FEDERAL COURT OF AUSTRALIA

Coshott v Official Trustee in Bankruptcy, in the matter of Bankrupt Estate of Michael Petrovic Lenin (deceased) [2019] FCA 401

ORDERS

THE COURT ORDERS THAT:

1.    The proceedings be dismissed.

2.    The applicants pay the respondent’s costs.

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

REASONS FOR JUDGMENT

THAWLEY J:

1    By an Interim Application filed 4 October 2018, the respondent (the Official Trustee in Bankruptcy as trustee of the bankrupt estate of Michael Petrovic Lenin, deceased) seeks an order under Rule 26.01 that judgment be given against the applicants (Mr and Mrs Coshott). That rule includes:

26.01    Summary judgment

(1)    A party may apply to the Court for an order that judgment be given against another party because:

(a)      the applicant has no reasonable prospect of successfully prosecuting the proceeding or part of the proceeding; or

  (b)      the proceeding is frivolous or vexatious; or

  (c)      no reasonable cause of action is disclosed; or

  (d)      the proceeding is an abuse of the process of the Court;

…

2    The Official Trustee contended that there was an issue estoppel, an Anshun estoppel and that the proceedings were an abuse of process. The Official Trustee also contended that there was “no reasonable prospect of successfully prosecuting the proceeding”.

3    Mr Coshott, who was not represented, contended that there was no estoppel of any kind and that the proceedings were not an abuse of process. He contended that the proceedings were arguable and that the question of whether there were debts which fell within s 82 of the Bankruptcy Act 1966 (Cth) should be heard and determined otherwise than on this application.

BACKGROUND FACTS

4    On 4 December 2015, Mr and Mrs Coshott commenced proceedings in the Common Law Division of the Supreme Court of New South Wales against Ms Parker and Ms Collins who were the executrices of the estate of Mr Lenin. According to the statement of claim, Mr and Mrs Coshott were partners in Robert G Coshott & Associates, a partnership which had performed legal work for Mr Lenin. It was alleged that Mr Lenin had, before his death, incurred legal costs with the partnership which had not been paid. It was asserted that the executrices were aware of the debts owed by the estate to Robert G Coshott & Associates and, despite knowing of the debts, distributed the estate. Mr and Mrs Coshott claimed three amounts which they identified as the amounts of legal costs which had been incurred by Mr Lenin, together with interest and costs. The statement of claim described the claim as a “money claim”.

5    An amended statement of claim was filed on 14 February 2017. According to this pleading, Robert G Coshott & Associates had been retained by Mr Lenin to provide legal services to him, the terms of which were set out in a letter dated 18 January 1988. This pleading contained a more detailed identification of the asserted debts. Except for one amount, each debt arose from an invoice from 1992 or 1993, a quarter century or thereabouts before the proceedings were commenced. The amounts so identified were again claimed, together with interest and costs. The claim was identified as a “money claim”.

6    The executrices filed a defence, which – amongst other matters – unsurprisingly pleaded that:

(1)    the plaintiffs’ action on each cause of action founded on contract was not maintainable by reason of s 14(1)(a) of the Limitation Act 1969 (NSW); and

(2)    the right and title to the debt was, as against Mr Lenin and his successors, extinguished by operation of s 63(1) of the Limitation Act.

7    Section 14(1) of the Limitation Act provides for a limitation period of six years after which an action on a cause of action in contract is barred. Section 63(1) goes further than barring the remedy and provides for extinguishment of the underlying right:

63 Debt, damages etc

(1)    Subject to subsection (2), on the expiration of a limitation period fixed by or under this Act for a cause of action to recover any debt damages or other money, the right and title of the person formerly having the cause of action to the debt damages or other money is, as against the person against whom the cause of action formerly lay and as against the person’s successors, extinguished.

8    In reply, Mr and Mrs Coshott claimed – amongst other things – that they had a lien over documents to which Mr Lenin might be entitled and, therefore, that “[t]he debts claimed in these proceedings are saved by section 68 of the Limitation Act”.

