Port of Melbourne Authority v Anshun Pty Ltd

High Court of Australia Gibbs C.J. Mason, Murphy, Aickin and Brennan JJ. Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45

The appellant, Port of Melbourne Authority ("the Authority"), hired a crane to the respondent, Anshun Pty. Ltd. ("Anshun"). While the crane was in use by Anshun on 21 December 1973 at Appleton Dock, Melbourne, for the purpose of handling cargo and other materials for the ship Mount Keira, a load of steel girders handled by the crane struck one Soterales and severely injured him. Soterales sued the Authority and Anshun for damages for personal injury for negligence. Soterales alleged that he was injured as a result of Anshun exposing him to unnecessary risk and/or as a result of the negligence of the servants or agents of Anshun. Further and in the alternative, Soterales alleged that he was injured as a direct result of the negligence or breach of statutory duty of the Authority, its servants or agents.

The Authority and Anshun claimed contribution from each other pursuant to s. 24 of the Wrongs Act 1958 Vict., each defendant serving on the other a notice claiming contribution under O. 16A, r. 16 of the Victorian Supreme Court Rules. The notice served by the Authority claimed contribution, but not an indemnity, notwithstanding the existence of an indemnity given by Anshun in an agreement dated 31 January 1968 between the Authority and Anshun which governed the hiring of the crane.

The indemnity was contained in cl. 3 (b) of the agreement. It was expressed in these terms:

The hirer shall indemnify and at all times keep indemnified the Commissioners their servants and agents against all actions, proceedings and claims whatsoever brought against the Commissioners or their servants or their agents in relation to any injury or loss of life whatsoever arising directly or indirectly out of or in any way attributable or incidental to the use of the plant during the period of the hire

The expression "the plant" was so defined as to include any wharf crane hired by the Authority to Anshun. The agreement contained a provision excluding the indemnity where the injury or loss of life was caused solely by the negligence of the Authority.

The action was heard by a judge and jury. The jury found a verdict for Soterales in the amount of $44,629.81. That sum was reduced by $4,346.73 repayable by Soterales to Anshun pursuant to s. 79 (2) of the Workers Compensation Act 1958 Vict.. The amount to be recovered by Soterales was then increased by $2,400 damages in the nature of interest pursuant to s. 79A of the Supreme Court Act 1958 Vict.. Judgment was entered in favour of Soterales against both defendants in the sum of $42,638.08, together with costs. (If this amount is correctly transcribed in the appeal book it appears to involve an arithmetical error, the correct figure being $42,683.08.) There were no pleadings in relation to the issue of contribution. It appears that the jury found both defendants liable in negligence to Soterales and that it was just and equitable that Anshun should recover contribution from the Authority to the extent of 90 per cent of Soterales' damages and that the Authority should recover from Anshun contribution to the extent of 10 per cent of the damages. The Authority paid 90 per cent of Soterales' damages and costs and Anshun paid the remaining 10 per cent.

Subsequently on 24 August 1977 the Authority commenced an action in the Supreme Court against Anshun claiming $53,632.89 by way of indemnity for the amount paid by it to Soterales and for legal costs and disbursements. The claim was based on the indemnity in the agreement. It is common ground that if the Authority is entitled to recover at all, it is entitled to judgment in the amount claimed.

Anshun's defence to the claim is one of estoppel, the substance of the defence being that the Authority could have raised its claim against Anshun in the Soterales action.

Anshun issued a summons for summary judgment. This summons came before O'Bryan J. who thought that the point was complex and that it was not clear that the defence would succeed. He dismissed the summons.

When the action came on for hearing there was no contest as to the facts. Anshun contended that the claim was barred as a matter of law or alternatively that it should be barred as a matter of discretion. The primary judge held that it was not a case of res judicata, that the Authority's claim had not ceased to exist by reason of the judgment in the Soterales action. He also found that it was not a case of issue estoppel. However, he held that the principle of Henderson v. Henderson [1] applied, and granted a perpetual stay on the ground that the claim was a matter which should have been raised in earlier litigation [2] . The Full Court on appeal agreed that, although it was not a case of issue estoppel, it was a case in which the Henderson v. Henderson principle applied. Whereas the primary judge held that he had a general discretion to grant or refuse a stay, the Full Court concluded that once it was determined that the matter of the agreement properly belonged to the first action and might have been brought forward in that litigation by the exercise of reasonable diligence, the primary judge [3] : "had a discretion only in the sense that, although negligence, inadvertence or even accident would not suffice to excuse, he was required to consider whether special circumstances existed in the sense that justice required the non-application of the general rule". The Full Court went on to consider whether "special circumstances" existed and, having decided that question in the negative, dismissed the appeal [4] .

1. (1843) 3 Hare 100, at pp. 114-115 [67 E.R. 313, at p. 319]. 2. [1980] V.R. 321. 3. [1981] V.R., at p. 89. 4. [1981] V.R. 81.

The Authority's case is that the indemnity issue was not part of the subject matter of the Soterales action, that it was not determined by the judgment in that litigation and that, accordingly, the Authority cannot now be prevented from litigating the issue by any form of estoppel. In any event the Authority submits that as a matter of discretion the action should not have been stayed.

Section 24 (2) of the Wrongs Act empowers the court to exempt any person from liability to make contribution and to direct that the contribution to be recovered from any person shall amount to a complete indemnity. There is some ambiguity in the sub-section in so far as it speaks of contribution amounting to a complete indemnity. Nevertheless it is sufficiently clear that the court has power to order that one party shall recover from another on the basis of an indemnity and in our opinion this power may be exercised in a case where an actual indemnity is established.

Although the right to an indemnity arises on payment of the liability to which it relates and not before, this is not a bar to the litigation as between a defendant and a third party, or as between defendants, of a claim based on an indemnity in respect of a liability in negligence asserted by the plaintiff in his action. It is accepted that under so-called "third party procedures" of the kind provided for by O. 16A, the claim to an indemnity may be litigated in the plaintiff's action, notwithstanding that the payment creating the right to indemnity is not made until after the amount of the plaintiff's verdict is ascertained in that action. It has been repeatedly affirmed that one of the peculiarities of third party procedure is that it enables litigation on the indemnity to take place before there is any liability (Hordern-Richmond Ltd. v. Duncan [5] ; Bitumen and Oil Refineries (Australia) Ltd. v. Commissioner for Government Transport [6] ). Consequently, the fact that liability under the indemnity had not arisen was no bar to the Authority asserting its claim to an indemnity in Soterales' action by means of a notice served on Anshun under O. 16A, r. 16.

1. [1947] 1 K.B. 545, at p. 552. 2. (1955) 92 C.L.R. 200.

At common law the existence of an indemnity is a defence to an action in respect of the liability to which the indemnity relates (Bullen and Leake, 3rd ed. (1868), p. 604; Cutler v. Southern [7] . Section 24(1)(c) of the Wrongs Act specifically excludes the right of one tortfeasor to recover contribution from another tortfeasor given by the section where the tortfeasor against whom recovery is sought is entitled to be indemnified by the tortfeasor seeking to recover contribution in respect of the liability in question. It follows that the indemnity, had it been pleaded and proved, would have been an answer to Anshun's claim for contribution against the Authority.

1. (1667) 1 Wms. Saund. 113, at p. 116 [85 E.R. 123, at p. 125].

Despite some suggestion to the contrary, there is no reason for thinking that the indemnity issue could not have been determined in the Soterales action. The fact that the indemnity was excluded if the injury was caused solely by the negligence of the Authority is a complication. But there was nothing to prevent determination of the indemnity issue after the determination of the plaintiff's claim against the two defendants involving, as it did, a finding of negligence against each defendant. Moreover, had the indemnity issue been raised and had it been determined in favour of the Authority, the apportionment issue would have disappeared from the case.

Indeed, by making a claim for contribution the Authority asserted a right which was inconsistent with the right which it asserts in the present action. In the Soterales action it might have asserted a right to indemnity and in the alternative a right to contribution. Instead, for reasons which have not been explained, the Authority confined itself to the claim for contribution.

The judgment which the Authority seeks to obtain in the present action is one which would contradict the judgment which has been entered in the Soterales action. The judgment in that action was that Anshun should recover contribution from the Authority to the extent of 90 per cent of Soterales' damages and costs and that the Authority should recover from Anshun contribution to the extent of 10 per cent of the damages and costs. The judgment which the Authority now seeks is one whereby the Authority recovers from Anshun the whole of Soterales' damages and costs. It is this inconsistency between the judgment obtained in the first action and the judgment sought to be obtained now that is of importance.

The distinction between res judicata (in England called "cause of action estoppel") and issue estoppel was expressed by Dixon J. in Blair v. Curran [8] in these terms: "in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order."

The distinction was restated by Fullagar J. in his dissenting judgment in Jackson v. Goldsmith [9] . His Honour expressed the rule as to res judicata by saying: "where an action has been brought and judgment has been entered in that action, no other proceedings can thereafter be maintained on the same cause of action. This rule is not, to my mind, correctly classified under the heading of estoppel at all. It is a broad rule of public policy based on the principles expressed in the maxims " interest reipublicae ut sit finis litium " and " nemo debet bis vexari pro eadem causa. " " His Honour went on to discuss issue estoppel, citing the comment of Dixon J. in Blair v. Curran [10] : "A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies."

1. (1950) 81 C.L.R. 446, at p. 466. 2. (1939) 62 C.L.R., at p. 531.

The difference between res judicata (cause of action estoppel) and issue estoppel has been expressed in similar terms in the House of Lords - see Carl Zeiss Stiftung v. Rayner & Keeler Ltd. [11] .

Subject to an examination of the application of the principle in Henderson v. Henderson [12] , it is evident from the discussion which has already taken place that this is not a case of res judicata. The rule as to res judicata comes into operation whenever a party attempts in a second proceeding to litigate a cause of action which has merged into judgment in a prior proceeding. Here the indemnity cause of action was not litigated in the Soterales proceedings. The judgment in that case did not deal with that cause of action, though it evidently proceeded on the assumption that the Authority was not entitled to an indemnity.

For a similar reason this is not a case of issue estoppel in the strict sense. The Full Court was correct in deciding that the existence of an indemnity is a defence to a claim for contribution under s. 24 (1) (c) of the Wrongs Act and that the absence of an indemnity is not an ingredient in the cause of action for contribution. It was not a necessary step to the decision that Anshun was entitled to contribution for the Court to decide that the Authority was not entitled to an indemnity against Anshun: Carl Zeiss [13] . Had the Authority pleaded the indemnity as a defence to Anshun's claim for contribution, a decision on that defence would have been a necessary step to the ultimate decision that Anshun was entitled to contribution. The defence of indemnity not having been raised, the judgment for Anshun did not involve a determination of that issue.

The critical issue, then, is whether the case falls within the extended principle expressed by Sir James Wigram V.C. in Henderson v. Henderson [14] . The Vice-Chancellor expressed the principle in these terms:

where 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 (except under 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. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time. 1. (1843) 3 Hare, at p. 115 [67 E.R., at p. 319].

The existence of the principle has been affirmed by the Judicial Committee on four occasions (Hoysted v. Federal Commissioner of Taxation [15] ; Kok Hoong v. Leong Cheong Kweng Mines Ltd. [16] ; Yat Tung Investment Co. Ltd. v. Dao Heng Bank Ltd. [17] ; Brisbane City Council v. Attorney-General (Q.) [18] ). See also Carl Zeiss [19] ). In two of these cases the principle was applied so as to shut out litigation of an issue which could and should have been litigated in the earlier proceedings.

1. (1925) 37 C.L.R. 290, at p. 303; [1926] A.C. 155, at p. 170. 2. [1964] A.C. 993, at pp. 1010-1011. 3. [1975] A.C. 581. 4. [1979] A.C. 411, at p. 425. 5. [1967] 1 A.C., at pp. 915-916, 966.

Although it has been said that the principle operates so as to extend the doctrines of issue estoppel as well as res judicata, its application to cases of issue estoppel is to be treated with caution. Lord Wilberforce in Carl Zeiss [20] observed that Henderson v. Henderson was an instance of res judicata. Lord Reid in the same case [21] noted that confusion had been introduced by applying to issue estoppel without modification rules designed to deal with res judicata.

1. [1967] 1 A.C., at p. 966. 2. [1967] 1 A.C., at p. 916.

Indeed, for a long time Wigram V.C.'s statement did not express the principle that was applied to a case in which it was contended that a party, whether plaintiff or defendant, was estopped from asserting a matter in a new action by reason of his failure to plead that matter as a defence in an earlier action. As applied to such a case Wigram V.C.'s statement of principle suggests that there will be an estoppel except in special circumstances. The English and United States authorities establish that this was certainly not the law and that it was only an omission to deny by way of a defence a traversable allegation that gave rise to an estoppel. In Howlett v. Tarte [22] Willes J. went so far as to say: "nobody ever heard of a defendant being precluded from setting up a defence in a second action because he did not avail himself of the opportunity of setting it up in the first action."

1. (1861) 10 C.B. (N.S.) 813, at p. 827 [142 E.R. 673, at p. 679].

However, it seems that Williams J. in the same case expressed the proposition with greater accuracy when he said [23] : "if the defendant attempted to put upon the record a plea which was inconsistent with any traversable allegation in the former declaration, there would be an estoppel."

1. (1861) 10 C.B. (N.S.), at p. 826 [142 E.R., at p. 678].

In considering whether failure to plead a defence available in an earlier action gives rise to an estoppel in subsequent litigation, early authorities distinguished between failure to traverse an allegation made by the other side and failure to plead affirmative matters which would not have conflicted with any traversable allegation, e.g. a plea by way of confession and avoidance. The general rule was that a general adverse decision imported also a particular adverse decision on any traversable allegation made by the successful party which the unsuccessful party omitted to traverse but did not import an adverse decision as to affirmative matters which, if pleaded, would not have conflicted with any traversable allegation. This appears to have been the basis of the judgment of Williams J. in Howlett v. Tarte. See also Field J. in Cromwell v. County of Sac. [24] ; Spencer-Bower and Turner, Res Judicata, 2nd ed. (1969), pp. 165-167 and Halsbury's Laws of England, 4th ed., vol. 16, par. 1533. Thus in Davis v. Hedges [25] a plaintiff was not precluded from claiming damages for non-performance and improper performance of work by reason of his failure to raise this claim when earlier sued by the defendant for the price of the work alleged to have been improperly done.

1. (1876) 94 U.S. 351, at pp. 356-357 [24 Law. Ed. 195, at p. 199]. 2. (1871) L.R. 6 Q.B. 687.

A similar distinction seems to have been drawn in the United States. 46 American Jurisprudence 2d., Judgments, par. 433 states:

the general rule is that a judgment in a prior action in which a claim might have been but was not asserted as a setoff, counterclaim, or cross action does not conclude the defendant and is no bar to a subsequent independent action based on the claim An Annotation, A.L.R. vol. 8 (1920) 694, at p. 695 says: The general rule is that a defendant, having a claim available by way of set-off, counterclaim, or cross petition, has an election so to plead it, or to reserve it for a future independent action, and a prior action in which a claim might have been asserted as a set-off, counterclaim, or cross petition is no bar to a subsequent independent action thereon.

If a defendant did elect in the first action to raise a plea which did not traverse the allegation of the other party and which could have been pleaded as a counterclaim or set-off he would be bound by a general adverse decision (Davis v. Hedges [26] ; in the United States, Brown v. First National Bank of Newton, Kansas [27] ).

1. (1871) L.R. 6 Q.B., at p. 692. 2. (1940) 132 F. 450.

There were several reasons why a distinction was drawn between the effect of failure to plead to traversable allegations and failure to raise matters which could be pleaded as a counterclaim or set-off. Some, but not all, are still applicable. The right to plead by way of cross-claim or set-off is a relatively modern development for the benefit of defendants. (See Davis v. Hedges [28] , per Hannen J. speaking for Blackburn J. and himself and Merchants Heat and Light Co. v. Clow & Sons [29] , per Holmes J. delivering the opinion of the Court.) To require that the defendant always raise his cross-claim or set-off at the first available time could cause great inconvenience. Hannen J. in Davis v. Hedges [30] noted that an action for the price of goods delivered or work performed may be maintainable before it is possible for a defendant to ascertain the extent to which breach of warranty or breach of contract may afford a defence.

1. (1871) L.R. 6 Q.B., at p. 690. 2. (1907) 204 U.S. 286, at pp. 289-290 [51 Law. Ed. 488, at pp. 489-490]. 3. (1871) L.R. 6 Q.B., at p. 640.

Other justifications suggested for the distinction such as that consequential damages could not be recovered (Davis v. Hedges [31] ) or the old rule against double pleading (Howlett v. Tarte [32] ) are no longer relevant to the post Judicature Acts system (see Hoysted [33] ).

1. (1871) L.R. 6 Q.B., at p. 691. 2. (1868) 10 C.B. (N.S.), at p. 828 [142 E.R., at p. 679]. 3. (1925) 37 C.L.R., at p. 302; [1926] A.C., at pp. 168-169.

This may explain why the old distinction between allegations which are traversable and those which are not is not always rigorously applied. Spencer-Bower and Turner (p. 165) notes that "according to the more recent authorities, an allegation may be "traversable", for the purposes of the rule, not only when it is express and direct, but also when it is reasonably implied." Thus in Humphries v. Humphries [34] in an action upon an agreement for a lease the Court of Appeal held that there is an implied allegation that the agreement is valid so that a defendant could not in subsequent litigation with the plaintiff allege for the first time that it did not conform with s. 4 of the Statute of Frauds. Even so, in the judgment of the Court delivered by Farwell L.J. the decision is expressed to be based on the statement of principle by Williams J. in Howlett v. Tarte.

