Ken Salisbury & Associates Pty Ltd & Anor v Waldon
[1999] QDC 197
•31 May 1999
IN THE DISTRICT COURT
HELD AT BRISBANE
QUEENSLAND
[Ken Salisbury & Associates Pty Ltd & Anor v. Waldon]
[Before Samios DCJ]
Appeal No 1412 of 1999
BETWEEN:
KEN SALISBURY & ASSOCIATES PTY LTD (ACN 067 865 570)
and KENNETH JOHN SALISBURY
Appellants
AND:
GARY WALDON
Respondent
JUDGMENT
Judgment delivered: 31 May 1999
Catchwords: ESTOPPEL - res judicata - issue estoppel - abuse of process - appeal from decision of Magistrate - previous action commenced by plaintiff in Magistrates Court seeking monies due under contract - money paid into court in that action ordered to be paid out to respondent - second action commenced by plaintiff again in Magistrates Court for damages for breach of the contract the subject of the first action - learned Magistrate hearing second action ruled plaintiff not barred by res judicata or issue estoppel or abuse of process proceeding with second action - whether in the second action same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest but which was not brought forward - whether second action contained points which properly belonged to the subject of the first action and which the plaintiff exercising reasonable diligence might have brought forward at the time - whether there had been an adjudication at all in the first action - held learned Magistrate correct to rule that the plaintiff was not barred by res judicata, issue estoppel or abuse of process and that the plaintiff was entitled to proceed with the second action.
Henderson v. Henderson (1843) 3 Hare 100, 115 (67 ER 213)
Wells v. D’Amico (1961) VR 672
Van Amstel v Country Roads Board (1961) VR 780
Yat Tung Investment Co Ltd v. Dao Heng Bank Limited (1975) AC 581
Greenhalgh v. Mallard (1947) 2 All ER 255, 257
Cole v. Austin Distributors Ltd (1953) VLR 155,158
Port of Melbourne Authority v. Anshun Pty Ltd (1981) 147 CLR 589.
Ebber v. Isager (1995) 1 Qd.R. 150
Blair v. Curran (1939) 62 CLR 464, 531
Brisbane City Council v. Attorney General (1979) AC 411
Counsel:Mr. P. Hackett for appellants
Mr. P. Rashleigh for the respondent
Solicitors: Egans for the appellants
Porter Hulett for the respondent
Hearing Date(s): 18 May 1999
IN THE DISTRICT COURT
HELD AT BRISBANE
QUEENSLAND
Appeal No 1412 of 1999
BETWEEN:
KEN SALISBURY & ASSOCIATES PTY LTD (ACN 067 865 570)
and KENNETH JOHN SALISBURY
Appellants
AND
GARY WALDON
Respondent
REASONS FOR JUDGMENT -SAMIOS D.C.J.
Delivered the 31st day of May 1999
This is an appeal to the District Court from an order made by the learned Magistrate Mrs. Tynan at Brisbane on 29 March 1999.
By a plaint and summons filed in the Magistrates Court at Inala on 11 June 1998, the respondent as plaintiff claimed against the appellants as defendants the sum of $47,406 presumably for damages for breach of contract, although the Statement of Particulars of Claim does not expressly say so. I will refer to this action as the second action. The Statement of Particulars of Claim in the second action allege a breach of the agreement pleaded and that the appellants were indebted to the respondent in the sum of $47,406 pursuant to the agreement. The agreement was alleged to have been entered into on or about 18 April 1997.
When the second action came on for hearing before the learned Magistrate at Brisbane, Mr. Hackett of counsel, who appeared on behalf of the appellants, raised a preliminary point. That point was that the respondent was precluded from prosecuting the action because of issue estoppel or alternatively the second action was an abuse of process. The basis behind the point was in earlier proceedings between the respondent and the appellants, the respondent sued the appellants for the sum of $6,000 claimed to be due and owing by the appellants to the respondent pursuant to the agreement pleaded. These earlier proceedings were filed in the Magistrates Court at Inala on 22 July 1997 and I will refer to these proceedings as the first action.
