Res judicata, issue estoppel, Anshun estoppel
109 I do not accept the submissions by the respondents that Layton J's judgment in Garrett v Mildara Blass Ltd [2009] SASC 19 operates as res judicata in relation to Mr Garrett's claims in this proceeding based on the 2000 Deed. The matters before Layton J, and the decisions her Honour made, are apparent from the introduction to her Honour's judgment:
There are three applications before me. The first is a Notice for Specific Directions filed on 3 May 2007 by Andrew Morton Garrett in Action Number SCCIV-96-2244 ("Action 2244 of 1996"). Mr Garrett seeks, inter alia, to re-open and set aside the judgment entered in that action.
The second is an application which was filed on 27 June 2007 by the first defendant, Mildara Blass Limited ("Mildara Blass"), now known as Foster's Wine Estates Ltd ("FWE"), in Action 2244 of 1996. The Notice for Specific Directions seeks orders, pursuant to s 39 of the Supreme Court Act 1935 (SA) ("the Act"), that Mr Garrett be declared a vexatious litigant, that he be prohibited from instituting any proceedings with respect to FWE and related entities without the leave of the Court, and a permanent stay of the proceedings issued by Mr Garrett in Action 2244 of 1996.
The third is an application filed on 10 October 2007 in Action Number SCCIV-07-1342 ("Action 1342 of 2007"), instituted by the Attorney-General for the State of South Australia against Mr Garrett pursuant to s 39 of the Act. This application seeks, inter alia, a declaration that Mr Garrett has persistently issued vexatious proceedings, and an order that he be prohibited from instituting any proceedings in any court without permission of the Court.
On 16 November 2007, I made an order that the applications in Action 2244 of 1996 be listed for hearing concurrently with Action 1342 of 2007. I also made an order that the applications should be heard both as to evidence and submissions, in the following order: first, the Attorney-General's application in Action 1342 of 2007; second, the application by FWE in Action 2244 of 1996; and, lastly, Mr Garrett's application to re-open in Action 2244 of 1996. I also ordered that, subject to relevance, the evidence adduced and submissions made in Action 1342 of 2007 be treated as evidence and submissions in the applications by the first defendant and second plaintiff in Action 2244 of 1996, and vice versa.
At the hearing, Mr Livesey QC, counsel for FWE, identified and made submissions with respect to two preliminary matters, namely:
• the effect of the declaration made by Anderson J on 17 May 2007 that Mr Garrett had persistently instituted vexatious proceedings as defined by s 39 of the Act; and
• Mr Garrett's standing to take out the application in Action 2244 of 1996.
I will deal with these preliminary issues before moving on to the substantive matters which I will then deal with in the following order:
• the application made by Mr Garrett to re-open Action 2244 of 1996;
• the application made by the Attorney-General pursuant to s 39 of the Act;
• the application made by FWE pursuant to s 39 of the Act.
110 On the issue of Mr Garrett's standing, in terms of acting as trustee and bring the proceedings in that capacity, her Honour found Mr Garrett lacked standing, and said at [28]:
the fact that Mr Garrett is an undischarged bankrupt is prima facie a circumstance which suggests that he lacks standing as a fit person to act on behalf of the trust. In this case, rather than there being other information before me which would rebut this presumption, to the contrary, the material before me confirms that he is an unfit person to act for the GFT. Despite having been told on many previous occasions that he lacked valid standing, he has continued to creatively contrive proceedings in this Court using the guise of another legal identity to air his grievances. In endeavouring to establish standing in the name of the GFT for the purpose of resurrecting Action 2244 of 1996, he is exposing the property of the GFT to the risk of detriment, including costs orders against it in the event that the application is dismissed.
111 Layton J did make some findings about "Action 2244 of 1996", which was the proceeding compromised and settled by the 2000 Deed. This was the proceeding which, before Layton J, Mr Garrett was seeking to reopen, on the basis that the 2000 Deed had been "breached" and, or perhaps alternatively, terminated by the Garrett Family Trust: see Mildara Blass [2009] SASC 19 at [56].
112 At [58]-[59] Layton J describes the proceedings leading up to the 2000 Deed, and the Deed, in the following terms:
The brief background is that the action was commenced on 26 November 1996. The plaintiffs were Mr Garrett and the GFT. The Amended Statement of Claim pleaded various causes of action and the plaintiffs sought various remedies including damages and royalties in respect of a Licence Agreement and the use of the "Garrett Family" brand name for the making and selling of wine. FWE, the plaintiff by counterclaim, claimed that the named defendants by counterclaim were producing, selling and promoting wine in Australia in bottles bearing the mark "Andrew Garrett Winemaker" and other related marks, which was contrary to the Licence Agreement and also to the agreements for the purchase by FWE of the assets and intellectual property of the Andrew Garrett Group Pty Ltd.
On 26 July 2000, the GFT, FWE (which at the time was Mildara Blass Estates), International Vintners Pty Ltd and Andrew Garrett Vineyard Estates Pty Ltd, as well as Mr and Mrs Garrett personally, together with two other parties, Vinpack International Pty Limited and Andrew Garrett Wine Resorts Pty Limited (who are not parties to the action), entered into a Deed of Settlement to resolve proceedings. The Deed of Settlement is a comprehensive and complex 31 page document containing a number of separate agreements.
113 After describing some of the more relevant clauses in the 2000 Deed, and the fact that as a result of the conclusion of the Deed, consent orders were signed and filed dismissing Mr Garrett's claims and the counterclaims by the respondents to that proceeding, her Honour then set out (at [63]-[64]) the arguments made by Mr Garrett to support his application to have the consent orders set aside:
• That FWE has breached the Deed of Settlement in that it has failed to comply with terms, conditions and the tenure of the Deed of Settlement from the date of its execution "until today's date", being 30 April 2007. This includes failing to pay $600,000 per annum, and instead paying only $300,000 per annum, and failing to use best endeavours, which resulted in reducing the value of the Andrew Garrett name brand and associated marks by half.
• That the AGFT No 3 was entitled to receive the income from the Deed of Settlement at the direction of the GFT until the date of termination of the Deed of Settlement on 20 July 2006.
• That Mr Garrett had terminated the Deed of Settlement in his capacities as trustee of the Andrew Garrett Family Trust; the AGFT No 2 and the AGFT No 3, on 20 July 2006.
• That the institution by FWE of an action in the Victorian Supreme Court to pay monies due under the Deed of Settlement into the Victorian Supreme Court Litigants' Fund, which was later transferred by a cross-vesting action into the Federal Court, was contrary to the requirements of the Deed of Settlement.
114 Before dealing with each of these arguments in turn, I note the most obvious issue arising from these grounds is the contradiction between the assertion that the Deed of Settlement was terminated by Mr Garrett on 20 July 2006, and at the same time the assertion that FWE "continued" to breach the Deed of Settlement until 30 April 2007.
115 Clause 9 of the 2000 Deed is set out at [87] of Layton J's reasons for judgment. At [88] her Honour describes cl 9:
Clause 9 of the Deed of Settlement on one reading suggests that FWE was to pay royalties to "AMG", being the reference by definition to Mr Garrett. At the same time, there is a reference to payments being made into a bank account of the AGFT. The interpretation of this clause and the entity entitled to the income stream is the subject of other litigation discussed hereafter. I make no findings of fact which would impact on the outcome of that litigation.
116 The "other litigation" to which her Honour refers here is the interpleader litigation commenced in the Victorian Supreme Court. Her Honour describes this, and its cross-vesting, at [101]-[104]:
The circumstances in which FWE paid the income stream into court was as follows. The trustee in bankruptcy of Mrs Garrett's estate issued Federal Court proceedings in SAD 29/2005, claiming an entitlement to the income stream on behalf of her bankrupt estate. Following Mr Garrett's bankruptcy in September 2004, disputes arose as to who was entitled to the income stream. A number of parties asserted an entitlement to the FWE royalty payments, including Mr Shu Mu Tseng; Evajade Pty Ltd; Universal Holdings Pty Ltd; Mrs Garrett's trustee in bankruptcy; and Mr Garrett's trustee in bankruptcy. On 22 July 2005 FWE sought interpleader relief in the Supreme Court of Victoria, Proceeding No 7323 of 2005, seeking that it pay the income stream due under the Settlement Deed into court as a result of uncertainty of the terms of clause 9 of the Deed of Settlement and whether the income stream was payable to Mr Garrett or to the trustees of the Garrett Family Trust.
