[1999] 29 MVR 262 Reported Decision : [1999] 10 ANZ Ins Cas 61-456 [1999] Aust Contract R 90-102 New South Wales Supreme Court CITATION : Anthony Developments P/L v Marsden [1999] NSWSC 472 CURRENT JURISDICTION : Common Law Division FILE NUMBER(S) : 10810/99 HEARING DATE(S) : 17/05/99 JUDGMENT DATE : 25 May 1999 PARTIES : Anthony Developments Pty Limited t/as Cut-Price Rent-A-Car (Appel) Geoffrey Arthur Marsden (Resp) JUDGMENT OF : Kirby J LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 13163/97 LOWER COURT JUDICIAL OFFICER : G Henson COUNSEL : M Vincent (Appel) M W Young (Resp) SOLICITORS : Newman & Associates (Appel) A S Laumberg (Resp) CATCHWORDS : Appeal against Magistrate's decision; Stated Case; Anshun estoppel Port of Melbourne Authority v Anshun P/L (1980-81) 147 CLR 589 CASES CITED : Henderson v Henderson (1843) 67 ER 313 Rahme v Commonwealth Bank of Australia (C of A, unreported, 20/12/91) Green v Schneller (Simpson J, unreported, 12/1/99) DECISION : See para 28 THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION KIRBY J Tuesday 25 May 1999 10810/99 - ANTHONY DEVELOPMENTS PTY LIMITED T/as CUT-PRICE RENT-A-CAR v GEOFFREY ARTHUR MARSDEN JUDGMENT 1 HIS HONOUR: This matter comes before the Court by way of case stated by Mr G Henson, Local Court Magistrate. 2 Mr Geoffrey Marsden hired a car from Anthony Developments Pty Limited, trading as Cut-Price Rent-A-Car (Cut-Price Rent-A-Car). At the time of the hire, Mr Marsden signed a hire agreement. The terms of that agreement are not included in the stated case. 3 At the time the car was hired, Mr Marsden sought to have the vehicle insured whilst the vehicle was on hire. He paid an additional amount to this end. 4 On 1 November 1994, Mr Marsden was involved in an accident with another vehicle driven by a Mr Handley. 5 Mr Handley commenced proceedings in the Local Court claiming the cost of the car repairs (approximately $5,352) plus costs. The claim named Cut-Price Rent-A-Car as first defendant, and Mr Marsden as the second. The statement of claim apparently asserted, as the basis of liability of the hire company, that it was the owner of the vehicle (as it was), and having hired the vehicle, Mr Marsden was its agent. Mr Marsden, however, was plainly not the hire company's agent, and the claim against the hire company was bound to fail. 6 Mr Marsden, naturally, sought from Cut-Price Rent-A-Car the name of the insurer. Cut-Price Rent-A-Car, surprisingly, and unhelpfully, refused to identify that insurer. In those circumstances, Mr Marsden, recognising that he was responsible for the collision, proceeded to settle the plaintiff's claim. The terms of settlement were filed on 17 June 1997. He was required to pay approximately $9,000, being the cost of repairs and costs. 7 Again Mr Marsden sought the name of the insurer from Cut-Price Rent-A-Car. Again that company declined to provide that information. This material was not included in the facts stated by the learned Magistrate, but was common ground before me. 8 Mr Marsden, in these circumstances, began an action against Cut-Price Rent-A-Car in the Local Court. The terms of his claim do not form part of the stated case. However, the broad basis was described by the learned Magistrate in the following paragraph: "On 25 July 1997 the current proceedings were commenced by the Respondent alleging that the Appellant was obliged by an express term in the contract of hire to, in the event of an accident and subsequent claim, disclose to the Respondent, the identity of the insurer of the vehicle for the purpose of indemnification under a comprehensive insurance policy over the hired vehicle." 9 The proceedings first went to arbitration. One gathers that the arbitrator determined the matter against Cut-Price Rent-A-Car. The company thereafter sought, as was its right, a rehearing before the Local Court. 10 The matter came before Mr Henson, a Magistrate, on 10 August 1998. Cut-Price Rent-A-Car sought to amend its defence in order to raise an estoppel. It asserted that Mr Marsden was estopped from pursuing his claim, having not sought indemnity under the insurance arrangements in the original proceedings brought by Mr Handley. The estoppel was said to arise under the principle enunciated by the High Court in Port of Melbourne Authority v Anshun Pty Limited (1980-81) 147 CLR 589. The learned Magistrate dealt with the issue as a preliminary matter. He determined that there was no estoppel. There was, accordingly, no entitlement to a permanent stay. The matter then proceeded, and the merits were investigated. The learned Magistrate decided in favour of Mr Marsden. The Anshun Principle 11 The source of the Anshun estoppel is the statement by Sir James Wigram VC in Henderson v Henderson (1843) 67 ER 313, which was in these terms: "Where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time." 12 The principle has evolved over time. At first the estoppel only arose in circumstances where there was "an omission to deny a traversable allegation" (Anshun at 599). It is now accepted that it can arise in circumstances where an affirmative defence has not been pleaded in the first action. 