Eastland Technology Australia Ltd v Ritract Ltd - [2005] WASC 125

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: EASTLAND TECHNOLOGY AUSTRALIA LTD -v- RITRACT LTD [2005] WASC 125

CORAM: MASTER NEWNES

HEARD: 21 MARCH 2005

DELIVERED : 14 JUNE 2005

FILE NO/S: CIV 2203 of 2004

BETWEEN: EASTLAND TECHNOLOGY AUSTRALIA LTD (ACN 059 479 391)
Plaintiff
AND
RITRACT LTD (ACN 106 353 253)
Defendant

Catchwords:

Practice and procedure - Application by defendant to strike out or stay action - Exclusive licence granted to plaintiff to exploit patents - Finding in earlier proceedings that licence lawfully terminated by licensor - Subsequent proceedings by plaintiff against defendant for infringement of patent - Whether res judicata or issue estoppel - Whether privity of interest or title - Whether infringement proceedings are abuse of process - Relevant principles - Relevance of extant appeal by plaintiff against decision in earlier proceedings - Turns on own facts

Legislation:

Patents Act 1990 (Cth)

Result:

Stay granted pending outcome of plaintiff's appeal in earlier proceedings

Category: B

Representation:

Counsel:

Plaintiff: Mr P J Jooste QC
Defendant: Mr G R Donaldson SC

Solicitors:

Plaintiff: Gadens Lawyers
Defendant: Fairweather & Lemonis

Case(s) referred to in judgment(s):

Arnold v National Westminster Bank Plc [1991] 2 AC 93
Australian Federation of Consumer Organisations v Tobacco Institute of Australia Ltd (1988) 81 ALR 701
Blair & Perpetual Trustee Co Ltd v Curran (Adams' Will) (1939) 62 CLR 464
Dallal v BankMellat [1986] QB 441
Davey v Ron Farris Real Estate Pty Ltd [2000] WASCA 58
Eastland Technology Australia Pty Ltd v Whisson [2002] WASC 150
Effem Foods Pty Ltd (Receivers and Managers Appointed (In Liq) v Trawl Industries of Australia Pty Ltd & Ors (1993) 115 ALR 377
General Steel Industries Inc v Commissioner for Railways NSW (1964) 112 CLR 125
Golski v Kirk (1987) 14 FCR 143
Grant v Australian Temporary Fencing Pty Ltd [2003] QSC 194
Haines v Australian Broadcasting Corporation (1995) 43 NSWLR 404
Jackson v Goldsmith (1950) 81 CLR 446
Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd and Larcombe (1996) 40 NSWLR 543
Manners v Transfield Pty Ltd (1992) 110 ALR 70
New Brunswick Railway Co v British & French Trust Corporation Ltd [1938] 4 All ER 747
Partridge v McIntosh and Sons Ltd (1933) 49 CLR 453
Port of Melbourne Authority v Anshun Pty Ltd (Anshun Case) (1981) 147 CLR 589
Ramsay v Pigram (1968) 118 CLR 271
Re Griffiths; ex parte Homestyle Pty Ltd [2005] WASCA 103
Read v Brown (1888) 22 QBD 128
Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198
Rogers v Legal Services Commission of South Australia (1995) 64 SASR 572
State Bank of New South Wales Ltd v Alexander Stenhouse Ltd (1997) Aust Tort Reports 81 ‑ 423
Trawl Industries of Australia Pty Ltd (In Liq) v Effem Foods Pty Ltd (1992) 108 ALR 335
Vitamins Australia Ltd v Beta‑Carotene Industries Pty Ltd (1987) 9 IPR 41
Walton v Gardiner (1993) 177 CLR 378
Yat Tung Investment Co Ltd v Dao Heng Bank Ltd (1979) AC 581

Case(s) also cited:

