Kalaui Pty Ltd as Trustee for the Fred Pinzone Family Trust v Moove Holdings Pty Ltd
[2024] WADC 86
•9 OCTOBER 2024
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: KALAUI PTY LTD as Trustee for THE FRED PINZONE FAMILY TRUST -v- MOOVE HOLDINGS PTY LTD [2024] WADC 86
CORAM: MASSEY DCJ
HEARD: 29 AUGUST 2024
DELIVERED : 9 OCTOBER 2024
FILE NO/S: APP 21 of 2024
BETWEEN: KALAUI PTY LTD as Trustee for THE FRED PINZONE FAMILY TRUST
Appellant
AND
MOOVE HOLDINGS PTY LTD
Respondent
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram: MAGISTRATE M CRAWFORD
File Number : MC/CIV/PER/GCLM/4874/2023
Catchwords:
Res judicata - Functus officio - Anshun estoppel
Legislation:
Magistrates Court (Civil Proceedings) Act 2004 (WA)
Magistrates Court (Civil Proceedings) Rules 2005 (WA)
Magistrates Court (Minor Cases Procedure) Rules 2005 (WA)
Magistrates Court Act 2004 (WA)
Result:
Appeal dismissed
Representation:
Counsel:
| Appellant | : | Mr D H Solomon |
| Respondent | : | Mr L R Nicholls |
Solicitors:
| Appellant | : | Solomon Brothers |
| Respondent | : | Patten Robins Lawyers |
Case(s) referred to in decision(s):
Blair v Curran 1939 62 CLR 464
Briggs v Lunt [No 3] [2011] WASCA 44
Concut Pty Ltd v Ivor Warrell [2000] HCA 64; 75 ALJR 312
Fiorelli Properties Pty Ltd v Professional Fencemakers Pty Ltd and Huu Tai Le [2011] VSC 661; (2011) 34 VR 257
Holland v Wiltshire [1954] 90 CLR 409
Jackson v Goldsmith (1950) 81 CLR 446
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Sampey v Doherty [2024] WASCA 105
Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management (2012) 42 WAR 287
Terry v Permanent Trustee Australia Ltd (1995) 6 BPR 14091
Von Adametz v Johansen [2012] WADC 178
Willoughby v Clayton Utz [No 2] [2009] WASCA 29
Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd [1993] AC 573
Wright v Lemon [2024] WASCA 19
MASSEY DCJ:
This is an appeal against the decision of his Honour Magistrate Crawford (the Perth Magistrate) to dismiss the appellant's claim in the Perth Magistrates Court (the Perth Proceedings) and to award costs.
Background
Before I come to the issues, it is necessary to set out the background.
On 31 January 2022 the respondent entered into an offer to lease (the offer to lease) with the appellant relating to commercial premises owned by the appellant.
It was a condition of the offer to lease that the respondent pay a deposit of $6,025, comprised of a deposit of $4,125 and estimated legal costs of $1,900. That amount was paid by the respondent on 2 February 2022.
The offer to lease required the respondent to execute a lease within seven days. The lease was to be in substantially the same form as that annexed to the offer to lease, allowing for reasonable amendments as agreed between the parties.
The parties were unable to reach agreement on the terms of the lease and on 8 March 2022 the respondent asked the appellant to return the deposit.
On 31 March 2022 the appellant's solicitors sent a notice of termination of lease to the respondent (the notice of termination), stating that the appellant terminated the lease on the grounds of repudiation effective immediately. The notice went on to say that it did so:
… subject and without prejudice to [the appellant's] rights to forfeit the deposit paid under the agreement for lease and to claim loss of bargain damages for the repudiation.
On 17 October 2022 the appellant entered into an offer to lease with new tenants and on 14 November 2022 a deed of lease was entered into with those new tenants with a commencement date of 1 November 2022.
The respondent commenced a minor case claim in the Fremantle Magistrates Court (the Fremantle Proceedings) on 17 March 2022 seeking recovery of the $6,025 deposit. The respondent claimed that the appellant had breached item 14 of the offer to lease, which allowed for reasonable amendments to the lease document.
On 31 March 2022, or on the same day as the notice of termination was issued, the appellant lodged a response to that minor case claim in the Fremantle Proceedings.
In its response the appellant asserted that the respondent had repudiated the agreement and that the appellant had accepted the repudiation and terminated the agreement on 31 March 2022. The appellant asserted that it was therefore entitled to forfeit and retain the deposit.
The appellant also completed and filed, together with the response, an application for counterclaim in Part 1 of the response. This 'Part 1 ‑ application for counterclaim' is part of the standard form which is served with the minor case claim on a defendant. There is a box which is marked, in this case by the appellant with an 'X', by a defendant who wishes to counterclaim in the proceedings.
That part of the form includes a section which is marked 'PART I‑DETAILS IN SUPPORT OF COUNTERCLAIM'. The appellant completed that section of the form as follows:
1.Declaration that the agreement for lease was repudiated by the claimant and terminated by the defendant for the claimant's repudiation.
2.Declaration that the defendant is entitled to forfeit the deposit of $6,025 paid under the agreement for lease and retain it.
3.Damages for repudiation.
A status conference was held in the Fremantle Magistrates Court on 18 May 2022 before his Honour Magistrate Lemmon.
Ultimately the trial of the matter came before Magistrate Hills‑Wright (the Fremantle Magistrate) in Fremantle on 25 October 2022. His Honour reserved his decision and then subsequently delivered oral reasons on 21 November 2022. His Honour found that the appellant had not breached item 14 of the offer to lease, that the respondent had repudiated the lease on 8 March 2022 and thereby forfeited the leasing deposit and lease costs, and that because the appellant had only incurred $1,390 in legal fees ($510 less than the estimate provided in the offer to lease of $1,900), the appellant was to repay the difference to the respondent. Accordingly, judgment was entered for the respondent in the sum of $510.
No appeal was brought by either party against that decision.
On 17 April 2023 the appellant commenced a general procedure claim in the Perth Proceedings seeking damages for repudiation of the offer to lease in the amount of not less than $20,620.74, plus interest and costs.
The respondent defended the claim on the basis that the proceedings were barred because of any one or more of the following reasons:
(a)res judicata - the cause of action (damages for repudiation had already been adjudicated);
(b)Anshun estoppel (Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589) - it was unreasonable for the appellant not to have pursued the claim before the Fremantle Magistrate;
(c)functus officio - under the relevant legislation the court was precluded from again considering a matter that had already come before it; and
(d)further matters relating to the merits which it said justified refusal of the relief. Relevantly, the respondent contended that the remedies afforded under the offer to lease had been exhausted and no further damages could be awarded.
On 13 February 2024 the Perth Proceedings were heard by the Perth Magistrate at a trial.
The evidence given at that trial included a written statement of intended evidence of Alfredo Pinzone dated 22 September 2023 and oral evidence given by Mr Pinzone. His evidence was in effect to set out the history of the matter and to provide evidence of the appellant's alleged loss and damage. He was not cross-examined.
The evidence also included a statement of intended evidence of a witness, Raymond Taylor, on behalf of the respondent. He also gave some evidence about the history of the matter and was cross‑examined to some extent about his awareness of any steps having been taken by the appellant to lease the premises after the respondent repudiated the agreement.
The Perth Magistrate ultimately delivered written reasons for decision on 15 March 2024 dismissing the appellant's action for substantially the reasons contended for by the respondent.
On 22 March 2022 the appellant commenced this appeal against the decision of the Perth Magistrate. The appeal was commenced within time.
The respondent filed a notice of respondent's intention on 23 May 2024.
The respondent accepts that the Perth Magistrate accepted its argument in relation to Anshun estoppel and the matters going to the merits but that arguably the court may not have relied on the res judicata or functus officio points in making its decision.
As a consequence, the respondent filed an amended notice of respondent's intention on 27 May 2024 in which it contends that, to the extent that the following matters were not relied on by the Perth Magistrate in his decision, the Perth Magistrate's decision should be upheld on the following grounds:
1.The appellant's claim is barred due to the doctrine of res judicata/cause of action estoppel; and
2.The appellant's claim is barred because the Magistrates Court is functus officio.
I heard the appeal on 29 August 2024. During the course of the hearing of the appeal it became apparent that the court file in the Fremantle Proceedings had not been provided to this court. I was of the view that the evidence provided to the Fremantle Magistrate was of relevance to this appeal. That evidence consisted of statements of intended evidence of the witnesses available to the Fremantle Magistrate, namely Raymond Taylor on behalf of the respondent and Brodie Keay, on behalf of the appellant.
