Rinbridge Marketing Pty Ltd v Rinbridge Pty Ltd & Ors [1997] FCA 1126

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 434 of 1996

BETWEEN: RINBRIDGE MARKETING PTY LIMITED

Applicant

AND: RINBRIDGE PTY LIMITED

First Respondent

JOHN PROSPER CULLEN

Second Respondent

PETER THOMAS WALSH

Third Respondent

JUDGE(S): HILL J

DATE: 15 OCTOBER 1997

PLACE: SYDNEY

REASONS FOR JUDGMENT Before the Court are, in substance, two motions. The first is a motion by the third respondent seeking leave to appeal against a decision of Whitlam J given on 9 April 1997. The second is a motion brought by the second respondent, Mr John Prosper Cullen who was not a party to the proceedings before Whitlam J that he be joined, retrospectively, to the motion heard by Whitlam J and decided on 9 April 1997 so as to ensure that he had a right to seek leave to appeal against the judgment. All parties have agreed that the substantive issue I should decide is whether leave to appeal should be granted. If it should then it is accepted that the appropriate course would be an appeal to which both Mr Cullen, the second respondent and the third respondent were parties.

The background to the matter is as follows. On 22 June 1994 an agreement was entered into between Rinbridge Marketing Pty Limited ("Marketing") and Rinbridge Pty Limited ("Rinbridge"). Notice of termination of that agreement was given by Marketing on 24 October 1994. In consequence Marketing brought proceedings against Rinbridge for the wrongful termination of the agreement. To those proceedings, which became proceeding NG 723 of 1994 in this Court, Mr Cullen and Mr Peter Thomas Walsh were the parties. They were at the relevant times directors of Rinbridge. In due course these proceedings came before Lockhart J who heard an application to strike them out on the basis that it was a condition precedent to the litigation that a notice of dispute be given. The relevant clause in the agreement was cl 24 which was in the following terms: "24(a) In the event of any dispute or difference arising between the two parties hereto at any time as to the construction of this agreement or as to any matter or thing of whatsoever nature arising hereunder or in connection herewith then any party may give to the other notice in writing adequately identifying the matters the subject of that dispute or difference (herein after referred to as the 'Notice of Dispute') and the giving of such Notice of Dispute shall be a condition precedent to the commencement by any party of proceedings (whether by way of arbitration or litigation) with regard to the matters the subject of that dispute or difference as identified in that notice. (b) If the dispute or difference relates to the unit price to be paid pursuant to either or both clauses 9 and 10A hereof then at the expiration of twenty-one (21) days from the date of service of the Notice of Dispute the party giving such notice may notify the other in writing that it requires the dispute or difference to be referred to arbitration (hereinafter referred to as the 'Notice of Arbitration') and such dispute or difference (unless meanwhile settled) shall upon receipt of such notice by the other party then be referred to arbitration pursuant to paragraph 24(c) below." In a careful judgment Lockhart J, not without some difficulty, concluded that the language of cl 24 of the agreement was sufficiently wide to embrace the dispute which arose between the parties and held accordingly that a Notice of Dispute was required to be given before proceedings could be commenced. In the result his Honour made an order dismissing the proceedings. He did so after giving the parties an opportunity of filing written submissions as to the form of order which should be made. On 19 April 1996 Marketing gave a Notice of Dispute pursuant to cl 24(a) and on 13 May 1996 commenced proceedings again in this Court against Rinbridge, Mr Cullen and Mr Walsh. Those proceedings are NG 434 of 1996. A motion was filed in those proceedings for an order that they be dismissed on the ground that there was an issue estoppel brought about by virtue of the orders made by Lockhart J in proceedings NG 723 of 1994. The strike out application was brought by Rinbridge and Mr Walsh. I should perhaps mention for completeness there was some dispute as to whether Mr Walsh was represented in the strike-out application but the file suggests that this was the case. Whitlam J gave judgment on 9 April 1997. The judgment is quite brief. His Honour pointed out that the statement of claim in the proceedings before him was substantially identical to that in the proceedings before Lockhart J except that there was pleaded the giving of the notice pursuant to cl 24(a). His Honour then referred to the judgment of Lockhart J to determine the ambit of the dispute that had arisen before Lockhart J. His Honour's decision is encapsulated at page 14 of the judgment of 23 October 1995 when his Honour said: "It follows that, on the facts of this case, the giving of a Notice of Dispute pursuant to clause 24(a) is a condition precedent to the commencement by RM of this proceeding. As no such notice was given, the proceeding must be dismissed." At no time was there ever any attempt to embark before Lockhart J on the merits of the dispute between the parties. No doubt it is for this reason that Lockhart J in his reasons for judgment of 1 December 1995 said (at 2): "Once the applicant has given notice, assuming it does, pursuant to clause 24(a) of the agreement, assuming it is still entitled to do so, the whole dispute between the parties can be litigated in the appropriate court including the matters raised by the cross-claim." It is that course in which Marketing now seeks to engage. The arguments put before Whitlam J as they emerge from his Honour's judgment are as follows: (1) That there had been a merger of Marketing's cause of action in the judgment given on 1 December 1995; and (2) That if there was no actual estoppel created by the judgment of Lockhart J then in any event there was what is often referred to as an Anshun estoppel which had the effect of barring Marketing from commencing the present proceedings. His Honour referred to the judgment of Gummow J