In this passage, the reference to "for Mr Jabbour to take over the nine contracts" is clearly intended as meaning "for Mr Jabbour's company Cuzeno to take over the nine contracts" . His Honour continued, at pages 10-11:
"I find on the balance of probabilities that when it became apparent in July 1996 that, for one reason or another the parties were unable to agree on the financial situation, that in consideration for revoking the contract for the sale of the Cairo Street property on 29th March 1996, and the loan documentation from the bank of both 28th March 1996 and 18th July 1996 and in effect terminating the joint venture, Powercell would build the building for an agreed price which was the price set out in the agreement signed on 19 July 1996, and that Cuzeno would take over as vendor on any contract entered into by Powercell in regard to the nine units it had purported to sell where the purchaser insisted on the contract being performed."
28 His Honour Judge Williams expressed "considerable doubt that the agreement that I have found existed is an agreement for the sale or other disposition of land and or any interest in land" and hence took the view that Cuzeno's defence based on section 54A Conveyancing Act 1919 failed. His Honour held that, even if he were wrong in taking that view, there had been part performance of the agreement. He went on, on that basis, to make an award of damages for breach of contract.
Part Performance of Oral Contract as a Basis for Awarding Damages
29 In one respect the trial before his Honour Judge Williams was conducted, by counsel on both sides, on a fundamentally mistaken basis. Part performance is a doctrine invented by the Chancery Court, and provides a basis upon which a court of Equity will provide equitable relief concerning a contract, when that contract is unenforceable by reason of non-compliance with the Statute of Frauds. The equitable relief most commonly provided when acts of part performance of a contract are established is specific performance of that contract. It may be that part performance can also provide a basis for other equitable remedies, such as an injunction to enforce a provision of the contract (Meagher, Gummow & Lehane, Equity Doctrines and Remedies, 4th edition, paragraph 20-220), or some other equitable remedy (Jones v Baker [2002] NSWSC 89; (2002) 10 BPR 19,115). However, an action for damages for breach of contract is a common law action, to which part performance is irrelevant.
30 These principles are authoritatively adopted in New South Wales. In O'Rourke v Hoeven [1974] 1 NSWLR 622 at 626 Glass JA (with whom Reynolds and Hutley JJA agreed) said:
"The doctrine of part performance was developed in the Equity courts and has never been available in an action at law for damages to excuse absence of the writing which the Statute of Frauds demanded. As Dixon J, as he then was, said in J C Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282, at p 297. "An action of damages could not but fail, because, when a common law remedy is sought, part performance never did and does not now afford an answer to the Statute of Frauds ... if the doctrine is not confined to cases in which a decree might be made for the specific performance of the contract, it is at least true that the doctrine arose in the administration of that relief and has not been resorted to except for that purpose." (and see per Starke J and Evatt J (1931) 45 CLR 282, at pp 294, 306.) The position is in no way altered by the concurrent administration of law and equity directed by Pt IV of the Supreme Court Act . This is not a fusion of two systems of principle but of the courts which administer the two systems: Britain v Rossiter (1879) 11 QBD 123, at p 129. The rules continue to be influenced by the system to which they belong, so as to disentitle a party claiming damages at law from praying in aid an exemption from writing on equitable grounds."
31 Before 1858 the Court of Chancery might have had a limited jurisdiction to award damages in lieu of, or in addition to, specific performance (Meagher, Gummow and Lehane, Equity Doctrines and Remedies, 4th edition, paragraph 23-025). In 1858 Lord Cairns' Act conferred on the Court of Chancery jurisdiction to award damages either in addition to, or in substitution for, the grant of an injunction for specific performance; that provision now has its equivalent in New South Wales in section 68 Supreme Court Act 1970 (NSW). However there was no equivalent of that section in the District Court Act in 1998 (or now). The Supreme Court's powers under section 68 Supreme Court Act are conferred on the District Court through section 137 District Court Act, but are exercisable only in relation to actions for an injunction or specific performance where jurisdiction is conferred on the District Court by some other section of the District Court Act. No provision of the District Court Act enabled it to grant specific performance of a contract like that which Williams DCJ held existed between Powercell and Cuzeno. Thus, the award of damages for breach of contract because there were sufficient acts of part performance was an error.
