British American Tobacco (Australia) Services Ltd v Kadkhudayan - [2009] SADC 25

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
BRITISH AMERICAN TOBACCO (AUSTRALIA) SERVICES LTD v KADKHUDAYAN & ANOR
[2009] SADC 25
Judgment of His Honour Judge Herriman
19 March 2009
ESTOPPEL - GENERAL PRINCIPLES
Anshun estoppel - finding current claim was so closely connected with earlier Federal Court proceedings that it could and should reasonably have been maintained in them and no special circumstances exist such as to avoid a finding of estoppel.

ESTOPPEL - FORMER ADJUDICATION AND MATTERS OF RECORD OR QUASI OF RECORD - FORMER ADJUDICATION - JUDGMENT INTER PARTES - ISSUE ESTOPPEL - IDENTITY OF ISSUES
Where previous judgment delivered findings made upon particular issues in Federal Court proceedings based on same background facts and seeking same damages - where current proceedings assert separate cause of action but rely upon issues already determined in Federal Court.
Trade Practices Act 1974 (Cth) s 45, s 46, s 48; Fair Trading Act 1987 (SA) s 54, s 57; Limitation of Actions Act 1936 (SA) s 48, referred to.
Blair v Curran (1939) 62 CLR 464; Henderson v Henderson (1843) 3 Hare at 115 (67 ER at 319); Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; Rahme v Commonwealth Bank of Australia [1991] NSWCA 230; Port of Melbourne Authority v Anshun (No. 2) [1981] VR 81; BC v Minister for Immigration and Multicultural Affairs [2002] FCAFC 221; Wong v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 146 FCR 10; Ling v Commonwealth (1996) 68 FCR 180; Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543; Zavodnyik v Alex Constructions Pty Ltd (2005) 67 NSWLR 457; Egglishaw v Australian Crime Commission (2007) 164 FCR 224; Applicant A87/2003 v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCAFC 20, applied.

BRITISH AMERICAN TOBACCO (AUSTRALIA) SERVICES LTD v KADKHUDAYAN & ANOR
[2009] SADC 25
Introduction

This is an appeal against an order made by a Master of this Court whereby he refused to strike out these proceedings as an abuse of process or otherwise to permanently stay them.
At relevant times, the appellant, in its present name and previously under the name of WD & HO Wills (Australia) Limited, carried on the business of a manufacturer and wholesale supplier of cigarettes and tobacco products (collectively hereafter called “tobacco products”) and the respondents carried on business first as retailers and later as wholesalers and retailers of tobacco products.
In the early stages of the development of the respondents’ business, they had purchased tobacco supplies from various of the appellant’s wholesalers, but in 1991 they were able to purchase direct from the appellant and sell to other retailers or directly to the public. As wholesalers, in particular, they received from the appellant various incentive payments in the form of volume discounts, contributions to advertising and displays, and direct payments in aid of particular stock promotions. (I will hereafter refer to these collectively as “incentive payments”.)
The respondents’ business had originally been carried on in conjunction with the business of a chicken shop, but in 1994 they took a lease on neighbouring premises and established a shop dedicated to the sale of tobacco products. They had by then become significant customers of the appellant.
The retail market in tobacco products is highly competitive and at a particular time in 1996, the respondents formed the view that the appellant was conniving with certain competitors to undercut their retail prices. They concluded that they could not successfully compete with this unless they sold particular product lines for less than their purchase price – that is to say, at a loss. They therefore embarked upon that course. It was not well received by the appellant, which informed them that they would not receive any incentive payments if they continued to sell at below cost.
They nonetheless persisted in doing this and, in response, in May 1996 the appellant ceased providing all incentive payments to them. Negotiations ensued and, for a brief time between September 1996 and January 1997, some incentive payments were made, but by July 1998 all such payments had stopped and the respondents’ business was in terminal decline. It closed its doors in May 1999.
I should then return to some intervening events.
In the midst of their disputes, the respondents had, in September 1996, secretly complained to the Australian Competition & Consumer Commission (“ACCC”) about the appellant’s conduct and that body had then begun an investigation into it. Ultimately, that resulted in the appellant being convicted in February 1998 of attempting to contravene s 45 of the Trade Practices Act (“TPA”). It was then heavily fined.
Further, in April 1997, the appellant had adopted a new wholesale distribution system whereby it would only appoint, as wholesalers, those purchasers of its products who were themselves able to achieve a particular proportion of wholesale sales. The respondents had applied to be so appointed but their wholesale sales figures had not reached the designated proportion and, thereafter, they lost their status as wholesalers and became obliged to purchase supplies, not directly but from other wholesalers.
The respondents had complained to the ACCC about those events, as well, alleging that the appellant had thereby engaged in unconscionable conduct. It appears that the ACCC had investigated that complaint but no action had been taken over it.
Federal Court Proceedings
As I have noted, by July 1998 the respondents’ business was doomed and in October 1998 they instituted Federal Court proceedings against the appellant founded upon allegations that it had engaged in resale price maintenance and had misused its market power. They sought consequential damages, claiming the loss of all incentive payments they say they should have received between 1995 and 1998 and, as well, for the asserted loss of their tobacco wholesaling business.
Those proceedings were heard and determined by a single judge of that Court. He rejected both claims, albeit that he proceeded to assess the damages that would have been awarded had the respondents been successful. The respondents were unrepresented in the proceedings.
It should be noted that, at the start of that trial, the respondents had tendered a letter, which might be regarded as a written submission and in which it was asserted, inter alia, that:
6) I prove Wills has broken Contract 3 times with me. I prove they lied to ACCC, I do have contract with them.
At no point did their pleadings contain any assertion that there had ever been any particular contract with the appellant with respect to:
(1)the supply of tobacco products on specified terms;
(2)the making of incentive payments; or
(3)any other matter
nor that any particular contract had been breached.
Further, there is no evidence before me that the learned trial judge discussed or entertained any application by the respondents to amend their pleadings to formulate such a claim, nor, indeed, that he considered or took any account of the assertion in that letter.
Federal Court Appeal
At all events, the respondents appealed the single judge decision. Their Notice of Appeal, apparently drawn without legal input, recited numerous grounds of limited relevance; however, Ground 3 was in terms:
Wills Company (7) times broke promises and Contract.
Subsequently, an amended Notice of Appeal was filed, which inter alia asserted:
Company (Wills) broke my contract – cover up.
Separately, in a letter accompanying the amended Notice, the respondents claimed:
Company broke my Contract and Justice Lee said yes I had Contract, but cover-up that one.
The Full Federal Court heard and dismissed their appeal (Kadkhudayan v W D & H O Wills (Aust) Ltd [2002] FCAFC 110) but it did reverse part of the primary judge’s decision and find that the appellant had contravened s 48 of the TPA. Even so, it concluded that no loss had flowed from that breach. In its reasons (para. 23), the Full Court touched upon the contract question, observing:
A cause of action in contract is not pleaded in the Statement of Claim. The application indicates that it is made under ss 46, 48 and 82 TPA. There is no reference in either the application or in the Statement of Claim to a contract-based claim. The description by the primary judge of the issues arising in the case is not consistent with a contract-based claim having been advanced at the hearing. This complaint therefore leads nowhere.
In a separate passage (paras 56 & 57) the Court, in discussing the trial judge’s findings as to an entitlement to receive incentive payments, said:
After making a non-specific allowance for imponderables and contingencies, his Honour reached the conclusion that the loss suffered by the appellants could have been assessed at $250,000.
There are a number of problems with this approach. First, loss of the value of the business was not pleaded as a consequence of the s 48 contravention; it was only pleaded as a consequence flowing from the s 46(1)(c) contravention. Second, his Honour “assumed” that but for the contravening conduct of Wills the appellants could have expected to receive from Wills a further sum of $25,000 by 30 June 1997 and at least $30,000 in the year ending 30 June 1998. No factual findings are made which make good that assumption. It is unclear why the assumption was made. The appellants did not have any contractual entitlement to receive the payments; by 13 May 1997 Wills had informed the appellants that they had not been appointed as a licensed wholesaler under the new distribution system, hence the foundation for the making of promotional payments in favour of the appellants was swept away as the appellants would thereafter acquire cigarettes from the licensed wholesaler, rather than from Wills.
The emphasis is mine and I infer that the Court was there speaking of “incentive payments”.
Further, the Full Court observed (at para. 58):
Mr Kadkhudayan’s evidence at the trial was that he lowered his retail prices to a level below the wholesale price at which he purchased cigarettes in order to better his competitors’ prices. This was an election made independently of the respondent’s conduct, and which necessarily caused the appellants’ loss. The appellants did not contend, nor could they contend, that they lowered the prices to a level below cost on the faith of a representation that a promotional rebate would nonetheless be payable, as it was a constant and communicated feature of Wills’ policy that promotional rebates would not be paid to retailers who sold Wills’ goods below cost.
(My emphasis)
The Full Court’s reasons were delivered on 7 May 2002.
These Proceedings
By summons dated 1 October 2004, the respondents instituted these proceedings. In an accompanying affidavit filed at the time, they alleged that in about April 1994 they had entered into a six-year contract with the appellant whereby the appellant would provide them with incentive payments and, inferentially, supply them with tobacco products, that the appellant had breached that contract and that they were therefore entitled to damages arising from that breach. Ultimately, those allegations came to be pleaded more specifically in an Amended Statement of Claim filed in this Court on 27 February 2007 (“the ASC”).
In paragraphs 14 to 17 of the ASC it is pleaded that in 1994 the respondents entered into a contract with the appellant whereby, for a period of six years, the appellant would supply them with cigarettes and tobacco products and would provide them with incentive payments. That contract is said to have been partly oral, partly written and it is asserted that certain terms were implied in it.
The pleadings go on to say that that contract was partly performed, but that the appellant breached its terms in and after August 1995 by failing to provide the promised level of incentive payments and later, in 1998, by ceasing to supply the respondents with any wholesale tobacco products.
Further, say the respondents, the appellant, at the time of entering into that contract, contravened s 54 of the Fair Trading Act (“FTA”) by misleading them in that it did not then have the intention of adhering to its terms and conditions. Further, they pleaded that the appellant has been guilty of unconscionable conduct under s 57 of the FTA, in its dealings with them.
As to this last plea, I will discuss it no further as it is now acknowledged to have no foundation.
Curiously, the ASC does not purport to rely upon any alleged breaches of ss 54 and 57 of the FTA, nor indeed to plead reliance, but it otherwise pleads that because of the asserted breaches of contract, the respondents suffered loss and damage comprising the loss of incentive payments due between 1995 and 1998, and the loss of the value of their wholesaling business; that is to say, the same damages as were claimed in the Federal Court proceedings.
Finally, the respondents have sought extensions of time under s 48 of the Limitation of Actions Act (“LAA”), alleging that facts material to their case were only ascertained within 12 months prior to the issue of these proceedings. Those facts are then pleaded.
The Appellant’s Application
By an application filed on 14 December 2007, the appellant sought orders that the proceedings in this Court be struck out as an abuse of process or, in the alternative, that they be permanently stayed. Argument as to that took place before the learned Master, who delivered his reasons on 4 November 2008, refusing the application to strike out the action permanently or to stay the proceedings, but otherwise striking out those paragraphs in the Statement of Claim relying upon ss 54 and 57 of the FTA.
It is against that decision that the appellant now appeals.
Legal Issues
The relevant legal principles were largely undisputed and are extensively discussed in the learned Master’s reasons. They focus upon the distinction between res judicata, issue estoppel and what is commonly known as “Anshun” estoppel.
In Blair v Curran[1] Dixon J observed (at 532):
The distinction between res judicata and issue-estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order.
[1] (1939) 62 CLR 464
The origins of so-called Anshun estoppel appear to lie in the historical case of Henderson v Henderson[2] in the remarks of Sir James Wigram VC:
Where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.
[2] (1843) 3 Hare at 115 (67 ER at 319)
In subsequent decisions, queries arose as to whether Henderson was truly a case of res judicata or issue estoppel, but that is unimportant now because of what was decided in Port of Melbourne Authority v Anshun Pty Ltd[3].
[3] (1981) 147 CLR 589
That case concerned a defence raised in a second action that could have been raised in an earlier action between the same parties but, even so, the remarks of the High Court have been held to apply with equal force to a cause of action sought to be raised in subsequent proceedings and which might have been raised in the earlier suit (Rahme v Commonwealth Bank of Australia[4]).
[4] [1991] NSWCA 230
The joint judgment of Gibbs CJ, Mason, and Aickin JJ adopted the Henderson principle, albeit questioning whether its rationale lay in abuse of process. At 602/03:
In this situation we would prefer to say that there will be no estoppel 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. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff’s claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few …
It has generally been accepted that a party will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment …
The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgments is obviously an important factor to be taken into account in deciding whether the omission to plead can found an estoppel against the assertion of the same matter as a foundation for a cause of action in a second proceeding.
And at 604:
The matter now sought to be raised by the Authority was a defence to Anshun’s claim in the first action. It was so closely connected with the subject matter of that action that it was to be expected that it would be relied upon as a defence to that claim and as a basis for recovery by the Authority from Anshun. The third party procedures were introduced to enable this to be done. If successful, the indemnity case would have obviated an inquiry into contribution. If reserved for assertion in a later action, it would increase costs and give rise to a conflicting judgment.
That decision upheld the decision of the Victorian Supreme Court of Appeal in Port of Melbourne Authority v Anshun (No. 2)[5]. In the course of their remarks in that earlier hearing, the Appeal Court had observed (at 89):
We find it unnecessary to set forth his arguments in this regard, for we accept the submission of Dr. Pannam that the learned Judge, having once determined that the matter of the agreement properly belonged to the subject of the earlier litigation and might have been brought forward at the time of that litigation by the Authority, exercising reasonable diligence, had a discretion only in the sense that, although negligence, inadvertence or even accident would not suffice to excuse, he was required to consider whether special circumstances existed in the sense that justice required the non-application of the general rule (Yat Tung Investment Co. Ltd v Dao Heng Bank Ltd., [1975] A.C. 581, at p.590 and others).
(My emphasis)
[5] [1981] VR 81

In BC v Minister for Immigration and Multicultural Affairs[6], the Full Court of the Federal Court noted that there was some uncertainty as to how the High Court regarded those remarks of the appellate court as to the availability of a discretion, if special circumstances existed, but after discussing authorities, it concluded (at page 8):
In our opinion, the better approach is, with respect, that taken by the Full Court of the Supreme Court of Victoria in Anshun (No 2) i.e. that once a court has found that the Anshun principle applies, then the only “discretion” which the court may exercise not to apply the Anshun principle is if it finds that “special circumstances” exist. That is essentially a finding of fact …
[6] [2002] FCAFC 221
In Wong v Minister for Immigration and Multicultural and Indigenous Affairs[7] the court affirmed that it
… has a discretion, if it determines that special circumstances exist, to allow an issue to be raised, even where it is found that the point was unreasonably omitted from the earlier proceeding …[citing Macquarie Bank] … What will be sufficient to constitute special circumstances is by no means fixed and may involve consideration of a wide range of factors, all of which bear upon the general discretion of the Court where justice requires the non-application of the general principle …
[7] (2004) 146 FCR 10 at para. 38
Numerous cases were cited before me, amplifying the application of Anshun principles, but the real focus of attention in argument was whether the subject matter of the claims in the Federal Court proceedings and in these proceedings was the same or substantially the same so that it would be unreasonable to allow these proceedings to run. In that respect I have been assisted by the cases of Ling v Commonwealth[8], Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd[9] and Zavodnyik v Alex Constructions Pty Ltd[10].
[8] (1996) 68 FCR 180
[9] (1996) 40 NSWLR 543
[10] (2005) 67 NSWLR 457
I will not discuss all of them but in Ling (supra) at 184 Wilcox J observed:
In considering reasonableness, as it seems to me, consideration must be given to all aspects of the case. They include the extent of the overlap between the facts underlying each claim; the greater the overlap, the easer it is to argue that it was unreasonable not to raise the matter in the first case. They also include any difficulties that existed, or might reasonably have been perceived, in raising the matter earlier.
(My emphasis)
In Macquarie Bank (supra), Clarke JA observed at 559:
What I think is necessary is an examination of the factual circumstances relied upon to establish the right to relief in each case in order to determine whether there is a sufficient identity between them to found the conclusion that the same cause of action was in question in both cases. One matter which may be of importance in contract cases is whether, in substance, both actions are based on breaches of a particular term in a single contract. This factor may be conclusive in some cases while in others it may not be. On the other hand, the defence of estoppel by record may defeat a second action despite the fact that it is based on a breach of a term of the contract not relied on in the first action: eg, India Steamship. Again the fact that both claims arise out of the same incident may be most material.
(My emphasis)
The thrust of the appellant’s argument in this matter was that there was a very substantial overlap of the facts underlying each of the claims brought respectively in the Federal Court and this Court, so much so that it would be unreasonable to allow the cause in contract now pleaded to be pursued and that otherwise there are no special circumstances justifying its maintenance.
There was some time on the appeal devoted to the question of onus, but in the end I am not satisfied much turns on that. Plainly, it is for the party relying on Anshun estoppel to show unreasonableness (Egglishaw v Australian Crime Commission[11]), but it appears to me that it can do that by relying on the materials before the court and arguing that, on their face, they demonstrate unreasonableness.
[11] (2007) 164 FCR 224
Of course, it remains open for the party maintaining the cause to adduce evidence going to that same question or, indeed, to “special circumstances”. In this particular case, the respondents did not seek to do that, albeit that the Master did himself identify some reasons which might have been advanced by the respondents in support of their position that Anshun estoppel should not apply. The appellant was critical of this, but I am not minded to comment on those other than to say that, as I apprehend it, it would always be legitimate for a judicial officer to rely not merely on the materials put before him, but on any inferences which might reasonably be drawn from them.
For reasons which appear below, I do not intend to say anything further about the issues of time limitation and extension.
Discussion
As I have noted, the applicable legal principles were not really in dispute, but their application to the facts of this case was.
The appellant argued that the Master erred in refusing to strike out or stay the claim:
(a)by incorrectly applying the Anshun principle;
(b)on the basis of issue estoppel;
(c)because it disclosed no reasonable cause of action, in the sense that it was time‑barred and there was no reasonable prospect that an extension of time would be granted.
The respondents contested all of those matters and sought to support the Master’s reasons.
Having considered the submissions of the parties and the authorities, I have determined that the appeal should be allowed and that the proceedings should be struck out. I find that for the following reasons:
1.Plainly, the same parties are or have been involved in each set of proceedings.
2.Save as to the precise amounts claimed, the nature of the damages sought in each action is identical.
3.With two important exceptions, the factual background and time frames pleaded with respect to each claim are identical. I will not embark on a specific comparison of corresponding paragraphs: the identity becomes obvious from a reading of each document.
4.The exceptions to which I refer are the plea in the current action that, in 1994, the parties entered into a contract, partly written and partly oral, whereby the appellant undertook, inter alia, to:
· supply the respondents with tobacco products for six years
· over that same time provide the respondents with the pleaded incentive payments
and the related plea that the appellant breached that contract.
5.No such pleas had been made in the Federal Court proceedings; indeed, they contain no reference at all to any contract to supply products for a fixed period or to provide incentive payments. They simply assert that over the relevant periods, the appellant had supplied tobacco products to the respondents and had made incentive payments to them.
The basis of the claim in those proceedings is that the appellant had sought to manipulate the respondents’ selling and pricing practices by modifying or withholding incentive payments (resale price maintenance, TPA s 48) and that it had misused its market power in denying the respondents ‘wholesaler’ status (misuse of market power – TPA s 46). Accordingly, it had been pleaded that the appellant had breached ss 46 and 48 of the TPA and that in consequence the respondents had lost incentive payments over the relevant period and, as well, the value of their wholesale business.
No other cause of that loss had been asserted.
6.Against the background of those observations, I considered the following questions:
6.1whether the contract claim raised in the current proceedings is so “closely connected with the subject matter” (Anshun, supra, at 604) of the Federal Court proceedings, whether there is such an “overlap” of facts between them (Ling, supra), that it was unreasonable of the respondents not to have pleaded it in those earlier proceedings. Could not the respondents be expected to have then raised it?
6.2whether the current action “íf it succeeds, will result in a judgment which conflicts with” (Anshun, ibid at 603) the Federal Court determination – the answer to this question may not be determinative but it is “an important factor” (Anshun, ibid at 603);
6.3If the answer to 6.1 is no, can I be satisfied there are “special circumstances” present, of a kind that justify the non-application of Anshun estoppel?
6.4whether any of the findings made in the Federal Court give rise to issue estoppel on matters relevant to this action;
6.5whether the respondents’ cause is in any event doomed to fail due to the effluxion of time.
7.As to the first of them (6.1), I am satisfied that it was unreasonable of the respondents not to have raised in the Federal Court the contract claim upon which they now rely, and for these reasons:
7.1As I have noted, and save with respect to the pleas as to the existence of a contract and its breach, there is an almost complete overlap of the factual background pleaded in each cause, the parties are the same and the damages the same.
7.2To the extent that the respondents asserted in the Federal Court that part of their losses was directly attributable to non-receipt of incentive payments, a clear and obvious path for the pursuit of that claim was a cause based on the now asserted contractual obligation of the appellant to provide them. Such a claim was so closely connected with the factual basis for the TPA claim that it ought to have been joined with it. Indeed, on what appears to have been the evidence then available to the respondents, it was always a much simpler claim to pursue.
7.3To the extent the respondents asserted in the Federal Court that the appellant misused its market power in not appointing them as a wholesaler of tobacco products, they must necessarily have considered, at that time, the impact of the appellant’s actions upon their asserted losses.
The pursuit of a claim for breach of an alleged contract to supply them on a wholesale basis was the most obvious pathway to pursue, but for their own reasons they chose the more difficult course of alleging misuse of market power. In reality, both claims should have been joined.
I am satisfied that the asserted contract was so intimately connected with the history of dealings between the parties and the respondents’ assertions as to causation and loss, that it was unreasonable for the respondents not to have included a contract claim in the original suit.
8.As to the second question (6.2), I am satisfied that were the respondents successful in these proceedings, their judgment would, indeed, conflict with the Federal Court findings, and for these reasons:
8.1At first instance in the Federal Court, the respondents’ assertion was that incentive payments were provided to them on the basis of sales volumes: they did not contend they had a contractual right to them. The judge at first instance found that there was an understanding between the parties that incentive payments would only be made if the respondents sold products at specified price levels (para. 29): impliedly, as I read it, that, irrespective of any other basis there might be for claiming the benefits, they would not be payable if the respondents chose to undercut.
8.2On appeal, the Full Court reflected those observations in a passage at para. 57, which I have previously quoted (para. 18).
8.3In so far as the respondents now seek to assert a contractual entitlement to receive incentive payments, a positive finding as to that would necessarily conflict with the Federal Court’s findings.
8.4Separately, the respondents now plead their losses are attributable to breaches of contract. A positive finding as to that would necessarily conflict with the findings of the Full Court as to causation at para. 58 (quoted above).
Put another way, the Federal Court held that the respondents’ asserted losses were caused by their election to sell below cost and thereby deprive themselves of incentive payments, hence a potential finding that their loss resulted from another cause – i.e. breach of contract to supply or pay incentive payments – would conflict with that.
Whilst the possibility of conflicting judgments is not of itself determinative, it is nonetheless a matter of which I should and do take account.
9.As to paragraph 6.3, the respondents were, of course, at liberty to adduce evidence on the question of special circumstances justifying the non-application of the Anshun rule, but none was adduced and, accordingly, I have considered the matter simply on the basis of documents and materials placed before me, aided, of course, by the parties’ submissions.
Anshun (supra) at 603 spoke of circumstances where a party might justifiably refrain from litigating an issue in the first proceeding but litigate it later, but subsequent cases have not assisted in establishing any useful guidelines permitting that.
Self-representation does not of itself give rise to special circumstances (Applicant A87/2003 v Minister for Immigration & Multicultural & Indigenous Affairs[12]) and there was nothing of any substance put before the Master, nor me, in support of any claim that any special circumstances existed which should override the application of Anshun estoppel.
[12] [2005] FCAFC 20
I am not satisfied that any of the matters raised by the learned Master at paras 130-135 inclusive, singly or in combination amount to special circumstances.
10.As to the fourth question (6.4), I am further satisfied that the doctrine of issue estoppel prevents the respondents from asserting in these proceedings:
10.1that they had a contractual right to incentive payments – in the face of the Federal Court finding set out in para. 8.2 above;
10.2that their asserted losses were caused by the alleged breach of contract – in the face of the Federal Court observation set out in para. 8.4 above. The Federal Court made a specific finding on that issue which closed the door on any other argument as to causation;
Both issues, but overwhelmingly the second one, are critical to the respondents’ claim here and they cannot succeed in this action on the face of findings on those issues.
11.As to the fifth question (6.5), for the above reasons I do not find it necessary to decide it, but would favour the view, generally, that such matters should be left for the determination of the trial court, anyway. I would add only these observations:
11.1The Federal Court finding that the business had collapsed by 1998 creates an issue estoppel as to that fact and notwithstanding that the doors remained open until May 1999.
11.2It was not seriously in issue before me that time begins to run in a contract claim from the date of breach. Even so, for the same reasons advanced by the Master, I would have been minded to find that, were there any breach of a covenant to supply, it would have continued until, at the latest, the time when the business closed its doors, i.e. May 1999. To that extent the respondents’ claim for continuing breaches of contract would be within time, at the least, with respect to the period between October 1998 and May 1999.
11.3Even so, in view of the Federal Court findings (8.4 above), the respondents would remain estopped from asserting that their asserted losses flowed from any continuing breaches of contract.
11.4The respondents’ assertion of breach of s 54 of the FTA, which is currently struck out, is not followed by plea as to causation, anyway. Were the ASC amended to plead that, the respondents would still encounter the problem of issue estoppel adverted to in para 10.2 and their claim would be based upon conduct allegedly occurring in 1994, that is to say, 10 years prior to the institution of proceedings. Section 48(1) of the LAA would apply to any extension application but, in considering the “justice of the case”, the court would likely take account of the estoppel matters commented upon above.
The appeal is allowed and I order that the within proceedings be struck out.