That statement of principle became less instructive as the old rules of pleading became obsolete. The remarks of Wigram V.C. did not suffer from this disadvantage: they were not tied to the elements of common law pleading. It is significant that in Hoysted both statements were approved. Subsequently, Viscount Radcliffe in Kok Hoong [35] noted that the effect of the judgments in Howlett v. Tarte is that a defendant "is estopped only from asserting something which, if pleaded in the earlier action, would have amounted to a direct traverse of what was there asserted" and that "if what he wishes to set up in the second action would have been matter only for a plea by way of confession and avoidance or, it seems, a special plea in the first action, there is no estoppel." He went on to observe, rightly in our opinion, that this formula, based on an obsolete and complicated system of pleading, was of limited utility in resolving questions of estoppel. For this reason, it was jettisoned in favour of the formulation by Wigram V.C.

However in Yat Tung [36] the adoption of the principle in Henderson v. Henderson [37] was taken too far. Lord Kilbrandon spoke of it becoming "an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings" [38] . As we have seen, this statement is not supported by authority. And if we are to discard the traditional statement of principle because it was linked to the rules of common law pleading, there is no reason for rejecting the powerful arguments based on considerations of convenience and justice which were associated with it.

1. [1975] A.C. 581. 2. (1843) 3 Hare 100 [67 E.R. 313]. 3. [1975] A.C., at p. 590.

Lord Kilbrandon's remarks go further than the statement of Somervell L.J. in Greenhalgh v. Mallard [39] which was recently approved by Lord Wilberforce in Brisbane City Council [40] . Somervell L.J. had said: " res judicata for this purpose is not confined to the issues which the court is actually asked to decide, but it covers issues or facts which are so clearly part of the subject-matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them." Yet, Greenhalgh v. Mallard and Brisbane City Council, unlike Yat Tung, were not cases in which the alleged estoppel arose from a defendant's failure to plead a defence. They were cases in which it was argued that a plaintiff was estopped from bringing a new proceeding by reason of dismissal of an earlier action.

1. [1947] 2 All E.R. 255, at p. 257. 2. [1979] A.C., at p. 425.

In these cases in applying the Henderson v. Henderson principle to a plaintiff said to be estopped from bringing a new action by reason of the dismissal of an earlier action, Somervell L.J. and Lord Wilberforce insisted that the issue in question was so clearly part of the subject matter of the initial litigation and so clearly could have been raised that it would be an abuse of process to allow a new proceeding. Even then the abuse of process test is not one of great utility. And its utility is no more evident when it is applied to a plaintiff's new proceeding which is said to be estopped because the plaintiff omitted to plead a defence in an earlier action.

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. 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. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, 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. See the illustrations given in Cromwell v. County of Sac. [41] .

It has generally been accepted that a party will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment. In this respect the discussion in Brewer v. Brewer [42] is illuminating.

There it was held that the wife's omission to plead matters which would have constituted a discretionary bar to her husband's suit for dissolution of marriage on the ground of adultery did not estop her from raising those matters in subsequent proceedings for maintenance. Fullagar J., with whom Dixon C.J. agreed, said [43] :

In Hoysted's Case [44] the Commissioner was not merely seeking to raise on the second appeal a point which he might have raised but had omitted to raise on the first appeal. He was seeking to raise a point which could not be decided in his favour consistently with the decision on the first appeal. The point had not been argued on the first appeal, and there was therefore no express decision on the point. But the Commissioner had allowed it to be assumed against him, and the assumption was fundamental to the decision in the sense that, if the assumption had not been made, the decision must have been different. As Somervell L.J. said: - "He was therefore seeking to obtain an order which was on the face of it and in form in direct conflict with the order which had been made previously" [45] . The point in question had been " the groundwork of the decision itself, though not then directly the point at issue" (per Coleridge J. in Reg. v. Township of Hartington [46] ). This was also the conclusion reached by Williams, Webb and Taylor JJ. [47] . 1. (1953) 88 C.L.R., at p. 15. 2. (1925) 37 C.L.R. 290; [1926] A.C. 155. 3. [1949] Ch., at p. 360. 4. (1855) 4 El. & Bl. 780, at p. 794 [119 E.R. 288, at p. 293]. 5. (1953) 88 C.L.R., at p. 10.

The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgments is obviously an important factor to be taken into account in deciding whether the omission to plead can found an estoppel against the assertion of the same matter as a foundation for a cause of action in a second proceeding. By "conflicting" judgments we include judgments which are contradictory, though they may not be pronounced on the same cause of action. It is enough that they appear to declare rights which are inconsistent in respect of the same transaction.

It is for this reason that we regard the judgment that the Authority seeks to obtain as one which would conflict with the existing judgment, though the new judgment would be based on a different cause of action, a contractual indemnity.

Taking into consideration the relevant factors we conclude that the Full Court was right in holding that there was an estoppel. The matter now sought to be raised by the Authority was a defence to Anshun's claim in the first action. It was so closely connected with the subject matter of that action that it was to be expected that it would be relied upon as a defence to that claim and as a basis for recovery by the Authority from Anshun. The third party procedures were introduced to enable this to be done. If successful, the indemnity case would have obviated an inquiry into contribution. If reserved for assertion in a later action, it would increase costs and give rise to a conflicting judgment.

The Authority did not adduce evidence at the trial to show why it failed to raise the indemnity issue in the first action. Apart from considerations such as the ability to overcome any prejudice to Anshun by orders for costs and the fact that O'Bryan J. refused to strike out the action summarily - matters mainly associated with the conduct of this action - the Authority's case is that the principle in Henderson v. Henderson [48] does not apply.