The interpleader relief was granted and FWE paid the income stream into the Victorian Supreme Court as a result of the Court's determination. Action 7323 of 2005 was later cross-vested to the Federal Court and became Federal Court Action Number SAD 5/2006. Thereafter monies have been paid by FWE into the Federal Court.
With regard to Mr Garrett's claim that FWE had breached the Deed of Settlement by paying monies due under the Deed of Settlement into the Victorian Supreme Court Litigants' Fund, apart from this being a subsequent event, it is untenable to allege that a payment in accordance with a court order would thereby amount to a breach of the Deed of Settlement. The money is clearly being held until such time as the Court makes a determination as to whom the monies should be paid. FWE contends that clause 9 of the Deed of Settlement is ambiguous. This is manifest by the interpleader action in the Victorian Supreme Court. These matters, together with Mr Garrett's flawed assertion that the AGFT No 3 is entitled to the royalty payments, underscores how untenable Mr Garrett's argument is with regard to an alleged breach by FWE.
In my view, there is no basis upon which Mr Garrett can properly argue that the Court orders appropriately obtained by FWE amount to a breach of the Deed of Settlement. In light of the disputes arising from the uncertainty of clause 9, the orders sought by FWE and made in the Federal Court were appropriate and necessary in the circumstances.
117 Thus, it is apparent that the construction of cl 9 was centrally in issue in the cross-vested proceedings which became SAD 5 of 2006. Those proceedings were amongst the proceedings settled by the Macks Deed to which I have referred above, and in respect of which consent orders disposing of SAD 5 of 2006 were agreed and filed by the parties, and subsequently made by the Court.
118 The compromise of the proceedings meant the proper construction of cl 9 was never the subject of judicial determination. Layton J did not determine it, as her Honour's observations at [88] make clear.
119 Her Honour's conclusions refusing Mr Garrett leave to reopen were expressed in the following terms (at [105]-[109]):
Considering the number of years that have elapsed since the matter settled, together with the entirely flawed nature of the application instituted by Mr Garrett to re-open this proceeding, in my view, there is no reasonably arguable basis for the application brought by Mr Garrett. It is a vexatious proceeding instituted by him asserting that a wrong has been done without in any way being able to substantiate his arguments. Moreover, Mr Garrett's attempt to put this argument on behalf of a trust suggests to me that he is using whatever means he can, in whatever capacity he can, to devise ways to try to establish standing to continue to litigate against FWE.
The application to re-open was filed on 3 May 2007. It came hot on the heels of a judgment delivered by Finn J on 2 March 2007 in Action Number SAD 12/2007, which Federal Court action in turn had been instituted by Mr Garrett on 24 January 2007.
In the Federal Court proceedings in Garrett v Foster's Wines Estates Ltd, Mr Garrett, purporting to act in a number of different capacities, sought to set aside the Asset Sale Agreement between the Wine Company Pty Ltd, Mildara Blass and Suntory Australia Pty Ltd. The application also sought an order that FWE pay to Andrew Morton Garrett in his capacity as Trustee of the AGFT No 3 the monies that would have been due under the Garrett Family Licence. The Asset Sale Agreement lay at the heart of the circumstances giving rise to the Deed of Settlement.
In the course of his reasons, Finn J referred to the Deed of Settlement entered into between FWE and other parties on 26 July 2000. His Honour noted that there was significant reference to this Deed of Settlement in the Statement of Claim, but indicated that Mr Garrett had accepted during the course of the hearings that the Deed of Settlement was not in issue in the proceedings before him. Nonetheless, Finn J noted that the documentation relied on by Mr Garrett with regard to the application sought "impermissibly, but irrelevantly for present purposes, to attack collaterally the leave given in the Supreme Court of Victoria."
This application was therefore yet another contrivance by Mr Garrett to re-agitate similar related matters in the Supreme Court to those which had failed in the Federal Court. This is yet another reason for being satisfied that this application constitutes the institution of a vexatious proceeding by Mr Garrett.
120 Layton J was concerned with the lawfulness of the payment into court by FWE in the interpleader proceedings. That conduct is not the subject of the current proceedings. The proper construction of cl 9 of the 2000 Deed clearly is. Mr Garrett was litigating that issue in SAD 5 of 2006, but then chose to compromise that proceeding. This in my opinion has unavoidable consequences for his ability to re-litigate the issues in this proceeding, but no res judicata is created.
