Queensboro Pty Limited v Butler Pollnow Pty Limited

[1999] NSWSC 700

CITATION:	Queensboro Pty Limited v Butler Pollnow Pty Limited [1999] NSWSC 700
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	3237/87
HEARING DATE(S):	3, 7 May 1999
JUDGMENT DATE:	13 July 1999
PARTIES :	Queensboro Pty Limited (P) Butler Pollnow Pty Limited (D1) Butler Pollnow Financial Services Pty Limited (D2) Errol Pollnow (D3) Richard Butler (D4) Butler Pollnow Pty Limited (Cr-Cl 1) Errol Pollnow (Cr-Cl 2) Queensboro Pty Limited (Cr-D 1) Garden Mews St Leonards Pty Limited (Cr-D 2) Bay Road Properties (Cr-D 3) Lake Village Apartments Pty Limited (Cr-D 4) Rosalind Gardens Pty Limited (Cr-D 5) Bydown Gardens (Cr-D 6) Ash Street Properties (Cr-D 7) Alexander Barclay Shand (Cr-D 8) Allan Gordon Coogan (Cr-D 9) Alan Ivor Terrell (Cr-D 10) Warren Walter Madgwick (Cr-D 11) Anthony Gardiner Sherlock (Cr-D 12) Paul Dean Ramsbottom Isherwood (Cr-D 13)
JUDGMENT OF:	Master McLaughlin

COUNSEL :	Mr. M. L. D. Einfeld, QC, and Mr. A. C. Henderson (P) Mr. D. Heydon, QC, and Mr. M. Leeming (D)
SOLICITORS:	Solomon Garland Partners (P) Smits Leslie (D)
CATCHWORDS:	Summary judgment; Res Judicata; Estoppel by convention; Waiver; Proceedings in Local Court; Abandonment of excess; Cross-claim in Local Court; Proceedings in Local Court compromised by deed and consent orders; Effect of deed; Dismissal of cross-claim in Local Court; Whether such dismissal constitutes a judgment of the Local Court; Plea in bar.
ACTS CITED:	Local Court (Civil Claims) Act 1970 Local Court (Civil Claims) Rules 1988 District Court Act 1973
CASES CITED:	General Steel Industries Inc. v Commissioner for Railways (1964) 112 CLR 125 Gray v Furber (23 May 1995, Dunford J, unreported) Chamberlain v Deputy Commissioner for Taxation (1988) 164 CLR 502 Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 Segur v Franklin (1934) 51 WN (NSW) 31 Amalgamated Investment & Property Co v Texas Commerce International Bank Limited [1982] 1 QB 84 Legione v Hately (1983) 152 CLR 406 Lee v Furno Holdings Pty Limited (1993) 33 NSWLR 404 Commonwealth of Australia v Newcrest Mining (WA) Limited (1995) 130 ALR 193 Commonwealth of Australia v Verwayen (1990) 170 CLR 394 Craine v Colonial Mutual Fire Insurance Company Limited (1920) 28 CLR 305 Presmist Pty Limited v Turner Corporation Pty Limited (1992) 30 NSWLR 478 Republic of India v India Steamship Co Ltd [1993] AC 410
DECISION:	1. I order that the proceedings be dismissed as against the first and third defendants.; 2. I order that the plaintiff pay the costs of the first and third defendants of the notice of motion filed by the first and third defendants on 25 November 1998 and of the proceedings after 3 December 1993 (the costs of the notice of motion to include only one day of hearing), and that otherwise there be no order as to costs in the proceedings by the plaintiff against those defendants.

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SUPREME COURT OF
NEW SOUTH WALES
EQUITY DIVISION

MASTER McLAUGHLIN

Tuesday, 13 July 1999

3231 of 1987 QUEENSBORO PTY LIMITED -v- BUTLER POLLNOW PTY LIMITED

JUDGMENT

1    MASTER: At the commencement of the hearing of this matter I stated, and had it recorded, that I was acquainted with Alexander Barclay Shand, the eighth cross-defendant. That fact caused no problem to any of the parties thereto to my hearing the present application. I was also informed that a member of one of the partnerships in respect of which the substantive proceedings are brought by the plaintiff is the Honourable John Edward Horace Brownie, formerly a Judge and currently an Acting Judge of the Supreme Court, with whom I am also acquainted. Again, that fact caused no problem to any of the parties thereto to my hearing the present application. 2    By notice of motion filed on 25 November 1998 Butler Pollnow Pty Limited and Errol Hugh Pollnow, the first and third defendants respectively, seek, substantively, the following order:

Pursuant to Part 13 rule 5, Part 15 rule 26 and/or the inherent jurisdiction of the Court that:
(a) the statement of claim filed in these proceedings on 7 July 1987 (“SOC”) be dismissed generally as against the first and third defendants; or
(b) striking out the said SOC as against the first and third defendants.

3    By that statement of claim, Queensboro Pty Limited (to which I shall refer as “Queensboro”), the plaintiff alleges that payments in the sums of $598,967.24, $70,000 and $209,141.99 have been made to the first and second defendants, those payments having been procured by the third and fourth defendants. Each of the payments is alleged to have been made in breach of contract and in breach of fiduciary duty. The plaintiff purports to sue both on its own behalf and also in a representative capacity on behalf of six specified partnerships and the members of those partnerships. 4    Notwithstanding that it was seeking recovery of those sums in the present proceedings, the plaintiff whilst the present proceedings were on foot also sought to recover the same amounts against the third defendant in the Local Court of New South Wales. It did so in proceedings 618 of 1993 in the Local Court of New South Wales at the Downing Centre. In those proceedings Errol Hugh Pollnow was the plaintiff and Queensboro Pty Limited was the defendant. That plaintiff sued that defendant for money payable by the defendant to the plaintiff for money had and received by the defendant for the use of the plaintiff, and claimed the sum of $5,569.76 together with interest thereon in an amount of $1,371.12. By notice of cross-claim filed on 24 March 1993 in those proceedings in the Local Court the present plaintiff, Queensboro,

(a) alleged that the sums of $598,967.24, $70,000 and $209,141.99 were owing to it by the present third defendant, Errol Hugh Pollnow;
(b) abandoned, pursuant to section 15(4) of the Local Court (Civil Claims) Act 1970, those sums in excess of the jurisdictional limit of $40,000;
(c) claimed, after abandonment, the sum of $40,000.

5    Subsequently a document headed “Terms of Settlement” and further headed “Consent Orders Terms of Settlement” was filed in the Local Court in those proceedings. Paragraph 2 of that document is in the following terms,

Verdict for the Cross-defendant on the Cross-claim.

6    That document also contains the following,

AND THE COURT NOTES:
A. The terms and provisions expressed and the consideration given by the Parties to the Deed in the Deed of Settlement and Release dated 3rd December 1993 and annexed hereto

7    That document is signed by the solicitor for Errol Hugh Pollnow and executed under seal by Queensboro Pty Limited. It bears the following endorsement by the Registrar of the Local Court, dated 22 December 1993, “I note terms 1 to 5 and notations”. 8    The deed of settlement and release is annexed to the Terms of Settlement. It is dated 3 December 1993. The parties thereto are Errol Hugh Pollnow and Butler Pollnow Pty Limited (collectively referred to as “Pollnow”), Garden Mews St Leonards Pty Limited (“Garden Mews”), and Queensboro Pty Limited (“Queensboro”). 9    That deed contains the following operative clauses,

4. All the Parties hereto agree that this is a full and final settlement between them of the issues and matters as pleaded by them in the Queensboro and the Garden Mews proceedings.
5. The Parties agree that this is a full and complete release which may be pleaded by any party hereto in bar to action, suit or proceedings where the proceedings so brought or pleaded raises the same or similar issues or claims as the pleadings in the Garden Mews proceedings and/or the Queensboro proceedings.

10    The Queensboro proceedings and the Garden Mews proceedings, which are referred to in the foregoing clauses, are identified in recitals B and C respectively to the deed, as follows,

B Errol Hugh Pollnow has commenced proceedings against Garden Mews for the over payment of an amount as claimed in Local Court proceedings No. 617 of 1993, “the Garden Mews proceedings”.
C Errol Hugh Pollnow has commenced proceedings against Queensboro for the over payment of an amount as claimed in Local Court proceedings No. 618 of 1993, “the Queensboro proceedings”.

11    In proceedings commenced in the Commercial List of the Supreme Court of New South Wales in 1986 (“the Auditors proceedings”), Queensboro sued it auditors, England Roberts and Company, for negligence and breach of contract. The defendants to the present proceedings (Butler Pollnow Pty Limited, Butler Financial Services Pty Limited and Errol Hugh Pollnow) were not joined as parties in those proceedings. By its statement of claim in those proceedings, filed on 6 March 1986, Queensboro sought damages in the sum of $598,967.24, arising from alleged overpayment. By its amended statement of claim, Queensboro purported to sue on its own behalf and on behalf of the same six partnerships and the same members of those partnerships as it alleges that it is suing in the present proceedings. 12    Subsequently judgment in the auditor’s proceedings was entered in favour of Queensboro in 1989. 13    I have already recorded that the notice of motion stated that the relief sought therein is claimed pursuant to Part 13 rule 5, Part 15 rule 26 and/or the inherent jurisdiction of the Court. 14    However, the applicants did not, in fact, ground their application on Part 15 rule 26 (which relates to the form of a pleading), but essentially relied upon the power of the Court to order summary dismissal (Part 13 rule 5) and the inherent jurisdiction of the Court to prevent abuse of its process. 15    Essentially, it was the submission of the applicants that, whatever might have been the status of the proceedings at their inception, the consequence of the proceedings in the Local Court and the manner of the compromise of those proceedings had the consequence that, thereupon, either any cause of action which might to that point have existed had ceased to exist or that the continuation of the proceedings constituted an abuse of the process of the Court, with the effect that the applicants thereupon became entitled to invoke the jurisdiction of the Court for the summary dismissal of the proceedings. 16    Part 13 rule 5 provides, in subrule (1) thereof,

Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings ---
(a) no reasonable cause of action is disclosed;
(b) the proceedings are frivolous or vexatious; or
(c) the proceedings are an abuse of the process of the Court,
The Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.

