Hicks v Ashdon Valley Pty Ltd

[2016] VCC 1428

IN THE COUNTY COURT OF VICTORIA AT SHEPPARTON

COMMERCIAL DIVISION GENERAL LIST

Revised Not Restricted

Suitable for Publication

Case No. CI-14-03360

NIGEL HICKS	First Plaintiff
AND
VIVIEN HICKS
V
ASHDON VALLEY PTY LTD	Defendant

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JUDGE:	HER HONOUR JUDGE COHEN
WHERE HELD:	Melbourne
DATE OF HEARING:	15 August 2016
DATE OF JUDGMENT:	29 September, 2016
CASE MAY BE CITED AS:	Hicks v Ashdon Valley Pty Ltd
MEDIUM NEUTRAL CITATION:	[2016] VCC 1428

REASONS FOR JUDGMENT

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Subject:  Practice and Procedure

Catchwords:  Application by defendant for summary dismissal or permanent stay of plaintiffs’ claim; whether Res Judicata; Issue Estoppel; “Anshun” Estoppel apply

Legislationcited: Civil Procedure Act 2010 s 62; County Court Civil Procedure Rules, Rule 23.03

Cases Cited:Sahin v National Australia Bank Ltd [2012] VSCA 317; Blair v Curran (1939) 62 CLR 464; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.

Judgment:  Conditional stay on plaintiffs’ claim

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	In person
For the Defendant	Mr M Baker	Morrison & Sawers Lawyers

COUNTY COURT OF VICTORIA

250 William Street, Melbourne

HER HONOUR:

1This is an application by the defendant (“Ashdon Valley”) for summary judgment, or alternatively a permanent stay on the plaintiffs’ (“the Hicks’ ”) claim. The plaintiffs oppose the application.

2Mr and Mrs Hicks have represented themselves throughout the current proceeding.

3There are several years of litigation history between these parties; indeed that is how this application arises. Further, whatever my decision on this application, it will not finalise all such litigation. Not only is there a counterclaim in this proceeding which I am informed the defendant intends to pursue1, but more significantly, I am also informed that there is intended to be further litigation by the defendant to overturn the very Magistrates Court orders which are the basis of the present application.

4The defendant’s summons set out three alternative defences on which its application is based – the principle of res judicata; alternatively, issue estoppel; or alternatively, estoppel based on the decision in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. The defendant’s counsel said he relied primarily on “Anshun” estoppel.

5Each such basis of the application relates to a previous proceeding in the Magistrates’ Court, being proceeding B11169494, issued by Ashdon Valley in April 2011, in which proceeding the Hicks were defendants and filed a counterclaim.

Background

6In May 2009, the Hicks entered a terms contract of sale of real estate to purchase from Ashdon Valley three lots of land at Agnes Road, Wyuna. The sale was to be completed no later than 5 years from the initial date of settlement

1. At this stage the plaintiffs have not brought a cross-application to dismiss or stay the counterclaim on any of the bases being raised against them by the defendant.

and possession. They intended to run a dairy farm on that property. The contract contained special conditions relating to water allocations and entitlements, and payment of water rates.

7The Hicks took up possession of the land in June 2009, but a dispute arose between them and Ashdon Valley in relation to water rights and access to water. As a result they refused to pay the water rates.

8In early 2011, Ashdon Valley commenced proceedings in the Magistrates’ Court against the Hicks, alleging breach of the contract for failing to pay water rates and charges. The Hicks (defendants in the Magistrates’ Court proceeding) filed a defence and counterclaim alleging that Ashdon Valley had breached the contract by failing or refusing to transfer to them ownership of 3 mega litres of high reliability water rights, and to sign necessary documents allowing the plaintiffs access to the infrastructure for delivery of water to the property. There were alternative allegations of breach of the Commonwealth or state consumer laws by misleading or deceptive conduct, or negligent misstatement. They claimed damages, the period for which was unspecified in the pleadings but for the hearing they claimed damages based on an expert report which had assessed their losses to 30 December 2010, and the amount claimed was

$84,684.82.

9The Magistrates’ Court proceeding was heard over 3 days in June and August 2012. Ashdon Valley amended its claim to update the amount of outstanding rates and charges claimed. The Hicks did not amend their counterclaim to update any damage allegedly suffered after 31 December 2010. On 17 September 2012 His Honour Magistrate Lauritsen (as he then was) delivered judgment, providing written reasons for decision, finding for Ashdon Valley on the claim for non-payment of water rates, and for the Hicks on the counterclaim, on the basis of breach of contract, which amounts he ordered be set off. The net effect was judgment for $20,989.59 plus costs in the Magistrates’ Court in favour of Mr and Mrs Hicks.

10Ashdon Valley appealed the decision on the counter-claim to the Supreme Court. On 1 November 20132, Emerton J handed down a decision in which she set aside the Magistrate’s finding on the counterclaim, on the basis that her Honour could not be confident that a different decision would not have been reached on the question of causation had certain of the company’s arguments been specifically considered which she found they had not been. The counterclaim was remitted to the Magistrates’ Court to be heard and determined according to law, with a stay on the claim until then. There was no cross-appeal before the Supreme Court in relation to the company’s claim for water rates.

11Meanwhile, the Hicks had lost possession of the property from October 2013. The property had been repossessed by the bank financing the vendor.

12The Hicks were represented by lawyers in the initial Magistrates’ Court proceeding, and in the Supreme Court proceeding, but not after that. Ashdon Valley has been represented by lawyers throughout both those proceedings and in the current proceeding.

13

On 7 July 2014, the rehearing of the Hicks’ counterclaim came on before a different Magistrate, Mr Ginnane. Mr and Mrs Hicks were present, representing themselves, but there was no appearance by or for Ashdon Valley. The Magistrate struck out the defence to the counterclaim for non-attendance, removed the stay imposed by Justice Emerton on the judgment in favour of the plaintiff, namely Ashdon Valley, and awarded further interest on that sum from 18 September 2012 to 7 July 2014. His Honour then ordered that there be judgment on the defendants’ counterclaim in the sum of $84,685.82 ( the same amount as originally ordered), such sum to be set off against the judgment in favour of the plaintiff in that proceeding. There was an order for the defendants (Mr and Mrs Hicks) to be paid by the plaintiff (Ashdon Valley) $20,989.59 together with interest from 18 September 2012 in the sum of $4,027.99, and costs ordered by the Magistrates’ Court on 17 September 2012. There were

1. [2013] VSC 597

no costs ordered for that day (7 July 2014).

14The above is the limit of information from evidence before me of what occurred on 7 July 2014 at the Magistrates’ Court. Mr and Mrs Hicks said more in the hearing before me. As I pointed out to them at the time, what they said is not strictly evidence before me, and when I asked whether they wanted the opportunity to have the matter adjourned for an affidavit by Mr or Mrs Hicks or both to be prepared, they declined.

15What Mr and Mrs Hicks said of what occurred on 7 July 2014, had it been formally in evidence, would raise some issues about whether the matter was indeed considered according to law on that day as had been ordered by the Supreme Court. I make no finding about that without evidence, and in any event this Court does not have power to review the Magistrate’s decision on that day even were there an application on foot to do so.

16According to Mr and Mrs Hicks, the Magistrate did not actually rehear the matter, but first stood it down for some time to have inquiries made as to the non-appearance by lawyers on behalf of Ashdon Valley. When nothing came of those inquiries, Mrs Hicks says that the Magistrate returned into Court, told them not to say anything, and simply made the orders which he did. The defendant is not in a position to know what occurred on that day as it had no- one on its behalf present, and had apparently assumed that the Hicks also did not attend because the certified copy of the Court order did not record appearances.

