Blinoff v Strangio & ors [2007] NSWCA 233 | Case summary

REASONS FOR DECISION Background 1 The Applicant, Steven Blinoff ("the Applicant") by Application for Original Decision filed 4 April 2007 seeks against Tina Strangio, Emma Romano, Joanne Alinejad and John Demarte as Respondents ("the Respondents") orders that the Respondents pay the sum of $60,000.00 to the Applicant plus interest, and for costs. The Application is propounded as a combined retail tenancy claim and unconscionable conduct claim. The grounds are specified in the Application as: "(1) Failure to accept an assignment of Registered Lease AA7152935 from the Lessees, Harry Simmons and Debbie Simmons, to the Applicant from on or about 8th April 2004. (2) Unlawful termination of assigned transferred lease AA7152935 on or about 15th March 2005 causing a damage of $60,000. (3) Alternatively, if the respondents had validly refused consent to an assignment, it did so in circumstances of misleading or deceptive conduct or unconscionability causing damage to the Applicant in the sum of $60,000." Grounds 1 and 2 are particularised by reference to the judgment of His Honour Judge Naughton of 13 November 2006 in District Court proceedings 4320 of 2005 between the Applicant as Plaintiff and Harry Simmons and Debbie Simmons ("the Lessees") as Defendants ("the District Court proceedings"). In the District Court proceedings the Applicant sued the Lessees for $60,000 being the purchase price paid by the Applicant to the Lessees on 8 April 2004 under an agreement alleged to have been made on that day in respect of a take-away food shop business at 2/46 Harden Street, Canley Heights whereby the Applicant alleged "it was agreed by the defendants that they would sell the business, goodwill, fixtures and assign the lease to the plaintiff for the consideration of $60,000.00." 2 The District Court judgment set out relevant facts, as that Court found them on the evidence before it, including: "The lessors of the premises were Tina Strangio, Joanne Alinejad, Emma Romano and John Demarte. By an undated Real Property Act lease stamped on 11 May 2004 and registered on 11 June 2004 the lessors had demised the premises to the defendants for 5 years commencing on 1 January 2004 and terminating on 31 December 2008. The lease contained an option to renew for a further 5 years. The permitted use of the premises as specified in the lease was 'a takeaway fish and chips shop.' The plaintiff and his de facto wife, Ms Kim Dodkins, took up possession on 8 April 2004 pursuant to a tri-partite oral agreement between them, the defendants, and the lessors. They conducted a takeaway food shop business in the premises until 15 March 2005. On that date they vacated the premises pursuant to their solicitor's advice to do so. From the time of going into possession on 8 April 2004 they regularly paid the correct amount of monthly rent ($1,650.00) up to and including 28 January 2005. The rent was paid to the lessors' agent and accepted by it on behalf of the lessors. Rent amounting to $2,887.50 for the 7 week period from 28 January to 15 March 2005 was not paid. On 16 November 2004 the lessors (through their solicitors) informed the plaintiff (through his solicitors) for the first time that they would not consent to assignment of the lease to him…" … "A meeting about the matter was held in the shop on or about 1 April 2004. Present were the plaintiff and Ms Dodkins, both defendants, Mr John Demarte on behalf of the lessors, and Mr Peter Fornasier of Fornasier Independent Real Estate. It was the lessors' letting agent. By the time of the meeting Mr Demarte was well known to both Ms Dodkins and the plaintiff. At the meeting a tri-partite agreement was made by which the defendants agreed to sell to the plaintiff the goodwill of the business and their interest in the 'fixtures and lease' for $60,000 together with the stock in trade at valuation. In addition, it was agreed by the lessors, through Mr Demarte who had authority to bind them, that the whole of the defendants' interest in the leasehold of the premises would be assigned to the plaintiff. It was further agreed that the plaintiff and Ms Dodkins would take up possession of the premises under those agreements on 8 April 2004. Mr Demarte on behalf of the lessors gave them permission to carry out immediate renovations and repainting and to change the shop front painted sign from 'Harden Street Fish Shop' to 'Kimmies Hot Food'. It was agreed that Ms Dodkins would manage the shop full time on the plaintiff's behalf. It was also agreed that the second defendant would continue working in the shop as an employee of the plaintiff."… 3 The Plaintiff sued in those proceedings alleging frustration and in the alternative, breach of an implied (alternatively, express) term that "the defendants would secure the assignment of the lease to the plaintiff". In the District Court it was held that there was no frustration and that there was no term as alleged. There was a verdict given for the Defendants and the Plaintiff was ordered to pay the Defendants' costs. An appeal by the Applicant to the Court of Appeal was unsuccessful (Binoff v Simmons [2007] NSWCA 233). Preliminary Issue 4 In the proceedings before this Tribunal the issues have been detailed in pleadings. The Applicant has filed Amended Points of Claim and the Respondents have filed a Defence. For present purposes it suffices to note that, among other issues, the Respondents dispute, in effect, any agreement involving themselves as found in the District Court proceedings or at all, and assert in paragraph 19 of the Defence: "19. Further, and in reply to the Appellant's entire Amended Points of Claim, the Respondents assert that the Appellant should be estopped from bringing the claim on the basis that a party cannot commence proceedings against a party when such matters should have previously been dealt with in prior proceedings commenced by the Applicant 'Port of Melbourne Authority -v- Anshun Pty Ltd (1981) 147 CLR 589'." 5 By agreement and/or by direction, at directions hearings in this Tribunal, paragraph 19 of the Defence is to be dealt with as a preliminary issue. The preliminary issue has been referred to me for determination, and concerning, as it does, a question of law only it is appropriate to be determined by me alone without the assistance of non-judicial members (Administrative Decisions Tribunal Act 1997 Schedule 2, Part 3B, Division 3). The circumstances make it apparent that the preliminary issue can be adequately determined in the absence of the parties and that the determination can be made by considering the documents lodged with the Tribunal (section 76 Administrative Decisions Tribunal Act). I add that I understand that the parties have agreed to this method of determination of the preliminary issue and that relevant documents lodged with the Tribunal apart from those that I have already referred to are the lease between the Respondents as Lessors and the Lessess and written submissions from both sides which include copies of the subject District Court and Court of Appeal decisions and the Statement of Claim in the District Court proceedings. Anshun Principle 6 The Anshun decision (Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589) can be adequately presented in summary by quoting parts of [449] of Spencer Bower, Turner & Handley, Res Judicata 3rd edition 1996: "The appellant hired a crane to the respondent on terms that the hirer indemnified it against any claim arising out of its use. A workman injured by the negligent operation of the crane sued the authority and the hirer. Each sought contribution, but the authority did not rely on its agreement. Responsibility was apportioned 90% to the authority and 10% to the hirer. The authority then brought proceedings claiming an indemnity. In a joint judgment Gibbs CJ, Mason and Aickin JJ found that neither cause of action nor issue estoppel applied, but the judgment sought would contradict that entered in the former action because the indemnity would have been a defence to the hirer's claim for contribution… The indemnity would have been a defence to the hirer's claim for contribution and was so closely connected with the subject matter of the earlier proceedings that it was to be expected that it would be relied upon both as a defence and as a cause of action. A successful claim under the contract would obviate any enquiry into contribution. If raised later it would increase costs and give rise to a conflicting judgment. The authority's claim to enforce its indemnity therefore contravened the extended res judicata doctrine and the action was properly stayed." 7 The reference there to "the extended res judicata doctrine" relates back to Henderson v Henderson (1843) 3 Hare 100, 67 ER 313, and can be explained sufficiently for present purposes by reference to Justice Handley's 1997 paper Anshun Today 71 ALJ 934 at 934: "…The extended doctrine, of which Anshun is only part, supplements the doctrines of merger, cause of action estoppel and issue estoppel. It can apply where the parties or causes of action are different. It has never been suggested however that it extends an issue estoppel to decisions on questions of fact or law which were not fundamental to the earlier decision. The extended doctrine also applies to later proceedings which are vexatious and hopeless in the light of an earlier decision and to proceedings which are collateral attack on an earlier decision as in Hunter v Chief Constable [1982] AC 529 where one of the Birmingham Six brought a civil action for assault against the police repeating allegations which had been rejected in his criminal trial…" 8 In that paper, Justice Handley summarised the test for application of the Anshun principle (71 ALJ 791 at 938): "In Anshun, the High Court rejected the Kilbrandon test in Yat Tung ([1975] AC 581 at 590) that additional claims that 'could and therefore should' have been litigated in the first suit will be barred, but held that claims that would result in inconsistent judgments will be barred. Between these two extremes we have the test of reasonableness based on the relevancy of the omitted claims to the subject matter of the first suit. The test is whether 'it would be expected' having regard to the nature and subject matter of the first suit that the additional claim would have been raised in that suit." Perhaps emphasis on reasonableness should be reinforced by reference to what Gibbs CJ, Mason and Aickin JJ said in Anshun (147 CLR 589 at 602) after rejecting the Kilbrandon test: "In this situation we would prefer to say that 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." 9 Anshun resulted in a stay of proceedings and as to such relief, comments by McHugh J in Rogers v The Queen (1994) 181 CLR 251 at 286-287 (cited by Justice Beaumont in a commentary on Justice Handley's paper (1997) 71 ALJ 950 at 953) are pertinent: "Inherent in every court of justice is the power to prevent its procedures being abused. Although the categories of abuse of procedure remain open, abuses of procedure usually fall into one of three categories: (1) the court's procedures are invoked for an illegitimate purpose; (2) the use of the court's procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court's procedures would bring the administration of justice into disrepute. Many, perhaps the majority of, cases, of abuse of procedure arise from the institution of proceedings. But any procedural steps in the course of proceedings that have been properly instituted is capable of being an abuse of the court's process. In Walton v Gardiner (1993) 177 CLR 358 at 393, Mason CJ, Deane and Dawson JJ said that the jurisdiction to stay proceedings that are an abuse of process 'extends to all those cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness.' Their Honours gave three examples of such an abuse of process. One of them is the case where an estoppel cannot be established but the proceedings are unjustifiably oppressive because it is sought to litigate an issue which has already been disposed of by earlier proceedings." Submissions 10 In the Respondents' written submissions Mr Vince Galluzzo, solicitor, refers to a number of cases generally relevant to the Anshun principle (many without report references, but I have traced them all). Without enumerating and separately explaining here all these decisions, my consideration of them indicates that in terms of statement of principle they do not relevantly add to what I have written thus far concerning Anshun and I do note in particular Stuart v Sanderson (2000) 100 FCR 150 at 155-159, Symonds v Raphael (1998) 148 FLR 171 at 190-195 and Egglishaw v Australian Crime Commission (2007) 164 FCR 224 at 230-231. I add that this Tribunal has considered Anshun on occasions and in particular it was applied in Sotiropoulos v Mattana Coffure Pty Ltd (No.3) [2006] NSWADT 234; I similarly note [28]-[36] of that decision. 11 Dominant within the Respondent's submissions are also contentions that: (a) Both the District Court proceedings and the Tribunal proceedings involve relief sought by the Applicant "under a Tri-Partite agreement between the Lessor, the Lessee and the Applicant as assignee" and "The issues are therefore based upon the same subject matter . " (b) The Anshun principle may be applied in favour of a person who was not a party to the original proceedings: Yat Tung Investment Co v Dao Heng Bank [1975] AC 581, Ashmore v British Coal Corp [1990] 2 QB 338, and Johnson v Gore Wood & Co [2002] 2 AC 1. (c) "By not joining in those proceedings and attempting to join her now, Strangio and others are prejudiced by not being able to raise a cross-claim based upon the Tri-Partite agreement against Simmons as it would seem that Simmons has the benefit of res judicata." 12 On behalf of the Applicant, Mr Andrew Reoch of Counsel relies in his written submissions particularly on the need for identity of parties and issues for application of estoppel or res judicata. Among authorities he refers to is Macquarie Bank v National Mutual Life (1996) 40 NSWLR 543 which he summarises thus: "…a bank sued a number of parties including its solicitors for negligence in failing to register transfers of life policies which were taken as security. At the very end of the proceedings the bank unsuccessfully applied to amend the claim to include allegations of negligence by the solicitors. The bank appealed the decision not to grant leave to amend. The bank also commenced a second claim which made the allegations of negligence against the solicitors. In other words, same parties, different issues. The Court of Appeal held that there was no Anshun estoppel because the breaches of duty as alleged raised different factual issues." He also refers to Ling v Commonwealth (1996) 60 FCR 180 where a Full Court of the Federal Court held that the circumstances were such it could not be said that it was unreasonable for the appellant not to have raised a claim for negligent misrepresentation brought in later proceedings, as a cross-claim in earlier proceedings against the appellant for debt, and that the later proceedings were therefore not blocked by the Anshun principle. Consideration 13 It is correct, as has been submitted on behalf of the Applicant, that it is a requirement of both res judicata and issue estoppel that there be identity of parties (Cross on Evidence, Australian Edition [5040] citing Tedeschi v Legal Services Commissioner (1997) 43 NSWLR 20). The question here, however, is whether the extended res judicata doctrine referred to above is applicable. 14 In the Amended Points of Claim, the Applicant pleads a tri-partite agreement similar to that found in the District Court proceedings (par.2 above): "2. By way of a tripartite agreement entered into on or about the 1st April 2004, partly evidenced in writing, it was agreed by the proprietors of the business, Harry and Debbie Simmons and the Applicant that they would sell the business, goodwill, fixtures and assign the lease to the Applicant for a consideration of $60,000. It was also agreed between the Applicant, Mr & Mrs Simmons and the Respondents (upon the authority and agency of John Demarte) that the lease would be assigned to the Applicants under the Retails Leases Act. ("the agreement"). 3. The agreement was created at a meeting in the premises and in the presence of the respondents' letting agent, Mr Peter Fornasier ("the agent'). 4. Pursuant to the said agreement the applicant paid Mr & Mrs Simmons on 8 April 2004 the sum of $60,000. … 5. It was an implied term of the agreement (or alternatively expressed) that the Respondents would secure or otherwise cause the assignment of the lease to the Applicant." To this extent, there is validity in the Respondents' submissions that "the issues are therefore based upon the same subject matter". Nevertheless, the findings in the District Court proceedings concerning the tripartite agreement and otherwise were made on the basis of evidence comprising only that of the Applicant and his partner together with some documentary material and the Respondents were neither parties to, or witnesses at, those proceedings. The findings in the District Court proceedings have no status as such in the present proceedings (cf s 91 Evidence Act 1995 and Hollington v F Hewthorn & Co. Ltd [1943] KB 587). 15 The Respondents' contention that "it would seem that Simmons has the benefit of res judicata" may be valid as between the Lessees and the Applicant but it is not valid as between the Lessees and the Respondents. The Respondents not having been parties to the District Court proceedings, there can be no res judicata (or issue estoppel) as against the Respondents whether to constitute, as alleged by the Respondents, a reason why there could be no cross-claim by the Respondents against the Lessees in the present proceedings or otherwise. Indeed, the Respondents have instituted in this Tribunal proceedings 085100 between themselves as Applicants and Peter Fornasier trading as Fornasier Independent Real Estate and the Lessees as Respondents, seeking to have those Respondents held responsible to them for the payment of any monetary order made against the Respondents in the present proceedings. Proceedings 085100 have not been addressed in the submissions made on the present application and I make no further comment on them, whether as to their viability or otherwise. 16 As I have noted, the Respondents have referred to three cases in support of their submission that "the Anshun principle may be applied in favour of a person who is not a party to the original proceedings". The circumstances considered in those cases do not particularly correspond with the circumstances in, and those cases do not readily suggest a course of action for, the present proceedings. 17 In Yat Tung Investment Co v Dao Heng Bank [1975] AC 581 there were involved first proceedings where a borrower unsuccessfully claimed against its bank seeking to impugn the sale of security by the bank following default by the borrower, and second proceedings between the borrower and the bank together with the purchaser of the secured property from the bank, alleging complicity between the bank and the purchaser in relation to the transaction between them; the Privy Council affirmed a decision of the Full Court of the Supreme Court of Hong Kong that the second proceedings constituted an abuse of process and should be struck out. Ashmore v British Coal Corp [1990] 2 QB 338 concerned an industrial claim brought by an individual worker following a selection process, of which the worker had been aware, whereby fourteen sample cases involving the same issue had already been conducted on a test basis; the Court of Appeal confirmed that the proceedings should be struck out as vexatious. The proceedings in Johnson v Gore Wood & Co [2002] 2 AC 1 concerned a claim by an individual for professional negligence against solicitors; proceedings in respect of the same complaints against the same solicitors by companies through which the plaintiff had conducted his affairs had previously been settled; while there was an area of overlap in relation to the standard of care which the solicitors owed, the heads of loss in the respective proceedings were different; and the House of Lords confirmed that the individuals' claim did not constitute an abuse of process. 18 Nor do I think that there is any precise guidance for the present proceedings to be found in Macquarie Bank v National Mutual Life (1996) 40 NSWLR 543, referred to in the Applicant's submissions. To add to the summary of that case given by the Applicant and repeated in paragraph 12 above, I explain that in the first proceedings in that case there was a claim against the solicitors for negligence which was much narrower than that sought to be advanced first by way of amendment in the first proceedings and then as the subject matter of the second proceedings. The Court of Appeal reversed the decision in the second proceedings that there were defences of res judicata and Anshun estoppel available to the solicitors in the second proceedings such that there should be a verdict for the defendants. Nevertheless, some assistance as to the sorts of considerations relevant to Anshun perhaps can be found in the judgments in the Court of Appeal, particularly per Clarke JA at 561-2: "In simple terms, the issues raised in the second proceedings were not litigated in the first. The relief claimed in each was different and depended on the resolution of essentially different factual issues arising out of different alleged acts and omissions on the part of Westgarths, so that it cannot be said that in substance Macquarie was endeavouring again to litigate the same cause of action. To hold otherwise would be to extend the ambit of the doctrine of estoppel by record to include cases where, as in the present case, multiple parties would be forced to litigate a multiplicity of issues in the one proceeding in circumstances where it may be neither convenient nor efficient (in terms of time and cost) to do so. In the present case, for instance, I can think of no good reason why National Mutual should have been obliged to sit through a lengthy court proceeding while issues with which it was totally uninterested were ventilated. In my opinion this is not a case of estoppel by record. If estoppel is to operate it is only because of the Anshun doctrine. However, my examination of the initial question leads inevitably to the conclusion that that doctrine is also no answer to Macquarie's claim. The multiplicity of possible parties and the entirely separate nature of the issues makes it plain to me that it could not be said that it was unreasonable not to rely on the mortgage breaches in a second action. Nor is there any basis on which it could be concluded that a judgment for Macquarie in the second action would contradict the judgment against it in the first. The basis of the earlier judgment (that is, that Macquarie's failure to obtain the benefit of the insurance policies did not result from any breach by Westgarths) would be untouched by a finding that the quite distinct loss in respect of the real property securities did result from a breach by Westgarths. It follows that, in my opinion, Rolfe J was in error and the appeal from his judgment should be allowed." 19 I also note, from my own researches, Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198 where the Court of Appeal ordered on the basis of abuse of process the dismissal of proceedings instituted against the accountants who had prepared accounts for a business which the plaintiffs had bought. The plaintiffs had previously unsuccessfully sued the vendor of the business and in those proceedings (affirmed on appeal) it had been held that the plaintiffs had not relied on the accounts and that the accounts had been historical only and not promissory. In the second proceedings the plaintiffs were seeking to re-litigate those issues and the Court of Appeal expressed the opinion (at 205) that "these proceedings do threaten the integrity of the administration of justice and raise the prospect of conflicting judgments." In respect of the present proceedings it could not be said that there was any finding in the District Court proceedings concerning the Respondents which could be said to correspond to the findings concerning the accountants in Rippon in the first proceedings there. I do not see Rippon either as suggesting the result in the present proceedings. Rippon was applied in the Court of Appeal in Redwood Pty Ltd v Link Market Services [2007] NSWCA 286, emphasising that Anshun estoppel is based on the Court's inherent jurisdiction to prevent abuse of its process. 20 Ultimately, in my opinion, the present issue falls to be decided by applying the Anshun principle as I have sought to explain it above, to the circumstances now before the Tribunal, as follows: (a) What is essentially involved in the present proceedings is a claim against the Respondents arising out of an alleged failure by them formally to consent to the assignment of the subject lease. Such a claim was not made, nor sought to be made, in the District Court proceedings. The Respondents were not involved as parties or in any other direct way in the District Court proceedings. What was said about the Respondents in the District Court proceedings (and in the Court of Appeal) occurred in their absence and, as I have already said is not, as such, relevant in these proceedings. (b) With the outcome of the District Court proceedings and the pendency of the present proceedings, it might be said that it would have been more convenient if the Respondents here had been joined as Defendants in the District Court proceedings and all matters had been disposed of there. The inconvenience of the resulting state of affairs does not, however, amount to relevant unreasonableness, that is, for example, in some of the language in Rogers quoted above, such as to constitute oppression. It was not so unreasonable for the claim now made against the Respondents not to have been made in the District Court proceedings because as those proceedings were then constituted in terms of parties, such a claim could not have been made there in those proceedings. For the Applicant to have joined in the District Court proceedings only the Lessees as defendants should not mean that he should thereby be taken to have foregone the right to sue other persons on causes of action against those persons connected with the subject matter of the District Court proceedings. (c) Finally, it could not be said that the District Court proceedings (or the appeal) suggest that a claim by the Applicant against the Respondents is not viable or otherwise inappropriate nor that present proceedings constitute a collateral attack on the District Court proceedings. Conclusion

For these reasons, I find that the defence pleaded in paragraph 19 of the Points of Defence is not made out and I determine the preliminary issue in favour of the Applicant
The question of any costs order is reserved
The proceedings (together with proceedings 085100) should be listed for a further directions hearing at an early date.

Blinoff v Strangio & ors

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Judgment (11 paragraphs)

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Cases Cited (11)