In the first action, the respondent pleaded the agreement between the parties and that the relevant term of the agreement that the respondent would be paid by the appellants at the rate of $500 per day for the respondent’s services. It was further alleged that the respondent’s engagement was terminated by the appellants on or about 20 June 1997. It was further alleged that the appellants were indebted to the respondent in respect of the work undertaken by the respondent in the month of June 1997 in respect of which he had delivered an invoice to the appellants dated 25 June 1997 Thereunder, the respondent set out the details of work performed over three weeks at four days per week at $500 per day, leading to the claim of $6,000.
With respect to the first action, the following occurred:-
a defence was lodged by the appellants;
a payment into court in the amount of $6,000 was made by the first named appellant;
the respondent applied to the court on 26 September 1997 for payment out of the money and an award of legal costs;
an order was made by the court on 3 October 1997 for the payment out of court to the respondent in the sum of $6,000 and costs in the sum of $829.20;
payment of the costs of order of $829.20.
Although in the second action the same agreement between the parties was alleged, in the second action the respondent alleged that it had been agreed between the parties that the respondent’s services would be provided to the appellants for a fixed period of 29 weeks for the agreed remuneration of $500 per day for a four day week. This allegation had not been made in the first action. As with the first action, in the second action it was alleged that on or about 20 June 1997, the appellants purported to terminate the agreement. In the second action it was alleged that the appellants had failed to pay to the respondent the sum of $2,000 per week during the 29 weeks and thereby breached the agreement. Finally, in the second action it was alleged that the appellant was indebted to the respondent in the sum of $47,406 pursuant to the agreement. Particulars were set out, namely:
PARTICULARS OF INDEBTEDNESS
29 weeks @ $2,000 per week $58,000.00
Less monies in fact paid by the defendant to the plaintiff $10,000.00
Less sums received by the plaintiff from other employment $ 594.00
from other employment during the period of the contract
TOTAL:$47,406.00
In support of the argument that the second action was barred, or ought to be barred, the appellant relied upon correspondence between the parties before the first action commenced. In one letter dated 27 June 1997 from the solicitors for the respondent to the appellants, a number of matters were stated:-
the agreement was for 29 weeks for services at the remuneration of $2,000 per week;
termination of the contract by the appellants because the respondent would not enter into another contract which purported to vary the terms of the contract;
that the termination of the respondent’s services was a breach of the contract;
the appellants were put on notice that they would be held responsible for any loss that the respondent might make as a result of their actions;
that the loss was likely to be the difference between the remuneration which the respondent might have expected had his contract with the appellants continued its full course and the remuneration which he may receive from other work over the remainder of the period;
that the appellants were indebted at that point in time to the respondent in the sum of $6,000 for the work done in June;
a demand was made that the sum of $6,000 be paid to the respondent within seven days of the date of the letter.
In another letter the respondent’s solicitors stated:
“We hereby give you notice of our intention to commence proceedings for recovery of the sum of $6,000 due to our client. Would you please indicate whether you have instructions to accept service of process.
As to our clients claim for damages for breach of contract, this will no doubt be the subject of a separate and future action. You have raised with us a suggestion that our client was an employee. Our client has discussed the situation with Wage Line at the Department of Industrial Relations and remains of the view, duly supported by the opinion of Wage Line, that he was at all times an independent contractor.”
There is no dispute about the facts.
The learned Magistrate ruled:
the respondent was not estopped from bringing the second action; and
while she could not understand why the respondent had brought two actions for two breaches of the same contract known at the time of the first action, the second action was not an abuse of process.
The learned Magistrate was not satisfied that the respondent was barred by res judicata, issue estoppel or the contention that the second action was an abuse of process.
On the hearing of the appeal, Mr. Hackett referred me to Henderson v. Henderson (1843) 3 Hare 100, 115 (67 ER 313) in which Sir James Wigram VC said:
“In trying this question, I believe I state the rule of the court correctly, when I say, that where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.”
Mr. Hackett also referred me to Wells v. D’Amico (1961) VR 672 where the defendant had negligently damaged a shop occupied by the complainant to the extent of £53, and stock therein to the value of £65. The complainant instructed the solicitor to sue for the full amount, but due to an oversight the complaint was issued for the £65 only. The solicitors for the defendant admitted liability and it was agreed between solicitors that the action be settled for the full claim and costs, and the action was struck out. The complainant refused to sign a release. The defendant relied upon the settlement and tendered the agreed sum which the complainant refused. The complainant then issued a fresh complaint for the full sum of £118. Gavin Duffy J held that the defendant’s solicitors had authority to compromise the first action and that as the cause of action in the second complaint was substantially the same cause of action as that settled by the solicitors, the complainant was bound by the terms of settlement originally agreed upon. In the course of his judgment Gavin Duffy J referred to Henderson v. Henderson.
I was also taken to the decision of O’Bryan J in Van Amstel v Country Roads Board (1961) VR 780 where the plaintiff instituted proceedings for monies due under a contract for work and labour done and recovered judgment. He thereupon brought a second action in which he sought to recover damages sustained by him as a result of a failure of the defendant to pay the monies due under the original contract within a reasonable time of the due date. It was held the plaintiff was estopped by the judgment in the first action from maintaining the second action. In the course of his reasons O’Bryan J said at p.782:
“From the foregoing recital of the claims in the two actions it would appear that the plaintiff is in this action claiming damages for breach of the same contract as that in respect of which he recovered judgment in the previous action. This does not, however, conclude the matter. A party may be justified in bringing separate actions for the breach of different terms or indeed of the same term in the same contract. This may be necessary in the case of a continuing contract where new breaches may occur after action brought and judgment has been given in respect of an earlier breach. What is prohibited under the estoppel rule and under the maxim nemo debet bis vexari pro eadem causa is the bringing of two suits for the one cause of action. Thus you cannot bring separate actions to recover different items or loss or damage for the breach of the same clause in a contract arising from the same act or omission.”
Mr. Hackett also referred me to the passage in O’Bryan J’s judgment at p.786:
“Mr. Moodie-Heddle then contended that the basis of the plaintiff’s claim in the previous action was not for breach of contract but for recovery of a debt. He drew attention to the fact that the claim in that action was not expressly stated to be a claim for damages for breach of contract and he contended that it should be regarded as an action for the recovery of a debt or as a claim in indebitatus assumpsit. He contended that the recent High Court decision in Young v. Queensland Trustees Ltd (1956), 99 CLR 560; [1956] ALR 939, showed that a party suing in debt or on the common count of indebitatus assumpsit was suing in a different right from a party who sues for breach of contract and that, therefore, as the claim in this action is for the infringement of a separate right from that relied upon in the earlier action, there is no estoppel. As Brett, M.R., said in Serrao v. Noel (1885), 15 Q.B.D. 549 ‘... where separate rights have been infringed separate actions may be maintained’.”
Mr. Hackett also quoted other passages from O’Bryan J’s judgment in support of his argument.
Then I was referred to Yat Tung Investment Co Ltd v. Dao Heng Bank Limited (1975) AC 581 where Lord Kilbrandon at 590 applying the passage from Henderson v. Henderson quoted above said:
“It becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings.”
I was also referred to the following passages from the following judgments, namely, Greenhalgh v. Mallard (1947) 2 All ER 255 at 257 per Somervell LJ:
“Res judicata for this purpose is not confined to the issues which the court is actually asked to decide, but ... it covers issues or facts which are so clearly part of the subject-matter of the litigation and so clearly could have been raised that it would be an abuse of process of the court to allow a new proceeding to be started in respect of them.”
Cole v. Austin Distributors Ltd (1953) VLR 155 at 158 per Gavan Duffy J:
“It is sufficiently apparent that paying money into court or taking it out does not result and is not intended to result in a judicial decision and cannot be the basis of a plea of res judicata. It is equally plain that any cause of action in respect of which money is paid in and taken out has been satisfied and if the same claim is made again it should not succeed, whatever may be the appropriate cause for the defendant to take, whether it be to plead the facts as a defence or to have the new action stayed or the Statement of Claim struck out as an abuse of process of the court.”
Mr. Hackett relied upon the High Court’s decision in Port of Melbourne Authority v. Anshun Pty Ltd (1981) 147 CLR 589. He submitted this decision definitively lays down the principles of estoppel, res judicata and issue estoppel. Further, he submitted the High Court at p.598 expressly approved the passage from Henderson v. Henderson I have quoted above.
