Federal Court of Australia

Directed Electronics OE Pty Ltd v Isuzu Australia Limited [2022] FCA 254

ORDERS

THE COURT ORDERS THAT:

1.    The Respondent’s application for a permanent stay or dismissal of these proceedings be stayed until 28 days after judgment on liability is handed down in VID 1157 of 2017; or until the determination of any appeal from that judgment.

2.    Costs be reserved.

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

REASONS FOR JUDGMENT

ROFE J:

Introduction

1    This is an application brought by the respondent (Isuzu) pursuant to ss 23 or 31A of the Federal Court of Australia Act 1976 (Cth) (FC Act) or r 26.01(1)(d) of the Federal Court Rules 2011 (Cth) (FC Rules), or the Court’s implied or inherent jurisdiction, to dismiss or permanently stay this proceeding (2020 Proceeding). The cross-respondents, being Hanwha Aus Pty Ltd, Hanwha Hightech Co Ltd, Kichang (Ryan) Lee and Leemen Co Ltd (Hanhwa Parties) and Johnny Meneses make the same application.

2    Isuzu contends that the claims brought by the applicant (Directed) in the 2020 Proceeding substantially overlap with the claims which it brought against the cross-respondents in proceeding VID 1157 of 2017 (2017 Proceeding), and in the circumstances constitute an abuse of process. Isuzu was not a party to the 2017 Proceeding.

3    In the 2017 Proceeding, Directed brought many and varied claims against Mr Meneses, its ex-General Manager, the Hanhwa Parties, and a further five parties who are not parties to the 2020 Proceeding. Relevantly for the 2020 Proceeding, those claims include breach of fiduciary duties, breach of contract, breach of confidence and copyright infringement.

4    At its simplest, Directed’s case in the 2020 Proceeding concerns the knowledge and conduct of Isuzu for the purposes of establishing accessorial liability for the claims the subject of the 2017 Proceeding.

5    Directed did not sue the cross-respondents in the 2020 Proceeding. However, Isuzu contends that the nature of the claims made by Directed against Isuzu in the 2020 Proceeding, and against the cross-respondents in the 2017 Proceeding, made their joinder by Isuzu to the 2020 Proceeding effectively inevitable.

6    Isuzu contends that Directed delayed in commencing proceedings against Isuzu and that it could have and should have joined Isuzu to the 2017 Proceeding. The delayed commencement of proceedings against Isuzu will, Isuzu submits, lead to an unreasonable multiplication of proceedings dealing with the same subject matter, giving rise the potential for inconsistent findings and oppression (particularly of the cross-respondents), and the perception that the administration of justice is inefficient, careless of costs and profligate in its application of public moneys.

7    The 2017 Proceeding has a protracted and lengthy history. There have been several interlocutory disputes, with at least two appeals from interlocutory decisions (see Meneses v Directed Electronics OE Pty Ltd [2019] FCAFC 190 and Meneses v Directed Electronics OE Pty Ltd (No 2) [2019] FCAFC 200). The trial on issues of liability took over 40 days, commencing in December 2019, and continuing sporadically until April 2021. The progress of the matter was not helped by the arrival of the COVID-19 pandemic. Justice Beach has reserved his decision on liability in the 2017 Proceeding.

8    In short, Directed denies that there has been any abuse of process. This is the first proceeding brought by Directed against Isuzu, and the claims made and relief sought are different from those in the 2017 Proceeding. Directed contends there was no delay in commencement.

9    For the reasons that follow, I consider that it is premature to determine the stay application before the liability judgment is handed down in the 2017 Proceeding. Accordingly, I will make orders staying this application until 28 days after judgment is handed down in the 2017 Proceeding, at which point the nature and extent of the abuse of process, if any, will be clearer.

Background

Parties

10    Directed is an Australian automotive electronics developer and supplier. It specialises in the design, marketing and sale of in-vehicle electronic products, including in-vehicle audio visual products and associated accessories, component parts and navigation software. Directed sells to original equipment manufacturer customers in Australia and New Zealand.

11    Mr Meneses was employed by Directed between May 2009 and November 2017. During that period, Mr Meneses was employed as Directed’s Business Development Manager, OEM Director, and later acted as its General Manager.

12    The Hanhwa Parties include:

(a)    Hanhwa Aus Pty Ltd (Hanhwa AU), a company incorporated in Australia pursuant to the Corporations Act 2001 (Cth) (Corporations Act) which carried out the business of the South Korea-based Hanwha Parties as the Australian representative during the relevant period;

(b)    Hanhwa Hightech Co Ltd (Hanhwa Korea), a company incorporated pursuant to the laws of South Korea;

(c)    Leemen Co Ltd (Leemen Korea), a company incorporated pursuant to the laws of South Korea; and

(d)    Kichang (Ryan) Lee, who was during the relevant period the sole director of the corporate Hanhwa Parties.

The Hanhwa Parties design, develop, manufacture, market and supply a range of electronic vehicle accessories.

13    Directed and the Hanhwa Parties were previously in a relationship whereby the Hanhwa Parties were Directed’s contract manufacturer for the development of products including AV units, navigation software and other accessories.

14    Isuzu is a company registered under the Corporations Act which is engaged in the business of importing, distributing and marketing trucks and associated components. As explained below, at various times Isuzu had relationships for the supply of components with both Directed and the Hanhwa Parties.

15    The 2017 Proceeding includes several other respondents which are briefly noted below.

The 2017 Proceeding

16    Directed commenced the 2017 Proceeding on 25 October 2017 against various respondents, including the Hanhwa Parties and Mr Meneses. Directed made a range of allegations, with the final version of the Statement of Claim totalling some 320 odd pages.

17    The claims in the 2017 Proceeding arise from various courses of conduct. At the heart of the 2017 Proceeding is the allegation that, while Mr Meneses was employed by Directed he diverted a substantial part of Directed’s business to Hanhwa AU. This diversion of opportunity is said to be not only from Isuzu, but from other companies including Hino, ICL, Fuso, UD Trucks and Mercedes. The 2017 Proceeding also alleges that the Hanhwa Parties paid Mr Meneses and his company OE Solutions secret commissions since the outset of his tenure at Directed, from July 2009 to November 2017.

18    The claims made by Directed arising from this conduct are many and varied. While it is not necessary to set out a precise list of which claims were made against which parties, it is useful to note the long list of claims, including: breach of employment contract; breach of fiduciary duties; breach of ss 182 and 183 of the Corporations Act; breach of confidence; payment of secret commissions; copyright infringement; breach of a supply agreement between the Hanhwa Parties and Directed; breach of s 18 of the Australian Consumer Law; and accessorial liability.

19    Furthermore, claims are brought against OE Solutions arising from an allegation that Mr Meneses used that company as a vehicle to mark-up products to then supply to Directed; against the Gridtraq Parties in relation to their dealings with the Hanhwa Parties; and against Mr Mills, an employee of Directed who worked under Mr Meneses and who Directed alleges was involved in Mr Meneses’ conduct.