17    (I would here observe that the inherent jurisdiction of the Court to prevent abuse of its process is, to the extent that is here relevant, replicated in paragraph (c) of Rule 5 (1). Thus, no question can arise as to the power of a Master to grant relief of the nature sought upon the ground of abuse of the process of the Court.) 18    The principles relating to the exercise of the power of summary dismissal are well recognised: see, for example, General Steel Industries Inc. v Commissioner for Railways (1964) 112 CLR 125 at 128 - 130 per Barwick CJ. 19 It was submitted on behalf of the present applicants that there are three reasons --- each of which is conclusive --- why the present claim of Queensboro cannot succeed, and thus ought not be permitted to proceed. Those reasons are:

(a) The deed of settlement and release, which compromised the Local Court proceedings;
(b) The Local Court judgment, which gives rise to a res judicata ;
(c) Abandonment by Queensboro, under section 15(4) of the Local Court (Civil Claims) Act , which resulted in the judgment against Queensboro on its cross-claim being a full discharge of all demands in respect of the causes of action asserted by Queensboro.

20    I shall proceed to a consideration of each of those reason asserted by the applicants.

(a) Deed of Settlement and Release

21    I have already observed that the parties to the deed of settlement and release included the present applicants, Butler Pollnow Pty Limited and Errol Hugh Pollnow (who are collectively referred to therein as “Pollnow”) and the present plaintiff, Queensboro Pty Limited (referred to therein as “Queensboro”), and that the recitals to that deed include recital C (which I have already set forth). 22    Clause 2 of the deed provides,

Queensboro agrees to pay Pollnow and Pollnow agrees to accept the sum of $7,723.16 in full satisfaction and discharge of all claims and issues pleaded, raised, and/or referred to in the Queensboro proceedings.

23    It was submitted on behalf of the present applicants that the present proceedings raise the same issues or claims as were contained in the cross-claim in the Local Court proceedings. Precisely the same monetary amounts in dollars and cents are claimed in the present proceedings as were claimed in the Local Court proceedings. The present proceedings contain three claims for liquidated damages (or equitable compensation), being for:

(a) $598,967.24, representing alleged overpayments of management fees by Queensboro to the first defendant (paragraphs 11 - 15);
(b) $70,000, representing payment of a financial procurement fee to which the second defendant was allegedly not entitled (paragraphs 16 - 19);
(c) $209,141.99, alleged to be unauthorised and outstanding loans made by Queensboro to the first defendant (paragraphs 23 - 28).

24 The defendant to the Local Court proceedings, Queensboro, on 24 March 1993 filed a notice of cross-claim (dated 23 March 1993). I have already recorded that by that document the defendant claimed the sum of $878,109.23, that the defendant abandoned, under section 14 of the Local Courts (Civil Claims) Act, the sum of $838,109.23; and that the defendant claimed, after abandonment, the sum of $40,000. 25    The particulars of cross-claim annexed to that document identify the total amount of $878,109.23, that amount comprising claims for liquidated damages as follows,

(a) $598,967.24, representing alleged overpayments of management fees by Queensboro to the first defendant, Errol Hugh Pollnow (paragraphs 3 - 5, 6(b), 7, 8);
(b) $70,000, representing payment of a financial procurement fee to which the second defendant was allegedly not entitled (paragraphs 3 - 5, 6(a), 7, 8);
(c) $209,141.99, representing unauthorised and outstanding loans allegedly made by Queensboro to the first defendant (paragraphs 9 - 11).

26    Each of the material allegations in the cross-claim filed in the Local Court has a counterpart in the statement of claim in the present proceedings. 27    It was submitted on behalf of the present applicants that the Supreme Court proceedings clearly raise the “same or similar issues or claims” as were the subject of the Local Court proceedings 618 of 1993 (referred to in the deed as “the Queensboro proceedings”), and that the underlying substratum of fact is identical. It was submitted that the causes of action pleaded in the statement of claim in the Supreme Court proceedings fall squarely within the ambit of clause 5 of the deed. 28    It is appropriate here to record that at the hearing of the present application Mr Martin Einfeld of Queen’s Counsel, for the plaintiff, stated that he did not submit that the subject matters of the two proceedings were not substantially similar. 29    It was submitted on behalf of the plaintiff that, as a matter of construction, the deed does not have the effect for which the applicants contend. 30    In support of that primary submission the plaintiff submitted that the deed did not contemplate a release from, or a discharge of, the claims raised in the present proceedings, for the following reasons:

(i) As at the date of the deed, 3 December 1993, the present proceedings had been on foot for some years. The proceedings had been instituted by statement of claim filed on 7 July 1987.
(ii) The existence of the Supreme Court proceedings must have been present to the minds of the parties and their representatives. For example, in June 1993 (only six months earlier) the first and third defendants filed an amended defence and cross-claim. In July of that year the plaintiff sought particulars of those pleadings. Also in July 1993 the plaintiff (by summons 12935 of 1993) sought to remove into the Supreme Court the proceedings in the Local Court.
(iii) It is inconceivable, so it was submitted on behalf of the plaintiff, that, if the operative provisions of the deed (especially clauses 4 and 5) had been intended to effect a release in respect of the present Supreme Court proceedings, the Supreme Court proceedings would not have been described in the recitals and would not have been referred to in terms in the operative provisions.
(iv) The deed, so it was submitted, plainly addresses future proceedings. It was submitted that the language of the deed is entirely inappropriate to catch the then current Supreme Court proceedings. That such was the case is manifest from the fact that, following execution of the deed, neither of the applicant defendants sought to plead its terms in bar to the claim of Queensboro in the present proceedings. No steps were taken by them to seek dismissal of the Supreme Court proceedings, and no such steps are contemplated by the terms of the deed.