in Trawl Industries of Australia Pty Limited (In liquidation) v Effem Foods Pty Limited (1992) 36 FCR 406 and concluded in accordance with that judgment that no question of merger would arise for the reason that Lockhart J had not determined whether the cause of action as pleaded before Whitlam J existed. Rather, his Honour had determined that another cause of action had not, the difference being the giving of the notice in cl 24(a). That notice is part of the cause of action which Marketing must plead in order to succeed in any claim it has against Rinbridge. Failing to give that notice operated to preclude the proceedings being brought. On that basis the summary dismissal did not operate as an estoppel. His Honour then considered the Anshun principle and referred to the judgment of this Court in Ling v The Commonwealth of Australia (1996) 139 ALR 159. His Honour concluded that it was not unreasonable on the part of Marketing to litigate the matter as it had done before Lockhart J without giving notice under cl 24(a) and accordingly that no Anshun estoppel could exist. The resolution of both grounds was said to invoke error on the part of his Honour and it was submitted that the present was a case which was attendant with sufficient doubt that leave to appeal should be granted. In respect of the first issue, reference was made to the judgment of Diplock LJ in Thoday v Thoday [1964] P 181 at 197-8 quoted in the judgment in Effem Foods at 409 where his Lordship distinguished between a case where a cause of action was shown to exist where there would be a merger and a case where a cause of action was determined not to exist where an estoppel would arise. It is said that the present is a case where the cause of action was determined not to exist with the consequence that there would be an estoppel or at least arguably there would be an estoppel. With respect the argument misconceives what was said by Diplock LJ and its relevance to the facts of the present case. In my view it is just unarguable on the facts of the present case that an estoppel can arise whether one refers to an estoppel in the traditional sense or whether one refers to it in the Anshun sense. The reason is quite plain. It was an essential ingredient to the cause of action which Marketing had that notice be given. So much was decided by Lockhart J. No doubt it could be argued that there was an estoppel on that point but the dismissal of the action brought by Marketing being an action which had not pleaded the giving of the notice did no more than prevent any further proceeding being brought which did not plead the giving of the notice. It did not in any way prevent Marketing from commencing proceedings once notice was given and litigating the merits of those proceedings assuming, as I would for present purposes at least, that it was possible for the notice to be given at the time it was, a matter that has not been litigated. It was said that a possible ground of appeal should leave to appeal be granted was that Whitlam J had decided the Anshun point on the basis that it was reasonable for the notice not to have been given without evidence. There are two answers to that point. The first is that whether evidence is or is not to be given obviously is a matter for the parties but the more obvious answer is that in a case such as the present the question of reasonableness is one which is looked at objectively in the light of all relevant circumstances and those relevant circumstances were in evidence in a real sense, they being the existence of a dispute between the parties; the contract contained in cl 24(a); the failure to give notice and the proceedings before Lockhart J. His Honour took those relevant facts into account and concluded that the course taken by Marketing was in all the circumstances reasonable. It cannot be said to have been an error on his Honour's part to have reached that conclusion on the material that was before him. There has been some discussion before me as to the proper test to be applied in deciding whether leave should be granted. Counsel for the second respondent referred to the decision of the High Court in Dart Industries Inc v Decor Corporation Pty Ltd (1993) 116 ALR 385 as authority for the proposition that leave would be granted where the decision sought to be appealed from was attendant with doubt of a sufficient nature to suggest the leave to appeal should be given and where failure to give leave would bring with it substantial injustice to the party seeking leave. Another way the point has been put, and I doubt if it is all that different, is that I should determine whether there was a real issue between the parties to be argued, the converse being whether the appeal was one which was frivolous. Of course it must be so that if the appeal is frivolous leave to appeal would not be granted. If on the other hand there is a real issue between the parties then clearly provided there is some suggestion of injustice leave likewise would be granted. However, it seems to me that any appeal is so likely to fail that it cannot be said that the judgment against which leave to appeal is sought is attendant with any real doubt. Indeed I think the present is almost a case where one would say that the appeal is frivolous. It is true that if leave to appeal is not granted there will be substantial factual issues to be tried and that a decision favourable to the respondent in the proceedings or a strike out application would avoid the time and expense involved in a trial of those issues. But to some extent any injustice to the respondents in having to participate in a trial of the factual issue is militated against by an order for security for costs which has been given against the applicants. Further, the event that ultimately the respondents should lose the proceedings an appeal will exist as of right when if need be the estoppel issue could again be argued. In the circumstances I would refuse leave to appeal with costs. I vary the orders made by Whitlam J on 22 August 1997 by directing the respondents to file and serve their defence by 29 October 1997 and leave the matter before Whitlam J on 31 October 1997. I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill