissions fairly alerted MCI and Mr Elliott to the fact that TWE intended to urge upon the Court a process of reasoning based upon inferences to be drawn from the entirety of the evidence and from the circumstance that neither Mr Zita nor Mr Elliott nor any other witness gave evidence on behalf of MCI that Mr Elliott was not going to derive some undisclosed financial benefit from the proceeding which was a benefit which exceeded any claim for damages made by MCI and any legitimate compensation that MCI might earn as the lead plaintiff in a class action. When confronted with the evidence to be adduced at the hearing of the abuse of process application and the Written Submissions of TWE, MCI chose not to adduce any evidence. I infer that it took the view, at the time when it read TWE’s evidence and submissions, that its best interests would be served by not calling any evidence. I also infer that it held the view both at that time and subsequently that the Court was not likely to accept the submissions which TWE was urging upon it.

54    Ultimately, the matter was put beyond doubt when Senior Counsel for TWE, in oral address to the Court, made perfectly clear that his client was contending that one of the ways that Mr Elliott might derive an undisclosed financial benefit from causing MCI to conduct the present proceeding was through a share of the legal costs to be earned by Portfolio Law.

55    As I have already mentioned, the only response which MCI made to these submissions was the response at Transcript p 28 which I have extracted at [9] above.

56    MCI did not seek an adjournment in order to meet what it now says were new allegations. MCI did not complain that it had been taken by surprise. MCI had no difficulty in deciding to deal with the submissions made on behalf of TWE by simply making a contrary submission.

57    It is only when I delivered the principal judgment that MCI decided that its best interests might be served by adducing the evidence which it now seeks to tender through the affidavits of Mr Elliott and Mr Zita.

58    There is no doubt that every decision that was made in the conduct of MCI’s case in answer to TWE’s abuse of process application was made after due consideration and constituted a deliberate and conscious decision.

59    The present case is a case where, having decided that it needed no evidence to meet the claims advanced by TWE, MCI now wishes to change its mind in light of the principal judgment. Of course, if MCI had thought that I had erred in finding that the present proceeding was an abuse of process, based upon the evidence before me on 8 May 2015, it should have sought leave to appeal from the principal judgment and the permanent stay order in July 2016. It did not do so.

60    In my view, the Court ought not to countenance assisting MCI to avoid the consequences of its deliberate forensic decisions by acceding to MCI’s revocation application. Rather, in my judgment, this case falls on the side of the line which favours finality in litigation and that the interests of justice are best served by compelling MCI to accept the consequences of its conscious and deliberate forensic decisions.

61    I propose, therefore, to refuse leave to MCI to reopen its case.

62    The inevitable consequence of that decision is that I will also decline to reopen the permanent stay order and the principal judgment.

63    In addition to the reasons which I have already discussed, I do not accept that the reasoning which led me to conclude that the present proceeding was an abuse of the process of the Court would be undercut or rendered nugatory by allowing MCI now to adduce the supplementary evidence which it now seeks to adduce. I do not accept that, were I to delete [156(j)] from the principal judgment that, as night follows day, TWE would fail in its allegation that the present proceeding is an abuse of the process of the Court. The principal judgment must be read as a whole and it is quite clear from the judgment as a whole but, in particular, from 512–514 [156]–[158], that I took into account a number of factors in arriving at the conclusion which I reached in the principal judgment that the commencement of this proceeding was an abuse of process and that many of those factors were interwoven with other factors. It is simply not the case that the removal of the inferences which I drew at [156(j)] would result in a conclusion that TWE had failed to establish that the present proceeding was an abuse of the process of the Court.

64    There is, for example, material in the principal judgment (at 514 [157]), to the effect that MCI’s individual case for damages has no reasonable prospects of succeeding because it would never be able to argue that the contraventions of which it complains in its Statement of Claim caused the loss or damage which it claims in this proceeding.

65    There is no substantial injustice occasioned to MCI by declining to allow it to reopen its case and by declining to reopen the permanent stay order. MCI will remain as part of the group in the Jones proceeding (NSD 660 of 2014), unless it opts out in accordance with the opt out regime which I have put in place in that proceeding. If MCI truly does have a case, that case can be prosecuted within the framework of the Jones proceeding or, if it wishes, separately from that proceeding and on its own individual account. The only real detriment to MCI by my refusing to accede to its revocation application is that MCI, its associated entities and Mr Elliott will all be denied the opportunity to secure financial benefits from the circumstance that MCI is the lead plaintiff in a significant investor class action. The loss of that opportunity does not qualify, in my opinion, as a matter tipping the interests of justice in favour of the present application.

Conclusions

66    For all of the above reasons, I am of the view that I should refuse MCI’s revocation application with costs.

67    There will be orders accordingly.

Associate:

Dated:    1 May 2017