Percival v Barok Industries Pty Ltd (No.2)
[2005] FMCA 1278
•5 September 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PERCIVAL v BAROK INDUSTRIES PTY LTD (No.2) | [2005] FMCA 1278 |
| BANKRUPTCY – Costs. Federal Magistrate Court Rules, Part 21 Wong v MIMIA [2004] FCA 51 |
| Applicant: | BARRIE ARCHIBALD ROBERT PERCIVAL |
| Respondent: | BAROK INDUSTRIES PTY LTD |
| File No: | BRG597 of 2001 |
| Delivered on: | 5 September 2005 |
| Delivered at: | Brisbane |
| Hearing dates: | 14, 15 & 17 May 2002 |
| Last written submissions re costs | 9 March 2005 |
| Judgment of: | Rimmer FM |
REPRESENTATION
| Applicant: | Applicant appeared in person |
| Respondent | No Appearance |
| Counsel for the Third Party: | Mr McQuade |
| Solicitors for the Third Party: | Baker Johnson |
ORDERS
That all applications for costs be dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BZ 597 of 2001
| BARRIE ARCHIBALD ROBERT PERCIVAL |
Applicant
And
| BAROK INDUSTRIES PTY LTD |
Respondent
And
BAKER JOHNSON
Third party
REASONS FOR JUDGMENT
Proceedings
This is an application for costs by third parties Baker Johnson solicitors against the applicant Barry Percival. Such a costs application arises from the setting aside of a Bankruptcy notice. Reasons for decision were delivered on 22 February 2005. On that day it was also ordered that the application by the applicant that the third party pay his costs was also dismissed. All other applications for costs were then to be dealt with by written submissions. Final submissions were received on 9 March 2005.
In his written submissions the applicant seeks to revive the question of his costs application against the third party and then seeks that any application by the third party that he pay their costs be dismissed.
The applicant clearly cannot seek to have the same issue already determined by the court the subject of further consideration. A final order was made with respect to his costs application against the third party and the only right existing for the applicant with respect to an application that has been the subject of a final order is to appeal. The doctrines of res judicata and issue estoppel are clearly applicable.
In Wong v MIMIA [2004] FCA 51 Lindgren J described res judicata and issue estoppel in the following way:
[43] I need not discuss res judicata or issue estoppel at length. (The expression ‘res judicata’ is sometimes used to include issue estoppel as one form, and merger of cause of action in judgment as a different form, but, consistently with the cases to be discussed below, I will use it here to refer to the form of estoppel which arises from the establishment, or failure to establish, a cause of action, by reason of a judgment.) For res judicata to operate:
· there must have been a final judgment (albeit appealable) within its jurisdiction, by a judicial tribunal, based on the establishment or failure to establish a cause of action;
· the later proceeding must raise the same cause of action; and
· except where the prior judgment was in rem, the parties to the two proceedings must be the same: cf Spencer Bower, Turner and Handley, The Doctrine of Res Judicata (3rd ed, 1996) at 1–3; Campbell, ‘Relitigation in Government Cases: A Study of the Use of Estoppel Principles in Public Law Litigation’ (1994) 20 Mon U L Rev 21 at 21–22, and cases cited in both works.
[44] For issue estoppel to apply, an issue of fact or law which is raised for decision in the later proceeding must necessarily have been determined by reason of the final judgment in the earlier proceeding, and, again, except where the prior judgment was in rem, there must be identity of parties: Spencer Bower, Turner and Handley, chs 8, 9; Campbell at 22–23, and cases cited in both works.
[45] In Blair v Curran (1939) 62 CLR 464, Dixon J distinguished between res judicata and issue estoppel on the basis that in the case of res judicata the cause of action itself has ‘passed into judgment, so that it is merged and has no longer has an independent existence’, whereas, in the case of issue estoppel, ‘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’ (at 532 – the passage was adopted in Anshun by Gibbs CJ, Mason and Aickin JJ at 597).
[46] Where the earlier proceeding is dismissed in so far as it is based on a particular cause of action, that cause of action does not merge in the judgment: cf Macquarie Bank Ltd v National Mutual Life Association of Australasia Ltd (1996) 40 NSWLR 543 (‘Macquarie Bank’) at 556 per Clarke JA, with whom Priestley JA agreed; BC (at [19] per Sackville J).
[47]Reliance on the same cause of action in successive proceedings will ordinarily raise the same issues, so that if a litigant is defeated by res judicata, an issue estoppel will also be present. But the converse is not necessarily true: an issue estoppel may defeat a litigant without res judicata doing so; cf the passages from the judgment of Dixon J in Blair v Curran set out in [45] above.
[48] The expression ‘cause of action’ can bear different meanings, and Brennan J observed in Anshun (at 610–611) that the imprecision in its meaning ‘tends to uncertainty in defining the ambit of the [res judicata] rule’.
Some principles are clear. Firstly, the doctrines of res judicata and issue estoppel apply in this type of administrative proceedings: Taylor v Ansett Transport Industries Ltd (1987) 18 FCR 342; Somanader v MIMA (2000) 178 ALR 677 per Merkel J; BC v MIMA (2001) 67 ALD 60 per Sackville J; Re Ruddock; Ex parte LX [2003] FCA 561 per Heerey J; Thayananthan v MIMIA [2003] FCA 1054 per Merkel J and Wong v MIMIA (supra). Secondly, if I find that there is a res judicata or an issue estoppel I have no discretion as to whether or not to accede to the Minister’s request to dismiss these proceedings, at least in so far as there is commonality of issues: Chamberlain v DCT (1988) 164 CLR 502. Next Anshun estoppel may apply in these proceedings:
BC(supra) but in those circumstances the Court does have limited discretionary powers: BC (supra); Stewart v Sanderson (2000) 100 FCR 150. Finally the dismissal by consent of the proceedings first brought in the Federal Court/Federal Magistrates Court by FM Barnes can give rise to a plea of res judicata or issue estoppel: Makoul v Barnes (1995) FCR 572 at 502; Somanader (supra).
The doctrine of res judicata and issue estoppel are both concerned with ensuring finality of litigation. However, as has been noted in cases such as Blair v Curran (1939) 62 CLR 464 at 531 and Jackson v Goldsmith (1950) 81 CLR 446 at 466-467, they do operate differently. Res judicata prevents re-agitation of the same cause of action where there has been previous judicial determination of the matter. In contrast issue estoppel applies where, although a separate cause of action is argued, an issue of fact or law is relied upon that has previously been determined and which formed the basis of an earlier judgment. As Fullagar J said in Jackson v Goldsmith at 467:
“It follows from the very nature of the difference between the plea of res judicata and the plea of issue estoppel that 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.”
Maiden (supra) quotes Dixon J in Blair v Curran (1939) 62 CLR 464 as defining this principle in the most elegant and succinct way. His Honour said:
“A judicial determination directly involving an issue of fact or 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. Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded.”
Cases such as Philip Morris Incorporated v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 453; Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 36 FCR 406 at 418 and Macquarie Bank Ltd v National Mutual Life Association of Australia (1996) 40 NSWLR establish that it is the substance of a cause of action and not the form that is relevant when considering whether an action is barred by estoppel.
Therefore the only costs considerations that are possibly left for determination to the applicant are against the respondent. It is clear in his written submissions that he has made no claim against the respondent in relation to his costs.
Other than that the only costs application then to be determined is that of the third party against the applicant. In essence the third party seeks an order that the applicant pay the third party’s costs of and incidental to the application on the basis that they were put to considerable expense, time and costs in responding to what were clearly unfounded allegations of impropriety against them as the solicitors for the respondent creditor.
In my reasons for decision I found that the applicant had sought to have the court make a finding that the third party as the creditors solicitors had acted without instructions in issuing the bankruptcy notice against him. I found that this was not the case and that the solicitors had at all times had those instructions from an agent of the respondent creditor. The respondent chose to play no part in the determination of the application by Mr Percival to have the Bankruptcy Notice set aside. The third party only came into the proceedings as a result of the second application by Mr Percival to have them pay his costs. The third party therefore contend that they are entitled to their costs on the basis that they were enjoined in these proceedings as a result of the actions of the applicant and were required to defend the matter on the basis of the unfounded allegations that he made.
Ordinarily, such a set of circumstances would entitle them to an order for costs against the applicant as they were clearly successful in having findings made in their favour and the application for costs against them dismissed. However the third party chose to take a role in these proceedings which I found they had no proper standing to take and that was to in fact go wider than the that necessary to have their interests determined and oppose the setting aside of the bankruptcy notice. In effect they by their own actions made these proceedings contested in relation to the bankruptcy notice, in their own right and not as solicitors for the creditor. In those circumstances, the applicant claims that they have lengthened and made more expensive the proceedings for both themselves and for him and that no order for costs should be made.
In this matter, I am satisfied that no order for costs should be made in favour of the third party. They cannot be said to have been wholly successful in the proceedings in so far as they sought to have an order made by the court to dismiss the application by Mr Percival to have the bankruptcy notice set aside. I accept that if they had not pursued this part of the matter that they would have been entitled to their costs, however, having elected to do so they have extended the expense and length of the proceedings in such a way that I find disentitles them to the benefit of a costs order.
Therefore I order that all applications for costs be dismissed.
I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of Rimmer FM
Associate: Lynnette Chin
Date: 5 September 2005
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