Skevington v Morrison - [2002] WADC 26

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: SKEVINGTON -v- MORRISON & ANOR [2002] WADC 26

CORAM: WISBEY DCJ

HEARD: 25 JANUARY 2002

DELIVERED : 14 FEBRUARY 2002

FILE NO/S: CIV 1971 of 2000

BETWEEN: WENDY SKEVINGTON
Plaintiff
AND
IAN MORRISON
First Defendant
DCH LEGAL GROUP
Second Defendant

Catchwords:

Practice and procedure - Application to amend defence - Action for damages against legal representatives for breach of duty towards client - Allegation of error made by trial Judge in Supreme Court claim by client plaintiff when represented by defendants - Application to amend to plead - Issue estoppel - Abuse of process - Precedent

Legislation:

Nil

Result:

Proposed amendments allowed

Representation:

Counsel:

Plaintiff:     Mr I N Wilson
First Defendant             :     Mr D M McKenna
Second Defendant         :     Mr G J Pynt

Solicitors:

Plaintiff:     Ian Wilson
First Defendant             :     Jackson McDonald
Second Defendant         :     Pynt McKay

Case(s) referred to in judgment(s):

Blair & Perpetual Trustee Co Ltd v Curran (Adams' Will) (1939) 62 CLR 464
Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499
Carl Zeiss Stiftung v Rayner & Keeler (No 3) (1970) Ch 506
Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853
Jackson v Goldsmith (1950) 81 CLR 446
Midland Bank Trust Co Ltd v Hett, Stubbs and Kemp (A Firm) [1979] Ch 384
North West Water Ltd v Binnie & Partners (A Firm) (1990) 3 All ER 547
Ramsay v Pigram (1968) 118 CLR 271
Trawl Industries of Australia Pty Limited (In liquidation) & Ors v Effem Foods Pty Limited (1992) 36 FCR 406
Walton v Gardiner (1993) 177 CLR 378

Case(s) also cited:

Bone v Commissioner of Stamp Duties (1972) 2 NSWLR 651
Canam Enterprises Inc v Coles & Ors, Court of Appeal for Ontario; Docket No C33982;. 8 December 2000
Cassell & Co Ltd v Broome [1972] AC 1027
Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (1993) 115 ALR 377
Gleeson v J Wippell & Co Ltd [1977] 3 All ER 54
Haines v Australian Broadcasting Corporation (1995) 43 NSWLR 404
House of Spring Gardens Ltd v Waite [1991] 1 QB 241
Judamia v The State of Western Australia, unreported; FCt SCt of WA; Library No 960114; 1 March 1996
Moore v Inglis (1976) 9 ALR 509
National Bank of Commerce v National Westminster Bank (1990) 2 Lloyds Rep 514
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166
Rozens QC & The Director of Public Prosecutions (VIC) v Beljajev, Szajntop, Kunz, Lambert & Judge Kelly [1995] 1 VR 533
Russian Commercial and Industrial Bank v British Bank for Foreign Trade [1921] 2 AC 438
Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275
Tito v Waddell (No 2) [1977] Ch 106

WISBEY DCJ: The controversy requiring adjudication is a by‑product of Supreme Court proceedings CIV 1263 of 1998 between Ronald John Skevington and Lesley Joy Skevington (the husband's parents) as plaintiffs, Wendy Skevington (the wife) first defendant, and Stephen Skevington (the husband) second defendant. Broadly speaking the Supreme Court action was commenced by the parents to remove a caveat placed by the wife over a property known as 44/46 Bulwer Street, Perth; although as the action developed and proceeded to trial it essentially became a claim by the wife that the Bulwer Street property had been sold by the parents to the husband, and that she and the husband were entitled to it. She sought a declaration that the parents held the property beneficially in trust for the husband and herself in equal shares, or alternatively held it in trust for the husband.
As Murray J stated in his reasons:
"The main thrust of (the wife's) case, I was told, rested upon the former proposition, but the latter declaration, although it would confer no beneficial interest in the property upon her, would be a satisfactory outcome because the Bulwer Street property would then be dealt with in the Family Court proceedings as one of the assets of the marriage and regard would be had to it when in those proceedings orders were made in respect of the property of the marriage under the Family Law Act 1975 (Cth) s 79 … . That (wife's) case involves the assertion that (the husband) owns the entire beneficial interest in the Bulwer Street property, to which effect should be given by a declaration of an implied trust or by a declaration of trust consequent upon an equitable estoppel, when the entitlement to any such relief on any such ground is denied by the beneficiary (husband) and by his parents."
Put simplistically Murray J found (inter alia) that the wife lacked locus standi to obtain the declaratory relief sought, and that in any event any justiciable rights she may have had, expired by reason of the provisions of the Limitation Act 1935(WA). Consequently the wife's claims failed.
The wife, being dissatisfied with her representation in the Supreme Court action, brings these proceedings against the first defendant Ian Morrison (her barrister), and the second defendant DCH Legal Group (her solicitors), claiming damages for negligent advice given concerning, and negligent handling of the Supreme Court action. In particular she alleges that the defendants failed to give proper consideration to the locus standi and limitation issues, and to advise that her claims in the action were by reason thereof misconceived, and could not succeed. Each defendant has filed a defence denying liability, and by chamber summons each sought leave to amend the defence to allege (inter alia) that Murray J was wrong in holding that the plaintiff did not have locus standi in the Supreme Court action, and that any cause of action she might have had was statute barred.
On 5 November 2001 Deputy Registrar Harman ordered that the defendant have leave to amend his or its defence in terms of the proposed minute of amendment; and by notice dated 6 November 2001 the plaintiff appeals against those orders.
Essentially the grounds of appeal are that the Deputy Registrar erred in allowing the amendments in that:
(1)the defendants are precluded by the doctrine of issue estoppel from litigating the issues raised by the proposed amendments;
(2) the amendments give rise to relitigation of the issues arising in the Supreme Court action and constitute an abuse of process;
(3) the amendments might result in determinations antithetic to the findings of Murray J, in contravention of the doctrine of precedent;
(4) the amendments amount to a collateral attack upon the findings of a court of superior jurisdiction;
(5) a consideration of the issues raised by the amendments amount to relitigation and would undermine public confidence in and respect for the authority of the courts.
The fundamental question raised by this appeal is whether the defendants are now precluded from arguing that the plaintiff in fact had standing to seek the relief she was pursuing in the Supreme Court action, and/or that her claims were not barred by the provisions of the Limitation Act. Primarily that raises the question of issue estoppel.
In Cross on Evidence, 6 Aust ed, Ch 3, it is stated that issue estoppel prevents a party in subsequent proceedings relitigating an issue which has previously been determined against that party. Reference is made to Blair & Perpetual Trustee Co Ltd v Curran (Adams' Will) (1939) 62 CLR 464 at 531 where Dixon J stated:
"A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion … The distinction between res judicata and issue‑estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order.
Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue‑estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. … the judicial determination concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide and which was actually decided as the groundwork of the decision itself, though not then directly the point at issue. Matters cardinal to the latter claim or contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous.
In the phraseology of Lord Shaw 'a fact fundamental to the decision arrived at' in the former proceedings and 'the legal quality of the fact' must be taken as finally and conclusively established (Hoysted v Commissioner of Taxation (1926) AC 155."
In Jackson v Goldsmith (1950) 81 CLR 446 at 466 Fullagar J analysed the doctrines res judicata and issue‑estoppel, stating:
"The rule as to res judicata can be stated sufficiently for present purposes by saying that, where an action has been brought and judgment has been entered in that action, no other proceedings can thereafter be maintained on the same cause of action. This rule is not, to my mind, correctly classified under the heading of estoppel at all. It is a broad rule of public policy based on the principles expressed in the maxims 'interest reipublicae ut sit finis litium' and 'nemo debet bis vexari pro eadem causa'.
The rule as to issue estoppel is generally stated in the words of Lord Ellenborough in Outram v Morewood (1803) 102 ER 630 at p 633. His Lordship said that parties and privies are 'precluded from contending to the contrary of that point, or matter of fact, which having been once distinctly put in issue by them … has been, on such issue joined, solemnly found against them …' … The same rule was concisely stated by Dixon J in Blair v Curran (1939) 62 CLR 464 at p 531 where His Honour said - 'A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies.' "
Cross points out that a strict construction of the requirement concerning identity of parties and their capacity can be justified on the ground that no one ought to be wholly precluded from arguing a point, by a decision taken in proceedings at which that person was not represented, and refers to Jackson v Goldsmith (supra) as supporting the strict construction approach.
The identification of parties in litigation does not raise any difficulty, but that does not always apply concerning privies.
In Stroud's Judicial Dictionary 6^th ed at 2057 it is stated that:
"As distinguished from a party, a privy 'signifies him that is partaker, or hath an interest, in any action or thing' (Cowel).;"
In Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853 at 945 Lord Upjohn addressed the question of identity of parties and the doctrine of privity, with particular reference to the position of a solicitor, stating:
"The position of the solicitor in proceedings such as these is clear-cut; as I have already pointed out, he is no party to the proceedings; the sole question is as to his authority to initiate proceedings. …
The solicitor has no interest in the action as such, nor under our system (unlike that pertaining, for example, in the USA) is he permitted even to participate in the proceeds of a successful judgment. His duty is to render his services to his client in the litigation to the best of his skill and ability and his sole reward is the costs which by law he may charge.
I can see nothing in the solicitor's relationship with his client which renders them privy to one another in the ordinary sense in which privy or privity is used for the purposes of the doctrine.
As has been said in Halsbury's Laws of England 3^rd ed vol 15 (1956), pp 196-197, par 372, privies are of three classes: (1) privies in blood, (2) privies in law, and (3) privies in estate, but they all have an interest in the subject matter of the action.
Though your Lordships have been referred to a number of authorities in other courts which may expand the meaning of privy, none touch on the question before your Lordships, where the lis has nothing to do with the substance of the action itself."
In Ramsay v Pigram (1968) 118 CLR 271 at 279 Barwick CJ referred to three classes of privies being of blood, of title, and of interest, noting that the basic requirement of a privy in interest is that he must claim under or through the person of whom he is said to be a privy.
The relationship must be such that the supposed privy obtains a benefit or incurs an obligation from the preceding action: Carl Zeiss Stiftung v Rayner & Keeler (No 3) (1970) Ch 506 at 541. It is not sufficient that a person is merely concerned, even commercially concerned, in that action.
In Trawl Industries of Australia Pty Limited (In liquidation) & Ors v Effem Foods Pty Limited (1992) 36 FCR 406 Gummow J at p 413 discussed privity in interest as it operated upon the doctrine of issue estoppel stating:
"The requirement or identity of parties between the parties in the concluded action and the action which the estoppel is raised is satisfied where there is privity in interest. The basic requirement of a privy in interest is that the privy must claim 'under or through' the person to whom he is said to be a privy."
And at p 414:
"It is important … to appreciate that in these authorities, when finding the necessary privity in a successive or mutual relationship, the Courts have looked to legal rather than economic indicia as the criterion of the operation of the privity doctrine."
Clearly neither defendant was party to the Supreme Court action, and neither can be said to have had an interest in the outcome of the litigation such that it would constitute him or it privy to that action.
In his submissions plaintiff's counsel refers to and relies upon North West Water Ltd v Binnie & Partners (A Firm) (1990) 3 All ER 547 as authority for the broad proposition in the headnote that:
"Where an issue had for all practical purposes been decided in a court of competent jurisdiction the court would not allow that issue to be raised in separate proceedings between different parties arising out of identical facts and dependent on the same evidence, since not only was the party seeking to relitigate the issue prevented from doing so by issue estoppel, but it would also be an abuse of process to allow the issue to be relitigated."
An examination of the case demonstrates that in the original proceedings injured persons sued North West, Binnie, and a construction firm, for damages following an explosion at a plant owned by North West and designed by Binnie. The plaintiffs were successful, and there was an apportionment of fault between North West, Binnie, and the construction firm. On appeal the finding of negligence against North West and the construction firm was set aside. In the subsequent action North West sued Binnie for damages because of Binnie's alleged negligence and/or breach of contract in designing the plant and the issue was whether Binnie was estopped from denying negligence. The action clearly involved parties who were directly involved in the original action; and for all practical purposes the same issues were being litigated. The trial judge, Drake J, referred to the broad approach that the true test of an issue estoppel was whether for all practical purposes the party seeking to put forward some issue had already had that issue determined against him by a court of competent jurisdiction, even if the parties to the two actions were different. His Honour described as the conflicting approach the view that for an issue estoppel to arise there was a requirement that the actions involved the same parties and/or their privies and the same issues. His Honour held:
"In my judgment, this broader approach to a plea of issue estoppel is to be preferred. I find it unreal to hold that the issues raised in two actions arising from identical facts are different solely because the parties are different or because the duty of care owed to different persons is in law different. However, I at once stress my use of the word 'solely'. I think that great caution must be exercised before shutting out a party from putting forward his case on the grounds of issue estoppel or abuse of process. Before doing so the court should be quite satisfied that there is no real or practical difference between the issues to be litigated in a new action and that already decided, and the evidence which may properly be called on those issues in the new action.
I have already decided, when considering abuse of process, that in the present case no such real or practical difference does exist.
Thus on the broader approach to issue estoppel, which in my judgment should be applied, I hold that Binnie's are estopped from denying negligence in the present action. Even if I am wrong about the limits to issue estoppel and the true limit is in fact the narrower one, that is to say that favoured by Goff LJ in McIlkenny v Chief Constable of West Midlands Police Force [1980] 2 All ER 227, (1980) 1QB 283 and Lord Diplock on the appeal to the House of Lords (1981) 3 All ER 727, (1982) AC 529, I would still hold that Binnie's are in this case caught by issue estoppel. This is because I find that the issues arising in the present action have already been decided and that in practical terms they have been decided between the same parties, the Water Authority and Binnie's. The absence of third party or contribution notices does not affect my finding on this for I think the reality is that all issues concerning negligence were in fact litigated before Rose J and decided by him and subsequently by the Court of Appeal.
For these reasons I find in favour of the Water Authority and hold that Binnie's denial of negligence should be struck out as an abuse of the process of the court under RSC O 18 r 19, alternatively under the inherent jurisdiction of the court. I further hold that Binnie's are estopped from denying negligence on the ground that the issue has already been decided against them in the Lancaster action.
In my judgment the proceedings between these two parties have reached the stage where it can emphatically be said that it is in the public interest that there should be a finish to this litigation."
His Honour's approach is to be understood in the particular context of the two cases, and having regard to his view concerning abuse of process. The litigating parties in the second action were parties in the first action, and the same negligence issue was the essential point of the controversy. In the result the headnote is misleading. In any event it appears that the Australian authorities embrace the narrower view.
Neither defendant is estopped from contending in these proceedings that the plaintiff was legally entitled to bring her claims in the Supreme Court action.
Plaintiff's counsel contends that by reason of the doctrine of stare decisis a District Court Judge trying this action would be bound by Murray J's findings on the locus standi and limitation issues. It is suggested that a decision of a single Judge of the Supreme Court is binding on all courts lower in the judicial hierarchy. Whilst the doctrine of comity requires that a Judge of this Court accord due respect to a decision of a single Judge of the Supreme Court, the decision is not binding. It is only decisions of the Full Court or the Court of Criminal Appeal that are binding on this Court. The authorities cited by plaintiff's counsel do not suggest other than that the principle of precedent, based on the need for certainty in the law, dictates that prior error in a decision can be adjusted only by a court higher in the appellate hierarchy. A single Judge of the Supreme Court does not constitute a court higher in the appellate hierarchy. "Stare decisis involves courts being bound by appellate decisions of courts standing above them and in the same hierarchy" Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499 at 504.

Plaintiff's counsel argues that absenting the doctrine of issue estoppel, litigation of the issues raised by the proposed amendments would constitute an abuse of process.
Whilst litigation of an issue not precluded by issue estoppel may amount to an abuse of process because it had been the subject of an earlier adjudication, it would be an unusual situation where that position applied.
Plaintiff's counsel referred to Walton v Gardiner (1993) 177 CLR 378 at 393, where their Honours Mason CJ, Deane and Dawson JJ, said:
"Yet again, proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, the continuance would be unjustifiable vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings."
And Brennan J at 410:
"I venture to repeat what I said in Jago v District Court (NSW) (1989) 168 CLR 23 at p 47 'An abuse of process occurs when the process of the court is put in motion for a purpose which, in the eyes of the law, it is not intended to serve or when the process is incapable of serving the purpose it is intended to serve'. If a party instituting proceedings does so for a purpose alien to the purpose which the proceedings are designed to serve, the proceedings are an abuse of process whether or not they are well founded in fact and law. And equally, the institution of proceedings which will inevitably and manifestly fail or which unnecessarily duplicate proceedings already pending or determined are incapable of serving a legitimate purpose."
In the context of this case it cannot be suggested that the proposed amendments constitute an abuse of process.
The claim against the defendants is for damages for negligence and breach of professional duty. That duty was identified by Oliver J in Midland Bank Trust Co Ltd v Hett, Stubbs and Kemp (A Firm) [1979] Ch 384 at 435 as:
"The implied obligation to devote to the client's business that reasonable care and skill to be expected from a normally competent and careful practitioner."
The plaintiff seeks to establish that a competent and careful legal practitioner exercising reasonable care and skill would have addressed the issues of the plaintiff's standing in any proposed Supreme Court action, and the limitation question, ought to have concluded that both issues would be determined adverse to the plaintiff, and would have advised her accordingly. What advice the competent and careful practitioner would have given necessarily requires an examination of the legal position (and hence the authorities) pertaining to the questions of locus standi and limitation. A proper defence must necessarily focus on and examine the state of the law in respect to those issues at the time the breach of duty is said to have taken place. The fact that it involves a reconsideration of the issues central to the Supreme Court action may be unfortunate, but is no more than that.
One aspect of the proposed amendments that is problematical is the plea that there was an agreement between the parties in the Supreme Court action not to question the plaintiff's standing. That agreement, if such there was, could not confer jurisdiction on the Court, if there was none. It does, however, go to the issue of the reasonableness of the approach taken by the defendants in the litigation, and identifies facts in respect of which evidence can be led at trial.
In the circumstances I confirm the decision of the Deputy Registrar and dismiss the appeal.