L H Markwell P/L v L A & D E Fitzgerald P/L
[2000] QCA 319
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- Unreported Judgment
- Appeal Determined (QCA)
- L H Markwell P/L v L A & D E Fitzgerald P/L[2000] QCA 319
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L H Markwell P/L v L A & D E Fitzgerald P/L[2000] QCA 319
L H Markwell P/L v L A & D E Fitzgerald P/L[2000] QCA 319
SUPREME COURT OF QUEENSLAND
CITATION: | L H Markwell P/L v L A & D E Fitzgerald P/L [2000] QCA 319 |
PARTIES: | L H MARKWELL PTY LTD ACN 010 232 630 (plaintiff/appellant) v L A & D E FITZGERALD PTY LTD ACN 068 518 249 (defendant/respondent) |
FILE NO/S: | Appeal No 4932 of 2000 DC No 2689 of 1998 |
DIVISION: | Court of Appeal |
PROCEEDING: | Application for leave s 118 DCA (Civil) |
ORIGINATING COURT: | District Court at Brisbane |
DELIVERED ON: | 8 August 2000 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 10 July 2000 |
JUDGES: | McPherson and Thomas JJA, Mullins J Joint reasons for judgment of Thomas JA and Mullins J; separate reasons of McPherson JA concurring as to the orders made |
ORDER: | 1.The time for filing an application for leave to appeal against the orders given on 12 May 2000 in Brisbane District Court action No D2689 of 1998 is extended until 20 June 2000. 2.Leave is granted to the applicant to appeal against those orders in accordance with the amended notice of appeal filed on 9 June 2000. 3.The appeal is allowed. 4.Orders 1 and 2 made on 12 May 2000 set aside 5.In lieu, the application filed on 20 March 2000 is dismissed. 6.The respondent is to pay the applicant's assessed costs of the application filed in the District Court on 20 March 2000, the application for leave to appeal to this Court (excluding the application for extension of time in which to file the application) and the appeal. 7.The respondent is granted an indemnity certificate under the Appeal Costs Fund Act 1973 in respect of the appeal. |
CATCHWORDS: | ESTOPPEL – FORMER ADJUDICATION AND MATTERS OF RECORD OR QUASI OF RECORD – FORMER ADJUDICATION – JUDGMENT INTER PARTIES – PARTIES – WHO ARE BOUND - claim for damages for respondent's negligent work to appellant's machinery – whether appellant estopped from raising issue of workmanship allegedly not properly raised previously – whether appellant bound by finding made in respondent's action for work and labour done against a director and shareholder of the appellant – whether appellant's action an abuse of process. Appeal Costs Fund Act 1973 (Qld) District Court Act 1967 s 118(3) (Qld) Magistrates Courts Rules 1960 r 89A (Qld) Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (Receivers and Managers Appointed – In Liquidation) (1993) 43 FCR 410, discussed, followed EM Investments (Qld) Pty Ltd v Aldrick [1999] QCA 183, Appeal No 2468 of 1999, 24 May 1999, considered Gleeson v J Wippell & Co Ltd [1977] 2 All ER 54, distinguished Mondel v Steel (1841) 8 M&W 858; 151 ER 1288, considered R v McKay, ex parte Cassaniti [1993] 2 QdR 95, considered Ramsay v Pigram (1968) 118 CLR 271, applied Shears v Chisholm [1994] 2 VR 535, discussed Trawl Industries of Australia Pty Ltd (In Liquidation) v Effem Foods Pty Ltd (1992) 36 FCR 406, followed Walton v Gardiner (1993) 177 CLR 378, considered |
COUNSEL: | K Howe for the plaintiff/appellant K Buxton for the defendant/respondent |
SOLICITORS: | Robinson & Robinson for the plaintiff/appellant McCullough Robertson for the defendant/respondent |
- McPHERSON JA: For the reasons given by Thomas JA and Mullins J, with which I agree, this appeal should be allowed. I would make the orders proposed by Thomas JA and Mullins J.
- THOMAS JA and MULLINS J: This application for leave to appeal in respect of an order of the learned District Court judge given on 12 May 2000 striking out the applicants action was heard on 10 July 2000. During the course of the hearing Counsel were asked whether they wished to argue the appeal at the same time. Subject to being able to provide the court with further written submissions, for which directions were made, Counsel agreed to that course. The further written submissions were received by the court.
- In the District Court action LH Markwell Pty Ltd ("the applicant") which was the plaintiff sought to recover economic loss of $30,945.50 and rectification costs of $3,550.71 (making a total of $34,496.21) from LA & DE Fitzgerald Pty Ltd ("the respondent") as the defendant, alleged to arise from repair work done by the respondent for the applicant on the applicant's trencher.
- The claim was pleaded in the District Court plaint as damages and consequential loss caused by the negligence of the respondent. A more accurate description of the nature of the applicant's claim on the basis of the pleaded facts is that it was a claim for damages for breach of contract.
- The respondent undertook work on the trencher in July 1995. A director of the respondent, Mr Lawrence Fitzgerald, described that work, in an affidavit sworn in the District Court action on 17 June 1999, as hydraulic work to be fitted to shaker screens that had been fitted to the trencher, so that the shaker screens could function. The respondent sued Mr Lester Markwell for its costs in undertaking that work by plaint and action for a small debt filed on 8 March 1996 in the Magistrates Court at Roma. The claim was for the sum of $4,800.69 for goods and services supplied.
- Mr Markwell filed an entry of appearance and defence to the small debt action raising the following defences:
- any request or agreement was made between the respondent and the applicant and not the respondent and Mr Markwell;
- the action was commenced in the wrong district;
- there was no jurisdiction to hear the action as a small debt as the claim was not liquidated.
- The action came on for trial on 25 September 1996 before Mr LA Mellors SM. It appears that Mr Markwell appeared on his own behalf. The hearing took over 8 hours to complete. At that hearing, Mr Markwell sought to file affidavits on the issue of the workmanship of the work that had been carried out by the respondent. The learned Magistrate refused leave to file the affidavits, because Mr Markwell did not have his witnesses available for cross-examination and had not provided copies of the affidavits to the respondent, in accordance with directions which had been made for the use of affidavits at the hearing. According to Mr Fitzgerald's affidavit sworn in the District Court action on 15 March 2000, Mr Markwell "gave extensive oral evidence alleging that the works had not been performed completely" by either Mr Fitzgerald or the respondent.
- The learned Magistrate found Mr Markwell to be personally liable for the debt of $4,800.69. In his reasons the learned Magistrate dealt with each of the defences raised in Mr Markwell's entry of appearance and defence. During the course of his reasons, the learned Magistrate stated:
"It should be noted that throughout the hearing the defendant questioned the plaintiff's competency and referred to the work that was done to rectify it so quickly in Brisbane. It might be observed that the work was able to be completed with the benefit of hindsight.
I also mention that I issued directions for the use of affidavits. I refused the defendant leave to file them because he did not have his witnesses for XXM and did not file them with the plaintiff.
On the other hand the plaintiff who has some 22 years experience gave evidence and this is virtually uncontradicted by anyone who could competently comment on it. I am satisfied that the plaintiff carried out the work competently."
- The District Court plaint was filed on 24 June 1998. By application filed on 20 March 2000 the respondent sought an order that the action be stayed or struck out on the basis that:
- the facts in issue between the parties in relation to the works were the subject of judicial determination by Mr Mellors SM on 25 September 1996;
- in his decision Mr Mellors SM determined that the respondent carried out the works competently;
- the applicant is estopped by the decision of Mr Mellors SM from alleging that the works were undertaken negligently.
- The learned District Court judge was satisfied that the particulars of negligence identified in paragraph 8 of the District Court plaint were before the learned Magistrate and, because of the finding by the learned Magistrate that the works were done competently by the respondent, there was an issue estoppel between Mr Markwell and the respondent in respect of the finding that the works were done competently which amounts to a finding of no negligence. The learned District Court judge found that Mr Markwell was a privy in so far as the applicant was concerned, on the basis that he was the principal of the applicant.
- The applicant's solicitors caused a notice of appeal against the orders of the learned District Court judge to be filed in this Court on 6 June 2000 and for an amended notice of appeal to be filed on 9 June 2000.
- Although the District Court plaint in form stated that the plaintiff claimed the sum of $200,000 for damages, it was apparent from the details in the plaint that the amount in contention was only the sum of $34,496.21. As that amount is less than the jurisdictional limit of the Magistrates Court, leave of the Court of Appeal is required for an appeal pursuant to s 118(3) of the District Court Act 1967: EM Investments (Qld) Pty Ltd v Aldrick ( [1999] QCA 183, Appeal No 2468 of 1999, 24 May 1999). As that leave was not sought until the application which was filed on 20 June 2000, the applicant also requires an extension of time within which to apply for leave to appeal.
- The main questions raised by this appeal are:
- whether the workmanship of the works carried out by the respondent on the trencher was an issue before the learned Magistrate, so that the doctrine of issue estoppel can apply to that issue;
- if the issue of workmanship was raised as such an issue in the Magistrates Court action, whether the applicant is the privy of Mr Markwell;
- if the issue of workmanship was so raised and the applicant is not the privy of Mr Markwell, whether the District Court action should be struck out or stayed as an abuse of process.
- As the Magistrates Court action proceeded as an action for a small debt, the then r89A of the Magistrates Courts Rules 1960 precluded Mr Markwell from bringing a counterclaim or relying on a right of set off in that action. The issue of workmanship could have been raised as a matter of defence to the claim for work and labour done made by the respondent: Mondel v Steel (1841) 8 M&W 858, 871-872; 151 ER 1288, 1293-1294; R v McKay, ex parte Cassaniti [1993] 2 QdR 95, 100.
- The applicant submits that there was never a fully contested hearing on the issue of workmanship, because it was not pleaded and Mr Markwell was not allowed to present all relevant evidence on that issue. The respondent relies on the cross-examination undertaken by Mr Markwell in respect of that issue and the findings set out in the learned Magistrate's reasons that the work was carried out competently.
- There is no transcript of the hearing in the Magistrates Court. That makes it difficult to discern the extent to which the issue was raised and pursued at the hearing. Ideally the statement in the learned Magistrate's reasons as to the competency of the work should be considered in the light of the conduct of the hearing.
- If it is assumed (without deciding) that the issue of the respondent's workmanship was an issue in the Magistrates Court action to which the doctrine of issue estoppel would otherwise apply, the second and third questions raised by this appeal can be dealt with.
- On this assumption, resolution of the second question depends on whether the applicant can be described as the privy of Mr Markwell.
- The nature of a privy for the purpose of issue estoppel was discussed by the High Court in Ramsay v Pigram (1968) 118 CLR 271. Barwick CJ stated at 279:
"Of the three classes of privies of blood, of title and of interest, the only one which is submitted and indeed could be submitted to be relevant is that of a privy in interest. ... The basic requirement of a privy in interest is that the privy must claim under or through the person of whom he has said to be a privy."
- The respondent relies on the statement made by Megarry V-C in Gleeson v J Wippell & Co Ltd [1977] 2 All ER 54, 60:
"Second, it seems to me that the substratum of the doctrine is that a man ought not to be allowed to litigate a second time what has already been decided between himself and the other party to the litigation. This is in the interest both of the successful party and of the public. But I cannot see that this provides any basis for a successful defendant to say that the successful defence is a bar to the plaintiff suing some third party, or for that third party to say that the successful defence prevents the plaintiff from suing him, unless there is a sufficient degree of identity between the successful defendant and the third party. I do not say that one must be the alter ego of the other: but it does seem to me that, having due regard to the subject-matter of the dispute, there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party. It is in that sense that I would regard the phrase 'privity of interest'."
- The respondent relies on a number of authorities in which that statement has been referred to with approval and submits that the test which should be applied in this matter is whether there was a sufficient degree of identification between the parties to make it just to hold that the applicant be bound by the Magistrates Court proceedings to which Mr Markwell was a party.
- The statement by Megarry V-C in Wippell was the subject of consideration by Gummow J in Trawl Industries of Australia Pty Ltd (In Liquidation) v Effem Foods Pty Ltd (1992) 36 FCR 406. See also the subsequent judgment of Gummow J reported at (1992) 108 ACR 353 given after the hearing was reopened, but with no different result.
- In the first judgment, Gummow J pointed out that Megarry V-C on the facts in Wippell was able to find that there was no privity of interest, and that Megarry V-C stated at 61 that:
"I am conscious that I have been unable to state any clear principle as to what does and does not constitute privity of interest for this purpose ... . Whatever the test, and wherever the line will finally be drawn, the plaintiff seems to me to be on the right side of any reasonable line that could be drawn – right, that is, from the plaintiff's point of view."
- In respect of authorities which purported to apply the test of Megarry V-C set out in Wippell , Gummow J then stated at 416:
"(i)Megarry V-C has been treated as doing that which he expressly professed not to be doing;
- the law as to privity has been a subject of some technicality and it would be a large step to supplant it with a loosely phrased, however alluring, invitation to judicial idiosyncrasy;
- the High Court decisions such as Jackson v Goldsmith and Ramsay v Pigram approach the subject at quite a different level of analysis."
- In the matter before Gummow J, the first applicant ("Trawl") and the second to sixth applicants had commenced proceedings in the Federal Court against the respondent ("Effem"). Earlier proceedings had been brought by Trawl against Effem in the New South Wales Supreme Court, arising out of the same transactions which had concluded in favour of Effem. Gummow J found that cause of action estoppel was not made out against the second to sixth applicants, because they were not parties to the Supreme Court proceedings and had no privity in interest in those proceedings. Gummow J was prepared to conclude that the second to fifth applicants participated so actively in the conduct of the Supreme Court litigation that in substance they assumed the roles of actual parties. The second applicant was the shareholder of Trawl and the holder of security granted by Trawl in its favour over the whole of Trawl's assets. The third applicant was a lender to both Trawl and the second applicant and the equity in the third applicant was held by the fifth applicant. The fourth, fifth and sixth applicants were directors of Trawl and the second applicant. The second and fourth to sixth applicants had guaranteed the indebtedness of Trawl to another lender.
- Gummow J's decision was affirmed on appeal in Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (Receivers and Managers Appointed – In Liquidation) (1993) 43 FCR 510. On the appeal only the doctrine of res judicata was considered. It was stated by Northrop and Lee JJ at 525-526 that "the doctrine of 'privy' has equal application to the defences of 'res judicata' and 'issue estoppel'". They applied Ramsay v Pigram and concluded that privity of interest is limited to a legal interest and may not be extended to include an economic or financial interest. The same conclusion was reached by Burchett J.
- The respondent relies on the adoption of the words of Megarry V-C in Wippell by Phillips J in Shears v Chisholm [1994] 2 VR 535, 546. That decision was given on 30 November 1992 and no reference is made in the judgment to the decision of Gummow J in Trawl. In that case the plaintiff sought to plead issue estoppel against the first six defendants. Those six defendants were five directors and the general manager of Phosphate Co-operative Company of Australia Ltd ("Phosphate"). The plaintiff was a shareholder of Phosphate who was claiming damages arising out of the circumstances surrounding a scheme of arrangement with its shareholders proposed by Phosphate. The plaintiff had opposed court approval being given to the scheme of arrangement and was successful in so doing before Brooking J. The plaintiff then brought the action for damages and claimed that the first six defendants could not in that proceeding dispute the findings of Brooking J. Those six defendants were not parties to the application before Brooking J.
- Phillips J held that Phosphate was the only relevant party before Brooking J and, applying Ramsay v Pigram, held that neither the directors nor the general manager had any such privity of interest as would justify a plea of issue estoppel against them. Phillips J's reference to the dictum of Megarry V-C in Wippell supported the conclusion that he had reached applying the doctrine of privity in Ramsay v Pigram.
- Since the decision of the Full Court of the Federal Court in Trawl, the nature of privity in interest sufficient to support an issue estoppel or res judicata has not been reconsidered by the High Court. The view expressed in Ramsay v Pigram therefore remains authoritative and has not been displaced in Australia by the dictum of Megarry V-C in Wippell.
- The respondent in the supplementary written submissions sought leave to file a further affidavit which exhibited a current search of the applicant obtained from the Australian Securities and Indemnity Commission. We would grant that leave. That search shows that at all material times Mr Markwell has held 50 per cent of the issued shares in the applicant and has been one of two directors of the applicant.
- There is therefore a close relationship between Mr Markwell and the applicant. Privity in interest for the purpose of issue estoppel must be a strict legal interest. In the circumstances of this matter, the applicant is not claiming through or under Mr Markwell.
- Even if the respondent's workmanship was an issue before the learned Magistrate for the purpose of issue estoppel, the learned District Court Judge erred in finding that the applicant is the privy of Mr Markwell.
- Although it does not appear to have been argued in the District Court, the respondent now seeks to argue that, even if issue estoppel does not apply, the applicant's District Court action should have been struck out as an abuse of process.
- The principle was referred to in the following terms in the judgment of Mason CJ and Deane and Dawson JJ in Walton v Gardiner (1993) 177 CLR 378, 393:
"Yet again, proceedings before a court should be stayed as an abuse of process, if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings."
- The respondent submits that precisely the same factual issues were ventilated at length in a trial in the Magistrates Court in which Mr Markwell was a party and the primary witness, those findings were never the subject of an appeal and for the applicant to succeed at trial, the court would have to conclude that the respondent did not perform the works "competently" which would controvert the finding of the learned Magistrate.
- Even if the issue of workmanship was raised before and disposed of by the learned Magistrate, it is apparent that the matter was not fully ventilated. Mr Markwell was prevented from putting in all the evidence on which he wished to rely in respect of that issue. We consider that a relevant matter as to whether the District Court action brought by the applicant should be stayed as an abuse of process.
- Another relevant matter is that the respondent was on notice at the time of the hearing in the Magistrates Court that Mr Markwell claimed that it was the applicant which contracted with the respondent and not him personally and the respondent did not seek to join the applicant as a party to the Magistrates Court action.
- We therefore do not consider this to be an appropriate case to shut out the action of the applicant as an abuse of process.
- We therefore propose that the orders be:
- the time for filing an application for leave to appeal against the orders given on 12 May 2000 in Brisbane District Court action No D2689 of 1998 be extended until 20 June 2000;
- leave be granted to the applicant to appeal against those orders in accordance with the amended notice of appeal filed on 9 June 2000;
- the appeal be allowed;
- orders 1 and 2 made on 12 May 2000 by the learned District Court judge be set aside;
- in lieu, it is ordered that the application filed on 20 March 2000 be dismissed;
- the respondent pay the applicant's assessed costs of the application filed in the District Court on 20 March 2000, the application for leave to appeal to this Court (excluding the application for extension of time in which to file the application) and the appeal; and
- the respondent be granted an indemnity certificate under the Appeal Costs Fund Act 1973 in respect of the appeal.