I was of the view that exceptional circumstances existed so as to justify reception by the court of that additional evidence and told the parties that they could make any further submissions on that evidence, once it was received, in writing. The appellant took the opportunity of making those further submissions, which effectively were that the witness statements were entirely consistent with the inference of ultimate fact contended for by it.
The appellant's grounds of appeal
The appellant raises four grounds of appeal. The grounds are lengthy, contain a number of particulars which in reality are submissions and it is unnecessary to set them out in full.
What can be distilled is that the grounds of appeal are:
1.That the Perth Magistrate erred in fact and in law in holding that the counterclaim application was an actual counterclaim which was filed pursuant to r 10(2) of the Magistrates Court (Civil Proceedings) Rules 2005 (WA) (the Civil Proceedings Rules) and which was on foot and heard at the hearing before the Fremantle Magistrate and effectively determined in the decision of the Fremantle Magistrate (Ground 1).
2.By reason of so erring, the Perth Magistrate then erroneously held that res judicata, cause of action estoppel, inconsistency and the court being functus officio were all applicable (Ground 2).
3.The Perth Magistrate erred in holding that the appellant was prevented by Anshun estoppel from bringing the claim (Ground 3).
4.The Perth Magistrate erred in law in holding that item 13 of the offer to lease conferred the sole remedy available to the appellant for repudiation by the respondent of the offer to lease and in not holding that the appellant was entitled to sue for and recover unliquidated damages claimed for repudiation of the offer to lease (Ground 4).
There are a number of particulars to these grounds, some of which are in the nature of submissions, to which I will turn when dealing with the submissions of the parties.
The issues
As a consequence, the issues raised in this appeal include the following:
1.Whether the Perth Magistrate did dismiss the claim in the Perth Proceedings on the basis of res judicata. If so, was he correct? Alternatively, if the learned magistrate did not rely on the doctrine of res judicata to order that the appellant's claim was barred, was he wrong to do so? (Issue 1)
2.Whether the Perth Magistrate was wrong in finding that the doctrine of Anshun estoppel applied, so that it was unreasonable for the appellant not to have pursued its claim in the Fremantle Proceedings (Issue 2).
3.Whether the Perth Magistrate found that the claim was barred because the Perth court was functus officio. If so, was he correct? Alternatively, if the Perth Magistrate did not find that the court was functus officio, was he wrong? (Issue 3)
4.Whether the Perth Magistrate was wrong in finding that the remedies available to the appellant had been exhausted under the lease and that no further damages should be awarded (Issue 4).
I turn now to the grounds of appeal.
Ground 1
In order to assess Ground 1 it is necessary to examine the appellant's contention that the application for counterclaim was not heard and determined by the Fremantle Magistrate.
As I have already said, the appellant was served with a minor case claim Form 4 (the minor case claim form).
The minor case claim form contained, in Part E, information for the defendant (the appellant). That information included telling the appellant that if it wished to defend the claim then it was required to tick the relevant box and respond to the claim and provide a defence within 14 days of service.
Part E also told the appellant that if it intended to make a counterclaim then it had to 'tick the relevant box stating your intentions (complete Part I and lodge it together with your response). Your intentions stated on this document will be dealt with by a Magistrate at a status conference'.
The appellant completed Part H of the claim form by providing a response to claim in which it said that it was, and remained, entitled to forfeit and retain the deposit of $6,025 and that the respondent's claim should be dismissed.
In Part I, which is headed 'Application for counterclaim', the appellant marked an 'X' in the box provided next to the words 'make application to the Court for the Defendant to bring a counterclaim'. By doing so the explanatory note said that it was required to complete 'Part I‑Details in Support of Counterclaim'. Underneath that, in the details in support of the counterclaim part of the form, the appellant said:
1.Declaration that the agreement for lease was repudiated by the claimant and terminated by the defendant for the claimant's repudiation.
2.Declaration that the defendant is entitled to forfeit the deposit of $6,025 paid under the agreement for lease and retain it.
3.Damages for repudiation.
The respondent was the claimant in the Fremantle Proceedings. In the minor case claim form it elected to have the case heard and determined under pt 4 of the Magistrates Court (Civil Proceedings) Act 2004 (WA) (the Act) as a minor case.
Section 26 of the Act provides that:
In this Part -
general procedure means the procedure prescribed by Part 3 and the rules of court other than rules of court made for the purposes of this Part;
minor case means -
(a)a claim within the jurisdiction of the Court where -
(i)the value of the claim or of the relief claimed is not more than the minor case jurisdictional limit; and
(ii)the claimant has elected to have the claim dealt with under the minor case procedure;
or
(b)a matter within the jurisdiction of the Court referred to in section 8 that is declared to be a minor case for the purposes of this Act by the written law that confers jurisdiction on the Court to deal with the matter; or
(c)any other claim within the jurisdiction of the Court (including a claim within the jurisdiction of the Court by virtue of a consent given under section 6(1)(f)) that the parties agree is to be treated as a minor case.
The respondent's election to have the case heard as a minor case was one of the necessary pre-conditions to it being heard in that way. The value of its claim was less than the jurisdictional limit for the minor case, which at the relevant time was $10,000.
The appellant contends however that the counterclaim was not a minor case. The appellant contends that in filing a form headed 'Application for Counterclaim' all that the appellant was doing was applying to make a counterclaim in the Fremantle Proceedings. The appellant says that the counterclaim was not a minor case as it exceeded $10,000 and that it never consented to its counterclaim being dealt with as a minor case. It therefore should have been dealt with under the Civil Proceedings Rules and accordingly was not before the Fremantle Magistrate when he heard the matter.
Section 28 of the Act provides as follows:
(1)The Court must deal with a minor case in accordance with the minor cases procedure unless an order has been made under subsection (2) or (3).
(2)The Court must order that a minor case be dealt with under the general procedure if the case involves any jurisdiction conferred on the Court by a law of the Commonwealth.
(3)The Court may order that a minor case be dealt with under the general procedure if -
(a)all the parties so request; or
(b)the case involves an important principle of law or complex facts or issues.
(4)If a minor case involves a counterclaim that is not a minor case the Court may -
(a)with the consent of the parties, deal with the whole of the minor case under the minor cases procedure; or
(b)otherwise -
(i)order the counterclaim to be dealt with as a separate case under the general procedure; or
(ii)if the claimant so requests, order the whole of the minor case to be dealt with under the general procedure.
(5)Subsection (4) does not affect the operation of section 9.
No orders were made pursuant to subsections (2) or (3) of s 28.
Rule 23 of the Magistrates Court (Minor Cases Procedure) Rules 2005 (WA) (Minor Cases Rules) says:
(1)If a defendant lodges a response, a registrar must, within 14 days, list the case for a status conference.
(2)The registrar must notify you and the other parties in writing of the status conference.
Rule 23AA of the Minor Cases Rules provides as follows:
(1)The purpose of a status conference is to allow for the management of a case.
(2)Specifically, at a status conference the Court may do any or all of the following -
(a)refer the case to a pre‑trial conference to be conducted by a registrar immediately;
(b)determine what facts, if any, are agreed by the parties;
(c)order the parties to -
(i)lodge and serve lists of documents the parties might tender in evidence at the trial in support of their claims or defences; or
(ii)exchange any other documents or information;
(d)extend the time for making counterclaims or third party claims (even if the time for making those claims has passed);
(e)list the case for a further status conference;
(f)make any other orders necessary to facilitate settlement or ensure the case is ready for trial.
(3)If the case involves a counterclaim that is not a minor case, then, at the status conference -
(a)the Court will consider whether or not you and the other parties consent to the counterclaim being dealt with under these rules; and
(b)if the parties do not consent to the counterclaim being dealt with under these rules, the court must -
(i)list the case for a hearing before the Court for it to determine what part of the case, if any, is to be dealt with under these rules; and
(ii)notify you and the other parties in writing of the hearing date.
(4)If the Court determines at the hearing referred to in subrule (3) that part of the case is to be dealt with under these rules, it will list the case for a further status conference.
(5)The court must notify you and the other parties in writing of the listing under subrule (4).
At the time of the Perth Proceedings there was some uncertainty as to whether or not a status conference had occurred in accordance with r 23. However a review of the transcript of the hearing before the Fremantle Magistrate showed reference by his Honour to a hearing before his colleague. At the hearing of this appeal the respondent's counsel provided a transcript of the status conference.
Given that the issue as to whether a status conference had occurred was an important procedural step in understanding the appellant's argument, I granted leave for that additional evidence to be adduced pursuant to s 40(4). In my view, such an order was necessary to do justice between the parties and therefore I found exceptional circumstances existed to allow its admission.
The transcript of the status conference reveals that no mention of the application for counterclaim was made, either by Magistrate Lemmon or by either of the parties. The status conference explored the prospects of settlement and Magistrate Lemmon then made programming orders in respect of the filing of witness statements and documents to be relied upon prior to the hearing of the matter.
The appellant contends that in order for the counterclaim to be before the Fremantle Magistrate a number of steps had to be undertaken. The appellant says that firstly the counterclaim had to fall within the definition of a minor case. In short, the appellant says that the court was required to satisfy itself that the counterclaim was for not more than the minor case jurisdictional limit and that the appellant had elected to have the counterclaim dealt with under the minor cases procedure. I accept that proposition. I also accept the proposition that a court is required to ensure that it has jurisdiction before dealing with the matter.
In this case the only amount specified in the response was for forfeiture of the deposit, namely, $6,025. The counterclaim itself referred to damages for repudiation as a separate remedy to the entitlement to forfeit the deposit.
The appellant says that there was no evidence before the Fremantle Magistrate that the appellant had elected to have the proposed counterclaim dealt with under the minor cases procedure. Furthermore, given that the Perth Magistrate assessed the appellant's damages for repudiation at $20,620.74 (but said that the claim did not arise for determination given his other findings) the proposed counterclaim was beyond the jurisdictional limit of $10,000 so it could not be dealt with as a minor cases procedure unless all parties consented pursuant to r 23AA(3) of the Minor Cases Rules.
The appellant further says that the claim for damages sought in the application for counterclaim was separate to the claim for forfeiture of the deposit. The appellant's contention is that what can be inferred is that the counterclaim was not before the Fremantle Magistrate and was not part of the Fremantle Proceedings, because if it had been then it would have been discussed and enquiry made at the status conference or by the Fremantle Magistrate as to the quantum of the claim and whether the appellant consented to it being dealt with as a minor case.
The appellant says that this inference is made more irresistible given that the Fremantle Magistrate did not, at the trial hearing, inform the self-represented appellant that he was considering hearing the counterclaim, or that it was being heard and that the appellant should put on all relevant information concerning the counterclaim before the court. The appellant says that this procedure would have been consistent with the duty referred to in Von Adametz v Johansen [2012] WADC 178 [17].
The appellant says that the inference that the counterclaim was not before the Fremantle Magistrate is further strengthened by the failure of either of the parties or his Honour to mention it, either at the hearing or in the reasons for decision. There is, in the submission of the appellant, no evidence that the appellant ever consented to the counterclaim being dealt with as a minor case.
The appellant says that all of the matters which I have summarised in the preceding four paragraphs indicate that the application for counterclaim was not on foot in the proceedings before the Fremantle Magistrate and that the Perth Magistrate erred in so concluding.
The appellant also submits that the Perth Magistrate erred in concluding that the appellant's counterclaim was on foot when he said (at [12]) that there was no further procedural step the appellant needed to comply with to advance the counterclaim and referred to r 10(2) of the Civil Proceedings Rules.
I accept that the Perth Magistrate was in error in referring to the Civil Proceedings Rules, given that the counterclaim was lodged in response to a minor case claim. However, the essential point his Honour was making, namely that there was no further procedural step the appellant needed to advance its counterclaim, was not in error. His Honour's error in referring to the Civil Proceedings Rules does not necessarily mean that he erred in concluding that the counterclaim was on foot.
The respondent says that regardless of whether the counterclaim is a minor case the court had jurisdiction to hear the case. The respondent contends that in those circumstances the court simply needs to consider under which procedure the claim should be determined.
The respondent says that the Fremantle Magistrate found that the respondent had repudiated the contract and that the appellant accepted the repudiation and terminated the contract. The Fremantle Magistrate held that, according to the clear terms of item 13, '[the respondent] thereby forfeits the leasing deposit and the lease costs'.
The respondent's contention, as observed by the Perth Magistrate, was that the contract had been repudiated and that most of the deposit had been forfeited. In the submission of the respondent, this provided the declaratory relief sought by the appellant in items 1 and 2 of its counterclaim, albeit not as formal declarations.
During the course of the trial of the Fremantle Proceedings the appellant did not produce any evidence of its loss and nor did the Fremantle Magistrate refer to any such evidence, or indeed refer to the counterclaim at all.
The respondent says that there was nothing to suggest to either the Fremantle Magistrate or to Magistrate Lemmon at the status conference that the appellant was seeking to counterclaim for an amount which exceeded the minor case jurisdictional limit.
The respondent says that the appellant's decision not to produce evidence of loss or make submissions as to loss or reveal to the court that its claim actually exceeded $10,000 cannot now be relied upon to provide a basis to pursue the claim afresh, or to argue that there was no jurisdiction because the appellant chose not to reveal to the court that its claim exceeded $10,000.
The respondent says that either the Fremantle Magistrate correctly dealt with the counterclaim and found that the appropriate remedy was forfeiture of the deposit or that the Fremantle Magistrate incorrectly dealt with the counterclaim by overlooking it or proceeding without jurisdiction.
The respondent's submission is that in either of those circumstances the appropriate remedy was for the appellant to appeal the decision of the Fremantle Magistrate, not to issue fresh proceedings for what the respondent says are effectively the same damages it sought in par 3 of the application for counterclaim.
The respondent's position is that, after ticking the box that it wished to make a counterclaim, there was nothing more that the appellant had to do. It was then incumbent on the appellant to produce evidence in support of its counterclaim, which it failed to do.
The respondent's submission is that, having validly lodged the counterclaim and received judgment in the Fremantle Proceedings, any allegation that the Fremantle Magistrate did not comply with s 28(4) of the Act or r 23AA of the Minor Cases Rules does not entitle the appellant to litigate the claim afresh. Upon delivering judgment the cause of action (damages for repudiation) merged with the judgment.
The respondent's position is that the principles of res judicata apply.
After the hearing of the appeal the Court of Appeal handed down its decision in Sampey v Doherty [2024] WASCA 105 (Sampey). In an email of 4 September 2024 from my associate I alerted the parties to that decision and provided them with an opportunity to make further written submissions if they so wished. Both parties took that opportunity.
The issue raised in Sampey was the obligation of a trial judge to consider a cause of action or a defence which had been pleaded but which had not been addressed by either party at trial.
In that case the appellants had pleaded a defence of laches but that defence had been effectively ignored at trial. It had not, however, been expressly abandoned but it was not the subject of any evidence or the subject of any opening or closing submissions at trial.
The primary judge addressed the defence in brief terms before rejecting it and the appellants in that case relied on the rejection as one of the grounds of appeal.
The court referred to Briggs v Lunt[No 3] [2011] WASCA 44 (Briggs) and Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management (2012) 42 WAR 287, [274] (Southern Properties) where it was held in both those cases that, where the cause of action or defence had been pleaded and not expressly abandoned, a trial judge's failure to deal with the matter would amount to an error of law.
At [267] the court referred to the observations of Pullin JA in Southern Properties at [324] where his Honour said:
However, a party cannot be taken to have abandoned a cause of action which is supported by the pleadings unless it is expressly abandoned. The cause of action in nuisance was pleaded, it was not expressly abandoned and therefore the trial judge erred in failing to deal with that cause of action in his reasons for decision.
At [264] of the judgment in Sampey the court also referred to the court's observations in Briggs at [116] as to the following:
[116]…When it was clear that neither counsel was going to address submissions to the issues, the correct approach would have been for the trial judge to have asked counsel for the parties to explain why no submissions were made …
…
[117]The trial judge erred in law in failing to deal with issues which were live and which had to be determined at the trial. As a result, grounds 17, 18 and 22 should be upheld. The question then is whether the case should be referred back to the trial judge for determination…(emphasis added)
(original emphasis)
The appellant's further submissions say that Sampey is distinguishable because it and the earlier authorities referred to in it concern the status of a ground of defence which is pleaded and, at trial, not the subject of submissions but not abandoned. This case concerns a case determined under the Minor Cases Rules, in which there are no pleadings.
The appellant then repeated its submissions about the jurisdiction of the Fremantle Magistrates Court to determine the counterclaim under the Minor Cases Rules, that there was no mention of the counterclaim in the course of the status conference before Magistrate Lemmon and nor was there any mention of the counterclaim during the hearing before the Fremantle Magistrate or in the reasons for judgment.
The respondent says that Sampey makes it clear that, to the extent that the Fremantle Magistrate failed to deal with the appellant's counterclaim for damages for repudiation, or otherwise failed to ask the appellant about its counterclaim, his Honour erred in doing so.
Ultimately, I have decided to dismiss this ground of appeal for a number of reasons. In my view, the decision in Sampey does assist the respondent's contention that to the extent that the Fremantle Magistrate failed to deal with the counterclaim, he was in error. However, whilst acceptance of this submission fortifies my view it is not determinative of the ground of appeal.
Res judicata
In Blair v Curran 1939 62 CLR 464, 531 ‑ 532 (Dixon J) explained the doctrine of res judicata as follows:
A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commanded or be restrained or that rights be declared. 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.
In Jackson v Goldsmith (1950) 81 CLR 446, 466 Fullagar J explained:
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.
(original emphasis)
At (467) his Honour went on to say:
In the first place, if A sees 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.
His Honour later said (467):
… it follows from the very nature of the difference between the plea of res judicata and the plea of issue estoppel but different materials are relevant in each case. Where the plea is of res judicata, only the actual record is relevant. Where the plea is of issue estoppel, any material may be looked at which will show what issues were raised and decided. Reasons given for judgment pronounced are likely to be particularly important for this purpose …
(original emphasis)
In Willoughby v Clayton Utz [No 2] [2009] WASCA 29 Pullin JA, with whom Wheeler JA and Miller JA agreed, said at [23]:
Pollnow's case stands as authority for the proposition that the record consists of the pleadings and the judgment or order but not the reasons for judgment or order.
Later his Honour went on to say at [28]:
The result is that counsel for the respondent was correct when he submitted that reasons for judgment are not part of the record to be examined when deciding whether the Causes of Action have already been determined in an earlier action. However, the reasons for judgment are relevant and may be examined to determine whether the Causes of Action in the First Action were decided 'on the merits' or were 'litigated'.
Issue 1 - Did the Perth Magistrate deal with the appellant's claim on the basis of res judicata? Was he correct to do so?
I am of the view that the Perth Magistrate did disallow the claim on the basis of res judicata. In my view that finding is consistent with: his Honour adopting the written submissions of the respondent's counsel at [57], his determination that the counterclaim was on foot, that by that stage the appellant's damages had crystallised; and his determination at [64] that it was simply not open to the appellant to recommence that counterclaim as a fresh claim in the Perth Proceedings.
Conclusion on res judicata
I am not persuaded that the Perth Magistrate was in error in dismissing the counterclaim on the basis of the doctrine of res judicata. I am not satisfied that the Perth Magistrate's erroneous reference to the Civil Proceedings Rules means that his Honour was otherwise in error to conclude that res judicata did apply.
His Honour was aware of r 23AA of the Minor Cases Rules and referred to it at [30] when dealing with the issue of the alleged lack of jurisdiction of the Fremantle Magistrate to deal with the counterclaim.
I do not accept the appellant's submissions that the appellant's counterclaim was, in reality, an application to make a counterclaim. While that is the wording on the form received with the claim, it does not reflect its reality. Neither the Act, the Civil Proceedings Rules or Minor Cases Rules contemplate an application to make a counterclaim and nor is any procedure contemplated where such an application is received. Despite the title on the form, it was a counterclaim. It reflected the relief contemplated by the appellant when it sent the notice of termination on the same day it lodged its counterclaim.
I am not satisfied that the Perth Magistrate was in error because an examination of the record, namely the pleadings and the judgment or order, but not the reasons for judgment or order reveals the following:
1.There was a minor case claim against the appellant.
2.The appellant filed a response and an application to counterclaim seeking the remedies I have already outlined.
3.A judgment was entered in favour of the respondent in the amount of $510.
The appellant could have adduced evidence in the Fremantle Proceedings in relation to Item 3 of the counterclaim.
The fact that the appellant chose not to put evidence before the Perth Magistrate is a matter for it. Such a failure may have been an error on its part or may have been a deliberate decision. Regardless of the reason, it did not entitle it to issue fresh proceedings.
Whilst I have had regard to the reasons for decision of the Fremantle Magistrate there is nothing before to me to suggest that the counterclaim had been removed from the proceedings or was to be dealt with in another forum. No discontinuance was ever filed of the counterclaim. I do not accept that the inference which the appellant asks me to accept, namely that the counterclaim was not before the court, is as irresistible as the appellant contends.
I am not persuaded that I should infer that the counterclaim was not on foot from the failure of the Fremantle Magistrate to inform the self‑represented appellant that he was hearing the counterclaim, or that it was being heard and that the appellant should put on all relevant information concerning the counterclaim before the court.
In making this submission the appellant places some reliance on what Scott DCJ said in Von Adametz v Johansen [17].
What Scott DCJ said was:
17In circumstances where both parties are unrepresented and within the scope and purpose of the minor case procedure, the court should as far as is practicable, ensure that all relevant information is before it before a decision is made.
During the hearing the Fremantle Magistrate enquired of the parties as to the evidence they relied on, whether any oral testimony would be given, which of the parties bore the onus of proof and enquired as to whether any objections to evidence were being raised. His Honour also enquired as to the issue in dispute.
I do bear in mind that his Honour was dealing with a claim being heard as a minor case and that such hearings appear to be dealt with less formally. I also take into account that, at the status conference before Magistrate Lemmon, the parties were told by his Honour that on the hearing date the court would decide the matter and that it would do so on the oral testimony of the witnesses and any exhibits tendered (ts 7 of the status conference). The Fremantle Magistrate was clearly aware of the earlier status conference. At the commencement of the hearing he referred to the earlier hearing before his colleague, which I infer was a reference to the status conference.
In considering the appellant's submission I also bear in mind that the appellant had the benefit of legal advice prior to the trial of the Fremantle Proceedings, although not during the course of the trial. I draw that inference from the fact that the notice of termination was signed by the appellant's firm of solicitors and was sent on the same day as the filing of the application for the counterclaim and response.
I do not need to ultimately determine whether the Fremantle Magistrate provided the self-represented litigants with sufficient information. The appellant asks me to infer that his failure to do so means that the counterclaim was not before the court. I do not draw that inference.
Firstly both the Fremantle Magistrate and Magistrate Lemmon did provide the information I have already detailed. Secondly, there are a number of inferences available. As an example another inference which is open is that the appellant, having received the information that was provided, may have made a conscious decision not to adduce evidence in support of the claim for damages in the counterclaim.
However, if the Fremantle Magistrate did not provide the self‑represented litigants with sufficient information that is an error, which is capable of being appealed, subject to any restrictions on rights to appeal from a minor case.
Similarly, the fact that the counterclaim was not referred to by either the Fremantle Magistrate at trial or in his reasons for decision, or by Magistrate Lemmon at the status conference does not lead me to infer that this means the counterclaim was not before the court. Again, it may have been overlooked, or the counterclaim may have been impliedly dealt with when his Honour found that the respondent forfeited the deposit under the 'clear terms' of item 13 of the offer to lease.
I should add that there was nothing in the pleadings or in the evidence filed by the appellant in the Fremantle Proceedings from which it was apparent that the counterclaim exceeded the minor case jurisdiction.
Furthermore, if the Fremantle Magistrate failed to deal with the counterclaim in his reasons for decision then that may also be grounds for appeal. Again, it cannot provide justification for issuing fresh proceedings. It does not lead me to infer that the counterclaim was not on foot.
I do accept the appellant's submission that the relief sought in pars 1 and 2 of the counterclaim, namely, a declaration that the offer to lease was repudiated and a declaration that the appellant was entitled to forfeit the deposit of $6,025, may be capable of being separate relief from the remedy sought in the third paragraph, namely, damages for repudiation. Whether it was entitled to claim damages in the light of item 13 of the offer to lease is a matter for construction of that clause. The appellant's counsel made lengthy submissions about this. I will come back to the submissions made in that regard when dealing with Issues 3 and 4 and Ground 4.
I accept the respondent's submission that the Perth Magistrate was not in error in concluding (at [16]) that the Fremantle Magistrate granted two of the three matters sought in the counterclaim. I agree with the Perth Magistrate that, although the Fremantle Magistrate did not make the formal declarations sought, the substance of the relief sought in items 1 and 2 of the counterclaim was granted.
In so finding I have relied on the Fremantle Magistrate saying the following:
The defendant asserts that he's (sic) entitled to forfeit the leasing deposit and the legal costs in accordance with item 13 of the agreement. (ts 6 of the reasons for decision)
I am satisfied that the claimant's email of 8 March 2022 does constitute a repudiation of the agreement, that is, a withdrawal or, at the very least, an attempt to withdraw from the lease (ts 7).
