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  4. SEQ Tourism Projects Pty Ltd v Pioneer Australia Pty Ltd - [2020] QSC 310

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SEQ Tourism Projects Pty Ltd v Pioneer Australia Pty Ltd[2020] QSC 310

SEQ Tourism Projects Pty Ltd v Pioneer Australia Pty Ltd[2020] QSC 310

SUPREME COURT OF QUEENSLAND

CITATION:

SEQ Tourism Projects Pty Ltd v Pioneer Australia Pty Ltd [2020] QSC 310

PARTIES:

SEQ TOURISM PROJECTS PTY LTD ACN 609 024 599

(Plaintiff)

v

PIONEER AUSTRALIA PTY LTD ACN 128 784 725

(First Defendant)

SPA INVESTMENTS PTY LTD ACN 134 314 631

(Second Defendant)

FILE NO/S:

BS 3193 of 2020

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

2 October 2020

DELIVERED AT:

Brisbane

HEARING DATE:

28 May 2020

JUDGE:

Brown J

ORDER:

The order of the Court is:

  1. That proceeding number 3193 of 2020 is stayed unless and until proceeding number 5692 of 2020 is determined or until further order.
  2. The costs of the application are reserved.
  3. Liberty to apply is granted upon three business days’ notice
  4. The application is otherwise adjourned to a date to be fixed.

CATCHWORDS:

ESTOPPEL – ESTOPPEL BY JUDGMENT – ISSUE ESTOPPEL – OTHER PARTICULAR CASES – where judgment entered in favour of defendants in previous proceedings – where claim of sale of undervalue unsuccessful – where plaintiff not a party – where cause of action brought by plaintiff on basis of second mortgage claims sale at undervalue – whether plaintiff privy in interest of plaintiff by counterclaim based on legal interest in separate proceedings – whether plaintiff should be estopped from bringing proceedings

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – OTHERWISE ABUSE OF PROCESS – where previous proceedings claimed defendants sold property at undervalue – where plaintiff not involved in previous proceedings – where sole director and shareholder of plaintiff personally involved in previous proceedings – where sole director and shareholder of plaintiff acquired second mortgage shortly after previous proceedings commenced – where cause of action similar to previous proceeding – where plaintiff offered undertaking not to proceed until previous proceeding set aside – whether proceedings an abuse of process

Property Law Act 1974 (Qld) s 88

Uniform Civil Procedure Rules 1999 (Qld) r 16, r 171

BHP Billiton (Olympics Dam) Corporation Pty Ltd v Steuler Industriewerke GmbH [2009] VSC 322, considered

Clone Pty Ltd v Players Pty Ltd (in liq) (2018) 264 CLR 165, considered

Ramsay v Pigrim (1968) 118 CLR 271, considered

Tomlinson v Ramsey Food Processing (2015) 236 CLR 507, considered

Wentworth v Rogers (No 5) (1986) 6 NSWLR 534, considered

COUNSEL:

A Morris QC with L Jurth for the Plaintiffs

M Martin QC with D Ferraro for the Defendants

SOLICITORS:

Direct access for the Plaintiffs

Gall Standfield & Smith for the Defendants

Introduction

  1. [1]
    A statement of claim has been filed by SEQ Tourism Projects Pty Ltd (SEQ) against each of the defendants by which it claims, as an assignee of a second mortgage of a property known as the “Pineapple Patch”, that the defendants sold the property at an undervalue on 21 March 2014 (SEQ Proceedings). The statement of claim was filed but not served. However, it came to the second defendant’s knowledge that such a claim had been filed.
  2. [2]
    There has previously been litigation in this Court brought on behalf of the Mortgagor of Pineapple Patch, YIC Industrial Pty Ltd (YIC) and one of the guarantors of the mortgage, Mrs Rory Quinn, by way of counterclaim against the defendants[1] claiming sale at an undervalue which was unsuccessful, both at first instance and upon appeal (the YIC Proceedings) and judgement was given in favour of the defendants against Mrs Quinn as guarantor. The first and second defendants apply to this court for an order striking out the statement of claim as an abuse of process or alternatively, permanently staying these proceeding as an abuse of process, on the basis that the matters the subject of the statement of claim have already been litigated. [2]
  3. [3]
    Mr Quinn, the sole director of SEQ stated that the statement of claim in these proceedings was filed in order to protect the plaintiff’s claim from limitation issues, and that it was not intended to pursue the claim unless the judgments in the YIC Proceedings were set aside. A signed statement of claim settled by Counsel seeking to set aside the previous judgements on the basis they were procured through fraud amongst other relief (the Setting Aside Proceedings) was attached to affidavits of Mr and Mrs Quinn on 27 May 2020. Relief is also sought setting aside the guarantee provided by Mrs Quinn. Mrs Quinn deposes to the facts contained in the statement of claim being true and correct to the best of her information. Mrs Quinn is bankrupt and claims that the trustee in bankruptcy had no objection to her becoming a party to the proposed proceeding in her own name. That is an inaccurate description of the position and is a matter to which I will return.
  1. [4]
    In short, the allegations of fraud arise out of the fact that the mortgage documents, the subject of the first mortgage, provided that one of the mortgagees was “Pioneer Australia Pty Ltd ACN 073 498 905” (Deregistered Pioneer). In fact that company had been deregistered at that time. However, “Pioneer Australia Pty Ltd ACN 128 784 725” (Registered Pioneer) was registered. Subsequently, some five months later Mr Gall of Gall Standfield & Smith (GSS) sought to correct the name of the mortgagee to the Registered Pioneer and corrections were made on the title of the Pineapple Patch property at Yeppoon.[3] YIC and Mr and Mrs Quinn were not informed of that correction. The title search however notes that a correction was made referring to “Correction of Name” and noting the details of the Registered Pioneer, the new mortgage dealing number and the cancellation of the previous dealing number with the Deregistered Pioneer and Spa Investments Pty Ltd (Spa) as parties. Subsequent variations of the mortgage signed on behalf of YIC and by Mr and Mrs Quinn referred to the mortgagee Registered Pioneer. A handwritten amendment was initialled by Mr and Mrs Quinn which corrected the mortgage number to 712810004 which was the new mortgage number allocated after the correction was made and which was recorded on the title search. After YIC had defaulted under the mortgage a notice to remedy default and to exercise the power of sale were issued which referred to Spa and the Registered Pioneer.
  1. [5]
    The YIC Proceedings were subsequently issued against Mrs Quinn as guarantor where the plaintiffs were Spa and the Deregistered Pioneer. In the counterclaim by Mrs Quinn and YIC they were the defendants. Mr Reynolds who was responsible for the conduct of the YIC Proceedings (BS No. 1550 of 2017) deposed to the fact that he was responsible for identifying the Deregistered Pioneer as the plaintiff by mistakenly recording the ACN. The allegations as to the Deregistered Pioneer being a mortgagor and the first and second variations of the mortgage were admitted by Mrs Quinn. The judgments at first instance and on appeal and the orders made also identify the deregistered Pioneer as the relevant party.
  2. [6]
    In very simplified terms Mrs Quinn and YIC allege that the solicitors and directors of Spa and Registered Pioneer sought to conceal the fact that the Deregistered Pioneer had been referred to in the mortgage documents and that, at the time when proceedings were commenced in the name of the Deregistered Pioneer, either they knew or were recklessly indifferent to the truth that the company did not exist, but pretended that the company did exist and the documents executed in favour of the Deregistered Pioneer were valid.[4]
  3. [7]
    The defendants contend that the reference to the wrong ACN was simply a mistake and nothing more than a misnomer which would not render the loan documentation or the proceedings invalid. Further, the defendants contend that the discovery of the ACN being the Deregistered Pioneer on the mortgage documents is neither fresh evidence nor new facts given that the first and second variations and title search were in evidence in the original proceedings.
  4. [8]
    The Setting Aside Proceedings (BS No. 5692 of 2020) were filed as separate proceedings the day before the present application was heard. On that same day, Mr Quinn also offered to provide an undertaking to the Court not to serve the SEQ Proceedings on either of the defendants until the Setting Aside Proceedings had been commenced and determined, or until further order of the court. That was not accepted. The offer was renewed at this application.
  5. [9]
    Counsel for SEQ conceded that the SEQ Proceedings may arguably be characterised as an abuse of process whilst the judgments in the YIC Proceedings stands (although it contends that that ultimately would be the incorrect characterisation). SEQ submits that the defendants should not succeed in obtaining a summary determination of the matter given that:
    1. (a)
      The proceeding has not been served on the defendants;
    2. (b)
      SEQ clarified by correspondence that there was no intention to serve the SEQ Proceedings on the defendants;
    3. (c)
      SEQ has advised the defendants that:
      1. (i)
        The proceeding was only filed to protect the potential time limitations; and
      2. (ii)
        That SEQ considered it proper only to serve and pursue the proceeding in the event that the judgment in the YIC Proceedings is set aside;
    4. (d)
      SEQ, through its sole director Mr John Quinn, has given an undertaking not to serve the proceeding on either of the defendants until the Setting Aside Proceedings have been determined;
    5. (e)
      The balance of convenience therefore favours:
      1. (i)
        The court accepting SEQ’s undertaking;
      2. (ii)
        Further, or alternatively, ordering an interim stay of the SEQ Proceedings until the Setting Aside Proceedings have been determined or further order;
    6. (f)
      The balance of convenience does not favour summary determination of the SEQ Proceedings in the manner sought in the application.
  6. [10]
    The defendants contend that, notwithstanding the filing of the Setting Aside Proceedings, the Court should proceed to determine the application on the basis that the Setting Aside Proceedings are doomed to fail, and claim that in any event, the court could decide their application as a discreet issue of whether the SEQ Proceedings were an abuse of process.
  7. [11]
    The defendants seek to strike out the SEQ statement of claim or seek an order that these proceedings be permanently stayed, either pursuant to r 16(g) or r 171(2) of the Uniform Civil Procedure Rules 1999 (Qld) (the UCPR) or alternatively pursuant to the inherent jurisdiction of the Court. Given they seek relief by way of summary determination they must meet a high bar. The Court must grant such relief only in the clearest of cases, akin to the summary judgment where the Court must be satisfied that there are no real prospects of a claim succeeding.[5] The power of a court to dismiss proceedings as an abuse of process must also be exercised with extreme caution.[6]
  8. [12]
    The matter was the subject of considerable argument and submissions by counsel and there was some limited cross-examination of Mr Quinn when heard in applications. I reserved judgment in this matter to consider it further.

Chronology of events

  1. [13]
    In December 2007 the Registered Pioneer was registered.
  2. [14]
    In June 2008 the Deregistered Pioneer was deregistered. It had the same registered address as the Registered Pioneer and shared a common director and company secretary, Mr Stefanowicz.
  3. [15]
    In October 2009, the Registered Pioneer and Spa lent monies to YIC in the amount of $3.5 million. A mortgage was granted over the Pineapple Patch with the mortgage specifying SPA and the Deregistered Pioneer as mortgagees as tenants in common in half shares. The mortgage was registered on 21 October 2009. A guarantee was given by Rory Quinn and John Quinn. There is no issue that the monies were in fact lent.
  4. [16]
    I note that given that the Deregistered Pioneer had been deregistered by that point, any monies must have come from the Registered Pioneer to the extent that it provided monies.
  5. [17]
    On 26 March 2010, a form 14 general request to record a correction of a name of the registered corporation was registered on the title of the Pineapple Patch seeking to have the name of the mortgagee corrected from “Pioneer Australia Pty Ltd ACN 073 498 905” to “Pioneer Australia Pty Ltd ACN 128 784 725”.
  6. [18]
    A statutory declaration was sworn by Mr Gall stating that the information as to the mortgagee Deregistered Pioneer was incorrect and attached the company search of the Registered Pioneer. The defendant’s solicitor, YIC, and Mr and Mrs Quinn were not notified of the change sought to be made.
  7. [19]
    In the Setting Aside Proceeding, it is claimed that the statutory declaration as to the basis for the correction was false insofar as it stated “the information contained in item 4 of the mortgage was shown incorrectly and the above mortgage should have been stated as ‘Pioneer Australia Pty Ltd ACN 128 784 725’”. It is said to be false on the basis that it was not a typographical error, although according to Counsel for SEQ it is not alleged that it is fraud. In any event, given that the basis of the correction was clear on its face it is difficult to see that in failing to be more expansive about the correction the statutory declaration was false.
  1. [20]
    On 29 March 2010, Angas Securities Limited advanced approximately $12 million to the Quinn Group. That was secured by the second mortgage over the Pineapple Patch at Yeppoon.
  2. [21]
    On 15 April 2010, the second mortgage between YIC and Angas Securities was registered.
  1. [22]
    On 30 June 2010, according to the setting aside statement of claim, Mr Gall retired.
  2. [23]
    The first mortgage between YIC and the defendants went into default and on 3 May 2011, following which a notice of exercise of power of sale by the Registered Pioneer and Spa was issued. On 11 March 2014, the mortgagees (namely the Registered Pioneer and the Spa) exercised a power of sale and sold the land. The contract of sale nominated the Registered Pioneer and Spa as the vendors.
  3. [24]
    On 15 February 2017, the YIC Proceedings were commenced against Mrs Quinn as guarantor by Spa and the Deregistered Pioneer. A counterclaim was made by Mrs Quinn and YIC was joined as a plaintiff in the counterclaim alleging that the sale of land in 2014 had been at an undervalue. The solicitors for YIC and Mrs Quinn were C I Legal Services Pty Ltd whose registered office is that of the Quinn Group. At the time of the YIC Proceedings, Mrs Quinn was the sole director of the Quinn Group. Mr Quinn is now the sole director of the Quinn Group. Mrs Quinn informed the solicitors acting on behalf of the mortgagees, Registered Pioneer and Spa, that she gave authority to communicate with Mr Quinn in respect of the YIC Proceedings. The unrefuted evidence is that Mr Quinn was intimately involved in the YIC Proceedings attending court to provide instructions on his own as well as with Mrs Quinn. There is evidence of Mr Quinn providing responses to emails, including to the Judges Associate at that time and in respect of the appeal.
  4. [25]
    In July 2017, Angas Securities Limited assigned its rights and interests in the second mortgage to SEQ.
  5. [26]
    In an email of 8 May 2020, Mr Quinn described SEQ and YIC as part of the Quinn Group. Although he was not a shareholder or a director of SEQ at the time of the assignment, he did send an email to Angas Securities on behalf of the Quinn Group notifying them that the executed documents had been sent and later that documents had been received in July 2017. On 1 August 2017 Mr Quinn emailed Angas Securities asking for any documents that they had received from the first mortgagees or anyone on their behalf from the time that Angas Securities became the second mortgagee of the Pineapple Patch to that date. A notice of completion of sale dated 16 April 2014 was then provided to Mr Quinn.
  6. [27]
    The trial in the YIC Proceedings occurred on 5–7 and 10 September 2018.
  7. [28]
    On 26 March 2019, judgment was given against Mrs Quinn and the counterclaim dismissed, on the basis that Mrs Quinn and YIC did not persuade the court that the sale price was below market value.[7] That followed valuation evidence being presented on behalf of both the plaintiffs by counterclaim and the defendants by counterclaim. The plaintiffs by counterclaim were legally represented at the proceeding. In the Setting Aside Proceeding, it is claimed that the correction was false insofar as it stated, “the information contained in item 4 of the mortgage was shown incorrectly and the above mortgage should have been stated as ‘Pioneer Australian Pty Ltd ACN 128 784 725’”.
  8. [29]
    Mrs Quinn was declared bankrupt after a bankruptcy notice was issued following judgment on 20 January 2020. YIC and Mrs Quinn attach some significance to the fact that the ACN of Pioneer Australia Pty Ltd was left blank in terms of their contention that the judgments in the YIC Proceedings were procured by fraud.
  9. [30]
    On 11 March 2020, John Quinn was appointed sole director and shareholder of SEQ. On 20 March 2020, SEQ filed the statement of claim, the subject of the present application.
  10. [31]
    According to affidavit material filed on behalf of SEQ, YIC and Mrs Quinn, the fact that the YIC Proceedings had been conducted with the plaintiff being nominated as the Deregistered Pioneer, was only discovered on 19 March 2020. Mr Quinn, in cross-examination, stated that he had not picked up the fact that the registered variations referred to the Registered Pioneer. He agreed that, as a fact, the Deregistered Pioneer was deregistered at the time the mortgage was granted to YIC and that at that time there was only one Pioneer Australia Pty Ltd that existed. Mr Quinn stated that he did not carry out a company search of the Deregistered Pioneer or a title search at the relevant time.
  11. [32]
    In the Setting Aside Proceedings, YIC and Mrs Quinn make serious allegations of fraud seeking to set aside the judgment in the YIC Proceedings and that the guarantee be set aside or be declared unenforceable. The plaintiff described the principle issues as the effect of:
    1. (a)
      A deregistered company as taking or purporting to take a security interest in a mortgage and personal guarantee granted to it; and
    2. (b)
      A deregistered company commencing and continuing proceedings before this court to enforce such security interest all the way to final judgment.
  12. [33]
    It is alleged that in the statement of claim to set aside the proceedings that the statement of claim and the variations of the mortgage, the notice of default pursuant to s 84 of the Property Law Act 1974 (Qld) (the PLA) and notice of completion of sale pursuant to s 85 PLA and the written demand were prepared by the solicitors acting on behalf of the defendants and with instructions from a director of Spa or a director of the Registered Pioneer in circumstances where the solicitors knew them to be false and the directors knew them to be false.[8] According to the statement of claim, Spa, the Registered Pioneer and the solicitors for the defendants were under a duty or obligation to disclose to and inform Ms Quinn and YIC of the facts in relation to the Deregistered Pioneer and the purported corrections. Further, that the discovery of the “fraud” constituted a new discovery of material facts and further alternatively fresh facts which entitled Mrs Quinn and YIC to have the judgments set aside.