Abriel v Bennett [2003] NSWSC 368
Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853
Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 3) [1970] Ch 506
Dalgety Australia Ltd & Dalgety Farm Management Pty Ltd v Rubin & Murdoch, unreported; Library No 5485; 24 August 1984
Dissidomino v Butcher Paull and Calder (A Firm) [2004] WASC 122
Dormer v Solo Investments Pty Ltd [1974] 1 NSWLR 428
Gleeson v J Wippell & Co Ltd [1977] 3 All ER 54
Howden v Truth & Sportsman Ltd (1937) 58 CLR 416
In the Estate of Leachy (Dec) [1975] 1 NSWLR 246
Kimberley Downs Pty Ltd v Western Australia, unreported; SCt of WA; Library No 6414; 25 August 1986
Kuligowski v Metrobus (2004) 208 ALR 1
Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268
Metzger v Department of Health and Social Security [1978] 3 All ER 444
Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286
Packhard v Transport, Trading Agency & Weir (1912) 14 WALR 191
Rayhill v Mouawad [2001] NSWSC 676
Reichel v Magrath (1889) 14 App Cas 665
Spalla v St George Motor Finance Ltd (No 6) [2004] FCA 1699
Tedeschi v Legal Services Commissioner (1997) 43 NSWLR 20
Trans Realties Pty Ltd v Grbac [1975] 1 NSWLR 170
University of New South Wales v Moorhouse & Angus & Robertson (Publishers) Pty Ltd (1975) 133 CLR 1
West v Jackson McDonald (A Firm) [2001] WASC 198
Whisson v Eastland Technology Australia Ltd [2004] WASCA 272
Young v Public Service Board [1982] 2 NSWLR 456

