Anshun Estoppel Rejected: Timbercorp Finance Pty Ltd (in liquidation) v Collins [2016] HCA 44
Wednesday 9 November 2016 @ 1.41 p.m. | Legal Research
The High Court has unanimously dismissed appeals from the Court of Appeal of the Supreme Court of Victoria, holding that investors in a previous group proceeding against the Timbercorp Group are not precluded by estoppel or abuse of process from raising issues specific to them in subsequent proceedings. French CJ, Kiefel, Keane and Nettle JJ wrote a joint judgment while Gordon J wrote a separate but concurring opinion. The majority opinion concluded that “raising the defences in these proceedings can in no way be said to amount to an abuse of process. To the contrary, the preclusion of the respondents' defences to the appellant's claims would be unwarranted in principle and therefore unjust.” [at 73]
Facts
The appellant in the case, Timbercorp Finance Pty Ltd (“Timbercorp Finance”), provided loans to investors in horticultural and forestry projects which were operated as managed investment schemes by Timbercorp Ltd (of which Timbercorp Finance was a subsidiary). The companies in the “Timbercorp Group”, including these two and their successors, were placed in liquidation in June 2009.
The respondents in the case had applied for loans from the appellant between May and October 2008. They had also participated in an earlier group proceeding brought against the Timbercorp Group in October 2009. This proceeding was unsuccessful at trial and on appeal.
The current proceeding commenced when the liquidators brought an action alleging that the respondents had defaulted on their payments under the loan agreements in 2009. The appellants argued that the respondents are precluded from raising their filed defences either by Anshun estoppel, or because of an abuse of process.
Decision
The High Court outlined the principle in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 (“Anshun”) as:
“the respondents should be estopped from pursuing their defences because they could and should have raised them for determination in the group proceeding.” [at 5]
The majority judgment noted that Anshun says that estoppel will not exist “unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it" (emphasis added)” [at 56].
Their Honours found:
“By way of contrast, in these proceedings, it could hardly be said to have been expected that the respondents would raise their individual issues about their loan agreements referred to above in the group proceeding, where the common issues were undisclosed risks and misrepresentations affecting the entry of investors into the schemes. The only connection between those matters and their loan agreements was the relief sought regarding the enforceability of the loan agreements. There was no issue in the group proceeding about the validity of the loan agreements which would have made the claims in the respondents' defences relevant in the group proceeding.” [at 58]
They also dismissed the argument that the defences would be an abuse of process, saying:
“At most it may be said that the respondents' claims were not brought to the attention of the Court. It could not be said that the failure to do so affected the case management decisions open to the Court. There is no reason to suppose that knowledge of the respondents' claims would have altered the course that the Court took.” [at 73]
TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.
Sources:
Timbercorp Finance Pty Ltd (in liquidation) v Collins [2016] HCA 44 & judgement summary