31    A deed is the most solemn and binding manner known to the law by which one party obliges itself contractually to another party. A deed does not merely evidence an agreement. It creates contractual rights between the parties thereto. 32    In the instant case the provisions of the deed are clear and unambiguous. There is nothing in clause 5 of the deed which has the effect of limiting its operation to future action, suit or proceedings. Indeed, by the very terms of clause 4, the deed effects a resolution of proceedings then currently on foot in the Local Court. 33    Further, it must be clearly recognised that the Local Court proceedings, the resolution whereof was effected by clause 4 of the deed included the cross-claim of the present plaintiff for precisely the same causes of action and precisely the same amounts as are the subject of the present proceedings. It is difficult to envisage any reason why the plaintiff would in the Local Court proceedings have brought such a cross-claim, recognising expressly that in doing so the maximum verdict which could be awarded to it on the cross-claim would be $40,000, unless it were prepared to abandon whatever rights it might have had to receive a higher verdict in the then current proceedings in the Supreme Court. 34    I am satisfied that the effect of clause 5 of the deed is to constitute a full and complete release in respect of the cause of action which the plaintiff had against the third defendant for the amounts claimed in the Local Court, which amounts are the identical amounts claimed against the first and third defendants in the present proceedings. 35    Clause 5 creates a right in the third defendant to plead in bar the release created by that clause. That is a right which I am satisfied can be exercised by the third defendant in the present proceedings. The fact that the third defendant has not sought to do so does not in my conclusion in any way derogate from the full and complete release of the claim by the plaintiff against him which is created by clause 5 of the deed. 36    It would seem to me to be an unnecessary and time consuming exercise were the third defendant to be required to seek the leave of the Court to amend his defence in the present proceedings merely to insert a plea in bar grounded upon the release contained in clause 5 of the deed. Such an amendment would then, almost certainly, give rise to an application by the applicants of the nature of that presently before the Court, or a similar application concerning the effect of such a plea in bar. (It will be appreciated that a plea in bar, if established, has the effect of barring the claim made against the defendant who, in answer thereto, has filed the plea in bar.) 37    I can see no legitimate complaint which can be levelled against the applicants (in particular, against the third defendant), on account of the present application having been brought without the (in my view, unnecessary) intervening step of the third defendant seeking to amend his defence by pleading in bar the release effected by clause 5 of the deed. 38    I am satisfied that the terms of the deed between the parties, and, in particular, clause 5 of the deed, have the effect that the present claim of the plaintiff is terminated and defeated by the deed.

(b) Res Judicata from judgment in the Local Court

39    It was submitted on behalf of the applicant defendants that, as in the case of a judgment consequent upon a contested hearing, a judgment entered by consent may give rise to a res judicata. In this regard the defendants relied upon the following passages from Spencer Bower, Turner and Handley, The Doctrine of Res Judicata (3 ed, Butterworths, London, 1996), paragraphs 38 - 39,

Judgments, orders and awards by consent are as efficacious as those pronounced after a contest…
Any issue which the parties recognised was the subject of the litigation and was fundamental to the judgment or order will be conclusively determined.

40    The foregoing passages (which appeared also in the second edition, sub. nom. Spencer Bower & Turner, The Doctrine of Res Judicata) were applied by Dunford J in Gray v Furber (23 May 1995, unreported), where His Honour struck out subsequent proceedings instituted in the Supreme Court after orders had been made by consent in the Local Court dismissing proceedings brought on the same cause of action. His Honour held that, final orders having been made, the matter was res judicata and the parties were estopped from averring or claiming to the contrary, such consequence arising notwithstanding that the orders had been made by consent, and that a second action could not be brought which was founded on the same cause of action. 41    In Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 the High Court of Australia (Deane, Toohey and Gaudron JJ) quoted with approval, at 507, a passage from the joint judgment of Gibbs CJ, Mason and Aickin JJ in Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 at 597, which included the following statement,

The rule as to res judicata comes into operation whenever a party attempts in a second proceeding to litigate a cause of action which has merged into judgment in a prior proceeding.