MASTER NEWNES: This is an application by the defendant for an order striking out the proceedings, or alternatively for an order that they be stayed, on the ground that the claim is res judicata, alternatively that the plaintiff is estopped from making this claim or, further alternatively, that the proceedings are an abuse of process, the issue having been determined in earlier proceedings. In the alternative to that relief, the defendant seeks to strike out par 11 of the statement of claim on the ground it fails to disclose a reasonable cause of action.
In the action, the plaintiff pleads that, pursuant to a written agreement dated 25 January 1999, and varied in writing on 5 June 1999, made between the plaintiff, as licensee, and Messrs Whisson and Prestidge, as licensors, the plaintiff was granted an exclusive worldwide licence to commercialise, manufacture, use, market and sell products which were the subject of certain patents held by Messrs Whisson and Prestidge (the "exclusive licence agreement"). The licence was to enure for the life of the patents. It is alleged that the plaintiff thereby obtained a proprietary interest in the patents, and the right to exploit them, for the life of the patents.
The plaintiff alleges that, on a date or dates unknown to it but in or about 2004, the defendant purported to acquire from some other person an interest or right in the patents, without the consent of the plaintiff. It is alleged that the defendant has interfered with, and acted contrary to, the plaintiff's proprietary rights and interest in the patents and will continue to do so. The plaintiff pleads that the defendant purported to acquire rights in the patents with knowledge of the plaintiff's exclusive licence agreement and has, since about April 2004, been commercially exploiting, or attempting to commercially exploit, the patents. It pleads that the defendant refuses to acknowledge the plaintiff's proprietary rights and interest in the patents.
The basis of the defendant's current application lies in earlier proceedings in this Court in relation to the exclusive licence agreement. Suffice it for present purposes to say that, after the initial exclusive licence agreement was entered into, disputes arose between Messrs Whisson and Prestidge, as licensors, and the plaintiff, as licensee. Ultimately, those parties entered into a deed of settlement dated 5 June 1999 and a variation of the exclusive licence agreement of the same date. Subsequently, further disagreements occurred and proceedings were instituted in this Court by, among others, the plaintiff against Messrs Whisson and Prestidge. In that action, Messrs Whisson and Prestidge counterclaimed for a declaration that they had validly terminated the exclusive licence agreement in 2000.
On 14 June 2002, after trial, Templeman J granted a declaration that Messrs Whisson and Prestidge had validly terminated the exclusive licence agreement: Eastland Technology Australia Pty Ltd v Whisson [2002] WASC 150.
The plaintiff has appealed against, among other things, the decision of Templeman J to grant the declaration. That appeal has recently been heard by the Court of Appeal, but a decision has not yet been delivered. The parties to this application declined my suggestion that the application be stood over until the result of the appeal was known.
The defendant in the current action says that the plaintiff's claim against it is untenable in light of the decision of Templeman J. The plaintiff's case rests entirely on the validity of the exclusive licence agreement by which the plaintiff claims that it acquired, and continues to have, proprietary rights and interests in the patents. The plaintiff alleges the defendant wrongfully purported to acquire rights and interests in the same patents in about 2004. It was submitted by the defendant that it necessary follows from the decision of Templeman J that the plaintiff did not have in 2004, and does not have now, any rights or interest in the patents, the exclusive licence agreement having been found to have been validly terminated by Messrs Whisson and Prestidge in 2000.
The plaintiff advanced three contentions in opposition to the defendant's application to strike out or stay this action: first, that the proprietary rights granted to the plaintiff by the exclusive licence agreement survived for the life of the patents and were not affected by the termination of the exclusive licence agreement; secondly, that the doctrines of res judicata and issue estoppel do not apply; thirdly, that there was no abuse of process in the prosecution of this action because entirely different issues are involved and, in any event, the decision of Templeman J is the subject of a bona fide appeal by the plaintiff on strong grounds.
Senior counsel for the plaintiff submitted that an exclusive licence confers on the licensee the right to enjoy the exploitation of the patents to the exclusion of all others for so long as the patents remain in force, a right which is proprietary in nature and continues independently of the agreement which created it. Accordingly, there was a clear distinction between contractual rights and the proprietary rights conferred by an exclusive licence agreement in relation to a patent. The effect of the latter is that an exclusive licensee has a proprietary interest in the patents, not merely contractual rights in them.