9    Section 68 of the Limitation Act provides:

68 Possessory lien

Notwithstanding this Division, where:

 (a)    a person is in possession of goods, and

(b)    the person has a lien on the goods for a debt or other money claim payable by a second person,

the right and title of the first person to the debt or other money claim is, as against the second person and the second person’s successors, saved from extinction under this Division for so long as a cause of action of the second person or of a person claiming through the second person for the conversion or detention of the goods or to recover the proceeds of sale of the goods has not accrued or is not barred by this Act, but only so far as is necessary to support and give effect to the lien.

10    The executrices filed a rejoinder, but it is not necessary to summarise its contents.

11    On the executrices’ application, Adamson J made an order transferring the proceedings to the Federal Court of Australia. That order was made on 18 August 2017. Her Honour made the order because Mr Coshott was an undischarged bankrupt and the proceedings were held to constitute a “special federal matter” within the meaning of s 3 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth): Coshott v Parker (2017) 323 FLR 212.

12    On 4 September 2017, the executrices filed an Administration Petition in the Federal Circuit Court of Australia seeking an order for the administration of the bankrupt estate of Mr Lenin. On 9 October 2017, the Federal Circuit Court made an order that the estate of Mr Lenin be administered under the Bankruptcy Act. The Official Trustee was appointed the same day to administer the bankrupt estate under Part XI of that Act.

13    The proceedings which had been transferred from the Supreme Court of NSW became proceedings NSD 1460/2017 in this Court. The proceedings were docketed to Lee J.

14    The Official Trustee took the view, which it communicated to the parties and the Court, that the proceedings were stayed by operation of s 249(3) of the Bankruptcy Act. That section provides:

(3)    Except as provided by this Act, after an order has been made for the administration of the estate of a deceased person under this Part, it is not competent for a creditor:

(a)    to enforce any remedy against the estate in respect of a debt provable in the administration; or

(b)    except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceedings in respect of such a debt or take any fresh step in such a proceeding.

15    On 6 April 2018, the parties filed an “Agreed Statement of Facts” which contained also what was described as a “question for determination by the Court”.

16    On 6 April 2018, Lee J made an order that the following question be determined separately and before all other issues (the preliminary issue):

Whether, as a matter of law, section 68 of the Limitation Act 1969 (NSW) has the effect that given the lien that has been maintained, the Respondents (as executrices of the Estate of the Deceased) were liable to pay the Second Applicant for any debts in respect of the invoices listed in Schedule 1 to the Agreed Statement of Facts.

17    The preliminary issue was heard and determined on 26 April 2018. Mr Cheshire SC appeared for Mr and Mrs Coshott and Ms Castle appeared for the executrices. Mr McNally appeared for the Official Trustee.

18    Mr and Mrs Coshott (by Mr Cheshire SC) took the position that leave was not required under s 249(3) of the Bankruptcy Act but that they were ambivalent if the Court considered the expeditious course was to grant leave for the purpose of determining the preliminary issue. Everyone agreed with that course.

19    Mr Cheshire SC then raised a further issue. He noted that the Official Trustee’s “concern was there are going to be findings about debts that concern the bankrupt estate” and that if the Official Trustee was not a party to the proceedings or did not agree to be bound by the findings concerning the debts, then arguably he would be able to take different points at a later time beyond those argued by the parties in the context of the preliminary issue.

20    In particular, Mr Cheshire SC identified the concern to be that, if Mr and Mrs Coshott were successful against the executrices but could not “enforce the debts”, and if the Official Trustee recovered moneys in the bankruptcy, his clients should be entitled to a portion of those moneys. He stated: “I wouldn’t want, as it were, the fight to be resurrected at that point”. The point was clarified as being that Mr and Mrs Coshott wanted the Official Trustee to be bound by the Court’s decision in determining whether any proof of debt lodged by Mr and Mrs Coshott should be accepted.

21    Mr McNally stated, in substance, that the Official Trustee was content to be bound by the Court’s decision with respect to the preliminary issue. Lee J confirmed that this undertaking would be recorded on the transcript.

22    On that basis, Lee J made an order nunc pro tunc granting leave under s 249(3) of the Bankruptcy Act to take fresh steps after 9 October 2017 and to continue the applicants’ claim in the proceedings against the respondents for the purposes of the determination of the preliminary issue. Mr McNally was then excused.

