Secure Parking (WA) Pty Ltd v Wilson
[2012] WASCA 230
•15 NOVEMBER 2012
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: SECURE PARKING (WA) PTY LTD -v- WILSON [2012] WASCA 230
CORAM: MARTIN CJ
BUSS JA
MURPHY JA
HEARD: 7 SEPTEMBER 2012
DELIVERED : 15 NOVEMBER 2012
FILE NO/S: CACV 103 of 2011
CACV 104 of 2011
BETWEEN: SECURE PARKING (WA) PTY LTD
Appellant
AND
ALFRED KARL WILSON
First RespondentPARKING ASSET MANAGEMENT PTY LTD
Second RespondentJOAN OLIVE WILSON
Third RespondentLAWRENCE LESLIE WILSON
Fourth RespondentPARKING ASSET MANAGEMENT (WA) PTY LTD
Fifth Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :LE MIERE J
Citation :SECURE PARKING (WA) PTY LTD -v- WILSON [2011] WASC 212
File No :CIV 2192 of 2002, CIV 2363 of 2010
Catchwords:
Appeal against summary dismissal - Anshun estoppel - Principles of appellate review - Whether a finding of Anshun estoppel is in the nature of a discretionary decision
Legislation:
Nil
Result:
Appeal allowed
Category: A
Representation:
Counsel:
Appellant: Mr B W Rayment QC & Mr G R Hancy
First Respondent : Mr J A Thomson
Second Respondent : Mr J A Thomson
Third Respondent : Mr J A Thomson
Fourth Respondent : Mr J A Thomson
Fifth Respondent : Mr J A Thomson
Solicitors:
Appellant: Talbot Olivier
First Respondent : Tottle Partners
Second Respondent : Tottle Partners
Third Respondent : Tottle Partners
Fourth Respondent : Tottle Partners
Fifth Respondent : Tottle Partners
Case(s) referred to in judgment(s):
Asher v Secretary of State for the Environment [1974] Ch 208
Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256
Bryant v Commonwealth Bank of Australia [1995] FCA 1103; (1995) 57 FCR 287
C G Maloney Pty Ltd v Noon [2011] NSWCA 397
Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245
Davis v Hedges [1871] LR 6 QB 687
DP World Australia Ltd v Fremantle Port Authority [2009] WASCA 16
Henderson v Henderson (1843) 3 Hare 100
House of Spring Gardens v Point Blank [1985] FSR 327
House v The King [1936] HCA 40; (1936) 55 CLR 499
Ling v The Commonwealth [1996] FCA 1646; (1996) 68 FCR 180
Morris v Wentworth-Stanley [1999] QB 1004
Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187
Port of Melbourne Authority v Anshun Pty Ltd (No 1) [1980] HCA 41; (1980) 147 CLR 35
Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589
R v Carroll [2002] HCA 55; (2002) 213 CLR 635
Rahme v Commonwealth Bank of Australia [1991] NSWCA 230
Re Dawson; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWR 211
Redowood Pty Ltd v ASX-Perpetual Registrars Ltd [2006] NSWSC 334; (2006) 57 ACSR 256
Redowood Pty Ltd v Link Market Services Pty Ltd (formerly known as ASX-Perpetual Registrars Ltd) [2007] NSWCA 286
Rippon v Chilcotin Pty Ltd [2001] NSWCA 142; (2001) 53 NSWLR 198
Ruddock v Taylor [2003] NSWCA 262; (2003) 58 NSWLR 269
Secure Parking (WA) Pty Ltd v Wilson [2008] WASCA 268; (2008) 38 WAR 350
Secure Parking (WA) Pty Ltd v Wilson [2011] WASC 212
Spalla v St George Motor Finance Ltd (No 6) [2004] FCA 1699
Tang Man Sit (Personal Representatives of) v Capacious Investments Ltd [1996] 1 AC 514
Trawl Industries of Australia Pty Ltd (in liq) v Effem Foods Pty Ltd [1992] FCA 272; (1992) 36 FCR 406
Zavodnyik v Alex Constructions Pty Ltd [2005] NSWCA 438; (2005) 67 NSWLR 457
MARTIN CJ: These appeals should be allowed and orders made in the terms proposed in the reasons of Murphy JA, with which I agree.
BUSS JA: I agree with Murphy JA.
MURPHY JA:
Introduction
This matter concerns two identical appeals by Secure Parking (WA) Pty Ltd (Secure Parking) against orders by the primary judge summarily dismissing certain proceedings against the respondents. The judge found, in effect, that Secure Parking was precluded by an Anshun estoppel from maintaining the proceedings.
For the reasons below, the appeals should be allowed. In order to understand the primary judge's findings on Anshun estoppel, it is necessary to trace the lengthy history of litigation between the parties which has occurred to date.
Background
The following background is taken principally from the judgment in Secure Parking (WA) Pty Ltd v Wilson [2008] WASCA 268; (2008) 38 WAR 350, and references to reasons in what follows are references to those reasons for judgment, unless otherwise indicated. I will refer to the reasons for judgment of Le Miere J in Secure Parking (WA) Pty Ltd v Wilson [2011] WASC 212, which is the judgment under appeal, as 'the primary reasons'.
The original lease : 1995
On 19 October 1995, Nullagine Investments Pty Ltd (Nullagine) leased to the first respondent (Mr Wilson, trading as 'Panda Parking') part of a building in the Perth central business district known as the Esplanade Carpark (the car park). (I will refer to this lease as the 'lease' or the 'original lease'). The initial term of the lease was five years, with options for renewal for further terms of five years each, commencing on 19 October 2000 and 19 October 2005.
The proposed transfer of the lease to Secure Parking and Mr Wilson's management role : 1996 ‑ 1999
By letter agreement dated 21 June 1996 (1996 letter agreement), Mr Wilson granted the appellant (Secure Parking) the right to receive all
income and revenue from the operation of the car park as if the lease had been assigned to Secure Parking, until Nullagine formally consented to the transfer of the lease to Secure Parking. Secure Parking, for its part, agreed to pay Mr Wilson $150,000. The parties also agreed that Secure Parking would be entitled to direct Mr Wilson to manage the car park in accordance with Secure Parking's best interests. Secure Parking paid the $150,000 and Mr Wilson and Secure Parking executed a deed of assignment in respect of the lease on 25 June 1996. The deed, however, was not executed by Nullagine and Nullagine never consented to any assignment.
From 25 June 1996, Secure Parking took over the day‑to‑day operation of the car park, received all income and revenue and paid all outgoings.
On 26 June 1996, Mr Wilson executed a written service agreement under which he agreed to serve as general manager of Secure Parking's business operations, including the management of the car park. Also, on 26 June 1996, Mr Wilson was granted an option to purchase 50% of the issued capital of Secure Parking for $75,000. On 19 March 1999, the option was exercised and about two weeks later Mr Wilson paid the $75,000.
On 14 September 1999, Mr Wilson was appointed a director of Secure Parking.
The exercise of the first option under the lease : 2000
By deed stamped 28 September 2000, Mr Wilson and Nullagine extended the term of the lease for a further five years, from 19 October 2000, pursuant to the exercise of the first option.
Communications concerning the proposed assignment of the lease to Secure Parking : 2001 ‑ 2002
On 11 May 2001, Secure Parking requested that Nullagine execute a formal assignment of the lease. The request referred to the proposed provision of certain guarantees by Secure Parking's principal shareholders (not Mr Wilson) on terms limited to three months' rent. On 16 May 2001, Nullagine informed Mr Wilson of this communication and requested confirmation that the proposed arrangements were acceptable to him. By letter dated 28 May 2001, Mr Wilson informed Nullagine that the proposed arrangements were not acceptable as he wished to remain as lessee under current arrangements and to 'protect' his 'interests'.
Mr Wilson's proposal to take a new lease by Public Asset Management (WA) Pty Ltd (PAM (WA)) : 2002
On 17 July 2002, Mr Wilson proposed in a letter to Nullagine that Nullagine grant a new lease to PAM (WA) with an initial term of 10 years with three five year options to renew. PAM (WA) was a company the sole director of which was Joan Wilson, Mr Wilson's mother.
The letter was written at a time when Mr Wilson was still the general manager and a director of Secure Parking. Mr Wilson did not disclose the letter to the other directors of Secure Parking before the letter was sent.
On 16 August 2002, Mr Wilson resigned as a general manager and director of Secure Parking.
On 17 August 2002, Mr Wilson and his family attempted to take possession of the car park. This conduct led to the grant of certain interlocutory injunctions, at the suit of Secure Parking, against Mr Wilson, Mr Wilson's parents (Joan and Lawrence Wilson - the third and fourth respondents) and a company called Parking Asset Management Pty Ltd (PAM) - see [18] below.
By a letter dated 28 August 2002, Mr Wilson inquired of Nullagine whether it regarded Secure Parking as meeting the criteria which any assignee of the lease would be required to satisfy. By letter dated 29 August 2002, Nullagine informed Mr Wilson that any consent to an assignment would only be given 'strictly in accordance with the provisions of the lease'.
Injunctions in CIV 2192 of 2002 (the injunction action) : 2002
According to the court file in CIV 2192/02, on 22 and 23 August 2002, Secure Parking obtained injunctions against Mr Wilson, his parents and PAM restraining them from, in effect, dealing with the lease and from attempting to take possession of the car park or receive income from its operations. The injunctions were initially granted for one week and were then extended on 30 August 2002 until trial or further order. (Although the injunctions were granted against PAM, the Court of Appeal's reasons in [2008] WASCA 268 referred to PAM (WA) as having been enjoined: [6] and [52] ‑ [54]).
Commencement of proceeding CIV 1074 of 2003 (the lease action) : 2003
In January 2003, Secure Parking commenced CIV 1074 of 2003 (the 'lease action') against Mr Wilson and Nullagine. It sought declarations to the effect that Mr Wilson had assigned the lease of the car park to Secure Parking, and consequential orders.
The events concerning the second option, the trial of the lease action and the variation of the injunction : 2005
On 28 July 2005, Secure Parking directed Mr Wilson to exercise the second option to renew the lease for a term of a further five years. By agreement between Secure Parking, Mr Wilson and Nullagine, the time for exercising the second option was extended to 18 October 2005.
In the lease action, Secure Parking alleged a contractual obligation on the part of Mr Wilson to exercise the second option at its direction.
On 15 August 2005, the trial of the lease action commenced before Le Miere J.
On 14 October 2005, Le Miere J dismissed Secure Parking's claims in the lease action.
Also on 14 October 2005, the solicitors acting for Mr Wilson and his parents requested that Secure Parking agree to discharge the interlocutory injunctions in the injunction action. Mr Wilson, by his solicitors, informed Secure Parking that he did not intend to exercise the option in any event. By letter dated 17 October 2005, Secure Parking responded [57]:
Given your advice, in your letter of 17 October 2005, that your client, Mr Alfred Wilson, does not intend to exercise the option to renew, and without derogating from our client's position on any matter in relation to any of the Defendants, our instructions are that our client will agree to vary the interlocutory injunctions by releasing therefrom [Mr Wilson's parents and PAM].
On 18 October 2005, Mr Wilson did not exercise the second option to renew the lease, and the lease thereby expired.
On 20 October 2005, by consent, the interlocutory injunctions were varied so as to release Mr Wilson's parents, and PAM, from their operation.
On 4 November 2005, Secure Parking lodged an appeal against Le Miere J's decision in the lease action.
The grant of a new lease to PAM (WA) and the sale of the car park : 2006
By deed of lease dated 30 January 2006, Nullagine granted a new lease of the car park to PAM (WA) for an initial term of six years, commencing on 26 October 2005, with an option to renew for six years (the PAM (WA) lease).
On 12 July 2006, PAM (WA) lodged a caveat against the car park land, recording its interest as lessee.
On 13 October 2006, Benbally Pty Ltd (Benbally) became the registered proprietor of the car park land. Benbally granted mortgages over the land which were also registered.
According to the respondents' chronology in the appeal papers, on or about 23 October 2006, Benbally terminated the lease to PAM (WA), but allowed PAM (WA) to remain in possession as a monthly tenant, and on or about 27 March 2007, Benbally terminated PAM (WA)'s monthly tenancy.
On 3 August 2007, Pakwest Pty Ltd became the registered proprietor of the car park land. Pakwest granted a mortgage over the land, which was also registered on 3 August 2007.
The appeal in the lease action
The grant of a new lease by Nullagine to PAM (WA) led to PAM (WA) being added as a party to the appeal (primary reasons [12]). On 18 December 2006, PAM (WA) filed a notice in the appeal to the effect that it did not intend to take part in the appeal, but would abide by the decision of the court other than any order that it pay costs.
On 21 August 2008, the Court of Appeal heard Secure Parking's appeal against Le Miere J's decision in the lease action. There were only two grounds of appeal, to the effect that the trial judge erred in failing to hold that:
(a)Mr Wilson was obliged to exercise the second option; and
(b)Nullagine was obliged to give effect to any such exercise of the second option.
On 19 December 2008, the Court of Appeal delivered judgment. By majority the court allowed the appeal and held, in effect, that Secure Parking was entitled to direct, and that it had directed, Mr Wilson to exercise the second option. By failing to exercise the second option, Mr Wilson breached the June 1996 letter agreement. The court said that Secure Parking had no entitlement to relief against Nullagine and that its remedy against Mr Wilson was limited to claims for breach of contract. The court remitted the matter to the trial judge for an assessment of damages. The Court of Appeal's decision is referred to in more detail in [43] ‑ [45] below.
Evidence adduced as to termination of the PAM (WA) tenancy : 2011
The respondents in this appeal adduced, without objection, evidence to the effect that PAM (WA) no longer has any lease of the car park. The evidence was advanced on the basis that there had been a change in circumstances since the primary judge's decision and the publication of the primary judge's reasons. It is unnecessary to make any findings in that regard and a consideration of the evidence is not necessary for the disposition of this appeal.
The claims originally made in the injunction action
In the injunction action, the statement of claim as at 5 November 2003 alleged that:
(a)Mr Wilson owed fiduciary duties to Secure Parking by reason of his position as a manager and director of that company;
(b)in breach of his fiduciary duties, Mr Wilson attempted to divert away from Secure Parking certain parts of its business in relation to the operation of five car parks, including the Esplanade Car Park, for the benefit of Mr Wilson, his parents and PAM; and
(c)Mr Wilson's parents and PAM were knowingly concerned in the breaches of duty.
In relation to the alleged breaches of duty with respect to the Esplanade Car Park, Secure Parking relied on the events of July/August 2002 referred to in [13] ‑ [17] above.
Secure Parking sought relief including:
(a)mandatory injunctions of the kind it obtained as interlocutory injunctions, referred to earlier;
(b)an account; and
(c)'damages', ie equitable compensation in relation to the alleged breaches of fiduciary duty.
The injunction action 'was not proceeded with during the resolution of [the lease action] and the appeal': primary reasons [18].
The relief sought by Secure Parking in the lease action before Le Miere J and on appeal
The Court of Appeal said at [9] that in the lease action at first instance, Secure Parking, in its prayer for relief, claimed:
(a)a declaration that:
(i)the lease has been assigned by Mr Wilson to Secure Parking;
(ii)Nullagine has consented to the assignment; and
(iii)Secure Parking is entitled without any further consent on the part of Nullagine to occupy the Esplanade Car Park for the term of the lease (including the second option to renew);
(b)alternatively, if the declaration referred to in par (a) hereof is refused, an order that Mr Wilson do execute a document of exercise of the option of renewal of the lease due to be renewed on 18 [sic: 19] October 2005 and upon such terms as the court may direct and deliver such exercise of the option to Nullagine, so as to effect the exercise of such option;
(c)consequential orders that Mr Wilson and Nullagine do all things that may be necessary to give effect to the assignment; and
(d)such further or other relief as the court considers just.
In the Court of Appeal, Secure Parking contended (see [71]) that if the appeal were allowed, it should be restored to the position it would have been in, and should have been in, had Mr Wilson properly performed the 1996 letter agreement and had Le Miere J ordered Mr Wilson to exercise the second option. Secure Parking contended that restoration of its position, or 'restitution' following the successful appeal, could be effected by Nullagine terminating the PAM (WA) lease pursuant to a 'break clause' in the lease. The court said (reasons [72] ‑ [74]):
Secure Parking sought an order for a renewed lease, and orders that acknowledge its rights to manage the car park during the term of the renewed lease. The orders in question should invoke the operation of the 'break clause'.
The related Supreme Court proceedings [the injunction proceedings] between Secure Parking as plaintiff and Parking Asset Management, Mr Wilson, Joan Wilson and Lawrence Wilson as defendants are still pending. In those proceedings, Secure Parking seeks relief for alleged breach of fiduciary duty, and knowing assistance in that breach of fiduciary duty, in relation to the conduct of various car parks including the Esplanade Car Park.
If the appeal is allowed, Secure Parking would seek orders, relevantly, in these terms:
1.Declaration that Secure Parking was entitled to direct and did direct Mr Wilson to give notice of the exercise of his option to renew the lease of the relevant premises at 18 The Esplanade Perth for a term of 5 years from 19 October 2005.
2.Declaration that Nullagine was obliged to give effect to such notice of exercise of such option.
3.Order that the action otherwise be remitted to a Judge of the General Division of the Court for further consideration in the light of the reasons of this Court.
4.Order that Mr Wilson, Nullagine and Parking Asset Management do pay Secure Parking the costs of the appeal to be taxed.
The decision of the Court of Appeal in the lease action and its orders and directions
The decision of the Court of Appeal was to the effect that (reasons [139], [147] ‑ [151]):
(a)Secure Parking's right to receive all income and revenue from the operation of the car park would subsist until the expiration of the original term, or any renewed terms, even if Nullagine did not ever formally assign the lease to Secure Parking;
(b)Mr Wilson was obliged, by the 1996 letter agreement, to exercise the second option when directed to do so by Secure Parking;
(c)Secure Parking had given the requisite direction; and
(d)Mr Wilson's failure to act in accordance with the direction constituted a breach of contract for which Secure Parking was entitled to damages.
The court declined to make restorative orders of the kind sought by Secure Parking. It said that damages 'would be an adequate remedy ... against Mr Wilson' and that Secure Parking was 'not entitled to any relief against Nullagine' [151]. In this regard the court said, amongst other things, that there was no evidence that Mr Wilson was beneficially entitled to any subsequent leasehold, estate or interest in the car park premises; that the PAM (WA) lease had been granted after PAM and Mr Wilson's parents had been released, by consent, from the operation of the interlocutory injunction; the terms of the PAM (WA) lease were materially different from the original lease; the 'break clause' in the PAM (WA) lease, on its proper construction, had no application; and third party interests, including those of Pakwest and its mortgagees, had intervened.
The Court of Appeal made orders and directions to the following effect:
(a)a declaration that Secure Parking was entitled to direct and did direct Mr Wilson to give notice of the exercise of his option to renew the lease for a term of five years from 19 October 2005;
(b)a declaration that Nullagine was obliged to give effect to a notice of exercise of the second option to renew given by Mr Wilson in accordance with the lease and the agreement to extend the latest date for exercising the option;
(c)Mr Wilson do pay to Secure Parking damages to be assessed; and
(d)the action be remitted to the Hon Justice Le Miere for assessment of damages.
The trial of the assessment of damages has not taken place.
The further litigation : 2010
In 2010, Secure Parking commenced a new action (CIV 2363 of 2010), against Mr Wilson, his parents and PAM (WA) and alleged, in effect that:
(a)Mr Wilson breached his duties to Secure Parking as a fiduciary and trustee by:
(i)certain conduct in 2000;
(ii)his conduct in July/August 2002 (referred to in [13] ‑ [17] above);
(iii)operating the car park for his benefit or for the benefit of his parents or PAM, or PAM (WA) between October 2005 (after the original lease expired) and January 2006 (when the PAM (WA) lease was granted);
(iv)between October 2005 and January 2006, negotiating for the grant of a new lease by Nullagine to a company controlled by Mr Wilson, his parents or PAM (WA);
(v)the grant of the PAM (WA) lease on 30 January 2006.
(b)Mr Wilson's parents and PAM (WA) had 'knowingly assisted and procured' those breaches of duty; and
(c)by reason of the breaches of duty and knowing assistance:
(i)Secure Parking suffered loss and damage including the loss of the benefit of the term of the second option under the original lease; and
(ii)Mr Wilson's parents and PAM (WA) had obtained the benefit of a lease of the car park.
Secure Parking also pleaded the construction of the 1996 letter agreement as determined by the Court of Appeal. It also pleaded that Mr Wilson had deliberately refrained from exercising the second option.
In the relief sought by Secure Parking, it claimed a declaration that the PAM (WA) lease was held on trust for Secure Parking, an order that the PAM (WA) lease be assigned to it, and an account of benefits received and equitable compensation.
Amendments were made to the statement of claim in the injunction action (in which PAM was already a party) to similar effect. In that action the earlier claims with respect to the respondents' conduct in relation to other car parks were deleted.
The substantive difference between the amendments to the statement of claim in the injunction action and the new action (CIV 2363 of 2010), is that in the new action, PAM (WA) is added as a defendant. It was not joined to the injunction action because the claims against it relate to events which occurred after the issue of the writ in the injunction action: primary reasons [22].
I will refer to the pleaded amendments to the injunction action and the new action as the 'further litigation'. It is the further litigation which, as discussed below, the primary judge held Secure Parking was precluded from maintaining on the basis of Anshun estoppel.
The primary judge's decision
The judge, with reference to the doctrine of Anshun estoppel (Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589) held that the further litigation should be struck out. His Honour reasoned (primary reasons [35] ‑ [38]) that:
(a)Secure Parking could have claimed in the lease action, or in the Court of Appeal in respect of the appeal from the decision in the lease action, the equitable claims now made in the further litigation;
(b)for that purpose Secure Parking could have joined to the lease action, or as respondents in the Court of Appeal, Mr Wilson's parents and PAM (WA) (and it had in fact joined PAM (WA) to the appeal);
(c)it would have been expected that Secure Parking would raise in the lease action, and in the appeal, the equitable claims now alleged, and that such matters were 'so relevant to the subject matter of [the appeal] that it was unreasonable not to rely upon them in the hearing of the appeal'; and
(d)the equitable relief now claimed would be inconsistent with the orders of the Court of Appeal.
The judge concluded that in the circumstances, an Anshun estoppel operated to preclude Secure Parking from maintaining the further litigation and his Honour dismissed the further litigation summarily as an abuse of process (primary reasons [53] ‑ [55]).
The grounds of appeal
Secure Parking, by its grounds of appeal in both appeals, alleges in effect, that:
(1)the judge erred in law in holding that the matters now sought to be relied upon in the further litigation were so relevant to the appeal in the lease action that it was unreasonable not to rely upon them at the hearing of the appeal; and
(2)the judge erred in holding that the relief sought by Secure Parking in the further litigation would be inconsistent with the orders of the Court of Appeal.
Appellate review
An appeal from a decision of this nature is a final decision and leave to appeal is not required: Port of Melbourne Authority v Anshun Pty Ltd (No 1) [1980] HCA 41; (1980) 147 CLR 35.
The respondents contended, however, that the primary judge's decision was only capable of appellate review on the basis of the principles applicable to appellate review of discretionary decisions. Reference was made to R v Carroll [2002] HCA 55; (2002) 213 CLR 635 [73]; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [7]; and House v The King [1936] HCA 40; (1936) 55 CLR 499.
The application of the Anshun principle requires the making of an evaluative judgment: Spalla v St George Motor Finance Ltd (No 6) [2004] FCA 1699 [64] ‑ [65]; Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245 [3]. However, the nature of the evaluative judgment has as its touchstone the question of unreasonableness. As Meagher JA (Spigelman CJ & Ipp JA agreeing) said in Ruddock v Taylor [2003] NSWCA 262; (2003) 58 NSWLR 269 [82]:
An overall requirement of an Anshun estoppel is reasonableness. It does not arise unless it was unreasonable of the party sought to be estopped not to plead the cause of action in question.
In Port of Melbourne Authority v Anshun Gibbs CJ, Mason and Aickin JJ said that:
[T]he abuse of process test is not one of great utility. And its utility is no more evident when it is applied to a plaintiff's new proceeding which is said to be estopped because the plaintiff omitted to plead a defence in an earlier action' (602).
In this context, it has been held, correctly in my respectful view, that a finding of Anshun estoppel is not in the nature of a discretionary decision, but rather is one, like a finding of negligence, which an appeal court can, and should set aside, if the appeal court is appropriately satisfied that it was wrong. Although evaluative, it involves the application of a legal standard and not the exercise of discretion. See C G Maloney Pty Ltd v Noon [2011] NSWCA 397 [70] ‑ [71]; Redowood Pty Ltd v Link Market Services Pty Ltd (formerly known as ASX-Perpetual Registrars Ltd) [2007] NSWCA 286 [53]. Even if I were wrong in this view, for the reasons given below, there have, in any event, been express errors in the reasons of the learned primary judge (and it is unnecessary to consider whether error is to be inferred).
Anshun estoppel
The general principles of the doctrine of Anshun estoppel have been outlined in this court in DP World Australia Ltd v Fremantle Port Authority [2009] WASCA 16.
The doctrine has operated to preclude a party (party A) to contribution proceedings with another party (party B), from later suing party B on a separate cause of action with a view to, in effect, securing a different level of contribution from that determined in the contribution proceedings. Port of Melbourne Authority v Anshun examined such a scenario. In that case, the subject matter of the subsequent action was a contractual indemnity, which could have been raised as a defence in the earlier contribution proceedings.
The doctrine may also operate to preclude a party (party A) who has sued another party (party B) on a cause of action and lost, from bringing second proceedings against party B on a different cause of action that could have been raised in the first action: Rahme v Commonwealth Bank of Australia [1991] NSWCA 230 (referred to in DP World at [77] ‑ [79]); Trawl Industries of Australia Pty Ltd (in liq) v Effem Foods Pty Ltd [1992] FCA 272; (1992) 36 FCR 406, 422 ‑ 423; Zavodnyik v Alex Constructions Pty Ltd [2005] NSWCA 438; (2005) 67 NSWLR 457 [34] ‑ [40].
The doctrine may also preclude a party (party A), who is a defendant in an action brought by a plaintiff (party B), from later suing party B for a claim which could have been brought in the first litigation as a cross‑claim: Bryant v Commonwealth Bank of Australia [1995] FCA 1103; (1995) 57 FCR 287. However, for the reasons given by Wilcox J in Ling v The Commonwealth [1996] FCA 1646; (1996) 68 FCR 180, 184 (referred to in DP World at [81] ‑ [82]), there will likely be greater scope for not imputing unreasonableness when the later claim sought to be litigated is one which allegedly ought to have been brought as a cross‑claim in the first action. For example, it has been held that a party may bring a subsequent claim for damages for non‑performance and improper performance of work despite not having raised the claim when originally sued for the price of the work: Davis v Hedges [1871] LR 6 QB 687, referred to in Port of Melbourne Authority v Anshun at 600. As Gibbs CJ, Mason and Aickin JJ observed:
[T]here 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 eg expense, importance of the particular issue, motives extraneous to the actual litigation to mention but a few (603).
The doctrine has also received consideration in circumstances where the party claiming the benefit of the estoppel was not itself a party to the first action or a privy of the party to the first action. Thus, consideration has been given to the doctrine's application where in the first action, party A has sued party B and failed, and then brought a second action against party C, where party C contends that party A is estopped because the claim against it ought to have been brought and dealt with, if at all, by joining it as a party to the first action. For example, in Asher v Secretary of State for the Environment [1974] Ch 208, the plaintiffs, who were local councillors, appealed the decision of a statutory decision maker, a district auditor, who had been appointed by the Minister and who had found misconduct by the plaintiffs in relation to certain housing authority finances, and had imposed a surcharge on the councillors accordingly. The court dismissed the councillors' appeal against the auditor's decision (the first action). The plaintiffs then commenced proceedings against the Minister seeking a declaration that the Minister had, in effect, unlawfully appointed the district auditor in the first place. The trial judge struck out the statement of claim in the subsequent proceedings as vexatious and disclosing no reasonable cause of action. The councillors appealed that decision to the Court of Appeal. The Court of Appeal upheld the trial judge's decision.
In relation to an argument by the councillors that they ought not be precluded by the earlier decision because their claim was against the Minister and the Minister had not been a party to the first action, the Court of Appeal held (222, 224 ‑ 225, 228) that the plaintiffs could have alleged the invalidity of the audit in the first action and could have joined the Minister for that purpose. Lawton LJ (228) said that the plaintiffs could not bring a further action so as to get a 'second chance' to do what they omitted to do in the first action.
See also Rippon v Chilcotin Pty Ltd [2001] NSWCA 142; (2001) 53 NSWLR 198 in this context, in which reference was made at [23] to Morris v Wentworth-Stanley [1999] QB 1004.
In Morris v Wentworth-Stanley, a plaintiff had sued a partnership in two actions, which were consolidated. In the second action the plaintiff amended its claims by deleting all references to, relevantly, a widow who, although a partner, had taken no active role in the partnership. Ultimately, the action was settled and judgment against one partner was entered by consent. The plaintiff did not recover the full settlement amount and later brought proceedings against the widow. It was held that the claim against the widow should be struck out on two bases. The first was that her liability, as a joint debtor, had been discharged by accord and satisfaction. The second was the application of the principle in Henderson v Henderson (1843) 3 Hare 100. Potter LJ, with whom Mantell LJ agreed, said at [43]:
I have already indicated my view that, viewed objectively, by first deciding to join the defendant in the proceedings but then to delete her, without at the time reserving the right to sue her later, the plaintiff was, in effect, electing to have the matter (including the counterclaim brought in the name of the partnership) dealt with in one action without the necessity for the defendant being made a party.
The doctrine has also been considered in circumstances where A sued B, B cross‑claimed against C, A failed in its suit against B, and A later commenced a separate action against C in respect of a claim which was, in effect, an alternative to its failed claim against B. In Redowood Pty Ltd v Link Market Services Pty Ltd the plaintiff (Redowood Pty Ltd) had sued a defendant (Mongoose Pty Ltd) who cross‑claimed, seeking indemnity from a third party (ASX‑Perpetual Registrars Ltd). Prior to trial it was agreed that there would be a stay of the defendant's cross‑claim against the third party until determination of the plaintiff's claims against the defendant. The third party then took no further part in the proceedings. The trial judge ultimately found for the defendant and dismissed the plaintiff's claim. On the day of making final orders, the plaintiff applied to amend its claim to join the third party as a defendant. The application was not pressed following an exchange with the judge to the effect that it would likely be open to the plaintiff to commence a separate action against the third party. Subsequently, the plaintiff commenced separate proceedings against the former third party. The former third party applied to have the proceedings against it struck out as an abuse of process. Rein AJ acceded to that application and dismissed the plaintiff's action against the former third party on the basis that the plaintiff was precluded by the operation of the doctrine of Anshun estoppel: see Redowood Pty Ltd v ASX-Perpetual Registrars Ltd [2006] NSWSC 334; (2006) 57 ACSR 256. An appeal by the plaintiff to the Court of Appeal was allowed. Hodgson JA, with whom Mason P and Bryson JA agreed, referred to Port of Melbourne v Anshun and said:
In my opinion also, the approach of the primary judge ... was too sweeping. ... [W]here a plaintiff may have alternative remedies against different parties, to suggest that a plaintiff should generally sue all of them, barring exceptional circumstances, would be to encourage complex and lengthy litigation, and promote the incurring of costs where there is no certainty that a Bullock or Sanderson order would be obtained. In my opinion, plaintiffs should be permitted reasonable latitude in deciding whether to sue just one defendant, or to join a number of defendants in alternative claims [50].
Disposition
The judge, with respect, erred in finding that the equitable claims in the further litigation were so relevant to the subject matter of the appeal in the lease action that it was unreasonable for Secure Parking not to rely on them at the hearing of the appeal. First, the Court of Appeal could not have examined the claims for equitable relief without the matters first having been pleaded, tried, and determined at first instance by Le Miere J. Adopting and adapting the words of Meagher JA in Ruddock v Taylor at [82], 'there was not the slightest chance' that the Court of Appeal 'would have done anything about it' if Secure Parking had sought to raise, for the first time in an appeal, allegations of breach of fiduciary duty against Mr Wilson and, moreover, claims of knowing participation against other parties who had not participated in the proceedings below under appeal. Claims of that kind are quite different in nature and scope from the pure legal questions, dealt with in the Court of Appeal, as to whether on its proper construction the 1996 letter agreement extended to require the exercise of the second option and whether, against the admitted fact that the second option had not been exercised, there had been a breach of contract in that regard. It is not insignificant that the Court of Appeal noted the currency of the injunction action in passing, before dealing with the appropriate disposition of the lease action [73]. The Court of Appeal had also noted Secure Parking's reservation of rights at the time that it released Mr Wilson's parents and PAM from the operation of the interlocutory injunctions (cf Morris v Wentworth-Stanley).
Secondly, it is incorrect, in my view, to conflate the joinder of PAM (WA) in the appeal with the contention that it, and the other respondents, should have been joined in the appeal to enable the equitable claims to be determined. The only reason why PAM (WA) was joined to the appeal was that it was a necessary party having regard to the restorative orders sought by Secure Parking in the event that it succeeded on the issue of the legal effect of the 1996 letter agreement. PAM (WA) was properly joined for that purpose but could not properly have been joined for any other purpose in the appeal.
Thirdly, insofar as it was found that Secure Parking should have brought its current equitable claims into the lease action for determination by the primary judge and hence for consideration by the Court of Appeal, there are in my view, insuperable difficulties with that proposition. The first and foremost is that material facts, constituting the alleged equitable causes of action, including negotiations for the subsequent lease to PAM (WA), and the grant of the subsequent lease to PAM (WA), occurred after the trial and indeed after Le Miere J's judgment in the lease action. It could hardly be unreasonable not to sue in respect of events which had not yet occurred.
Another difficulty is that the joinder of multiple defendants in the lease action with serious allegations of breaches of fiduciary duty and knowing participation would have increased the complexity and likely length of that litigation. It was not unreasonable to proceed with the lease action on the basis that, if the primary relief sought by Secure Parking were granted, Secure Parking would have a legal lease in its own name. This was particularly so where there was a deadline looming for the exercise of the second option. The respondents, nevertheless, contended, in effect, that Secure Parking could at least have sought a declaration in the lease action that Mr Wilson owed fiduciary duties to it. However, in the absence of a breach plea, such a claim would have been vulnerable to the criticism that it was purely theoretical in nature. Plainly, it was not unreasonable to refrain from introducing into the lease action a claim for a bare declaration of the existence of a duty.
Next it is necessary to consider the primary judge's finding that the equitable relief claimed in the further litigation would be inconsistent with the orders of the Court of Appeal in the lease action. Under those orders, damages for breach of contract have not yet been assessed. It is to be noted at the outset, (and it was accepted by the respondents), that the judge did not base his decision on a finding that Secure Parking had already made an election between inconsistent remedies - as to which see, for example, Tang Man Sit (Personal Representatives of) v Capacious Investments Ltd [1996] 1 AC 514, 521. Rather, his Honour found that for the purposes of the Anshun doctrine, there would, prospectively, be a likelihood of inconsistent judgments if Secure Parking were to proceed with the further litigation. His Honour paid particular attention to the declaratory relief sought by Secure Parking to the effect that the PAM (WA) lease was held on trust for it, and referred to the prospect that if such a declaration were ultimately made, Secure Parking might recover, through the PAM (WA) lease, certain profits which might also form part of an award of damages (primary reasons [37] ‑ [38]).
In my respectful view, his Honour erred. The potential for double recovery of that kind might well be relevant to any consideration of the grant of declaratory relief in the further litigation and its scope, but it provided no basis for summarily dismissing the further litigation when it included claims by Secure Parking for an account of profits and equitable compensation.
An account of profits is generally appropriate in cases where the fiduciary has gained profits in breach of fiduciary duty and in certain circumstances the profit may also be traced into properties subjected to a constructive trust. The remedy is available to strip the defaulting fiduciary of the profit, whether or not the principal has suffered a loss commensurate with the profit made by the fiduciary, or any loss, by reason of the breach and even where it might be thought that the result is an unmerited windfall for the plaintiff. Accordingly, the remedy does not depend either on the principal's loss or whether the principal could have earned the gain. (See generally, [5‑245] of Meagher, Gummow & Lehane's Equity, Doctrine & Remedies (4th ed)). Further, insofar as Secure Parking seeks equitable compensation for loss of the term of the second option under the original lease, it would not be limited by common law principles governing remoteness of damage: Re Dawson; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWR 211, 214; Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187, 243 ‑ 245.
As a result of the Court of Appeal's orders, Secure Parking would be seeking to recover damages at law against Mr Wilson for breach of contract on 19 October 2005, in the assessment of which the terms of the original lease will be relevant. On the other hand, in the further litigation, Secure Parking would seek an account of profits or equitable compensation from him in relation to another transaction, involving a different lease, the terms of which, the Court of Appeal found, were materially different from the original lease. Orders would also be sought in the further litigation against the other respondents, in relation to whom Secure Parking has no claim for damages at all for breach of contract. Orders for equitable relief may be moulded to prevent double recovery. For example, the court may direct that any sum recovered by way of damages is to be deducted from the sum awarded in respect of account of profits, in order to avoid any double recovery: House of Spring Gardens v Point Blank [1985] FSR 327, 346 and see also the discussion of that case in Meagher, Gummow & Lehane's Equity, Doctrines and Remedies [25‑020].
It cannot be said in these circumstances that the claims for equitable relief will likely produce judgments inconsistent with the Court of Appeal's orders, particularly if consolidation is ordered (as Secure Parking has previously proposed).
Conclusion
The appeals should be allowed. The further litigation, and the assessment of damages, mark a new stage in the parties' disputes. The matters should proceed afresh in a different CMC List with any current orders concerning remitter to the primary judge to be varied accordingly. The parties should be given an opportunity to consider these reasons and be heard on the precise form of final orders and on the question of costs.
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