Conference & Exhibition Organisers Pty Ltd v Johnson

Judgment

McCOLL JA: I have had the advantage of reading Meagher JA's reasons in draft. The facts are set out by his Honour and do not require repetition. I have used the terminology his Honour has adopted to describe the critical events.
The critical question is whether his Honour Judge Robison erred in dismissing District Court Proceedings the appellant had commenced to recover revenue due to it from the 2014 Exhibitions. His Honour dismissed those proceedings on the basis of an estoppel (in the sense explained in Port of Melbourne Authority v Anshun Pty Ltd) [1] his Honour held arose by reason of proceedings the appellant had taken in 2013 to recover revenue due to it from the 2013 Exhibitions.
As I explained in Habib v Radio 2UE Sydney Pty Ltd, [2] there will be an Anshun estoppel if it appears that "the matter relied upon … 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." [3]
Anshun estoppel, established in Henderson v Henderson, [4] involves an extended doctrine of res judicata. [5] However, in Anshun, the plurality held that the adoption of the principle in Henderson v Henderson was taken too far by Lord Kilbrandon in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd. [6] Thus, the plurality rejected his Lordship's formulation of the test that it was "an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings." [7] Rather, the test is one of reasonableness. There will be no estoppel unless it appears that the matter relied upon 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. [8]
Thus Anshun estoppel introduces "an evaluative element based upon what a litigant could reasonably have been expected to do in earlier proceedings." [9] As Allsop P said in Champerslife Pty Ltd v Manojlovski, [10] this entails "at least two related assessments … was the matter so relevant that it can be said to have been unreasonable not to rely upon it in the first proceeding?" (emphasis in original).
In undertaking the evaluative exercise, it is relevant to bear in mind that Anshun estoppel, like res judicata and issue estoppel, finds its roots in the policy of the common law favouring the resolution of particular disputes between parties by the bringing of a single action rather than successive proceedings. [11] The "underlying public interest is … that there should be finality in litigation and that a party should not be twice vexed in the same matter." [12] Nevertheless, a "strict approach is necessary in an Anshun estoppel case to the inquiry whether there exists the requisite identity between the proceedings; the mere fact that the proceedings are closely related is insufficient; a technical approach is not helpful, the doctrine being concerned with substance and not form." [13]
In the present case, the Local Court Proceedings were commenced in 2013 at a time when the 2014 Exhibitions which gave rise to the claims in the District Court Proceedings had not taken place. By the time the consent judgment in the Local Court Proceedings was entered on 7 August 2014 the revenue to which the appellant was entitled from the 2014 Exhibitions had fallen due, but had not been remitted by Toro Media Pty Ltd. Rather, the appellant was still seeking to ascertain the quantum of that revenue.
The primary judge found the appellant was estopped from pursuing the District Court Proceedings because, in substance, in his Honour's view, the appellant should have engaged in procedural gymnastics to shoehorn its causes of action arising from the 2014 Exhibitions into the Local Court Proceedings pursuing the revenue from the 2013 Exhibitions.
His Honour's approach, with respect, confounds the notion of expeditious disposition of proceedings for which s 56 of the Civil Procedure Act 2005 (NSW) provides. It was entirely sensible, in my view, for the appellant to pursue the Local Court Proceedings to finality at a time when it had apparently achieved a consensual agreement on their outcome, but not pursue the revenue from the 2014 Exhibitions at that stage. Further, it could not be said that the 2014 causes of action were "so relevant" to the 2013 causes of action that it could "be said to have been unreasonable" for the appellant not to rely upon them in the Local Court Proceedings. At the time the Local Court Proceedings were commenced, the causes of action in relation to the 2014 Exhibitions had not accrued.
There may be many reasons why a party "may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings". [14] One, clearly apposite in the present case, is that the earlier proceedings have advanced to a stage where a consensual outcome is available, while the subject matter of the prospective proceedings has not yet been ascertained.
Permitting the appellant in those circumstances to pursue the District Court Proceedings did not, in my view, attract the principles of Anshun estoppel. The respondents are not being "twice vexed in the same matter". [15] Rather, in the District Court Proceedings they are being pursued in respect of their guarantee of a Business Sale Agreement, breaches of which in relation to the 2014 Exhibitions, as Meagher JA has explained (at [27]) gave rise to "separate causes of action relating to separate breaches of the Business Sale Agreement, those breaches arising at different and later times to the breaches with which the Local Court Proceedings were concerned."
For these reasons, and those of Meagher JA, I agree with the orders his Honour proposes.
MEAGHER JA: By his judgment delivered on 21 August 2015, the primary judge held that Conference & Exhibition Organisers Pty Ltd (the appellant) was estopped from prosecuting its claim against the respondent guarantors as a result of the application of the principles in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; 147 CLR 589. The question whether an estoppel arose was determined separately under Uniform Civil Procedure Rules 2005 (NSW), r 28.2. Judgment was then entered for the respondents pursuant to Civil Procedure Act 2005 (NSW), s 24, which re-enacts the common law rule against case splitting. The appellant appeals from that final judgment. Leave to appeal is not required because the appellant's claim was for an amount in excess of $100,000: District Court Act 1973 (NSW), s 127(2)(c).
The respondents contend that the primary judge correctly concluded that the claim was barred. That provided a complete answer to the appellant's claim and accordingly they maintain that they were entitled to final judgment, albeit not in accordance with s 24 of the Civil Procedure Act.
The factual background may be shortly stated. On 17 July 2012, the appellant sold its business to Toro Media Pty Ltd. That company is now in liquidation. The business involved the organisation of tattoo and body art exhibitions. The Business Sale Agreement, which was not included in the material before this Court, required the purchaser to pay to the appellant 10% of the "Expo Revenue" (as defined in the Agreement) derived from upcoming exhibitions to be held in Melbourne in 2012 and 2013; Sydney in 2013 and 2014; and Perth in 2013 and 2014. The respondents jointly and severally guaranteed the purchaser's performance of its obligations under the Business Sale Agreement.
Payments were made to the appellant in respect of the 2012 Melbourne and 2013 Sydney exhibitions. On 29 October 2013, the appellant commenced proceedings in the Local Court to recover amounts outstanding in relation to the exhibitions held in Sydney, Perth and Melbourne in 2013 (the Local Court Proceedings). The total amount claimed was $48,319 (excluding filing, service and solicitors' fees). On 7 August 2014, judgment was entered by consent in the Local Court against the respondents. While there is no evidence confirming the judgment amount, paragraph 7 of the appellant's Statement of Claim in the District Court, which is admitted in the Defence, states that the revenue due in respect of the 2013 exhibitions has been paid. From that it may be inferred that judgment was entered for the sum claimed. That is consistent with the respondents' statement of the position in their written submissions before the primary judge. In any event, the respondents do not contend that the settlement of the Local Court Proceedings sought to compromise later claims relating to other exhibitions, or that the amount paid in satisfaction of the consent judgment made any allowance for those claims.
By the time of that judgment the 2014 exhibitions in Sydney and Perth had been held (the 2014 Exhibitions). The appellant had made requests for information as to the revenue generated by those exhibitions on 8 July 2014 and, in the absence of any response, on 2 October 2014. The email sent on 8 July foreshadowed the institution of proceedings in the Supreme Court (presumably for the enforcement of the appellant's contractual rights to inspect business records which would contain that information) if no response was received. Some information was provided on 7 October 2014. A further request, to which there was no response before the proceedings at first instance were commenced, was made on 24 October 2014.
On 16 March 2015, the appellant commenced proceedings against the respondents in the District Court, seeking to recover the revenue owed to it in relation to the two exhibitions held in 2014 (the District Court Proceedings). Toro Media Pty Ltd had been required to make payments in relation to them on 8 April 2014 and 8 July 2014. By their defence filed 16 June 2015, the respondents claimed that the appellant was barred from bringing those proceedings by reason of an Anshun estoppel.

Consideration

In my view the circumstances of this case did not give rise to an Anshun estoppel and the primary judge erred in concluding otherwise.
First, it is necessary to consider the subject matter and substance of the proceedings. In their submissions to this Court, the respondents argue that the District Court Proceedings are "intimately connected" with the Local Court Proceedings. It is said that there was an overlap in the factual matters to be considered because: (a) all claims arose from the same Contract; (b) the appellant relied on the same contractual provisions in relation to all claims (the contractual definition of "Expo Revenue" and clauses 4.3 and 4.6 of the Contract); (c) the same method for quantifying Expo Revenue applied to all claims; (d) the respondents were sued on the basis of the same guarantee in respect of all claims (clause 20 of the Contract); and (e) it follows that any questions of contractual interpretation would have applied in the same way to all claims.
Where the same facts give rise to more than one breach of a single contract or constitute a continuing repudiation of such a contract, there is only one cause of action so that in each case those matters must be litigated in the same proceeding: see C G Maloney Pty Ltd v Noon [2011] NSWCA 397 at [147], [160] (Handley AJA). That is not this case. The District Court Proceedings prosecuted separate causes of action relating to separate breaches of the Business Sale Agreement, those breaches arising at different and later times to the breaches with which the Local Court Proceedings were concerned.
Considering the position at the time the Local Court Proceedings were settled, there were no common factual controversies with respect to the existing claims and those that remained in relation to the 2014 Exhibitions. As a result of the proposed settlement, the only remaining matters in issue with respect to any proposed claims could be the calculation of the revenue derived from each exhibition, the quantification of the amount owed to the appellant and the determination of the time for payment.
That being so did not depend on the respondents making admissions (as they did by the Statement of Agreed Facts attached to the Amended Defence filed in the District Court on 16 June 2015) because the entry of the consent judgment gave rise to issue estoppels in favour of the appellant in relation to the application of the contractual provisions: Ekes v Commonwealth Bank of Australia [2014] NSWCA 336; 313 ALR 665 at [111]-[114] (Bathurst CJ, Beazley P and Emmett JJA agreeing).
This Court's decision in Boles v Esanda Finance Corporation Ltd (1989) 18 NSWLR 666 further demonstrates that reliance on common contractual provisions will not necessarily establish a sufficient connection between two proceedings to give rise to an Anshun estoppel. The lessor made a claim to recover the entire rent payable under a chattel lease agreement, where a prior claim for an instalment of rent had already been brought. Samuels JA, with whom Priestley and Meagher JJA agreed, said (at 674): In my opinion, upon the facts here, it was not unreasonable for the respondent [lessor] to have advanced the claim it did in the first proceedings. … There were tactical considerations favouring a claim for an instalment of which the appellants' lawyers must have been aware and which therefore disposed of any contrary expectation. I am doubtful whether it is helpful to try and apply the notion of 'relevance', which is mentioned in Port of Melbourne Authority v Anshun (at 602) in the context of a defence which might have been raised in an earlier proceeding … to the failure to advance a claim. … In this case the claim first made and the current claim are connected in the sense that each has its genesis in the same contract. But it is meaningless to say that one is relevant to the other.
The primary judge's consideration of the 'relevance' of the District Court Proceedings to the Local Court Proceedings did not extend beyond observing that the contractual provisions relied on were the same. Nor was it sufficient to attract the operation of the Anshun principle that the claims in the District Court could have been brought in the Local Court Proceedings. Those matters do not address at all whether having regard to the nature of the further claims and their subject matter, and in the context of the conduct of the Local Court Proceedings, it was to be expected that because of their relevance to those proceedings, the further claims also would have been made at that time.
There was no risk of inconsistent judgments if the appellant successfully pursued the further claims after the Local Court Proceedings had been settled. The prospect of inconsistent judgments has been described as an "obviously important" and critical factor in any assessment of whether an Anshun estoppel arises: Anshun at 596, 603; Zavodnyik v Alex Constructions Pty Ltd [2005] NSWCA 438; 67 NSWLR 457 at [35]. The issue estoppels arising from the consent judgment, which were wholly consistent with the appellant's claims, excluded that possibility in this case.
The principles which underlie Ashun estoppel involve an extension of the plea of res judicata as described by Wigram VC in Henderson v Henderson (1843) 3 Hare 100 at 115; 67 ER 313 at 319: [W]here a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (expect in special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. [emphasis added]
Necessarily where proceedings are resolved by consent, there can be no "adjudication" by the court. In Ekes, this Court (at [136] per Bathurst CJ, Beazley P and Emmett JA agreeing) considered, without having to decide, that an Anshun estoppel could arise in such circumstances. Even so, having regard to the knowledge of the parties at the relevant time, the fact of their agreement to the consent judgment is inconsistent with either expecting that the further claims would be raised in the existing proceedings so as to make it unreasonable for the appellant not to have done so. That knowledge included that there was a dispute as to the appellant's entitlement to further monies; that a request had been made for information that would allow the appellant to formulate and pursue those monies; and that the subject matter of those claims had not been dealt with in the Local Court Proceedings or the settlement of them.
Finally, the "time and trouble" and other difficulties involved in amending the Local Court Proceedings so as to raise further claims, and, most likely, in transferring those proceedings to the District Court confirm that the appellant's conduct in not seeking to do so was not unreasonable: Maloney v Noon at [85] (Campbell JA, Tobias AJA agreeing); Champerslife at [54] (Giles JA); Bazos v Doman [2001] NSWCA 347 at [47] (Stein JA, Priestley and Beazley JJA agreeing); Ling v Commonwealth (1996) 68 FCR 180 at 184.
The primary judge was correct to observe that there were "opportunities available" to the appellant to amend its earlier claims to include the payments due in relation to the 2014 Exhibitions. However, that observation did not address the reasonableness or otherwise of the decision not to pursue those opportunities.
To make its claims relating to the 2014 Exhibitions in the Local Court Proceedings, it would have been necessary for the appellant to have done the following. First, to reject the opportunity to settle the existing proceedings, recover part of the debt owed to it and obtain the benefit of issue estoppels in relation to all aspects of the remaining dispute, except quantification. That would have involved delaying the progress and resolution of the existing claims. Secondly, upon receipt of information as to the revenue derived from the 2014 Exhibitions, to seek to amend the existing claims to include the additional payments said to be due: Civil Procedure Act, s 64(1)(b). If that information was not received, it may have been necessary to amend and then to seek discovery or production so as to be in a position to quantify those claims. As the primary judge acknowledged, receipt of that information would have confirmed that the amended claim exceeded the jurisdiction of the Local Court: Local Court 2007 (NSW), s 29(1)(a). Because of that fact, it would also have been necessary to apply to the District Court for the transfer of the proceedings: Civil Procedure Act, s 140(2), (4).
Taking account of these matters, the separate pursuit and resolution of the Local Court Proceedings was a reasonable, if not the clearly preferable, course. Giving effect to the overriding purpose of s 56 of the Civil Procedure Act does not necessarily or always require the joining in the one proceeding of all claims which are in some way related. In terms it is directed to facilitating the just, quick and cheap resolution of the real issues "in the proceedings". Given the inconvenience, delay, cost and uncertainty involved in pursuing the later claims in the Local Court, the appellant acted consistently with that overriding purpose by resolving the existing claims.
For these reasons, the primary judge erred in concluding that the appellant was estopped from prosecuting the District Court Proceedings; in answering the two preliminary questions in the affirmative; and in entering judgment for the respondents.
The following orders should be made: 1. Appeal allowed. 2. Set aside the judgment for the respondents given on 21 August 2015 and the answers to the two preliminary questions ordered by the District Court. 3. The two preliminary questions ordered under UCPR, r 28.2 to be decided separately, be answered "no". 4. Respondents pay the appellant's costs of the notice of motion in the District Court filed on 3 June 2015, including its costs of and incidental to the hearing on 21 August 2015. 5. Respondents pay the appellant's costs of the appeal.
LEEMING JA: I agree with Meagher JA. I also agree with McColl JA.

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