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Summary of Judgment
TIMBERCORP FINANCE PTY LTD (IN LIQ) V COLLINS and anor
timbercorp finance pty ltd (in liq) v tomes
[2016] VSCA 128
1 June 2016
Timbercorp Finance Pty Ltd (in liquidation) (‘Timbercorp Finance’), was a member of the Timbercorp Group of companies. The other main member of the group was Timbercorp Securities Limited (in liquidation) (‘Timbercorp Securities’), which was the responsible entity for relevant Timbercorp managed investment schemes.
Between 1992 and its collapse in 2009, the Timbercorp Group invested more than $2billion in agribusiness projects on behalf of some 18,500 investors. Many investors, including the respondents in the present proceedings, Douglas James Collins, Janet Ann Collins, and John Charles Tomes, borrowed moneys from Timbercorp Finance to finance their investments in the schemes.
On 23 April 2009, administrators were appointed to the Timbercorp Group companies. On 29 June 2009, the Group’s creditors resolved to wind up the companies, and the administrators became liquidators. At the time the Timbercorp Group collapsed, Timbercorp Finance’s loan book had over 14,500 outstanding loans to over 7,500 borrowers totalling $477.8 million, including loans to Mr and Mrs Collins and Mr Tomes.
After the administrators were appointed, a large number of borrowers failed to meet their loan repayments (totalling approximately $243 million);Timbercorp Finance notified borrowers that they were in default, andissued final demand notices in respect of approximately 1,480 of those loans. In June 2009, Timbercorp Finance commenced proceedings against 20defaulting borrowers.
On 27 October 2009, a group proceeding was commenced by Allen Rodney Woodcroft-Brown. The definition of ‘group members’ was complex but extended to those who had an interest in a managed investment scheme in which Timbercorp Securities was the responsible entity. The defendants to the group proceeding were Timbercorp Securities, Timbercorp Finance and various directors of those companies. The allegations related to deficiencies in product disclosure statements issued in respect of the schemes. On 27 October 2011, Judd J dismissed the group proceeding.
The Court of Appeal dismissed an appeal from the judgment and orders made by Judd J. An application for special leave to appeal to the High Court was refused.
Subsequently, Timbercorp Finance commenced separate proceedings against Mr and Mrs Collins and Mr Tomes seeking recovery of outstanding loan amounts and interest. Neither Mr and Mrs Collins nor Mr Tomes had opted out of the group proceeding. However, each sought to defend their respective recovery proceeding on bases not raised in the group proceeding.
Timbercorp Finance argued that each respondent was precluded from raising their defences because they were a group member in the group proceeding. Timbercorp Finance contended that the respondents were subject to the estoppel described in Port of Melbourne Authority v Anshun Pty Ltd[1] (‘Anshun estoppel’). In addition, it contended that their defences should be stayed as an abuse of process. On 2 September 2015, Robson J held that the respondents were not precluded either by Anshun estoppel or by the principles of abuse of process from raising any of the defences pleaded by them in the recovery proceedings.
Timbercorp Finance applied for leave to appeal against the order of Robson J. Today, the Court of Appeal granted leave to appeal to Timbercorp Finance, but dismissed the appeal.
The Court held that a group member may be ‘Anshun estopped’ only if it was unreasonable for him or her not to have raised, during the group proceeding, some claim other than the common questions of law or fact in that proceeding. The failure by a group member to opt out and/or to use s 33Q of the Supreme Court Act 1986to draw the Court’s attention to any claim that is peculiar to that group member does not mean that the group member will be automatically precluded from raising that claim in later proceedings. While the Act provides for a statutory estoppel in respect of any determination of the common questions of law and fact, it does not provide for any estoppel in respect of claims peculiar to a group member that were not advanced in the group proceeding. Whether there will be an Anshun estoppel depends upon a ‘merits-based’ assessment taking into account all the circumstances of the case. In the circumstances, it was not unreasonable for these particular respondents not to have raised their individual claims in the group proceeding. Nor were they precluded from relying on their defences as a result of the plaintiff in the group proceeding not having raised such claims on their behalf. The abuse of process claim was rejected on similar grounds.
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NOTE: This summary is necessarily incomplete. It is not intended as a substitute for the Court’s reasons or to be used in any later consideration of the Court’s reasons. The only authoritative pronouncement of the Court’s reasons and conclusions is that contained in the published reasons for judgment.
[1](1981) 147 CLR 589.