I am satisfied that the evidence establishes that the defendant accepted the repudiation and terminated the contract. According to the clear terms of item 13, the claimant thereby forfeits the leasing deposit and lease costs.
The substance of his remarks was to grant the relief sought in items 1 and 2 of the counterclaim.
I accept the appellant's contention that a counterclaim must either meet the definition of minor case contained in s 26 of the Act or have the consent of the parties in order to be dealt with as a minor case.
Consequently, if the counterclaim was for an amount in excess of $10,000 then it would not have been capable of being dealt with as a minor case without the consent of the parties. However, any failure of the Fremantle Magistrate to enquire as to whether the counterclaim was within jurisdiction does not lead me to infer that the counterclaim was not on foot. If that is the case then the Fremantle Magistrate may have been in error, but in my view that is a matter which should have been dealt with on appeal from the Fremantle Magistrate's decision, and not by simply litigating the matter in fresh proceedings.
Similarly, the fact that I accept that damages for repudiation may be a separate item to a declaration for forfeiture does not mean that the whole of the counterclaim was not before the Fremantle Magistrates Court. It may not have been dealt with completely and that may be an error, or the appellant may have simply made a decision not to call evidence or erroneously failed to call evidence in support of the counterclaim. However, the record leads me to conclude that the whole of the counterclaim, including the claim for damages, was on foot in the Fremantle Proceedings.
The appellant contended that it had no rights of appeal from the decision of the Fremantle Magistrate because the counterclaim was not before the court. It says I should infer that for the reasons I have already mentioned. The Fremantle Magistrate therefore, in the appellant's submission, made no error.
I note that s 32 of the Act specifically provides for rights of appeal in minor cases. Section 32(3) provides that appeals against judgments in minor cases can only be made on the grounds that the minor case was not within the jurisdiction of the court, was not a minor case, that in dealing with the case there was a denial of natural justice or that the judgment was beyond the court's jurisdiction.
Most, if not all of those matters apply to the matters raised by the appellant.
In my view the correct approach available to the appellant was to appeal the judgment of the Fremantle Magistrate, rather than to institute further proceedings.
None of the matters raised, when considered either in isolation or in combination, lead me to infer that the counterclaim was not on foot in the Fremantle Proceedings.
If it was not, then the question might be asked: what happened to it? A counterclaim was definitely completed in the appropriate section of the claim served on the appellant, it was not discontinued, it was not the subject of any remittance to the general procedure claims in the Magistrates Court and, as I have said, the appellant received in substance, two out of the three claims it made in the counterclaim.
It is my view that the counterclaim was on foot in the Fremantle Proceedings, that it merged in the judgment, that res judicata does apply and that the appellant's claim should be dismissed. I respectfully agree with the decision of the Perth Magistrate with the qualifications I have already outlined.
Ground 2
The appellant's counsel conceded at the hearing of the appeal that the outcome of Ground 1 would determine Ground 2. To date I have not dealt with the Perth Magistrate's findings that there would be inconsistency between the Fremantle Proceedings and the Perth Proceedings if any greater relief was awarded in the Perth Proceedings than in the Fremantle Proceedings. I accept that to be the case for the reasons I have already given when dealing with the res judicata issue.
I do still need to consider the issue of whether the Perth Magistrates Court was functus officio.
Did the Perth Magistrate determine that the court was functus officio? Was the court in the Perth Proceedings functus officio?
In my view the Perth Magistrate did, at [76], determine that the court was functus officio. However, his Honour did not give detailed reasons in relation to this issue.
I agree with the Perth Magistrate that the court was functus officio.
Given my earlier findings that the counterclaim was on foot in the Fremantle Proceedings, I accept that the Magistrates Court's powers to determine the claim were spent upon judgment being delivered in the Fremantle Proceedings. There is no power for the Magistrates Court to revisit that claim.
I accept the submission of the respondent that these powers of the Magistrates Court in those circumstances are effectively limited to:
(a)setting aside judgment following strike out (the Act s 17(3));
(b)setting aside summary judgment (s 18(6));
(c)setting aside default judgment (s 19(3)); and
(d)correcting accidental errors (such as a mistake in the description of a person or thing (Magistrates Court Act 2004 (WA) s 23)).
Once a matter has been brought to the Magistrates Court in its civil jurisdiction it, as a court exercising jurisdiction or powers conferred by statute, has only limited power to revisit or reopen the matter.
For these reasons Ground 2 fails.
Ground 3 - Anshun estoppel
Ground 3 reads as follows:
3.The Magistrate erred at J [65]-[74] and [145]-[146(d)] in holding that Kalaui was prevented by Anshun estoppel from bringing the claim before the Magistrate in that:
3.1Kalaui had a statutory right to not consent to the proposed counterclaim being, or to not elect that the proposed counterclaim be, dealt with under the minor cases procedure as referred to in particulars 1.4.1, 1.4.2 and 1.4.3 above, which statutory right is inconsistent with and excludes the operation of the doctrine of Anshun estoppel to a failure by the defendant to a minor case applying to have a proposed counterclaim which is not a minor case as defined in s.26 of the Act determined with the minor case claim; and
3.2further or alternatively to particular 3.1, for the reasons dealt with in ground 4, the claim for damages in the proposed counterclaim was entirely separate from the defence of the Minor Case Claim on the ground that, because the deposit had been forfeited, Kalaui was entitled to retain the deposit.
In Port of Melbourne Authority v Anshun Pty Ltd the court was dealing with a judgment in an earlier action by which contribution between the parties for damages consequent upon injuries sustained by a workman was determined and a subsequent action, dealing with the same parties' respective liability for those damages, in which there was a claim to a contractual indemnity.
The plurality held that, because the indemnity had not been litigated in the earlier action, the judgment in that case did not deal with that cause of action and as such it was not a case of res judicata. The court said at [602]:
… we would prefer to say 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.
Some of the principles relating to Anshun estoppel were summarised by Buss P in Wright v Lemon [2024] WASCA 19 [1153] ‑ [1157], where his Honour said as follows:
1153Anshun estoppel operates to preclude the assertion of a claim, or the raising of an issue of fact or law, in a proceeding if that claim or issue was 'so connected with the subject matter of [a previous] proceeding as to have made it unreasonable in the context of that [previous] proceeding for the claim not to have been made or the issue not to have been raised in that proceeding': Tomlinson [22]. See also Port of Melbourne Authority v Anshun Pty Ltd.
1154In Champerslife Pty Ltd v Manojlovski, Allsop P made these points about Anshun estoppel:
(a)The question of unreasonableness is derived significantly from the claim or issue having been 'so relevant' to the subject matter of the previous proceeding that it can be concluded that it was 'unreasonable' not to have relied upon it in that proceeding [3].
(b)The mere fact that the claim or the issue 'could' have been raised in the previous proceeding does not mean that the claim or the issue 'should' have been raised in that proceeding [4].
(c)Rather, the claim or the issue must have been 'so relevant' as to make it 'unreasonable' not to have raised it in the previous proceeding [4].
1155In Clayton [31], Kiefel CJ, Bell and Gageler JJ approved the observation of Allsop P in Champerslife [4] that approaching Anshun estoppel on the basis that the fact that the plaintiff 'could' have asserted a right in the previous proceeding means that the plaintiff 'should' have asserted that right in that proceeding in the sense that it was unreasonable for the plaintiff not to have done so, involves fundamental error. Their Honours then said [31]:
As was pointed out in Port of Melbourne Authority v Anshun Pty Ltd, 'there are a variety of circumstances … why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings eg expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few' ((1981) 147 CLR 589 at 603).
1156However, an Anshun estoppel may arise even where the failure to raise the claim or the issue in the previous proceeding was due to negligence, inadvertence or accident. See Port of Melbourne (598).
1157The onus is on the party who asserts an Anshun estoppel to prove that the other party's failure to raise a claim or an issue in the previous proceeding was unreasonable. See Clayton [30] ‑ [31].
(footnotes omitted)
The appellant says that its claim for damages contained in the counterclaim was never run. I have already dealt with this issue when determining that it was on foot in the Fremantle Proceedings.
The appellant says that the claim or issue in the Perth Proceedings was not sufficiently connected to the subject of the Fremantle Proceedings to make Anshun estoppel applicable. It points to the following:
1.A claim for damages by a vendor for repudiation of a contract is separate from a claim by the purchaser, or here, the lessee, to recover a deposit paid under the agreement.
2.There is overlap with Ground 1 so that if Ground 1 is upheld and it is held that the proposed counterclaim was not heard in the Fremantle Proceedings, it must follow there is insufficient connection between the respondent's claim to recover the entire deposit and the appellant's proposed counterclaim to have made it unreasonable for the appellant to claim damages for repudiation in subsequent proceedings.
3.Further or in the alternative, if the judgment under appeal is sufficiently connected to the proceedings in the Fremantle Court so as to make Anshun estoppel applicable, it was not unreasonable for the appellant to bring the Perth Proceedings in circumstances where no evidence of damage was put before the Fremantle Magistrate and the proposed counterclaim was not mentioned.
4.It was not unreasonable because of the statutory right of the appellant to not consent to the proposed counterclaim being heard under the minor cases procedure at the same time as the respondent's minor case claim and to thereby cause the claim for damages to be heard in a separate case under the general procedure. The appellant says this is inimical to Anshun estoppel having any application in this case.
5.It cannot be said that the exercise of that statutory right by the appellant in the circumstances would make the proceedings unreasonable so as to make Anshun estoppel applicable.
6.Because the loss of the appellant only crystallised upon the appellant entering into a new offer to lease of the premises seven days before the hearing date, then the Perth Magistrate erred in holding it was unreasonable for the appellant not to have the proposed counterclaim heard on the hearing date. The appellant says that there simply was not sufficient time after the date of crystallisation to have evidence of the crystalised damages put before the Magistrates Court and to have the matter determined. It says that is a factor I can take into account when deciding reasonableness.
In support of its submission that it was not unreasonable for the appellant not to litigate its claim for damages in the Fremantle Proceedings the appellant referred to Terry v Permanent Trustee Australia Ltd (1995) 6 BPR 14091. In that case the plaintiff purchaser in a contract for the sale of land brought an action for specific performance of the contract in which judgment was given by consent in favour of the defendant vendor.
The plaintiff subsequently issued separate proceedings for relief against forfeiture of the deposit.
Santow J held that it was not unreasonable, in the circumstances of that case, for the plaintiff to have refrained from litigating the issue of relief against forfeiture in earlier proceedings.
He did so because:
(a)it would not result in a judgment conflicting with the earlier judgment;
(b)he was satisfied that in the circumstances there were reasons why the plaintiff could justifiably refrain from litigating the issue of the return of the initial deposit in the earlier proceedings; and
(c)judgment was delivered by consent in the earlier proceedings and so the parties had not gone to the cost, delay and inconvenience of having had to go through same evidence and argument twice.
The appellant submitted that by not cross‑examining Mr Pinzone, who was the witness called by the appellant during the hearing of the Perth Proceedings, the respondent failed to satisfy its onus of proof in relation to the Anshun estoppel defence.
I reject this. The appellant did not rely upon Mr Pinzone's testimony in asserting that it was unreasonable for the appellant to litigate its counterclaim during the Fremantle Proceedings. It made that submission on other grounds. While the appellant did not bear any onus of proof in relation to that issue, it could have adduced evidence from Mr Pinzone if it wished to do so and that evidence could have been taken into account in establishing whether or not the respondent had satisfied its onus of proof. It was not for the respondent to potentially weaken its case by cross‑examining a witness for the opposing party in the way contended for by the appellant. I do not regard the failure of the respondent's counsel to cross‑examine Mr Pinzone as in any way undercutting its submission that Anshun estoppel applies in this case.
The respondent's submissions
The respondent says that there are several factors supporting a conclusion that the issue of damages for repudiation should have been pursued in the first proceedings and it was unreasonable not to do so. Those are as follows:
1.The counterclaim was on foot, in the sense it was lodged and served in accordance with court procedure. The basis of the counterclaim was described in writing and sought both declaratory relief and damages for repudiation.
2.There was no further procedural step the appellant needed to take to advance its claim.
3.It took no steps to bring to the court's attention to the fact that its claim exceeded the minor case jurisdictional limit.
4.To the extent that it chose not to pursue its counterclaim it did not seek to discontinue it.
5.The notice of termination of lease on the grounds of repudiation was sent to the respondent on the same day the response and counterclaim was lodged. Termination had therefore occurred at the time the defence and counterclaim were lodged, the appellant had referred to its right to claim damages from the respondent in the notice of termination, and the appellant had the benefit of legal assistance in relation to termination of the agreement.
6.The counterclaim and claim were interconnected and resolution of one should have determined the other. The same facts and issues needed to be traversed in respect of the claim and counterclaim, both of which arose out of the same transaction, namely the offer to lease.
7.Resolution of the counterclaim was so tied up with and connected to the respondent's claim that it would be unreasonable for the appellant to seek to have its counterclaim dealt with in subsequent fresh proceedings.
8.The appellant's cause of action had crystallised prior to the first trial so that its loss was known and easily calculable.
9.If the appellant wanted to claim an amount that exceeded the minor case jurisdictional limit it could have consented to the court dealing with the whole of the minor case under the minor cases procedure or asked for the counterclaim to be dealt with as a separate case under the general procedure.
10.Neither of the two directors who appeared at trial in the Fremantle Proceedings took the opportunity to press any aspect of the counterclaim.
11.There is a potential for inconsistency. The respondent sought to recover the deposit. The appellant claimed retention of the deposit and damages for repudiation. The court delivered judgment which was limited to forfeiture of most of the deposit. In the submission of the respondent that judgment shows that the court finally determined the remedies flowing from a repudiation in that the appellant could retain most of the deposit and that, by implication, no further damages were available. In the submission of the respondent any additional decision awarding damages would therefore be directly inconsistent with the first decision.
12.The unreasonableness of the appellant's action is also underscored by potential unfairness to the respondent. If the respondent had known that the appellant would bring a further $20,000 claim in relation to the same subject matter, then that may have affected the way in which the respondent approached the initial case. For example, it may have sought to compromise the case or to have had the entire case heard as a general procedure claim. In the submission of the respondent, the appellant's actions deprived the respondent of the options ordinarily available to a party in a similar situation and thereby subjected the respondent to significantly higher costs than if the matters were consolidated into one proceeding.
13.There are policy considerations which weigh against facilitating successive litigation of claims arising from the same matter.
Ultimately, the respondent says that the Perth Magistrate was correct to dismiss the appellant's case on the basis of Anshun estoppel. Finally, the respondent says that the fact is that a counterclaim was lodged and there was no plausible reason for the appellant not to advance that counterclaim during the course of the Fremantle Proceedings.
The Perth Magistrate's reasons on Anshun estoppel
His Honour held that it was unreasonable for the appellant not to pursue its counterclaim for a number of reasons, including that the counterclaim was on foot and the counterclaim and claim were interconnected with the same facts and issues needing to be traversed. Resolution of the counterclaim was so tied up with the claim that it would be unreasonable for the appellant to seek to have its counterclaim dealt with in subsequent fresh proceedings and that the claim and counterclaim arose out of the same facts and the same offer to lease.
His Honour was also concerned with the potential for inconsistency because the appellant was awarded two out of the three items counterclaimed with nothing further being awarded.
I accept the reasoning of the Perth Magistrate with two caveats. Those are that, firstly, I accept the submission made by the appellant's counsel that crystallisation of the cause of action some seven days prior to the hearing would have made it unreasonable for the appellant to call evidence as to the crystallisation of its loss by the time of trial. I note that at the status conference on 18 May 2022 orders were made which included the defendant lodging and serving a statement of intended evidence from each witness by 30 July 2022. That is, the defendant had to file all of its evidence prior to the date on which the claim crystallised.
However, I accept that the defendant could still have litigated the counterclaim in the Fremantle Proceedings even though the loss had not yet crystallised. Alternatively it could have alerted the Fremantle Magistrate to the crystallisation of its claim at the hearing and applied for an adjournment so that it could have put on further evidence. It chose not to do so for reasons known only to itself, whether that be deliberately or because it forgot, or for any other reason.
The second qualification to my acceptance of the reasoning of the Perth Magistrate is in relation to the appellant's submission that a claim for damages by a vendor for repudiation of a contract is separate from a claim by the purchaser, or here, the lessee, to recover a deposit paid under the agreement. This submission takes issue with the Perth Magistrate distinguishing the comments of Lord Browne-Wilkinson in Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd [1993] AC 573, 578, where his Honour said:
Ancient law has established that the forfeiture of such a deposit (customarily 10 percent of the contract price) does not fall within the general rule and can be validly forfeited even though the amount of the deposit bears no reference to the anticipated loss to the vendor flowing from the breach of contract.
The Perth Magistrate distinguished those comments at [79] because his Honour held that those comments related to contracts for the sale of land. The appellant's counsel referred me to a number of cases, including Fiorelli Properties Pty Ltd v Professional Fencemakers Pty Ltd and Huu Tai Le [2011] VSC 661; (2011) 34 VR 257.
I accept that the cases cited to me by the appellant's counsel establish that the Perth Magistrate was wrong in distinguishing the cases cited by the appellant on the basis that they only applied to contracts for the sale of land.
I am of the view that, if the appellant did have the statutory right to have its counterclaim litigated separately to the respondent's minor case claim then any failure of it to do so was:
(a)either an error of the Fremantle Magistrate; or
(b)an error of the appellant in failing to litigate the counterclaim it had filed in the appropriate forum; or
(c)a failure of it to put on evidence which might have alerted the Fremantle Magistrate to the fact that the amount claimed would be in excess of the minor case jurisdictional limit.
It failed to put on evidence in those proceedings as to the extent of the damage it claimed. In my view that failure was unreasonable in circumstances where the counterclaim was on foot.
Furthermore, if the appellant had exercised its statutory right, as its counsel terms it, that would have meant that the respondent could have exercised its statutory right to request that the whole of its minor case be dealt with under the general procedure (s 28(4)(b)(ii) of the Act). That would have meant that the claim and counterclaim could have been dealt with in the one proceeding.
I have had regard to the decision cited in Terry v Permanent Trustee Australia Ltd, but in my view the circumstances of that case are distinguishable from this case because:
(a)a counterclaim for damages was actually filed in the Fremantle Proceedings;
(b)the Fremantle Proceedings were not resolved by consent;
(c)the respondent had been put to the inconvenience of an earlier proceeding; and
(d)the Fremantle Magistrate relied on item 13 of the offer to lease in his decision to order that the respondent forfeited the deposit. At issue in this appeal is whether such a clause was in reality a liquidated damages clause so as to preclude any claim for damages beyond the deposit. That issue needed to be determined in the one proceeding in order to avoid inconsistency.
I find that it was unreasonable for the appellant not to have progressed the counterclaim. The counterclaim was on foot, the defendant had the ability to progress it and the defendant had the ability to put evidence before the court as to the extent of the counterclaim.
If it was in excess of the jurisdictional limit for the minor cases procedure the appellant had the ability to draw that to the attention of the court. If it had done so all items under the counterclaim could have been litigated in the general division.
As to the submission about the appellant's statutory rights, the fact is that the statement of intended evidence of Mr Keay gave no hint that any matter contained in the counterclaim exceeded the jurisdictional limit.
As a consequence, the Fremantle Magistrate had nothing in the evidence before him which could have led him to make any further enquiry as to whether the value of the counterclaim exceeded $10,000.
I also find the failure of the appellant to progress its counterclaim in the Fremantle Proceedings unreasonable because in choosing to conduct the litigation this way the respondent has been exposed to two sets of court proceedings arising out of the lease in circumstances where the appellant had the opportunity to litigate the issues in one proceeding, whether by accepting the jurisdictional limit and consenting to the matter being dealt with in the minor case claim, or by removing the matter to the general proceeding. If it had done so the respondent could have asked for its claim to be heard in the general division at the same time as the appellant's counterclaim, thereby giving the respondent the chance to finally have all matters dealt with at the same time, or by allowing the respondent the opportunity to settle all matters in the one proceeding.
Additionally, issues relating to the interpretation of item 13 of the offer to lease could have, and should have, been determined at the one hearing.
Ultimately the claim for a declaration that the appellant was entitled to forfeit the deposit and the claim for damages arose out of the contention that the respondent had repudiated the offer to lease.
I am not persuaded that the Perth Magistrate was in error.
Additionally, in conducting the litigation this way there is another unfairness to the respondent. The appellant obtained a ruling in the Fremantle Proceedings that the respondent had repudiated the lease. On this issue an issue estoppel arose in the Perth Proceedings. What that in effect meant was that the appellant, having raised a counterclaim in the Fremantle Proceedings but not, on its argument, litigating all of that counterclaim, could then rely on a finding in the Fremantle Proceedings to succeed in further litigation on the repudiation. That, in my view, adds to the unfairness to the respondent.
I would dismiss this ground of appeal.
Ground 4 - The right of the appellant to sue for damages
Ground 4 contends that the Perth Magistrate erred in law in holding that the offer to lease conferred the sole remedy available to the appellant for repudiation by the claimant of the offer to lease and not holding that the appellant was entitled to sue for and recover unliquidated damages as claimed for repudiation of the offer to lease. There were a number of particulars attached to the ground which are more in the nature of submissions, which I will come to shortly.
In its submissions the appellant contends that the Perth Magistrate erroneously conflated two separate matters:
(a)whether item 13 of the offer to lease excluded the appellant's right to recover common law damages through repudiation of the offer to lease; and
(b)whether the appellant was obliged to bring the forfeited deposit to account in calculating its damages.
In the submission of the appellant, the conflating of those two issues provided no basis for the Perth Magistrate not applying contractual principles clearly enunciated in the judgment in Holland v Wiltshire [1954] 90 CLR 409 (Holland) and applied and explained in the passage in Concut Pty Ltd v Ivor Warrell [2000] HCA 64; 75 ALJR 312.
The appellant submits that the Perth Magistrate's reasons for distinguishing those authorities were erroneous because:
(a)he limited the principle in Holland to sales of land which, in the submission of the appellant, is incorrect. I have already dealt with this issue when considering Ground 3. I accept that the Perth Magistrate was in error in doing so;
(b)he appears to have held that, because the appellant did not bring the deposit to account in its claim for damages, the entire principle that an innocent party may, after terminating a contract for repudiation, elect to recover common law damages is inapplicable. In the submission of the appellant the Perth Magistrate should have held that, if quantum of damages had been in issue at trial (which it was not) the amount of the retained deposit should have been deducted from the claimed amount in assessing the damages;
(c)the appellant submits that item 13 of the offer to lease does not, in clear words, exclude the appellant's common law right enunciated in Holland to be relieved, after accepting the repudiation of a contract by the other party, from all obligations under the terminated contract, including any contractual provision limiting its entitlement as an innocent party to recover damages at common law, and to then proceed to recover damages at common law as the appellant did; and
(d)the Perth Magistrate erred in holding that item 13, properly construed, was a provision limiting the appellant's entitlement to recover damages because item 13 conferred the right to forfeit the deposit but made no mention of forfeiture of the deposit being the appellant's only remedy, as erroneously held in the judgment at [82] - [86].
The appellant further submits that for the appellant to be held to have abandoned its right to terminate the offer to lease then the claimant has the burden to establish that, by clear words, the appellant had intended to abandon the legal presumption that the appellant did not intend to abandon any remedies for breach of the offer to lease arising by operation of the law.
The appellant contends that item 13 of the offer to lease does not prove such an intention of the appellant by clear words:
1.Item 13 does not provide that the circumstances referred to in item 13 are the only circumstance in which the deposit may be forfeited.
2.Item 13 deals only with the deposit and does not regulate termination of the offer to lease for breach or repudiation and hence does not in any way restrict the appellant's right to terminate for repudiation and to then proceed to recover damages at common law.
3.The cases cited by the respondent do not establish the proposition contended for and the facts support the position of the appellant.
Respondent's submissions
The respondent says that there was no error of the Perth Magistrate.
The respondent says that the right of one party to a contract to terminate it if the other party repudiates is a right given by the common law, but it is open to the parties to a contract to agree that it does not apply to their particular contract.
The respondent's position is that item 13 provided the exclusive remedy for the termination of the agreement, namely that the deposit would be forfeited.
It says that item 13 expressly contemplates the prospective tenant's withdrawal from the agreement and that the consequence for doing so is the forfeiture of the deposit. If the landlord's legal costs were less than expected, then it would refund the difference and if the costs were more, then the tenant would be liable for the difference.
The appellant submits that this interpretation is supported by the juxtaposition of cl 8.5 of the draft lease, which makes it clear that in addition to the liquidated damages payable in accordance with that clause the appellant may still rely on any other rights or remedies it may have, whereas item 13 contains no such proviso.
In addition, the respondent submits that the Fremantle Magistrate construed item 13 as requiring forfeiture of the deposit following repudiation and termination and relied on that finding to order forfeiture. The respondent says that issue estoppel precludes the appellant from now advancing any alternative construction, whether that forfeiture of the deposit was actually an equitable remedy, or the consequence of repudiation was damages rather than forfeiture.