13 The principle 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. 14 In Port of Melbourne Authority v Anshun Pty Limited, Gibbs CJ, Mason and Aickin JJ, said this: (at 602/603) " … there will be no estoppel unless it appears that 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. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few." 15 Their Honours continued: (at 603) "It has generally been accepted that a party will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment." 16 In Rahme v Commonwealth Bank of Australia (C of A, unreported, 20 December 1991), Priestley JA, when discussing the High Court's analysis of Anshun, identified three situations where the estoppel may arise. His Honour said this: (at 4) "They next discussed various aspects of the principle, including situations where (1) what was brought forward in defence to the second proceeding was matter which would have provided a defence to the first but was not raised, (2) what was brought forward in the second proceeding was a cause of action which could have been relied on as a defence in the first proceedings, but was not, and (3) a second proceeding upon a cause of action which could have been raised as a cause of action in the first proceedings, but was not." 17 His Honour elaborated upon the third situation in these terms: "The decision of Gibbs CJ and Mason and Aickin JJ in Anshun seems to me to be authority for the following propositions: 1, that Wigram VC's extended principle as stated in Henderson is accepted as good law by the High Court; 2, that that principle applies, inter alia, to category (3) cases, that is to a proceeding in which a party is asserting a cause of action which could have been raised, but was not, in a previous proceeding in which the same party was asserting a different cause of action based on substantially the same facts against the same party as the second proceeding is being brought; and 3, that the extended principle of Henderson will be applied to the second proceeding when it was unreasonable for the party asserting the cause of action in that second proceeding to refrain from raising it in the earlier proceeding against the same opponent party." 18 It is instructive to look at the facts in Anshun itself. The Port of Melbourne Authority owned a crane. It hired the crane to Anshun Pty Limited ("Anshun") on terms which included an agreement to indemnify the Port of Melbourne Authority against any claim arising out of the company's use of the crane. A workman was injured in the course of his employment when girders being handled by the crane fell on him. He sued both the Port Melbourne Authority and Anshun for damages, alleging each was negligent. The defendants claimed contribution from each other, as joint tort feasors. 19 The Port of Melbourne Authority did not assert any right to indemnity under its hire agreement with Anshun. The matter was then determined by the Court. The plaintiff succeeded against both defendants. The liability of the defendants on the contribution notices was divided ninety percent to the Port Melbourne Authority, and ten percent to Anshun. 20 It was in these circumstances that the Port of Melbourne Authority commenced a fresh action against Anshun, asserting the right to indemnity under the hire agreement. The Court said that they could not do so, and permanently stayed the action. Commenting upon the facts, their Honours Gibbs CJ, Mason and Aickin JJ, said this: (at 596) "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 Soterales action. The judgment in that action was that Anshun should recover contribution from the Authority to the extent of 90 per cent of Soterales' damages and costs and that the Authority should recover from Anshun contribution to the extent of 10 per cent of the damages and costs. The judgment which the Authority now seeks is one whereby the Authority recovers from Anshun the whole of Soterales' damages and costs. It is this inconsistency between the judgment obtained in the first action and the judgment sought to be obtained now that is of importance." 