The 2020 Proceeding

20    On 13 August 2020, Directed commenced the 2020 Proceeding against Isuzu by way of concise statement. The claims made against Isuzu include breach of contract; knowing inducement of breach of contract (relating to its dealings with Hanhwa Korea); misuse of confidential information; copyright infringement; and that it was involved in Mr Meneses’ alleged dishonest breaches of employment, fiduciary and statutory duties.

21    The conduct giving rise to the 2020 Proceeding primarily relates to the development of audio-visual units (AV units); namely Directed’s SuperDAVE AV unit and the Hanhwa Parties’ HAU8000 unit. Directed describes the three groups of conduct on which it bases the 2020 Proceeding as follows:

(a)    The 2017 HAU8000 Conduct: The 2017 HAU8000 conduct is said to span from at least November 2016 to October 2017. In the 2017 Proceeding, Directed claims that the cross-respondents improperly diverted the SuperDAVE project to themselves, renaming it to HAU8000. Directed submits that Isuzu represented that, as a consequence of the 2017 Proceeding, it would no longer utilise, install, or purchase any of the HAU8000 units. Isuzu says it relied on representations made by Mr Meneses and Mr Lee that the supply agreement had transitioned from Directed to Hanhwa under the name HAU8000 (the Transition Agreement);

(b)    The LM18i Conduct: Between February/March 2018 and August 2018, Directed submits that Isuzu entered negotiations with the Hanhwa Parties to supply a new AV unit to replace the SuperDAVE — this was to become the LM18i unit. Directed submits that it became apparent that the LM18i unit was based on the HAU8000 unit with minor modifications. Another aspect of the LM18i Conduct is the tender process that Directed participated in from January 2018, unbeknownst to the fact that Isuzu was working closely with the Hanhwa Parties; and

(c)    The 2020 HAU8000 Conduct: In May 2020, Isuzu sold its quarantined stock of the HA8000 units and sought supply from the Hanhwa Parties of at least 500 further units. Hanhwa indemnified Isuzu in relation to any liability Isuzu may have incurred to Directed in respect of the use of parts including the HAU8000.

22    On 18 December 2020, Isuzu filed a notice and statement of cross-claim. The cross-claim made claims against five cross-respondents: Hanhwa AU, Hanhwa Korea, Leemen Korea, Mr Lee and Mr Meneses. The cross-claim is based on:

(a)    The Transition Agreement and the 30 June 2017 Representations: Isuzu alleges that on around 30 June 2017, Mr Meneses and Mr Lee, acting on behalf of the Hanhwa Parties, represented to Isuzu that Directed and Hanhwa Korea had agreed to transition the distribution of new AV units from Directed to Hanhwa AU. Further, it was represented to Isuzu that Directed was fully aware of the Transition Agreement, that Mr Meneses would be moving from Directed to Hanhwa AU, and that Mr Meneses was lawfully able to be involved in the supply of the HAU8000 products to Isuzu;

(b)    The Hanhwa Aus Supply Agreement and the Hanhwa Supply Agreement Representations: On 6 October 2017, Isuzu entered into a supply agreement with Hanhwa AU for supply of the HAU8000. In entering into the agreement, Isuzu alleges that the cross-respondents again made representations regarding Directed’s knowledge of the agreement and Mr Meneses’ employment status;

(c)    The LM18i Agreement and the 24 January 2018 Representations: Isuzu alleges that on 24 January 2018, Mr Lee and Hanhwa AU made various representations to Isuzu about the LM18i AV Units. These representations included that the LM18i was newly developed and significantly different to the SuperDAVE and the HAU8000; and that Directed, Mr Meneses and Mr Mills had no involvement in the concept or development of the LM18i; and

(d)    The Amendment Agreement and the Amendment Agreement Indemnity: Isuzu alleges that on 17 May 2020, it agreed with Hanhwa AU to amend the Hanhwa Aus Supply Agreement. The Amendment Agreement included terms that Hanhwa indemnified Isuzu against all losses arising directly or indirectly out of a breach of the Hanhwa Aus Supply Agreement, any negligent act or omission by Hanhwa AU, and any claims arising in any way connected to the 2017 Proceeding (including any claim by Directed against Isuzu in relation to the HAU8000 units).

Overlap

23    While I consider the nature and consequence of any overlap in the two sets of proceedings later, I will make some brief preliminary observations.

24    First, there were an additional five parties to the 2017 Proceeding that are not parties to the 2020 Proceeding. These include Mr Mills, another employee of Directed who is alleged to be Mr Meneses’ co-conspirator; the Gridtraq Parties, who had a business relationship with Directed and who Directed sued as accessories in connection to the misuse of confidential information and copyright claims; and OE Solutions, Mr Meneses’ company who Directed sued in relation to the mark-up claims. As counsel for Directed observed, there were some 30 lawyers in the room at the commencement of the trial for the 2017 Proceeding.

25    Second, several claims in the 2017 Proceeding clearly do not relate to Isuzu. For example, there were claims relating to the Hanwha Parties’ and Mr Meneses’ attempted supply of AV units to multiple other trucking companies. There were also claims relating to a separate standalone AV unit called the RA7000, which Directed alleges the Hanhwa Parties and Mr Meneses developed through misuse of Directed’s confidential information and copyright. There are claims relating to alleged secret commission payments made by the Hanhwa Parties to Mr Meneses. Mr Meneses also made a cross-claim against Mr Siolis and Mr Tselepis, two directors of Directed, alleging an equal shareholding or partnership agreement between the three individuals.

26    Third, although there is some common substratum of fact around certain issues, the focus of the 2020 Proceeding is very much on what Isuzu knew and what it did in light of that knowledge. The subsets of conduct the subject of the 2020 Proceeding are the SuperDAVE Conduct, the LM18i conduct, and the HAU8000 2020 Conduct, and in particular Isuzu’s knowledge of and participation in the conduct.

Evidence

27    In support of its application, Izuzu relied on four affidavits of Mark Anthony Farquhar, being those sworn 22 June 2021, 30 July 2021 and 18 August 2021, and a confidential affidavit sworn on 22 June 2021.

28    In response, Directed relied upon four affidavits of Anthony Brooke Watson made 10 August 2021, 13 August 2021, 18 August 2021 and 20 August 2021.

29    Each side filed extensive chronologies and comparative pleadings tables. For reference, I annex Isuzu’s comparison of pleadings in the 2020 Proceeding and the 2017 Proceeding.

Principles

30    There did not appear to be any disagreement about the applicable principles. In two relatively recent decisions, UBS AG v Tyne (2018) 265 CLR 77 (UBS AG) and Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 (Tomlinson), the High Court identified a number of important points of principle when considering whether to stay a proceeding as an abuse of process:

(a)    Abuse of process is insusceptible of formulation comprising closed categories. It involves a “broad, merits-based judgment which takes account of the public and private interests” and requires a consideration of all the facts of the case: UBS AG at [7] (Kiefel CJ, Bell and Keane JJ) quoting Johnson v Gore Wood & Co [2002] 2 AC 1 at 31 (Lord Bingham of Cornhill) (Johnson);

(b)    The court’s power to stay a proceeding as an abuse of process is enlivened where either of two conditions are met:

(i)    where the use of the court’s procedures occasions unjustifiable oppression to a party; or

(ii)    where the use serves to bring the administration of justice into disrepute: UBS AG at [1] (Kiefel CJ, Bell and Keane JJ), [62] (Gageler J), [92] (Nettle and Edelman JJ);

(c)    The principles governing an abuse of process are broader and more flexible than res judicata or issue estoppel: Tomlinson at [25] (French CJ, Bell, Gageler and Keane JJ). Abuse of process is also broader and more flexible than an estoppel of the kind identified in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 (Anshun estoppel): UBS AG at [62] and [68] (Gageler J);

(d)    To establish an abuse of process, is not necessary that the second case should involve the same parties as the first case or their privies: Tomlinson at [17] (French CJ, Bell, Gageler and Keane JJ), UBS AG at [63] (Gageler J);

(e)    Abuse of process may be invoked to prevent attempts to litigate a claim that should have been litigated in earlier proceedings, or which ought reasonably to have been made or raised in the earlier proceeding, as well as attempts to re-litigate a claim that has been determined: Tomlinson at [26] (French CJ, Bell, Gageler and Keane JJ); UBS AG at [39] and [41] (Kiefel CJ, Bell and Keane JJ);

(f)    It is not necessary to show an additional element such as collateral attack or dishonesty, although those elements may assist in demonstrating an abuse of process: UBS AG at [67] (Gageler J), quoting Johnson at 31;

(g)    The test of whether the claim should have been brought in earlier proceedings demonstrates the overlap between abuse of process and Anshun estoppel: Tomlinson at [25]–[26] (French CJ, Bell, Gageler and Keane JJ); UBS AG at [68]–[69] (Gageler J);

(h)    Not every claim that could have been brought in an earlier proceeding constitutes an abuse of process when raised in a later proceeding. However, where the claim should have been brought in the earlier proceeding it will be an abuse of process even though it may not be precluded by an estoppel: UBS AG at [43] (Kiefel CJ, Bell and Keane JJ), [110]–[111] (Nettle and Edelman JJ), [127] (Gordon J); Tomlinson at [26] (French CJ, Bell, Gageler and Keane JJ);

(i)    In UBS AG, Gageler J offered an alternative formulation of the test, preferring to state the relevant public interest as the timely and efficient administration of justice, rather than focussing on oppression and disrepute: [72]. Gageler J found that abuse of process was demonstrated because a party was required to respond to a proceeding which it had already gone to the cost and expense of bringing to completion (even though there had been no final determination on the merits), and the public interest in the timely and efficient resolution of claims: [75];

(j)    The test of what constitutes an abuse of process must be interpreted and applied in light of the overarching purpose of civil litigation — to facilitate the just resolution of disputes as quickly, inexpensively and efficiently as possible: UBS AG at [6], [32], [34], [38], [45] (Kiefel CJ, Bell and Keane JJ), [107]–[108] (Nettle and Edelman JJ), [139] (Gordon J). This requires the Court to take into account factors wider than the private interests of the parties to the dispute: UBS AG at [38] (Kiefel CJ, Bell and Keane JJ). In UBS AG, the plurality found that “hiving off” the claim of one party with the view of bringing it after the determination of the first proceeding was the antithesis of the discharge of the duty imposed on parties to civil litigation: [55];

(k)    Relevant factors include significant delay in resolving the dispute, increased costs and the inconvenience of having to deal with the matter again after lengthy litigation: UBS AG at [33] (Kiefel CJ, Bell and Keane JJ);

(l)    Undue vexation does not arise solely where there has been a judgment on the merits. Vexation also arises from both significant delay and being required to deal again with claims that should have been resolved in the first proceeding: UBS AG at [46], [58] (Kiefel CJ, Bell and Keane JJ);

(m)    The staged conduct of what is in fact one dispute, with the attendant duplication of court resources, delay, expense and vexation, is likely to give rise to the perception that the administration of justice is inefficient, careless of costs and profligate in its application of public money: UBS AG at [59] (Keifel CJ, Bell and Keane JJ); and

(n)    Even though, having regard solely to the interests of the party deciding to split the case, that may be a reasonable approach, a different determination may be reached having regard to the interests of the other party and the timely and efficient administration of justice: UBS v Tyne at [80] (Gageler J), cf [106], [120] (Nettle and Edelman JJ).

31    It can be added there is no requirement to establish moral delinquency or punishment of a miscreant or blameworthiness in the sense of an improper purpose or guilty state of mind to invoke the abuse jurisdiction: see Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 2] [2021] WASCA 105, [164]. Once enlivened, there is no discretionary aspect.

32    Prior to the High Court’s decision in UBS AG, a number of first instance and appellate courts considered allegations of abuse of process in circumstances where the same or similar facts were to be raised in subsequent proceedings, but one of the parties to the proceeding were different. These cases often (but not always) involved the party that lost in the first proceeding seeking to run the same point in the second proceeding.

33    The court was taken to a handful of authorities where the applicant to stay the proceedings was not a party to the initial proceedings.

34    Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198 is one authority where the party moving to halt the proceedings had not been a party to the previous proceeding. The original proceedings were bought by the purchaser of a business against the vendor, alleging breach of warranty as to the accuracy of financial statements annexed to the contract of sale, and statutory misleading and deceptive conduct. The plaintiffs were successful only in the contractual claim, with the judge finding that they had relied on the warranty rather than the accuracy of the figures. The purchasers initiated another action in negligent misrepresentation against the accountants who had prepared the financial statements. The accountants brought an application for dismissal of proceedings on the basis of abuse of process, which was granted by the New South Wales Court of Appeal.

35    The Court of Appeal explained that the accountants were not parties to the previous action, nor were they privies of the vendor, nor did they have the benefit of any cause of action or issue estoppel.

36    The Court ultimately found at 202–3:

The purchasers could have included their claim against the accountants for negligent misrepresentation… in their Supreme Court proceedings. They knew that the figures came from the accountants and there would have been common issues of reliance, falsity and damage. If the claims based on the earlier figures were not worth pursuing against the vendor they would not be worth pursuing against the accountants either.

In those circumstances it could have been said, in the language of the joint judgment in Port of Melbourne Authority v Anshun, that the claims against the accountants were so relevant to the subject matter of the first action that it was unreasonable for the purchasers not to rely upon them in that action.

37    Another case to which the parties referred is Solak v Registrar of Titles (2011) 33 VR 40. The appellant alleged that someone had fraudulently obtained a loan in his name from BankWest, secured by a registered mortgage over the appellant’s land. The appellant’s claim against BankWest seeking to discharge the mortgage was dismissed, given the indefeasibility provisions in the relevant legislation. The appellant then instituted the second set of proceedings against the Registrar of Titles seeking an indemnity for loss suffered by reason of the registration of the mortgage. The trial judge granted the Registrar’s application for summary dismissal of the proceedings on the basis of Anshun estoppel.

38    The Court of Appeal overturned the decision of the trial judge on another point, but proceeded to consider whether the Anshun estoppel principles applied at [67]–[68]:

This case is one of the relatively few cases where the party asserting Anshun estoppel in the second proceeding was not a party to the first proceeding. The High Court is yet to consider the principles applicable in this situation. However, in Redowood Pty Ltd v Link Market Services Pty Ltd Hodgson JA of the NSW Court of Appeal (with whom Mason P and Bryson AJA agreed) suggested that a stricter test should be applied:

In cases where the earlier proceedings and the later proceedings are between the same parties, as in Anshun itself, a finding of unreasonableness in not raising a matter in the earlier proceedings would almost inevitably mean that the later proceedings were oppressive and an abuse of process. Where the parties are different, the test of unreasonableness is still relevant; but in my opinion it must either be considered not conclusive, or else must be understood as involving unreasonableness of such a nature that the later proceedings against different parties are an abuse of process.

The court cautioned against applying Anshun estoppel too readily where the party asserting the estoppel was not a party to the first proceeding:

… [W]here a plaintiff may have alternative remedies against different parties, to suggest that a plaintiff should generally sue all of them, barring exceptional circumstances, would be to encourage complex and lengthy litigation, and promote the incurring of costs where there is no certainty that a Bullock or Sanderson order would be obtained.

… [P]laintiffs should be permitted reasonable latitude in deciding whether to sue just one defendant, or to join a number of defendants in alternative claims.

39    The Court then continued at [69], quoting Thomas LJ of the English Court of Appeal in Aldi Stores Ltd v WSP Group Plc [2008] 1 WLR 748 at [25]:

There is a real public interest in allowing parties a measure of freedom to choose whom they sue in a complex commercial matter and not to give encouragement to bringing a single set of proceedings against a wide range of defendants, or to complicate proceedings by cross-claims against parties to the proceedings. The freedom can and should be restricted by appropriate case management.

Submissions

40    Isuzu submits that several aspects of the 2020 Proceeding render it an abuse of process. These include Directed’s delay in bringing the proceeding, the overlap of the claims, the likelihood for inconsistent findings, and the public interest. The parties’ submissions on each of these aspects is outlined below. Isuzu styles itself as the white knight, upholding the sanctity of the Court’s processes, and defending the Court against the disrepute which follows from the unreasonable multiplication of litigation concerning essentially the same subject matter (without privity of parties).

41    The Hanwha parties submit that the 2020 Proceeding with all its idiosyncratic features, fits within either or both limbs of the test for abuse in UBS. It sets up for re-litigation a raft of conduct which has already been exhaustively litigated against Hanwha in the 2017 Proceeding, which Hanwha will have to defend again. The Hanhwa Parties and Mr Meneses also particularly draw attention to the oppression they would face by being involved in further litigation.

42    Directed on the other hand denies any abuse of process has occurred and submits that in the circumstances it has conducted itself, and the litigation, reasonably.

43    It is useful to consider the parties’ submissions thematically.

Extent of overlap

44    At the heart of Isuzu’s argument regarding abuse of process is the submission that it was inevitable for them to join the cross-respondents to the 2020 Proceeding, “closing the circle” by repeating the same allegations concerning misrepresentation that Directed had made in the 2017 Proceeding.

45    Directed rejects the proposition that the joinder of the cross-respondents was inevitable. Rather, Directed characterises the joinder as a forensic decision of Isuzu, and submits that the joinder is something of a contrivance — in other words, Directed essentially submits that if Isuzu had not brought the cross-claims, it would not be making the application for a stay of the 2020 Proceeding. Directed acknowledges that there may be a common element to the underlying facts in the cross-claim, however asserts that the matters relevant to the cross-claim do not concern Directed as they are a separate and distinct issue.

46    Isuzu submits that there is very considerable overlap between the 2017 Proceeding and the 2020 Proceeding. Isuzu characterises the three sets of claims brought in the 2020 Proceeding as follows:

(a)    the SuperDAVE Conduct claims;

(b)    the SuperDAVE Confidential information and copyright claims; and

(c)    the LM18i Conduct claims.

47    As noted above, I annex Isuzu’s comparative pleadings table to these reasons.

48    Isuzu submits that the first two sets of claims were made by Directed in the same terms in the 2017 Proceeding. Isuzu also notes “substantial overlap” in respect of the third claim, and the overlapping matters in respect of that claim were known to Directed since no later than 2018. It is useful to deal with each in turn, and the submissions made in relation to them.

49    The SuperDAVE Conduct claims are outlined at [22]–[36] and [38] of the Statement of Claim in this proceeding. By these claims, Directed alleges that between June 2016 and October 2017, Isuzu and the cross-respondents took steps to further the development, marketing and supply of the SuperDAVE AV Unit to Isuzu to the exclusion of Directed; and furthermore used information obtained from Directed to develop a unit which was substantially the same (the HAU8000). In participating in this conduct, Isuzu is said to have breached the SuperDAVE Development Agreement; aided, abetted or was involved in Mr Meneses’ contraventions of various duties; and induced the Hanhwa Parties to breach various agreements.

50    Isuzu submits that the SuperDAVE conduct claims assert the same factual and legal matters as seen in the 2017 Proceeding. While acknowledging that some allegations of Isuzu’s knowledge did not appear in the 2017 Proceeding, Isuzu submits that each of the key allegations and the substantive facts from which the inference of knowledge is to be drawn was contained in the 2017 Proceeding Statement of Claim.

51    The SuperDAVE confidential information and copyright claims are outlined at [37] and [39]–[46] of the Statement of Claim in this proceeding. By these claims, Directed alleges that in developing and distributing the HAU8000, Isuzu used confidential information of Directed in contravention of the SuperDAVE Development Agreement and Isuzu’s equitable duties, and that in reproducing certain documents, Isuzu infringed Directed’s copyright.

52    Similarly to the SuperDAVE Conduct Claims, Isuzu submits that the SuperDAVE confidential information and copyright claims rely on the same factual matters set out in the 2017 Proceeding Statement of Claim. Isuzu further submits that each of the key allegations (bar one) is included in the 2017 Proceeding Statement of Claim.

53    The LM18i Conduct claims are outlined at [47]–[61] of the Statement of Claim in this proceeding, and relate to the purchase of AV units from the Hanhwa Parties after the 2017 Proceeding commenced. By these claims, Directed alleges that Isuzu breached the SuperDAVE development agreement and used Directed’s confidential information in breach of the same agreement and of the equitable duties owed to Directed.

54    Isuzu submits that the LM18i Conduct claims are related to the 2017 Proceeding, in that they are related to various allegations in the 2017 Proceeding.

55    Directed submits that while there is a common substratum of facts between it and the cross-respondents in the 2017 Proceeding, and it and Isuzu in the 2020 Proceeding, a similar consideration in ASIC v Lindberg (No 2) (2010) 26 VR 355 (Lindberg) did not lead to a finding of abuse of process.

56    Lindberg arose out of the Australian Wheat Board (AWB) scandal, in which AWB was accused of improperly paying fees to the former government of Iraq. ASIC had previously brought civil penalty proceedings against the same respondent, alleging breaches of his duties as a director and officer of the company. In those first proceedings, the allegations were confined to conduct during a certain time period. After that first proceeding was set down for trial, ASIC tried unsuccessfully three times to amend the statement of claim to add allegations arising from conduct in a different, later time period.

57    ASIC then brought a second set of proceedings against the respondent, this time dealing only with allegations arising from the later conduct. ASIC led evidence that these allegations relating to the later conduct had not been brought earlier due to its finite resources and investigative priorities, submitting that it was unable to form a view earlier as to whether the allegations could be supported by admissible evidence.

58    At first instance, the trial judge made an order permanently staying the second proceeding, holding that it constituted an abuse of process.

59    On appeal, this was overturned. The Victorian Court of Appeal (comprising Maxwell P, Buchanan and Weinberg JJA) acknowledged that there was certain overlap in the facts, but concluded at [70]:

In arriving at the conclusion that the second proceeding constituted an abuse of the court’s process, his Honour mistook the facts in important respects and failed to take into account material considerations. Our reasons may be summarised as follows. First, in treating the second proceeding as if it were an echo of the first proceeding, his Honour failed to take into account the significant distinctions between the issues in the proceedings which he had identified in the earlier amendment ruling. Secondly, in characterising as unreasonable ASIC’s conduct in failing to incorporate in the first proceeding the allegations made in the second proceeding, his Honour failed to take into account evidence which established that ASIC had properly concentrated its limited resources on instituting proceedings in respect of causes of action which were on the point of becoming statute-barred. Thirdly, we think that his Honour in assessing (un)reasonableness gave insufficient attention to the public interest in the adjudication of allegations of significant wrongdoing in the conduct of an Australian company’s foreign business.

60    Directed also relied on ASIC v Helou [2019] FCA 1634 (Helou), and submitted that while it was not on all fours with this case, it was a good example of a case where a common substratum of facts was not enough to give rise to an abuse of process. In that case, five separate proceedings had been brought before this Court relating to Murray Goulburn Co-operative Co Limited and its directors and officers, concerning non-disclosure of material information to the ASX and to the market, and misleading or deceptive conduct. The proceedings included two proceedings brought by ASIC and one by the ACCC, as well as two class actions.

61    The first ASIC proceeding sought declarations and a pecuniary penalty and was resolved by Davies J in December 2017: Australian Securities & Investments Commission, in the matter of MG Responsible Entity Limited v MG Responsible Entity Limited [2017] FCA 1531.

62    Helou was the second ASIC proceeding. It was brought against former CEO and director Mr Helou and former CFO Mr Hingle seeking declarations and disqualification orders. The ACCC proceeding was also brought against Mr Helou and Mr Hingle, seeking similar relief. Mr Helou and Mr Hingle brought an application to permanently stay or dismiss the second ASIC proceeding. In support of their application, Mr Helou and Mr Hingle relied on several matters not dissimilar to the matters relied upon by Isuzu and the cross-respondents in this case, including that ASIC could have brought the claims as part of its earlier proceeding, that the second proceeding would put the respondents to significant cost, stress, expense and forensic disadvantage, and that allowing the second proceeding would be inconsistent with the overarching purpose expressed in s 37M of the FC Act.

63    While Beach J ultimately dismissed the stay applications, he did not endorse ASIC’s conduct. At [267] his Honour concluded:

I cannot say that ASIC’s strategy was wholly unreasonable, but I can say that it was undesirable.

64    And continued at [269]:

In terms of whether the administration of justice has been brought into disrepute, ASIC’s conduct has sailed close to the line.

Directed’s knowledge and delay

65    Another central argument made in support of Isuzu’s application is that Directed had the requisite knowledge to join Isuzu (or otherwise bring proceedings against it) to the 2017 Proceeding. Isuzu essentially submits that the failure to do so, and the resultant bifurcation of proceedings, has been a tactical move on Directed’s part that is unreasonable having regards to the timely and efficient administration of justice.

66    Isuzu suggests that the alleged delay in bringing the 2020 Proceeding has been a deliberate staging of the litigation for the commercial self-interest of Directed. Isuzu submits there has been no evidence from Directed as to its motivation for the timing. Isuzu relies on a trail of correspondence between the parties (which I will elaborate on below) to demonstrate how Directed had knowledge of facts sufficient for it to claim against Isuzu at some point in 2018.

67    In response, Directed submits that it was not in a position to sue Isuzu until mid-2019. Directed takes issue with its conduct being described as “staged”; and the attendant notion that it has knowingly kept an action up its sleeve to be deployed under circumstances where an alternative case has been run and lost.

68    Directed explains how the voluminous discovery in the 2017 Proceeding impacted any delay and its evolving knowledge of Isuzu’s role. The Hanhwa Parties discovered some 82,000 documents, the bulk of which were in Korean. In October 2019 Hanhwa put on evidence as to the origin of the HAU8000 and the LM18i, which Directed found was “convoluted”. Directed then identified a tranche of 220 documents in the discovery to translate (at a cost of some $62,000). Certain relevant documents that coloured the relationship between Isuzu and Hanhwa were only translated at this point, just one month out from trial.

69    Directed also submits that it was justifiably attempting to preserve its commercial relationship with Isuzu. In November 2017, it had been told that Isuzu had quarantined the old HAU8000 stock and would not sell any more units. Directed participated in the subsequent tender process (which it now alleges was rigged). Directed was also told by Isuzu in March 2018 that its purchase of units from Hanhwa was an interim measure, leading Directed to believe that Isuzu may well enter supply arrangements with Directed in the near future.

70    Directed submits that if there is any delay, it is only from July 2019 to August 2020, and points to several matters to justify why it did not commence 2020 Proceeding at what Isuzu says was the first opportunity. These include:

(a)    Any joinder application may have been unsuccessful given the proximity to the trial date in the 2017 Proceeding;

(b)    If leave were granted to join Isuzu, the hearing of the 2017 Proceeding (set down for December 2019) would likely be significantly delayed to accommodate further pleadings, discovery, evidence, experts, and potentially mediation — and the public interest in not putting off a hearing in complex, long-running and multi-party litigation just to bring late-discovered claims against a new party;

(c)    Relatedly, parties in the 2017 Proceeding not involved in the 2020 Proceeding (for example Mr Mills and the Gridtraq Parties) would particularly face unreasonable and significant delay and expense;

(d)    There is a question as to whether Mr Meneses or the Hanhwa Parties should have called Isuzu as witnesses in the 2017 Proceeding; and

(e)    There is public interest in viewing litigation as a last, and not first, resort.

Correspondence

71    Isuzu and the cross-respondents submit that Directed had knowledge of the facts giving rise to the 2020 Proceeding no later than 22 November 2018, and could have put on a reasonable pleading of the issues by mid-2019. On the other hand, Directed asserts that it was not aware of all the facts giving rise to the 2020 Proceeding until mid-2019, by which time the 2017 Proceeding had been set down for trial.

72    Isuzu and the cross-respondents rely on several pieces of correspondence in support of their submission regarding Directed’s knowledge of Isuzu’s conduct and its unreasonable delay. It is convenient to set out some of that correspondence between Directed, Isuzu, and the parties’ legal representatives to demonstrate the evolving situation.

73    On 2 January 2018, Directed wrote to Isuzu after the parties’ lawyers had discussed providing Isuzu with information regarding the 2017 Proceeding and assurances about Directed’s supply of products to Isuzu. Directed also enclosed the 2017 Proceeding statement of claim. In this letter, Directed notified Isuzu of the allegation that:

Mr Meneses has… conspired with the Hanhwa Parties to divert the DIR 8000 or Super DAVE business opportunity to Hanhwa (marketed to Isuzu by Hanhwa as HAU8000 or ICC).

74    Directed also informed Isuzu that while the Hanhwa Parties are permitted to continue the supply of the HAU8000 products to Isuzu, Directed would seek at trial to restrain Hanhwa from supplying the products.

75    Counsel for the Hanhwa Parties submits that this letter, in particular the extracted paragraph above, demonstrates that Isuzu’s role was well known by this point in 2018. Additionally, counsel characterised the reference to seeking to restrain supply as a shot across the bows.

76    On 17 May 2018, Directed wrote to Isuzu outlining several meetings held between January and March 2018. In the March 2018 meeting, Isuzu had advised Directed that it would be sourcing AV units directly from Hanhwa in the future. Directed reiterated that they would continue to pursue the Hanhwa Parties in the 2017 Proceedings. While Directed expressed disappointment with Isuzu, it emphasised that:

We stand ready to support Isuzu however, should the Hanhwa supply program come into jeopardy and we look forward to being able to again become the technology supply partner of choice for Isuzu Australia Limited.

77    Counsel for the Hanhwa Parties said this letter reflected the “carrot and the stick” approach, which continues throughout the correspondence. That is, while Directed’s “disappointment” is evident, Directed reiterates that it can continue to supply to Isuzu. In other words, Directed had the knowledge that enabled it to sue Isuzu but would rather retain them as a customer.

78    On 22 May 2018, Directed’s lawyers wrote to Ms Hiroko Yaguchi, then Managing Director and CEO of Isuzu Australia Limited. The letter outlines the 2017 Proceedings and the allegations made by Directed, and concludes:

The news that Isuzu, a company with high standing and ethical reputation, will be selecting Hanhwa to supply the new AV Unit given all the circumstances above involving illegal, immoral and unethical behaviour, is therefore very disappointing and quite frankly incredible to Directed.

…

We are instructed to emphasise however that Directed will stand ready to support Isuzu, should the Hanhwa supply program come into jeopardy. Directed hopes to be able to again become the technology supply partner of choice for Isuzu.

79    On 18 June 2018, Isuzu’s lawyers responded to Directed’s lawyers.

We and our client are concerned at the contents of your letter and the various assertions it makes with respect to our client. In particular, while your letter contains no direct or unambiguous allegations against our client, your letter does appear, at least implicitly, to make a number of assertions against our client and its directors and officers.

80    The Hanhwa Parties submit this letter demonstrates that by this point in time, Isuzu had rightly perceived the implicit accusations of wrongdoing against it.

81    On 25 June 2018, Directed’s lawyers responded to Isuzu’s lawyers.

Our Letter did not make and Directed does not make any allegation or assertion that Isuzu has engaged in or been complicit in any wrongful conduct.

…

As communicated in Our Letter, Directed will stand ready to support Isuzu, as it has done for many years, in respect to its supply needs and hopes to be able to again become the technology supply partner of choice for Isuzu.

82    The Hanhwa Parties note that in this letter, Directed tries to defuse the suggestion that it has made allegations against Isuzu and that it somewhat softens its tone.

83    There was no further correspondence for some six months. On 19 December 2018, Directed’s lawyers again wrote to Isuzu’s lawyers. This letter provided Isuzu with an update on the status of the 2017 Proceeding, in which Directed had just been granted leave to file an amended application and statement of claim, including a schedule of amended particulars. The letter also outlined Directed’s intention to issue a subpoena to Isuzu, which was ultimately done on 21 December 2018.

84    Directed’s lawyers said:

There are certain matters in this summary which are of great concern to Directed and which it considers warrants an explanation from Isuzu in writing as to how they have occurred.

…

Directed considers it is entitled to a fulsome explanation in writing from Isuzu of how and why the conduct of Isuzu between June 2017 and November 2017 referred to above occurred and why at no stage did anyone from Isuzu contact Mr Siolis or Mr Tselepis to ask whether it consented to the actions of Mr Meneses, Mr Mills, Mr Palone, Hanhwa and/or Mr Ryan Lee in that period.

85    At the hearing, counsel for Directed emphasised that while the amended particulars enclosed with the 19 December 2018 letter concerned Isuzu, they were limited to matters constituting the 2017 HAU8000 Conduct. At that time, the HAU8000 unit was no longer being sold, so Directed would have had a very limited, if any, damages claim.

86    In contrast, counsel for Isuzu submits that prima facie, the December 2018 letter indicates Directed’s position that unless Isuzu satisfactorily explains the matters, there is a possibility, probability or near certainty that Directed would have a grievance against Isuzu warranting consideration as to whether or not to sue. Counsel for Isuzu also drew attention to the lengthy summary of Directed’s knowledge of potentially “nefarious connections” between Isuzu and the cross-respondents.

87    On 3 May 2019, Directed’s lawyers again wrote to Isuzu, this time more explicitly exploring the possibility of claiming against Isuzu:

Directed is giving serious consideration as to what potential claims it has as against Isuzu arising from its role in the above conduct, however it is obviously very reluctant to commence such an action and is conscious of the work the two entities put into building a successful relationship over the 9 years before the above events occurred. In the event the Hanhwa Parties are restrained from supplying the New Hanhwa AV Unit to Isuzu, then Directed may well be a potential option for future supply of products to Isuzu in the future.

Directed believes it is in both its and Isuzu’s best interests to have a meeting “to seek to clear the air”, without prejudice if necessary, with or without lawyers.

88    Counsel for Isuzu submits that this letter is merely an evolution in the parties’ correspondence, rather than demonstrating any radical departure or advent of new knowledge from the position in December 2018. That is, the May 2019 letter does not demonstrate any new piece of knowledge enabling Directed to sue Isuzu.

89    Counsel for the Hanhwa Parties also drew attention to the following passage from the 3 May 2019 letter:

It appear clear to Directed, however, that the new Hanhwa AV unit is the HAU8000 with a new fascia.

90    Even being “generous” to Directed, the Hanhwa Parties submit that the letter shows that Directed had the “final piece of the puzzle”, yet waited another 15 months before commencing proceedings against Isuzu.

91    A further letter, dated 5 July 2019, was submitted by Directed to demonstrate that it was only then when it acquired full knowledge of the circumstances permitting it to bring a case against Isuzu.

92    Isuzu submits that any submission by Directed that it did not have sufficient information available to it until mid-2019 to decide to sue Isuzu, and that this justifies the bifurcation of the proceedings, should be rejected. The claims which Directed makes against Isuzu in the 2020 Proceeding are based on the same factual matters as the claims which Directed made against the cross-respondents in the 2017 Proceeding. The only additional element is the relevant knowledge or participation of Isuzu in allegedly contravening conduct. The information which Directed relies upon in this respect was available to it well before mid-2019, and no later than 22 November 2018 — when it filed an amended statement of claim bringing the corresponding LM18i claims against the Hanhwa Parties. In any event, in light of the problems created by the bifurcation of the proceedings, including the “well nigh inevitable” closure of the circle by joinder of the cross respondents, it could not be said that the approach taken by Directed in these two proceedings was reasonable.

Delay in bringing this application

93    Directed also submits that Isuzu and the cross-respondents unreasonably delayed in bringing the application for a stay of the 2020 Proceeding. Directed highlights the fact that Isuzu waited some 10 months, and until after the mediation, to bring the application. This was said to be a tactical manoeuvre and not indicative of a party facing unjustifiable oppression.

94    Directed submits that Isuzu foreshadowed the stay application in correspondence between the parties contemporaneous to the initiation of the 2020 Proceeding on 13 August 2020. Directed also asserts that Isuzu raised the prospect of an application for abuse of process at the first case management hearing in this proceeding on 21 September 2020 (and in their written submissions filed ahead of that hearing on 18 September 2020).

95    This application was brought on 22 June 2021. Directed submits that Isuzu’s delay is “completely unexplained” and weighs heavily against the application, and notes the significant costs incurred prior to the dismissal application.

96    Isuzu submits that Directed’s claims regarding delay are irrelevant to the question for the court — that is, whether the 2020 Proceeding constitutes an abuse of process — as it is not a discretionary matter. Even so, Isuzu says there was no delay in bringing the application and submits that it would never be unreasonable to wait to see a pleading in order to determine areas of overlap; nor to wait until after mediation to make such an application given the self-evident benefits of a successful mediation. Additionally, in his fourth affidavit, Mr Farquhar gives evidence that Isuzu had said at the first case management hearing that proper pleadings were required to determine whether or not the claim was an abuse of process, and that this application was filed within three months of the close of pleadings.

97    Relatedly, Directed also notes that Isuzu and the Hanhwa Parties did not bring an application for consolidation of the two set of proceedings under r 30.11 of the FC Rules. Directed submits that Isuzu waited until it was too late for that and now brings this stay application.

98    Isuzu and the cross-respondents respond that as at August 2020, the evidence had just finished in the 2017 Proceeding extended trial (after some 39 hearing days), so it was no longer an option to consolidate the proceedings.

Potential for inconsistent findings

99    Isuzu submits that Directed is seeking inconsistent findings in the 2017 Proceeding and the 2020 Proceeding.

100    Isuzu refers to paragraph [81] in the third further amended Statement of Claim in the 2017 Proceeding, which relates to alleged misrepresentations made by Mr Meneses, Hanhwa Aus and Mr Lee to Isuzu. Paragraph [81] states:

Since at least June 2017, in furtherance of the RA 7000 Joint Venture and SuperDAVE Conduct, Meneses and Ryan Lee, represented to Isuzu that:

(a)    Meneses was no longer employed by Directed OE;

(b)    Meneses was a director of Hanhwa Aus; and

(c)    Meneses was lawfully able to be involved in the supply by Hanhwa Aus of the HAU 8000 products to Isuzu in competition with Directed OE’s supply of the DAVE products.

101    Isuzu submits that this is inconsistent with allegations in the 2020 proceeding: namely, the overarching allegation that Isuzu engaged with the cross-respondents, in circumstances where it knew or ought to have known that Mr Meneses was not permitted to be involved in the supply of the HAU8000 by Hanhwa to Isuzu, and that Isuzu was a knowing participant in the cross-respondents’ various breaches of duties.

102    Isuzu also submits that the other areas of significant overlap between the proceedings outlined above increase the likelihood of inconsistent findings in the 2017 Proceeding and the 2020 Proceeding.

103    Counsel for Hanhwa made brief submissions in support of Isuzu’s position, noting that should the 2020 Proceeding proceed to trial after a final judgment is handed down in the 2017 Proceeding, either side may be put in the position of arguing a case which is inconsistent with findings on contested facts in the 2017 Proceedings. Counsel noted the difference between a case like the present and a case brought by a regulator (for example ASIC v Helou) where there has been a statement of agreed facts.

104    Directed rejects the assertion of inconsistent claims in the two proceedings. Directed asserts that the 2017 Proceeding misrepresentation claim at [81] (extracted above) is a statutory claim directed to the conduct of Mr Meneses and Mr Lee. On the other hand, the knowing assistance case in equity in the 2020 Proceeding has a different focus: Isuzu’s knowledge of surrounding circumstances which would have indicated the dishonest and fraudulent nature of Mr Meneses and Mr Lee’s conduct to an honest and reasonable person, and that such knowledge ought to have precluded Isuzu from entering into the supply agreement with Hanhwa.

Oppression and prejudice

105    Counsel for Mr Meneses and the Hanhwa Parties both emphasised the oppression their clients will face, having been parties to the 2017 Proceeding.

106    The Hanhwa Parties drew attention to several matters in support of its submission that the 2020 Proceeding causes unjustified oppression:

(a)    The similarities between the Statements of Claim and the issues raised in both proceedings mean that the Hanhwa Parties would be vexed by having to deal with claims that should be resolved by the 2017 Proceeding;

(b)    The likelihood of witnesses for the Hanhwa Parties being required for further cross-examination in the 2020 Proceeding;

(c)    The significant amount of time in which the Hanhwa Parties have been “unwilling participants” in the litigation, approximately four years; and

(d)    The significant expense to Hanhwa in defending another proceeding after having spent some $7m defending the 2017 Proceeding, noting that Hanhwa Korea was now in an administration-like arrangement.

107    Counsel for Mr Meneses made submissions along similar lines, highlighting that Mr Meneses will likely feel greater impacts of oppression due to him being an individual rather than a corporation. Factors causing the oppression include:

(a)    The large expenses likely to be incurred by Mr Meneses in defending the 2020 Proceeding, after having spent over $1.3m defending the 2017 Proceeding and having had his assets frozen for a considerable period;

(b)    Mr Meneses will be subject to the stress of litigation for many years to come, which began when his home was searched in October 2017; and

(c)    Mr Meneses will have to spend significant time undertaking pre-trial and trial processes, which will divert him from his occupation and be time-consuming and costly.

108    Isuzu also notes that, through no fault of Isuzu, the cross-respondents will face significant oppression by reason of the 2020 Proceeding.

109    In response, Directed submits that the legal costs associated with the 2017 Proceedings do not constitute oppression, especially where, on Directed’s view, the cross-respondents will be held liable. Directed further submits that there is no special prejudice faced by the cross-respondents, and that any issues arising from witnesses having to give further evidence can be managed through case management.

110    Directed also draws attention to the fact that Isuzu has suffered no oppression, having benefitted from not participating in the 2017 Proceeding.

Public interest

111    Each of the parties submit that the public interest lies in their favour.

112    Isuzu emphasises that the two proceedings will likely bring the administration of justice into disrepute in terms of being inefficient, careless of costs and profligate in its application of public moneys.

113    Directed, on the other hand, submits that there is public interest in hearing and determining the claim, particularly as the 2020 Proceeding contains allegations of significant wrongdoing by Australian companies. Directed submits that the public expectation is that a wronged party ought to be entitled to bring to account those who knew of and participated in the wrongdoing.

114    In response, the Hanhwa Parties submit that Directed’s reliance on the public interest is misconceived. Counsel noted that this was a private dispute between two business entities (as opposed to a proceeding brought by a regulator such as Lindberg or Helou), and that the real public interest (in the sense recognised by Gageler J in UBS AG at [70]–[71]) lay in the timely and efficient administration of justice.

Disposition

115    For the reasons below, I consider that it is appropriate to stay this application until at least 28 days after the liability judgment in the 2017 Proceedings is handed down. The very existence of the 2020 Proceedings at this point is not sufficient to engage abuse of process remedies, and it would be premature to dismiss the 2020 Proceedings at this point.

116    Dealing first with submissions on delay, I acknowledge that prima facie, there has been some delay in Directed bringing the 2020 Proceeding against Isuzu. Directed was likely armed with sufficient relevant facts by the time of the 19 December 2018 letter, where it requested a “fulsome” response to a number of allegations. I accept Isuzu’s submission that Directed could have pleaded the case put against Isuzu by mid-2019.

117    However, there is a further question as to whether Directed should have brought the proceedings (or otherwise plead the case by way of joinder) earlier. Isuzu’s case in the present application involves an element of hindsight analysis. The 2017 Proceeding, as outlined above, was a very large case involving many other parties and issues. Directed points to the inconvenience of potentially putting off the hearing of the 2017 Proceeding for a year and the cost, expense and delay that would cause the other parties. Additionally, I note the parties in 2019 had no idea that COVID-19 was about to hit Australia and cause further delays in the court system and the hearing of the 2017 Proceeding.

118    I also acknowledge the various reasons provided by Directed for not joining the Isuzu to the 2017 Proceeding and for bringing the 2020 Proceeding when it did, and particularly observe that it was understandable for Directed to try to preserve its commercial relationship with Isuzu. While the line may not always be clear as to what constitutes an unjustifiable delay, in many cases there is a clear benefit in attempting to repair commercial relationships rather than jumping to litigation at the first opportunity.

119    In an ideal world, Isuzu would have been joined to the 2017 Proceeding, however, I do not think it is appropriate that Directed could potentially have no or limited recourse in the event that Isuzu is found to have engaged in any wrongdoing. So, I consider it my role at this stage to determine the best way forward, with the least possibility for repetition and oppression.

120    In terms of overlap, Isuzu and the cross-respondents have pointed to several key areas of overlap between the 2017 Proceeding and the 2020 Proceeding. While I do not consider it necessary to wholly consider the intricacies of the overlap, I note that there are significant areas of overlap that create the possibility of substantially re-litigating points in the 2017 Proceeding, or the possibility of inconsistent findings between the two proceedings.

121    However, this is not merely a re-run of the 2017 Proceeding. The 2017 Proceeding had many other parties and many other claims unrelated to Isuzu and the issues in the 2020 Proceeding. This proceeding is a small subset of the 2017 Proceeding and goes to Isuzu’s knowledge of certain conduct. Different relief is sought.

122    Clearly, the greatest danger for an abuse of process arises in the situation where Directed is unsuccessful in the 2017 Proceeding and seeks to re-litigate the same issues in this proceeding, but with different and improved evidence and finessed arguments. That cannot be allowed. However, this concern is still a hypothetical, so it would be premature to dismiss the 2020 Proceeding on this basis.

123    If Directed is successful in the 2017 Proceeding, it should not be denied a claim against Isuzu. In that event, the 2020 Proceeding can be run with interventionist case management to reduce duplication and the scope for oppression. For example, the case could be run with limited evidence and cross-examination directed squarely towards the knowledge of Isuzu.

124    I do note, however, the possibility that Isuzu would be denied a proper chance to defend itself on certain points of liability. Because Isuzu was not present at the trial of the 2017 Proceeding, it may want to fight findings as to the liability of Mr Meneses rather than its knowledge of his conduct. It would be unfair to deny Isuzu that opportunity, so it is necessary to consider how best to balance any prejudice.

125    Taking the course I order here, the possibility of inconsistent findings on the same causes of action is removed: the 2020 Proceeding will not be heard until after judgment is handed down in the 2017 Proceeding. In the circumstances, I think it is also appropriate to say that at the hearing of the 2020 Proceeding:

(a)    Directed will not be permitted to re-litigate any point on which it did not succeed on in the 2017 Proceeding; and

(b)    Should Mr Meneses or the Hanhwa Parties have to seriously engage or be cross-examined, their costs should be recoverable.

126    In the circumstances, it is appropriate to stay the strike-out application until at least 28 days after the liability judgment is handed down in the 2017 Proceeding. At that point, it will become evident whether or not there is a case against the cross-respondents. If there is no case, it will likely follow that the 2020 case should fail. Instead of dealing with a hypothetical, the Court will know the result and be in a position to evaluate the likelihood of any abuse of process, and case manage the 2020 Proceeding accordingly to ensure there is no abuse of process or oppression.

Associate:

Dated:    23 March 2022

Annexure A

Isuzu’s comparison of pleadings in 2020 Proceeding and 2017 Proceeding

SCHEDULE OF PARTIES