CTHFCA

Primus Telecommunications Pty Ltd v Kooee Communications Pty Ltd

[2008] FCA 1027

Federal Court of Australia|2008-07-10|Before: Gibbs CJ, Aichin JJ, Kenny JA, Phillips JA, Marshall J

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At a glance

Source facts

Court

Federal Court of Australia

Decision date

2008-07-10

Before

Gibbs CJ, Aichin JJ, Kenny JA, Phillips JA, Marshall J

Source

Original judgment source is linked above.

Judgment (12 paragraphs)

[1]

REASONS FOR JUDGMENT 1 The applicant, Primus Telecommunications Pty Ltd, has applied to the Court for damages from Kooee Communications Pty Ltd in respect of what Primus alleges was misleading or deceptive conduct engaged in by Kooee, in breach of s 52 of the Trade Practices Act 1974 (Cth). Primus also alleges that Kooee made a false representation to it and breached an implied duty to act in good faith in relation to the performance of a contract between Primus and Kooee. 2 Primus filed its application in the Victoria District Registry of the Court on 21 December 2007. By motion filed on 3 March 2008 Kooee applied for an order pursuant to O 20 r 5 of the Rules of Court that Primus' application be stayed or dismissed. In essence, Kooee contends that the claims made by Primus in the current proceeding should have been raised in an earlier proceeding between the two companies in the New South Wales Supreme Court. Kooee submits that the two proceedings arise out of substantially the same facts and that the current proceeding will give rise to the possibility of a judgment inconsistent with that obtained in New South Wales. Kooee further contends that no special circumstances apply to avoid the conclusion that it was unreasonable for Primus to have refrained from raising its current claims in the earlier proceeding.

[2]

ANSHUN AND ITS REQUIREMENTS 3 The legal principle sought to be invoked by Kooee is usually described as Anshum estoppel having its roots in Australia in the judgment of the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589: see especially at 598 and 602-603, per Gibbs CJ, Mason and Aichin JJ. The question for determination in the current proceeding is whether the Anshun principle applies to require Primus' proceeding in this Court to be dismissed without adjudication of its merits. 4 Before embarking on an examination of the relevant facts which are said to give rise to the operation of the Anshun principle, it is important to bear in mind the parameters of the principle guided by Anshun itself and subsequent judgments of the Full Court of this Court and various State Courts of Appeal. I now turn to those matters. I do so mindful of the fact that whether the principle applies depends on the particular circumstances involved: see Egglishaw v Australian Crime Commission (2007) 164 CLR 224 and Gibbs v Kinna (1999) 2 VR 19 at [23] per Kenny JA (with whom Phillips JA agreed). 5 The invocation of the Anshun principle is a serious step and a power which should not be exercised without a scrupulous examination of all the circumstances. It is to be applied only in the clearest of cases as it ends a litigant's right to have the merits of a claim adjudicated and may result in a serious injustice if applied too readily. To do otherwise would be to hamper free access to the courts without careful consideration of the consequences: see Ling v Commonwealth (1996) 68 FCR 180 at 182 per Wilcox J and Gibbs v Kinna at [33]. 6 No estoppel arises unless the new claim relied on was so relevant to the subject matter of the first proceeding that it would have been unreasonable not to rely on it in that proceeding: Anshun at 602-603. However, the concept of relevance is more helpful when considering the failure to raise a defence than a failure to advance a claim: see Gibbs v Kinna at [24] and Egglishaw at [28]. Further, the mere fact that each proceeding is closely related is an insufficient basis to invoke the principle, given that it is concerned with substance and not form and technicalities: Bazos v Doman [2001] NSWCA 347 at [44] per Stein JA (with whom Priestly JA and Beazley JA agreed). 7 Other than in special circumstances, the principle applies if it was unreasonable for a claimant to have refrained from raising the new claim in the earlier proceeding: Anshun at 602; Egglishaw at [21]. The issue is not whether it would have been reasonable to advance the claim beforehand because it was possible to do so but whether it was unreasonable to defer reliance: Egglishaw at [24] and [34] and Gibbs v Kinna (per Ormiston JA) at [2]. 8 In considering the issue of unreasonableness, it is first necessary to determine whether the subject matter of the subsequent claim could have been raised in the earlier proceeding: Anshun at 598; Gibbs v Kinna at [23] and Wong v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) (2004) 146 FCR 1 at [37], per Lindgren J. Next, to invoke the principle, it must be shown that the same or substantially the same facts will arise for consideration in the new proceeding as arose in the earlier proceeding: Gibbs v Kinna at [23]. These two factors were described by Kenny JA in Gibbs v Kinna at [23] as "…necessary but not sufficient considerations for the application of the principle…". 9 Another factor indicative of unreasonableness is whether any judgment or order made in the later proceeding would conflict with any judgment or order made in the earlier proceeding: Anshun at 604; Gibbs v Kinna at [25] and Egglishaw at [32]. Putting to one side this factor and the two factors examined in the preceding paragraphs, there still remains a question whether the failure to raise the claim in the earlier proceeding was unreasonable: Egglishaw at [37]. 10 In considering the issue of unreasonableness one must consider all the facts of the case, including the nature of the proceeding, the pleadings, the length and complexity of the foreshadowed trial and the explanation, if any, for the failure to raise the claim in the previous proceeding: Egglishaw at [33] and Gibbs v Kinna at [28]. 11 Unless the alleged unreasonableness is manifest (such as the likelihood of plainly inconsistent judgments) considerable caution should be exercised in summarily dismissing the subsequent application at an early stage of the proceeding when it may be more appropriate for the issue to be considered upon "meticulous examination [of] precisely pleaded defences": Custombuilt Homes Pty Ltd v Dowell [2005] WASCA 221 at [9] per Wheeler JA (with whom Steytler P agreed). 12 A finding of relevant unreasonableness is not to be made lightly. It is a severe test different from a test of severe inconvenience. The starting point should be free access to the courts: R & J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd [2008] NSWSC 232 per Bryson JA.

CONSIDERATION 25 The claims raised in the current proceeding were relevant to the subject of the earlier proceeding given that the same parties were agitating issues concerning the breakdown of their commercial relationship. However, the fact that the New South Wales litigation and this proceeding are closely related is insufficient to invoke the Anshun principle. The question remains whether it was unreasonable for Primus to defer reliance on its current claims. 26 Based in large part on the inadequacy of the response of Primus' solicitor when asked why he did not raise the current issues earlier, the subject matter of the current claims could have been raised in the New South Wales Supreme Court at first instance. This may have been done by way of an amendment to that proceeding; with the original New South Wales claims raised in addition or in the alternative. 27 Although there are documents such as the VSPA, the Separation Deed, the Letter Agreement, the Purchase offer, the Digiplus offer and the B Digital/SP Telemedia Deed, which were referred to in evidence in New South Wales and are relevant to the current proceeding, the facts which are relevant to the instant proceeding are not substantially the same as those admitted in New South Wales. The critical facts in the current proceeding will concern the conduct of Kooee from about October 2004 until July 2005 with respect to the circumstances of the Purchase offer and the availability or otherwise of the services referred to in it. Those issues were not relevant to the monetary entitlement of the parties under the Separation Deed. It is not to the point that some of the evidence tendered in the New South Wales case will, in all likelihood, be sought to be relied on in this proceeding. The focus of this proceeding is different in nature to the focus of the litigation in the New South Wales Supreme Court. In Gibbs v Kenna at [23], Kenny JA observed that there would be "a good deal of overlap" in the evidence in the two cases her Honour examined, however that concept is not necessarily the same as the concept that the factual material will be substantially the same. Here the critical facts required to make out the current application did not require examination in the earlier litigation. On that basis alone it was not unreasonable for Primus to defer raising the current claims. 28 There is a further consideration in support of the view that Primus did not act unreasonably in not raising the issues in the current application in the New South Wales Supreme Court proceeding. That reason would defeat the current motion even if the view that the facts are not substantially the same is in error. The reason is that no judgment or order can be made in the current proceeding which will conflict with any judgment or order made in New South Wales. The judgments in New South Wales give effect to the Separation Deed by interpreting the rights of the parties under it. Any judgment in this proceeding will focus on the conduct of Kooee in the six month or so period leading up to the termination of the VSPA to examine whether Kooee engaged in conduct of the kind which caused compensable damage to Primus. As Einstein J said at [10] in Primus Telecommunications Pty Ltd v Kooee Communications Limited [2007] NSWSC 91: The VSPA received only minimal attention during the hearing. It is likely sufficient for present purposes to do no more than to set out the recitals and some detail from the schedules. 29 An examination of the entirety of those reasons gives no cause for concern of any likely embarrassment in the sense that this Court will be required to consider taking a contrary view on any issue to that taken by Einstein J or the Court of Appeal. On this ground alone the motion must be dismissed. It is not unreasonable to defer the bringing of a claim which could have been brought in an earlier proceeding if there is no likelihood of inconsistent orders or judgments. In this context the submissions of Primus on the deed of release issue referred to at [21] above are persuasive. 30 The alleged unreasonableness is not manifest. No doubt it would have been more convenient for the issues raised in the current proceeding to have been advanced in New South Wales, but that is not the question. It is not appropriate when considering the Anshun principle to say what a party could reasonably have done. The proper question is, was it unreasonable to do as that party did? In any event there is much force in the view expressed by Wheeler JA in Custombuilt Homes that one should exercise considerable caution in summarily dismissing an application before the issues are crystalised after the filing of a defence. To this one might add "and/or contentions of fact and law". A judgment dismissing the matter before the Court is interlocutory in nature. It would still be open to Kooee to advance its submissions based on the Anshun principle at the trial of the proceeding when the issues will be more clearly defined.