23    At the conclusion of the hearing, Lee J delivered ex tempore reasons and made orders answering the preliminary issue “no” and otherwise dismissing the proceedings: Coshott v Parker [2018] FCA 596. It had been common ground that any cause of action in relation to the debts was one founded on contract. It was not contentious that the action on any cause of action in contract was not maintainable by reason of s 14(1) of the Limitation Act. Rather, what was in contention was whether “the right and title … to the debt” (summarised as “the debt”) had been extinguished by s 63(1) of the Limitation Act. Mr and Mrs Coshott submitted that the debt was not extinguished by reason of the operation of s 68 in circumstances where they had a lien in respect of certain documents to which Mr Lenin or his successors might claim entitlement (that is, demand possession).

24    In respect of this argument Lee J observed:

[24]    … [T]he principled construction of s 68 of the Act is that where a person lawfully maintains a lien, the right and title to the debt that it supports is not extinguished, but only insofar as it is necessary to maintain the lien (that is, to exercise whatever rights the particular lien provides, given its nature). As can be seen from the LR Report, s 68 is only necessary because of the concept introduced in s 63 of extinguishment, because a lien is only able to be maintained when the debt, underlying it, exists.

25    His Honour recorded the argument which Mr and Mrs Coshott had advanced in this way:

[28]    The argument proceeded on the basis that even though a debt was statute-barred, the effect of s 68 of the Act was to ensure that, in circumstances where there was an extant lien, the underlying debt had not been extinguished. The logic went that if a debt exists, there must, as a matter of inexorable logic, be a ‘debtor’ and a ‘creditor’ and the provisions of s 82 of the Probate Act require that all creditors of whatever description be paid equally, including statute-barred debts.

26    Section 82(1) of the Probate and Administration Act 1898 (NSW) (Probate Act) provides:

82    All debts to stand in equal degree, and retainer abolished

(1)    In the administration of the estate of every person dying after the passing of this Act, all the creditors of every description of such person shall be treated as standing in equal degree and be paid accordingly out of the assets of such deceased person whether such assets are legal or equitable, any statute or law to the contrary notwithstanding.

27    His Honour held that Mr and Mrs Coshott were not creditors under s 82 of the Probate Act and that the preliminary issue had to be answered “no”.

28    Mr and Mrs Coshott appealed on 14 May 2018.

29    On 16 May 2018, they submitted a proof of debt and, on 15 June 2018, the Official Trustee rejected that proof.

30    On 28 June 2018, Mr and Mrs Coshott commenced the proceedings in which the present interim application is brought. They appealed the Official Trustee’s rejection of the proof of debt. They also sought a declaration that they were creditors of the bankrupt estate of Mr Lenin. A statement of claim was filed on 31 August 2018.

31    The appeal from Lee J’s decision regarding the preliminary question was dismissed by the Full Court: Coshott v Parker [2019] FCAFC 14 (Gleeson, Thomas and Thawley JJ). The single ground of appeal had been that Lee J had erred in answering the preliminary question “no”, having wrongly rejected the appellant’s argument that it was a creditor for the purpose of s 82 of the Probate Act.

32    Before the Full Court, Mr and Mrs Coshott (by Mr Cheshire SC) advanced two principal propositions (at [32]), namely that:

(1)    the right and title to the debts continued past the expiry of the relevant limitation periods; and

(2)    the debts ought to have been paid by the executrices.

33    In relation to the operation of s 63 and s 68, the Full Court stated (at [38]):

[T]he debts were “saved from extinction … but only so far as is necessary to support and give effect to the lien” (s 68), that is, only to permit the appellant (or Mr Coshott) to retain possession of the deceased’s papers. The parties were agreed (or it was the consequence of their agreement) that the debts were not “saved from extinction” so far as concerned the appellant’s right to sue to recover the debts. Nor was it suggested that the appellant could enforce the debt in any other way.