The Grasso Litigation on Appeal
32 Cuzeno appealed against his Honour Judge Williams' decision to the Court of Appeal. The appeal failed: Cuzeno Pty Ltd v Powercell Pty Ltd [1999] NSWCA 344.
33 Cuzeno's first argument in the Court of Appeal attacked the trial judge's factual findings, including his findings about the terms of the contract between Powercell and Cuzeno. That argument was rejected.
34 The remaining submissions on the appeal assumed that the trial judge's factual findings were correct, but made arguments about their legal consequences. One such argument was that the agreement between Cuzeno and Powercell was one which sought to effect a novation of the underlying contracts, and hence was ineffective without the participation of the purchaser. That argument was rejected. Priestley JA (with whom Stein JA and Davies AJA agreed) said, at [23]-[24]:
"I do not think this argument is correct. I do not think there is any rule of contract law which prevented Cuzeno from agreeing with Powercell to take over Powercell's contract with Mr Grasso. Such an agreement would bind Cuzeno to take over, that is become the vendor in, the contract with Mr Grasso, and to take all necessary steps to bring that about. If Cuzeno should prove to be unable to achieve the result it had agreed with Powercell, that would mean it would be in breach of its contract with Powercell. In other words, by such an agreement, Cuzeno was assuming the risk that Mr Grasso might not agree to contract with it on the same terms as those in the contract with Powercell and leaving itself open to the consequences if he did not.
There is a further reason in the facts of the present case which makes the submission even less arguable. The facts show that Mr Grasso's solicitors were pressing Cuzeno to enter into the contract with Mr Grasso on the same terms as those in the Powercell contract. Cuzeno chose not to enter into such a contract. It could have done so. Thus, in fact, it was possible for the arrangement made between Powercell and Cuzeno to be carried out in full. Powercell and Cuzeno had agreed to do something which it was lawful for them to agree upon and which could have been done had Cuzeno not chosen itself not to carry out its contracted arrangement."
35 Another argument on the appeal was that the trial judge had erred in holding that section 54A of the Conveyancing Act 1919 did not apply, and in holding that, even if section 54A applied, there were sufficient acts of part performance to enable Powercell's claim to succeed. Priestley JA dealt with this argument at [26]-[29]:
"It seems to me likely that s54A was applicable to the arrangement found by the trial judge and I will assume in Cuzeno's favour, without deciding, that that was so. That brings me to the submission that the judge was wrong in holding there had been part performance.
The first point taken on Cuzeno's behalf on this aspect of the case was that Powercell's claim was for damages at law but the doctrine of part performance was only available in equity and could not support an action for damages at law. O'Rourke v Hoeven [1974] 1 NSWLR 622 was relied on. This point was not taken at the trial and in the appeal Powercell argued that Cuzeno should not be allowed to rely on it.
It seems clear that had the point been taken at the trial Powercell's conduct of its claim would have been very different. In accordance with what was said in O'Rourke v Hoeven by Glass JA, with whom Reynolds and Hutley JJA agreed (at 625 and 626) the only proper way for Powercell to have relied on the doctrine of part performance would have been to claim specific performance of its agreement with Cuzeno and damages in lieu of specific performance. To do this, Powercell may have needed to seek to have its claim transferred to the Supreme Court, because s134 of the District Court Act as it stood at relevant times may not have conferred sufficient jurisdiction in equity upon the District Court to deal with such a claim. Pleadings would have had to be amended; it would have been prudent also for Powercell to consider whether it could claim that Cuzeno was estopped by its conduct from relying on s54A, and whether such an estoppel should be classified as a common law or equitable estoppel, or whether it should rely on equitable fraud as preventing Cuzeno from relying on s54A, and if it were to seek to rely on either of the latter two doctrines whether only the Supreme Court would be a proper venue.