17The amount ordered by the Magistrate on 7 July 2014 to be paid by the plaintiff to the Hicks has not been paid. Further, I was told by the defendant’s counsel that after the present application his client intends to apply to set aside that order.

18The plaintiffs say, through an affidavit of Mr Hicks, that they limited their claim in the Magistrates’ Court on the advice of their lawyer, so as not to exceed the

monetary limit in the Magistrates Court, as they had been told that if they claimed more the case would have to be transferred to the County Court and they would have to pay the costs of Ashdon Valley in the Magistrates Court proceeding. Whether they were given correct advice on the matters which Mr Hicks sets out is not for me to determine, nor whether they might have any cause of action against their former solicitors in respect of that or any other advice in relation to the handling of their claim.

The Defendant’s application to dismiss or permanently stay the present proceeding

19The defendant applies for orders that the plaintiffs’ claim in this proceeding be dismissed pursuant to s62 of the Civil Procedure Act 2010, as having no real prospect of success, or pursuant to Rule 23.03 of the County Court Rules, as being an abuse of process. Alternatively, it argues that the plaintiffs’ claim in this proceeding should be permanently stayed. As a final alternative, it argues that the plaintiffs’ claim should be dismissed or alternatively permanently stayed insofar as it seeks any relief for the period prior to 17 September 2012, the latter being the date of (first) decision in the Magistrates’ Court proceeding B11169494.

20The grounds for each alternative in the defendant’s application, are the relationship between the Hicks’ claim in this proceeding and both the legal and factual issues raised and determined in their counterclaim in the Magistrates’ Court proceeding. The Hicks do not disagree that the causes of action on which they rely here are essentially the same as in the Magistrates Court proceeding, as they copied for their statement of claim here what had been pleaded for them by the lawyer acting for them in the Magistrates’ Court proceeding. The difference is that the claim for damages in the Magistrates’ Court was in fact (although not on the pleading) limited to their losses up to the end of December 2010, and the claim in the current proceeding is for their losses after that date.

21At the start of the hearing of the application, counsel for the defendant indicated that it relied primarily on the “Anshun” estoppel principles.

22As the 17 September 2012 judgment and orders in the Magistrates Court on the Hicks’ counterclaim were set aside by the Supreme Court, in my view neither the orders nor reasons for decision could be the basis of the present application. The defendant therefore must rely on the orders made by Magistrate Ginnane on 7 July 2014.

Res Judicata

23In oral submissions counsel for the defendant did not press this basis for the application. He conceded that as there are no reasons for decision by the Magistrate for the 7 July 20143 judgment, he could not rely on the 7 July 2014 judgment as establishing res judicata on the present causes of action. He sought to rely on the September 2012 judgment, however when I queried how that could be when that order had been set aside by the Supreme Court, this basis was not argued further.

24The principle of res judicata is that a party will not be allowed at law to litigate the same cause of action twice. If a cause of action has been determined by a court it is taken to have merged into the judgement made by the court which has determined it, and a party to that judgment is prevented from asserting or denying that particular cause of action against the same other party again4.

25In the current proceeding the plaintiffs rely on essentially the same pleading that was the ultimate form of their counterclaim in the Magistrates Court proceeding. In almost identical terms they allege breach of contract, misleading or deceptive conduct under the Competition and Consumer Act 2010 (Cth), or alternatively

1. No reasons in writing were given and there is no evidence of any oral reasons. The defendant’s counsel submitted that it can be inferred that the Magistrate merely re-instated the previous judgment as undefended

2. Dixon J in Blair v Curran (1939) 62 CLR 464 at 532; Diplock LJ in Thoday v Thoday cited in Sahin v National Australia Bank Ltd [2012] VSCA 317 at [68]; Brennan J in Port of Melbourne Authority v Anshun at 610-611

negligent misstatement. Although the amount of damages claimed is unspecified, they particularise their losses as being for the period January 2011 to October 2013, or alternatively for the period January 2011 to June 2014, details to be provided closer to hearing date and after expert material.

