Issue estoppel
72 Mr Simos submitted that the reasons for judgment of Branson J created an issue estoppel in relation to the issues:
· Was Mr Simos negligent in relation to the performance of his retainer for Yates?
· Was any conduct of Mr Simos misleading, deceptive or likely to mislead or deceive?
It was submitted that there was an issue estoppel in relation to these issues so that any cross‑claim against Mr Simos, which relied on causes of action in negligence and conduct which was misleading or deceptive or likely to mislead or deceive, was doomed to failure. Accordingly, as it was futile to allow the amendments to the cross‑claim, I should not exercise my discretion to grant leave to amend.
73 Mr Simos submitted that Branson J, in dismissing the claim against Mr Simos, determined factual issues which were necessary for her to determine before she reached her decision. The particular factual issues which Branson J decided were whether Mr Simos was liable to Yates either in negligence or by reason of contravention of s 42 of the Fair Trading Act. It was said that these issues were directly raised for determination and in controversy between Abbott Tout and Mr Simos at the time of Branson J's determination because of the existence of Abbott Tout's amended cross‑claim which had been filed but which was not presented for determination before Branson J. Mr Simos submitted that the causes of action raised in the proposed further amended cross‑claim raised for determination the same issues and conduct which had been decided by Branson J in reaching her decision and that accordingly the claims against Mr Simos should be dismissed.
74 As an anterior point Mr Simos submitted, but did not press the proposition, that the duty alleged against Mr Simos in the proposed further amended cross‑claim was not a duty known to the law. However, at this stage I am satisfied, having regard to the current trend of authorities, that it is arguable that there may be such a relationship of proximity between an instructing solicitor and counsel retained by the solicitor that, independently of the duty of care which counsel owes to the client, there is also a duty of care owed to the instructing solicitor to carry out the retainer for the client in a competent manner.
75 Put shortly, Mr Simos submitted that the duty of care owed by Mr Simos to Yates was the same duty of care that Abbott Tout was seeking to allege was owed by Mr Simos in the proposed further amended cross‑claim. Mr Simos expanded on this submission by comparing relevant allegations in the final statement of claim delivered in the principal proceeding with the allegations raised in the proposed further amended cross‑claim.
76 It is therefore necessary to identify the substantive allegations raised in Yates' final statement of claim and to determine Branson J's findings in relation to those allegations.
77 In its final statement of claim Yates:
· set out the underlying facts said to give rise to the claimed special value of the land, sometimes described as the headstart claim (pars 6 to 74);
· set out the allegations against Abbott Tout in relation to the terms of its retainer, the duty of care it owed to Yates, the breaches of the retainer and duty and the respects in which it engaged in conduct that was misleading or deceptive or likely to mislead or deceive (pars 75 to 98);
· set out the allegations against Mr Simos in relation to the duty of care he owed to Yates (par 102), the breaches of that duty (par 103) and the respects in which he engaged in conduct that was misleading or deceptive or likely to mislead or deceive (par 107);
· set out the allegations against Mr Webster in relation to the duty of care he owed to Yates, the breaches of that duty and the respects in which he engaged in conduct that was misleading or deceptive or likely to mislead or deceive (pars 114 to 130).
In particular the duty said to be owed by Mr Simos to Yates is expressed in very wide and general terms The breach of duty alleged is then set out and, in particular, it is alleged (par 103(f)) that Mr Simos negligently failed to advise Yates "accurately on all or any alternative ways in which to formulate and establish the Claim [for compensation]". Particulars are then given of the respects in which Mr Simos failed to advise on or formulate the special value and "headstart" claim (sub‑pars (g), (h), (i), (j) and (k)). Put generally, the claim against Mr Simos was that he was negligent in carrying out the work comprised in his brief and that he was guilty of misleading and deceptive conduct.
78 In order to determine whether the judgment of Branson J gives rise to an issue estoppel upon which Mr Simos can rely, against the issues raised in the proposed further amended cross‑claim, it is important to understand what matters are covered by an issue estoppel or a judicial determination of an issue of fact or law. A classic formulation of the principle is found in the judgment of Dixon J in Blair v Curran (1939) 62 CLR 464 where at 531‑533 his Honour said:
"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 (1), 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 (Hoystead v. Commissioner of Taxation (2)). 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.
The difficulty in the actual application of these conceptions is to distinguish the matters fundamental or cardinal to the prior decision or judgment, decree or order or necessarily involved in it as its legal justification or foundation from matters which even though actually raised and decided as being in the circumstances of the case the determining considerations, yet are not in point of law the essential foundation or groundwork of the judgment, decree or order."
These passages immediately raise for consideration the questions:
· What were the issues of fact or of law disposed of by the judgment of Branson J?
· What were the matters necessarily established as the legal foundation or justification for the Court's conclusion?
· What was legally indispensable to the Court's conclusion?
· What were the ultimate facts which formed the ingredients of the cause of action against Mr Simos?
· What were the matters cardinal to the Court's decision or necessarily involved in it as its legal justification or foundation?
Mr Simos submitted that Branson J's judicial determination of the dismissal of the claim against him meant that he had not breached the duty of care he owed to Yates and fell within the formulation of issue estoppel in Blair v Curran (supra) because the issue determined in Mr Simos' favour was - did he negligently fail to exercise the professional care, skill and diligence reasonably to be expected from a practising barrister? Putting the matter round the other way - Did Mr Simos prepare and prosecute the claim competently (cf: par 103(d) of statement of claim)? Mr Simos submitted that Branson J answered this question in his favour.
79 Mr Simos also submitted that, in the language of Dixon J in Blair v Curran (supra), matters cardinal to Yates' claim against him dismissed by Branson J could not be raised in the proposed further amended cross‑claim as to raise them is to assert that Branson J's decision is erroneous.
80 Whether this proposition can be made out depends upon whether the allegations against Mr Simos in the proposed further amended cross‑claim raise issues which go beyond those raised against Mr Simos in the final statement of claim.
81 An analysis of the proposed further amended cross‑claim and Abbott Tout's submissions shows that Abbot Tout relies for the existence of the duty of care owed to it by Mr Simos upon Mr Simos' dutyto Yates. The cross‑claim proceeds upon the basis that:
· Simos assumed a responsibility to Abbott Tout to provide Yates and Abbott Tout with the relevant advice;
· Simos knew that Abbott Tout relied upon Simos to provide Yates and Abbott Tout with the relevant advice;
· it was reasonably foreseeable by Simos that if he failed to provide Yates and Abbott Tout with the relevant advice, Abbott Tout might incur liability for any consequent loss and damage to Yates and thereby suffer loss and damage;
· Simos therefore owed a duty of care to Abbott Tout to provide Yates and Abbott Tout with the relevant advice;
· if Abbott Tout is liable to Yates then, in breach of the duty Simos owed to Abbott Tout, Simos failed to provide Yates and Abbott Tout with the relevant advice;
· Simos made misrepresentations to Abbott Tout which are identical to the representations alleged in the statement of claim.
Mr Simos said that it is an essential finding of Branson J that Mr Simos did not give careless advice to Yates.
82 Mr Simos demonstrated the submission that the duty of care owed to Yates was the same as the duty alleged in the proposed further amended cross‑claim by reference to the particular structure of the allegations in the proposed further amended cross‑claim. For example, in par 3 it is alleged that, in accepting a brief from Abbott Tout to advise and appear on behalf of Yates in its claim for compensation, each of Mr Simos and Mr Webster:
"assumed a responsibility to the cross claimant to provide the applicant and the cross‑claimant with all necessary advice in relation to the items of compensation available to the applicant …"
Paragraph 4 continues in the same way by alleging that each of Mr Simos and Mr Webster knew or ought to have known that Abbott Tout relied upon each of Mr Simos and Mr Webster:
"to provide the applicant and the cross‑claimant with all necessary advice in relation to the items of compensation available to the applicant in the proceedings …"
Paragraph 5 alleges that it was reasonably foreseeable by each of Mr Simos and Mr Webster that:
"Should they fail to provide the applicant and the cross‑claimant with all necessary advice in relation to the items of compensation available to the applicant …"
Abbott Tout might incur liability for any consequent loss and damage to Yates and thereby itself suffer loss and damage.
83 Paragraph 6 alleges:
"In the premises each of the cross‑respondents owed a duty of care to the cross claimant to provide the applicant and the cross‑claimant with all necessary advice in relation to the items of compensation available to the applicant in the proceedings …"
Paragraph 7 alleges that if Abbott Tout is liable to Yates on any of its causes of action then Abbott Tout says that:
"in breach of the duty owed to the cross claimant each of the cross‑respondents failed to provide the applicant and the cross claimant with all necessary advice in relation to the items of compensation available to the applicant …"
The particulars under par 7 are in the following terms:
"(a) Each of the cross respondents failed to advise the applicant or the cross‑claimant that compensation was available to it on the basis that it had an advantage or a 'headstart' over any other hypothetical purchaser of the land as a result of being in a position to develop a market on the land more quickly than any other hypothetical purchaser ('headstart claim').
(b) Each of the cross respondents failed to advise the applicant or the cross‑claimant of the steps that should have been taken to have compensation on the basis of the headstart claim properly assessed so that it could be reflected in the claims for and in the award of compensation by the marshalling and presentation of lay and expert evidence to prove the existence and value of the headstart.
(c) Each of the cross respondents failed to take any steps to have compensation on the basis of the headstart claim properly assessed so that it could be reflected in the claim for and in the award of compensation."
84 Mr Simos submitted that the duty alleged by Yates against Mr Simos in par 102 of the final statement of claim was expressed in wide terms but was in substance no different from the duty alleged in the proposed further amended cross‑claim.
85 Mr Simos submitted that the duty alleged in par 6 of the proposed further amended cross‑claim did not go beyond what the duty required Mr Simos to carry out vis‑a‑vis Yates. It was further submitted that the breaches alleged in par 103 of the final statement of claim were in substance replicated in the breaches alleged in par 7 of the proposed further amended cross‑claim. Mr Simos compared par (a) of the particulars under par 7 of the cross‑claim with subpars 103(b), (d), (e) and (f) of the final statement of claim and subpars (h), (i), (j) and (k) of the particulars under par 103. It was submitted that they were the same allegations in substance and that when one analysed Branson J's reasoning and her finding of no negligence against Mr Simos it was clear that the issue raised in par 7 of the proposed further amended cross‑claim and the particulars in subpar (a) had been decided by Branson J.
86 Similar submissions were made comparing subpars 103(b), (d), (e), (f), (i) and (n) of the final statement of claim and subpars (h), (i), (j), (k), (o) and (p) of the particulars under par 103 with par 7 and the particulars under it in subpars (b) and (c).
87 Similar submissions were made comparing subpars 103(f), (i) and (o) of the final statement of claim and subpars (h), (i), (j) and (k) of the particulars under par 103 and par 104(a), (b) and (e) with the allegations of negligent advice and reliance found in pars 8 and 9 of the cross‑claim.
88 Paragraph 104 of the final statement of claim alleged (in particular subpars (1), (b) and (e)) that Mr Simos had made certain implied representations to Yates. The same representations were raised in pars 8 and 11 of the proposed further amended cross‑claim. This issue was decided in favour of Mr Simos by Branson J (at 214) who concluded that Yates had failed to establish that the respondents' conduct, as legal representatives, had any potential to mislead or deceive.
89 In her reasons for judgment (at 191‑199) Branson J found that no negligence had been established against Abbott Tout, Mr Simos or Mr Webster in connection with the headstart claim (at 198). This conclusion or finding effectively resolves the allegation of breach of duty raised in par 7 of the proposed further amended counterclaim and particularised in subpars (a) and (b) of the particulars. Branson J accepted the validity of the reasoning of Mr Simos and Mr Webster not to call Mr Yates as a witness. Branson J also found the issues whether Mr Simos and Mr Webster had given negligent advice and whether Yates had relied on that evidence in favour of Mr Simos and Mr Webster.
90 The analysis of the final statement of claim and the proposed further amended cross‑claim undertaken by Mr Simos must be considered with care because it is most important to identify what is the particular issue of fact or law which is said to be the subject of an issue estoppel.
91 Mr Meagher SC, who appeared with Mr Whitford for Mr Simos, submitted that the issue which was the subject of the issue estoppel was whether Mr Simos had conducted the case competently, that is to say did his conduct meet the relevant standard of care. Mr Macaulay, who appeared for Abbott Tout, submitted that the correct issue on which to focus in determining whether there was an issue estoppel which foreclosed the issues raised in the proposed further amended cross‑claim was whether Mr Simos breached the duty of care he owed to Yates. It was that issue or finding on an ultimate fact which Branson J determined in favour of Mr Simos. There were findings on evidentiary facts made along the way to that finding on the ultimate fact but, in the language of Dixon J in Blair v Curran (supra), those findings did not give rise to preclusion.
92 The issue which arises for determination is how to decide what is an ultimate fact and what is an evidentiary fact. Blair v Curran (supra) answers the question by reference to what is legally indispensable to the conclusion, the ultimate facts which form the ingredients in the cause of action and matters cardinal to the groundwork of the decision itself though not directly the point at issue.
93 As Gleeson CJ said in Murphy v Abi‑Saab (1995) 37 NSWLR 280 at 288, after referring to the passages extracted from Blair v Curran above:
"The difficulty is to distinguish between decisions of fact or law fundamental or cardinal to the judgment and other decisions. One thing, however, is clear. Only a decision about a matter which it was necessary to decide can create an issue estoppel …
A practical test of whether a decision is fundamental is to ask whether it is possible to appeal against that finding: Spencer Bower and Turner, The Doctrine of Res Judicata, 2nd ed (1969) at 182".
94 Abbott Tout submitted that the application of this test resulted in the conclusion that there was no issue estoppel in favour of Mr Simos. This was because Yates could not have appealed against a finding that Mr Simos did not act in breach of the standard of care imposed upon him nor did Mr Simos breach the duty of care he owed without identifying the party in whose favour the duty of care was owed. It was said that the relevant ultimate issue decided by Branson J was whether Mr Simos breached the duty he owed to Yates by failing to conform to the standard of care he owed to Yates. The issue raised in the proposed further amended cross‑claim was whether Mr Simos breached a duty owed to Abbott Tout by failing to conform to the standard of care owed to Abbott Tout as his instructing solicitors.
95 Abbott Tout submitted these were different issues and that a finding in favour of Mr Simos as against Yates did not give rise to an estoppel as against Abbott Tout although there may involved in each issue similar findings of fact, such as whether the advice of Mr Simos conformed to a given standard. It was said that whether the advice given by Mr Simos was advice which a prudent skilled legal practitioner should have given constituted an evidentiary fact and not an ultimate fact and that the ultimate issue whether Mr Simos breached a duty he owed to Yates was a different issue to that whether Mr Simos breached any duty he owed to Abbott Tout.
96 Abbott Tout relied on Jackson v Goldsmith (1950) 81 CLR 446 in support of this submission and cited the following passage in the judgment of Latham CJ at 455‑456:
"In the District Court the issue was whether Goldsmith had been guilty of contributory negligence, that is, had he contributed to the injury to Jackson by either-(1) carelessness with respect to his own safety; or (2) breach of a duty which he owed to Jackson to take care? What was decided was that Goldsmith was not guilty of contributory negligence. This decision therefore negated the following propositions:-(1) that Goldsmith contributed to his own injury by carelessness for his own safety; (2) that he contributed thereto by negligence consisting in a breach of a duty owed by him to Jackson to take care.
In the third party proceedings in the Supreme Court the question is whether Goldsmith is liable in respect of the injury done to White by reason of a breach of duty to take care which he owed to White."
It was said that this passage demonstrated the manner in which different ultimate issues will arise albeit out of the same or similar fact situations.
97 A similar situation arose in Linsley v Petrie [1998] 1 VR 427 where the plaintiff was injured in a collision between a car driven by her and a car driven by the defendant. The plaintiff's insurer indemnified her for the value of her car, paid her out and exercised its right of subrogation by bringing a proceeding in the Magistrates' Court to recover damages from the defendant. The Magistrate held that the defendant had not been negligent and dismissed the proceeding. The plaintiff brought proceedings in the County Court against the defendant for damages for personal injuries she suffered in the accident. The Victorian Court of Appeal held that no issue estoppel had arisen as a result of the decision in the Magistrates' Court which precluded the plaintiff from bringing the County Court proceeding. The members of the Court differed in their reasoning. There are a number of observations in the judgment of Hayne JA which are relevant to the present issues.
98 After citing the first two paragraphs from Blair v Curran (supra) referred to earlier in par 78, his Honour posed the relevant enquiry at 429:
"It is therefore of the first importance to identify with care the issue of fact or law which is said now to be the subject of an issue estoppel."
Hayne J analysed Brunsden v Humphrey (1884) 14 QBD 141 in which the majority of the Court of Appeal held that the owner of a cab involved in collision with the defendant's van as a result of the negligence of the driver of the van was not barred from bringing an action for personal injuries suffered in the collision by reason of his having brought an earlier action for damage to the cab and recovering the amount claimed from the defendant. The majority concluded that the action for damages to the cab was founded on a different cause of action for damages for personal injury. Hayne J also noted that Brunsden v Humphrey had been the subject of considerable criticism.
99 Hayne J then turned his attention to Azzopardi v Bois [1968] VR 183. In proceedings in the Court of Petty Sessions both parties claimed damages for the damage to their vehicles. Both were found negligent and responsibility was apportioned 60% to Azzopardi and 40% to Bois. In proceedings brought by Azzopardi in the Supreme Court for damages for personal injuries Adam J held that Azzopardi was estopped from alleging that the collision was caused entirely by the negligence of Bois but was not estopped from claiming that responsibility should be apportioned differently from the apportionment in the Court of Petty Sessions. Hayne J then said at 434:
"This criticism of Brunsden v. Humphrey has considerable weight if the difference in kind of damage sustained by the plaintiff is the only distinction to be drawn between an action for personal injuries and an action for property damage caused in a single highway collision. But is it the only difference? What of the duty of care and the standard of care?
It may be accepted that a road user owes a single duty to take reasonable care not to injure those persons whom the user may reasonably foresee will be injured if that care is not taken and there is a sufficient relationship of proximity between the person injured and the supposed tortfeasor. Accordingly it may no longer be appropriate to examine questions of duty of care by reference to the interests of the plaintiff that are to be protected and it would follow that the analysis by Machin ['Negligence and Interest' (1954) 17 Modern Law Review 405] may therefore be of no assistance. However, whether or not that is so, it seems to me that Adam J. was right to say, as he did in Azzopardi v. Bois, that in a case of this kind there are not two distinct duties of care owed by the allegedly negligent driver. That is, the driver does not owe one duty to avoid damage to the property of A and another, different, duty to the same person to avoid personal injury.
That is not to say that different duties may not be owed to different persons. It may be that the duty a driver owes to A is different from the duty that driver owes to B. However, I need not consider this question and thus need not consider the various cases which have examined whether Jackson v. Goldsmith is authority for a general proposition that there can be no issue estoppel where breaches of different duties are litigated.
But to decide that Linsley owed Petrie but a single duty of care does not conclude the matter.
The estoppel which now is said to be created by the determination of the earlier Magistrates' Court proceeding is not an estoppel against contending that Linsley owed Petrie a duty of care, it is an estoppel against contending that in the particular circumstances of this collision, there was a breach of that duty.
Counsel for Linsley submitted that to distinguish between the standard of care to be exercised to avoid damage to Petrie's property and the standard of care to be exercised to avoid damage to her person would be to draw distinctions without difference where, as here, the property that was damaged was nothing but the vessel containing Petrie and by reason of collision with which she was injured both in her property and her person.
As I have already mentioned, if, as Adam J. pointed out in Azzopardi v. Bois there are different factors which may bear upon apportionment of responsibility between parties according to whether the plaintiff claims damages for personal injuries or for damage to property, why may there not be different factors which bear upon whether one of the drivers breached the relevant standard of care according to whether the resulting damage was to person or to property? In my view, there may. The steps which a driver may reasonably be expected to take to avoid colliding with an empty supermarket shopping trolley may be very different from the steps that that driver must take to avoid colliding with a child.
It must be acknowledged that there will seldom be any difference in outcome according to whether the collision gives rise to damage to property or damage to person. But the question whether parties are estopped from re‑litigating an issue is not to be answered according to some prediction whether, in any particular case, re‑litigation of the matter would, or might lead to a different outcome. The question is whether parties should be precluded from seeking to obtain a different outcome.
Because the nature of the damage sustained may, in at least some cases, reflect upon the standard of care required of the parties, I do not consider that the issue of breach of duty determined in an action for property damage is the same issue as falls to be determined in the claim for damages for personal injuries. Thus it is not only the difference in kind of damage which leads to the conclusion that the action brought in the Magistrates' Court in this case does not give rise to any res judicata precluding the later maintenance of the claim for personal injuries: not only are the damages claimed different in kind, so too are the issues of breach of duty."
100 Mr Macaulay relied on this line of reasoning to support the proposition that the ultimate or cardinal fact in the proceeding determined by Branson J was whether Mr Simos breached the duty of care he owed to Yates whereas the issue raised in the proposed further amended cross‑claim is whether Mr Simos breached the duty of care he owed to Abbott Tout in carrying out his retainer.
101 I accept this submission. I do not consider that the issue of the breach of the duty which Mr Simos owed to Abbott Tout is the same issue as the breach of the duty which Mr Simos owed to Yates. They are two different issues giving rise to different considerations: cf Jackson v Goldsmith (supra); Linsley v Petrie (supra), not only in relation to the nature and content of the duty owed but also in relation to the nature of the damage which flows from any breach of that duty. There is no identity of issues. What preceded Branson J's finding in this respect, such as whether it was reasonable for Mr Simos to hold the opinions he held, was an evidentiary finding used in determining the ultimate fact. There is no issue estoppel in relation to the duty and breach of duty raised against Mr Simos in the proposed further amended cross‑claim because there was no issue before Branson J as to the duty of care owed by Mr Simos to Abbott Tout or whether any such duty had been breached. Nor was it necessary to decide any matter relating to any duty owed by Mr Simos to Abbott Tout. For the same reason, to seize upon the conduct alleged against Mr Simos and to say it is the same conduct alleged against Abbott Tout and Mr Webster is to ignore the fact that the aspects of conduct referred to relate more to evidentiary matters and is to confuse the determination of ultimate facts and "matters cardinal" to them with evidentiary issues.
102 Mr Macaulay submitted in the alternative that if the relevant ultimate issue was, as Mr Meagher put it, whether Mr Simos had conducted the case competently (that is to say did his conduct meet the relevant standard of care), then there is no finding contrary to what is alleged in the proposed further amended cross‑claim in respect of which an issue estoppel can arise because the Full Court has reversed the finding of Branson J on this issue. Put shortly, it was submitted that there is nothing left standing which is in conflict with the issue propounded in the proposed further amended cross‑claim so that there cannot be inconsistent findings if the allegations in the proposed further amended cross‑claim are established. That submission was advanced on the basis that the same substantive case that was put against Abbott Tout and Mr Webster was put against Mr Simos. The Full Court found that that case was made out against Abbott Tout and Mr Webster who were negligent in the way they formulated, prepared and presented the case for special value.
103 This submission ignores the fact that Mr Simos is entitled to claim res judicata in relation to the issue of his conduct as against Yates. The fallacy of the submission is that Mr Simos' conduct was not the subject of consideration by the Full Court, rather it was the conduct of Abbott Tout and Mr Webster. Although the allegations against them may be the same, mutatis mutandis, as the allegations against Mr Simos it does not follow that it should be said that the Full Court has made a finding that Mr Simos was guilty of negligence. This argument fails to identify that it is the ultimate issue which forms the basis for the res judicata as it does for the issue estoppel if it exists.
104 I have already referred to the observations of Dixon J in Blair v Curran (supra) to the effect that an issue estoppel is confined to the ultimate facts which form the ingredients of the causes of action and that "matters cardinal" to the later claim cannot be raised if to do so is necessarily to assert that the former decision was erroneous. In Sandtara Pty Ltd v Abigroup Ltd (1997) 42 NSWLR 5 the issue was whether a cross defendant to a cross‑claim brought by the defendant in the primary or principal proceeding had the benefit of an issue estoppel against the plaintiff in respect of an issue decided between the plaintiff and the defendant in the primary proceeding. The New South Wales Court of Appeal answered the question in the affirmative and said at 8‑9:
"A third party bound by the decision between the plaintiff and the defendant must also be entitled to rely on it because res judicata estoppels are mutual …
Cenrin [the cross‑defendant] cannot rely on res judicata based on merger of the cause of action because no judgment was given against it on the cause of action for rent. However, as a party to the earlier proceedings, it can rely on issue estoppels flowing from that judgment, which include an estoppel as to the amount of rent due up to 31 August 1992. The distinction was explained in Blair v Curran … by Dixon J [in the passage referred to in par 78 above]."
105 Abbott Tout contended that these principles do not assist Mr Simos in relation to the cross‑claim as Abbott Tout and Mr Simos were not "in controversy" at the time of Branson J's judgment. Abbott Tout submitted that no issue estoppel can arise between defendants unless there be an identity of parties: Taylor v Ansett Transport Industries Ltd (1987) 18 FCR 342 at 357‑358. The manner in which an issue estoppel may arise between defendants has been the subject of analysis in Spencer Bower et al, The Doctrine of Res Judicata 3rd ed 1996 at 112 in the following terms:
"Res judicata estoppels normally operate between plaintiffs and defendants. However they may also operate between defendants. The relevant principles were developed by the Privy Council in Indian appeals. In Munni Bibi v Tirloki Nath [(1931) 58 LR Ind App 158 at 165‑6], the Privy Council said:
'In such a case … three conditions are requisite: (1) There must be a conflict of interest between the defendants concerned; (2) It must be necessary to decide the conflict in order to give the plaintiff the relief he claims and (3) The question between the defendants must have been judicially decided'.
These principles apply where the plaintiff's case failed. In a later case, Lord Simonds said:
'… the doctrine may apply even though the party, against whom it is sought to enforce it, did not in the previous suit think fit to enter an appearance and contest the question. But to this the qualification must be added that, if such a party is to be bound by a previous judgment, it must be proved clearly that he had, or must be deemed to have had, notice that the relevant question was in issue and would have to be decided'.
These principles apply when multiple defendants are sued jointly, severally, or in the alternative in contract, tort, equity or otherwise. They were applied in North Wales Water Ltd v Binnie & Partners by Drake J, although he was not referred to the Privy Council decisions. These cases illustrate a wider principle formulated by Fisher J in Taylor v Ansett Transport Ltd:
'… issue estoppel can only be raised by or applied against parties who were in 'controversy' at the time when the issue was first determined, either in their favour or adversely to them. If a party was not involved in the litigation of that issue, either because it was not an issue between him and another party to the proceedings, or because he was not a party at all … at the time of resolution, then he is not affected by nor can he raise an estoppel. Likewise his presence initially or subsequently cannot affect the right of other parties to raise or rely upon issue estoppel as between themselves".
Abbott Tout submitted that in the present case none of the three conditions referred to in Munni Bibi v Tirloki Nath (1931) 58 LR Ind App 158 at 165‑6 have been met or satisfied.
106 Abbott Tout and Mr Simos had an identical interest in the proposition that the advice given to Yates, in particular by Mr Simos, was not negligent and although there was agreement that neither party would advance a case at trial that the other party was liable to Yates, there was a conflict of interest between Abbott Tout and Mr Simos. The amended cross‑claim was in existence, albeit dormant and yet to be reviewed. Further there was a conflict of interest between Abbott Tout and Mr Simos in the sense that they were both being sued by Yates in respect of a matter in which there was the potential for a different result against each of them in Yates' action. It was necessary to decide which of Abbott Tout, Mr Simos and Mr Webster were guilty of breach of duty, negligence or misleading or deceptive conduct in order to give Yates the relief it sought. That question of the liability of Abbott Tout and Mr Simos to Yates was raised in the cross‑claim in which it was in Abbott Tout's interests to have the issue of Mr Simos' liability to Yates answered in the affirmative and in which it was in Mr Simos' interests to have that issue answered in the negative. It was in the interests of both Abbott Tout and Mr Simos that Yates' action fail against both of them. Abbott Tout had an alternative position. Mr Simos' sole interest was in having the issue of the liability of Abbott Tout and himself to Yates answered in the negative. Abbott Tout's alternative position was that if it was liable to Yates then Mr Simos should also be held liable to Yates. Although the amended cross‑claim for contribution was only activated when liability was found against Yates, its existence placed Abbott Tout and Mr Simos in a position of conflict. Although there may have been a conflict of interest between Abbott Tout and Mr Simos, it was not necessary to decide that conflict in order to give Yates the relief it claimed and the issue between Abbott Tout and Mr Simos was not determined by Branson J. It follows that the three conditions referred to by the Privy Council in Munni Bibi v Tirloki Nath (supra) were not satisfied.
107 The difficulty with the proposition that there was a conflict of interest between Abbott Tout and Mr Simos is that at the time of Branson J's judgment the amended cross‑claim was not before her for decision. However Mr Simos relied upon the decision in North West Water Ltd v Binnie & Partners (a firm) [1990] 3 All ER 547, for the proposition that, in the absence of any cross‑claims between defendants where there is a need to apportion liability or responsibility between defendants, there is a sufficient conflict of interest to give rise to an issue estoppel between defendants. In that case Drake J was not referred to the three Privy Council decisions on appeal from India and did not decide the issue in terms of there being a relevant conflict of interest. Rather he decided the issue on what he called the broad approach to issue estoppel (at 552):
"… which holds that the true test of an issue estoppel is whether for all practical purposes the party seeking to put forward some issue has already had the issue determined against him by a court of competent jurisdiction, even if the parties to the two actions are different. The conflicting approach is to confine issue estoppel to that species of estoppel per rem judicatam that may arise in civil actions between the same parties or their privies: see, for example, Lord Diplock in Hunter v Chief Constable of West Midlands [1981] 3 All ER 727, [1982] AC 529."
After analysing a number of authorities on the two approaches Drake J concluded (at 561):
"In my judgment, this broader approach to a plea of issue estoppel is to be preferred. I find it unreal to hold that the issues raised in two actions arising from identical facts are different solely because the parties are different or because the duty of care owed to different persons is in law different. However, I at once stress my use of the word 'solely'. I think that great caution must be exercised before shutting out a party from putting forward his case on the grounds of issue estoppel or abuse of process. Before doing so the court should be quite satisfied that there is no real or practical difference between the issues to be litigated in the new action and that already decided, and the evidence which may properly be called on those issues in the new action.
I have already decided, when considering abuse of process, that in the present case no such real or practical difference does exist.
Thus on the broader approach to issue estoppel, which in my judgment should be applied, I hold that Binnies are estopped from denying negligence in the present action.
Even if I am wrong about the limits to issue estoppel and the true limit is in fact the narrower one, that is to say that favoured by Goff LJ in McIlkenny v Chief Constable of West Midlands Police Force [1980] 2 All ER 227, [1980] 1 QB 283 and Lord Diplock on the appeal to the House of Lords ([1981] 3 All ER 727, [1982] AC 529), I would still hold that Binnies are in this case caught by issue estoppel. This is because I find that the issues arising in the present action have already been decided and that in practical terms they have been decided between the same parties, the water authority and Binnies. The absence of third party or contribution notices does not affect my finding on this for I think the reality is that all issues concerning negligence were in fact litigated before Rose J and decided by him and subsequently by the Court of Appeal"
I do not consider that what Drake J called the "broader approach" to issue estoppel represents the law in Australia. It is inconsistent with the reasoning in Blair v Curran (supra), Jackson v Goldsmith (supra), Sandtara Pty Ltd v Abigroup Ltd (supra) and Linsley v Petrie (supra).
108 I would venture to disagree with Drake J's proposition that the issues had already, in practical terms, been decided between the same parties. Although the issue of the duty of care owed to those injured and killed by the explosion which had occurred had been decided in the first case, no issue had been determined as to the duty of care or the standard of care owed by the engineers to the water authority.
109 In any event the decision is distinguishable from the facts presently before the Court. In that case there was a substantive dispute between two of the defendants in the primary proceeding albeit there were no cross‑claims filed between them as one defendant (the water authority) in its defence had alleged that the engineers had been guilty of negligence and had caused the explosion. No such allegation had been made in the present proceeding.
110 I therefore do not consider that Branson J's reasons for judgment created an issue estoppel in relation to the issue whether Mr Simos breached the duty of care which he owed to Abbott Tout. That ultimate fact was not determined by Branson J although evidentiary facts along the way to such a determination were the subject of findings. But those findings do not create an issue estoppel in relation to the issue whether Mr Simos breached the duty of care he owed to Abbott Tout.