Finally, Mr. Hackett referred to Ebber v. Isager (1995) 1 Qd.R. 150. In that case Justice White in our Supreme Court held:
“(1) that for the purposes of the principle of res judicata there was but one cause of action for breach of contract founded upon breach of a promise such as to carry out work in a good and workmanlike manner, and not a number of causes of action according to particular defects or classes of defect resulting from the breach.
(2) That accordingly judgment in one proceeding for such a breach of contract was a bar to a second proceeding to recover damages for the same breach of contract with respect to defects or classes of defect not the subject of the first proceeding, even where such defects or classes of defect were not apparent to the plaintiff at the time of the first proceeding.”
Mr. Rashleigh of counsel, who appeared on behalf of the respondent submitted to me that with respect to the first action res judicata and issue estoppel did not arise because there had been no decision by judgment or otherwise. In fact, the learned Magistrate held that the decision made by the acting Magistrate on 3 October 1997 on the plaintiff’s application for an order for payment out of court pursuant to r.111 of the Magistrates Court Rules and costs in the action did not in any material respect adjudicate upon nor determine any issue in contest between the parties. I respectfully agree with the learned Magistrates’ finding in that regard. As the majority said in Anshun at p.597:
“The rule as to res judicata comes into operation whenever a party attempts in a second proceeding to litigate a cause of action which is merged into judgment in a prior proceeding”.
There not having been a judgment, res judicata does not arise with respect to the second action. As was said by Gavan Duffy J in Cole, the payment in of money or the taking it out does not result and is not intended to result in a judicial decision and cannot be the basis of a plea of res judicata.
Further, the majority in Anshun referred to the distinction between res judicata and issue estoppel as expressed by Dixon J in Blair v. Curran (1939) 62 CLR 464, 531 where with respect to issue estoppel he said:
“... 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.”
Again, as there was no judgment and as nothing was decided by the learned acting Magistrate on 3 October 1997 other than pursuant to the rules of the Magistrates Court the appellants had no basis to resist the order that the sum of $6,000 be paid out to the respondent, no fact or issue relevant in the second action was necessarily decided in the first action. Of course, as was said by Gavan Duffy J in Cole, any cause of action in respect of which money is paid in and taken out is satisfied and if the same claim is made again, it should not succeed. In the first action, the claim was for the $6,000 for services rendered under the agreement up to that point in time pursuant to the term to be paid $500 per day. In my opinion, that was not the same cause of action upon which the claim was based in the second action. Although in the second action the same agreement is pleaded, and even though termination of the agreement on or about 20 June 1997 is alleged (superfluously alleged in my opinion in the first action) a different term is alleged (the 29 week period for services) and a breach of that different term is alleged. Thus, I respectfully agree with the learned Magistrate’s ruling that there was no issue estoppel.
Thus, as in Anshun, the learned Magistrate considered whether the case before her fell within the extended principle expressed by the Vice-Chancellor in Henderson v. Henderson. The majority in Anshun at p.598 noted that in two cases the principle was applied.
“... so as to shut out litigation of an issue which could and should have been litigated in the earlier proceedings.”
Mr. Hackett submitted that as the respondent knew he had a claim for damages for breach of the 29 weeks services term before the first action was commenced, and damages could be assessed, the respondent could have and should have made that claim in the first action.
However, it should also be noted, in my opinion, that the majority in Anshun considered that in Yat Tung the adoption of the principle in Henderson v. Henderson was taken too far (p.601). The majority said that Lord Kilbrandon’s statement I have quoted above was not supported by authority.
However, dealing with estoppel what the majority in Anshun decided was stated at p.602:
“In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff’s claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g., expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few. See the illustrations given in Cromwell v. County of Sac. (70).
It has generally been accepted that a party will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment. In this respect the discussion in Brewer v. Brewer (71) is illuminating.”