34    In relation to the meaning of “creditor” in s 82 of the Probate Act, the Court referred to Motor Terms Co Pty Ltd v Liberty Insurance Ltd (1967) 116 CLR 177. In that case, a question arose as to whether the word “creditor” in a section providing for the winding up of a company by “any creditor, including a contingent or prospective creditor, of the company” included a creditor whose remedy had been barred by a limitation statute. Kitto J said at 180-181:

… The application of the word [“creditor”] in its most general sense is not affected by the Statute of Limitations, for the operation of the Statute in respect of a debt is only to bar the remedy: it does not extinguish the debt. But in construing statutory provisions for the distribution of assets amongst creditors there is a natural presumption that the only creditors in contemplation are those who, by the operation of the relevant statute in the particular case, are denied a right they would otherwise have had to sue for their debts by action or suit under the general law and are given instead a right to participate in the distribution …

The fundamental notion that special modes of administering assets are for the benefit of those creditors only whose ordinary rights of recovery are withdrawn from them upon the initiation of the special administration was applied by the Court of Chancery in relation not only to bankruptcies and insolvencies but to trusts for creditors and administration decrees in respect of deceased estates. It is a necessary corollary that a person is not a creditor in the relevant sense if, at the time when a right to come in to receive payments under an official administration of the debtor’s assets supersedes an existing right of action or suit, his right of enforcement by action or suit is barred by the Statute of Limitations (if the debt is legal), or would be denied by a Court of Equity on the analogy of the Statute (if the debt is equitable). 

(Emphasis added.)

35    After setting out this passage, the Full Court stated at [62]:

Of course, as mentioned, [unlike in the case before Kitto J] the New South Wales statute does operate to extinguish debts in many situations. However, that does not affect the point made by Kitto J that those creditors who could not have recovered because of a Statute of Limitations defence (or by analogy in equity) were not relevantly creditors. Kitto J also made the point that the same position obtained with respect to administration of deceased estates. In relation to administration proceedings, his Honour expressly referred, at 181, to the decision of Jessel MR in Re Greaves; Bray v Tofield (1881) 18 Ch D 551.

36    The Full Court held that Lee J was correct in concluding that Mr and Mrs Coshott were not “creditors” within the meaning of s 82 of the Probate Act. It followed that the second principal proposition put forward by Mr and Mrs Coshott was rejected and the appeal was dismissed.

CONSIDERATION

No reasonable prospect of successfully prosecuting the proceeding

37    The power of this Court to dismiss a proceeding or part of a proceeding under paragraph (a) of r 26.01(1) comes from s 31A of the Federal Court of Australia Act 1976 (Cth) which includes:

(2)      The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)      the first party is defending the proceeding or that part of the proceeding; and

(b)      the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

(3)      For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:

  (a)      hopeless; or

  (b)      bound to fail;

for it to have no reasonable prospect of success.

(4)      This section does not limit any powers that the Court has apart from this section.

38    In Spencer v The Commonwealth of Australia (2010) 241 CLR 118, French CJ and Gummow J observed at [24] that the exercise of power to terminate a proceeding summarily must be attended with caution and stated at [25]:

Section 31A(2) requires a practical judgment by the Federal Court as to whether the applicant has more than a “fanciful” prospect of success. That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue. Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this Court, the court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success.

39    In Takemoto v Moody’s Investors Service Pty Limited [2014] FCA 1081, Flick J observed at [11]:

[Section] 31A was introduced by way of amendment and came into effect on 1 December 2005. It was a provision which was intended to establish a lower standard than that previously laid down by decisions of the High Court (eg, Dey v Victorian Railways Commissioners (1948) 78 CLR 62; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125), namely that allegations are “so clearly untenable that [they] cannot possibly succeed”. See also: Hicks v Ruddock [2007] FCA 299 at [12] to [13], (2007) 156 FCR 574 at 582. The effect of s 31A is to “soften the test for a successful application for summary judgment”: Kowalski v MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117 at [25], (2009) 178 FCR 401 at 407 per Spender, Graham and Gilmour JJ.

40    There is limited utility in describing a case as “manifestly deficient” or “untenable”. Such terms do little to illuminate the ambit of the Court’s power under s 31A. As the plurality (Hayne, Crennan, Kiefel and Bell JJ) observed in Spencer at [59]-[60]:

59.    In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like “clearly”, “manifestly” or “obviously”) as “frivolous”, “untenable”, “groundless” or “faulty”. But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word “reasonable”, in the phrase “no reasonable prospect”, be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a “frivolous”, “untenable”, “groundless” or “faulty” claim.

60.    Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is “no reasonable prospect” of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to “no reasonable prospect” can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase “just and equitable” when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes.

41    The critical question under s 31A(2)(b) and r 26.01(1)(a) is whether the applicant has “no reasonable prospect of successfully prosecuting the proceeding”.

42    On this interim application, Mr Coshott submitted that Lee J had held that “the debts have not been extinguished and are extant debts”. In this context, Mr Coshott referred to [24] of his Honour’s reasons set out above, but now repeated for convenience:

It follows from the above analysis that the principled construction of s 68 of the Act is that where a person lawfully maintains a lien, the right and title to the debt that it supports is not extinguished, but only insofar as it is necessary to maintain the lien (that is, to exercise whatever rights the particular lien provides, given its nature). As can be seen from the LR Report, s 68 is only necessary because of the concept introduced in s 63 of extinguishment, because a lien is only able to be maintained when the debt, underlying it, exists.

43    This submission misunderstands his Honour’s reasoning at [24] and ignores that of the Full Court at [38] (set out at [33] above). The right and title of Mr and Mrs Coshott to the debts is extinguished. That occurred by operation of s 63 on the expiry of the limitation period. The effect of s 68 is that the right and title to the debts is “saved from extinction … but only so far as is necessary to support and give effect to the lien”. In all other respects, it is extinguished. If Mr Lenin had sought his documents after expiry of the limitation period, then Mr and Mrs Coshott could have resisted giving them to him because s 68 would have operated to “save” the extinguishment of the debts which had been effected by s 63(1) upon expiry of the limitation period, “but only so far as is necessary to support and give effect to the lien”. In fact, however, that never happened and there is nothing to suggest his successors have any interest in documents relating to litigation now years old.

44    The right and title to the debts is no longer in existence. The possibility of breathing limited life back into the right and title to the debt under s 68, should it be necessary to support and give effect to a right on the part of Mr and Mrs Coshott to refuse to return Mr Lenin’s papers (their possessory solicitor’s lien), is at best theoretical. It is most unlikely ever to arise. Even if it did arise, it does not change the fact that the right and title to the debts has been extinguished and will remain extinguished for all other purposes.

45    Mr Coshott submitted, correctly, that neither Lee J nor the Full Court had directly decided whether there were debts which fell within s 82 of the Bankruptcy Act. That section relevantly provides:

82 Debts provable in bankruptcy

(1)      Subject to this Division, all debts and liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his or her bankruptcy.

46    Whilst that precise question was not decided, Mr and Mrs Coshott “have no reasonable prospect of successfully prosecuting the [current] proceeding”, within the meaning of s 31A(2)(b) and Rule 26.01(1)(a), because it is inevitable that the Court will conclude that Mr and Mrs Coshott’s right and title to the debts was, on expiry of the limitation period, extinguished by s 63(1) of the Limitation Act such that there is now no debt which falls within s 82(1) of the Bankruptcy Act.

47    On this basis, judgment should be given against Mr and Mrs Coshott.

Abuse of process and Anshun estoppel

48    Anshun estoppel was described in this way by the plurality (French CJ, Bell, Gageler and Keane JJ) of the High Court in Tomlinson v Ramsey Food Processing Pty Limited (2015) 256 CLR 507 at [22] (footnotes omitted):

… [An Anshun estoppel] operates to preclude the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding.

49    Also at [22], their Honours observed:

Considerations similar to those which underpin this form of estoppel may support a preclusive abuse of process argument.

50    Their Honours then stated:

[23]    The present significance of the recognition of those three forms of estoppel [cause of action estoppel, issue estoppel and Anshun estoppel] is that each has the potential to preclude assertion of a right or obligation, or the raising of an issue of fact or law, between parties to a proceeding or their privies. Absent a principled basis for distinction – and none has been suggested – one principle must govern the identification of privies for the purpose of all forms of estoppel which result from the rendering of a final judgment in an adversarial proceeding.

