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[2001] VCAT 2416
defendant. Proceeding dismissed; the applicants must pay the respondent’s costs, to be taxed in default of agreement under County Court Scale D, with the costs order stayed for 30 days from agreement on...
The applicants had earlier settled a claim against their building surveyor for legal costs connected with a dispute against the builder. They later brought a claim for the cost of fixing allegedly defective work. The Tribunal concluded that the earlier settlement could bar the later claim even though the earlier matter had not resulted in a judgment. Because the claims involved the same alleged breach of duty and substantially the same proof, and because the Deputy President considered himself bound by Wells v D'Amico, he dismissed the later proceeding and ordered the applicants to pay costs.
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2,165 words · generated 29/09/2026
In Prestwich v Hirschfeld [2001] VCAT 2416, the Victorian Civil and Administrative Tribunal considered whether a building owners' earlier settlement with a building surveyor barred a later claim against that surveyor.
No linked legislation citations have been extracted yet.
Chris and Maureen Prestwich alleged that respondent Eric Hirschfeld, a building surveyor, should not have approved defective building work. Their later proceeding sought damages for the cost of rectifying that work. Before it, the applicants had brought and compromised a claim against Hirschfeld for legal costs arising from a claim against the builder. The dispute before the Tribunal was therefore not simply whether the surveyor had been negligent. It was a preliminary question about the effect of the earlier compromise on the later proceeding.
At the initial hearing on 9 August 2001, the Deputy President had decided the preliminary issue in favour of the applicants. His initial view was that an Anshun estoppel might have arisen had the earlier claim for legal costs been determined, but that settlement alone did not create one. He also declined to imply a general release into the settlement terms (paras [1]–[3]).
Before authenticating the order, however, the Deputy President considered further authorities and invited additional submissions. The central authority was Wells v D'Amico [1961] VR 672, a Supreme Court of Victoria decision concerning a settlement of a claim for damage to stock followed by a later claim for damage to a shop. The Deputy President concluded that Wells was binding and sufficiently similar to govern the issue before him (paras [4]–[5], [14]).
The final order, made on 13 September 2001, dismissed the proceeding. The applicants were ordered to pay the respondent's costs, to be taxed in default of agreement in accordance with County Court Scale D. The order was stayed 30 days from agreement of taxation.
The Deputy President's reasoning turned on three connected points: whether a compromise could create an estoppel without a judgment, whether the earlier and later claims were the same in substance, and whether the Tribunal could decline to apply the estoppel as a matter of discretion.
First, the absence of a judgment was not decisive. In Wells v D'Amico, the earlier claim had been compromised. The Deputy President relied on Gavan Duffy J's treatment of a compromise as equivalent to a judgment for estoppel purposes, and viewed that authority as directly relevant (paras [4]–[5]). He also discussed Darley Main Colliery Ltd v Mitchell and Brunsden v Humphrey as examples in which settlements or recoveries not resulting from a conventional judgment were relevant to the estoppel analysis (paras [6]–[10]). Those discussions supported his conclusion that the earlier compromise could not be disregarded merely because no judgment had been entered.
Second, the claims were treated as the same in substance. The earlier claim concerned legal costs arising from the dispute with the builder; the later claim concerned rectification costs. The Deputy President accepted the respondent's submission that both claims alleged breach of duty by the building surveyor, and that success in the later claim would require proof of the same matters as the earlier claim (para [11]). He considered this analogous to Wells, where the claims for damage to stock and to the shop were assessed by reference to substantially the same evidence of negligence and resulting loss (paras [12]–[14]). Although the forms of loss differed, the common alleged wrong mattered to his characterisation of the claims.
Third, the Deputy President addressed whether the estoppel could be withheld because applying it might be unjust. Counsel for the applicants argued that barring a claim for a substantially larger alleged loss after a $2,000 compromise would be contrary to justice. He also relied on the fact that parties in VCAT may appear without professional representation. The respondent argued that the estoppel operated automatically (paras [15]–[16]). The Deputy President acknowledged that Australian authority appeared to conflict on this question, and that the issue might require a High Court pronouncement. But he considered that Wells, as binding authority, applied the estoppel without a discretion to suspend it in the circumstances before him (para [17]).
The difference between the beneficiaries of the two claims also featured in the reasoning. The first proceeding had been brought for the applicants' own benefit; the later claim relied on subrogation and was for the insurer's benefit. The Deputy President discussed Callaway JA's observations in Linsley v Petrie about successive litigation involving an insured and an insurer. He understood those observations as supporting the view that any prejudice to the insurer resulting from the insured's conduct in earlier litigation was a matter between insurer and insured, rather than a reason to avoid the estoppel against the respondent (paras [17]–[18]). He ultimately accepted the respondent's submission that the present proceeding was barred.
The judgment records a shift in the Deputy President's own view during the proceeding. His first reasons treated settlement as insufficient to create the relevant estoppel, while recognising that an estoppel might have arisen if the earlier claim had proceeded to determination (para [3]). Further argument and the authorities, particularly Wells v D'Amico, led him to reverse that position before making the final order (paras [4], [14], [17]–[18]).
The decision does not purport to settle the general Australian question of whether Anshun estoppel always operates automatically or whether there is a discretion not to give effect to it. The Deputy President expressly noted a conflict of authority and suggested that the question might need resolution by the High Court (para [17]). His conclusion was narrower: he considered himself bound by Wells in the factual circumstances before him, and read that decision as requiring the estoppel to be applied without a discretion to suspend it.
The judgment also distinguishes the estoppel question from the contractual effect of the settlement. In his initial reasons, the Deputy President had declined to imply a general release into the settlement, which he characterised as an accord and satisfaction concerning the legal-costs claim (para [3]). The final decision instead rested on estoppel. In other words, the proceeding failed because of the effect attributed to the earlier compromise under the estoppel doctrine, not because the Tribunal found that the settlement expressly released every possible claim.
The reasoning should be read in its setting. It applies the Deputy President's understanding of a binding Supreme Court decision and his characterisation of the two claims. It does not announce a general rule that any settlement of any claim necessarily bars every later claim related to the same events.
At paragraph [14], the Deputy President said: “the present matter seems on all fours with Wells v D'Amico” and that Wells was “binding upon this Tribunal.” In plain English, he considered the earlier Supreme Court case close enough to control the result, rather than merely offering an analogy that VCAT could choose to accept or reject.
At paragraph [11], the Deputy President recorded the respondent's point that both proceedings alleged breach of duty and that success in the later matter would require proof of the same matters as the compromised proceeding. The significance is that the Tribunal looked beyond the different categories of claimed loss and focused on the alleged wrong and the proof needed to establish it.
At paragraph [17], the Deputy President stated that, because Wells directly covered the situation and proceeded without considering discretion, he should proceed on the basis that he had “no discretion other than to give effect to the estoppel.” In plain English, he did not consider himself free to excuse the effect of the estoppel because of the circumstances counsel described.
At paragraph [18], he concluded that the proceeding was barred. This was the operative conclusion: the Tribunal did not determine the merits of whether the building surveyor had breached a duty or the amount of any rectification loss. It disposed of the proceeding on the preliminary estoppel issue.
The decision also records the applicants' arguments about the apparent difference between the $2,000 compromise and the later alleged loss of $80,000, and about self-representation in VCAT (paras [15]–[16]). Those were submissions made to the Tribunal, not factual findings that the later loss had been proved.
On the judgment's own reasoning, the key features were an earlier proceeding that had been compromised, a later proceeding against the same respondent, and claims said to arise from the same alleged breach of duty. The Deputy President considered it important that success in the later claim would require proof of substantially the same matters as the earlier claim (para [11]). The different descriptions of loss, legal costs in the earlier claim and rectification costs in the later claim, did not prevent the Tribunal from treating the claims as analogous to those in Wells (paras [12]–[14]).
The decision is particularly relevant to a proposed later claim where a prior claim concerning the same alleged wrong has been settled without a judgment. It shows that, in the Deputy President's analysis, the lack of a judicial determination did not itself prevent an estoppel from arising. The settlement's effect was considered alongside the substance of the claims and the evidence needed to establish them.
The decision also addressed successive proceedings involving different beneficiaries: an earlier claim brought for the applicants' own benefit and a later claim brought for an insurer's benefit by subrogation (para [17]). The Deputy President treated that difference as not preventing the estoppel from barring the later case, while noting the possible relevance of duties between insurer and insured.
The judgment does not establish that every later claim relating to the same building project, or every claim for a different type of loss, will be barred after settlement. Its reasoning depends on the Deputy President's view that the claims before him were materially alike in their allegations and proof, and on his application of the binding authority he identified. The judgment does not set out the full settlement terms or provide a broader test for every possible settlement.
The supplied judgment does not discuss any later treatment of Prestwich v Hirschfeld. It therefore does not establish whether later courts followed, distinguished, limited, or questioned this VCAT decision.
Within this decision, the authorities are treated as follows. Wells v D'Amico is identified as binding and applied to the facts (para [14]). Darley Main Colliery Ltd v Mitchell and Brunsden v Humphrey are discussed as authorities relevant to the proposition that an estoppel may arise despite the absence of a judgment (paras [6]–[10]). Port of Melbourne Authority v Anshun Pty Ltd is cited in connection with counsel's argument about the modern formulation of Anshun estoppel and discretion (para [15]). Linsley v Petrie is considered in relation to successive proceedings involving an insured and insurer (para [17]). The judgment cites Bryan v Maloney for the characterisation of rectification costs and legal costs as economic or pecuniary loss (para [13]).
Those relationships describe how Macnamara DP used or discussed the cases in this judgment. They do not provide evidence of how later courts treated Prestwich itself. That question cannot be answered from the supplied text.
The most explicit unresolved issue is whether Anshun estoppel operates automatically or whether a court or tribunal has discretion not to give effect to it. The Deputy President said there was a conflict of authority in Australia and that the point might require a High Court pronouncement (para [17]). He resolved the case by applying his understanding of Wells, rather than by deciding the general question for all cases.
The judgment also leaves open how the comparison between claims should be made in cases where the later proceeding concerns a different loss, beneficiary, or legal basis. Here, the Deputy President focused on the shared allegation of breach of duty and the substantially overlapping proof (paras [11]–[14]). The reasons do not provide a comprehensive test for deciding when different claims are the same cause of action for estoppel purposes.
The effect of the full settlement terms is not set out in the reasons reproduced here. The Deputy President had declined to imply a general release at the earlier stage (para [3]), but the final decision rests on estoppel. The judgment does not explain whether particular wording in the settlement could have altered the outcome, or how express release terms would interact with the estoppel analysis.
Finally, the decision's treatment of the insurer's position is limited to the Deputy President's understanding of Callaway JA's observations in Linsley v Petrie (paras [17]–[18]). It does not decide a separate dispute between insurer and insured, or detail the duties that might arise from the insured's conduct of earlier litigation. The judgment says the issue may be remediable between those parties, but does not determine any such remedy.
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Domestic Building List; Settlement of Earlier Proceedings Relating to Same Subject Matter; Whether Creating Anshun Estoppel
Medium Neutral Citation [2001] VCAT 2416
2. The applicant must pay the respondent's costs of this proceeding to be taxed in default of agreement in accordance with County Court Scale "D" stayed 30 days from agreement of taxation.
1. This proceeding has had a fairly vexed history. On 9 August I heard argument on a preliminary issue whereby the respondent, a building surveyor, claimed to have a complete defence to a claim for damages brought against him by the building owners for the cost of rectification of defective work which it is contended, according to Mr Hirschfeld's duty as a building surveyor that he should not have approved or to put it another way, should have condemned.
2. The argument was that a claim brought and compromised earlier by the proprietors and for their own benefit to recover legal costs arising out of a claim against the builder, acted as a bar to the bringing of the proceeding. I described the facts in the proceeding at somewhat greater length in reasons which I gave on the 9th of August 2001.
3. I concluded that whilst a so-called Anshun estoppel might have arisen in the circumstances had the claim for the legal costs proceeded to a determination by the Tribunal, the fact that it was a mere settlement prevented any such estoppel arising. I also declined to imply, as I was invited to do, a general form of release in the terms of settlement which I characterised as an accord and satisfaction with respect to the claim for the legal costs.
4. Subsequent to my giving those reasons and pronouncing order determining the preliminary issue in favour of the applicant and against the respondent, further authorities came to my attention. I did not authenticate the order and invited the parties to provide further argument with respect to a decision of the Supreme Court of Victoria Wells v D'Amico [1961] VicRp 103; [1961] VR 672 a judgment of Gavan Duffy J. In Wells' case the respondent in the Supreme Court had allegedly caused damage to the appellant's shop by his vehicle's colliding with the appellant's shop. It was said that the appellant had suffered damage both to the realty and also to stock. A proceeding was brought in the Court of Petty Sessions for the damage to the stock which proceeding His Honour found was compromised by the respondent agreeing to pay the damage to the stock. Thereafter a further claim was brought for damage to the appellant's realty. It was accepted by His Honour that the bringing of the first proceeding with a claim for damage for the stock only was a mistake made by the appellant's solicitor. The respondent contended successfully before the Magistrate that the bringing and the compromise of the first proceeding prevented the appellant from bringing the second.
5. It will be seen that this case resembles the present one in that instead of there having been a judgment entered or a determination made the matter was merely compromised between the parties. His Honour upheld the respondent's claim that the second proceeding must fail. He dealt with the consideration that no judgment or order has been made by the Magistrate in the first claim as follows. At page 675 His Honour said:
"I shall first consider whether the complainant was estopped by the settlement of the first claim. In Darley Main Colliery Limited v Mitchell (1886) 11 App Cas 127, 149 Lord Fitzgerald said:
`He accepted compensation which it seems agreed is equal to a recovery of damages in an action if such an action has been instituted.'
It seems to me sufficiently clear that the settlement of compromise for an action in being is certainly equivalent to judgment for the purposes of producing an estoppel."
6. In the Darley Main Colliery case there were two subsidances. The plaintiff sought compensation for the first subsidence of his land from the colliery company and received that compensation. Years later there was a further subsidence which occurred without further work in the colliery. Faced with a further claim the colliery company said that the settlement of the first claim stood as a bar to the second.
7. The House of Lords was divided as to whether the claim arising out of the second subsidence was in the circumstances a separate cause of action or merely a further outgrowth of the first. Lord Blackburn dissented being of the view that the damage from both subsidances arose from the same cause of action. The majority of their Lordships took the view however that the second subsidence created a second new and separate cause of action. All of their Lordships however proceeded upon the assumption described by Lord Fitzgerald and quoted by Gavan Duffy J.
8. The Darley Main Colliery case might be regarded as a particularly striking application of the width of the estoppel doctrine because not only had there been no adjudication, it seems that initially there had been no proceedings issued at all. Nevertheless, all of their Lordships were prepared to assume that had the second subsidence not created a new cause of action, acceptance of the compensation for the first would have been a bar to any further claim.
9. The well known and controversial case of Brunsden v Humphrey (1884) 14 QBD 141 is an illustration of the same point. That decision is customarily quoted as authority for the proposition that where a cabman involved in a traffic accident recovered damages in the County Court for damage to his cab, he was not barred from bringing a separate claim in the High Court for personal injury. The Court of Appeal constituted by Sir Baliol Brett, MR as he then was; Lord Justice Bowen and Lord Coleridge CJ so held by a majority with Lord Coleridge dissenting.
10. What is notable however and frequently not referred to in a formulation of the effect of the case is that the recovery made in the County Court was not pursuant to a judgment, rather it was the withdrawal of moneys that had been paid court. This particular distinction was relied upon by the plaintiff and his Counsel, Waddy QC and Crispe submitted that there was no estoppel because there was no judgment. At page 143 they said in the County Court there was no "judicial determination" of the rights of the parties. This point does not appear to have attracted the attention either of the majority of the Court or the dissenting Lord Chief Justice; once again, perhaps indicating that it was regarded as a relatively trite point in the same way as the correctness of the view that no judgment was required to create an estoppel seems to have been accepted unanimously by their Lordships in the Darley Main Colliery case.
11. The question then is whether in the circumstances the two claims are to be characterised as arising out of the same cause of action, because if they are not then in accordance with Brunsden v Humphrey there would be no estoppel. Mr Andrew in his submissions last month drew attention to the fact that in both the present and the previously compromised proceeding the allegation against the building surveyor is of breach of duty. To put it another way success in this proceeding would entail proof of the same matters as would have been necessary for success in the proceeding which was compromised.
12. At page 606 in Wells v D'Amico Gavan Duffy J. said:
"What I have to determine therefore is whether the claim of damages done to the complainant's stock is in substance the same cause of action as a claim for damages done to his shop. I think on the whole that it is. The evidence would be substantially the same, namely proof of negligence and of the amount of damage suffered in consequence of it.
13. There seems a fairly clear analogy between the Wells v D'Amico in the present proceeding in that regard. Further, it is notable that both the cost of rectifying defective building work and the legal costs outlaid are to be regarded as economic or pecuniary loss or damage rather than as ordinary damage to property or to the person. See Bryan v Maloney (1995) 182 CLR 609, 617 in the joint judgment of Mason CJ and Deane and Guadron JJ.
14. Accordingly the present matter seems on all fours with Wells v D'Amico. That case is a decision of the Supreme Court and therefore binding upon this Tribunal. Moreover, as the reference to the other authorities indicates, whilst it has a degree of obscurity such that it had not come to the attention of either of the Counsel appearing before me at the previous hearing or my own attention, it by no means stands alone.
15. Mr Hanos was prepared to concede ultimately that Wells v D'Amico seemed to stand against his client. He submitted nevertheless that in the modern re-statement of the wide doctrine of estoppel now known as Anshun estoppel, by the High Court of Australia in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 it was conceded that there may be circumstances in which either no estoppel would be regarded as arising, or the estoppel which would in a general sense be thought to arise. would not be given effect to. To put it another way, Mr Hanos submitted that the High Court allowed for the application of this estoppel to be discretionary. He said it would be very much contrary to justice to allow the building surveyor for the minimal outlay of $2,000 in the earlier compromise proceeding to discharge himself from further liability for the much larger loss, namely $80,000 which the applicants now say that they have suffered as a result of the building surveyor's breach of duty.
16. Mr Hanos stressed that since in this Tribunal parties are facilitated in appearing for themselves, indeed representation of parties by professional advocate is generally only by leave, to allow causes of action to be barred in circumstances such as the present by the action of parties without the benefit of legal representation would, he submitted, be such an injustice. To the extent that there is a discretion in the application of the so called Anshun estoppel, this would be a proper case for discretion to point away from its being given effect. Mr Andrews submitted that were the estoppel operated, it operated automatically and there was no discretion.
17. There is as I understand it some conflict of authority in Australia as to whether the Anshun estoppel operates automatically or not. The point perhaps calls for a pronouncement of the High Court before this issue can be regarded as settled. However, in the present case, Wells v D'Amico which is binding upon me, entails an analysis of the operation of the estoppel which assumes that it operates automatically. One might have thought that if there were a discretion, Gavan Duffy J need not have applied the estoppel. He accepted that it was a mere mistake on the part of the complainant appellant solicitors that the first proceeding was brought for other than the full amount of the shopkeeper's damage. Surely if there were a discretion to suspend the estoppel which might otherwise exist in the interests of justice, this would have been an occasion for it to operate. In my view since Wells v D'Amico directly covers the present situation and proceeds without any consideration of discretion, I should likewise proceed upon the basis that I have no discretion other than to give effect to the estoppel. There is a further consideration which fortifies me in that view. The first of the two claims brought in the name of the applicants was brought for their own benefit. The second is being brought in reliance of the doctrine of subrogation and for the benefit of the insurer. In Linsley v Petrie [1998] 1 VR 427 the Court of Appeal considered a situation in which initial proceedings were brought in the Magistrates' Court arising out of a traffic accident for the benefit of an insurer and failed. Thereafter a claim was brought by the unsuccessful party in the first claim but for his own benefit. In the Court of Appeal Hayne, Callaway JJA and Smith AJA were unanimous in finding that the failure of the first claim did not bar the second, though they were far from unanimous in their reasons for reaching that conclusion. It is relevant at present however is a dictum of Callaway JA at pages 446-447 where he was considering the problems arising out of successive pieces of litigation, on the one hand brought for the benefit of the party itself, and on the other hand brought for the benefit of an insurer. His Honour said:
"I turn to four cases that need to be distinguished.
1. We need not be concerned with situations where the insured first engages in litigation, whether as plaintiff or defendant without insurance cover and an issue estoppel is pleaded against the insured in a subsequent proceeding in respect of a claim that is covered by insurance. The prejudice that entails to the insurer in the second proceeding does not flow from its compliance with an equitable requirement and is remediable if at all by reference to the duties that the insured owed to it in conducting the earlier case."
18. What His Honour there means, I think, is that if the insurer is shut out from recovery in the second proceeding because of the conduct in the first by the insured for his own benefit, the remedy to that apparent injustice lies between insurer and insured. That also supports the view that the estoppel operates in a circumstance such as this automatically and without discretion. Therefore I accept the submission made by Mr Andrew the consequence is that this proceeding is barred.
Prestwich
Hirschfeld [2001] VCAT 2416
(1995) 182 CLR 609
(1981) 147 CLR 589
Proceeding dismissed; the applicants must pay the respondent’s costs, to be taxed in default of agreement under County Court Scale D, with the costs order stayed for 30 days from agreement on taxation.