Principles of issue estoppel and Abuse of Power

  1. [34]
    The applicant contends that the SEQ Proceedings are precluded either on the basis of issue estoppel or abuse of process.
  2. [35]
    In Tomlinson v Ramsey Food Processing Pty Limited (Tomlinson),[9] the plurality French CJ, Bell, Gaegler and Keane JJ at [21] and [22] stated as follows:

“Estoppel in relation to judicial determinations is of a different nature. It is a common law doctrine informed, in its relevant application, by similar considerations of finality and fairness. Yet its operation is not confined to an exercise of judicial power; it also operates in the context of a final judgment having been rendered in other adversarial proceedings. It operates in such a context as estoppel operates in other contexts: as a rule of law, to preclude the assertion of a right or obligation or the raising of an issue of fact or law.

Three forms of estoppel have now been recognised by the common law of Australia as having the potential to result from the rendering of a final judgment in an adversarial proceeding. The first is sometimes referred to as “cause of action estoppel”. Estoppel in that form operates to preclude assertion in a subsequent proceeding of a claim to a right or obligation which was asserted in the proceeding and which was determined by the judgment. It is largely redundant where the final judgment was rendered in the exercise of judicial power, and where res judicata in the strict sense therefore applies to result in the merger of the right or obligation in the judgment. The second form of estoppel is almost always now referred to as “issue estoppel”. Estoppel in that form operates to preclude the raising in a subsequent proceeding of an ultimate issue of fact or law which was necessarily resolved as a step in reaching the determination made in the judgment. The classic expression of the primary consequence of its operation is that a “judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies”. The third form of estoppel is now most often referred to as “Anshun estoppel”, although it is still sometimes referred to as the “extended principle” in Henderson v Henderson. That third form of estoppel is an extension of the first and of the second. Estoppel in that extended form 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. The extended form has been treated in Australia as a “true estoppel” and not as a form of res judicata in the strict sense. Considerations similar to those which underpin this form of estoppel may support a preclusive abuse of process argument.” (citations omitted)

  1. [36]
    The High Court in Tomlinson also considered at [25] the relationship between the doctrine of estoppel and the doctrine of abuse of process, the latter similarly being informed by considerations of finality and fairness. According to the plurality at [25] – [26]:

“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.

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.” (citations omitted)

  1. [37]
    SEQ was not a party to the YIC Proceedings. An issue estoppel could only bind SEQ in the event that SEQ is a privy in interest with YIC. In Ramsay v Pigrim,[10] Barwick CJ stated that “The basic requirement of a privy in interest in that the privy must claim under or through the person said to be the privy.” Tomlinson reiterated that “one principle must govern the identification of privies for the purpose of all forms of estoppel which result from the rendering of a final judgement in an adversarial proceeding.”[11] According to the High Court in Tomlinson, a party to a later proceeding can be a privy in interest with a party in an earlier proceeding on two bases. One basis is that the party to the later proceeding might have had some legal interest in the outcome of the earlier proceedings which was represented by the party in the earlier proceedings or that the earlier party has some legal interest in the outcome of the later proceeding which is represented by the former party.[12] The interest of the privy must be a legal interest, an economic or other interest is insufficient.[13]
  2. [38]
    As stated by the High Court in Tomlinson, abuse of process does not require a party to be the privy of the party to an earlier proceeding.

Setting aside proceedings procured by Fraud

  1. [39]
    In order succeed in setting aside a judgment on the basis of fraud a party must establish actual fraud.[14] Fraud must be pleaded distinctly and with particularity and clearly proved.[15] It is not however a precondition to the exercise of the power that the party seeking to set aside the judgment exercised reasonable diligence to attempt to discover the fraud during the earlier proceedings.[16]
  2. [40]
    The requirements to set aside a judgment on the basis it has been procured fraud were discussed by Kirby P in Wentworth v Rogers (No 5),[17] which in summary are:
    1. (a)
      That, as the essence of the action is fraud, particulars of the fraud must be exactly given and the allegations must be established by strict proof which such a charge requires;
    2. (b)
      It must be shown by the party asserting that a judgment was procured by fraud that there has been a new discovery of something material in the sense that fresh facts have been found which, by themselves or in combination with previously known facts, would provide a reason for setting aside the judgment;
    3. (c)
      Mere suspicion of fraud raised by fresh facts later discovered will not be sufficient to secure relief;
    4. (d)
      The mere allegation or even proof of perjury will not normally be sufficient to attract such drastic and exceptional relief as the setting aside of a judgment;
    5. (e)
      It must be shown by admissible evidence that the successful party was responsible for the fraud which taints the judgment under challenge. If the fraud is affected through an agent it must be shown that the agent in so acting was acting in concert with the party who derived benefit of the judgment;
    6. (f)
      The burden of establishing the components necessary to warrant the drastic step of setting aside a judgment allegedly affected by fraud or other relevant taint, lies on the party impugning the judgment. In that respect Kirby P stated:[18]

“….he or she must establish that the case is based on newly discovered facts; that the facts are material and such as to make it reasonably probable that the case will succeed; that they go beyond mere allegations of perjury on the part of witnesses at the trial; and that the opposing party who took advantage of the judgment is shown, by admissible evidence, to have been responsible for the fraud in such a way as to render it inequitable that such a party should take the benefit of the judgment”

  1. [41]
    The alternative basis raised by the defendants is that even if the plaintiff was not the privy of YIC and Mrs Quinn, the SEQ Proceedings would constitute an abuse of process. It contends that to re-litigate the same issue, which has been the subject of the YIC Proceedings would be unjustifiably oppressive to the defendants and would clearly bring the administration of justice into disrepute. In that regard, it relied upon the fact that the SEQ Proceedings raise the same issue as previously litigated in relation to the sale of Pineapple Patch at an undervalue and that Mr Quinn, the guiding mind of SEQ, was involved in the previous proceedings. Mr Quinn was the guarantor of the first mortgage granted by YIC but was not joined in the proceedings because he was the subject to a Part X arrangement under the Bankruptcy Act 1966 (Cth). According to the evidence of Mr Reynolds, Mr Quinn was integrally involved in the YIC Proceedings through providing instructions and in the conduct of those proceedings.

Consideration

  1. [42]
    There is undoubtedly a parallel in the statement of claim in the SEQ Proceedings and the counterclaim in the YIC Proceedings insofar as both proceedings raise an issue for determination whether the Pineapple Patch was sold by the first and second defendants at an undervalue. Findings were made that the Pineapple Patch was not sold at an undervalue after evidence was led in the YIC Proceedings. There is a coincidence of issues in relation to the proceedings. That is not really the subject of dispute in this application, although SEQ’s Counsel points to the fact that these proceedings are against the Registered Pioneer not the Deregistered Pioneer.
  1. [43]
    In order to successfully raise an issue estoppel, SEQ would have to be a privy of YIC. That was again considered by the plurality in Tomlinson, it recognised that there were two bases upon which a party could be privy in interest with a party to an earlier legal proceeding. Relevant to this case, SEQ might have a legal interest in the outcome of the earlier proceeding which was represented by, in this case YIC, or that YIC has some legal interest in the outcome of the later proceeding which was represented by SEQ.[19] The interest of the privy must be a legal interest with an economic or other interest in the outcome of the proceedings being insufficient.[20] If that legal interest is absent, the influence that, in this case, SEQ as the assignee of the second mortgage would have over the conduct of the earlier proceeding is irrelevant even if it amounts to control. In the present case, while the SEQ would have an economic interest in the outcome of the YIC Proceedings, its entitlement to be paid the surplus after all amounts were paid to the first mortgagee is an economic interest rather than a legal one.
  2. [44]
    The applicants refer to s 88(1)(c) PLA which directs the selling mortgagee, after obtaining its entitlement out of the proceeds of sale to apply the surplus in “payment of any subsequent mortgages or encumbrances”. Section 88(1)(c) PLA has been described as a provision intended to provide the machinery for giving effect to the priorities otherwise legally established.[21] The first mortgagee is directed, after obtaining his or her entitlement out of the proceeds, to apply the surplus in payment of any subsequent mortgages and encumbrances. It is to be read in a manner consistent with the equitable duty of the first mortgagee to account to puisne mortgages as trustee for any surplus.[22] The first and second mortgages, however, are separate and distinct, even when the first mortgage has been transferred in favour of a second mortgagee.[23] I am not persuaded that the relationship arising out of s 88(1)(c) PLA does relevantly create a privy of interest between the mortgagor, namely YIC and the second mortgagee. While there is no doubt that the second mortgagee would have an economic interest in proceedings brought by the mortgagor based on a sale at an undervalue, s 88(1)(c) does not establish a legal interest between them.
  3. [45]
    However as stated above, a party is not required to be a privy of a party involved in the prior proceedings in order for proceedings to be an abuse of process in the sense discussed in Tomlinson.
  4. [46]
    In the present case, there is a strongly arguable case that the SEQ Proceedings are an abuse of process. SEQ seeks to re-litigate essentially the same issues which have been the subject of the YIC Proceedings. SEQ accepted that there was at least an arguable case that the SEQ Proceedings are an abuse of process for the purposes of the present application. While it was submitted on behalf of SEQ that ultimately it would not be characterised as an abuse of process because the SEQ Proceedings nominate the Registered Pioneer as the defendant, as opposed to the Deregistered Pioneer which was the party in the YIC Proceedings, little may turn on that given that it relates to the same property and the sale arising out of the first registered mortgage to which Spa was also a mortgagee. There is evidence supporting the fact that the nomination of the Deregistered Pioneer was the result of a mistake, rather than it being the result of actual fraud and at the time of the YIC Proceedings the Registered Pioneer was the only company of that name.
  5. [47]
    The misdescribing of the ACN of a company does not generally render documentation or the proceeding invalid, such as where a defendant has been correctly identified in name but with the incorrect ACN number.[24] SEQ however contends that the present case was affected by deception which is raised in the Setting Aside Proceedings.
  6. [48]
    In the present case, the second mortgage had been transferred to SEQ well prior to the YIC Proceedings going to trial and only some four months after proceedings had been commenced against the guarantor. There is evidence suggesting that SEQ was part of the Quinn Group in 2017. It did not seek to join in the proceedings the subject of the counterclaim. It has been recognised that there may be an abuse of process found by a person seeking to relitigate matters which could or should have been litigated in earlier proceedings.[25] Further, the sole director of SEQ is now Mr Quinn who was involved in the conduct of the YIC Proceedings although not a party. He is therefore the controlling mind of SEQ responsible for the SEQ Proceedings. The evidence supports the fact that he did have the opportunity to exercise control over the presentation of evidence and the making of arguments in the YIC Proceedings.
  7. [49]
    In that regard, in considering whether separate proceedings issued in the Federal Court of a trust where related parties had issued proceedings in New South Wales on the basis of largely the same facts, the plurality in UBS AG v Tyne (Tyne’s case) stated that :[26]

“…there is no reason why the courts should tolerate attempts to manipulate other parties and the courts themselves by the deployment, by a single directing mind and will, of different legal entities under common control for such a purpose. The concern is as to whether the processes of the court are being abused. Given that this is the central concern, the circumstance that the abuse is effected by the use of multiple entities orchestrated by a single mind and will is no reason to tolerate it.”

  1. [50]
    In Tyne’s case the plurality observed that the pursuit of substantially the same claim by serial proceedings conducted by different entities under common control is no less obviously an abuse of process. In Tyne’s case, the High Court found that it was an abuse of process for the trust to hold back bringing its claim when other related parties had sought to bring a claim against UBS in the New South Wales Supreme Court, to which it had originally been a party. The High Court described the hiving off of the trust claim with a view to bringing it in another court after the determination of the proceedings brought by other related parties as the antithesis of the discharge of the duties imposed to civil litigation in the Supreme Court of New South Wales and in the Federal Court. That duty was to conduct the proceedings in a way that is consistent with the overriding overarching purpose. The position is no different in this court. In that case, the plurality held:[27]

“For the Federal Court to lend its procedures to the staged conduct of what is factually the one dispute prosecuted by related parties under common control with the attendant duplication of court resources, delay, expense and vexation, as Dowsett J found, 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 moneys. The primary judge was right to permanently stay the proceedings as an abuse of the processes of the Federal Court. ” (citations omitted)

  1. [51]
    In the present case, there is in the circumstances strong evidence supporting a finding that the SEQ Proceedings are an abuse of process. The question of the sale at an undervalue was determined on its merits at first instance and subsequently was upheld on appeal after reasonably detailed argument. While it is contended that the SEQ Proceedings will not be oppressive or unfair because they are brought against the Registered Pioneer, the fact is the Registered Pioneer was the only company in existence throughout the YIC Proceedings and Spa was also a party to those proceedings. Mr Quinn was actively involved throughout the YIC Proceedings as a guiding hand instructing Counsel and in the conduct of those proceedings.[28] The SEQ Proceedings will result in duplication of Court resources and time and cost already spent in addressing this issue before when it appears that SEQ could have joined as a party in the proceedings, but in any case where Mr Quinn had the opportunity to have input into the conduct of the case as to undervalue. It will also involve an indirect attack on the decisions made in the YIC Proceedings.
  2. [52]
    My preliminary view, based on what has been placed before me and the subject of argument in the present application in relation to the Setting Aside Proceedings is that there are significant hurdles to be overcome in order for SEQ to have any prospect of succeeding. While the statement of claim has been settled by Counsel, the case of actual fraud for which the defendants will be held responsible appears to be a tenuous one, particularly having regard to the fact that the title was corrected such that Spa and the Registered Pioneer were stated to be the mortgagees. They were parties to the variations of the mortgage and Mr Reynolds has stated that he mistakenly recorded the ACN in the YIC Proceedings. Mr Gall, who was responsible for the correction of the register, had retired for some years by that time. There is no evidence as to the knowledge of the director of the Registered Pioneer. The basis upon which it is said that the relevant parties acted with knowledge or reckless indifference in causing the Deregistered Pioneer to be a party to the proceedings is not evident on the face of the pleading.
  1. [53]
    There is also an issue as to whether it can be established that there has been discovery of new facts or something material by Mrs Quinn and YIC. While her evidence was that she only discovered the existence of Deregistered Pioneer this year and it is not a precondition to an action for fraud that the party acted with reasonable diligence, there was material before the Court in the trial which did reveal the existence of Registered Pioneer and the correction on the title. Valid questions as to causation have been raised by the applicants in that regard.
  1. [54]
    Further, even if the judgement against the guarantor in the YIC Proceedings was found to have been procured by fraud, that may not extend to the claims in the counterclaim with respect to the sale at an undervalue.
  2. [55]
    I also note that Mrs Quinn does not have standing to bring the Setting Aside Proceedings given that she is a bankrupt and any such action would have to be brought by the trustee in bankruptcy
  3. [56]
    However, given that separate proceedings have been issued seeking to set aside the YIC Proceedings, which are not the subject of the application before me, it is not appropriate for me to make a specific finding as to the prospects of the Setting Aside Proceedings and pre-empt any findings that may be made in relation to those proceedings. That could result in inconsistent findings in decisions of this Court. That is particularly so where, notwithstanding the concern of the Registered Pioneer and Spa having the SEQ Proceedings on a Court file, the SEQ Proceedings are not being actively pursued.
  4. [57]
    While my preliminary view is that there is a considerable prospect that the Setting Aside Proceedings will not succeed, if the judgments were to be set aside as sought in those proceedings, which would directly impact upon the present application. Issue estoppel does not apply to a judgement found to be procured by fraud.[29] Further, while the judgment being set aside would not necessarily result in the court concluding that the SEQ Proceedings were not an abuse of process, the outcome would certainly be relevant to the Court’s considerations and whether or not the Court would strike out the proceedings or grant a permanent stay. In the circumstances, it would be premature for the Court to determine this application and the question of any grant of final relief before the Setting Aside Proceedings are resolved. Given my findings above that there is a strong case the SEQ Proceedings are an abuse of process, I am satisfied that this is a proper case for the grant of an interim stay. I consider that that is more appropriate relief than accepting Mr Quinn’s undertaking, particularly having regard to the impact of the progress of the Setting Aside Proceedings about which I have raised considerable concerns in terms of success. Granting an interim stay will allow this application to be determined expeditiously and finally when the Setting Aside Proceedings are resolved. I will make provision for liberty to apply to accommodate the changing circumstances.
  5. [58]
    I will therefore order that the SEQ Proceedings are stayed unless and until the proceedings to set aside the judgment and Court of Appeal judgment in proceedings number 1550 of 2017 and Appeal number 4290 of 2019, proceeding number 5692 of 2020, has been determined or until further order.
  6. [59]
    I consider that the costs should be reserved. Notwithstanding that Mr Quinn stated that he did not wish to pursue the SEQ Proceedings in correspondence until the Setting Aside Proceedings were determined and made an offer in those terms by way of an undertaking, the offer of the undertaking was made just prior to the hearing of the application. The Setting Aside Proceedings were only filed the day before this application, although attached to earlier affidavits. The relief granted is however consistent with the appropriate relief submitted on his behalf by his Counsel. Given the inter-relationship with the Setting Aside Proceedings, it would however be appropriate to determine the question of costs when this matter falls to be considered in light of the Setting Aside Proceedings. Had those proceedings not been in existence, the present application could have been determined.
  7. [60]
    The order of the Court is:
  1. That proceeding number 3193 of 2020 is stayed unless and until proceeding number 5692 of 2020 is determined or until further order.
  2. The costs of the application are reserved.
  3. Liberty to apply is granted upon three business days’ notice
  4. The application is otherwise adjourned to a date to be fixed.

Footnotes

[1] This is however the subject of controversy given that the company described in those proceedings was Pioneer Australia Pty Ltd (ACN 073 498 905) rather than Pioneer Australia Pty Ltd (ACN 128 784 725).

[2] Pioneer Australia Pty Ltd & Anor v Quinn [2019] QSC 72 and Quinn & Anor v Pioneer Australia Pty Ltd & Anor [2019] QCA 266.

[3] Affidavit of Reynolds, LTR 13 and LTR 14

[4] T1-26–T1-29.

[5] Edington v Board of Trustees of the State Public Sector Superannuation Scheme [2012] QSC 211 at [53]-[54] per Mullins J; Royalene Pty Ltd v Registrar of Titles [2007] QSC 59 at [6].

[6] Walton v Gardiner (1993) 177 CLR 378 at 392-3.

[7] Reasons [2019] QSC 72 at [91].

[8] Statement of claim to set aside the proceeding at [48].

[9] (2015) 256 CLR 507 at [22].

[10] (1968) 118 CLR 271 at 279.

[11] Tomlinson at [23].

[12] Tomlinson at [33].

[13] Tomlinson at [35].

[14] Clone Pty Ltd v Players Pty Ltd (in liq) (2018) 264 CLR 165, at [55] by reference to Sir John Rolt LJ in Patch v Ward, this was described as “a meditated and intentional contrivance to keel parties and the Court in ignorance of the real facts of the case and obtaining that decree by contrivance.”

[15] Clone Pty Ltd v Players Pty Ltd (in liq) (2018) 264 CLR 165 at [62].

[16] Clone Pty Ltd v Players Pty Ltd (in liq) (2018) 264 CLR 165 at [2].

[17] (1986) 6 NSWLR 534 at [538] – [539].

[18] Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 539.

[19] Tomlinson at [33].

[20] Tomlinson at [35].

[21] Rockett v Moneycorp Securities Pty Ltd [2008] QSC 258 at [15] and [16], referring to the decision of de Jersey J in Australia and New Zealand Banking Group Ltd v Evans [1992] 2 Qd R 230.

[22] Property Law and Practice Qld at PLA.88.540; See also Boefinger v Kingsway Group Ltd (2009) 239 CLR 269 at [35], referring to Charles v Jones where Kay J stated that the balance in the first mortgagee is a trustee of the balance for the persons beneficially interested.

[23] Huizhong Investment Group Pty Ltd v Westpac Corporation Ltd & Ors [2019] NSWSC 524 at [110] – [111].

[24] BHP Billiton (Olympics Dam) Corporation Pty Ltd v Steuler Industriewerke GmbH [2009] VSC 322 at [373]; See also New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [46] – [49] which was followed in a number of New South Wales decisions, including Egan v Egan [2018] NSWSC 202 at [83].

[25] Johnson v Gore Wood & Co [2002] 2 AC 1 at 31; Tomlinson at [26].

[26] UBS AG v Tyne (2018) 265 CLR 77 at [45].

[27] UBS AG v Tyne (2018) 265 CLR 77 at [59].

[28] Not dissimilar to the position of Mr Tyne in Tyne’s case; see also Thomas v Balanced Securities Ltd [2012] 2 Qd R 82 at [47].

[29] Weaver v Law Society of NSW (1979) 142 CLR 201.

Close

Editorial Notes

  • Published Case Name:

    SEQ Tourism Projects Pty Ltd v Pioneer Australia Pty Ltd & Anor

  • Shortened Case Name:

    SEQ Tourism Projects Pty Ltd v Pioneer Australia Pty Ltd

  • MNC:

    [2020] QSC 310

  • Court:

    QSC

  • Judge(s):

    Brown J

  • Date:

    02 Oct 2020

  • White Star Case:

    Yes

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Australia and New Zealand Banking Group Ltd v Evans [1992] 2 Qd R 230
1 citation
Jump To
Cite 1 - [1992] 2 Qd R 230
BHP Billiton (Olympics Dam) Corporation Pty Ltd v Steuler Industriewerke GmbH [2009] VSC 322
2 citations
Jump To
Cite 1 - [2009] VSC 322
Cite 2 - [2009] VSC 322
Bofinger v Kingsway Group Ltd (2009) 239 CLR 269
1 citation
Jump To
Cite 1 - (2009) 239 CLR 269
Clone Pty Ltd v Players Pty Ltd (in liq) (2018) 264 CLR 165
4 citations
Jump To
Cite 1 - (2018) 264 CLR 165
Cite 2 - (2018) 264 CLR 165
Cite 3 - (2018) 264 CLR 165
Cite 4 - (2018) 264 CLR 165
Edington v Board of Trustees of the State Public Sector Superannuation Scheme [2012] QSC 211
1 citation
Jump To
Cite 1 - [2012] QSC 211
Egan v Egan [2018] NSWSC 202
1 citation
Jump To
Cite 1 - [2018] NSWSC 202
Huizhong Investment Group Pty Ltd v Westpac Corporation Ltd & Ors [2019] NSWSC 524
1 citation
Jump To
Cite 1 - [2019] NSWSC 524
Johnson v Gore Wood & Co (2002) 2 AC 1
1 citation
Jump To
Cite 1 - (2002) 2 AC 1
New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176
1 citation
Jump To
Cite 1 - [2015] NSWSC 176
Pioneer Australia Pty Ltd v Quinn [2019] QSC 72
2 citations
Jump To
Cite 1 - [2019] QSC 72
Cite 2 - [2019] QSC 72
Quinn v Pioneer Australia Pty Ltd [2019] QCA 266
1 citation
Jump To
Cite 1 - [2019] QCA 266
Ramsay v Pigram (1968) 118 CLR 271
2 citations
Jump To
Cite 1 - (1968) 118 CLR 271
Cite 2 - (1968) 118 CLR 271
Rockett v Moneycorp Securities Pty Ltd [2008] QSC 258
1 citation
Jump To
Cite 1 - [2008] QSC 258
Royalene Pty Ltd v Registrar of Titles [2007] QSC 59
1 citation
Jump To
Cite 1 - [2007] QSC 59
Thomas v Balanced Securities Ltd [2012] 2 Qd R 82
1 citation
Jump To
Cite 1 - [2012] 2 Qd R 82
Tomlinson v Ramsey Food Processing (2015) 236 CLR 507
7 citations
Jump To
Cite 1 - (2015) 236 CLR 507
Cite 2 - (2015) 236 CLR 507
Cite 3 - (2015) 236 CLR 507
Cite 4 - (2015) 236 CLR 507
Cite 5 - (2015) 236 CLR 507
Cite 6 - (2015) 236 CLR 507
Cite 7 - (2015) 236 CLR 507
Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507
1 citation
Jump To
Cite 1 - (2015) 256 CLR 507
UBS AG v Tyne (2018) 265 CLR 77
2 citations
Jump To
Cite 1 - (2018) 265 CLR 77
Cite 2 - (2018) 265 CLR 77
Walton v Gardiner (1993) 177 CLR 378
1 citation
Jump To
Cite 1 - (1993) 177 CLR 378
Weaver v Law Society of New South Wales (1979) 142 CLR 201
1 citation
Jump To
Cite 1 - (1979) 142 CLR 201
Wentworth v Rogers (no 5) (1986) 6 NSW LR 534
3 citations
Jump To
Cite 1 - (1986) 6 NSW LR 534
Cite 2 - (1986) 6 NSW LR 534
Cite 3 - (1986) 6 NSW LR 534

Cases Citing

Case NameFull CitationFrequency
YIC Industrial Pty Ltd v Spa Investments Pty Ltd [2020] QSC 378 2 citations
1

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