The questions for Powercell to consider would have been serious and difficult. Cuzeno, by not raising the point, left the trial judge to resolve what would still have been an ultimate issue, even had the technical difficulties explained in O'Rourke v Hoeven been raised. That is, Cuzeno left it to the judge to decide the substantive question whether the facts before him justified the conclusion that there had been part performance, within the meaning of the doctrine of part performance, without the complications that would have followed from raising the O'Rourke v Hoeven point. In these circumstances it seems to me that the rule stated in a long line of authoritative cases, prominent among which are Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 and Coulton v Holcombe (1986) 162 CLR 1, should be applied and this court should not allow Cuzeno to raise the point in this court.
36 Priestley JA went on to hold that, when the question of whether there had been acts of part performance had been left to the trial judge in these circumstances, he had correctly come to the conclusion that the facts showed that there were sufficient acts of part performance.
37 Another argument advanced on the appeal concerned whether Cuzeno's breach of contract had caused the damage which the trial judge had quantified against Cuzeno. Priestley JA rejected an argument that Cuzeno was not responsible for the damage suffered by Powercell at the suit of Mr Grasso, and rejected an argument that Powercell had failed to mitigate its damage. Priestley JA said, at [36]:
"It was said that it was likely, as at August 1996, that in due course a clause in the contract between Powercell and Mr Grasso which entitled either party to rescind if the building development was not complete by April 1997, should have been availed of by Powercell. This submission overlooks the fact that the action taken by Powercell in writing to purchasers in terms of the letter of 1 August 1996 was a way suggested by Mr Jabbour to Mr Ward of carrying out their new agreement. In such circumstances, the duty to mitigate suggested on behalf of Cuzeno simply did not arise."
38 The final submission in the appeal, concerning the enforceability of the contract, arose from the guarantee, in the contract between Powercell and Mr Grasso, in the form I have set out in paragraph 7 above. Concerning that clause, Priestley JA said at [37]-[38]:
"It was submitted that the agreement by Cuzeno to take over Powercell's contract with Mr Grasso made no provision for what should happen about this clause. The result was said to be that the new agreement between Powercell and Cuzeno was incomplete and unenforceable.
I do not think this conclusion follows from the fact that the parties did not refer to special condition 20 in making their new agreement. No attention appears to have been given to this point in the evidence before the trial judge. On the evidence as it was left, it seems to me that the parties envisaged that their agreement would be carried out by the substitution of Cuzeno as the vendor for Powercell in Powercell's contract with Mr Grasso and that, in the absence of any agreement about an alteration to special condition 20 the guarantee of Mr and Mrs Ward would have remained in the new agreement which Cuzeno was undertaking to make with Mr Grasso. I do not think this point avails Cuzeno in the appeal."
39 An application to the High Court of Australia for special leave to appeal against that decision of the Court of Appeal was argued on 13 October 2000, resulting in special leave being refused. The following exchange occurred in the course of that application.
MR PARKER: May I say one further thing on the overall significance of this to the parties and that is this. There are five other actions between these parties and the outcome of this litigation and the outcome of these points may be determinative therefore, not just ---
KIRBY J: You say "may". I notice that submission. I am not at all certain that that is a ---
McHUGH J: No, neither am I.
MR PARKER: I can only point to the fact that my friends have put a point by way of res judicata on that.
KIRBY J: That will take its course in the other proceedings.
MR PARKER: Yes
KIRBY J: We cannot solve everything. We cannot even solve all the applications for special leave. We certainly cannot solve your future litigation.
MR PARKER: Your Honours, I think that ---
KIRBY J: I did understand the basis on which you put that up. You put it up as a reason why this case was elevated out of its own particular economic facts.
MR PARKER: It is not just a single case. Yes, your Honour.
KIRBY J: I am not at all convinced that it is."
Issue Estoppel - The Principles
40 In R v Storey (1978) 140 CLR 364 at 378-379 Gibbs J said:
"Although it appears that the phrase "issue estoppel" was first used by Higgins J in Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537, at p 561 the doctrine which the phrase describes is very much older, as Lord Reid pointed out in Carl Zeiss Stiftung v Rayner & Keeler Ltd [No 2 ] [1967] 1 AC 853, at pp 913-914. The principle was succinctly stated by Dixon J in Blair v Curran (1939) 62 CLR 464, at p 531:
"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."