[24]    To explain contemporary adherence to the comparatively narrow principle in Ramsay v Pigram, it is appropriate also to explain the relationship between the doctrine of estoppel and the doctrine of abuse of process as it has since come to be recognised and applied in Australia. The doctrine of abuse of process is informed in part by similar considerations of finality and fairness. Applied to the assertion of rights or obligations, or to the raising of issues in successive proceedings, it overlaps with the doctrine of estoppel. Thus, the assertion of a right or obligation, or the raising of an issue of fact or law, in a subsequent proceeding can be simultaneously: (1) the subject of an estoppel which has resulted from a final judgment in an earlier proceeding; and (2) conduct which constitutes an abuse of process in the subsequent proceeding.

[25]    Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court’s procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel.

[26]    Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel. Similarly, it has been recognised that making such a claim or raising such an issue can constitute an abuse of process where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to that earlier proceeding, nor the privy of a party to that earlier proceeding, and therefore could not be precluded by an estoppel.

51    The concept of abuse of process in this field was recently explored in UBS AG v Tyne (2018) 360 ALR 184. Kiefel CJ, Bell, and Keane JJ stated at [38] (footnotes omitted):

The timely, cost effective and efficient conduct of modern civil litigation takes into account wider public interests than those of the parties to the dispute. These wider interests are reflected in s 37M(2) of the FCA. As the joint reasons in Aon Risk Services Australia Ltd v Australian National University explain, the “just resolution” of a dispute is to be understood in light of the purposes and objectives of provisions such as s 37M of the FCA. Integral to a “just resolution” is the minimisation of delay and expense. These considerations inform the rejection in Aon of the claimed “right” of a party to amend its pleading at a late stage in the litigation in order to raise an arguable claim. The point is made that a party has a right to bring proceedings but that choices are made respecting what claims are made and how they are framed. Their Honours speak of the just resolution of the dispute in terms of the parties having a sufficient opportunity to identify the issues that they seek to agitate. The respondent’s argument in Aon, that the proposed amendment to raise the fresh claim was a necessary amendment to avoid multiple actions, did not avail. As their Honours observe, if reasonable diligence would have led to the bringing of the claim in the existing proceedings, any further proceeding might be met by a stay on Anshun grounds.

52    At [70] to [72], Gageler J stated (footnotes omitted):

Finally, and for present purposes no less importantly, Lord Bingham’s reference to the need for the requisite normative judgment to take account of “the public and private interests involved” underscores that the question of whether the claim sought to be brought in the later proceedings “should” have been brought in the earlier proceedings cannot be determined solely by reference to interests of the parties to the action. There is a public interest in the timely and efficient administration of civil justice. The importance of that public interest has only increased in the years since Lord Bingham spoke.

Dowsett J sought to capture that public interest when he referred in dissent in the decision under appeal to the abusive character of litigious conduct which, if permitted, would lead “the right-thinking person” to perceive the system for the administration of civil justice to be “inefficient, careless about the incurrence of cost by the parties, and profligate in the application of public moneys”. His Honour’s anthropomorphic allusion was evidently drawn from the frequently quoted description of the power to prevent an abuse of process in terms of an “inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people”.

Although undoubtedly capable of application in circumstances in which use of a court’s procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute, the doctrine of abuse of process has repeatedly been recognised to be insusceptible of a formulation which would confine it to closed categories. In the context of the application of the doctrine to the bringing of successive proceedings, consistently with the analysis of Lord Bingham, I think it better in weighing the private and public interests involved to eschew the extremes of private “oppression” and of public “disrepute”. The relevant public interest is ordinarily appropriately identified in more general and less emotive terms as the timely and efficient administration of civil justice.

53    The proceedings as transferred to this Court were against the executrices. Mr and Mrs Coshott commenced their proceedings in the Supreme Court of New South Wales as a “money claim” in the Common Law Division. They did not sue for damages to be assessed; they claimed the amounts of money and interest. The proceeding was not pleaded as, but was effectively, an action in devastavit. The parties conducted the proceeding before Lee J on the basis that the preliminary question of whether the debts were extinguished having regard to ss 63 and 68 of the Limitation Act and whether Mr and Mrs Coshott were creditors under s 82 of the Probate Act would resolve their dispute.