Senior counsel for the plaintiff submitted that that position was not affected by cl 17 of the exclusive licence agreement, which, so far as presently relevant, is in the following terms:
"17.1Upon termination of the Agreement by the Licensor for any reason whatsoever: -
(a)The Licensee shall deliver up to the Licensor all copies of the Intellectual Property stored on computer disk or any other method of storage, technical manuals, Trade Secrets and the product in its possession or under its control, or in possession or under control of its servants or agents.
(b)Subject to cl 17.2(a) below, the Licensee shall have no further rights to manufacture and sell the Product, the Patents or the Trade secrets whether under common any Law, statute or otherwise and, at the Licensee's expense, or exploit the Trade Mark and it shall execute and deliver to the Licensor such instruments and take all such other action as the Licensor deems reasonably necessary to ensure the termination of any such rights which the Licensee might otherwise have, and to vest in the Licensor every interest therein.
(c)This cl 17, cl 11 and the provisions of cl 12 shall continue to bind the parties.
(d)The Licensee shall immediately make good any arrears in payments of Royalty.
17.2Upon termination of this Agreement by the Licensee:
(a) The Licensee shall be entitled to complete all contracts already entered into for manufacture and/or sale of the Product and to the extent necessary use the Patent and Trade Secrets and Licensor's Improvements;
(b) The Licensor shall refund the whole of the Licence Fee, however, in the event that the Licensee shall continue trading in commercialising, manufacturing, having manufactured [sic] the Product in any of the Territories, then the Licensor shall not refund the Licence Fee.
17.3The termination of this Agreement shall not affect any right of action which may have accrued to either party in respect of any breach prior to the date of such termination."
It was also argued on behalf of the plaintiff that the effect of cl 17.1 was that it was necessary for Messrs Whisson and Prestidge, as licensors, to require the plaintiff to execute and deliver such things as the licensors deemed reasonably necessary to ensure the termination of any rights or interests of the plaintiff and to vest those interests in the licensors. It was submitted that, in fact, Messrs Whisson and Prestidge had not sought to do so in the previous proceedings, for example, by seeking an order for specific performance of cl 17 or any consequential relief in the action.
It was further argued that in that action the Court made no declaration as to the plaintiff's proprietary rights created by the exclusive licence agreement, but only as to the validity of the notice of termination served by Messrs Whisson and Prestidge. Accordingly, there remain live issues as to the plaintiff's current proprietary rights under the patents, and that will continue to be the case even if the appeal instituted by the plaintiff is unsuccessful.
Counsel for the plaintiff referred to Vitamins Australia Ltd v Beta‑Carotene Industries Pty Ltd (1987) 9 IPR 41 and Grant v Australian Temporary Fencing Pty Ltd [2003] QSC 194, as authority for the proposition that the plaintiff's proprietary rights in respect of the patents are independent of its contractual rights and obligations under the exclusive licence agreement.
In Vitamins Australia Ltd v Beta‑Carotene, the appellant and the respondent had entered into a joint venture agreement for the cultivation, harvest and processing of algae. The respondent was granted an exclusive licence over two patents by Bayonet Pty Ltd. The registration of Bayonet Pty Ltd under the Companies Code was later cancelled. The appellant subsequently exercised on option to purchase the whole of the respondent's interest in the joint venture, but contended it was not obliged to pay the full consideration because the licence over the patents had ceased to operate upon the cancellation of Bayonet Pty Ltd's registration under the Companies Code. Consequently, the respondent was unable to assign any interest in the patents to the appellant.
That argument was rejected at first instance and on appeal. It was held that an exclusive licence in a patent creates in the licensee a proprietary interest in the patent. Upon cancellation of the registration of the licensor, all that vested in the NCSC under s 461 of the Companies Code was the property which was then vested in the company or to which it was entitled or over which it had a power of disposition. At the time Bayonet Pty Ltd was dissolved it owned the patents, but subject to the exclusive licence. What vested in the NCSC therefore, was the patent subject to the exclusive licence. Brinsden J (at 50) made the observation that an exclusive licence conferred on the licensee the right to enjoy the exploitation of the patented article so long as the patent remained in force. That right was granted by the licence agreement and, having been granted, it continued so long as the patent continued in force. It was a right, proprietary in nature, which continued independently of the continuation of the agreement which created it, although the agreement may contain continuing obligations.
It does not seem to me that that case is authority for the contention advanced on this application on behalf of the plaintiff. What was said by Brinsden J must be viewed in the context of that case. There the agreement had not been terminated by the licensor, but rather the licensor had ceased to have any legal existence and its assets had vested in the NCSC by statute. The case does not, in my view, support the proposition that once an exclusive licence agreement is entered into, the lawful termination of that agreement by the licensor does not affect any proprietary rights it conferred on the licensee.
In Grant v Australian Temporary Fencing Pty Ltd (supra), VitaminsAustralia was referred to on the question of whether infringement proceedings can be commenced by an exclusive licence holder before registration of the exclusive licence agreement under the Patents Act, but there is nothing in Grant's case that assists the plaintiff.
It is the case that an exclusive licence agreement creates proprietary rights in the licensee. It is also the case that, under the Patents Act 1990 (Cth), an exclusive licensee has the powers of a patentee with respect to using the rights granted upon the grant of a patent, including the right to take proceedings for infringement. But the fact that an exclusive licence agreement creates such proprietary rights in the licensee, and not merely personal rights, does not, in my view, preclude a licensor from exercising rights under the agreement to bring the licensee's rights under the exclusive licence agreement, including proprietary rights, to an end. If the plaintiff's contention were right it would follow, for instance, that in the event of a serious breach, or even of repudiation, of the agreement by the licensee it would be beyond the power of the licensor to terminate the licensee's proprietary rights in respect of the patents. No case has been cited to me which supports such a far reaching proposition and in my view there is no foundation for it.
There is also, in my view, no substance in the submission that the rights of the plaintiff in the patents were not terminated because Messrs Whisson and Prestidge did not seek ancillary relief under cl 17(b) in the earlier proceedings. It is clear from cl 17 that, upon termination of the exclusive licence agreement by the licensor, the licensee's rights and interests in the patents thereupon cease. The right of the licensor to require the licensee to execute and deliver instruments and take other action, as provided for in cl 17.1(b), is simply to ensure the effectiveness of the termination of those rights. The termination of the licensee's rights and interests are not conditional upon the licensor requiring that any instruments be executed or other action taken by the licensee.
It follows, in my view, that the effect of the declaration made by Templeman J, that Messrs Whisson and Prestidge, as licensor, had validly terminated the agreement in 2000, was that as from that termination the plaintiff's rights and interests in the patents came to an end.
The next issue is whether in these proceedings the plaintiff is bound by the finding of Templeman J. The defendant submitted that the doctrines of res judicata and issue estoppel apply. Senior counsel for the defendant acknowledged that res judicata applies only in respect of parties to the first proceedings, but submitted that the defendant was a privy of both interest and title of Messrs Whisson and Prestidge.
It was also argued on behalf of the first defendant that an issue estoppel arose. It was submitted that an issue estoppel could arise in relation to a third party, and senior counsel referred to Manners v TransfieldPty Ltd (1992) 110 ALR 70 at 88.
Alternatively, it was submitted that the proceedings were an abuse of process. It was argued that even if no res judicata or issue estoppel arose, these proceedings were an impermissible attempt to relitigate a case that had already been determined against the plaintiff.
The defendant took a separate point in relation to par 11 of the statement of claim, in case its substantive application should not be upheld. It submitted in relation to par 11 that the allegation the defendant had notice, as at April 2004, of the exclusive licence agreement between the plaintiff and Messrs Whisson and Prestidge, was untenable. It followed from the finding of Templeman J in the earlier proceedings that in June 2004 the exclusive licence agreement was no longer in existence. A plea of knowing interference with the plaintiff's rights could not arguably succeed when the Court had found that at the relevant time the plaintiff had no such rights.
The plaintiff contended that the doctrine of res judicata had no application, it being a necessary element that the cause of action in the subsequent proceedings be the same as the cause of action in the earlier proceedings and between the same parties or their privies. It was submitted that the present proceedings involved neither the same cause of action nor the same parties or their privies. Senior counsel for the plaintiff argued that the issue, inter alia, in the earlier proceedings was whether the exclusive licence agreement had been validly terminated by the licensors. The present action was based upon the proprietary title of the plaintiff as exclusive licensee and the priority of the plaintiff's right, title and interest in the patents, and concerned the question of whether the defendant had wrongfully interfered in the plaintiff's right, title and interest in the patents.