Similarly Lord Denning MR said in Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630, at p 640 in a passage cited by Lord Wilberforce in Carl Zeiss Stiftung v Rayner & Keeler Ltd [No 2] [1967] 1 AC, at p 964:
" ... once an issue has been raised and distinctly determined between the parties, then, as a general rule, neither party can be allowed to fight that issue all over again ... "
The issue determined by the prior decision, and as to which an estoppel is raised, must have been essential to the conclusion, in the sense that to deny the correctness of the determination of that issue would necessarily be to deny the correctness of the decision itself: Queensland Trustees Ltd v Commissioner of Stamp Duties (Q) (1956) 96 CLR 131, at p 152. The estoppel only extends to what is "legally indispensable to the conclusion", that is to matters which are "in point of law the essential foundation or groundwork of the judgment, decree or order", and not to findings which concern only evidentiary facts, however important to the decision: see Blair v Curran (1939) 62 CLR, at pp 532-533. In order to ascertain what issues were necessary to be decided, and were in fact decided, in arriving at a judgment, it is permissible to look not only at the judgment and the reasons given for it, but at the pleadings and the evidence and indeed at any material which is relevant: see Jackson v Goldsmith (1950) 81 CLR 446, at p 467 and Carl Zeiss Stiftung v Rayner & Keeler Ltd [No 2] [1967] 1 AC, at p 965."
41 The classic statement of the nature and content of the doctrine of issue estoppel is that of Dixon J in Blair v Curran (1939) 62 CLR 464, at pp 531-533, as follows:
"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. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commanded or be restrained or that rights be declared. The distinction between res judicata and issue estoppel is that 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.
Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. Where the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived. But in neither case is the estoppel confined to the final legal conclusion expressed in the judgment, decree or order. In the phraseology of Coleridge J in R v Inhabitants of the Township of Hartington Middle Quarter (1855) 4 El & Bl 780, at p 794 [119 ER 288, at p 293], the judicial determination concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide and which was actually decided as the groundwork of the decision itself, though not then directly the point at issue. Matters cardinal to the latter claim or contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous.
In the phraseology of Lord Shaw, 'a fact fundamental to the decision arrived at' in the former proceedings and `the legal quality of the fact' must be taken as finally and conclusively established ( Hoysted v Commissioner of Taxation [1926] AC 155, at p 165). But matters of law or fact which are subsidiary or collateral are not covered by the estoppel. Findings, however deliberate and formal, which concern only evidentiary facts and not ultimate facts forming the very title to rights give rise to no preclusion. Decisions upon matters of law which amount to no more than steps in a process of reasoning tending to establish or support the proposition upon which the rights depend do not estop the parties if the same matters of law arise in subsequent litigation."
42 Some understanding of the meaning of the word "cardinal" in the second paragraph just quoted from Dixon J might be derived from the judgment of Starke J in the same case:
"A judgment is conclusive evidence not merely of the facts directly decided but of those facts which are necessary steps to the decision - so cardinal to it that without them it cannot stand." ( Blair v Curran (1939) 62 CLR 464, at 510)
From Which Decision Might Estoppels Emerge - Trial Judge, Court of Appeal, or High Court
43 Spencer Bower, Turner and Handley, Res Judicata, 3rd edition, paragraph [60] says:
"Where a tribunal with original jurisdiction has granted, or refused, the relief claimed and an appellate tribunal reverses the judgment or order at first instance, the former decision, until then conclusive, is voided ab initio ( Railways Commissioner (NSW) v Cavanough (1935) 53 CLR 220; and D M Gordon "Effect of Reversal of Judgment " (1958) 74 LQR 517 at 518-21) and replaced by the appellate decision, which becomes the res judicata between the parties. Even if the appeal fails the operative decision becomes that of the appellate court which replaces the earlier decision as the source of any estoppels ( Wishart v Fraser (1941) 64 CLR 470; R v Marks (1981) 147 CLR 471 at 476.)"
