- Unreported Judgment
SUPREME COURT OF QUEENSLAND
11 January 2007
13 December 2006
1.The following parts of the defendant’s amended defence are struck out:
(a)paragraphs 5, 7(b) and (c), 12, 13(c), 14(c), 17(a), 17(c)(i) to (iii), 19, 21(b) to (d), 22(d) and (e), 23 and 24(a) and (b);
(b)the words ‘the defendant repeats paragraph 5 hereof’ and each occurrence of the word ‘proposed’ in paragraph 6;
(c)the words ‘and otherwise refers to the facts and matters set out in paragraph 17(c)(iii)’ in paragraph 10;
(d)the words ‘if there was a contract’ in paragraph 18;
(e)the words ‘If the contract alleged was entered into’ in paragraph 21(a);
(f)paragraphs 7(a) and (b), and 12, with leave to replead those paragraphs;
2.the defendant is to pay the costs of the application to be assessed the standard basis.
ESTOPPEL – FORMER ADJUDICATION AND MATTERS OF RECORD OR QUASI OF RECORD – FORMER ADJUDICATION – JUDGMENT INTER PARTES – PARTIES – WHO MAY RELY ON – in an earlier action the first plaintiff obtained judgment against the defendant – second plaintiff an undisclosed principal of the first plaintiff and not a party to the earlier action – issue estoppel – whether the second plaintiff is the first plaintiff’s privy who may rely on issue estoppels arising in favour of the first plaintiff against the defendant
PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – PLEADING – DEFENCE AND COUNTERCLAIM – issue estoppel – defendant’s defence brings in issue an adjudication in an earlier proceeding – rules of pleading – adequacy of explanation for non-admissions in defence – whether parts of the defence should be struck-out because the defendant is estopped or has not adequately explained its non-admissions
Uniform Civil Procedure Rules 1999 (Qld), r 166, r 292(2)
Blair v Curran (1939) 62 CLR 464, followed
IVI Pty Ltd v Baycrown Pty Ltd  QSC 430, considered
IVI Pty Ltd v Baycrown Pty Ltd  QCA 205, cited
IVI Pty Ltd v Baycrown Pty Ltd  QSC 330, cited
IVI Pty Ltd v Baycrown Pty Ltd  QCA 461, cited
Port of Melbourne Authority v Anshun Pty Ltd (1980) 147 CLR 589, cited
Ramsay v Pigram (1967) 118 CLR 271, followed
Siu Yin Kawn v Eastern Insurance Co Ltd  2 AC 199, considered
Trawl Industries of Australia Pty Ltd (in liq) v Effem Foods Pty Ltd (1992) 36 FCR 406, followed
Trawl Industries of Australia Pty Ltd (in liq) v Effem Foods Pty Ltd (1993) 43 FCR 510, followed
Mr H B Fraser QC for the plaintiffs
Mr J A Griffin QC, with him Mr S S Monks, for the defendant
Kinneally Miley for the plaintiffs
Walsh & Partners for the defendant
 The plaintiffs sue as alternatives for a decree of specific performance of a written contract dated 24 October 2002 for the sale by the defendant to the first plaintiff of land for the price of $8,800,000 plus GST. The plaintiffs’ claim is made on the alternate basis that either the first plaintiff or the second plaintiff is entitled to enforce the contract. It was the first plaintiff which executed the contract but it did so as agent for the second plaintiff. Both the fact of agency and the identity of the second plaintiff as principal were kept from the defendant. Its title to sue in the contract comes from the fact that it was the undisclosed principal of its agent, the first plaintiff, who contracted on its behalf.
 In Siu Yin Kwan v Eastern Insurance Co Ltd  2 AC 199 at 207 Lord Lloyd said, for the Privy Council:
‘The main features of the law relating to an undisclosed principal have been settled since at least at the end of the eighteenth century. …
For present purposes the law can be summarised shortly as follows. (1) An undisclosed principal may sue and be sued on a contract made by an agent on his behalf, acting within the scope of his actual authority. (2) In entering into the contract, the agent must intend to act on the principal’s behalf. (3) The agent of an undisclosed principal may also sue and be sued on the contract. (4) Any defence which the third party may have against the agent is available against his principal. (5) The terms of the contract may … exclude the principal’s right to sue, and his liability to be sued. The contract itself … may show that the agent is the true and only principal.’
 In earlier proceedings, BS9907 of 2002, the defendant disputed the existence of the contract. It asserted that its written offer to sell the land to the first plaintiff had been withdrawn before the latter accepted it. On 3 December 2004 Philippides J held that the acceptance had occurred prior to the communication to the first plaintiff of the fact that the defendant had withdrawn the offer. Her Honour declared that the contract was ‘a valid contract binding on the defendant’:  QSC 430. An appeal was dismissed on 10 June 2005:  QCA 205, and the High Court refused special leave to appeal:  HCATrans 1031.
 The parties by their respective solicitors made arrangements for the completion of the contract, the payment of the balance purchase price and the contemporaneous delivery of a conveyance to the land, to occur on 9 March 2005 at the office of the defendant’s mortgagee’s solicitor’s office. At that time and place the second plaintiff tendered the purchase price but the defendant refused to convey the land to either first or second plaintiff. By letter dated 9 March 2005 the defendant’s solicitors asserted that the contract had been validly terminated on 31 October 2002 and that there ‘was no longer a contract to perform’.
 In these proceedings the plaintiffs claim, as I have mentioned, a decree of specific performance. Their statement of claim was delivered on 10 August 2005. The defendant’s defence puts in issue the validity of the contract and asserts that it does not exist and/or does not bind the defendant. The plaintiffs apply to have parts of the defence struck out on the ground that those parts which deny that the contract is binding on the defendant are inconsistent with findings of fact made by the Court in the earlier proceedings. Those determinations are said to give rise to an issue estoppel preventing the defendant re-litigating those questions.
 The defendant’s answer to the application is to say that the parties in the previous proceeding, BS9907 of 2002, were the first plaintiff and the defendant, while in these proceedings it is the second plaintiff, Norfolk Estates Pty Ltd, which is seeking to enforce the contract on the basis that it was nominated as the purchaser by the first plaintiff, or on the basis that it was the undisclosed principal of the first plaintiff and is entitled to sue on the contract and obtain a conveyance of the land. The defendant contends that there is no issue estoppel binding it with respect to the second plaintiff’s claim.
 Whether or not the second plaintiff may take the benefit of the estoppels which certainly arise with respect to the first plaintiff depends upon whether it was a privy of the first plaintiff. An issue estoppel binds a party and its privies as Dixon J explained in Blair v Curran (1939) 62 CLR 464 at 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. The estoppel covers only those matters which the prior judgment … necessarily established as the legal foundation or justification of its conclusion …’.
 The applicants’ submissions summarise the findings of fact found by Philippides J, upheld on appeal. They were that:
‘(a)Cleary & Hoare (and that firm’s partner, Mr Martinez) did not have actual or ostensible authority to … receive on behalf of [the first plaintiff] communications [from the defendant] withdrawing its offer;
(b)[the defendant’s] agent, Mr Gahan, did not tell [the first plaintiff’s] agent, Mr Moss, that the offer was withdrawn before Mr Moss [accepted] the offer [by email];
(c)accordingly, [the defendant’s] offer to sell the land to [the first plaintiff] was not withdrawn before acceptance by [the first plaintiff] and therefore a contract came into existence and is binding on [the defendant].’
 It is these findings which the defendant wishes to contest in these proceedings.
 Paragraph 5 of the statement of claim alleges that the defendant sold, and the first plaintiff bought, the land by a written contract by on 24 October 2002. Paragraph 5 of the defence denies that allegation ‘as untrue’. The basis for the denial was that:
‘… by signing an REIQ contract as seller (“the proposed contract”) it made an offer to sell the land … but says the offer was withdrawn before acceptance. The defendant admits that, in proceedings number S 9907 of 2002, this … Court held that the defendant’s withdrawal … was not received … prior to acceptance … The decision of this … Court remains the subject of review. The defendant admits that, whilst the decision stands, the defendant is, in proceedings between the first plaintiff and the defendant, bound by the decision.’
 In para 17(c)(iii) of the defence the defendant:
‘says further that, as between the second plaintiff and defendant, no contract came into existence because revocation of the offer … was communicated:
(aa)on 23 and 24 October 2002 to … Moss, Gahan, Martinez, Clearly and Hoare, and Ian Russell, director of [the second plaintiff] … each of whom were agents for … [the second plaintiff];
(bb)on 24 October 2002 to the second plaintiff … by a letter from Gahan to Moss dated 24 October 2002 confirming revocation …’.
 The only substantial question which arises on the application is whether the plaintiffs were privies for the purposes of the doctrine of issue estoppel.
 In my opinion they clearly were. There was one contract pursuant to which the defendant became obliged to sell its land for a price of $8,800,000. The contract was enforceable at the suit of the first plaintiff or the second plaintiff. Which party sought to enforce the contract was to be determined by the election of the second plaintiff, the undisclosed principal of the first plaintiff which made the contract on its behalf. The second plaintiff’s interest in the contract and the land are derived from the contract which the first plaintiff made. There was only one ‘interest’: the contractual right to buy the land. It is the second plaintiff’s interest but it may elect that that interest will be protected by suit brought by the first plaintiff. I agree with the submissions of Mr H Fraser QC that it is hard to imagine a case where the interests of the two parties, said to be privies, could be closer.
 In Ramsay v Pigram (1967) 118 CLR 271 Barwick CJ said (at 276):
‘… an estoppel is available to prevent the assertion in … proceedings of a matter of fact or of law in a sense contrary to that in which that precise matter has already been necessarily and directly decided by a competent tribunal in resolving rights or obligations between the same parties in the same respective interests or capacities, or between a privy of each, or between one of them and a privy of the other in each instance in the same interest or capacity.’
At 279 his Honour went on:
‘The basic requirement of a privy in interest is that the privy must claim under or through the person of whom he is said to be a privy.’
 In Trawl Industries of Australia Pty Ltd (in liquidation) v Effem Foods Pty Ltd (1992) 36 FCR 406 Gummow J said (413):
‘The requirement of identity of parties between the parties in the concluded action and the action in which the estoppel is raised is satisfied where there is privity in interest. The basic requirement of a privy in interest is that the privy must claim “under or through” the person to whom he is said to be a privy. Privity was described in Bigelow v Old Dominion Copper Mining and Smelting Co … in terms consistent with traditional doctrine, as a mutual or successive relationship to the same right of property. Thus, the necessary identity in interest may arise from a successive relationship in a temporal sense. Accordingly, a judgment against the holder of an office will bind successors in that office … The necessary identity in interest in this sense is also seen with privies by operation of law, such as testator and … executor …’
 On appeal ((1993) 43 FCR 510) Northrop and Lee JJ said (at 526):
‘… privity of interest is limited to cases where a person claims a title or right or makes a claim by virtue of a title or right in someone before him.’
 It is clear that the second plaintiff claims a right by virtue of the first plaintiff’s right. It is the very same right (of contract) and the first plaintiff asserted it prior to the second plaintiff’s claim. It is also clear that the second plaintiff seeks to supplant the first plaintiff, its agent, in enforcing the contractual right. The second plaintiff succeeds to the first plaintiff’s right because it is the undisclosed principal which has elected to enforce the contract by itself and in its own name.
 This disposes of the defendant’s resistance to the attack on its defence. One other point should be mentioned shortly. It concerns the assertion in paragraph 5 of the defence that the decision of this Court, dismissing the appeal against the declaration made by Philippides J, ‘remains the subject of review.’
 The defendant brought an application under UCPR 668 for an order that the declaration made by Philippides J on 3 December 2004 be set aside. The ground for the application was that after the declaration had been made the defendant discovered that the plaintiffs’ solicitors had sent Mr Gahan’s statement to Mr Moss, the principal of the plaintiffs, for his correction and comment. Mr Gahan was the defendant’s real estate agent and an important witness. The conduct would appear to have been unwise, if not improper, but I was informed that the defendant expressly eschewed any allegation of fraud or collusion on the part of the plaintiffs in prosecuting their action for the declaration. I take it, therefore, that the defendant did not contend that Mr Gahan was suborned to give false evidence.
 In the absence of such a case it is perhaps not surprising that the application to set aside the declaration was unsuccessful:  QSC 330. An appeal from that judgment was also unsuccessful:  QCA 461. An application for special leave to appeal against the dismissal of the appeal has been filed in the High Court and is expected to be heard some time in March 2007.
 It is for this reason that the defendant pleads that the judgment giving rise to the estoppels is ‘subject to review’.
 The true situation is that, should the High Court grant leave to appeal and subsequently allow the appeal, the declaration of 3 December 2004 will be, or may be, set aside, and there will be a new trial. Unless and until that happens the judgment of the Court stands as a binding judgment giving rise to all necessary estoppels. Should it happen the defence can be amended.
 Accordingly I order that paragraphs 5, 7(b) and (c), 12, 13(c), 14(c), 17(a), 17(c)(ii), 17(c)(iii), 19, 21(d), 22(d) and 22(e) be struck out. As well the words ‘the defendant repeats paragraph 5 hereof’ and the words ‘proposed’ where they appear in paragraph 6 of the amended defence should be struck out. In paragraph 10 the words ‘and otherwise refers to the facts and matters set out in paragraph 17(c)(iii) of this defence’ should also be struck out. In paragraph 18 the words ‘if there was a contract’ should be struck out. In paragraph 21(a) the words ‘If the contract alleged was entered into’ should be struck out.
 The defendant consents to an order striking out paragraphs 17(a), 17(c)(i) and 21(b), (c) and (d) of the defence and I make those orders.
 On miscellaneous grounds the plaintiffs also seek an order that paragraphs 23 and 24(a), (b) and (f) of the defence be struck out.
 Paragraph 23 pleads:
‘The defendant objects in point of law to the proceedings on the ground that the proceedings brought herein by the first plaintiff and the second plaintiff should have been brought as part of the proceedings in S.9907 of 2002.’
 The paragraph is meant to raise a point of the kind discussed in Port of Melbourne Authority v Anshun Pty Ltd (1980) 147 CLR 589. The contention is that the first plaintiff should have sought relief for specific performance in the earlier action which claimed a declaration only, and that it should be precluded from now prosecuting the further claim. The contention is without substance. At the time of the earlier proceeding the defendant denied the existence of a binding contract. It did not assert that if there were a binding contract, it would not perform it. There was no occasion for seeking a decree of specific performance. The defendant’s repudiation of the contract occurred only after the making of a declaration that the contract was binding on it. The present cause of action on which the plaintiffs sue did not exist at the time of the judgment in the earlier proceedings. In any event an Anshun estoppel is meant to prevent inconsistent judgments. That is the reason for the estoppel. There is no prospect that the judgment in the present proceedings will be inconsistent with the earlier declaration, whether or not the contract is ordered to be specifically performed. The issue estoppels which are binding in this case will prevent the declaration being called into question. Paragraph 23 should accordingly be stuck out.
 Paragraphs 24(a), (b) and (f) provide:
‘If the Court should hold that either the first plaintiff or the second plaintiff is otherwise entitled to specific performance … such relief should be refused on the following discretionary grounds:-
(a)… proceedings S.9907 of 2002 were instituted and pursued to judgment by the first plaintiff without the first plaintiff disclosing that the purchaser was the second plaintiff;
(b)Both the first plaintiff and the second plaintiff gave instructions to the solicitors acting for the plaintiff in that action;
(f)Further, as a result of the delays referred to … the land is far more valuable than it would have been when judgment ought to have been entered, and the defendant has in the interim … borne all interest and other costs associated with the holding of the land …’.
 Paragraphs (a) and (b) seem to me completely irrelevant to the plaintiffs’ claim. The allegations, if made good, would not impeach the plaintiffs’ claim for a decree of specific performance. They should be struck out.
 Paragraph 24(f) does, I think, give rise to an arguable basis for resisting the decree of specific performance. It hints at hardship in the equitable sense which might persuade a court not to enforce the contract but to leave the plaintiff to its remedies in damages.
 Paragraph 7 of the statement of claim pleads that on 24 October 2002 the first plaintiff duly paid the deposit of $25,000. By para 7(a) and (b) of the amended defence the defendant does not admit that allegation ‘on the basis that it has made enquiries, but remains uncertain of the truth of the allegations’. The plaintiffs complain that the defendant has failed adequately to explain his non-admission of that allegation of fact as required by UCPR 166. I accept the submission. The defendant must know, or be able to ascertain, whether or not the deposit was paid and on what date. It will know whether the money got to its bank account, or that of its agent, and would know whether it issued a receipt. The allegation should be addressed properly in the amended defence. I order that para 7(a) and (b) of the amended defence be struck out, with leave to replead.
 Paragraph 12 of the amended defence is in the same category. Paragraph 12 of the statement of claim pleads that the agreed date for settlement was 9 March 2005. The defendant does not admit the allegation ‘being uncertain as to the truth thereof’. The paragraphs which precede para 12 of the statement of claim show why the plaintiffs assert that the agreed settlement dated was 9 March 2005. The defendant should deal with the allegation properly. I order that para 12 of the amended defence be struck out, with leave to replead.
 The plaintiffs have succeeded in their application. The defendant should pay their costs of the application to be assessed on the standard basis.
- Published Case Name:
IVI Pty Ltd & Anor v Baycrown Pty Ltd
- Shortened Case Name:
IVI Pty Ltd v Baycrown Pty Ltd
 QSC 2
11 Jan 2007
No Litigation History