The appellant's response
As to issue estoppel, the appellant says that the Fremantle Magistrate did not hold that item 13 in the offer to lease provided the appellant's sole remedy for repudiation and that such a finding was immaterial to the cause of action.
Conclusion on this ground
Item 13 of the offer to lease provided:
The Tenant must pay the leasing deposit of $4125 including GST and estimated legal costs of $1,900 including GST, to the Landlord within 48 hours of acceptance of this Offer to Lease which will be forfeited to the Landlord if the Tenant attempts to withdraw from this offer to lease. (For extensive negotiation the Legal Costs figure may increase. Any excess amounts will be refunded).
As I have said, the Perth Magistrate drew a distinction between a deposit for purchase of land and the deposit under an offer to lease.
I accept the submissions of the appellant that the weight of authority is to the contrary.
However, the distinction drawn by the Perth Magistrate does not seem to have affected his decision. Immediately after drawing that distinction at [80] his Honour went on to say:
81.In any event, my reconciliation of the competing submissions is that it depends on the wording of the particular clause (item 13) …
His Honour then went on to summarise the competing submissions of the parties.
The Perth Magistrate then turned to the wording of the particular clause. His Honour, in my view appropriately, then considered whether the relevant clause was a provision which bears no reference to anticipated loss flowing from breach of the contract, as contended by the appellant or whether it was, as submitted by the respondent, a liquidated damages clause specifying the total amounts payable in the event of breach of the contract linked to specific anticipated loss.
His Honour found at [86] that the interpretation contended for by the respondent was consistent with it being a liquidated damages clause and accepted that it was because of the following:
(a)The wording and plain meaning of Item 13 is consistent with the clause providing for complete relief in the event of a repudiation.
(i)The wording of Item 13 tends to confirm that the amounts are based off [the appellant's] estimates of potential losses in the event of [the respondent's] withdrawing from the agreement to lease ie the leasing amounts thrown away and the normal costs of negotiation. Indeed, the only suggested potential increase was to the legal costs amount in the event of extensive negotiations. Here, the negotiations were short and in fact the legal costs proved to be lower hence the partial refund. [The appellant's] counsel appeared to accept that the refund of $510 to [the respondent] was properly ordered by His Honour:
And there is a just order made [referring to the refund of $510], which as I said from Havyn's case, is actually the equitable justification with respect to deposits.
In my view the orders made by [the Fremantle Magistrate] were indeed correct. In fact, there was no need to invoke equitable principles as the clause specifically provided an expect (sic) contractual basis for deduction: Any excess amounts will be refunded;
(ii)Relief is in the event of withdrawal from the agreement to lease and is described as being release of the deposit and nothing more;
(iii)The only increase of relief in the event of withdrawal is expressed to be for any extra legal fees in the event of protracted negotiations;
(iv)Provision is made for a refund of any excess amounts. [The Fremantle Magistrate] found there was one such excess amount that had to be refunded.
His Honour also, at [86(b)], held that the conclusion that item 13 provided for complete relief was also supported by the juxtaposition of item 13 in the signed offer to lease with cl 8.5 of the unsigned draft deed of lease and noted the differences between the two, with the unsigned deed of lease providing, in cl 8.4 [sic] (this should be 8.5), as follows:
If the lessee fails to comply with all of its obligations under cl 8.4 [which relates (sic) obligations upon expiry or termination] then without prejudice to any other rights or remedies available to the lessor the lessee shall pay …
In contrast the Perth Magistrate noted that item 13 contained no suggestion that the relief was limited but rather that it was all the relief available in the event of a default by the tenant.
The Perth Magistrate was of the view that the conclusion that item 13 provided for complete relief was supported by the conduct of the parties at the trial of the Fremantle Proceedings in that there was no suggestion by anyone that more was payable save for retention of the deposit. His Honour, however, accepted that the conduct of the parties at the trial of the Fremantle Proceedings could be explained in some other way.
That conclusion was supported by the Fremantle Magistrate's findings and orders.
Was Item 13 in effect, a liquidated damages clause?
The appellant relied on the decision in Holland at both the hearing of this appeal and in the Perth Proceedings.
In that case the clause under consideration, in a contract for the sale of land read:
But if default shall be made in the payment of the said purchase money and interest or any part thereof respectively at the respective times aforesaid, the vendor may at his option without notice to the purchaser sell the said property and rescind this contract and any monies paid on account of the purchase shall then be forfeited to the vendor as and for liquidated damages.
Dizon CJ said at 416:
When the plaintiff respondent, the vendor, notified the defendants, the appellants, the purchasers, that he would take proceedings for breach of contract, he must have been understood as saying he would seek to recover damages and that necessarily meant that he was putting on one side the restriction of the compensation to which he was entitled to the forfeiture under the clause of the 2 pounds already paid.
The proper conclusion is that the vendor proceeded not under the contractual provision but on the footing that the purchasers had discharged him from the obligations of the contract. It follows that he is entitled to sue for unliquidated damages. Some suggestion was made for the defendants appellants that once the contract was treated by the vendor as discharged he could not recover for breach. This notion, however, is based on a confusion with rescission for some invalidating cause. It is quite inconsistent with principle and has long since been dissipated.
I am of the view that the facts in Holland are distinguishable for the reasons given by the Perth Magistrate at [91]. In Holland the vendor elected to sue for unliquidated damages less the deposit. Here the appellant, in its counterclaim, elected to sue for retention of the deposit and damages. It specifically, in its response to the claim, relied upon item 13 of the offer to lease to ground its contention that the respondent was entitled to forfeit and retain the deposit. It did not proceed on the footing that the respondent had discharged it from the obligations of the contract.
Furthermore, item 13 is not in the same terms as that under consideration in Holland. Specifically, in that case the clause made no provision for potential return to the purchaser for money paid 'on account of the purchase', whereas item 13 here does.
Furthermore, the offer to lease here allowed for reasonable amendments to the lease in item 14 before that lease had to be executed, whereas in Holland a final contract for the sale of land was under consideration.
I do not find that the Perth Magistrate was in error in concluding, as he did, that the wording and plain meaning of item 13 is consistent with the clause providing for complete relief in the event of a repudiation, for the reasons his Honour gave at [86(a)] and [86(b)], which I have set out above.
Such a conclusion is also consistent with the evidence contained in the statement of Brodie Keay filed on behalf of the appellant in the Fremantle Proceedings and which was tendered as his evidence‑in‑chief. At the relevant time Mr Keay was the director of Burgess Rawson (WA) Pty Ltd. His statement deposes as to his involvement in assessing the offer to lease and draft lease as well as in negotiations. His statement deposes that:
Item 13 of the Offer to Lease provides that if the Tenant attempts to withdraw from the Offer to Lease the deposit will be forfeited to the Landlord.
I therefore accept the submission of the respondent that item 13 contained the exclusive remedy available to the appellant for termination.
Having found, as I have, that item 13 is a liquidated damages clause I do not need to consider the issue estoppel point raised by the respondent. However, for the sake of completeness I would find that issue estoppel does apply.
I make that finding because of the way in which the matter was litigated in the Fremantle Proceedings. As I have already said, I have found that the whole of the counterclaim, including the claim for damages, was on foot in those proceedings. The record, or pleadings and the judgment or order establishes that to be the case.
The Fremantle Magistrate said, at ts 7 of his reasons, that he was satisfied 'the evidence establishes that the defendant accepted the repudiation and terminated the contract. According to the clear terms of item 13, the claimant thereby forfeits the leasing deposit and lease costs'.
In my view, in doing so the Fremantle Magistrate was ruling that the amount of the deposit was being awarded on the whole of the counterclaim pursuant to item 13. I therefore accept the respondent's submission that this passage is a clear finding by the Fremantle Magistrate that he was satisfied that there was repudiation and that the remedy flowing was forfeiture of the lease deposit.
Issue estoppel therefore precludes the appellant from now advancing an alternative construction.
Ground 4 therefore fails.
Possible application of s 36 of the Magistrates Court Act 2004 (WA) to this appeal
Neither party submitted that I should remit this appeal to the Supreme Court under s 36(7)(a) or adjourn the appeal. Both parties submitted that s 36(1)(c) of the Magistrates Court Act was inapplicable to this appeal. I accept that to be the case.
Disposition
For those reasons I dismiss the appeal and will hear the parties as to costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
SK
Associate
8 OCTOBER 2024
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