Pending Appeal : CITATION: Sotiropoulos v Mattana Coiffure Pty Limited (No 3) [2006] NSWADT 234 DIVISION: Retail Leases Division APPLICANT PARTIES: Vlasios Vasilios Sotiropoulos RESPONDENT Mattana Coiffure Pty Limited FILE NUMBER: 055157 HEARING DATES: 19/04/2006 SUBMISSIONS CLOSED: 04/19/2006 DATE OF DECISION: 08/07/2006 BEFORE: Montgomery S - Judicial Member CATCHWORDS: Claim for payment of money MATTER FOR DECISION: Preliminary matter LEGISLATION CITED : Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994 Anthony Developments P/L v Marsden [1999] NSWSC 472 Blair v Curran (1939) 62 CLR 464 Bryant v Commonwealth Bank of Australia (1995) 130 ALR 129 Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 Commonwealth v Verwayen (1990) 170 CLR 394 CASES CITED: Kuligowski v Metrobus (2004) 220 CLR 363 Mattana Coiffure Pty Limited v Sotiropoulos (No2) [2004] NSWADT 80 Mattana Coiffure Pty Limited v Sotiropoulos [2003] NSWADT 210 Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 Quarmby v Motor Traders Association of NSW Group Apprenticeship Scheme [2005] NSW WCC PD 43 Sotiropoulos -v- Mattana Coiffure Pty Limited (No 2) (RLD) [2004] NSWADTAP 43 Sotiropoulos v Mattana Coiffure Pty Limited (RLD) [2004] NSWADTAP 23 APPLICANT M Elliott, Barrister REPRESENTATION: RESPONDENT K Dawson, Solicitor ORDERS: 1.The Applicant is estopped from claiming any rent shortfall for the period from 17 April 2001 to 23 September 2002; 2.The matter is to be listed for a directions hearing on 16 August 2006 at 2p.m. to determine the further progress of the application REASONS FOR DECISION 1 In April 2000 the Applicant and the Respondent entered a retail lease ("the Lease") for a hairdressing salon at 787 Military Road, Mosman. The Lease identifies the Applicant as the lessor and the Respondent as lessee. 2 Various issues arose between the parties with respect to the Lease and have been the subject of previous matters in this Tribunal. Decisions in the first instance matters are reported as Mattana Coiffure Pty Limited v Sotiropoulos [2003] NSWADT 210 ("the 2003 proceedings") and Mattana Coiffure Pty Limited v Sotiropoulos (No2) [2004] NSWADT 80 ("the 2004 proceedings"). The Tribunal's Appeal Panel decisions are recorded as Sotiropoulos v Mattana Coiffure Pty Limited (RLD) [2004] NSWADTAP 23 and Sotiropoulos -v- Mattana Coiffure Pty Limited (No 2) (RLD) [2004] NSWADTAP 43. 3 These proceedings were originally commenced by way of Statement of Liquidated claim in the Local Court. Following hearing of a Notice of Motion brought by the Respondent, they were transferred to the Tribunal pursuant to section 75 of the Retail Leases Act 1994 ("the Act"). Section 71 of the Act provides that a claim may not be lodged more than 3 years after the liability or obligation that is the subject of the claim arose. Section 44 of the Administrative Decisions Tribunal Act 1997 allows the Tribunal to extend the time for lodging a claim. On the date of hearing the Applicant sought an order extending the time for filing of the application to 19 December 2005. I granted that application. 4 The Applicant asserts that the Respondent has failed to pay rent owing as the result of a rent increase provided for under the Lease plus interest on the outstanding amount. The Respondent denies that the asserted rent review was applicable and raised a preliminary issue of estoppel. These reasons relate to the preliminary issue. 5 I note that no transcript is available for the majority of the earlier first instance proceedings as a consequence of problems experienced by the Tribunal's transcript service. The Respondent's case 6 The Respondent raises a number of bases on which the application is opposed. The Respondent accepts that it is responsible for payment of rent increases for rent review dates of 17 April 2003 and 17 April 2004. The Respondent says that the Applicant represented that he would not increase the rent in accordance with CPI or any entitlement under the lease to a rent review at any time prior to 17 April 2003 and that the Respondent relied on that representation. The Respondent says that the Applicant is estopped from resiling from the representation and is barred from claiming any rent shortfall for the period from 17 April 2001 to 23 September 2002. 7 Further, the Respondent says that the Applicant lodged a claim the 2003 proceedings claiming a shortfall of rent from the Respondent from 17 April 2001 to 16 July 2003 but withdrew that application during the proceedings. The Respondent says that the Applicant is estopped from bringing the substance of that application again in these proceedings. 8 The Respondent asserts that much of the evidence on which the Applicant relies was given in earlier proceedings and relates to a factual issue that was previously determined. In the 2003 proceedings the Respondent sought an order with respect to refurbishment following building work to the retail premises. The Tribunal ultimately ordered that the Applicant pay the Respondent compensation for loss incurred with respect to that work. In assessing the rent that was appropriate the presiding Tribunal Judicial Member, Fox JM, considered the rent that the Respondent was paying. 9 Ms Dawson referred to paragraphs 47 and 48 of the decision in the 2003 proceedings where Fox JM stated: 47 The operating profit for financial year ended 2002 was $53,209.00 or $4,433.00 per month. I was given figures for comparable periods July 2001 to March 2002 and July 2002 to March 2003. These figures appear to have been calculated on the same matrix as shown in the annual profit and loss statements, and from those I conclude that the whole year operating profit for the year commencing July 2002 and ending June 2003, being the period of the building interference, dropped to $900 per month. The obvious conclusion is that there has been a reduction of approximately $3500 per month, but of course I cannot ignore the fact that there may have been other factors which would bring about normal variations in trade. I think reduction of approximately 15% for these vicissitudes is appropriate, and so find that the compensation payable to the applicant, to place it in the same situation it would have been had the building interference not occurred, is $3000 per month. 48 I note that my proposed monthly loss figure factors in the $866 per month rent reduction, but that agreement by the applicant was made in consideration of an entirely different anticipated building interference to that which actually eventuated, and no countervailing adjustment is appropriate. If the reduction had not been made, the proper loss figure would be $3,866.00 per month. 10 Ms Dawson submits that higher compensation would have been warranted if a rent increase had been applicable. She says that a pro-rata reduction was based on unreceived rent with respect to Treatment Room No. 2. The Respondent couldn't claim compensation with respect to a rent review had not occurred. 11 Ms Dawson says that Mr Burton, counsel for the Applicant in the 2003 proceedings, raised the issue of interference with the occupancy giving rise to the Applicant forfeiting the right to claim CPI and that this was caught up in the issues determined by Fox JM. Consequently, she says, the Applicant cannot rely on the terms of the lease to pursue this claim: Commonwealth v Verwayen (1990) 170 CLR 394. Ms Dawson referred to an affidavit from Eleanor Mattana sworn 18 April 2006 in which she quotes from what she states is a transcription of part of the 6 April 2004 hearing in the 2003 proceedings as supporting this assertion. 12 Ms Dawson submits that an issue estoppel applies because Fox JM determined all issues necessary to the 2003 proceedings. Ms Dawson submits that there are three elements that need to be established in order for an issue estoppel to apply. In Kuligowski v Metrobus (2004) 220 CLR 363 the High Court affirmed that the requirements to be met for the doctrine of issue estoppel to apply are: "(1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and, (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies." 13 The second and third of these requirements are not controversial. As to the issue of whether the same question has been decided Ms Dawson says the issue was the ability to apply CPI increases. She says that it is not possible to separate this issue from the decision in the 2003 proceedings without adjusting that decision. The question is whether the cause of action claimed by the Applicant in these proceeding had already passed into judgment so as to lose its independent existence: Blair v Curran (1939) 62 CLR 464 at 532; Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502. 14 Ms Dawson submits that Fox JM didn't finally determine issues with respect to rent increases but did determine issues intimately connected with the claim now brought i.e. CPI adjustments that needed to be made. He was of the view that the orders would have had to be adjusted if CPI was to be considered. The Respondent would have been estopped from bringing a further compensation claim because it had been finally determined. 15 In the alternative, Ms Dawson also submits that this application relates to an issue that could have been raised and should have been raised in the earlier proceedings. She says that the same facts were before Fox JM and the claim should have been dealt with then. Consequently, the principle established by the High Court in Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 ("Anshun estoppel") applies. That principle prevents a party from later relying upon a claim or defence which it has unreasonably refrained from raising in earlier proceedings which were so closely connected with the later subject matter that it might reasonably have been expected that the claim or defence would have been raised. 