42    Their Honours, at 508, said that the principle of res judicata holds good in the case of a judgment entered by consent. 43 It was submitted on behalf of the applicant defendants that the specific payments alleged in the cross-claim to have been made in breach of contract, breach of duty of care and breach of fiduciary duty were clearly fundamental to the cross-claim. In consequence, so it was submitted, judgment having been given against Queensboro as cross-claimant, those claims cannot be re-agitated in the Supreme Court. The applicants relied expressly upon the document headed Consent Order Terms of Settlement and the notation thereon by the Registrar of the Local Court, which document has been filed in the Local Court on 22 December 1993. 44 It was submitted, however, on behalf of the plaintiff that, in fact, there had not been a judgment of the Local Court on the cross-claim. Evidence was given of an attempt made during the course of the hearing before me on 3 May 1999 by the solicitor for the defendants to obtain in documentary form the judgment of the Local Court on the cross-claim. The existence of such a document (equivalent to a certified or office copy of the minute of a judgment entered in the Supreme Court --- see, in this regard Part 41 of the Supreme Court Rules, and, in particular, Divisions 4 and 5 thereof) would have placed beyond doubt the question of whether or not there had been a judgment for the defendants upon the cross-claim of a nature which would give rise to the existence of res judicata. 45    In consequence of the failure on Monday, 3 May 1999 of the solicitor for the defendants to obtain such a certified or office copy of the minute of the judgment on the cross-claim, at the conclusion of the hearing that day, upon the application of the applicant defendants (which was opposed by the plaintiff), I adjourned the further hearing of the matter to the following Friday, 7 May 1999. The reason for that adjournment was to enable the defendants to make further efforts to obtain such a document from the Registry of the Local Court. At the time of the granting of that adjournment I noted that I was of the opinion that the hearing, had it not been so adjourned at 3:07pm on 3 May 1999, would have concluded that afternoon. 46    When the hearing resumed on Friday, 7 May 1999 the defendants offered no further evidence. However, I heard further submissions from Senior Counsel for the respective parties. 47    It was submitted on behalf of the plaintiff that the absence of any such certified copy or office copy of the minute of the judgment in the Local Court had the consequence that the applicant defendants were precluded from establishing the existence of res judicata. In that regard, however, a careful reading of section 15 of the Local Courts (Civil Claims) Act reveals that the judgment which is referred to in subsection (7) of that section is a judgment in favour of a cross-claimant. 48 The word judgment is often used somewhat loosely when a claim (be it in proceedings as originally constituted, or be it in a cross-claim subsequently brought by one of the parties) is unsuccessful and an order is made dismissing that claim. In those circumstances, there is no judgment as such, since an essential element of the concept of a judgment is an entitlement to the enforcement or execution by a party of a decision of the court in favour of that party. Where the party on the receiving end of court process is successful in having that process against it dismissed, then there can be no judgment which that successful party can enforce. 49 Strictly speaking, therefore, the disposal of the cross-claim in favour of the cross-defendants in accordance with the Consent Orders Terms of Settlement was not a judgment of the Local Court of the nature contemplated by section 15(7) of the Local Court (Civil Claims) Act. 50 Consistently with such a conclusion, the provisions of section 31 of that Act (concerning the entry of judgment in the records of a Local Court and the certification of that entry or a copy thereof by the Registrar being received as evidence of that judgment) do not apply when proceedings against a party are dismissed. Also consistently therewith, section 70 deems an order for the payment of an amount of money by one person to another to be a judgment, for the purposes of Division 6 of Part 4 (relating to interest) and of Part 5 (enforcement of judgment). 51 In the procedure of the Local Court as provided by the foregoing statute and by the Local Courts (Civil Claims) Rules 1988 there appears to be no procedure equivalent to that in the Supreme Court (provided by Divisions 4 and 5 of Part 41 of the Supreme Court Rules) for the entry of an order. Neither section 4(3) of the Local Courts (Civil Claims) Act nor the relevant provisions in the Local Court (Civil Claim) Rules, being Part 11 rule 1 (entering up of a default judgment), Part 12 rule 2 (entering up of a judgment following a confession) and Part 12 rule 3 (entering up of a judgment following an agreement as to judgment) has application otherwise than in the case of a judgment in favour of a party for a specified amount of money or for damages to be assessed or for some other positive relief (for example, in respect to detention of goods). 52    But, were there to have been provision for entry of an order, such an entry of the Consent Orders Terms of Settlement, and the certified copy of such entry by the Registrar, would have placed beyond doubt the entitlement of the applicant defendants to rely on the ground of res judicata in resisting the claim of the plaintiff and in asserting their entitlement to have the plaintiff’s claim against them dismissed. 53    Nevertheless, I am satisfied that the concept of res judicata is applicable not merely to a judgment for payment of money by one party to another but (consistently with the principle expressed in Ashun and Chamberlain) is equally applicable to an order for the dismissal of a claim brought by a moving party against a party in the position of a defendant. 54    In those circumstances, therefore, I am satisfied that the submissions of the plaintiff upon the ground of res judicata do not require the existence of some document of the nature contemplated by section 31 of the Local Courts (Civil Claims) Act. 55    The conclusion which I have just expressed is of itself sufficient to dispose of the present application in favour of the defendants.

(c) Abandonment

56 Where an abandonment is stated on the prescribed notice of cross-claim, section 15(4)(b) of the Local Courts (Civil Claims) Act provides

[J]udgment upon the cross-claim shall be in full discharge of all demands in respect of the defendant’s cause of action.

57 Section 14 of the Act provides in identical terms for abandonment of the excess (that is, the amount by which the amount of a claim exceeds the limit of the monetary jurisdiction of the Local Court). The foregoing provisions are replicated in other inferior courts (see, for example, District Court Act 1973, section 50). (The concept, and consequences, of abandonment of the amount of a claim in excess of the monetary jurisdictional limit of a court was considered by Jordan CJ in Segur v Franklin (1934) 51 WN (NSW) 31 at 32.) Abandonment of the excess is the price that has to be paid by a litigant who wishes to litigate a cause of action in an inferior court. 58 In Local Court proceedings 618 of 1993 a verdict was given for the cross-defendant (the present third defendant) on the cross-claim by Terms of Settlement Consent Orders. It was submitted by the present applicants that that verdict constitutes a “judgment upon the cross-claim” for the purposes of section 15(4)(b). In consequence, therefore, it was submitted on behalf of the present applicants that Queensboro cannot in the present proceedings in the Supreme Court pursue claims which it formally abandoned six years ago in the Local Court. 59 The plaintiff submitted, however, that the abandonment and the consent orders in the Local Court did not have the effect for which the applicants contend. 60 I have already expressed my conclusion as to the effect of the deed and the consequent res judicata which has arisen. Those conclusions have application to the submissions of the applicant defendants in respect to the abandonment by the plaintiff of its cause of action in the Local Court, and the consequential effect of that abandonment upon the present proceedings in the Supreme Court. 61    Nevertheless, the plaintiff submitted, not only in regard to the asserted abandonment of its claim by the plaintiff (which abandonment would be a further ground entitling the applicants to dismissal of the present proceedings), but also in regard to the grounds relied upon by the applicants in respect to the deed and in respect to res judicata, that the applicants, by their conduct, have waived any entitlement to the relief which they now seek. 62    In this regard it was submitted by the plaintiff that if the deed and the outcome of the proceedings in the Local Court were to have had the effect now asserted by the applicants they would have taken steps to have the proceedings dismissed. It pointed to the failure of the applicant defendants to do so for a period of some six years, either by the proffering to the plaintiff of a form of consent order for dismissal of the present proceedings, or by the making of an application of the nature of the present application for dismissal of the proceedings. (I would interpolate that it is appropriate here to observe that the proceedings appear to have been characterised by substantial inactivity on the part of both the plaintiff and the defendants.) 63    Instead, the defendants took further steps in the present proceedings, including the provision of further and better particulars of their amended defence on 7 April 1994 and the filing of a notice of change of solicitor on 11 August 1997. It was submitted on behalf of the plaintiff that the foregoing conduct by the applicants precluded them from the relief which they now seek. 64    The plaintiff in this regard relied upon what was described as the doctrine of conventional estoppel. 65    That doctrine (also referred to as estoppel by convention) was considered by the English Court of Appeal (constituted by Lord Denning MR, Everleigh and Brandon LJJ) in Amalgamated Investment & Property Co. v Texas Commerce International Bank Limited [1982] 1 QB 84. 66 Brandon LJ at 130 - 131 contrasted the kind of estoppel in the case before him (described as estoppel by convention) with the usual kind of estoppel in pais “based on a representation made by A to B and acted on by B to his detriment”. His Lordship continued,

It is rather the kind of estoppel which is described by Spencer Bower and Turner, Estoppel by Representation , 3 ed (1977), 157 - 160, as estoppel by convention. The authors of that work say of this kind of estoppel, at 157:
This form of estoppel is founded, not upon a representation of fact made by a representor and believed by a representee, but on an agreed statement of facts the truth of which has been assumed, by the convention of the parties, as the basis of a transaction into which they are about to enter. When the parties have acted in their transaction upon the agreed assumption that a given state of facts is to be accepted between them as true, then as regards that transaction each will be estopped as against the other from questioning the truth of the statement of facts so assumed.

67    It is also relevant to this reliance by the plaintiff upon the doctrine of conventional estoppel to observe that a necessary element in the application of such doctrine is detriment to the party in the position of the present plaintiff. In Legione v Hately (1983) 152 CLR 406 Mason and Deane JJ said, at 437,

[A] person will not be estopped from departing from an assumption or a representation “unless, as a result of adopting it as the basis of action or inaction, the other party will have placed himself in a position of material disadvantage if departure from the assumption be permitted” (per Dixon J in Thompson v Palmer (1933) 49 CLR 507 at 547; and see Tool Metal Manufacturing Co Limited v Tungsten Electric Co Limited [1955] 1 WLR, 763 - 764; Grundt v Great Boulder Pty Goldmines Limited, (1937) 59 CLR 641 at 674 - 677; Fontana N.V. v Mautner (1979) 254 Est Gaz LR 199). Again, we are of the view that this general rule is applicable to any doctrine of promissory estoppel (see Ajayi v RT Briscoe (Nigeria) Ltd [1964] 1 WLR 1330; Spencer Bower and Turner, Estoppel by Representation, 3 ed (1977), 391 - 394.

68    In the instant case there was no detriment to the plaintiff in consequence of the failure of the applicants to proffer some form of consent order for dismissal of the proceedings or in consequence of the furnishing by the applicants of further and better particulars of the amended defence or the filing by the applicants of a notice of change of solicitor. The plaintiff did not act in any way at all, in consequence of the foregoing absence of conduct or the foregoing positive steps on the part of the applicants, except to receive answers to a request for particulars which it had sought. 69    For the foregoing reason, being the absence of any detriment to the plaintiff, I am satisfied that the doctrine of conventional estoppel does not have application to the circumstances of the instant case, and does not preclude the applicants from the relief which they presently seek. 70    The concept of estoppel by convention was also considered by the Court of Appeal of New South Wales in Lee v Furno Holdings Pty Limited (1993) 33 NSWLR 404, where Meagher JA, at 407, referred to

the type of estoppel by convention which was formulated by Dixon J, as he then was, in Grundt v Great Boulder Pty Gold Mines Limited (1937) 59 CLR 641 and Thompson v Palmer (1933) 49 CLR 507 and more recently reaffirmed by the High Court in a series of cases of which Commonwealth of Australia v Verwayen (1990) 170 CLR 394 is perhaps the leading example.

71    Handley and Sheller JJA agreed with the foregoing reasons of Meagher JA for the recognition in the case before them of an estoppel by convention. (See also, as to the application of principles in relation to estoppel, both estoppel in pais and estoppel by convention, the decision of the Full Court of the Federal Court of Australia in Commonwealth of Australia v Newcrest Mining (WA) Limited (at 190 - 192 per Black CJ and Foster J.) 72    It was submitted by the plaintiff that the defendants by their conduct (by taking of positive steps in the proceedings and by failure to seek to have the proceedings dismissed) have waived whatever entitlement they might otherwise have had to the relief now sought. In this regard the plaintiff relied upon the decision of the High Court of Australia in Commonwealth of Australia v Verwayen (1990) 170 CLR 394. 73 In Verwayen Mason CJ (who, however, as it will be appreciated, was one of the minority) said, at 406,

According to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right by acting in a manner inconsistent with that right: Craine v Colonial Mutual Fire Insurance Company Limited (1920) 28 CLR 305 at 326; Grundt v Great Boulder Pty Gold Mines Limited , supra , at 658. However, the better view is that, apart from estoppel and new agreement, abandonment of a right occurs only where the person waiving the right is entitled to alternative rights inconsistent with one another, such as the right to insist on performance of a contract and the right to rescind for essential breach: see Kammins Company v Zenith Investments [1971] AC 850 at 883. This category of waiver is an example of the doctrine of election.
Another category of waiver is one in which a person is prevented from asserting, in response to a claim against him, a particular defence or objection which would otherwise have been available. Here waiver is said to arise when the person agrees not raise the particular defence of so conducts himself as to be estopped from raising it: see Kammins at 883.

74    In Craine v Colonial Mutual Fire Insurance Company Limited (1920) 28 CLR 305 Isaacs J (in delivering the written judgment of the Court, constituted by Knox CJ, Isaacs and Starke JJ) conveniently collected a number of earlier decisions concerning estoppel and waiver, and said, at 326 (in a passage which was quoted with approval by Gaudron J in Verwayen, at 481),

“Waiver” is a doctrine of some arbitrariness introduced by the law to prevent a man in certain circumstances from taking up two inconsistent positions (see per James LJ in Pilcher v Rawlins 7 Ch. App. 259 at 268f). It is a conclusion of law when the necessary facts are established. It looks, however, chiefly to the conduct and position of the person who is said to have waived, in order to see whether he has “approbated” so as to prevent him from “reprobating” --- in English terms, whether he has elected to get some advantage to which he would not otherwise have been entitled, so as to deny to him a later election to the contrary (see per Lord Shaw in Pitman v Crum Ewing [1911] AC 217 at 239). His knowledge is necessary, or he cannot be said to have approbated or elected.

75    In Presmist Pty Limited v Turner Corporation Pty Limited (1992) 30 NSWLR 478 Cole J (as he then was), at 486, held that there was no waiver of a contractual provision because there was no “specific, conscious, demonstrated surrender of the right…. to cancel the contract”. 76 It is abundantly clear in the instant case, firstly, that the conduct of the defendants in providing particulars did not constitute an intentional waiver of whatever rights might have flowed from the deed and the terms of settlement and consent orders in the Local Court. Further, that the position adopted by the defendants in achieving the resolution of the Local Court proceedings and the determination of the rights of themselves and the plaintiff by way of the deed did not result in the defendants “taking up two inconsistent positions”. The defendants at the time at which they furnished the particulars were still parties to litigation which at that stage was on foot. They were not the moving parties in that litigation. They were on the receiving end of claims by the plaintiff. 77 Further, in relation to the assertion by the plaintiff that the defendants have waived their rights to rely upon the deed and the verdict in the Local Court, it is a characteristic of a right susceptible of waiver that it is introduced solely for the benefit of one party (see Commonwealth of Australia v Verwayen, at 425 per Brennan J.) (I would here also observe that in Verwayen the considerations of the principles relating to waiver were essentially directed to the question of the asserted waiver by the Commonwealth of its right to rely upon a statutory limitation provision --- a situation which does not arise in the instant case.) 78 Further, waiver is an intentional act which can be effected by a party only with informed knowledge of that party’s rights. A party cannot, as it were, be held to have unintentionally waived its rights. The letter of particulars upon which the plaintiff relies in support of its assertion that the defendants have waived their right to rely upon the deed of release and upon the effect given to that deed by the terms of settlement and consent orders made in the Local Court does not indicate any intention on the part of the defendants to abandon their rights in respect to the deed and the Local Court consent orders. 79 Further, any asserted waiver on the part of the defendants cannot have effect contrary to the operation of section 15 of the Local Courts (Civil Claims) Act. That section not only operates for the benefit of individual parties, but also has a public effect (in relation, for example, to the public consequences of the judgment (sections 7, 15(7)) and the limitation upon the monetary jurisdictional limit of the Local Court (sections 12, 15(3) and (4)). 80    For completeness, I would refer to the decision of the House of Lords in Republic of India v India Steamship Co Ltd [1993] AC 410, which was relied upon by the plaintiff. There is nothing in that decision (in particular, in the speech of Lord Goff of Chieveley, at 413f) which persuades me that the applicants are precluded from relying upon the principle of res judicata, or that the doctrine of estoppel by convention or the doctrine of waiver deprives them of the relief which they presently claim. To the extent that anything in that decision is inconsistent with the foregoing decisions of the High Court of Australia to which I have earlier herein referred concerning the application of those principles, I am of course bound to apply the decisions of the High Court rather than that of the House of Lords. 81    In my conclusion there has been no waiver on the part of the applicants. 82    I should also refer to a number of other submissions made by the plaintiff in resistance to the present application. 83    It will be recognised that Butler Pollnow Pty Limited, the first defendant to the present proceedings, was not a party to the Local Court proceedings. Accordingly, so it was submitted on behalf of the plaintiff, no res judicata could arise from the consent orders to the effect that a continuation of the claims of the plaintiff against that defendant could be precluded. 84    It was further submitted that in the present proceedings Queensboro sues in its capacity as representative of the members of various investment partnerships, whereas in the proceedings in the Local Court Queensboro sued in its own right, that is, in its personal capacity. Thus, so the argument ran, the abandonment in excess of the jurisdiction of the Local Court and the consent orders would, at their highest (that is, at their best for the present applicants) only have effected a release in respect of Queensboro’s own entitlements, and could not discharge claims brought by that company on behalf of the members of the partnerships as a whole. That such was the case provides yet a further reason why, according to the plaintiff, the deed could not have contemplated the release which the applicant now asserts. 85    Whether the plaintiff brought the proceedings in its personal capacity (to the extent that a corporation can be regarded as being able so to do) or whether it brought the proceedings in its capacity as representative of various investment partnerships does not seem to me to have any effect whatsoever upon the consequences of the deed, the res judicata arising from the orders of the Local Court or the abandonment by the plaintiff in the Local Court proceedings. 86    The plaintiff also submitted, in resistance to the relief sought by the defendants in the notice of motion, that the plaintiff is entitled in the substantive proceedings to maintain its defence to the cross-claim brought against it by the defendants, and that the effect of that entitlement would be to make futile any order for dismissal of the substantive claim because, as I understand the reasoning of the plaintiff in this regard, the same issues would still require to be litigated upon the cross-claim and the defence to that cross-claim. 87    I do not consider that the possibility that the present applicants may, in the event that the plaintiff’s claim against them is dismissed, persist in their cross-claim against the plaintiff and that the plaintiff should in such circumstance be entitled to resist that cross-claim can be determinative of the fate of the present application. In this regard it should be observed that there are thirteen cross-defendants to the cross-claim of the present applicants, the plaintiff being only one of those cross-defendants. Further, the relief sought in that cross-claim is essentially by way of damages, and an indemnity by the first cross-defendant (the plaintiff) in respect to a possible liability of the first cross-claimant (the first defendant). 88    The absence of identicality between the parties to the cross-claim and the present parties, and between the relief sought therein and the substantive relief claimed by the plaintiff against the present applicants leads me to the conclusion that any present entitlement of the plaintiff to persist in its defences to the cross-claim should not preclude the applicant defendants from the orders which they presently seek. 89    The plaintiff also submitted that any settlement reached in what was described as the Auditor’s proceedings did not affect the validity of the present proceedings in the Supreme Court. I have already recorded that the present applicants were not parties to the Auditors proceedings. As I understand it, they do not rely upon the outcome of those proceedings as a substantive ground in their present application. 90    It follows from my foregoing conclusions that I am satisfied that each of the grounds relied upon by the applicant defendants (the deed of settlement and release, which compromised the Local Court proceedings; the Lcoal Court judgment, which gives rise to res judicata; and the abandonment by the plaintiff, under section 15 (4) of the Local Court (Civil Claims) Act, which resulted in the judgment against the plaintiff on its cross-claim being a full discharge of all demands in respect of the causes of action asserted by the plaintiff in the Supreme Court proceedings) entitles the applicant defendants to dismissal of the proceedings brought by the plaintiff against them. 91    In addition, I am satisfied that the terms of the deed between the parties, (in particular, clause 5 of the deed) have the effect that the present claim of the plaintiff is terminated and defeated by the deed, and that the plaintiff is barred from asserting that claim. 92    I have already recorded that I am not satisfied that, in the circumstances of this case, and for the reasons that I have expressed, there has been any waiver by the defendants of their entitlement to rely upon the foregoing terms of the deed. Further, I am not satisfied that the plaintiff has established that the defendants are estopped from relying upon the deed. 93    It follows from each of my foregoing conclusions that the claim of the plaintiff against the applicant defendants must be dismissed. 94    I make the following orders:

1. I order that the proceedings be dismissed as against the first and third defendants.
2. I order that the plaintiff pay the costs of the first and third defendants of the notice of motion filed by the first and third defendants on 25 November 1998 and of the proceedings after 3 December 1993 (the costs of the notice of motion to include only one day of hearing), and that otherwise there be no order as to costs in the proceedings by the plaintiff against those defendants.

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Last Modified: 07/13/1999