26I am satisfied from those particulars that the Hicks are seeking to recover losses for a period after that for which they claimed and recovered in the Magistrates court proceeding, however based on the identical causes of action. I am unsure whether it will be alleged that there were separate breaches of contract which caused the further losses, or the identical acts, or the same but ongoing acts.

27If the judgment of 17 September 2012 on their counterclaim still stood, there would be a problem for the Hicks in claiming further losses based on the same causes of action, because they had brought a claim based on the same causes of action as in the present case, and relied on a particular quantification of their losses and obtained judgment for that amount. Their claim for the losses up to 30 December 2010 succeeded, and was the subject of an initial judgment in their favour, which was based on a finding by Magistrate Lauritsen of breach of contract by Ashdon Valley, but not for misleading or deceptive conduct. However, as that judgment was set aside by the Supreme Court, it could not now prevent the plaintiffs from re-litigating the entirety of their claim. The only judgment which could do that is the order on their counterclaim made on 7 July 2014 by Magistrate Ginnane, which still stands.

28I was not urged by the defendant to draw any inference to the effect that the 7 July 2014 must have amounted to findings on at least one of the causes of action pleaded in the counter-claim. That may be because he accepted that at most a judgment apparently entered in default of defence, was interlocutory, but as this was not addressed in the hearing, I shall make no finding on whether the judgment of 7 July 2014 could be the basis for a defence of res judicata.

Issue Estoppel

29In contrast to the principle of res judicata, issue estoppel prevents the same issue from being re-litigated between the same parties. If a court has already decided an issue of fact or of law, that disposes once for all of the issue so that it cannot afterwards be raised between the same parties5. and of course if that decision still stands.

30Although the Magistrates Court proceeding arose out of the same contract as is the subject of this proceeding, and the same conduct between the parties, the factual issue of whether the Hicks suffered any losses after December 2010 as a result of either breach by Ashdon Valley of the contract, or as a result of misleading or deceptive conduct, or negligent misrepresentation by it, has not been decided. Any losses suffered by them after December 2010 were not included in their claim and so were not decided by the Magistrates Court, either when first heard, or on the remittal occasion. I am satisfied that issue estoppel does not apply in the present.

31In contrast to the factual issues of whether loss or damage was caused to the Hicks after December 2000 by the defendant’s conduct, what was decided and would be capable of creating an issue estoppel was the finding of breach of contract by Ashdon Valley, if the 17 September 2012 judgement still stood. However it does not.  Although no application has been brought by the Hicks to strike out any parts of the Defence on the basis of issue estoppel, they did raise that argument. I make no order to that effect.

“Anshun” estoppel

32

In Port of Melbourne Authority v Anshun Pty Ltd, the High Court dealt with a situation where neither res judicata nor issue estoppel strictly applied. It was held that one party should be estopped from pursuing a further claim arising out of the same factual background and relative rights of parties in earlier

1. Dixon J in Blair v Curran (1939) 62 CLR 464

proceedings, because the issue in the subsequent claim was so relevant to the subject matter of the first action that it was unreasonable not to raise and rely on it in the first proceeding. This was because, having regard to the nature of the claim, it would be expected that the party would raise the issue and thereby enable the relevant issues to be determined in the one proceeding6.

33The defendant relied principally on this ground, submitting that it should be found that the plaintiffs acted unreasonably in restricting their claim for damages to a period well short of when the proceeding came on for hearing, and if there were further losses beyond December 2010, they or at least part of them would have been known to the Hicks at the time of the earlier hearing and determination of the case, and ought to have been claimed. It is pointed out that the Hicks were legally represented at this stage, and that Mr Hicks acknowledges in his affidavit that they took a deliberate decision not to seek to amend to update their losses, he says based on their legal advice.

34

The defendant relied on the case of Sahin v National Australia Bank Ltd7, in which even litigants who had not had lawyers acting for them in any of the earlier proceedings, were held to be estopped under this principle from raising a claim for further damages under a different cause of action in subsequent proceedings. It was found that the new cause of action was similar to at least one other cause of action previously litigated, and based on the same factual conduct. The further claim was found to be so relevant that it was unreasonable that they had not raised it when their earlier proceeding had been before the Court of Appeal. In that case there had even been an attempt to raise the issue at first instance where leave to amend had been denied, but the problem for the plaintiffs was that they had not raised that refusal in the Court of Appeal when appealing the first judgment, but after succeeding in the Court of Appeal had issued further proceedings to litigate the other part of their claim. It was held that the other claim was very closely connected with the subject matter of the

1. Gibbs CJ, Mason & Aickin JJ, Port of Melbourne Authority v Anshun Pty Ltd (1981) 36 ALR 3 at p 12

2. [2012] VSCA 317

first proceeding, with evidence as to the same matters being required, and that there was also a real risk of inconsistency between two judgements if allowed to proceed8.

35The defendant’s counsel also argued that it had been open to the Hicks to seek to amend and seek before the Magistrates’ Court an order for specific performance of the contract which was still on foot, and would have sought to enforce the water rights conditions, and that relief could have been sought to minimise their losses. I do not consider that this submission has merit in this application as it now stands, because it is only the judgment of the second Magistrate which stands in the way of the plaintiffs’ pursuing their current claim, and by 7 July 2014 the contract was at an end as the land had been repossessed by the defendant’s bank, and specific performance could not have been available.

36A problem for the Hicks on this issue is that they did not put evidence before me (through an affidavit) of what they told me in their submissions had occurred at the Magistrates’ Court on 7 July 2014. They said that they were not given the opportunity to call any evidence or make any submissions, but that is not strictly in evidence before me. Moreover, there is no evidence to suggest that they would have raised the further losses on that occasion if given the opportunity.

37What is in evidence is that they did not avail themselves of the opportunity during the 2012 hearing before the first Magistrate, which opportunity clearly was available, to raise and put in issue further losses for the period after 30 December 2010. They took that course after advice from their lawyer. I am satisfied that if the judgment of 17 September 2012 still stood, then Anshun estoppel would apply.

38As I have said, I do not strictly have evidence to the effect that the second

1. At [96]

Magistrate did not give an opportunity for the other losses to be raised, and importantly there is no evidence that the Hicks would have raised those losses on that occasion given that they had taken the decision not to do so in the 2012 hearing.

39However, I do have in evidence the actual orders made by the second Magistrate, and from those I infer that due to the failure to appear by Ashdon Valley, the Magistrate struck out the defence to counterclaim and treated the matter as entry of judgement in default of defence, even though not for a fixed sum, and did not hear the matter on its merits. I am prepared to infer that there was in fact no reasonable opportunity to the Hicks to raise and put in issue any further losses. On the other hand there is nothing to indicate nor to enable me to infer that they would have attempted to do that had they been given opportunity in a full hearing.

40The question then is whether I can or should find that it was unreasonable for the Hicks not to have sought to claim what further losses they now allege on or before the 7 July 2104 judgment.

41I am satisfied that they could and should have done so at the 2012 hearing. I recognise that the monetary limit on the Magistrates Court’s jurisdiction meant that unless Ashdon Valley had consented, the counterclaim would have had to be transferred to the County Court, adding to the potential costs of the litigation. However that does not make reasonable a decision to defer raising more of their claim, as further separate proceedings must have been expected to incur further costs in any event, and that is what has ensued by them issuing a fresh proceeding in this court separately for those further losses.

42I find that well before returning to the Magistrates Court on 7 July 2014, Mr and Mrs Hicks would have realised that losses after December 2010 were relevant and based on the same causes of actions they alleged for the losses up to December 2010. They acknowledge this by saying that they decided not to

update their claim for damages in the Magistrates Court in 2012, because of legal advice they were given relating to the jurisdictional limits and possible costs implications. Whether they were given correct legal advice at the time is not for me to decide.

43On the basis of those findings, and bearing in mind that an important factor to be taken into account in considering this issue is whether conflicting judgements may arise9, in the circumstances I find that it was unreasonable for the Hicks not to have raised in the Magistrates Court proceeding as heard in mid-2012 that there were ongoing losses, at least to the extent that they had by then accrued or been able to be calculated. Further on the balance of probabilities I am satisfied that that finding must by implication apply to the position on 7 July 2014 when even if not given opportunity to make submissions or call evidence, they well knew of any further losses and had not applied to amend their counterclaim to include them.

44I therefore find that the principles from Anshun’s case are made out in respect of the Hicks’ claim in this proceeding.

What orders should be made?

45The defendant seeks orders that the plaintiff’s claim be dismissed, or permanently stayed, or in the alternative that losses for any period prior to 17 September 2012 be dismissed or stayed.

46The court has a discretion whether to make orders sought, either under s 62 or R 23.03. However, clearly that discretion must not be exercised other than on a proper considerations, and if the grounds of the application are established, the court ought ordinarily to grant the relief sought. Clearly in the current case there is an acknowledgment that there is some scope for discretion as between an order dismissing the claim or permanently staying it.

1. Sahin v NAB at [91]

47In my view there are some features of the circumstances in this case which impact on whether the relief sought should be granted at all and if so whether with conditions.

48First, the defendant has not complied with the Magistrates’ Court judgement of 7 July, 2014. It is made well over two years ago. It does not sit well for the defendant to make an application which relies on orders made in another court with which it has not itself complied.

49Moreover, there was foreshadowed before me an intention to apply to set aside the Magistrates’ Court judgement. Were that to occur, and if the Magistrates’ Court order on the Hicks’ counterclaim of 7 July 2014 were eventually set aside, the causes of action so determined would no longer be prevented from being re-litigated by both parties on any of the grounds which are the basis for the present application. I add that if the defendant chose to delay any such application until after the conclusion of the current proceeding in this court it would bring about a very considerable injustice to the Hicks.

50For these reasons, applying the test for summary dismissal under s 62 of the Civil Procedure Act 2010, I do not find that the Hicks claim has no real prospect of success. I find that there is only likely to be a good defence for so long as the Magistrates’ Court judgement and order of 7 July 2014 on the Hicks counterclaim stands. I have been informed that the defendant intends to apply to have it set aside. Therefore, while I have found that as matters currently stand the defence of Anshun estoppel would defeat any real prospect of the plaintiffs’ claim succeeding, that is not an indefinite situation and indeed is intended to be changed by the defendant.

51Under Rule 23.01, the defendant relies upon the bringing of this claim as being an abuse of process, or alternatively vexatious. I am satisfied that the Hicks do not intend it to be either, but the decision as to whether it is an objective one for me to make. However, as the defendant has filed a counterclaim, also based

on the issues litigated in the Magistrates Court proceeding, it does not sit well for it to assert either an abuse of process or that the proceeding is vexatious.

52I have decided that the plaintiff’s claim should not be dismissed, because as already explained the defendant has indicated that it intends to apply to set aside the judgment on which this application relies. I have decided that while the 7 July 2014 Magistrates’ court judgment stands, the principles in Anshun’s case should prevent the plaintiffs from proceeding with their claim, and their claim should be stayed for so long as the 7 July 2014 order on their counterclaim stands. However, in my view an order staying the Hicks’ claim on that basis should be conditional upon the defendant complying with that judgment.

53For these reasons, I propose to make the following order.

Upon the defendant paying into court the sum ordered in favour of the plaintiff on 7 July 2014 in Magistrates Court proceeding B11169494, namely $25,017.5810 the plaintiffs’ claim in this proceeding be stayed for so long as that judgement stands.

1. $20,989.59 together with interest from 18 September 2012 in the sum of $4,027.99, and costs as ordered on 17 September 2012