54    The evident object of the approach taken by the parties before Lee J, and of the Official Trustee, was to determine the status of the debts – that is, whether or not they were relevantly extinguished such that Mr and Mrs Coshott would or would not be able to recover them.

55    The Official Trustee agreed to be bound by the result of the determination of the preliminary issue by Lee J, at the insistence of Mr and Mrs Coshott. For practical purposes, the impression telegraphed on Mr and Mrs Coshott’s behalf, objectively assessed, was that the preliminary issue, if decided against them, would resolve the question of whether they had debts which they could recover from the bankrupt estate of Mr Lenin. Mr and Mrs Coshott secured the result that, should they be successful with respect to the preliminary issue, the Official Trustee would be bound by the result; that is, the Official Trustee would not be able to say otherwise than that the debts were provable.

56    Mr Coshott submitted that the proceeding before Lee J against the executrices was an action in devastavit, being an action against the executrices personally for damages to be assessed. He submitted that the action was not one against the deceased estate or the bankrupt estate. Those matters may be accepted. Nevertheless, the case against the executrices was conducted on the basis that the real issue between the parties was whether the debts were extinguished and whether Mr and Mrs Coshott were creditors of the estate within the meaning of s 82 of the Probate Act.

57    The result is that Mr and Mrs Coshott, the executrices and the Official Trustee each conducted themselves on the basis that the preliminary issue would resolve the question of whether Mr and Mrs Coshott could recover the debts either from the executrices or prove the debts in the bankrupt estate.

58    Having regard to s 37M of the Federal Court Act 1976 (Cth) and the principles enunciated in UBS AG, the present proceedings are an abuse of process. Mr and Mrs Coshott should not be permitted to continue them: Tomlinson at [22]. In the circumstances outlined above, and bearing in mind:

    that the ultimate subject matter concerns debts that are roughly a quarter century old and admittedly all statute-barred;

    that the deceased estate is being administered in bankruptcy and there is nothing to suggest any actual prospect of recovery;

    in particular, the way the parties conducted themselves before Lee J; and

    the various disputes which have been spawned in an attempt to recover statute-barred debts which have occupied the various judicial resources outlined above,

it may fairly be said that Mr and Mrs Coshott ought to have taken steps in the proceeding before Lee J to have joined the Official Trustee and sought a determination, at the same time as the preliminary issue was determined, of the question whether they had debts within the meaning of s 82 of the Bankruptcy Act if they were not in fact proceeding on the basis that Lee J’s decision would determine that question.

59    Having bound the Official Trustee to the result of the determination of the preliminary issue before Lee J and otherwise conducted themselves as they did, Mr and Mrs Coshott ought not be permitted now to bring these proceedings. Reasonable diligence would have led to the determination of the present issue at the same time as the preliminary issue. In substance, the issues are barely distinguishable and, to the extent they are distinguishable, they should both have been dealt with. The fact that the Official Trustee was not formally joined as a party to the proceedings before Lee J does not alter these conclusions: Tomlinson at [26].

60    A proceeding can be an abuse of process for various reasons. In concluding that this proceeding is an abuse of process, there is a significant element of public interest. Mr Coshott’s arguments were concise and engaging. However, to paraphrase and slightly alter the words of Dowsett J referred to earlier, most would regard the existence of this proceeding as inefficient, careless about the incurrence of cost and profligate in its absorption of public moneys. In short, public moneys in the form of judicial resources should not be further exhausted on this proceeding having regard to the circumstances identified above. In referring to the public interest, I do not wish to belittle the cost to the respondent.

CONCLUSION

61    The foregoing conclusions provide two independent bases for dismissing the proceedings. In those circumstances it is not necessary to decide whether the Official Trustee was a privy of the executrices (as to which see Tomlinson) such that the Official Trustee may take the benefit of an issue estoppel, or whether such an estoppel arises.

62    The proceedings should be dismissed.

Associate:

Dated:    22 March 2019