21 Their Honours added: (at 604) "Taking into consideration the relevant factors we conclude that the Full Court was right in holding that there was an estoppel. The matter now sought to be raised by the Authority was a defence to Anshun's claim in the first action. It was so closely connected with the subject matter of that action that it was to be expected that it would be relied upon as a defence to that claim and as a basis for recovery by the Authority from Anshun. The third party procedures were introduced to enable this to be done. If successful, the indemnity case would have obviated an inquiry into contribution. If reserved for assertion in a later action, it would increase costs and give rise to a conflicting judgment." The Application of the Anshun Principle 22 Here, the circumstances are quite different from those in the Anshun case. First, the original proceedings by Mr Handley did not include any issue between Mr Marsden and Cut-Price Rent-A-Car. They were simply two parties named by Mr Handley in the one action. There was no exchange of third party notices between defendants, nor the commencement of cross claims. Had there been a third party notice or cross claim, there would have been an issue between the defendants, and an obligation upon each to bring forth their whole case against each other. 23 Secondly, there is no risk of inconsistency. The judgment in the first proceedings was in respect of an action between Mr Handley and Mr Marsden. It did not, and obviously could not, deal with the rights and obligations of Mr Marsden in relation to Cut-Price Rent-A-Car. 24 Thirdly, in terms of the objective of fairness and efficiency, which underpin the Anshun estoppel, the separation of the two actions is neither inefficient nor unfair. The issues in the first action concern the circumstances of the accident, and the damage to the vehicle. The issue in the second presupposes the resolution of those issues against Mr Marsden, but depends upon the contractual arrangements between Mr Marsden, and Cut-Price Rent-A-Car. In my view it is neither unfair nor inefficient to separate those issues. Indeed, for convenience, and upon the application of a party, such issues are often separated. 25 Adopting the wording of Priestley JA in Rahme v Commonwealth Bank of Australia (supra), when describing the third category within the Anshun principle, the requirements of that category are simply not present. To come within category 3, two conditions must be met: · First, Mr Marsden, in the second proceedings, must assert a cause of action which could have been raised in the first proceedings, but was not. · Secondly, Mr Marsden, in the first proceedings, must assert against the same party as in the second proceedings (that is, Cut-Price Rent-A-Car) a different cause of action based on substantially the same facts. There was, as mentioned, simply no action, and therefore no joinder of issue, between Mr Marsden and Cut-Price Rent-A-Car in the first proceedings. 26 The appellant's contention involves an assertion that Mr Marsden was obliged to serve a third party notice upon Cut-Price Rent-A-Car in Mr Handley's action. There is no warrant for that assertion. In circumstances which are analogous, Simpson J (with whom I respectfully agree) made the following comment upon the application of the Anshun estoppel in the context of a defamation action: (Green v Schneller (unreported, 12 January 1999) at 4) "During the course of the hearing of the notice of motion I raised the question of whether it was correct for counsel for the defendant to assert, as he did, that the defendant would retain her right to bring proceedings for indemnity and/or contribution against Amalgamated Television, even after the conclusion of the principal proceedings. The cause for my concern was the decision of the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. Having re-read those judgments, and having read the written submissions from both counsel that resulted from that concern, I am satisfied that that decision will not prevent the prosecution by the defendant of any claim she may with to bring against Amalgamated Television." 27 I therefore believe that the determination by the Learned Magistrate, that the Anshun estoppel had no application in the circumstances of this matter, was not erroneous in point of law. 28 I therefore make the following orders: 1. Appeal dismissed. 2. The appellant should pay the respondent's costs. ********** Last Modified: 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. 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