44 Even though the appellate decision is the source of any estoppels, this does not necessarily mean that the content of any estoppels is derived solely from the appellate judgment. In the present case, where the Court of Appeal's decision concerning the fact finding of the trial judge was to effect that no reason had been shown to doubt it, it is to the judgment of the trial judge that one must look for the content of the findings on factual issues litigated between the parties, which might give rise to an estoppel. If it were to happen that, in the course of an appellate court giving its own account of the facts of a case, there was any difference between that account and the findings of the trial judge, it would be the account of the appellate court which should be looked to, on any matter where there is any such difference, for the content of any estoppels concerning factual issues. In carrying through the exercise of identifying the content of any issue estoppels, whether on factual matters, legal matters, or mixed questions of fact and law, one question to be asked is, "what are the findings which the course of the litigation, considered as a whole, has resulted in". There is then a further question of whether each of those findings is of a type which gives rise to an issue estoppel.
45 Cuzeno submits that the exchange between Mr Parker and McHugh and Kirby JJ on the application for special leave to appeal shows that their Honours were of the view that the outcome of the Grasso litigation would not be determinative of whether Cuzeno was liable to indemnify Powercell for its losses concerning other purchasers, and that that view is a matter which I should take into account in determining what issue estoppels arise from the Grasso litigation. I leave to one side whether the exchange between Mr Parker and McHugh and Kirby JJ should be read in the way for which Cuzeno contends. As a matter of principle, that exchange in the High Court does not enter into any consideration of what, if any, issue estoppels arise from the course of the Grasso litigation. The only issue which the High Court was deciding, on that occasion, was whether a case for granting special leave to appeal had been made out. Their Honours made no decision on the facts or law of the issues litigated in the Grasso litigation.
The Legal Foundation of a Decision
46 Some assistance can be provided from the case law in understanding the statement of Dixon J in Blair v Curran that a judicial determination concludes "those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion". All cases of issue estoppel are ones where two decisions of courts are involved - I will adopt the convention of referring to the decision from which the estoppel is said to arise as "the earlier decision", and the decision in which it is contended that estoppel should operate as "the later decision".
47 R v Inhabitants of the Township of Hartington Middle Quarter (1855) 4 El & Bl 780; 119 ER 288 was a case where, in the earlier decision, Justices had ordered the removal of two children to Hartington Middle Quarter, on the basis that they were the "lawful children" of two named people, and that the father of the children was settled in that township. In the later decision, the question at issue was whether that township was the place of settlement of the mother of the children (who by this time had become a lunatic). Coleridge J held that the earlier decision necessarily decided the place of settlement of the father, and the marriage of the father with the mother. There was, therefore, an estoppel concerning those two facts. There being no evidence of any subsequently acquired settlement on the part of the mother, the earlier decision necessitated the conclusion that the place of settlement of the mother was in that township.
48 Hoysted v Federal Commissioner of Taxation [1926] AC 155 concerned the application of federal land tax to land in a deceased estate. The relevant legislation allowed a deduction to each of several "joint owners" of land. In the earlier decision, a question had been stated to the Full Court of the High Court of Australia which assumed that certain beneficiaries of a deceased estate were joint owners; when the answer to that stated case was known, a single judge of the High Court, without further argument, entered judgment, allowing six such deductions. In the next tax year, the Commissioner of Taxation sought to argue that the beneficiaries of the estate were not joint owners, and hence were not entitled to multiple deductions. Higgins J in the High Court (Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537), and the Privy Council on appeal from the High Court, held that the Commissioner was bound by an estoppel as to whether the beneficiaries were joint owners, because the actual result in the earlier decision could not have been arrived at if the beneficiaries were not joint owners.
49 In Mraz v The Queen (No.2) (1956) 96 CLR 62 involved facts described as follows in the headnote (at 62):
"M was indicted on a charge of murder of a woman, the Crown case being that the death of the woman had been caused during or immediately after the commission of an act of rape upon her by M. At the trial it was not disputed that there had been sexual intercourse between M and the woman and that at the time, or shortly afterwards, the woman had died, but the real issue contested was whether or not such intercourse had taken place against the woman's will. The jury found M not guilty of murder but guilty of manslaughter. The conviction for manslaughter was quashed on appeal by the High Court. M was subsequently indicted for rape on the same facts, and to such indictment, in addition to pleading not guilty, he entered a special plea of issue estoppel in reliance on the verdict in the earlier proceedings."