16 Ms Dawson says that the Applicant took a conscious decision to delete the claim before Fox JM and that it was unreasonable that the matter was not raised at the appropriate time. There are also costs implications with respect to raising a matter now that could have been considered previously. In Bryant v Commonwealth Bank of Australia (1995) 130 ALR 129 the Court stated at page 298: [W]here, as here, a defendant's claim is intimately connected with that of the plaintiff, in the sense that each arises, substantially, out of the same matters of fact, there is every reason to require that both be litigated at the one time; thereby minimising costs and avoiding the possibility of inconsistent judgments 17 Ms Dawson concedes that there would have been additional costs in 2003 if the matter had been litigated then but she submits that the cost increase would have been smaller. The Applicant's case 18 The Applicant says that for an issue estoppel to apply there must be a final determination of the issue in question. Mr Elliott argues that it is clear from paragraph 6 of Fox JM's reasons in the 2004 proceedings that this was not the case. The Judical Member stated: "6 The matter of C.P.I. rent increases was first raised at the commencement of the hearing proper, and I then ruled that because it had not been pleaded, it was not appropriate that I allow it to be agitated. Today Mr Burton sought to again raise that matter, by way of set off. I acknowledge the logic of that approach, because it would be desirable that that issue, which still remains between the parties, be resolved. However, I cannot see how I can do that, having heard no evidence at all in relation to it. Mr Burton may well say, in effect:- "The lease speaks for itself, so rule on it" but that would deny Mr Darke the opportunity of raising proper evidentiary matter in response in denial." 19 Mr Elliott also refers to the transcript included in the 18 April 2006 affidavit of Eleanor Mattana in which Mr Darke, counsel for the Respondent is quoted as saying: "This proposed offsetting appears to assume the respondent is entitled to the CPI increase. … It is hotly disputed. … unless there is a full hearing on that matter and a judgement about it there is nothing to offset." 20 Later in the same transcript Fox JM is quoted as saying: "… It seems to me that whatever increases apply under the lease, have to apply to these figures as well – that's as far as I'd take it. Now, beyond that, I don't think I have heard enough evidence to make any useful decision." 21 Mr Elliott also refers to Fox JM's findings with respect to the compensation payable found at paragraphs [47] – [48] of his reasons in the 2003 proceedings. He submits that the figure arrived at was on the basis of profit only. The agreed rent reduction was considered at paragraph [48]. Mr Elliott says that it is not correct to say that the calculation of compensation considered CPI increases. All that was happening was the recognition of an amount that the parties agreed had to be paid. 22 Mr Elliott submits that CPI had to be approached on both sides of the ledger. If there were an increase in the rent by CPI there would need to be a similar consideration in relation to the agreed rent reduction. The amount of compensation did not take this into account. Therefore, he says, there is no issue estoppel on the way the compensation was calculated. 23 With respect to the Respondent's assertion that an Anshun estoppel applies, Mr Elliott submits that the Applicant's cross-claim in the earlier proceedings was never determined. He refers to the following passage from Bryant at page 294 of the judgement: Einfeld J held that there was no strict limitation of the Anshun principle to defences, as opposed to cross-claims, and that a cross-claim could form the basis of an Anshun estoppel; however, only in an exceptional case would a cross-claim satisfy the well-known test enunciated by Wigram VC in Henderson v Henderson (1843) 3 Hare 100 at 115; 67 ER 313 at 319. Einfeld J thought the matters of cross-claim satisfied that restricted test. He said: "If the claims are sustainable at all, they relate intimately and exclusively to the circumstances surrounding the contractual relationship between the parties, specifically the guarantees and mortgages at issue in the Supreme Court proceedings". 24 Mr Elliott says that evidence was filed in relation to the Applicant's cross-claim in the 2003 proceedings and as those proceedings were not determined it should not be surprising that it is again before the Tribunal in these proceedings. He says that it has not been established that the evidence filed was relevant to an issue determined in the earlier proceedings. The Respondent had opposed the Applicant's cross-claim on the basis that it would need time to prepare. It was not the case that the issue was just left to one side. Mr Elliott says that the Respondent cannot now seek to prevent argument given its earlier approach. 25 Mr Elliott further says that there is no merit to the Respondent's submission with respect to the issue of costs. He submits that if the matter had been run in 2003 it would have increased the length of time of the proceedings then. Findings 26 The lack of a transcript from the earlier proceedings makes it difficult to determine what actually transpired between the parties at the time. It is necessary to draw inferences from Fox JM's findings and his reasons. From the material before me it appears that the issue of the CPI increases was raised in a cross-claim brought by the Applicant and not pursued until very late in the proceedings. It seems that the Respondent opposed the cross-claim on the basis that it would be prejudiced as a consequence of the lateness of attempt to pursue the claim. It seems that Fox JM accepted the Respondent's arguments and declined to allow the Applicant to pursue the claim. It does not appear that the Applicant sought an adjournment to allow the matter to be prosecuted. 27 The Respondent has raised an estoppel issue with respect to part of the Applicant's claim. These reasons relate to the question of whether or not the Applicant is precluded from pursuing that claim. 28 In the Workers Compensation Commission matter Quarmby v Motor Traders Association of NSW Group Apprenticeship Scheme [2005] NSW WCC PD 43 Acting Deputy President Lansdowne dealt with an application based on Anshun estoppel, res judicata or issue estoppel. Her reasons provide a reasonable summary of the principles involved. She stated: "24. The authorities establish that there are three types of instances in which a party may be estopped from raising an issue, claim or defence in subsequent proceedings because, in broad terms, of the principle of res judicata. These are as follows: (1) Cause of action estoppel (res judicata in the narrow sense) (2) Issue estoppel (3) Anshun estoppel. 25. The difference between res judicata and issue estoppel was expressed as follows by Dixon J. in Blair v Curran (1939) 62 CLR 464 (as quoted by Priestley J.A. in Lambidis v Commissioner of Police (1995) 12 NSWCCR 225 at 240): "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." 26. The Anshun estoppel is different from both cause of action and issue estoppel. It relates not to what was determined by the previous proceedings, but what could have been. The principle was discussed by the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. It arises where a party seeks in subsequent proceedings to raise a defence (and possibly a claim) that could have been raised in earlier proceedings between the same parties, but was not. In certain circumstances, the party may be estopped from raising that defence or claim in later proceedings. In the majority opinion, delivered by Gibbs C.J., Mason and Aickin J.J, the Court expressed the view (strictly obiter to the determination of that case) that the estoppel will not arise unless "the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it." (paragraph 37) In that case the appellant, the Port of Melbourne Authority ("the Authority"), sought to rely in subsequent proceedings on an indemnity given by the respondent although it had not raised that indemnity in previous proceedings taken by an injured worker against both the Authority and the respondent as defendants. Those proceedings had concluded with judgment against both defendants. The judges of the High Court expressed slightly different views as to the ambit and rationale of the estoppel, but all agreed that on the facts of that case the appellant must fail because "the judgment which the Authority seeks to obtain in the present action is one which would contradict the judgment which has been entered in the (previous) action." (Gibbs C.J., Mason and Aickin JJ. at paragraph 16). 29 In Blair v Curran Dixon J observed that a "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". 30 In the circumstances of this matter it is apparent that Fox JM did not consider the issue of CPI increases. In there circumstances there was no Blair v Curran judicial determination. While I accept that the amount of compensation would have necessarily been different if he had done so, I do not accept that the issue could not be determined. It is not the case that the cause of action claimed by the Applicant in these proceeding has already passed into judgment so as to lose its independent existence. Therefore, I do not consider that an issue estoppel arises. 31 The Respondent relies on the decision in Bryant as the basis of its submission that an Anshun estoppel arises. In Ryan v Hansen [2000] NSWSC 354 Kirby J considered Bryant and other authorities that examined the Anshun estoppel principle. He observed: 45 In Bryant v Commonwealth Bank of Australia (1995) 130 ALR 129, the Court (Beaumont, Wilcox and Moore JJ) referred to certain comments made by Brennan and Dawson JJ in Tanning Research Laboratories v O'Brien (1989-90) 169 CLR 332, relevant to the application of the Anshun principle to a cross claim. They said this: (at p 139) "It is true that, in Tanning Research Laboratories at 346, Brennan and Dawson JJ stated that the Anshun principle will ordinarily not apply to cross-claims. They made an exception of cases where the relief claimed in the second proceedings is inconsistent with the judgment in the first. In making this distinction, their Honours may have had in mind a situation, such as the one before them in that case, where the cross-claim depended on facts remote from those of the principal claim. Questions of substantive degree may be involved; and in contrast to defences, many cross-claims may have little or no connection with the principal claim in the action; there may be no more than an identicality of parties. Where that is so, there may be no policy justification for forcing defendants to litigate their claims as cross-claims rather than as principal claims in separate actions in the forum of their choice." 46 The Court then applied that test to the facts before them. They said this: (at p 139) "But, where, as here, a defendant's claim is intimately connected with that of the plaintiff, in the sense that each arises, substantially, out of the same matters of fact, there is every reason to require that both be litigated at the one time; thereby minimising costs and avoiding the possibility of inconsistent judgments." 47 Justice K R Handley, in Anshun Today (71 ALJ 934) saw Bryant as a moderation of the Anshun test. He said this: (at p938) "In Anshun , the High Court rejected the Kilbrandon test in Yat Tung that additional claims that 'could and therefore should' have been litigated in the first suit will be barred, but held that claims that would result in inconsistent judgments will be barred. Between these two extremes we have the test of reasonableness based on the relevancy of the omitted claims to the subject matter of the first suit. The test is whether `it would be expected' having regard to the nature and subject matter of the first suit that the additional claim would have been raised in that suit." 48 His Honour added: (at p938) "The principle that has been applied by the Federal Court in Bryant v Commonwealth Bank and Ling v Commonwealth (Ibid at 274-275) is whether the additional claim arises out of substantially the same facts. If so, the later claim will be barred as in Bryant , if not, it will not, as in Ling . This is a useful test because it is easy to apply, and because it is directly related to the principles of private right and public convenience which undergird the res judicata doctrine. In so far as the claims have a common substratum of fact, there will be duplication in the use of court time and in the costs incurred by the parties. In so far as the new claims raise additional facts, there will be no such duplication. To that extent the defendant will not be vexed twice for the same cause, and litigation on the same cause will not be prolonged." 32 There can be no doubt that the Applicant's claim here is intimately connected with and arises, substantially, out of the same matters of fact raised by the Respondent in the earlier proceedings. It appears that the Applicant raised the substance of the present claim in those proceedings but did not pursue it until a late stage and was then prevented from doing so. It would clearly be disadvantaged if it were not now able to pursue the claim. The Respondent asserts that any disadvantage that might flow to the Applicant now is due to his own conduct in not bringing the matter properly. 33 I have not been given any evidence on which I could conclude that there was a sound reason for not pursuing the matter expeditiously in the earlier proceedings. It does not appear that the Applicant sought an adjournment to allow the matter to be prosecuted. Nor is it clear why the Applicant took as long as he did to commence the Local Court action after Fox JM declined to hear the CPI issue as part of the earlier claim. 34 The principle of the Anshun estoppel rests upon the foundation of two ideas. First, there is the aspect of fairness and efficiency. A party should bring before the Court its whole case at the one time. Secondly, there is the aspect of consistency. If a party's case comes before the Court piecemeal, there is the danger that any judgment given in the first proceedings will conflict with that in the second: Anthony Developments P/L v Marsden [1999] NSWSC 472 per Kirby J. 35 This is not a situation where the new claim raises additional facts. The new claim arises out of substantially the same facts as the earlier claims. It is common ground that much of the evidence here is an updating of evidence previously presented. The test for whether an Anshun estoppel applies as accepted by Kirby J in Ryan v Hansen is whether it would be expected having regard to the nature and subject matter of the first suit that the additional claim would have been raised in that suit. 36 In my view, that test is satisfied in this matter. As in Bryant this is a situation where the claims should have been litigated at the one time. The fact that Fox JM declined to hear the CPI issue as part of the earlier claim does not alter my opinion on this issue. There is nothing to suggest that it was not within the Applicant's power to prosecute the issue at that time. The Respondent's objection was based on the prejudice that would have flowed to it had it been forced to answer the claim without sufficient time to prepare. There is nothing to suggest that anything prevented the Applicant seeking an adjournment to allow the Respondent more time. It is conceivable that if the Applicant had done so there would have been a costs application in relation to the lost hearing time but that is not a basis for asserting that the claims should not have been litigated at the one time. 37 In my view, an Anshun estoppel applies in the circumstances of this matter, which precludes the claim for any rent shortfall for the period from 17 April 2001 to 23 September 2002 from proceeding. I do not need to deal with the issue of estoppel based on the alleged representations by the Applicant. Orders 1. The Applicant is estopped from claiming any rent shortfall for the period from 17 April 2001 to 23 September 2002. 2. The matter is to be listed for a directions hearing on 16 August 2006 at 2p.m. to determine the further progress of the application. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.