Justice Murphy in Anshun at p.605 appeared to base his judgment on the question of whether an estoppel arises on a decision whether the judgment in the first case is inconsistent with the judgment sought by the second case. He referred to the preservation of the orderly administration of justice that the earlier judgment should be treated as conclusive on the question sought to be raised in Anshun. Justice Brennan (as he then was) in Anshun I consider based his judgment on the notion that once there was a judgment the remedies of the party who obtained that judgment are merged in that judgment and may not be pursued in a second action. However, he too referred at p.614 to a party being barred from bringing subsequent proceedings on an issue which was not actually decided in the earlier proceedings but which the party could, and should, have raised in those proceedings. However, at p.614, his Honour said:
“Whatever effect be attributed to Henderson v. Henderson in estopping a party from litigating a particular issue, I do not think that Henderson v. Henderson has hitherto been understood in this court as applying to shut out a party from litigating a cause of action which is not merged in a judgment.”
As I respectfully understand Justice Brennan’s conclusion, it was that as the contribution proceedings had resulted in a judgment, that barred one of the parties from seeking to claim that it was entitled to an indemnity. As other members of the court recognized, there would be an inconsistency between the first judgment and a second judgment if one of the parties was allowed to pursue the claim of entitlement to an indemnity.
The learned Magistrate recognized, as I consider it must be recognized on the evidence, that the claim made in the first action and the claim made in the second action could have been brought in the one action. However, in my opinion, on the authorities I consider the question that arises for answer in the circumstances of this matter is that although the money paid in and taken out with respect to the cause of action based on the $6,000 claim put an end to that claim, was the claim for the damages for the breach of the 29 week services term an attempt to open the same subject of litigation in respect to a matter which might have been brought forward as part of the subject in contest, but which was not brought forward or was it a point which properly belonged to the subject of litigation, and which the respondent, exercising reasonable diligence, might have brought forward at the time (see Henderson p.115; p.319). The learned Magistrate considered these issues, and even though she could see no reason whatsoever for both claims not having been brought together in the first instance, nevertheless she was not satisfied that it was an abuse of process that the matters had been pleaded and run separately, and indeed, in two separate courts. I respectfully agree with the learned Magistrate’s ruling in that regard. In my opinion, the learned Magistrate was correct in that ruling. The causes of action were different as they were based upon breaches of different terms of the agreement. Further, as the majority of the High Court recognized in the context of what they decided on the issue before the High Court in Anshun, 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 (p.603).
That is, while on the evidence the respondent could have sued for the loss of being prevented from earning the 29 weeks remuneration, the action based on that loss was based on a different term of the contract, namely an entitlement to 29 weeks remuneration, whereas in the first action the term relied upon was different in that the term was that the respondent would be paid $500 per day for his work, and that by the time the action was commenced, he had earned and become entitled to be paid $6,000. In my view, those two claims were different as they sprang from different terms. As I have said earlier, the allegation in the first action that there had been a termination of the plaintiff’s engagement by the defendants on or about 20 June 1997 was an irrelevant fact, and its presence did not mean that the second action was a duplication of the first action. As the respondent claimed in the letters from his solicitors that were relied upon by the appellants, the respondent expressly reserved his rights with respect to the loss for the entire contract of 29 weeks and said the determination of the amount of his entitlement would be assessed by taking into account remuneration which he may receive from other work over the remainder of the period. Therefore, in my opinion, it is not sufficient that a party could litigate all its claims at the one time. The question is whether the second action was an attempt to open the same subject of litigation in respect to a matter which might have been brought forward as part of the subject in contest but which was not brought forward or was it a point which properly belonged to the subject of litigation and which the respondent, exercising reasonable diligence, might have brought forward at the time. The further question is, were the second action to proceed to a judgment in favour of the respondent, would that judgment contradict anything that happened in the first action by reason of the payment in and taking out of the money paid in with respect to the claim for the $6,000.
The learned Magistrate’s ruling decided these questions against the appellants and in doing so, in my opinion, the learned Magistrate was correct.
For these reasons I dismiss the appeal. I will hear the parties on the questions of costs. I have dealt with this appeal on the basis that the two appellants I have listed in the title are the appellants to this appeal despite only the first named appellant is named as the appellant on the notice of appeal. It seems to me both these appellants ought to be treated as the appellants as both sought to benefit from the ruling from the learned Magistrate. There may be a consequence as to recovery of costs if only the corporate appellant is treated as the only appellant in respect of this appeal. I will hear further submissions on this aspect of the matter when I hear the parties on the question of costs.
0