50 The High Court (Dixon CJ, Williams, Webb, Fullagar and Taylor JJ) upheld that plea of issue estoppel. Their reasoning was, in effect, that the crime of murder with which he had been charged had three elements - (1) that he committed rape, (2) that during or immediately after the commission of the crime (3) an act of his caused the death of the young woman. A finding of not guilty of murder could result if any one of these three elements was missing. However, when the jury's verdict of not guilty of murder was coupled with a finding of guilty of manslaughter, that involved a finding that the third element was proved. Thus, the finding of not guilty of murder must have been based upon the absence of one or other of the first two elements. An examination of the course of the trial showed that it was not disputed that an act of intercourse took place and that at the time or shortly afterwards the woman died. It followed that the verdict at the first trial could only have been based upon a finding that the accused had not committed rape. While the application of issue estoppel in criminal law, since Mraz, became, first, debatable (R v Storey (1978) 140 CLR 364) then impermissible (Rogers v R (1994) 181 CLR 251) Mraz remains a useful illustration of Sir Owen Dixon's views about the reasoning process involved in applying the law of issue estoppel.
51 In Cachia v Isaacs (1985) 3 NSWLR 366 a solicitor (Glass) had been ordered by a Consumer Claims tribunal, in the earlier decision, to pay a dissatisfied client (Cachia) $1,500, made up of $1,425 as refund of costs which the client had been ordered to pay to the opposite party in some unsuccessful litigation, and a return of $75 which the client had paid to the solicitor on account of fees. Hope JA (with whom Kirby P agreed) said, at 380:
"The order by the Tribunal that this amount be repaid to Cachia necessarily involves a conclusion that Glass was not entitled to any costs. One finding essential to reach this conclusion was that Glass had been negligent in respect of the services. However, this finding alone would not have justified the Tribunal reaching the conclusion that Glass was not entitled to any costs, and hence had to refund the $75, it would have had to conclude also that Cachia had received no benefit. Had he received a benefit, it would have been necessary for the Tribunal to identify what part of the costs included in Glass' bill produced some benefit to Cachia, and to decide accordingly what part of the bill should be regarded as recoverable costs. If this sum amounted to $75 or more, then Cachia would not have been entitled to a refund of any part of this amount. If the sum amounted to something less than $75, Cachia could recover the difference between that sum and $75. It is only if he obtained no benefit at all from the services provided by Glass that he would be entitled to recover the whole of the $75. In other words, whether or not it was explicitly raised as an issue before the Tribunal, a necessary basis of the order of the Tribunal that Glass return the whole of the $75 was, in the circumstances, that by reason of Glass' negligence, Cachia had received no benefit of any kind from the services the subject of Glass' bill of costs."
52 Thus, it was established that there was an issue estoppel that Cachia had received no benefit from Glass' work, which meant that Glass' claim against Cachia for unpaid fees, in the later action, failed. At 381 Hope JA said:
"It should be noted that the present case is not one where the defendant failed to raise some special defence; it is a case where a fact essential to the plaintiff's case was assumed."
53 In Humphries v Humphries [1910] 2 KB 531 the earlier decision had been one in a case where the plaintiff had contended there was a concluded agreement for lease of a property for 14 years; the defendant denied there was a lease, and refrained from entering into possession of the property. The plaintiff sued the defendant for rent said to have accrued during a particular period. The court in the earlier decision held that there was the agreement the plaintiff contended, and gave judgment for the rent then accrued. The plaintiff then brought the later action, suing for the second instalment of rent. In answer to that action, the defendant pleaded lack of writing of the lease to satisfy the Statute of Frauds. That issue had not been raised for adjudication at the trial of the first action. The English Court of Appeal held that there was an estoppel arising from the earlier decision, which prevented that issue being raised. The Court, at 534-535, accepted as correct the following statement by Williams J in Howlett v Tarte (1861) 10 CBNS 813 at 826; 142 ER 673.
"If the defendant (to a second action) attempted to put on record a plea which was inconsistent with any traversable allegation in the former declaration (ie in the first action) there would be an estoppel."
54 Farwell LJ, at 535 referred to the fact that the first action was for the first instalment of rent, while the second action was for the second instalment of rent, relating to the same premises, under the same lease. He continued:
"Each action, therefore, raised two issues of fact, (1) the existence of the specified agreement for a lease, and (2) the amount due for rent thereunder on the specified dates. The allegation of the existence of the agreement raises the issue which the plaintiff has to prove, namely, the existence of that specific agreement as an agreement binding and valid at law, ie, complying amongst other things with the requirements of the Statute of Frauds.
This is the issue that was raised by the plaintiff and was traversable by the defendant, and such an issue is not the less traversable because the defendant fails to traverse, either wholly or in part, whether such failure arises from neglect to comply with the rules of Court requiring notice of reliance on the statute to be given or from omission properly to argue a point - eg that the documents tendered in evidence omitted a material provision required by the statute.
It is clear that this was the fact to be alleged by the plaintiff under the old law. A bill for specific performance of a contract for the sale of land was demurrable if it omitted to state that the contract was in writing; and at common law, as it stood in 1842, a plea of the statute was demurrable on the ground that it was a mere argumentative denial of the contract ( Leaf v Tuton (1842) 10 M & W 393), the general issue being "itself a denial that the requisites of the Statute of Frauds had been complied with"; the abolition of demurrers is a mere matter of pleading which does not affect the principle. The rule laid down in Howlett v Tarte (10 CB (NS) 813) is confined to allegations which the defendant could have traversed, and does not extend to pleas which confessed and avoided, or to matters which were not raiseable by traverse but by special plea, necessitating proof on the part of the defendant, such as fraud, gaming, release or infancy, allegations which do not amount to denial, but to confession and avoidance of the contract"
55 In Cooke v Rickman [1911] 2 KB 1125 a divisional court considered another situation where the earlier decision gave judgment to a landlord for one instalment of rent, and in the second action the tenant was sued for a second instalment of rent for the same premises under the same agreement. The tenant sought to raise a point not previously raised. The point on that occasion was that there was no consideration for the agreement sued on. The court held that the earlier decision created an issue estoppel which prevented that point from being raised. Bray J said, at 1128-1129:
"The onus was on the plaintiff to prove that there was consideration for the agreement, and the effect of the decision in Humphries v Humphries [1910] 2 KB 531 is that it is only in the special circumstances mentioned in the judgment that the exception to the rule of estoppel prevails. It is true that Howlett v Tarte (10 CB (NS) 813) was decided before the passing of the Judicature Act, when pleading was a matter of great strictness, and no doubt the rules under the Judicature Act do involve some looseness in pleading; but it is not necessary for us to say whether a plaintiff suing on an agreement must now expressly allege consideration, though I am inclined to think that he need not do so; nor is it necessary for us to decide whether a defendant must plead in terms the want of consideration. Humphries v Humphries shews that to avoid the estoppel the matter must be such as requires a special plea or a plea necessitating proof by the defendant. The defendant in this case could have raised the question of no consideration in the first action, and if she had done so, that would have been a matter necessitating proof, not by the defendant, but by the plaintiff. The defendant did not raise that question in the first action, and therefore according to the principle laid down in Humphries v Humphries the defendant is estopped from raising it in the second action."
56 Bankes J came to the same conclusion, saying, at 1130:
"… under the present system of pleading, if an agreement were set up in a statement of claim, without saying what was the consideration, the defendant would be entitled to apply to strike it out or to apply for particulars of the consideration. But if the defendant does not adopt either of those courses and proceeds to trial, it is not, in my opinion, open to him, in a second action in respect of the same subject matter, to say that there was not a traversable allegation in the first action, because, applying the test laid down in Humphries v Humphries, the consideration for the agreement sued upon is an issue which the plaintiff has to prove, and if he fails to prove consideration he fails to prove, in the words of Farwell J, "the existence of that specific agreement as an agreement binding and valid at law" "
57 It will be seen from these cases that an issue estoppel can arise even in relation to a point which was not actually decided in the earlier decision. When Dixon J, in Blair v Curran (1939) 62 CLR at 532 said:
"… the judicial determination concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide and which was actually decided as the groundwork on the decision itself, though not then directly the point in issue. Matters cardinal to the latter claim or contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous",