Whelan Kartaway Pty Ltd v Mark Donnelly
[2012] VSC 45
•28 February 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
JUDICIAL REVIEW AND APPEALS LIST
No. 2581 of 2011
| WHELAN KARTAWAY PTY LTD | Appellant |
| v | |
| MARK DONNELLY | First Respondent |
| and | |
| DONNELLY’S SAND AND SOIL SUPPLIES (VIC) PTY LTD | Second Respondent |
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JUDGE: | Davies J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 7 December 2011 | |
DATE OF JUDGMENT: | 28 February 2012 | |
CASE MAY BE CITED AS: | Whelan Kartaway Pty Ltd v Mark Donnelly and Ors | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 45 | |
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ESTOPPEL – ANSHUN ESTOPPEL – Where the appellant appeals a decision of the Victorian Civil and Administrative Tribunal (“VCAT”) – Where the appellant applied to VCAT for summary dismissal of claims brought against it by the respondents – Application dismissed because earlier concluded litigation between the parties in the Magistrates’ Court was settled without adjudication – Whether the Tribunal erred in law by finding that the respondents were not prevented from bringing proceedings against the appellant on the basis of Anshun estoppel or abuse of process – Effect of prior compromise of claims – Victorian Civil and Administrative Tribunal Act 1998 (Cth), s 148
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | J Gleeson S.C. with A Woods | Aitken Partners Pty Ltd |
| For the Respondents | R Harris | Settle Legal Pty Ltd |
HER HONOUR:
Introduction
This is an appeal from the Victorian Civil and Administrative Tribunal (“VCAT”) pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act1998 (Vic) (“the VCAT Act”). The appellant, Whelan Kartaway Pty Ltd, is the respondent to civil claims filed against it in VCAT by the respondents, Mark Donnelly and Donnelly’s Sand and Soil Supplies (Vic) Pty Ltd. The appellant applied to VCAT for summary dismissal of those claims under s 75 of the VCAT Act on the basis of Anshun estoppel[1] or alternatively, abuse of process because of earlier concluded litigation between the parties in the Magistrates’ Court (“the Magistrates’ Court action”). VCAT dismissed the appellant’s application for summary dismissal, holding that the principle of Anshun estoppel had no application because the Magistrates’ Court action was settled without adjudication and that the respondents’ right to bring their civil claims against the appellant in VCAT was governed by the law relating to settlement agreements. The Senior Member held that as the terms of settlement did not release the appellant from the claims, there was no bar to the respondents bringing their claims in VCAT.[2]
[1]Port of Melbourne Authority v AnshunPty Ltd (1981) 147 CLR 589.
[2]The decision of the Victorian Civil and Administrative Tribunal made on 27 April 2011 in proceeding C7484/2010.
The question of law on which the appellant obtained the leave of the Court to appeal that decision is:
Did the Tribunal err in law by finding that the respondents were not prevented from bringing VCAT proceeding C7484/2010 against the appellant in circumstances where:
a)on 23 July 2009 the appellant had brought a claim in the Magistrates’ Court against the respondents claiming amounts due under a contract dated 22 September 2008;
b)the respondents had foreshadowed a cross claim against the appellant for claims arising out of the same contract from prior to the issuing of the Magistrates’ Court claim;
c)the respondents filed a defence denying there was a breach of the agreement and making allegations including that the termination of contract was an unlawful repudiation;
d)the appellant’s Magistrates’ Court claim was settled at the hearing on 9 February 2010;
e)on 28 October 2010, the respondents filed a claim in VCAT with respect to a dispute claiming damages arising out of matters intimately connected with the same contract, including breaches of contract. [3]
Background to the claims
The appellant is in the business of delivering and retrieving industrial bins of varying sizes to commercial and private customers. It contracts out the provision of the transport services to owner/drivers. In September 2008, the appellant engaged the second respondent on a 5 year contract to provide transport services as an owner/driver, which involved delivering and retrieving industrial bins for the appellant as required (“the contract”).
The contract was in writing and the terms of the contract included that:
(a)the second respondent must use a particular vehicle which the appellant would fit with hoisting and communication equipment at its own cost, agreed at $10,000;[4]
(b)the second respondent must carry out all reasonable requirements of the appellant in connection with the loading or unloading and carriage of goods;[5]
(c)the appellant may terminate the contract upon written notice to the second respondent if, amongst other things, the second respondent “ceases or threatens to cease to act as reasonably directed by the [appellant]”;[6] and
(d)if the contract is terminated by the appellant prior to its full term “for any reason whatsoever”, the appellant would remove the hoisting and communication equipment it had fitted to the vehicle and the second respondent would pay the appellant a pro rata fee calculated on the agreed costs of initial installation for the unexpired portion of the contract and liquidated damages of the sum designated in the contract as the “termination fee” ($2,000 for the first 12 months and $1,000 thereafter).[7]
[4]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1 p 39, cl 11 and p 66, item 8.
[5]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p 25, cl 14.5.
[6]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p 31, cl 26.1(g).
[7]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p 33, cl 26.4 and p 66, item 8.
On 15 April 2009, the appellant gave the second respondent notice of termination of the contract in reliance on cl 26.1(g) of the contract for allegedly failing to “act as reasonably directed by [the appellant]” and requested the return of the vehicle so that the hoisting and communication equipment could be removed. It appears that initially there was some issue about the return of the vehicle, but in due course the appellant was able to remove the equipment.
The circumstances in which the notice of termination was given is set out in an affidavit of Mr Whelan, the managing director of the appellant. Mr Whelan deposed that:
(a)on about 17 March 2009, the first respondent (“Mr Donnelly”) refused to collect bins, stating to Mr Dowd, the appellant’s state manager, that he had attended sites where customers had overloaded bins and that he wanted to be paid a call out fee. Mr Dowd explained to Mr Donnelly that notwithstanding that customers were provided with written advice that bins must not be overloaded, no call out fees were payable under the contract where bins were overloaded and were unable to be removed from the site;[8]
[8]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p 9 , para 8.4.
(b)Mr Dowd kept him informed of his discussions with Mr Donnelly “at about that time and following on from that time”. Mr Whelan deposed that he “was concerned that Mark Donnelly was agitating for a fee which was not provided for in the contract he had signed. Neither Dennis Dowd nor [he] were aware of other contractors insisting on payment for attending sites with overloaded bins which they could not collect. The procedure in such circumstances was, and is, that [the appellant] attempts to find the driver another bin in the area, tells the customer to remove excess items from the bin to ensure that it complies with regulations and does not charge the client for the uncollected bin”;[9]
[9]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p 9, para 9.
(c)the second respondent was given a job on 14 April 2009 for 15 April 2009 but that the second respondent “failed or refused to collect the bin. The driver who eventually collected the bin weighed it and found it to be within the regulations and not overweight or oversized”;[10]
[10]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p10, para 10.
(d)on 15 April 2009 he telephoned Mr Donnelly and had a conversation in which he told Mr Donnelly that he “understood that [Mr Donnelly] had issues concerning bins which he considered to be overloaded bins and that [he] wished to discuss and hopefully sort out his concerns”; that Mr Donnelly told him that he was upset because he had attended sites where there were overloaded bins which he could not collect and did not get paid for; that he [Mr Whelan] explained that overloaded bins were an unfortunate part of the industry and that no payment was provided for in that situation under the contract and that under the contract drivers should refuse any unsafe or unlawful work and overloaded bins should not be collected; that he
[Mr Whelan] said that the appellant had bins for Mr Donnelly to collect the following day; and that Mr Donnelly told him that he would only attend sites if he was guaranteed there would be no overloaded bins;[11]
(e)he then asked Mr Donnelly whether he would accept work if it was offered to him and that he replied “no”. Mr Donnelly was told that due to his refusal to take work, the contract was terminated and that a formal notice of termination would follow;[12]
(f)he then directed Mr Dowd to issue a notice of termination.[13]
This evidence was not contradicted by the respondents.
[11]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p 10 paras 1-3 and p 11, para 11:4 .
[12]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p 11, paras 11.6 and 11.7.
[13]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p 12, para 12.
The respondents responded to the notice of termination through their solicitors, who sent a letter to the appellant on 17 April 2009 in which they stated that it was assumed that the appellant relied on a breach of cl 14.5 of the contract (that their client will carry out all reasonable requirements of the appellant) as the basis of the termination of agreement and that they were instructed:
i)that our client is in dispute with [the appellant] regarding [the appellant’s] repeated instructions to collect and transport waste bins which are overloaded where to do so would be contrary to law;
ii)that our client is in dispute with [the appellant] with regards to being allocated waste bin collection assignments which yield no payment and actually incur losses to our client;
iii)our client is in dispute with [the appellant] regarding representations made by [the appellant] as to our client’s earning capacity arising from entering into the agreement (“the representations”); and
iv)our client is in dispute with [the appellant] regarding representations by [the appellant] regarding our client’s ability to double load waste bin transporting assignments once our client purchased a suitable trailer (which our client did) and once the proper hoisting equipment was fitted to our client’s vehicle (“the further representations”).
The letter went on to state that Mr Donnelly had sought assurances that bins to be transported were not overloaded and that he “was not therefore being directed to act unlawfully” but that no such assurances would be provided. Further, that had Mr Donnelly collected the bins as directed and had the bins been overloaded, Mr Donnelly would have been required not to collect the bins “in order not to act unlawfully” and that he would not have been paid for the assignment. The letter also stated that Mr Donnelly was acting in compliance with cl 8.9 of the agreement, which gave the contractor the right to refuse unsafe or unlawful work if it held the genuine view that if the act was performed, the contractor would be acting negligently, unsafely and/or unlawfully. Further, the letter said that it was arguable that by giving such a direction to Mr Donnelly, Mr Whelan was acting in breach of cl 16 of the contract (cl 16 provided that the appellant must not direct the contractor to commit an act in breach of the law). Finally, it was stated that cl 8.9 of the agreement expressly stated that any exercise of the contractor’s rights pursuant to cl 8.9 of the contract did not constitute a breach of contract and that “premised upon the above” the second respondent had not acted in breach of the contract and that the termination constituted an unlawful repudiation of the contract, which the second respondent accepted. The letter also asserted that the second respondent “reserved all rights arising from the representations and the further representations”.
Thus, it was foreshadowed by the second respondent before any proceeding was instituted that it disputed that there had been a lawful termination of the contract and, moreover, that it had claims against the appellant arising out of pre-contractual representations.
Subject matter of the Magistrates’ Court action
The appellant commenced proceedings against the respondents in the Magistrates’ Court on 23 July 2009 by filing a complaint for a debt claim. The appellant sued the respondents for “moneys due under the contract” in the amount of $7,235.45, being the sum of the pro rata installation costs claimable and the termination fee, less income earned by the second respondent but unbilled. Mr Donnelly was sued as guarantor of the obligations of the second respondent under the contract.
By Notice of Defence filed 26 August 2009, the respondents denied that the second respondent had failed to act as reasonably directed by the appellant and alleged that:
7(ii)Any directions by [the appellant] to [the second respondent] on about 16 March 2009 were not reasonable directions, in that any such directions:
(a)required [the respondents] to be in breach of the Contract made on or about 22 September 2008 (“the Contract”);
(b)required [the respondents] to be in breach of Victorian Statute Law (Vic); and
(c)were not lawful.[14]
It was further alleged that:
1)as the second respondent had not at any time failed to act as reasonably directed, such a failure could not constitute grounds for the appellant to terminate the contract, and that the termination constituted an unlawful repudiation of the contract by the appellant;[15] and
2)as the contract was terminated by the unlawful repudiation, not for reason of breach of the contract by the second respondent, the appellant had no entitlement to any part of the installation costs or the termination fee.[16]
[14]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p 86, para 7(ii).
[15]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p86, para 9.
[16]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p86, paras 9 and 10.
An Amended Defence was filed on 3 December 2009 in which paragraph 7(ii)(b) was amended to read:
b) required [the respondents] to be in breach of Victorian Statute Law (Vic) including but not limited to the Road Safety (Vehicles) Regulations 1999; and
A new defence based on a dispute resolution clause contained in cl 32 of the contract was also added. Clause 32 of the contract provided for the parties to engage in a four-stage dispute resolution process where any dispute arose over the terms, performance or termination of the contract. Stage four was an application to VCAT in accordance with Part 5 of the Owner Driver Forestry Contractors Act 2005 (Vic). It was alleged that the appellant would have been aware before it terminated the contract that the second respondent was in dispute with it regarding “the terms” and “the performance” of the contract, and that the appellant was aware subsequent to the termination of the contract that the second respondent was in dispute with it regarding the termination. It was further alleged that the appellant had not engaged in the four-stage dispute resolution process and therefore, that the appellant’s termination of the contract was unlawful and contrary to the terms of the contract.[17]
[17]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p 92, para 11.
No counterclaim was filed.
Stay application in the Magistrates’ Court
At the hearing of the complaint on 8 February 2010, application was made on behalf of the respondents for a stay of proceeding on the basis that the appellant was obliged by cl 32 of the contract to use that procedure to have the dispute resolved. Counsel for the respondents argued that the Court should also take into account “the possibility” that the respondents “will be bringing … or intend to bring a separate proceeding against [the appellant] … based on entering into [the contract]”.[18] It was stated that the claims had not yet been brought because the amount of the claim would exceed the jurisdiction of the Court and the respondents were bound to follow the dispute resolution process provided for in cl 32.[19] It was further submitted in support of the stay application that a determination by the Magistrate on the complaint may give rise to an Anshun estoppel in respect of the claims that the respondents intended to bring in VCAT.[20]
[18]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p 117.
[19]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p 118.
[20]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p 118.
The Magistrate ruled against the stay application, placing weight on the lateness of the application, and the likely costs to be wasted relative to the size of the claim if the stay was granted. The respondents sought, but the Magistrate refused, to require the appellant to give an undertaking that no issue would be taken, or Anshun estoppel argument raised, in any subsequent proceeding that the respondents “may well bring” against the appellant.[21]
[21]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, p 146.
Following a short adjournment, the Magistrate was advised that the parties had settled the dispute and orders were sought by consent striking out the action with a right of reinstatement, with no order as to costs.
Settlement of the Magistrates’ Court Action
The terms of settlement were reduced to writing and included the following:
1.The parties hereto consent to the making of an order on the claim striking out the action(s) herein with a right of reinstatement; and
2.In consideration of [the appellant’s] forbearance to seek judgment this day [the respondents] hereby offers to pay [the appellant] the sum of $2,500.00 in full satisfaction of the claim, interest and costs (“the agreed sum”).
…
7.[The appellant] agrees that by entering into these Terms of Settlement that it releases [the respondents] and each of them from any claim, rights or action it may have against each [respondent] whether past, present or in the future in any way arising out of in relation to these proceedings.
8.The parties agree that any claim or action that [the respondents] may wish to bring against [the appellant] in any way arising out of their dealings with [the appellant] whether contractual or otherwise shall be initiated by [the respondents] pursuant to clause 32 of the contract entered into between the parties dated 22 September 2008 … on or before 4.00pm Friday 29 October 2010 and [the respondents] hereby irrevocably undertake not to take any such action or claim after that date.
…
9.In the event that either of [the respondents] commence any claim or action as referred to in paragraph 8 herein the parties agree that [the appellant] has reserved to it its rights to argue that [the respondents’] claim or action is estopped by reason of these proceedings.[22]
[22]Affidavit of Brian Charles Smith sworn 25 May 2011, Exhibit BS-1, pp 166-167.
The VCAT proceeding
On 22 October 2010, Mr Donnelly wrote to the appellant advising that the respondents had “several disputes” with the appellant, and “as per the Terms of Settlement” and the contract, he sought “reimbursement of all costs and losses involved because of entering into the Contract”. The letter continued:
The matters that are in dispute with [the appellant] are:
1. The misrepresentation and misleading information given that I could work with a trailer.
2. The misrepresentation of earnings that the truck alone could earn
$120,000 p.a.3. The implied representation of the fitness of bins to be carted.
4. The implied representation that the work would be shared evenly amongst the contractors.
5. The unlawful termination of the contract.
On 28 October 2010, the respondents filed a claim against the appellant in VCAT. The action was commenced by lodging a “Form 1 Application”. The form stated that “the dispute” for determination by VCAT arose under the Owner Drivers and Forestry Contractors Act 2005 (Vic) and/or the Fair Trading Act 1999 (Vic). I note that s 41 of the Owner Drivers and Forestry Contractors Act 2005 (Vic) confers jurisdiction on VCAT to hear and determine an application by a contractor seeking resolution of a dispute. Mr Donnelly wrote on the form that the reasons for making the application were unconscionable conduct, misleading or deceptive conduct, implied misrepresentation, breaches of the contract dated 22 September 2008 and misleading representations about certain business activities. No further information was provided in the application, nor were the remedies sought by the respondents identified.
The stay application in VCAT
A pre-hearing conference was scheduled for 18 January 2011. On 22 December 2010 the appellant’s solicitors wrote to VCAT and the respondents advising that application would be made for the proceeding to be permanently stayed on the basis of the principles set out in Port of Melbourne Authority v Anshun Pty Ltd,[23] or alternatively, on the basis that the respondents’ claim was an abuse of process. The application was heard on 21 April 2011. The respondents were represented by Mr Donnelly himself.
[23](1981) 147 CLR 589.
The Senior Member dismissed the application and gave written reasons. In dismissing the application, the Senior Member reasoned as follows:
14.As the parties settled the Magistrates’ Court proceeding, that Court did not make a determination of the issues.
…
16.In my view, the parties have recorded and defined their rights in the Terms of Settlement. The [respondents’] right to issue this VCAT Application is not affected by Anshun at all. If their right to issue this VCAT proceeding was to be lost, it would be under the law relating to settlement agreements rather than Anshun…
…
18.… in the present case we are not even dealing with a situation where the [respondents] gave [the appellant] a release, and now argue about its effect. The [appellant] did not give the [respondents] a release, and by cl 8 of the Terms of Settlement the parties recognised that the [respondents] “may wish to bring” a claim or action against the [appellant]. The reservation of the [appellant’s] right to argue estoppel does not change anything. It would be unjust to prevent the [respondents] from bringing this VCAT proceeding in these circumstances.
Applicable principles
Anshun estoppel will arise in circumstances where a party to a subsequent proceeding seeks to litigate a claim or defence “which could and should have been litigated in the earlier proceedings”.[24] The estoppel is an “analogical extension” of the doctrines of res judicata and issue estoppel[25] and operates to preclude a litigant from bringing a particular claim where it was “unreasonable” for the litigant not to have brought that claim, or rely on that claim as a defence, in an earlier concluded proceeding.[26] If the litigant was unable to raise the claim or defence in the earlier proceeding, no Anshun estoppel will arise.[27] Equally, the fact that the litigant could have raised the claim or defence in the earlier proceeding does not mean that the estoppel will arise. The test is “based on the reasonableness … of the conduct of a litigant in earlier proceedings”.[28] The mere fact that the matter could have been raised does not mean that it should have been raised for the operation of the estoppel.[29] The “unreasonableness” criterion involves an evaluative element based upon what a litigant could reasonably have been expected to do in the earlier proceeding. In Port of Melbourne Authority v Anshun Pty Ltd, Gibbs CJ, Mason J and Aickin J stated:
there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding.[30]
Although the estoppel was expressed in reference to the failure to raise a defence, the principle equally applies with respect to a claim. The question is whether the claim was “so relevant” to the earlier litigation that it was “unreasonable” not to have raised it.[31]
[24]Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, 598.
[25]Spalla v St George Motor Finance Ltd (No 6) [2004] FCA 1699 (Unreported, French J, 20 December 2004) [59]; Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33 (Unreported, Allsop P, Giles JA, Handley AJA, 16 March 2010) [39].
[26]Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, 602.
[27]Spassked Pty Ltd v Commissioner of Taxation [2007] FCAFC 205 (Spender, Dowsett and Edmonds JJ, 21 December 2007) [78].
[28]Meriton Apartments Pty Ltd v Industrial Court of New South Wales [2009] NSWCA 434, [60] cited with approval in Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33, [39].
[29]Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33, [4]; Aon Risk Services Pty Ltd v Australia National University (2009) 239 CLR 175, 193-5 (French CJ).
[30]Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, 602.
[31]Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33, [4].
Whether a claim was “so relevant” to the earlier litigation that it was “unreasonable” not to have raised it requires consideration of all the circumstances bearing upon unreasonableness in the particular matter, not simply identifying common facts in, or subject matter of, both proceedings.[32] In Port of Melbourne Authority v Anshun Pty Ltd, Gibbs CJ, Mason J and Aickin J explained that:
there are a variety of circumstances … why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few.[33]
Circumstances bearing on “unreasonableness” include, but are not confined to,[34] the potential for the judgment in the later proceeding to “conflict”[35] with the judgment in the earlier proceeding.
[32]Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33, [52].
[33]Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, 603.
[34]Gibbs v Kinna [1999] 2 VR 19, [28] (Kenny JA).
[35]Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, 603.
The authorities establish that a finding of Anshun estoppel should not be made lightly and a consideration of all the relevant facts bearing on the question of “unreasonableness” is required. This may include the character of the previous proceeding, the scope of any pleadings, the length and complexity of any trial, any real or reasonably perceived difficulties in raising the relevant claim earlier, and any other explanation for the failure to raise the claim previously.[36]
[36]Gibbs v Kinna [1999] 2 VR 19 [28] (Kenny JA).
Decision
In my view, the Senior Member was wrong in law to hold that the principle of Anshun estoppel had no application because the earlier proceeding was compromised. There are a number of cases in which it has been held that Anshun estoppel may apply where the earlier proceeding was settled without adjudication.[37] In Johnson v Gore Wood & Co (a firm)[38] Lord Bingham explained that:
An important purpose of the rule is to protect a defendant against the harassment necessarily involved in repeated actions concerning the same subject matter. A second action is not the less harassing because the defendant has been driven or thought it prudent to settle the first; often, indeed, that outcome would make a second action the more harassing.[39]
The underlying public interest is the same: that there should be finality in litigation and a party should not be vexed twice in the same matter.[40] A later action may amount to an abuse of process if the claim should have been raised in the earlier compromised proceedings, if it was to be raised.[41] But as Corboy J observed in Rojanasaroj v Rachan (No 2),[42] the possibility that a party can be prevented from pursuing a claim in an action because the claim ought to have been made in an earlier proceeding that was compromised adds to the complexity of findings that must be made in determining what was truly disposed of by the settlement.
[37]Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1; Rojanasaroj v Rachan (No 2) [2011] WASC 271 [39] (Corboy J); R&J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd [2008] NSWSC 232 (Bryson AJ); Seidler v The University of New South Wales [2011] FCA 640 (Cowdroy J); Snowy Mountains Organic Dairy Products Pty Ltd v Wholefoods Pty Ltd (2008) 21 VR 43 (Beach J); Running Pigmy Productions Pty Ltd v AMP General Insurance Co Ltd and Ors [2001] NSWSC 431 [36] (Palmer J).
[38][2002] 2 AC 1.
[39][2002] AC 1, 32-33.
[40][2002] 2 AC 1, 31.
[41]Lord Bingham of Cornhill, cited with approval in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, 194 [34] (French CJ).
[42][2011] WASC 271 [39].
The determination of whether Anshun estoppel applies here first requires consideration of the nature of the claims in the VCAT proceeding. At the time that VCAT heard the stay application, it had before it the Form 1 initiating process but no points of claim. The respondents have since filed points of claim as a consequence of VCAT dismissing the appellant’s application for dismissal or permanent stay; but as those points of claim were not before VCAT when it determined the application, they do not form part of the record for the purposes of this judicial review application.
As there was no consideration by VCAT of the subject matter of the claims before it because of the way in which the application was decided, it is therefore necessary to identify the nature of the claims from the material that constitutes the record before VCAT, bearing in mind that the claim in VCAT was lodged by Mr Donnelly who also represented himself and his company before VCAT and is not a qualified legal practitioner. Before VCAT Mr Donnelly stated that his claims were based on pre-contractual representations which induced him to enter into the contract and thus that his claims were different from the appellant’s claim in the Magistrates’ Court action which was a debt claim under the contract. The Court should not accept that characterisation of the legal nature of his claims without giving critical consideration to the substance of the claims. In any event, the different nature of the claims would not decide the issue.[43] The question is not whether the legal form of the VCAT claims is the same, but whether the VCAT claims are so closely connected with the subject matter of the Magistrates’ Court action that the respondents should have raised them in that proceeding, if they were to raise them at all.
[43]Trawl Industries of Australia Pty Ltd v Effem Food Pty Ltd (1992) 108 ALR 335.
I am satisfied that the claims have close connection with the subject matter of the Magistrates’ Court action. The basis of the respondents’ claims in VCAT is the same contract on which the appellant sued in the Magistrates’ Court. In the Magistrates’ Court, the respondents put the terms and performance of the contract into issue. It is sufficiently clear from the material that the respondents’ civil claims in VCAT raise the same controversy about the terms and performance of the contract with respect to the assignment of jobs which could not be completed because bins were overloaded. It is also sufficiently clear from the material that the respondents seek to challenge the lawfulness of the termination of the contract based on the same set of facts. The difference is that in VCAT the matters are raised by way of a claim for relief, not by way of defence. It is possible that the doctrine of res judicata applies, although that point was not taken by the appellant and I make no finding to that effect. The respondents’ other claims based on “pre-contractual representations” or “misrepresentations” also bring into question the contractual relationship between the parties based substantially on the same dispute about the terms and performance of the contract. This is borne out by the Points of Claim. Although they do not form part of the record, they nonetheless provide confirmation that the claims now sought to be made were very relevant to the Magistrates’ Court action.
The respondents argued that even if there is a close connection between the issues in the Magistrates’ Court action and the issues raised by the civil claims, they did not act unreasonably in not bringing the civil claims by way of counterclaim in the Magistrates’ Court action because the Magistrates’ Court did not have jurisdiction over those claims. It was submitted that the civil claims, under the contract, needed to be brought in accordance with the procedure under cl 32 of the contract (which if pursued would result in a proceeding ultimately in VCAT, not the Magistrates’ Court) and because the civil claims involved a considerably larger sum of money beyond the jurisdiction of the Magistrates’ Court.
I am not persuaded that either matter provided justification for not bringing the cross claims in the Magistrates’ Court, having regard to the way in which the litigation unfolded. The initial defence filed by the respondents did not raise any defence based on cl 32 of the contract. That defence was not raised until a point in the proceeding when it was too late for the respondents to raise their civil claims by way of counterclaim in the Magistrates’ Court action. No explanation has been provided as to why no counterclaim was filed at the same time as the original defence, when no reliance was placed on cl 32 and notwithstanding that a claim was earlier foreshadowed by the respondents’ solicitors. It was open to the respondents to file a counterclaim beyond the jurisdictional limit of the Magistrates’ Court and either to seek the appellant’s consent in writing to the Magistrates’ Court determining the counterclaim[44] or a stay of the proceeding pending its transfer to the County or Supreme Courts.[45]
[44]The Magistrates Court Act 1989 (Vic), s 100.
[45]The Magistrates Court Act 1989 (Vic), s 101.
Next, it was submitted for the respondents that there was no unreasonableness in the respondents not bringing their civil claims in the Magistrates’ Court action because of the significantly different issues involved, the fact that the appellant’s claim was relatively straightforward, involved less court time and concerned a small sum of money; whereas the respondents’ claims involved a considerably larger sum of money and issues surrounding discussions leading to the contract, as well as a significantly different quantum. I accept that these factors may have a bearing on whether Anshun estoppel will apply in considering the issue of unreasonableness. However, the respondents took no step either to formulate their legal claims against the appellant or to have those claims dealt with by the dispute resolution process under cl 32 of the contract or otherwise. There is a complete absence in the evidence of any explanation as to why no step was taken either to pursue a counterclaim in the Magistrates’ Court action or to pursue the claims elsewhere.
It was also submitted that VCAT offered a potential cost free forum for an unrepresented litigant, compared with the requirement for the company to obtain legal representation to appear in the Magistrates’ Court (unless leave is granted by the Court to proceed unrepresented). There is, however, a complete absence of any evidence that suggests this was the explanation why the civil claims were not raised in the Magistrates’ Court action.
In my view, the respondents could not only bring their civil claims in the Magistrates’ Court action, they should have done so. I am satisfied that the civil claims were so relevant to the subject matter of the Magistrates’ Court action that it was unreasonable for the respondents not to raise those claims in that proceeding.[46] This conclusion can be tested in the following way: the bringing of the civil claims separately and independently of the Magistrates’ Court action posed the risk of inconsistent orders, if the Magistrates’ Court action had not settled but had proceeded to judgment. The fact of settlement is not justification or warrant for Anshun estoppel not applying in all of the circumstances.
[46]Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, 602 (Gibbs CJ, Mason J and Aickin J).
For the above reasons, the appeal is allowed.
Victorian Civil and Administrative Tribunal Act 1998 (Cth), s 148; Order of Muhktar AJ dated
21 June 2011.
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