Murphy v Overton Investments Pty Ltd - [2001] FCA 1725

FEDERAL COURT OF AUSTRALIA
Murphy v Overton Investments Pty Ltd [2001] FCA 1725
ESTOPPEL – res judicata – issue estoppel – Anshun estoppel – where respondent brought action for recovery of debt in Supreme Court of NSW – where judgment entered – where orders made in Supreme Court envisaging fresh applications made in Federal Court – where applicants brought action alleging inter alia unjust contract – whether judicial decision in Supreme Court precludes determination of issue in Federal Court
CONTRACT – unfair contract – Contracts Review Act 1980 – where agent of respondent misled applicants – where applicants entered lease – where respondents have since assigned lease to third party – where third party not a party to proceeding – whether lease unfair procedurally or substantively – whether unfairness arose at time lease was made – whether claims of substantive injustice a “matter” within s 39B of Judiciary Act 1903 – whether time limit for relief under s 16 of Contracts Review Act has expired
Contracts Review Act 1980 (NSW) ss 4, 7, 9, 12, 16
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 followed
Blair v Curran (1939) 62 CLR 464 followed
West v AGC Advances Ltd (1986) 5 NSWLR 610 followed
Elders Rural Finance Ltd v Smith (1996) 41 NSWLR 296 considered
Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 cited
Phillip Morris Inc v Adam P. Brown Male Fashions Pty Ltd (1981) 148 CLR at 512 cited
JOHN JAMES MURPHY v OVERTON INVESTMENTS PTY LTD
N159 OF 1999; N 946 OF 1999 and N 936 OF 1999
EMMETT J
7 DECEMBER 2001
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 159 OF 1999

BETWEEN:

JOHN JAMES MURPHY
APPLICANT

AND:

OVERTON INVESTMENTS PTY LIMITED
RESPONDENT

N 946 OF 1999

BETWEEN:

DAPHNE MURPHY
APPLICANT

AND:

OVERTON INVSTMENTS PTY LIMITED
RESPONDENT

N 936 OF 1999

JUDGE:

EMMETT J

DATE OF ORDER:

7 DECEMBER 2001

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
The parties deliver to the Court short minutes to give effect to these reasons.
The proceeding be listed for directions on a date convenient to the parties.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 159 OF 1999

BETWEEN:

JOHN JAMES MURPHY
APPLICANT

AND:

OVERTON INVESTMENTS PTY LIMITED
RESPONDENT

N 946 OF 1999

BETWEEN:

DAPHNE MURPHY
APPLICANT

AND:

OVERTON INVSTMENTS PTY LIMITED
RESPONDENT

JUDGE:

EMMETT J

DATE:

7 DECEMBER 2001

PLACE:

SYDNEY

REASONS FOR JUDGMENT

These two proceedings are members of a group of more than ninety proceedings in which similar relief is sought against Overton by Lessees of units in the Heritage Village, which was formerly owned and operated by Overton. In addition to other relief, claims were made in all of the proceedings for relief under the Contracts Review Act 1980 (NSW) (“the Contracts Review Act”). On 16 June 2000 I ordered…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2001] FCA 1725
Decision Date: 7 DECEMBER 2001

CaseChat Overview and Summary

The case of Murphy v Overton Investments Pty Ltd involved a dispute between the Murphys and Overton Investments Pty Ltd, concerning claims for arrears of outgoings and estoppel. The Federal Court of Australia was tasked with resolving the legal issues that arose from the proceedings in the Equity Division of the Supreme Court of New South Wales and subsequent appeals. The court had to determine whether Overton was estopped from claiming the moneys sought in its cross-claim and whether the contracts were unjust within the meaning of the Contracts Review Act.

The key legal issues centred on the estoppel defence raised by the Murphys and the other lessees against Overton’s claims for arrears of outgoings. Overton had filed a cross-claim against the lessees, including the Murphys, for arrears of outgoings in the Equity Proceeding. The Murphys and other lessees argued that Overton was estopped from claiming the moneys due to representations made about the increases in outgoings. The Murphys also argued that the contracts were unjust under the Contracts Review Act. The court had to decide whether the estoppel and Contracts Review Act defences were properly considered by the trial judge and whether they could be decided separately from the other issues.

The court found that it was in a position to decide all remaining questions since it had heard all the evidence relating to all questions in the proceedings. The court noted that the trial judge had made orders that certain defences, including those based on estoppel and the Contracts Review Act, would be decided in separate actions. The court concluded that the trial judge had not erred in his approach, as the orders did not deny procedural fairness to the Murphys and other lessees. The court held that the estoppel and Contracts Review Act defences could be decided separately and did not need to be heard in the context of the cross-claim.

The court dismissed Overton’s appeal and the Murphys' cross-appeal, upholding the orders made by the trial judge. The court further ordered that the parties deliver short minutes to give effect to these reasons and listed the proceeding for directions on a date convenient to the parties.

Orders

Orders of the court

The parties deliver to the Court short minutes to give effect to these reasons.

The proceeding be listed for directions on a date convenient to the parties.

Background

Background to the litigation

Alternatively, Overton asks for an order pursuant to Order 29 of the Federal Court Rules that the question of whether Mr and Mrs Murphy are estopped by reason of those matters be determined separately from and prior to the determination of all other issues remaining to be determined in the proceedings. However, I have now heard all of the evidence relating to all questions remaining to be decided in both proceedings. Accordingly, it is unnecessary to make an order pursuant to Order 29, since I am now in a position to decide all of the remaining questions. THE LITIGIOUS BACKGROUND It is convenient to decide the estoppel and res judicata questions before considering the substance of the claims under the Contracts Review Act. In order to consider the contentions of Overton, it is necessary to recount in some detail the litigious background to the present proceedings. That entails an examination of proceeding 1181 of 1997 brought by Mr and Mrs Murphy, together with in excess of ninety other Lessees, in the Equity Division of the Supreme Court of New South Wales (“the Equity Proceeding”). It will also entail reference to appeals to the Court of Appeal from orders made in the Equity Proceeding. THE EQUITY PROCEEDING Overton was the defendant in the Equity Proceeding. The relief originally claimed against Overton by the plaintiffs in the Equity Proceeding is not presently relevant. On 9 May 1997, Overton filed a cross-claim in the Equity Proceeding against all of the plaintiffs, including Mr and Mrs Murphy. By its cross-claim, Overton claimed judgment against each of the cross defendants (“the Residents”) for arrears of outgoings in respect of their units in the Heritage Village, calculated in accordance with the terms of the leases under which the Lessees occupied those units. The amounts claimed in the cross-claim varied from one Lessee to the next. On 30 May 1997, the Residents filed a defence to Overton’s cross-claim. An amended defence was filed on 10 December 1997. In their amended defence, the Residents asserted that Overton was estopped from claiming the moneys sought in its cross-claim. The Residents alleged that Overton had represented that increases in outgoings required to be paid under their leases would never exceed CPI increases and that the Residents had been induced to enter into their leases by reason of that representation. They asserted that, by reason of the representations, Overton was estopped from recovering the amounts claimed. The amended defence also asserted that the contracts comprised in the leases between the Residents and Overton were unjust within the meaning of s 7 of the Contracts Review Act. No claim had been made by the Residents in their statement of claim in the Equity Proceeding for relief based on estoppel or the Contracts Review Act. On 26 March 1998, Windeyer J, sitting in the Equity Division, ordered that all of the issues on Overton’s cross-claim as to the amounts due by the Residents under their leases be referred out for inquiry and report pursuant to Part 71 of the Supreme Court Rules. On 23 June 1998, orders were made directing the referee to limit his report to the issues in the cross-claim and those defences to the cross-claim (“the General Defences”) that did not raise questions of estoppel or the Contracts Review Act. The parties agreed that none of the evidence relating to the individual circumstances of particular Residents was material in the determination of the General Defences. On 19 November 1998, the referee submitted his report. The report did not address any defence based on estoppel or the Contracts Review Act but was confined to the General Defences.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

EMMETT J

After further discussion as to the form of the final orders, Windeyer J made orders relevantly as follows:“2. The report of the referee be adopted.………………………4.All matters arising under paragraphs 4 to 67 of the further amended defence to cross-claim be brought to trial by separate actions by residents raising such defence and that judgments be entered on the cross-claim without regard to such defences, but subject to any application for a stay.………………………6.Judgment be entered for the cross-claimant on the cross-claim against individual cross-defendants for the separate amounts set forth in the column “Equals Total Claimed for Judgment on 23 April 1999” on the document annexed to these orders.7.Order that interest on such judgments accrue at the daily rate shown in the last column of such document.………………………12.Order that proceedings for enforcement of the judgments against the cross-defendants other than Coxhead, Pegg, Johnston, Starck, Rourke, Deller, Hulscher, Wild, Lucas, Brown, Renaud and Baster be stayed under condition that the cross-defendants obtaining the benefit of such stay pay to the cross-claimant 50% of the amount shown against the name of such cross-defendant in the column headed “Total claim” in the document annexed (interim payments shown on such documents to be credited as part payment of the amount entered against any such cross-defendant) within 21 days of this date and further order that such stay continue until the conclusion of Federal Court Proceedings No. 159 of 1999 or earlier order of this Court.” [Emphasis added] The matters arising under paragraphs 46 to 67 of the further amended defence were the estoppel and Contracts Review Act issues.THE COURT OF APPEAL Overton appealed to the New South Wales Court of Appeal from certain of the orders made by Windeyer J on 23 April 1999. The Residents, including Mr and Mrs Murphy, filed a cross-appeal against Orders 4, 6 and 7 made by Windeyer J on 23 April 1999. Overton did not proceed with its appeal. However, the cross-appeal was prosecuted and determined. The essence of the complaint made by the Residents in their appeal was that Windeyer J, by the orders he made on 23 April 1999, effectively denied procedural fairness by disposing of Overton’s cross-claim without hearing the merits of the defences of the Residents based on estoppel and the Contracts Review Act. The Residents contended that the fact that those defences were formally addressed in paragraph 4 of the orders of 23 April 1999, as a prelude to the entry of judgment, did not alter that situation. The Residents contended that Windeyer J erred when he ignored the defences, especially the estoppel defences, which raised triable issues of fact that would have constituted shields or defences to Overton’s several claims embodied in its cross-claim. The Residents contended that Windeyer J was not entitled to ignore those defences by the expedient of deciding that the issues tendered by them could only be raised in the context of separate actions.

Ratio Decidendi

Legal Principle Established

Established by: EMMETT J

Full text does not contain this section.

BETWEEN:	JOHN JAMES MURPHY APPLICANT
AND:	OVERTON INVESTMENTS PTY LIMITED RESPONDENT
N 946 OF 1999
BETWEEN:	DAPHNE MURPHY APPLICANT
AND:	OVERTON INVSTMENTS PTY LIMITED RESPONDENT

JUDGE:	EMMETT J
DATE OF ORDER:	7 DECEMBER 2001
WHERE MADE:	SYDNEY