121 The second finding relied on by the respondents in relation to their res judicata submissions is a finding by Lander J in Tseng [2008] FCA 1011. It is appropriate now to say a little more about those proceedings. Lander J described the issue in those proceedings (at [1]-[3] and [33]) as follows:
This is an application by Mr Andrew Garrett to be joined in the cross-claim in this proceeding as the sole trustee of the Garrett Family Trust. He also seeks an order that he be given leave to file a cross-claim in the action.
The claim in this proceeding has been disposed of. However, the trustee of the bankrupt estate of Mr Andrew Garrett and the trustee of the bankrupt estate of Mr Garrett's wife, Averil Garrett, have brought cross-claims seeking orders against a number of parties.
This application is opposed by the cross-claimants on the ground that the Garrett Family Trust does not exist and has never existed at any relevant time as a separate trust.
….
The sole question for determination is whether or not the Garrett Family Trust has ever existed. Mr Garrett has made different claims as to when the Trust was settled but his case on this application is that it exists as a separate trust. Mr Garrett has sought to establish the existence of the Garrett Family Trust by reference to a number of documents in which there is a reference to the Garrett Family Trust. The cross-claimants contend that any reference to the Garrett Family Trust in any document was in fact a reference to the Andrew Garrett Family Trust and that there was only ever one trust at the relevant time.
122 The respondents contend that the finding made by Lander J at [60] in this judgment creates res judicata against Mr Garrett as to his trade mark claims in this proceeding. Lander J said at [60]:
On 26 July 2000 Mr and Mrs Garrett, and Mr and Mrs Garrett as trustees of The Garrett Family Trust and other parties associated with them, entered into a settlement deed with Mildara and Vinpac International Pty Limited (the Deed of Settlement). The Deed of Settlement brought to an end the disputes which were raised by the proceedings in Action No 2244 of 1996. Effectively, that Deed gave ownership of all the intellectual property rights owned by Mr and Mrs Garrett and associated entities to Mildara which thereafter was entitled to market and sell wine and other products bearing the Andrew Garrett Trade Mark, the Garrett Trade Mark, the Garrett Family Trade Mark and the Stylised Script Trade Mark in Australia, New Zealand and Japan.
(Emphasis added.)
123 Lander J's findings on the issue before him appear at [120]-[122]:
I am satisfied, as the cross-claimants contend, that Mr Garrett has made a number of representations inconsistent with the existence of the Garrett Family Trust and has conducted his affairs inconsistently with the existence of that Trust. It was not until some two years into the litigation between the cross-claimants and Mr Garrett that he first asserted, as he has now, that in fact the Garrett Family Trust was entitled to the debt owed or income stream owing by Beringer Blass pursuant to clause 9 of the Deed of Settlement of 26 July 2000.
In my opinion, notwithstanding the occasional reference to the Garrett Family Trust in some of the transactional documents prior to 2000, there is not, and never has been, a separate entity called the Garrett Family Trust of which Mr Garrett or Mr and Mrs Garrett was or were the trustees.
Where the expression the Garrett Family Trust is used in the transactional documents, in my opinion, it is a reference to the Andrew Garrett Family Trust which was then the only relevant trust in existence.
124 The finding which I have extracted at [119] above is Lander J's finding of the effect, at the time, of the 2000 Deed. As I understand Mr Garrett's claims in this proceeding, he contends either he had and exercised an option to buy the trade marks back, alternatively he was entitled to but did not receive a right of first refusal if they were sold, as they were to the first respondent. Lander J's finding about ownership of the trade marks, at the time of the conclusion of the Deed, is a finding preliminary to the arguments Mr Garrett seeks to make. I do not consider this finding has the necessary operation in terms of res judicata to the claims now sought to be brought by Mr Garrett.
125 For the same reasons, there is no issue estoppel.
126 The approach I have taken does not preclude a finding, which I make at [195] below, that Lander J's finding about the non-existence of the Garrett Family Trust, and Mr Garrett's subsequent claims contrary to that finding, are clear examples of the persistent non-acceptance by Mr Garrett of judicial findings made against him. The proposed consent orders to which I have referred at [80] above are another example of the extreme level of non-acceptance of judicial findings exhibited by Mr Garrett.