It was also submitted on behalf of the plaintiff that the parties were not identical. The defendant was not a party to, and is not the privy of a party to, the proceedings before Templeman J. There is nothing to suggest any relevant relationship between the defendant and Messrs Whisson and Prestidge which could give rise to a privity of interest or title. Accordingly, no issue estoppel or res judicata could arise.
On the question of an abuse of process, it was submitted on behalf of the plaintiff that in order to make out that case the defendant would have to show, among other things, that in the earlier proceedings a final decision had been made, after argument, on an issue that is sought to be litigated in this action and that decision is not the subject of appeal. That was not made out. No determination was made in the earlier proceedings as to the plaintiff's proprietary right in the patents and, in any event, the proceedings were subject to appeal. It was submitted that on such an application the guiding considerations are oppression and unfairness to the other party to the litigation and concern for the integrity of the system of the administration of justice. Counsel referred to State Bank of New South Wales Ltd v Alexander Stenhouse Ltd (1997) Aust Tort Reports 81 ‑ 423 at 64,089. Counsel argued that those issues did not arise in the context of the current action.
In relation to the application to strike out par 11 of the statement of claim it was submitted on behalf of the plaintiff that the plea in that paragraph was clearly arguable because the declaration of Templeman J did not disturb the proprietary rights, title and interest of the plaintiff to the patents, and the defendant had notice of those rights.
It is well established that on an application to strike out a claim, great care must be exercised to ensure the plaintiff is not improperly deprived of its opportunity for the trial of its case: General Steel Industries Inc v Commissioner for Railways NSW (1964) 112 CLR 125 at 130. Generally, a plaintiff is entitled as of right to have its case heard and it is only in cases in which it can be seen from the outset that, however the facts be found, there is no basis for the legal conclusion contended for by the plaintiff that the case should be dismissed. Similarly, an application to have an action stayed involves the exercise of "a power which no court should exercise but after a scrupulous examination of all the circumstances": Yat Tung Investment Co Ltd v Dao Heng Bank Ltd (1979) AC 581 at 590; Dallal v BankMellat [1986] QB 441 at 453. The discretion to stay proceedings as an abuse of the process of the court ought always to be exercised with great caution: see Australian Federation of Consumer Organisations v Tobacco Institute of Australia Ltd (1988) 81 ALR 701 at 708; Arnold v National Westminster Bank Plc [1991] 2 AC 93 at 107.
The rule as to res judicata is that, where an action has been brought and judgment has been entered in that action, no other proceedings can thereafter be maintained on the same cause of action: Jackson v Goldsmith (1950) 81 CLR 446, at 466.
The distinction between res judicata and issue estoppel was described by Dixon J in Blair & Perpetual Trustee Co Ltd v Curran (Adams' Will) (1939) 62 CLR 464, at 532, in the following terms:
"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 any 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."
In the case of both res judicata and issue estoppel, it is necessary to focus on the substance, not the form, of the relevant actions: Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd and Larcombe (1996) 40 NSWLR 543 per Clarke JA, at 559; Trawl Industries of Australia Pty Ltd (In Liq) v Effem Foods Pty Ltd (1992) 108 ALR 335 per Gummow J at 347.
Under the doctrine of res judicata it is necessary to identify the cause of action determined in the former proceedings. In Jackson v Goldsmith (supra), Williams J said (at 460) that a plea of res judicata, filed in a Supreme Court action on the basis of a District Court judgment "would only be good if the causes of action in the Supreme Court and in the District Court were precisely the same". In the same case, Fullagar J (in dissent but not on this point) said (at 466):
"The rule as to res judicata can be stated sufficiently for present purposes by saying that, where an action has been brought and judgment has been entered in that action, no other proceedings can thereafter be maintained on the same cause of action."
His Honour went on (467):
"In the first place, if A sues B to judgment and in subsequent proceedings between them a plea of res judicata is raised, the primary question will be whether the cause of action in the later proceedings is the same as that which was litigated in the former proceedings. This was the question which arose in the well-known case of Brunsden v. Humphrey … . It was held there that the causes of action were not the same. The injuria was the same but the damnum was different, and, since damage was 'of the gist' of the particular action, the causes of action were not the same. The plea therefore failed. On the other hand, if A sues B to judgment and in subsequent proceedings between them a plea of issue estoppel is raised, the plea may succeed although the causes of action in the two cases are entirely different. The question will be whether an issue of fact or law which is raised in the later proceedings was an issue of fact or law which was also raised in the earlier proceedings and therein determined."
The phrase "cause of action" has been described in Read v Brown (1888) 22 QBD 128 by Lord Esher MR (131) as:
" ... every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved."
See also Port of Melbourne Authority v Anshun Pty Ltd (Anshun Case) (1981) 147 CLR 589 per Gibbs CJ, Mason and Aitken JJ at 597, and Brennan J at 608 ‑ 613; Golski v Kirk (1987) 14 FCR 143 per Kelly J at 145.
It is, I think, also accepted that, despite the differences between the two doctrines, both res judicata and issue estoppel require that there be an identity of parties in the two proceedings: see Effem Foods Pty Ltd (Receivers and Managers Appointed (In Liq) v Trawl Industries of Australia Pty Ltd & Ors (1993) 115 ALR 377 at 392.
The basis of that rule, and the purpose of the identification of a privy with a party whose privy he is, was described by Starke J in Partridge v McIntosh and Sons Ltd (1933) 49 CLR 453. In that case his Honour was concerned with its application in relation to estoppel. Starke J said (at 462 – 3) as follows:
"Estoppel, however, is only a personal matter, between the particular parties. 'Outside this transaction, and in respect of matters unconnected with it, there is no ground whatever for exacting the admission, from either party; and, of course, so far as third parties not privy with nor claiming under either of them are concerned, their rights cannot be thereby affected in any way, either beneficially or prejudicially; the rights and liabilities of such parties depending upon the actual facts, which must be proved in the ordinary way. ... But although the estoppel is only a personal matter between the particular parties, yet to really give the parties the benefit of it, and subject them to the burden of it, it is essential that not they only, but those of whom it can be predicated, that they are their representatives in interest should likewise have the benefit of and be subject to the burden of the admission. Upon any one, therefore, upon whom all the rights and obligations of any legal entity devolve, such as an executor, administrator, or trustee in bankruptcy, there will devolve, as one of such rights and obligations, the right to exact, or the obligation to be subjected to the admission; and so, too, upon any one, upon whom the rights and obligations arising out of the particular transaction that give rise to the estoppel devolve, as, for example, a purchaser or assignee, that will also devolve this right and this obligation.' (Cababé, Principles of Estoppel, (1888), pp. 111-113; Ewart on Estoppel (1900), pp. 187 et seqq.; Richards v. Jenkins (1887) 18 Q.B.D. 451."
In Ramsay v Pigram (1968) 118 CLR 271, Barwick CJ (at 279) referred to the three classes of privies, of blood, of title, and of interest, and said:
"The basic requirement of a privy in interest is that the privy must claim under or through the person of whom he is said to be a privy. Here it is quite clear that the Government had no interest in the action between the respondent and the police officer: nor can it be said that the action brought by the police officer was brought by him in any sense on behalf of the Government or that in relation to the defence of contributory negligence the respondent could have been treating the Government as the real 'defendant' to that claim. In every respect the action between the respondent and the police officer was personal to each of them, neither being in any sense in relation to the action or any of the issues involved in it, representative of another. Nor can it be said that the Government in any sense claims under or in virtue of the police officer or of any right of his, or that it derives any relevant interest through him."
On the material before me, I am not satisfied that res judicata is applicable. Apart from any other issue, I am not satisfied that the parties to the two proceedings are identical. Senior counsel for the defendant said from the bar table that the defendant held an exclusive licence from Messrs Whisson and Prestidge in respect of the same intellectual property that had been the subject of the exclusive licence agreement between the plaintiff and Messrs Whisson and Prestidge. There was therefore a privity of interest between the defendant and Messrs Whisson and Prestidge. But, as senior counsel for the plaintiff pointed out, there was no evidence to that effect or any evidence as to what interest the defendant had in the patents. That, it seems to me, is correct and accordingly the necessary element of privity of interest has not been made out.
I should perhaps say that I understood the defendant's application was put primarily on the basis of issue estoppel or abuse of process. It is to those issues that I now turn.
In Blair v Curran (supra), Dixon J described the principle of issue estoppel as follows (at 531 – 532):
"A judicial determination directly involving an issue of fact or of law disposes once and for all of the issue, so that it cannot afterwards be raised between the same party or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily establishes as the legal foundation or justification of its conclusion whether that conclusion is a money sum to be recovered or that the doing of an act be commanded or be restrained or that rights be declared."
The estoppel therefore extends, not only to ultimate issues that are expressly declared in the judgment or order, but to any matter which it was necessary to decide or was central to the determination: Blair v Curran per Dixon J at 531 - 533; Rogers v Legal Services Commission of South Australia (1995) 64 SASR 572.
The basis upon which an issue estoppel may be raised was discussed in Ramsay v Pigram (supra) by Barwick CJ at 276, as follows:
"Long standing authorities, in my opinion, warrant the statement that, as a mechanism in the process of accumulating material for the determination of issues in a proceeding between parties, an estoppel is available to prevent the assertion in those proceedings of a matter of fact or of law in a sense contrary to that in which that precise matter has already been necessarily and directly decided by a competent tribunal in resolving rights or obligations between the same parties in the same respective interests or capacities, or between a privy of each, or between one of them and a privy of the other in each instance in the same interest or capacity. The issue thus determined, as distinct from the cause of action in relation to which it arose, must have been identical in each case. Of its nature such an estoppel must be available to and operative in respect of each party; or, as it is said, estoppels must be mutual."
Barwick CJ referred (at 277) to "the importance of the identification of the precise issue decided in the first place in order to ascertain whether it is identical with what is sought to be litigated in the second place". He referred to New Brunswick Railway Co v British & French Trust Corporation Ltd [1938] 4 All ER 747 at 756, 767, 770. In that case, at 770, Lord Romer said:
"It is no doubt true to say that whenever a question has in substance been decided which has in substance formed the ratio of, or has been fundamental to, the decision in an earlier action between the same parties, each party is estopped from litigating the same question thereafter. However, this is very different from saying that he may not thereafter litigate, not the same question, but a question that is merely substantially similar to the one that has already been decided. If, in an action, the question of the construction of a particular document has been in substance decided, each party to the action is estopped from subsequently litigating the same question of construction of that particular document. However, he is not estopped from subsequently litigating the question of construction of another document, even though the second one be in substantially identical words, for the documents are two distinct documents and the question of their construction are two distinct questions."
In my view, in the current action the plaintiff does seek to litigate an issue decided in the earlier proceedings. The question in the counterclaim in the earlier proceedings was whether the exclusive licence agreement was valid and subsisting. Templeman J found that the exclusive licence agreement had been validly terminated by the licensors in 2000. In this action, the plaintiff pleads, and it is essential to its case, that the exclusive licence agreement was in force in April 2004, and remains valid and subsisting. That issue has already been decided adverse to the plaintiff by the finding in the earlier proceedings.
The question then is whether there is privity of title or interest between the current defendant and the licensor. I do not accept the defendant's argument that an issue estoppel can arise in relation to a person who was not a party to, or who is not a privy of a party to, the earlier proceedings relied upon as giving rise to the estoppel. Manners v Transfield (supra) turned on the specific legislation with which the Court was there concerned and I do not consider it is authority for such a proposition.
On the material before me I do not consider that the issue of whether the defendant is a privy of Messrs Whisson and Prestidge has been made out and accordingly I would not strike out the proceedings or order a stay on the basis of issue estoppel.
I turn then to the question of an abuse of the process of the Court.
In Walton v Gardiner (1993) 177 CLR 378, a majority of the Court considered (at 393) that proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances did not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it was sought to litigate anew a case that had already been disposed of by earlier proceedings.
The relevant principles were enunciated in Haines v Australian Broadcasting Corporation (1995) 43 NSWLR 404 by Hunt CJ at CL (at 414) as follows:
"The issue determined in the earlier case which is sought to be litigated in the later case must be one which the party propounding it in the latter lost in the former … It must be an issue which was necessarily determined in the earlier case, and one of importance to the final result. It must have been properly argued - by which I mean that it is readily apparent from whatever records there are of the earlier case that the tribunal which decided it was an appropriate one to do so, that the parties were appropriate contradictors and that the issue was regarded by them as one of importance in that case. In normal circumstances, the decision disposing of the issue must have been a final one - by which I mean that it is not subject to appeal. (The filing of a notice of appeal may clearly be seen in some circumstances as merely seeking to delay the inevitable.) There may also be circumstances in which, notwithstanding the absence of an appeal, it is clear that the earlier decision has overlooked some binding authority, or that it has caused the unsuccessful party a manifest injustice. As most of the cases have emphasized, all the circumstances of the determination in the earlier case may be considered, and there can be no definitive statement of the circumstances which will inevitably lead to a finding of abuse of process."
That passage was cited with approval by the Full Court of this Court in Davey v Ron Farris Real Estate Pty Ltd [2000] WASCA 58, by the Court of Appeal of New South Wales in Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198 at 204 and was referred to with approval by the Court of Appeal of this Court in Re Griffiths; ex parte Homestyle Pty Ltd [2005] WASCA 103.
In my view, subject to the question of the appeal by the present plaintiff in the earlier proceedings, the current action is plainly an abuse of process of the Court.
As I have said, an essential issue in the present case is the existence of the plaintiff's rights and interests as exclusive licensee of the patents under the exclusive licence agreement. In the earlier proceedings it was found that the exclusive licence agreement, on which the plaintiff relies in the present action as conferring on it the rights which are the basis of its current claim, had been validly terminated by the licensors in 2000, well before the cause of action in the present case against the defendant is alleged to have arisen. The issue in the current action of whether or not the plaintiff was at all material times an exclusive licensee under the exclusive licence agreement has therefore been determined against the plaintiff in the earlier proceedings.
It was contended on behalf of the plaintiff that the appeal against the decision of Templeman J had strong prospects of success and on that ground alone the contention of an abuse of process must fail.
I do not consider it is necessary for me to reach a view as to the merits of what is, on the face of it, a complex appeal, beyond being satisfied, which I am, that the appeal is bona fide and has some prospects of success. In those circumstances, in my view, the proper course is to stand over the final determination of this application until the decision on the appeal has been delivered and then to hear any further submissions the parties may wish to make on the consequences of the decision of the Court of Appeal.
In the meantime, the decision in the earlier proceedings remains on foot and I would order that the action be stayed pending the decision of the Court of Appeal.