There is, however, one other factor which should be mentioned. It is that the defence of an indemnity required to be specially pleaded at common law. It was not covered by a general or particular traverse. Consequently the failure to plead it would not have founded an estoppel under the old law in its strictest formulation. But the evolutionary development of that rule evidenced by the decision in Humphries v. Humphries [49] may well have resulted in releases and indemnities being equated to traversable allegations for the purposes of estoppel. In any event the fact that the defence required to be specially pleaded at common law is not now a material consideration. It does not derogate from the conclusion that it was unreasonable for the Authority to refrain from raising its case of indemnity for disposition in the first action.

I prefer not to attempt to formulate an exhaustive theory of res judicata or issue estoppel in order to determine this case by application of such theory. These notions of res judicata and issue estoppel are founded on the necessity, if there is to be an orderly administration of justice, of avoiding re-agitation of issues, and of preventing the raising of issues which could have been and should have been decided in earlier litigation.

In this instance, the issue now sought to be raised was plainly open to be agitated in the previous litigation. The judgment in that case is inconsistent with the judgment now sought by the plaintiff. To preserve the orderly administration of justice the earlier judgment should be treated as conclusive on the question of indemnity. There is no discretion to allow the raising of that issue against the unwilling defendant; the attempt to do so is properly characterized as an abuse of process. The appeal should be dismissed.

In an action in the Supreme Court of Victoria one Alex Soterales alleged that he was tortiously injured in the course of his employment when he was struck by a metal girder suspended from a crane. The crane had been hired by the Port of Melbourne Authority (the Authority) to Anshun Pty. Ltd. (Anshun). Anshun was Soterales' employer. Soterales sued the Authority and Anshun for damages, alleging negligence against Anshun and negligence and breach of statutory duty against the Authority. At the trial of the action before a judge and jury Soterales obtained a verdict against the two defendants. The jury assessed the plaintiff's damages. The damages as assessed were adjusted to provide for repayment of workers' compensation and for a payment in the nature of interest and consequently judgment was entered against both defendants for $42,683.08 and for costs.

In those proceedings, the Authority had given to Anshun a notice claiming "to be entitled to indemnity or contribution from you in respect of any sum which the Plaintiff may recover herein against it to the extent of any such amount as may be found to be just and equitable by the Court having regard to your responsibility for such damages on the ground that your negligence as set forth in the Statement of Claim herein was the cause of or contributed to the happening of the said accident." A notice in similar terms was given by Anshun to the Authority.

There were no other pleadings in the proceedings between the two defendants. The notices were given by the Authority and Anshun in order to claim the relief to which a concurrent tortfeasor is entitled by reason of s. 24 (1) (c) of the Wrongs Act 1958 Vict.:

any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage (whether as a joint tort-feasor or otherwise) so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability in respect of which the contribution is sought.

The jury found that it was just and equitable that Anshun should recover contribution from the Authority to the extent of 90 per cent of Soterales' damages and that the Authority should recover from Anshun contribution to the extent of 10 per cent of those damages. Judgment was thereafter entered in the proceedings between the defendants, making adjustments appropriate to allow for the amounts of workers' compensation already paid to Soterales, the apportionment of liability for the payment of workers' compensation (pursuant to s. 62 (2) of the Workers Compensation Act 1958 Vict.), and the payment of interest and Soterales' costs. The judgment for the Authority against Anshun, following the jury's finding with respect to contribution between the defendants, ordered that if Soterales should recover from the Authority an amount in excess of $41,982.16 plus nine-tenths of Soterales' taxed costs, the Authority should be at liberty to enter judgment against Anshun for the amount of the excess together with the costs of entering the judgment. The judgment for Anshun against the Authority gave effect to the jury's finding that Anshun should bear only 10 per cent of the judgment in favour of Soterales and, after making the adjustments referred to, ordered that if the plaintiff should recover from Anshun an amount in excess of $790.92 plus one-tenth of Soterales' taxed costs, Anshun should be at liberty to enter judgment against the Authority for the amount of the excess together with the costs of entering the judgment. In conformity with these orders (hereinafter referred to as the contribution orders), the Authority paid to Soterales the sum of $48,057.16.

The crane hiring agreement between the Authority and Anshun provided that Anshun should indemnify the Authority

against all actions in relation to any injury or in respect of any damage to any property or financial or other consequential loss or for or in respect of any other loss, injury expense or damage whatsoever arising directly or indirectly out of or in any way attributable or incidental to the use of the plant during the period of the hire PROVIDED THAT this sub-clause shall not apply where -

(ii) such injury, loss of life, loss, damage or expense was caused solely by the negligence of [the Authority]

It is common ground that the jury's finding establishes that both the Authority and Anshun were negligent. Subsequently, in a second action - the action out of which this appeal arises - the Authority sued Anshun upon the indemnity for the amount recovered by Soterales from the Authority ($48,057.16) and for the Authority's own costs and disbursements ($5,575.73).

It is conceded that, if it were not for the defences presently to be mentioned, the Authority would be entitled in the present action to a judgment in an amount agreed upon by the parties. Those defences depend upon the contribution orders in the first action.

The second action came on for hearing before McGarvie J. in the Supreme Court of Victoria. Anshun's defences were that "the Authority is barred as a matter of law or should be barred as a matter of discretion from maintaining its present action, because of claims made and determined between the Authority and Anshun in Soterales' action, or because of claims which should have been made and defences which should have been raised in that action, but were not".

Clearly enough, the indemnity under the crane hiring agreement might have been raised in the contribution proceedings and would have determined the orders made between the Authority and Anshun in those proceedings; but the indemnity was not raised prior to the entry of judgment in the first action. Although Soterales' judgment debt was a liability in respect of which the contribution orders were made in the first action and is a liability in respect of which the Authority asserts a right to full indemnity in the second action, McGarvie J. held that the Authority's claim to an indemnity was not a cause of action litigated in the first action and it had not been negated by the judgment in that action. His Honour held that the claim for an indemnity was not res judicata. His Honour further held that, as the issue whether the Authority was entitled to an indemnity from Anshun had not been raised or decided in the contribution proceedings, a defence of issue estoppel had not been made out. However, in reliance upon a passage in the judgment of Wigram V.C. in Henderson v. Henderson [50] , his Honour held that a court may exercise a discretionary power, in order to prevent abuse of its process, to preclude a party from relying on a cause of action or raising an issue which he could and should have relied on or raised in an earlier proceeding between himself and the other party.

1. (1843) 3 Hare 100, at p. 115 [67 E.R. 313, at p. 319].

McGarvie J. found that in all the circumstances the second action to enforce the indemnity was an abuse of the Court's process, and stayed the action in the exercise of his discretion [51] . The Full Court dismissed an appeal from his Honour's order holding, however, that the discretion was more confined than his Honour conceived it to be. The Full Court held that, unless special circumstances were shown, there was no discretion to allow the matter to proceed once it was determined that the matter of the agreement entitling the Authority to an indemnity properly belonged to the subject of the earlier litigation and might have been brought forward then by the Authority, excercising reasonable diligence. The trial judge "had a discretion only in the sense that, although negligence, inadvertence or even accident would not suffice to excuse, he was required to consider whether special circumstances existed in the sense that justice required the non-application of the general rule" [52] . The Full Court found that special circumstances did not exist "in the necessary sense" and dismissed the appeal [53] . I agree in the conclusion at which McGarvie J. and the Full Court arrived, though I reach it by a different path.

1. [1980] V.R. 321. 2. [1981] V.R., at p. 89. 3. [1981] V.R. 81, at p. 90.

The contribution orders determined the extent to which the Authority and Anshun should respectively bear the burden of Soterales' judgment debt, and defined the rights of each to be indemnified by the other if the party seeking the indemnity satisfied more than that amount of Soterales' judgment debt which was to be borne by it: the contribution orders respectively imposed on the Authority a liability to bear $41,892.16 and nine-tenths of Soterales' costs and on Anshun a liability to bear $790.92 and one-tenth of Soterales' costs. In the second action, the Authority seeks a judgment by which Anshun would indemnify the Authority for the amount paid by the Authority to Soterales, and thus the respective liabilities defined by the contribution orders are inconsistent with the liability sought to be established in the second action. The remedy sought in the second action is inconsistent with the remedy which the contribution orders effect.

Unless a judgment recovered after litigation between parties is reversed or set aside, it binds the parties and determines their rights and liabilities inter se according to its tenor (Livesey v. Harding [54] ; Peareth v. Marriott [55] ; Thompson v. Thompson [56] ; Badar Bee v. Habib Merican Noordin [57] ). "It is most clear", said Lord Mansfield in Moses v. Macferlan [58] , "that the merits of a judgment can never be over-haled by an original suit, either at law or in equity. Till the judgment is set aside, or reversed, it is conclusive, as to the subject matter of it, to all intents and purposes." No civil proceedings which impugn a judgment can be brought by parties bound by the judgment except proceedings to have it reversed or set aside (Cabassi v. Vila [59] , per Williams J.). An action to recover a second judgment giving more copious relief than the relief given by the first judgment cannot be brought merely because the evidence was not properly prepared in the first action (Marriot v. Hampton [60] ; Wilson v. Ray [61] ) nor merely because some point was omitted from the argument then put to the court (Greathead v. Bromley [62] ). Both public policy and the interests of the litigants require that there should be an end to litigation as to a particular subject matter once a judgment determining the rights and liabilities of the parties as to that matter has been recovered (Lockyer v. Ferryman [63] ).

1. (1855) 21 Beav. 227 [52 E.R. 846]. 2. (1882) L.R. 22 Ch. D. 182. 3. [1923] 2 Ch. 205, at p. 214. 4. [1909] A.C. 615. 5. (1760) 2 Burrell 1005, at p. 1009 [97 E.R. 676, at p. 678]. 6. (1940) 64 C.L.R. 130, at p. 148. 7. (1797) 7 T.R. 269 [101 E.R. 969]. 8. (1839) 10 Ad. & E. 82 [113 E.R. 32]. 9. (1798) 7 T.R. 455 [101 E.R. 1073]. 10. (1877) L.R. 2 A.C. 519, at p. 530.

In the present case, as the parties are bound by the contribution orders determining the respective liabilities of the Authority and Anshun inter se to satisfy Soterales' judgment, and as the remedy sought in the second action is inconsistent with the rights and liabilities judicially defined by the contribution orders, the second action cannot be maintained. If it were otherwise, there would be concurrent and inconsistent judgments, the first entitling Anshun to payment by the Authority of any amount paid by Anshun in satisfaction of Soterales' judgment in excess of $790.92 plus one-tenth of Soterales' taxed costs, and the second requiring Anshun to pay that amount to the Authority; the Authority would recover judgment against Anshun for an amount which it had paid not only in satisfaction of Soterales' judgment but also in discharge of its liability to Anshun under the contribution orders. So incongruous a result can be avoided (in the absence of an application to reverse or set aside the contribution orders) by staying the second action, and accordingly the stay order was rightly made.

The recovery of a judgment which declares or enforces rights or liabilities between parties inconsistent with an earlier judgment binding upon them is precluded by the operation of the rules of estoppel and res judicata. These rules may operate concurrently in particular cases according to the causes of action litigated and the issues arising in each proceeding (see Stewart v. Todd [64] ). In the present case, the issues of fact which are common to the first and the second action were found in the first action and the parties are estopped by those findings in the second action. The facts are that the Authority and Anshun were concurrent tortfeasors, that both of them contributed (in the proportion 90:10) to Soterales' loss and damage, that Soterales' damages were assessed in a particular amount, that Soterales had received workers' compensation payments which were taken into account in the judgment entered in his favour, and that Soterales recovered a judgment against the Authority and Anshun in the amount of $42,683.08 and costs. Upon those facts and in reliance upon the hiring agreement the Authority asserts a right of indemnity.

The contractual indemnity was not in issue in the first action; the claims made in the contribution proceedings arose out of s. 24 (1) (c) of the Wrongs Act, not out of the indemnity. Though Anshun's claim against the Authority might have been defeated by proof of the indemnity, there is no estoppel against proving in the second action a fact which "would have been a matter only for a plea by way of confession and avoidance or, it seems, a special plea in the first action" (Kok Hoong v. Leong Cheong Kweng Mines Ltd. [65] , per Viscount Radcliffe). And so no estoppel is raised against the Authority which prevents it from proving the indemnity. The Authority submits that the right arising from the indemnity is a different cause of action from the right to a contribution order under s. 24 (1) (c), so that the merger of the latter cause of action in the contribution orders leaves the former cause of action unaffected.

There is an imprecision in the meaning of the term cause of action, which is sometimes used to mean the facts which support a right to judgment (see per Williams J. in Carter v. Egg and Egg Pulp Marketing Board (Vict.) [66] ); sometimes to mean a right which has been infringed (see Serrao v. Noel [67] ), and sometimes to mean the substance of an action as distinct from its form (see Krishna Behari Roy v. Brojeswari Chowdranee [68] ). Imprecision in the meaning of cause of action tends to uncertainty in defining the ambit of the rule that a judgment bars subsequent proceedings between the same parties on the same cause of action. The foundation of the rule, whether it be termed res judicata, or cause of action estoppel or judgment recovered, is the merging of the cause of action in the judgment. In reference to res judicata, Dixon J. said in Blair v. Curran [69] : "the very right or cause of action claimed or put in suit has passed into judgment, so that it is merged and has no longer an independent existence "

1. (1942) 66 C.L.R. 557, at pp. 600, 601. 2. (1885) L.R. 15 Q.B.D. 549. 3. (1875) L.R. 2 Ind. App. 283. 4. (1939) 62 C.L.R. 464, at p. 532.

If cause of action is taken to mean a right, the rule is stated in terms of the passing of the right into judgment, and the rule precludes a party bound by the judgment from maintaining against another party bound by it any subsequent proceeding to recover a judgment giving a remedy to enforce or to compensate for an infringement of that right. The rule does not preclude litigation seeking a remedy to which a party is entitled in virtue of a different right from that which was first put in suit provided that the facts which support the right sued upon in the second action are not the same facts as those supporting the right which passed into the first judgment: thus in Brunsden v. Humphrey [70] where the same act of negligence caused damage to the plaintiff's property and injury to the plaintiff's person it was held that different rights were infringed and that an action for damages for personal injury was not barred by recovery of a judgment for damage to property.

If cause of action is taken to mean the facts which support a right to judgment, the rule of res judicata bars an action for relief founded upon the same facts as those upon which an earlier judgment was recovered, though the right sued upon in the second action is different from the right which passed into or was negated by the earlier judgment. Thus in Lemm v. Mitchell [1] a plaintiff in Hong Kong who failed in an action for criminal conversation because that right of action had been abolished by Ordinance could not sue when that right of action was retrospectively revived by a subsequent Ordinance.

When the same facts support rights to different remedies against the same defendant, the plaintiff cannot recover a judgment giving a remedy in respect of more than one right (United Australia Ltd. v. Barclays Bank Ltd. [2] ; Mahesan v. Malaysia Housing Society [3] ). He may pursue his remedies concurrently in the same action, but he is put to his election before judgment as to which remedy he shall have. And when judgment is entered, all of the rights which he might have claimed in that litigation are merged in the judgment. Lord Atkin in United Australia Ltd. v. Barclays Bank Ltd. [4] defined the effect of a judgment upon alternative remedies:

Up to that stage the plaintiff may pursue both remedies together, or pursuing one may amend and pursue the other: but he can take judgment only for the one, and his cause of action on both will then be merged in the one. 1. [1941] A.C. 1. 2. [1979] A.C. 374. 3. [1941] A.C., at p. 30.

The party entitled to relief cannot improve his position by bringing separate actions. Though he may elect between inconsistent remedies pursued in the one action, or between the actions to be pursued in order to recover a judgment giving the remedy he chooses, the merger in the judgment first recovered of a right to another remedy takes effect by operation of law. When those rights (or causes of action) are extinguished, no further litigation may be pursued to recover a second judgment upon them.

Accordingly, inconsistency between judgments against the same defendant is avoided by the merger in the judgment first recovered of the right to the remedy thereby given and of all other rights which arise on the same facts. Thus, a plaintiff who recovers a judgment for damages in assumpsit is precluded from recovering a judgment for damages in tort arising out of the same facts (per Lord Atkin in United Australia Ltd. v. Barclays Bank Ltd. [5] ); a principal who recovers a judgment for damages in fraud against his bribed agent is precluded from recovering a judgment in the amount of the bribe as moneys had and received to his use (Mahesan v. Malaysia Housing Society [6] ); and a party whose goods have been wrongfully seized and who recovers in replevin, is precluded from recovering a judgment for damages in trespass to goods (Gibbs v. Cruikshank [7] ). A passage from the judgment of Willes J. in Nelson v. Couch [8] reveals the breadth of the rule and a limitation upon its application:

The plea sets up the exception of res judicata, and therefore must shew either an actual merger or that the same point has already been decided between the same parties Where the cause of action is the same, and the plaintiff has had an opportunity in the former suit of recovering that which he seeks to recover in the second, the former recovery is a bar to the latter action. To constitute such former recovery a bar, however, it must be shewn that the plaintiff had an opportunity of recovering, and but for his own fault might have recovered, in the former suit that which he seeks to recover in the second action. 1. [1941] A.C., at p. 28. 2. [1979] A.C. 374. 3. (1873) L.R. 8 C.P. 454. 4. (1863) 15 C.B. (N.S.) 99, at pp. 108, 109 [143 E.R. 721, at pp. 724, 725].

The Authority had an opportunity in its proceedings against Anshun in the first action to seek an order that Anshun indemnify it against its liability to Soterales, though the Authority had not then satisfied Soterales' judgment in whole or in part. The Authority did not take that opportunity, and now it cannot pursue the remedy of full indemnity so long as the contribution orders stand. The right of indemnity arises upon the same facts as those which founded the contribution orders, and the cause of action upon which the Authority relies to maintain the second action merged in the contribution orders. No doubt it would be necessary in the second action to prove the hiring agreement, a fact additional to the facts upon which the contribution orders were founded. But the agreement is solely the source of the legal right; it is not one of the facts which, fulfilling the conditions of the indemnity clause, support the right of indemnity in the relevant sense. The facts which support the right of indemnity are the facts on which the contribution orders were founded.

As the Authority's right of indemnity merged in the contribution orders, the second action is barred. There is no discretion to be exercised. The view that there is a discretion or power to prevent the litigation of a cause of action which has not merged in a judgment stems from the judgment of Wigram V.C. in Henderson v. Henderson [9] . The Vice-Chancellor spoke of the court's requirement that the parties bring forward their whole case, and said that the court "will not (except 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 he professed no novelty in what he was saying; he appears to have had in mind the principles which governed the discretion to give leave to file a bill of review to impeach a decree.

At that time, it was necessary to obtain the leave of the court to file a bill of review to reverse a decree which had been signed and enrolled where the bill was on the ground of the discovery of some new matter - ordinarily evidence of matters which had been in issue in the suit - which "might probably have occasioned a different determination" (Mitford's Chancery Pleadings, pp. 84-85; 5th ed. (1847), pp. 102, 103). The granting of leave was discretionary (Wilson v. Webb [10] ), and leave would be refused if the new matter could have been discovered with "reasonably active diligence" (Young v. Keighly [11] ). Unless the court gave leave to file a bill of review to permit the parties to reopen the issues concluded by the decree, the rule of res judicata put an end "to every point which properly belonged to the subject of litigation". The Vice-Chancellor does not assert the existence of a power to stay a proceeding upon a cause of action which has not merged in a decree. He expresses no exception to the operation of the rule of res judicata, though he refers to the possibility of reversing a judgment by a bill of review and thereby removing the foundation upon which the rule operates.

1. (1788) 2 Cox 3 [30 E.R. 2]. 2. (1809) 16 Ves. Jun 348 [33 E.R. 1015].

Although Henderson v. Henderson [12] does not appear to assert the existence of a power to bar an action where the rule of res judicata has no operation, there have been observations of high authority which draw upon it as authority for the existence of a power to shut out a party from raising in subsequent proceedings an issue which was not actually decided in earlier proceedings but which the party could, and should, have raised in those proceedings: see Yat Tung Investment Co. Ltd. v. Dao Heng Bank Ltd. [13] and Brisbane City Council v. Attorney-General (Q) [14] . If the operation of the rule of res judicata were confined to rights which had been litigated in earlier proceedings, it would be necessary to invoke a power to stay proceedings brought to enforce a right outside the operation of the rule though belonging to the subject of the earlier litigation; and accordingly Henderson v. Henderson was construed as applying the rule "in a wider sense", reserving to the court a discretion to relieve from its wider operation when "there is a danger of a party being shut out from bringing forward a genuine subject of litigation" (Brisbane City Council v. Attorney-General (Q.) [14] ). Whatever effect be attributed to Henderson v. Henderson in estopping a party from litigating a particular issue, I do not think that Henderson v. Henderson has hitherto been understood in this Court as applying to shut out a party from litigating a cause of action which has not merged in a judgment.

1. (1843) 3 Hare 100 [67 E.R. 313]. 2. [1975] A.C. 581, at p. 590. 3. [1979] A.C. 411, at p. 425. 4. [1979] A.C. 411, at p. 425.

The course of the present proceedings illustrates the difficulties inherent in assuming a power to shut out a party from litigating a cause of action. Despite the defences raised by Anshun in its pleading, it appears that after McGarvie J. demonstrated that the indemnity had not been litigated in the first action, the rule of res judicata was construed in its narrower sense and the parties and the Supreme Court were constrained to grapple with the wraith of the supposed discretion. Upon the hypothesis that the shutting out of the appellant is in the discretion of the court it is difficult to resist the submission that, if the appellant's cause of action has not merged in the judgment and has not been judicially considered, an order for costs can make good any additional expenditure which the respondent might incur by reason of the second action, and the second action should be allowed to proceed. The argument in favour of shutting out the appellant is in substance that the appellant's cause of action should be treated as though it had merged in the contribution orders. In my judgment, the reasons advanced for shutting out the appellant show that its cause of action in truth merged in the contribution orders and there is no discretionary power to exercise. The claim to an indemnity against the liability to satisfy Soterales' judgment is barred, and the stay order was rightly made (Macdougall v. Knight [16] ).

The claim to an indemnity for the costs incurred by the Authority in the first action requires separate consideration. When an indemnity is cast in general terms applying distributively to payments made in discharge of discreet liabilities, a separate cause of action arises with respect to each payment so made. Assuming that the costs incurred by the Authority in litigating the first action fell within the indemnity, the cause of action thus arising is a separate cause of action from that arising from the liability to satisfy Soterales' judgment.

The contribution orders made no provision for the payment by either defendant to the other of the costs incurred by it in Soterales' action. An order was made for costs between them limited to the costs of entering the judgment for which the contribution orders provided. The contribution orders may be construed as disposing of the question of costs incurred in Soterales' action by making no order for them; and upon that hypothesis, the Authority's cause of action has been extinguished. The question whether the same cause of action was litigated in the first proceeding is a question of fact, and it would be necessary to remit that question for determination by the Supreme Court if it turned upon evidence other than the material before this Court. Having regard to the pleadings, the verdict and the judgment, all of which are before this Court, and particularly to the jury's finding that the Authority and Anshun were concurrent tortfeasors, the judgment should be construed as having determined the matter of costs incurred by the defendants in the action by making no order for the payment of costs by either defendant to the other except for the costs of any judgment entered pursuant to the contribution orders. Upon that construction, the claim for an indemnity for costs is barred by the contribution orders.