New South Wales Court of Appeal CITATION: Commonwealth of Australia v Cockatoo Dockyard Pty Ltd [2006] NSWCA 322 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S): 30 May 2006, 31 May 2006,1 June 2006 JUDGMENT DATE: 23 November 2006 JUDGMENT OF: Giles JA at 1; Santow JA at 2; Tobias JA at 3 DECISION: Appeal dismissed with costs CATCHWORDS: ESTOPPEL – dispute arising after arbitration – res judicata – Anshun estoppel – issue estoppel – cause of action estoppel – principles – effect of a deed of settlement – whether estoppel "available" under a deed of settlement – whether special circumstances within meaning of Arnold v National Westminster Bank PLC [1991] 2 AC 93 – CONTRACT – contract with Commonwealth – whether contractual obligations subsisted after the expiry of a contract – PROCEDURAL FAIRNESS – whether denial of procedural fairness – whether primary judge searched for and found an estoppel substantially different than that alleged – TORTS – NEGLIGENCE – liability – whether conduct gave rise to liability – WORKERS' COMPENSATION – ENTITLEMENT TO AND LIABILITY FOR COMPENSATION – persons liable to pay compensation – whether Commonwealth liable to reimburse a company for workers' compensation costs pursuant to a contract – whether conduct of contractor gave rise to a liability to pay for costs itself – whether reimbursement for such costs capable of including a fee for profit margin Administrative Law Act 1978 (Vic) Arbitration Act 1979 (UK) Commercial Arbitration Act 1984 (NSW) LEGISLATION CITED: Commercial Arbitration Act 1984 (Vic) Dried Fruits Act 1928–1935 (Cth) Local Government Act 1989 (Vic) Supreme Court Rules 1970 (NSW) Arnold v National Westminster Bank PLC [1991] 2 AC 93 Blair v Curran (1939) 62 CLR 464 Briggs v Hall, Supreme Court of Victoria, Batt J, 8 November 1994 (unreported) Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 858 Coflexip SA v Stolt Offshore MS Ltd (2004) 60 IPR 202 Commonwealth of Australia v Cockatoo Dockyard Pty Ltd AC 9602289, Supreme Court of NSW, Bainton J, 29 May 1996 (unreported) Glen Eira City Council v Kingston City Council [2001] VSCA 150; (2001) 116 LGERA 292 Henderson v Henderson (1843) 3 Hare 100 at 115; 67 ER 313 Hoystead v Commissioner of Taxation [1926] AC 155 Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537 Humphries v Humphries [1910] 2 KB 531 James v Commonwealth (1935) 52 CLR 570 Kingston City Council v Monash City Council [2001] VSC 41 Kuligowski v Metrobus (2004) 220 CLR 363 Lake v Lake [1955] P 336 CASES CITED: Landco Ltd v Lynch [1995] 1 NZLR 37 Linsley v Petrie [1998] 1 VR 427 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 Mitsubishi Motors Australia Ltd v Harbord (1997) 69 SASR 75 Murphy v Abi-Saab (1995) 37 NSWLR 280 O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 Penn-Texas Corpn v Murat Anstalt (No 2) [1964] 2 QB 647 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Ramsey v Pigram (1968) 118 CLR 271 Re State of Norway's Application (No 2) [1990] AC 723 Rogers v The Queen (1994) 181 CLR 251 Sun Life Assurance Co of Canada v Lincoln National Life Insurance Co [2005] 1 Lloyd's LR 606 Talyancich v Index Developments Ltd [1992] 3 NZLR 28 Theo v Official Trustee in Bankruptcy (1996) 70 FCR 317 Tiufino v Walland (2000) 50 NSWLR 104 Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361 PARTIES: Commonwealth of Australia Cockatoo Dockyard Pty Limited FILE NUMBER(S): CA 40789/04; 40124/05 COUNSEL: A: P T Taylor SC / D Caspersonn R: T G Parker SC / B F Katekar SOLICITORS: A: Australian Government Solicitor, Sydney R: Allens Arthur Robinson, Sydney LOWER COURT JURISDICTION: Supreme Court LOWER COURT FILE NUMBER(S): SC50165/01 LOWER COURT JUDICIAL OFFICER: McDougall J LOWER COURT DATE OF DECISION: 17 September 2004 LOWER COURT MEDIUM NEUTRAL CITATION: Cockatoo Dockyard v Commonwealth of Australia [2004] NSWSC 841 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40789/04 CA 40124/05 SC 50165/01 GILES JA SANTOW JA TOBIAS JA Thursday 23 November 2006 COMMONWEALTH OF AUSTRALIA v COCKATOO DOCKYARD PTY LTD Facts Cockatoo Dockyard Pty Ltd (Codock) occupied and used a Naval Dockyard on Cockatoo Island pursuant to a series of agreements made with the Commonwealth of Australia from 1 March 1933 to 31 December 1992. Asbestos products were used at the Dockyard throughout that time in pipes and equipment as well as in operations involving the fitting of ships. As a result, many of Codock's employees contracted asbestos related diseases and commenced actions against Codock for damages. Codock alleged that the Commonwealth was liable for such damages pursuant, inter alia, to the terms of a trading agreement and lease that were entered into in 1972, and varied in 1976 and 1987. Together with some subsequent amendments, this document was referred to as the "1972 TAL". The 1972 TAL adopted the Commonwealth's Standard Conditions for the Determination of the Costs of Contracts and contained a provision that any dispute arising between the Commonwealth and Codock should be referred to arbitration. Clause 2(3) of the 1972 TAL provided that Codock was entitled to be reimbursed by the Commonwealth for "indirect costs or expenses" which were accepted as "overhead" within the meaning of that term in that sub-clause. In June 1990, the Commonwealth announced its decision to decommission the Dockyard. Accordingly, Codock ceased occupation of the Dockyard when the 1972 lease (and 1972 TAL) expired on 31 December 1992. At this point, a number of disputes arose from the Commonwealth's announcement that it intended to allocate some work to another dockyard. Codock also made a claim for the cost of defending, settling and paying damages in relation to common law claims made by its former employees for asbestos related injuries. These amounts were referred to as "Workers Compensation Costs", and Codock maintained that they constituted "overhead expenses" for which it was entitled to be reimbursed by the Commonwealth to the extent to which they had not been wholly or partially paid by Codock's insurers. The Commonwealth denied any liability in relation to the claims and the disputes were submitted to arbitration in late 1992. Codock's Points of Claim in the arbitration alleged that the Workers Compensation Costs were ongoing costs recoverable, inter alia, pursuant to cl 2(3) of the 1972 TAL, and that the Commonwealth was obliged to pay Codock the amount of those costs plus 7.5% profit. Codock's Points of Claim also pleaded that the Commonwealth was in breach of that obligation as it had refused to indemnify Codock against the Workers Compensation Costs, to accept liability for such costs and to pay to Codock the amount necessary to make provision against them in the future. The Arbitrator's reasons were delivered in December 1995. The Arbitrator concluded, inter alia, that the Commonwealth was liable to indemnify Codock in relation to Workers Compensation Costs incurred both before and after the termination of the 1972 TAL. The Arbitrator also made an interim award in the amount of $10,864,240 together with interest of $5,315,355. However, this award did not resolve all the matters of dispute between the parties. Codock and the Commonwealth agreed to a compromise in May 1997, and entered into a Deed of Settlement under which the Commonwealth agreed to pay Codock $4,960,000. This sum included mutual releases in respect of the subject matter of the arbitration, although it was agreed that the releases would not extend to certain future claims by Codock and any related defences available to the Commonwealth. With the consent of the parties, the Arbitrator made a final award in which he dismissed all remaining claims on 15 May 1997. On 13 October 2001, Codock instituted proceedings in the Commercial List of the Equity Division of the Supreme Court seeking an order that judgment be entered against the Commonwealth in the amount of $3,021,557.21 together with consequential orders. Codock asserted that the Commonwealth had refused to reimburse Codock for Workers Compensation Costs arising after 31 October 1995 and sought full reimbursement of all such costs incurred until 30 June 2003. Codock again maintained that such costs were overhead costs within the meaning of the 1972 TAL. In its defence, the Commonwealth denied that the Workers Compensation Costs were overhead costs, and denied that the Commonwealth bore any continuing obligation to Codock. In reply, Codock argued that the Commonwealth was estopped from denying that the obligation was ongoing and that the Workers Compensation Costs were overhead within the meaning of the relevant agreements. The parties agreed on a Statement of Issues which raised a series of questions relating to whether the Commonwealth was obliged to reimburse Codock. These were ultimately determined in Codock's favour in an interlocutory judgment and the Commonwealth now appeals against that judgment. The Commonwealth required leave to appeal against those aspects of the judgment that were determined contrary to its interests, and leave was granted by this Court on 24 October 2005. This appeal now raises seven issues: 1. The negligence issue: was the Commonwealth estopped from arguing that the Workers Compensation Costs were incurred in such a way that Codock's underlying conduct gave rise to a liability for it to pay those costs itself? 2. The expiration issue: did the Commonwealth have subsisting contractual obligations to Codock after the 1972 TAL expired? 3. The risk issue: did Codock bear the risk of the Workers Compensation Costs because the insurance premiums against risks of personal injury were reimbursed by the Commonwealth? 4. Clause 4(b) of the Deed of Settlement preserved some rights for each of the parties. The Commonwealth argued that the effect of this clause was to make each of its defences "available" to it. Was Codock therefore precluded from relying on any issue estoppel because of the Deed of Settlement? 5. Whether Codock is estopped from recovering a 7.5% fee under the terms of the Deed of Settlement. 6. Whether there were special circumstances in this case within the meaning of Arnold v National Westminster Bank PLC [1991] 2 AC 93. 7. Whether the primary judge denied the Commonwealth procedural fairness by searching for and finding an estoppel substantially different from that alleged in the Statement of Issues. Held, dismissing the appeal with costs: The negligence issue 1. Where several available factual grounds are determined in favour of the party who ultimately succeeds on the main issue, the individual detailed findings will be regarded as collateral findings, not properly founding an estoppel: [227]; Spencer Bower, Turner and Handley, "The Doctrine of Res Judicata" (3rd ed, 1996) cited. 2. An estoppel that arises from an issue advanced in support of a cause of action (as distinct from a defence) can only arise from findings on that issue that were essential to the success or failure of the cause of action: [238]. 3. In this case, the evidentiary issues upon which Codock succeeded before the arbitrator gave rise only to collateral findings. As such they did not give rise to an issue estoppel in respect of Codock's defences to the Commonwealth's arguments on the appeal: [235], [239]; Rogers v The Queen (1994) 181 CLR 251 referred to. 4. Given that one of the purposes of estoppel is to work justice between the parties, there may be an injustice in holding that a party was estopped from raising a defence if that issue was rejected in prior proceedings on the sole basis that the relevant party had failed to specifically plead it as a defence: [250]; Arnold v National Westminster Bank PLC [1991] 2 AC 93 referred to. 5. Where two issues are true alternative bases for a decision, insofar as each is capable of supporting the ultimate decision in its own right and neither is merely ancillary to the other, each issue is capable of giving rise to an issue estoppel: [209]; Mitsubishi Motors Australia Ltd v Harbord (1997) 69 SASR 75, Blair v Curran (1939) 62 CLR 464, Glen Eira City Council v Kingston City Council [2001] VSCA 150; (2001) 116 LGERA 292 discussed. 6. In this case, the arbitrator's conclusion that the 1972 TAL conferred a right upon Codock to recover against the Commonwealth was fundamental to the award that was made in Codock's favour. A clear cause of action estoppel therefore arose from the grant of the award: [228]. 7. Further, whether or not the arbitrator's award was appealable, it was one of the fundamental elements of his decision that the relevant costs were part of "overhead expenses", and so gave rise to an issue estoppel: [263]. 8. Accordingly, the Commonwealth was bound by the arbitrator's award in favour of Codock on the issue of the recoverability of Workers Compensation Costs and is estopped from raising the negligence issue in defence of Codock's claim. The question is a fortiori a question of construction that was determined in favour of Codock by the arbitrator: [279]. The expiration issue 9. A point or issue may be in controversy in litigation even if it is not specifically pleaded or not argued properly: [309]; Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537 referred to. 10. A point that is not ultimately argued may still give rise to an issue estoppel in the strict sense if it is put in issue by one of the parties and finally determined by the decision maker: [311]; Kuligowski v Metrobus (2004) 220 CLR 363 followed. 11. In this case, even though the expiration issue was not ultimately argued before the arbitrator, the issue was raised in Codock's claim and addressed in the Commonwealth's defence and the arbitrator's acceptance of Codock's argument was fundamental to the arbitrator's determination that Codock was entitled to recover Workers Compensation Costs from the Commonwealth incurred after the termination of the 1972 TAL: [311]–[312]; Kuligowski v Metrobus (2004) 220 CLR 363 applied. 12. Accordingly, an issue estoppel prevents the Commonwealth from raising the expiration issue in these proceedings: [312]. The risk issue 13. It has generally been accepted that a party will be estopped from advancing an argument which would result in a judgment conflicting with an earlier judgment if it succeeds: [375]; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 referred to. 14. Such an inconsistency may arise in relation to a claim for costs which are different from those sought in an earlier action where the legal basis for the claim is the same: [382]. 15. In this case, the defences on the risk issue raised by the Commonwealth would, if established, constitute a complete defence to Codock's present claim for the reimbursement of Workers Compensation Costs. Such an outcome would contradict the Arbitrator's judgment notwithstanding that the particular costs claimed are different from those awarded in the arbitration: [382]. 16. The Commonwealth is therefore estopped from raising the defences arising from the risk issue: [382]. 17. Moreover, it is unnecessary and inappropriate to form a final view on the merit of defences that are not directly in issue, and leave on this point should not therefore be revoked: [391]. Issue estoppel under the Deed of Settlement 18. The Deed of Settlement was not intended to release the parties from any aspects of the arbitrator's decision which may give rise to an issue estoppel: [407]. 19. If the Commonwealth is disentitled from maintaining a defence by virtue of the operation of an issue or Anshun estoppel, it must follow that that defence is not "available" to it within the meaning of the Deed of Settlement: [408]. 20. Accordingly, Codock is not precluded from relying on any issues estoppel because of the terms of the Deed of Settlement: [408]. Recovery of a fee under the Deed of Settlement 21. The notion of "reimbursement" would not normally extend to the garnering of a profit margin on an expense. However, the word must be construed in context: [409]–[410]. 22. In this case, the 1972 TAL did not use the term "reimbursement" to differentiate between a cost component as distinct form a profit component. As such, claims for reimbursement were capable of including a profit element and Codock is not estopped from recovering a 7.5% fee under the terms of the Deed of Settlement: [414]–[417]. Arnold special circumstances 23. It is not necessary or appropriate in this case to resolve the question of whether Arnold is part of the law of New South Wales: [487]; Arnold v National Westminster Bank PLC [1991] 2 AC 93 referred to. 24. The Arnold special circumstances exception is created by the absence of a right of appeal where the absence of such a right would prevent the correction of an error of law in circumstances where that error was plain on the face of the relevant award and possibly corrected in other proceedings: [451]. 25. Moreover, for the purposes of issue estoppel, special circumstances will not be constituted by merely establishing that there is some doubt as to the correctness of an earlier decision: [461]–[463]; Arnold v National Westminster Bank PLC [1991] 2 AC 93 discussed, Kingston City Council v Monash City Council [2001] VSC 41 not followed. 26. In this case, the absence of a right of appeal from the decision of the arbitrator does not, in and of itself, give rise to a special circumstance within the meaning of Arnold: [452], Arnold v National Westminster Bank PLC [1991] 2 AC 93 discussed. 27. Further, Codock's abandonment of any form of declaratory relief with respect to costs not yet incurred in the arbitration does not give rise to an Arnold special circumstance; nor do any of the other circumstances alleged by the Commonwealth: [456], [458], [475], [483]–[486]. Procedural fairness 28. The primary judge did give consideration to the question of Anshun estoppel, and the Commonwealth could not have been under any misunderstanding that that was the case. Accordingly, there was no denial of procedural fairness: [494]–[496]. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40789/04 CA 40124/05 SC 50165/01 GILES JA SANTOW JA TOBIAS JA Thursday 23 November 2006 COMMONWEALTH OF AUSTRALIA v COCKATOO DOCKYARD PTY LTD Judgment 1 GILES JA: I have had the privilege of reading the reasons of Tobias JA in draft. I agree with them, and with the orders his Honour proposes. 2 SANTOW JA: I agree with Tobias JA. 3 TOBIAS JA: On 25 February 2005 McDougall J formally answered four questions, and one further question in part, in favour of the respondent, Cockatoo Dockyard Pty Ltd (Codock). His Honour had made an order under Pt 31 r 2 of the Supreme Court Rules 1970 (the Rules) that these questions be determined separately from the balance of some 11 issues contained in a Statement of Issues agreed between the parties and dated 23 July 2004: [2004] NSWSC 841; [2005] NSWSC 11. Each of the questions relevant to this appeal raised issues of estoppel: in particular, whether the appellant, the Commonwealth of Australia (the Commonwealth), was estopped from maintaining certain defences in proceedings between it and Codock. 4 Because the primary judge's answers to the separate questions constituted an interlocutory hearing, the Commonwealth required this Court's leave to appeal so much of his Honour's determinations of the separate questions as had been answered contrary to its interests. This Court granted such leave on 24 October 2005. Essentially, the appeal raises questions both of issue estoppel in its strict sense and what was referred to in the course of argument as issue estoppel in its extended sense, and which is better known as Anshun estoppel: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. 5 The Commonwealth's challenges in this appeal are numerous and complex. Accordingly, I will commence by setting out the context for this appeal, including the factual background, the origins of the dispute and the manner in which those disputes were determined in the original arbitration between the parties. I will then turn to the proceedings that were instituted in the Commercial List of the Supreme Court and the Statement of Issues arising in those proceedings that was then agreed upon between the parties. In the second half of the judgment, I will consider the substantive issues raised on the appeal, addressing, in turn, the pleadings relating to the three issues referred to as the negligence issue, the expiration issue and the risk issue. Finally, I will consider whether either party was estopped from proceeding on any other basis, and will also deal with the issue of procedural fairness said to arise out of the manner in which the primary judge dealt with the separate questions which he was required to answer. Introductory observations on procedural fairness 6 It is appropriate to begin with a brief reference to the procedural fairness issue, which was one of the Commonwealth's primary contentions on the appeal. It was asserted that the primary judge denied the Commonwealth procedural fairness as a consequence of the manner in which he answered the first of the four separate questions referred to above. It was alleged that he had done so by depriving the Commonwealth of the opportunity to make submissions with respect to the questions contained in the Statement of Issues which were not the subject of the order made under Pt 31 r2. 7 However, whether or not the Commonwealth was denied procedural fairness in the manner alleged, it has now taken the opportunity to make submissions with respect to those findings of the primary judge. Accordingly, it will be convenient to consider the Commonwealth's primary contentions with respect to procedural fairness in conjunction with my determination of the parties' substantive submissions with respect to the estoppel issues. These issues underlie not only the matters in which the Commonwealth denies it was accorded procedural fairness, but also all the questions that the primary judge answered adversely to the Commonwealth and in respect of which it has been granted leave to appeal. 8 In this respect it is to be noted that the Commonwealth's allegations that it was denied procedural fairness generally arose out of complaints it had made about Codock's pleadings in the current proceedings and the manner in which it conducted its case before the primary judge with respect to the type of estoppel upon which it relies to resist certain of the Commonwealth's defences in those proceedings. However, to understand the Commonwealth's primary contentions with respect to its procedural fairness ground, it is appropriate to state those contentions before considering the substantive issues. Background to the appeal (a) The origins of the dispute between Codock and the Commonwealth 9 For more than 59 years, from 1 March 1933 to 31 December 1992, Codock occupied and used the Naval Dockyard on Cockatoo Island (the Dockyard) pursuant to a series of agreements made with the Commonwealth or a statutory body representing the Commonwealth. 10 For many of those years asbestos products were used in the operations carried on by Codock at the Dockyard. Many of those operations involved the fitting and refitting of naval and non-naval ships. Asbestos was used to lag pipes such as steam lines as well as other equipment, especially in the ship's engine rooms. Furthermore, there were other facilities at the Dockyard such as the turbine and boiler shops where asbestos products were also used extensively in the lagging of pipes and other plant equipment. 11 As a consequence of Codock's employees being exposed to asbestos products during the course of their employment, many contracted diseases associated with that exposure which, typically, took many years to manifest. When this occurred, the employee made a claim against Codock seeking damages for his or her injuries. 12 Codock was either uninsured or only partly insured for the purposes of some of those claims. As a consequence of the terms of the agreements with the Commonwealth (to which I refer below), Codock claimed that it was entitled to be indemnified by the Commonwealth in respect of those uninsured or partly insured claims. The parties came into dispute when the Commonwealth denied that it was liable to so indemnify Codock. (b) The history of the agreements between the parties 13 On 3 February 1933 an agreement (the 1933 Agreement) was entered into between, inter alia, the Commonwealth and Codock whereby the Dockyard would be leased to Codock for a term of 21 years commencing on 1 March 1933. A lease giving effect to that agreement was entered into on 16 February 1935 (the 1935 Lease). Codock entered into occupation of the Dockyard pursuant to the 1933 Agreement as and from 1 March 1933 and continued in occupation until 31 December 1992. 14 In 1941, during a time of war, the Commonwealth took substantial control of the Dockyard. For that purpose, the Commonwealth entered into an agreement with Codock on 20 November 1941 (the Wartime Agreement). This agreement took effect on 1 March 1940 and remained in force until 30 June 1954, and altered the trading arrangements under which the Dockyard had previously operated. 15 On 19 February 1954 the Commonwealth leased the Dockyard to Codock for a further term of 20 years and eight months commencing on 1 March 1954 (the 1954 Lease). A new agreement was also entered into between the parties on 16 May 1956 (the 1956 Agreement), which replaced the Wartime Agreement with effect from 1 July 1954. This agreement varied the existing trading arrangements between the Commonwealth and Codock for the operation of the Dockyard and remained in force until 31 October 1962. 16 On 31 July 1963 an agreement (the 1963 Agreement) was entered into between the Commonwealth and Codock which took effect on 1 November 1962 and remained in force until 31 December 1971. That agreement replaced the 1956 Agreement with a new trading agreement. 17 On 14 January 1972 the Commonwealth leased the Dockyard to Codock for a further term of 21 years (the 1972 Lease) commencing on 1 January 1972 and expiring on 31 December 1992. On 14 February 1972 an agreement (the 1972 Trading Agreement) was entered into between the parties whereby certain further provisions were made for Codock to perform its operations at the Dockyard. That agreement replaced the 1963 Agreement. Together, the 1972 Lease and the 1972 Trading Agreement were known as the "1972 Trading Agreement and Lease" or the "1972 TAL". 18 By agreement between Codock and the Commonwealth effective 1 January 1976, variations were made to the 1972 TAL (the Substituted Mode of Performance Agreement). By further agreement dated 2 September 1987 (the Advance Agreement), the parties agreed as and from 1 July 1987, to vary the 1972 TAL as modified by the Substituted Mode of Performance Agreement. I shall hereafter refer to the 1972 Trading Agreement and the 1972 Lease as varied by the Substituted Mode of Performance Agreement and the Advance Agreement together as "the 1972 TAL". 19 The 1972 TAL also adopted the Commonwealth's Standard Conditions for the Determination of the Costs of Contracts issued in August 1971 (the 1971 Standard Conditions). These established the basis upon which Codock was to charge the Commonwealth for the "cost plus profit" work it performed at the Dockyard. The 1971 Standard Conditions were replaced by the Standard Conditions for the Determination of the Cost of Contracts issued in May 1984 (the Standard Conditions). 20 In June 1990, the Commonwealth announced its decision to decommission the Dockyard. The 1972 Lease expired on 31 December 1992 whereupon Codock ceased occupation of the Dockyard. The 1972 TAL also expired or terminated on that date. (c) The disputes between the parties leading to the arbitration 21 It was a term of the Wartime Agreement, the 1956 Agreement and the 1963 Agreement that if any dispute or difference arose between the Commonwealth and Codock, it should be referred to arbitration. The 1954 Lease and the 1972 TAL contained a similar provision. 22 A number of disputes arose between the parties upon the expiry of the 1972 TAL on 31 December 1992. These arose from the Australian Government's announcement that it intended to sell Cockatoo Island and allocate the refitting of two of the Navy's submarines, HMAS Onslow and HMAS Otama, to the Garden Island Dockyard. Codock contended that this decision gave rise to its main contractual claim against the Commonwealth because of its incompatibility with an alleged collateral agreement whereby, in consideration of Codock's entry into the 1972 TAL, the Commonwealth had undertaken to place orders with Codock for the carrying out by it of all refits of Oberon Class submarines until the completion of any program for such refits. 23 Codock also made an unrelated claim against the Commonwealth in which it sought to recover monies it had paid, up to and in October 1995. Those monies were said to have arisen out of common law claims made by Codock's former employees in respect of asbestos-related injuries they had suffered and which arose out of their employment at the Dockyard (the Claims). Codock maintained that these amounts (to the extent to which they had not been wholly or partially paid by its insurers) constituted "overhead expenses" in respect of which it was entitled to be reimbursed by the Commonwealth. 24 The expression "overhead expenses" was alleged to encompass the indirect costs attributable to the work Codock had undertaken for the Commonwealth where those expenses were attributable to what was known as "costs-plus work" performed by Codock for the Commonwealth and which constituted the predominant operations of Codock at the Dockyard. Relevantly, those costs were said to include not only the costs of defending and settling personal injury actions by former employees of Codock where those injuries were asbestos related (such as asbestosis and mesothelioma) but also the net amount of damages paid to those ex-employees in respect of which Codock had not been indemnified either in whole or in part by its insurers. 25 The principal basis upon which this claim was propounded by Codock was founded upon the terms of the 1972 TAL. In particular, Codock relied upon cll 2(3) and 2(4) of the 1972 TAL which provided as follows: "2(3) The Commonwealth shall pay the Company for work ordered under this Agreement on the price basis specified in each order. … Where payment under any order is calculated on a cost plus profit or incentive basis, costs shall not include rent and the profit for work done on a cost plus basis shall be 5% of the cost of direct labour, direct material, direct expense (including subcontracts) and overhead. In this clause, 'cost' or 'costs' shall mean and shall be the cost as determined in accordance with the Department of Supply Standard Conditions Applicable to Contracts on a Cost Plus Profit Basis, as revised from time to time. 2(4) The Company shall not increase the overhead rate as agreed from time to time chargeable to cost plus profit or cost incentive price orders without the prior approval of the Commonwealth." 26 Codock claimed that cl 2(3) in particular of the 1972 TAL entitled it to be reimbursed by the Commonwealth for "indirect costs or expenses" which were accepted as "overhead" within the meaning of that term in that sub-clause. (d) The arbitration 27 As required by the various agreements, including the 1972 TAL, the disputes between the parties were submitted to arbitration. Codock's Notice of Dispute was dated 23 December 1992 and the first version of its Points of Claim was filed on 8 March 1993. The arbitration commenced on 4 February 1993 before the Arbitrator, Mr J N West QC, and relevantly concluded when he published his reasons and an interim award on 8 December 1995. 28 Both before and after 1 January 1993, Codock incurred certain costs as a result of the claims. Those costs were referred to in par 24 of version 5 of Codock's Points of Claim (the Points of Claim) in the arbitration as "Workers Compensation Costs", and Codock alleged in par 41 that it would continue to incur such costs in the future. These costs comprised compensation payments, medical costs and legal costs resulting from the Claims (Common Law Costs) together with the excess payable on Claims covered by Codock's insurance (Excess Costs) and the costs of administering and defending the Claims (Ancillary Costs). When I refer to those costs in these reasons, I do so on the basis of the meaning or definition adopted in par 24. 29 By par C26B of the Points of Claim, Codock alleged that it was a term of "the Contract" that the Commonwealth would reimburse Codock for indirect costs or "overhead" attributable to Commonwealth cost-plus work performed by it on the basis, relevantly from 1 July 1987 onwards, of those costs plus 7.5% profit. 30 The expression "the Contract" was defined in par 25 of the Points of Claim to include all the agreements and the Standard Conditions referred to in [13] to [18] above "supplemented or varied by warranties, representations, modifications, collateral agreements and other agreements between the parties from time to time". 31 Codock alleged in par 43 of the Points of Claim that the Workers Compensation Costs were, and are, "overhead" costs as defined in par 26B and were, therefore, recoverable pursuant to, inter alia, cl 2(3) of the 1972 TAL. Consequently, it was asserted in par 46(a) of the Points of Claim that the Commonwealth was obliged to accept any Workers Compensation Costs incurred from 1 January 1993 onwards into what was referred to in par 26C(b) of the Points of Claim as the "Dockyard Overhead" as at 31 December 1992, and to pay Codock the amount of those costs plus 7.5% profit. 32 Codock's Points of Claim then pleaded in par 47 that the Commonwealth was in breach of that obligation as it had refused to indemnify Codock against the Workers Compensation Costs, to accept liability for such costs and to pay to Codock the amount necessary to make provision against them in the future. 33 In his reasons in support of his interim award, the Arbitrator concluded that the Commonwealth was, inter alia, liable to indemnify Codock in relation to the asbestos-related common law claims, that is, the Workers Compensation Costs as defined in Codock's Points of Claim. He found that this was so in respect of such costs incurred both before and after the termination of the 1972 TAL on 31 December 1992. In this context, it was accepted that the word "incurred" referred to an item of expense that Codock had paid or which it became liable to pay in respect of a claim under a judgment or compromise. It was not used by the Arbitrator to relate back to the circumstances that gave rise to the liability to pay. The latter had clearly occurred prior to 31 December 1992. 34 The Arbitrator's interim award obliged the Commonwealth to pay Codock the sum of $10,864,240 together with interest of $5,315,355. Of the amount so awarded, some $810,162 (before interest) related to Workers Compensation Costs. Of that amount, some $555,181 was for such costs incurred by Codock after 31 December 1992. I shall return to the Arbitrator's reasons for his award when dealing with the substantive issues. 35 The Arbitrator's interim award did not resolve all the matters of dispute between the parties. The Commonwealth sought unsuccessfully to challenge the interim award in circumstances to which I refer below. However, ultimately, Codock and the Commonwealth agreed to a compromise on 14 May 1997. They entered into a Deed of Settlement on that day (the Deed) under which the Commonwealth agreed to pay Codock $4,960,000. This sum included mutual releases in respect of the subject matter of the arbitration. However, the parties agreed that the releases would not extend to certain future claims by Codock and any defences available to the Commonwealth in relation to those claims. The limits of that exception was one of the issues debated before the primary judge. 36 With the consent of the parties, on 15 May 1997 the Arbitrator made a final award in which he dismissed "[a]ll claims made in this arbitration which were not disposed of in my interim awards". Proceedings in the Commercial List of the Supreme Court (a) Codock's Summons 37 On 13 October 2001, Codock instituted proceedings by way of summons in the Commercial List of the Equity Division of the Supreme Court seeking an order that judgment be entered against the Commonwealth in the amount of $3,021,557.21 together with consequential orders. In its Second Further Amended Summons filed on 26 October 2004 (the Summons), Codock asserted in pars A2 and A3 that the nature of its dispute with the Commonwealth was that, under the contractual arrangements governing Codock's work at the Dockyard, the Commonwealth reimbursed it for overhead costs incurred as a result of operating the Dockyard. Codock also alleged that, since the late 1980s, Codock had incurred costs arising from personal injury claims made principally by former employees at the Dockyard as a result of their exposure to asbestos. 38 These paragraphs further asserted that although the Commonwealth initially reimbursed Codock for personal injury claim costs from former employees for the period up to 31 October 1995, it then refused to make any further reimbursement. Accordingly, Codock sought judgment for the full reimbursement of the Workers Compensation Costs it had incurred to 30 June 2003. 39 Under the heading "Issues Likely to Arise", par B1 of the Summons relevantly alleged that one of the issues was whether Codock was precluded from obtaining reimbursement for outstanding personal injury claim costs "on the basis of res judicata or Anshun principles arising from the award" in the arbitration. 40 After reciting the history of the agreements between the parties in paras C1 to C22 of the Summons (to which I have already referred), the Summons asserted at par C23A that Codock had incurred, and continued to incur, indirect costs attributable to work it had undertaken in the course of its operation of the Dockyard (thereafter referred to as "Overhead Costs"). This paragraph generally mirrored par 26B of the Points of Claim in the arbitration. 41 Next, par C24 asserted that Codock had incurred Workers Compensation Costs, which were defined in the same terms as in par 41 of the Points of Claim, since May 1987. Paragraph C26 alleged that "It was a term of the 1972 Trading Agreement as varied by the Substitute Mode of Performance and the Advance Agreement, that the [Commonwealth] would reimburse to [Codock] all Overhead Costs incurred from 1 July 1987 onwards ... plus a fee of 7.5%." Particulars of the term included cl 2(3) of the 1972 TAL. The equivalent of par C26 of the Summons is to be found in paras 26B and 26E of the Points of Claim. 42 The Summons then asserted in par C27 (in essentially the same terms as par 43 of the Points of Claim) that the Workers Compensation Costs were Overhead Costs referring by way of particulars to pars 4.49–4.51, 1.5, 1.16 and 2.4 of the Standard Conditions. After reciting in par C31 that the Commonwealth had refused to reimburse Codock in full for incurred Workers Compensation Costs since November 1995, it claimed payment of $3,021,557.21. This figure comprised $2,810,750.87 for the cost of meeting the Claims and allowed for a profit margin of $210,806.34. (b) The Commonwealth's defence to the Summons 43 Under Part B of its defence to the Summons headed "Issues likely to arise" (the Defence), the Commonwealth indicated its disagreement with Codock's statement as to the issues likely to arise although it accepted that those issues might arise. It then set out what it alleged would be the "fundamental issues" likely to arise in the proceedings. Relevantly, those issues included the following: "21. Whether the costs or any of them claimed by [Codock] in the Summons 'could have been avoided or reduced by the exercise of reasonable standards of skill, care and efficiency, to the extent that such could have been avoided or reduced', and thus are not part of 'contract cost' pursuant to sub-clause 3.11 of the 1984 Standard Conditions. … 23. Whether the insurance premiums paid in respect of the personal injury claims referred to in the Summons were allowable as 'contract cost' pursuant to sub-clause 4.41 of the 1984 Standard Conditions, and therefore the personal injury claims costs were not 'risks in respect of which the conditions of the contract provide that the Commonwealth accepts liability for loss or damage' pursuant to sub-par 4.41(b)(iv) of the 1984 Standard Conditions but rather were premiums or 'risk carried by the [Commonwealth] (provided any loss is to be borne by the [Commonwealth]' pursuant to par 4.42(b) of the 1984 Standard Conditions. … 25. Whether any obligations between the parties, and if yes, what, continue beyond:- … (b) the termination of the 1972 Trading Agreement as varied; or (c) 31 December 1992. … 30. Whether any issue estoppels between the parties arise from the previous arbitration proceedings." (Emphasis added.) 44 In Part C of the Defence, under heading "Plaintiff's contentions", the Commonwealth: (a) In par C16 denied the facts alleged in par C26 of the Summons insofar as the allegation concerned costs incurred by Codock after 31 December 1992; (b) In par C17 denied the facts alleged in par C27 of the Summons, namely that Workers Compensation Costs were and are Overhead Costs; (c) In par C24 alleged that any agreement between the parties had expired; (d) In par C31 denied that the Commonwealth had any subsisting contractual obligations to Codock; (e) In par C29(a) and (c) alleged that the costs claimed by Codock in the Summons arose out of its failure to exercise appropriate standards of skill and care at the Dockyard in not providing a safe system of work and that the parties had agreed that the Commonwealth would not be responsible for any costs arising out of that failure; particulars of this allegation refer to cl 3.11 of the Standard Conditions; (f) In par C30 alleged that by virtue of cll 4.41(b)(iv) and 4.42(b) of the Standard Conditions, any loss incurred by Codock arising from personal injury claims in respect of which it had paid insurance premiums which had been reimbursed by the Commonwealth as " overhead " under the 1972 TAL, had been agreed between the parties to be borne by Codock. (c) Codock's Reply to the Commonwealth's Defence 45 In its Reply under the heading "Issue Estoppel Arising from Previous Arbitration Proceedings" (the Reply), Codock relevantly pleaded as follows: "7. It was determined in previous arbitration proceedings that: (a) It was a term of the 1972 Trading Agreement, as varied by the Substituted Mode of Performance and the Advance Agreement, that the Defendant would reimburse to the Plaintiff all Overhead Costs (within the meaning of par 23A of the Plaintiff's Conditions) less a credit calculated by reference to commercial work undertaken by the Plaintiff in the course of its occupation of the Dockyard, plus a fee of 7.5%. (b) Workers' Compensation costs (within the meaning of par 24 of the Plaintiff's Contentions) were and are Overhead Costs. (c) The Plaintiff had a contractual entitlement to reimbursement of all Workers' Compensation costs plus 7.5%. PARTICULARS Reasons and Interim Award of Mr John West QC, dated 8 December 1995. 8. Consequently, by reason of the previous arbitration proceedings: (a) the Defendant is estopped from denying pars 26 and 27 of the Plaintiff's Contentions; and (b) the denial and non-admission in par 16 of the Defence (as that paragraph relates to par 26 of the Plaintiff's Contentions) and the denial in par 21 of the Defence of any subsisting contractual obligations and the pleas in pars 16, 17, 21, 24, … 29, 30 … of the Defence are not maintainable." (d) The parties agree on a Statement of Issues 46 In light of the issues raised in the Commonwealth's Defence and Codock's Reply, the parties agreed to a Statement of Issues of which Issues 1, 2, 5, 7 and 8 were the subject of the order of the primary judge made under Pt 31 r2 of the Rules. However, as the question of whether the Commonwealth was estopped from relying on the defences encapsulated in Issues 3(a), (g) and (h) was raised both before the primary judge and this Court, it is appropriate to include them in the list of issues relevant to the appeal which I will set out below. 47 It is necessary to begin by setting out the following definitions contained in the Statement of Issues: "Summons" is the Further Amended Summons filed 5 Jul 2004; "Defence" is the proposed Amended Defence to Further Amended Summons, leave to file which was granted on 19 July 2004; "Reply" is the Reply filed 2 April 2002; "Workers' Compensation Costs" are costs associated with personal injury claims made against Codock in respect of activities at the Dockyard during the period 1 March 1933 to 31 December 1992 (as more fully defined in par 24 of the Summons); "Commercial Case Award" means the award in the Arbitration dated 8 December 1995; "Deed of Settlement" means the Deed between the parties dated 14 May 1997. 48 Under the heading "Right of Reimbursement under 1972 Trading Agreement and Lease" the following issues in the Statement of issues are presently relevant: "1. Subject to 2, is the Commonwealth barred, by reason of an issue estoppel arising from the Commercial Case Award, from denying that it is obliged to reimburse to Codock [ all ] Workers compensation Costs plus (subject to 9) a 7.5% fee? (Reply par 7) 2. Is Codock precluded from relying upon any such issue estoppel by reason of pars 3 and 4 of the Deed of Settlement? 3. Subject to 1 and 4, is the Commonwealth obliged to reimburse to Codock [the] Workers compensation Costs [claimed in the Summons] plus (subject to 9) a 7.5% fee, by reason of the provisions of the TAL (as modified by the Substituted Mode of Performance and the 1987 Advance Agreement)? (Summons pars 26, 28; Defence pars C16, C17) or: (a) did the expiration of the TAL on 31 December 1992 terminate any obligation the Commonwealth might otherwise have had to make such reimbursement? (Defence pars C21, C24) … (g) is Codock not entitled to such reimbursement to the extent that such Costs could have been avoided by the exercise by Codock of reasonable standards of skill and care in providing a safe system of work? (Defence par C29(a)) (h) is Codock not entitled to such reimbursement to the extent that (the Commonwealth contends) the risk of such Costs was carried by Codock by reason of insurance premiums against risks of personal injury claims having been reimbursed by the Commonwealth? (Defence par C30) … Partial Defences and Quantum 8. Is Codock estopped from recovering a 7.5% fee by reason of pars 3 and 4 of the Deed of Settlement? (Defence par C33)." 49 Although Issues 5 and 7 were litigated before the primary judge, his Honour's answers to the questions raised by those issues were not the subject of challenge on the appeal and can therefore be omitted. (e) The Commonwealth's procedural fairness contentions 50 The Commonwealth contends that it was denied procedural fairness by the primary judge. Its submissions on this point may be summarised as follows: (a) The penultimate version of the Statement of Issues was agreed upon on 23 July 2004. The primary judge had encouraged the parties to prepare this document on the first day of the hearing on 19 July 2004. (b) On 26 July the final version of the Statement of Issues, which did not differ in any relevant way from the penultimate version, was handed to the primary judge. His Honour then made an order under Pt 31 r2 of the Rules for the separate determination of Issue 1 but, relevantly, made no such order with respect to any of the sub-issues of Issue 3. (c) Accordingly, the only issue estoppel question before the primary judge at the first hearing was that asserted in Issue 1, although it had been accepted by the Commonwealth that if that issue was determined in favour of Codock, then a number of the sub-issues of Issue 3 would fall away. (d) His Honour answered Issue 1 in the first judgment in the negative. (e) As a consequence of (c), it was not open to the primary judge to qualify his negative answer to Issue 1 in the first judgment by finding an issue estoppel with respect to Issues 3(a) and (g). (f) Furthermore, Codock had not asserted in its pleadings or in its submissions before the primary judge at the first hearing that the Commonwealth was barred from raising the defences encapsulating Issues 3(a) and (g) as defences to Codock's claim in the Summons by reason of an issue estoppel. (g) In any event, in par 8(b) of the Reply, Codock had not pleaded that the Commonwealth was barred by issue estoppel (either in its strict sense or in its extended Anshun sense) from maintaining the defences pleaded in pars C16, C17, C21, C24, C29 and C30 of the Defence. (h) It was therefore not open to the primary judge to "search for and find an estoppel substantially different from that alleged" in Issue 1. Accordingly, as Codock had neither pleaded nor otherwise contended for an issue estoppel (whether in its strict sense or Anshun sense) in respect of any of the sub-issues of Issue 3, the Commonwealth was denied procedural fairness in that it was denied a proper opportunity to lead relevant evidence with respect to the negligence issue and the expiration issue. These were the two issues (3(a) and (g)) that were determined by the primary judge as an exception to his negative answer to Issue 1. (i) So far as Issue 3(h) was concerned, although the primary judge found in the second judgment that the Commonwealth was barred from asserting the defence encapsulated in that issue by virtue of an Anshun estoppel, no such estoppel had been pleaded in the Reply and no submission based on Anshun had been made to his Honour at the second hearing. (j) Accordingly, the Commonwealth was also denied procedural fairness in the second hearing in that it did not have the opportunity of arguing against an Anshun estoppel. This would have included eliciting evidence to establish that it was not unreasonable for it not to have raised Issue 3(h) before the Arbitrator. (f) The relationship between the pleadings and the Issues 51 To fully understand the questions arising from these paragraphs of the Statement of Issues, it is necessary to have further regard to the paragraphs of the pleadings to which they refer. The whole thrust of Codock's claim in the Summons is that the Commonwealth is obliged to reimburse it with respect to Workers Compensation Costs plus a profit margin or fee of 7.5%. That obligation was alleged in par C26 of the Summons, which I have set out in [41] above. The Commonwealth's response in par C16 of the Defence was to deny the facts alleged in par C26 with regard to those costs incurred by Codock after the expiration of the 1972 TAL on 31 December 1992. 52 It is to be noted that Issue 3 in the Statement of Issues contains 11 sub-issues expressed as an alternative to what was referred to in argument as the "overarching" issue set out in the first part of Issue 3. This was the question of whether the Commonwealth was obliged to reimburse to Codock the Workers Compensation Costs claimed in the Summons by reasons of the provision of the 1972 TAL. It would thus appear from the terms of Issue 3 taken as a whole that the parties regarded the answers to the sub-issues, whether taken severally or jointly, as providing the answer to the "overarching" issue stated in what I might refer to as the chapeau to Issue 3. This must be so given that the word "or" introduces the sub-issues and was thus clearly intended to provide an alternative subset of issues which, depending on how they were answered, would automatically provide the answer to the "overarching" issue. 53 In one sense, this construction was confirmed by the Commonwealth in its additional written submissions in reply on the procedural fairness issue where (in par 20.2) it accepted that most of the sub-issues in Issue 3 would have been removed as issues if the primary judge had found in Codock's favour on Issue 1. In other words, if Issue 1 had been answered in the affirmative, the sub-issues (or at least a number of them) in Issue 3 would not have arisen. 54 On the other hand, affirmative answers to one or more of the sub-issues of Issue 3 would have resulted in an automatic negative answer to the "overarching" issue in the first part of Issue 3. Furthermore, that part of Issue 3 is subject to Issue 1. Accordingly, an affirmative answer to Issue 1 would have resulted in an affirmative answer to the first part of Issue 3. This is certainly so if the references in those issues to Workers Compensation Costs are read as a reference to those costs as a class. That this is so is confirmed by the word "all" in Issue 1 and the words "the" and "claimed in the Summons" in the first part of Issue 3 being in brackets. There could be no doubt that even if such costs were recoverable by reason of the provisions of the 1972 TAL as a class, costs in individual cases might not be reimbursable if they were not "reasonable" within the meaning of clause 1.16(d) of the Standard Conditions: see Issue 3(c). So much was acknowledged by the primary judge as will be seen. 55 In my opinion, therefore, there is a close relationship between Issue 1 and some of the sub-issues of Issue 3: in particular, Issues 3(a), (g) and (h). An affirmative answer to any of those issues would result in a negative answer to the first part of Issue 3 unless the Commonwealth was precluded from raising those sub-issues. If it is, then the result would be an affirmative answer to Issue 1 at least insofar as it related to Workers Compensation Costs as a class. Accordingly, notwithstanding that only Issue 1 expressly raises an estoppel against the Commonwealth, each of Issues 3(a), (g) and (h) implicitly or potentially raised an estoppel issue as a sub-set of Issue 1. As will appear (see [112] below), this is how the matter was approached by the primary judge and, in my opinion, he was justified in doing so. 56 In the context of the foregoing observations, I return to the relationship between the pleadings and the Statement of Issues. Thus, par C16 of the Defence, which denies any liability by the Commonwealth to reimburse Workers Compensation Costs incurred by Codock after 31 December 1992, is reflected in Issue 3(a) which, inter alia, denies that the Commonwealth "has any subsisting contractual obligations to" Codock. This issue was referred to in argument as "the expiration issue". 57 Issue 3(g) raises a broader issue that is unrelated to the date upon which Workers Compensation Costs were incurred and is directed at Codock's underlying conduct that gave rise to its liability to pay such costs to its ex-employees. Its source is par C29 of the Defence which I have summarised in [43] above. Particulars of this defence were directed to cl 3.11 of the Standard Conditions. As this provision loomed large in the arguments before this Court, I shall refer to it in greater detail later in these reasons in a more appropriate context. I shall refer to this issue, as the parties did in argument, as "the negligence issue". 58 Issue 3(h) has its source in par C30 of the Defence which I have also summarised in [43] above. Particulars to par C30(c) refer to cll 4.41(b)(iv) and 4.42(d) of the Standard Conditions. This issue was referred to in argument as "the risk issue" and I shall adopt the same description. 59 Issue 8 is sourced in par C33 of the Defence, which asserts that Codock was estopped from claiming the fee of 7.5% by reason of cll 3 and 4 of the Deed of Settlement entered into on 14 May 1997 between the parties. Whether or not this is so involves a consideration of the construction of those provisions. 60 Finally, it should be observed that pars 7 and 8 of the Reply raised questions of estoppel against the Commonwealth. That is reflected expressly in the terms of Issues 2, 5 and 8 (as well as Issue 4 which was not before the primary judge for determination as a separate question). Anshun estoppel was expressly raised against Codock in Issues 7 and 9 of which only Issue 7 was before the primary judge for separate determination. 61 As I have already observed, neither the "overarching" part of Issue 3 nor its sub-issues were expressly framed in terms of estoppel. Nevertheless, they were treated as questions of estoppel by the primary judge. Furthermore, Codock submitted that Issues 3(a), (g) and (h) raised the question of whether the Commonwealth could maintain the pleas in pars C21 and C24 of the Defence to which Issue 3(a) was directed, the plea in par C29 to which Issue 3(g) was directed and that in par C30 to which Issue 3(h) was directed. Paragraph 8(b) of the Reply, it was contended, expressly raised the question of whether those pleas could be maintained by the Commonwealth by reason of the Arbitrator's determination as set out in par 7 of the Reply. 62 Codock contended that the only basis upon which those pleas could not be maintained by the Commonwealth would be that it was estopped from asserting them by reason of the issues determined by the Arbitrator as set out in his reasons and interim award. Although the words "estopped", "estoppel", "issue estoppel" and "Anshun estoppel" were not used in par 8(b) of the Reply, this was no doubt because the more general assertion that the pleas were "not maintainable" was used instead. 63 Contrary to the Commonwealth's submission in its procedural fairness contentions, in my opinion this expression was wide enough to extend to issue estoppel in the strict Blair v Curran sense, Anshun estoppel and cause of action or res judicata estoppel. Codock reminded the Court that the Commonwealth did not seek particulars as to the legal basis upon which it was alleged that the pleas referred to in par 8(b) of the Reply were "not maintainable". Nor did the Commonwealth apply to strike out the whole or any part of par 8(b) of the Reply on the ground that it was embarrassing, prejudicial or did not disclose a reasonable answer to the Commonwealth's defences or pleas: cf Pt 15r26(1) of the Rules. 64 As noted above, Codock suggested that the Commonwealth had not sought particulars of pars 7 and 8 of the Reply. This was not strictly correct. By letter dated 12 April 2002, the Commonwealth sought particulars of pars 7 and 8 of which the following request is presently relevant: "16. Paragraphs 7 and 8 of the Reply (particularly 7(b) and 8(a)) appear not to make any pleas of issue estoppel in relation to Third Party Compensation Costs. Is this correct? If so, can we assume that the challenge to various paragraphs of the Defence, pleaded in sub-paragraph 8(b) of the Reply, are not to be read as challenging those various paragraphs insofar as they are confined to the [Codock's] claim for third party compensation costs." 65 Codock replied to this request on 26 April 2002 in the following terms: " Item 16 It is not contended that, insofar as Codock contends the Third Party Compensation Costs were and are Overhead Costs, that there is an issue of estoppel binding the Commonwealth. However, if it is established that Third Party Compensation Costs were Overhead Costs the Codock will rely on the issue estoppel pleaded in relation to paragraph 7(a) in relation to such Costs." 66 The Commonwealth submitted that its request for particulars with respect to pars 7 and 8 of the Reply "focussed on issue estoppel in the strict sense, not Anshun estoppel, because of the reliance in the reply upon matters which were 'determined' rather than upon matters which should have been raised" and that "the answers of Codock gave no hint of reliance upon Anshun estoppel". However, I have some difficulty in acceding to that submission. In my view there can be no doubt that par 8(a) of the Reply raises an estoppel against the Commonwealth denying pars C26 and C27 of the Summons which, for all intents and purposes, contain the same assertion as is pleaded in pars 7(a), (b) and, for that matter, (c) of the Reply. 67 As pars C26 and C27 when read together refer exclusively to Workers Compensation Costs, as does par 7 of the Reply, I can only assume that the assertion by the Commonwealth in the first sentence of par 16 of its letter requesting particulars was intended to ascertain whether the estoppel clearly relied on by Codock in par 8(a) of the Reply was being advanced as an issue estoppel, a cause of action estoppel or giving rise to res judicata. 68 I also have some difficulty with the first sentence of Codock's response. It seems inconsistent with the second sentence. In any event, it seems only to answer the first two sentences of par 16 of the Commonwealth's request for particulars. It certainly asserts, as I understand it, that if Codock establishes the facts alleged in par C27 of the Summons (that Workers Compensation Costs were and are Overhead Costs) Codock will assert that the Commonwealth is estopped from denying (as it has in par C27 of the Defence) the facts so alleged in par C27 of the Summons. The reference in Codock's Reply to reliance upon "the issue estoppel pleaded in relation to par 7(a)" again seems to be an assertion that Codock will rely on issue estoppel arising out of the Arbitrator's determination pleaded in par 7(a) (which may be an error for par 7(b)) of the Reply that Workers Compensation Costs were and are overhead costs. 69 The point is that, on one view of it, Codock did not answer the last sentence of par 16 of the Request for Particulars. If this was so, it was incumbent upon the Commonwealth to seek clarification of the matter. It did not do so. If the answer to that sentence is to be found in the second sentence of Codock's reply to that request then, if anything, it goes to the conclusion that the Commonwealth could not make the assumption in question. In my opinion, the latter is probably the case as there could be no doubt that Codock was challenging the Commonwealth's entitlement to plead the various paragraphs of its defence identified in par 8(b) of the Reply as an answer to Codock's claim in the Summons for Workers Compensation Costs. 70 I can understand that the Commonwealth was dissatisfied with Codock's response but, with respect, there is a deal of ex post facto rationalisation in the Commonwealth's submission that the request for particulars focussed on issue estoppel in the strict sense and not Anshun estoppel for the reasons it articulated. In my view, the Commonwealth has no proper basis to complain that it was, in effect, misled by par 8(b) in the reply to assume that Codock was asserting that the pleas identified in par 8(b) of the Reply were "not maintainable" on the sole basis of issue estoppel in the strict sense. 71 As I will discuss further in the context of the risk issue encapsulated in Issue 3(h), an estoppel arising out of that issue could only be an Anshun estoppel and the Commonwealth must have realised that fact. (g) Some preliminary observations with respect to the primary judge's first judgment of 17 September 2004 72 The primary judge in his first judgment determined (at [12]) that the issues which were the subject of the Pt 31 r 2 order relevantly fell into two groups. The first was issue estoppel which related to Issue 1 and the second was the effect of cll 3 and 4 of the Deed which governed the answer to Issues 2, 5 and 8. 73 The amount claimed by Codock in the Summons was, as his Honour noted (at [14]), for reimbursement for the costs of the personal injury claims incurred from 1 November 1995 to 30 June 2003. Such costs (obviously incurred after 31 December 1992) were the subject of the Arbitrator's interim award, which included reimbursement of $555,181 for costs incurred after 31 December 1992 and to the end of October 1995. Whether this amount was reflected in the Deed under which the Commonwealth agreed to pay Codock a total of $4,960,000 is not known. However, for present purposes, that fact is immaterial as the relevant issues were debated upon the basis of the Arbitrator's interim award which included the costs of asbestos-related common law claims incurred by Codock between 31 December 1992 and 30 October 1995. 74 The primary judge commenced his determination of Issue 1 by comparing Codock's claim for Workers Compensation Costs in the Summons with that in the Points of Claim that were the subject of the arbitration. He noted that the Commonwealth had submitted that no relevant issue estoppel arose out of the Arbitrator's decision because the contract upon which Codock sued in respect of Workers Compensation Costs in the arbitration was different to that upon which it based its claim for such costs in the Summons. His Honour observed (in [22]) that the claim for recovery of Workers Compensation Costs as "overhead" was that those costs were payable by the Commonwealth to Codock pursuant to the contract pleaded in par 25 of the Points of Claim as an item of overhead cost. The primary judge also noted that the contract included the entirety of the sources from which the contractual relationship and obligations of the parties might be ascertained from time to time. 75 His Honour then observed (at [23]) that the claim advanced by Codock in the Summons, insofar as it dealt with reimbursement of overhead costs incurred after 31 December 1992, differed from the claim advanced by Codock in the arbitration in two ways. The first was that the claim in the arbitration was limited to costs of the relevant kind "to the extent that those costs are not covered by Codock's insurance" whereas the claim in the Summons was not so limited. Second, in the arbitration, Codock's claim was brought under a contract "that included the pre-1972 agreements as well as the 1972 TAL" whereas its primary claim in the Summons was based only on the 1972 TAL. 76 The primary judge then summarised (at [25] to [42] of the first judgment) the relevant findings of the Arbitrator relating to Codock's claim for reimbursement as overheads of Workers Compensation Costs incurred by it since 1 January 1993. Before referring to those findings and their bearing upon the estoppel issue raised by Issue 1 of the Statement of Issues, it is necessary and convenient at this point to refer in some detail to the relevant legal principles relied upon by his Honour in determining the matter before him as supplemented by the parties' submissions with respect to those principles advanced on the hearing for the purposes of the appeal. 77 However, two preliminary observations may be made. First, it is tolerably clear that although Codock relied in the arbitration on the pre-1972 agreements as well as the 1972 TAL in respect of its entitlement to reimbursement of the various indirect costs it then claimed, those claims extended well beyond Workers Compensation Costs which formed only part of the total costs claimed in the arbitration but which also comprised the whole of those claimed in the Summons. 78 Second, so far as the claim for Workers Compensation Costs in the arbitration was concerned, par 41 of the Points of Claim makes it clear that it was limited to costs Codock had incurred since 1 January 1993. Further, as will become apparent, the sole contractual basis upon which those costs were so claimed and awarded by the Arbitrator was sourced solely in cl 2(3) of the 1972 TAL. (h) The principles of law relating to issue estoppel as expressed by the primary judge 79 The primary judge set out the relevant principles relating to issue estoppel at [43]–[52] of the first judgment. These statements do not appear to be in dispute. Relevantly for present purposes, the essential or basic principles set out by his Honour in may be summarised as follows: (a) A judicial determination directly involving an issue of fact or of law disposes once and for all of that issue so that it cannot afterwards be raised between the same parties or their privies: Blair v Curran (1939) 62 CLR 464 at 531–532; (b) However, issue estoppel covers only those matters which the prior decision necessarily established as the legal foundation or justification for that decision: in other words, the matter in issue must have been "necessarily decided" by the prior decision: Blair v Curran . (c) Further, what is closed or precluded is only that which is " legally indispensable to the conclusion " of the prior decision maker. Thus, where a number of ingredients or ultimate facts are essential to a claim, such that the absence of any one would cause the claim to fail, the estoppel covers only the actual ground upon which the existence of the right was negatived. However, any matter which was necessary to decide and which was actually decided as the basis of the decision would be included. Such matters have been referred to as the "matters cardinal" to the point in issue: Blair v Curran . (i) The authorities referred to in relation to issue estoppel before the primary judge 80 Of particular relevance to the present case is the following statement in Spencer Bower, Turner and Handley, "The Doctrine of Res Judicata" (3rd ed, 1996) at 105 [202] (Spencer Bower) under the heading "How to Distinguish the Fundamental from the Collateral". The learned authors, referring to the judgment of Dixon J in Blair v Curran at 533, stated the relevant principles as follows (omitting citations): "'The difficulty in the actual application of these conceptions', continued Dixon J, 'is to distinguish the matters fundamental or cardinal to the prior decision or judgment, or necessarily involved in it as its legal justification or foundation, from matters which, even though actually raised and decided as being in the circumstances of the case the determining considerations, yet are not in point of law the essential foundation or groundwork of the judgment'. In order to make this distinction one has to inquire whether the determination was so fundamental to the decision that the latter cannot stand without it. Even where this condition is met, it is suggested by Dixon J that there is another test to pass, viz. whether the determination is the 'immediate foundation' of the decision or merely 'a proposition collateral or subsidiary only, i.e. no more than part of the reasoning supporting the conclusion'. A mere step in the reasoning is insufficient. What is required is a determination fundamental to the decision. One test which has been suggested is: was it possible to appeal against the determination? This will not decide the question in all cases; but is often a useful test. There are many determinations which cannot effectively be challenged on appeal. If there can be no effective appeal against a particular determination it is not fundamental to the judgment. But this is not the only test; the inquiry must always be – is the determination such that without it the judgment cannot stand?" 81 The Commonwealth particularly relied upon par 205 of this learned work, which is in the following terms (omitting citations): "A decision of fact or law against the party who succeeded will not found an estoppel because it cannot be fundamental to the decision. It would be unjust to make such a decision the foundation of an estoppel, for no appeal is available to the person against whom it was given. A similar argument applies where several factual grounds are advanced as alternative bases for a cause of action and the court finds more than one in favour of the party who succeeds. No estoppel can be founded on any of the separate findings, for the party failing on such issues cannot appeal any of them separately. To succeed on appeal he must succeed on all the issues, and if the finding on one is good, this will be fatal. There will be a cause of action estoppel, but the separate issues will not ground issue estoppels because none was fundamental to the decision ." (Emphasis added.) 82 It is immediately apparent that the first two sentences of the above statement have no application to the present case as the estoppel alleged by Codock is against the Commonwealth who failed before the Arbitrator. As such, particular reliance is placed upon that part of par 205 that I have emphasised. 83 At the end of par 205, the learned authors cited the following authorities , presumably to support the statement in the text: namely, Penn-Texas Corpn v Murat Anstalt (No 2) [1964] 2 QB 647 at 660; James v Commonwealth (1935) 52 CLR 570 at 584, 590–591; Lake v Lake [1955] P 336; Talyancich v Index Developments Ltd [1992] 3 NZLR 28. One can put aside the reference to Lake v Lake which was a case of a finding of adultery against a wife. In that case, the husband's petition was dismissed because of condonation and, as the wife had succeeded, she had no basis upon which she could appeal against the finding of her adultery. I shall refer to the other cases cited later in these reasons. 84 At this point it is helpful to refer only to two other decisions on the issue. The first, the decision of this Court in Murphy v Abi-Saab (1995) 37 NSWLR 280, was heavily relied upon by the Commonwealth. In that case, Gleeson CJ, with whom Kirby P and Rolfe AJA agreed, noted (at 286) the public interest in the finality of litigation and "the law's concern with the injustice involved in permitting a litigant to be twice vexed with the same claim". That concern is reflected, inter alia, in the principle of issue estoppel. 85 At [288] the Chief Justice referred to what Dixon J had said in Blair v Curran at 532–533, namely, that issue estoppel precludes what is legally indispensable to the conclusion. In the case of matters of fact, the issue estoppel is confined to the ultimate facts which form the ingredients in the cause of action and which are facts fundamental to the decision. After citing from the judgment of Dixon J, the Chief Justice continued: "The difficulty is to distinguish between decisions of fact or law fundamental or cardinal to the judgment and other decisions. One thing, however, is clear. Only a decision about a matter which it was necessary to decide can create an issue estoppel. It is, therefore, essential to approach reasons for judgment which are said to create an estoppel with an accurate understanding of what the author of the reasons was required to decide. A practical test of whether a decision is fundamental is to ask whether it is possible to appeal against the finding: Spencer Bower & Turner, The Doctrine of Res Judicata 2nd Ed (1969) at 182 [now par 202 in the 3rd ed]; Talyancich v Index Developments Ltd [1992] 3 NZLR 28. Since finality of litigation is a primary object in the principle underlying issue estoppel, it would be incongruous if the doctrine operated so as to force a litigant to appeal in order to displace part of the reasoning of the Court whilst having no intention, perhaps no hope, of displacing the judgment: Landco Ltd v Lynch [1995] 1 NZLR 37." 86 The second decision to which I wish to refer is that of the High Court in Kuligowski v Metrobus (2004) 220 CLR 363. In the joint judgment of Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ, reference was first made (at 379 [40]) to the following statement by Barwick CJ in Ramsey v Pigram (1968) 118 CLR 271 at 276: "Long standing authorities, in my opinion, warrant the statement that, as a mechanism in the process of accumulating material for the determination of issues in a proceeding between parties, an estoppel is available to prevent the assertion in those 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. The issue thus determined, as distinct from the cause of action in relation to which it arose, must have been identical in each case." (Emphasis added.) 87 Of course, the difficult question in the present case is: what matter of fact or law has already been necessarily decided by the Arbitrator resolving rights or obligations between Codock and the Commonwealth? That requires, as will later appear, a determination of the level of abstraction at which, for the purposes of applying the relevant principles of issue estoppel, the court should identify the precise matter necessarily and directly decided by the Arbitrator in resolving Codock's rights and the Commonwealth's obligations and whether that precise matter is also the subject of the Summons. 88 The joint judgment later continued at 386 in these terms (omitting citations): "60 … A failure to find a matter alleged does not establish the truth of the contrary of that which is alleged. There are many general statements about the operations of issue estoppel, approved in this Court, which require more than non-satisfaction to establish an estoppel in later proceedings. 61 For example, in Jackson v Goldsmith , Williams J approved a passage from Halsbury's Laws of England including the following: 'A party is precluded from contending the contrary of any precise point which, having been once distinctly put in issue, has been solemnly found against him.' Much here turns upon what is involved in the phrase 'solemnly found'. The form of the first proceeding, particularly the issues joined or admitted on any pleadings, will be important. In Hoysted v Federal Commissioner of Taxation , Higgins J said: 'A point or an issue may be actually controverted, may be in actual controversy, in actual litigation, although it is not argued, or argued properly. A point may be in controversy although counsel may address no arguments to it, or may overlook certain aspects.' 62 An issue admitted on pleadings or other formal process or otherwise conceded at a hearing may, from the nature of the outcome, necessarily have been decided. But what of other questions arising in the first proceeding? 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'. His Honour went on to distinguish findings concerning only 'evidentiary facts' not the 'ultimate facts' which formed the very title to rights in dispute. This analysis, with the emphasis on decision-making, would require more than non-satisfaction." (j) The application by the primary judge in the first judgment of the above principles 89 Returning to the first judgment of the primary judge, his Honour, after referring to Abi-Saab, observed (at [50]): "Again, whether there are alternative factual grounds to support a cause of action and the court finds more than one in favour of the successful party, there can be no estoppel based on any of the separate grounds because an appeal against any one of them cannot displace the judgment appealed from. None of the issues can be regarded as fundamental to the decision." 90 The Commonwealth submitted before the primary judge (and repeated in its submissions to this Court) that Codock's claim as "pleaded" in the arbitration differed from that "pleaded" in the Summons. Moreover, the Commonwealth submitted that no element of the cause of action pleaded in the latter had been decided in the arbitration. In particular, it submitted that a number of issues which it had sought to raise before the Arbitrator were not decided or were not decided in a manner that gave rise to an estoppel. Accordingly it was submitted that the issue of the recoverability of Workers Compensation Costs incurred after 31 December 1992 had been abandoned by Codock in the arbitration. 91 On the other hand, Codock submitted to the primary judge (and repeated on the appeal) that although its claim in the arbitration had been pleaded as one based on a "contract" that embraced a number of agreements made over a number of years, the principal claim that was argued (that is, the claim relating to Workers Compensation Costs) had been upheld by the Arbitrator, since it had been a claim for reimbursement made solely under the 1972 TAL. Codock thus submitted that the legal basis on which it had sought reimbursement of those costs in the Summons was identical to the legal basis on which it had succeeded in recovering such costs in the arbitration. 92 In his analysis of the competing contentions on this issue, the primary judge noted that some of the Workers Compensation Costs in respect of which Codock sought and obtained reimbursement in the arbitration were incurred after 31 December 1992. The Commonwealth had submitted by way of defence that neither the 1972 TAL nor the earlier agreements which, together, were said to constitute the contract, gave Codock a right of reimbursement for costs incurred after 31 December 1992. However, the primary judge observed that the Arbitrator had held that Codock was entitled to reimbursement of the relevant costs incurred after that date and that that entitlement arose only under the 1972 TAL. 93 The primary judge then concluded in these terms (at [57]): "In my judgment, it was essential to the arbitrator's decision on this point that Codock retained its right of indemnity notwithstanding the expiry, by effluxion of time, of the 1972 trading agreement and lease. A determination that the right of indemnity survived expiry of the agreement under which it was granted was fundamental to the entitlement. A decision the other way must have meant that Codock's claim in the arbitration failed. In the words of [ Spencer Bower ] at [202], that determination was 'fundamental to the decision'. In other words, the decision was not merely a step in, or the process of, the arbitrator's reasoning; it was essential to the conclusion … it was a condition to be fulfilled before Codock could succeed." 94 Further, his Honour observed (at [60]) "that the Arbitrator had made it clear that the claim for common law expenses was upheld (1) under the 1972 TAL; (2) regardless of whether the expenses were incurred before or after 31 December 1992; and (3) regardless of when – so far as it could be ascertained – the original events occurred that gave rise to the claim." 95 Accordingly, in his Honour's view the manner in which the Arbitrator expressed his conclusion confirmed not only that the particular claim for Workers Compensation Costs was decided under and by reference to only the 1972 TAL, but also that the right of indemnity in respect of such costs incurred after the expiry of that agreement on 31 December 1992 survived that expiration, and was fundamental to his decision to hold the Commonwealth liable to reimburse those costs to Codock as determined by his interim award. To have held otherwise would have resulted in Codock's claim in the arbitration failing. In other words, his Honour held in favour of Codock on the expiration issue encapsulated in Issue 3(a). 96 The primary judge then dealt with the negligence issue (encapsulated in Issue 3(g)) in the following terms: "62 For similar reasons, I think that the arbitrator's decisions on the 'reasonable' cost issue (paras 1.16(d), 1.17 of the 1984 Standard Terms) and the 'reasonable standards of skill, care and efficiency' issue (para 3.11 of the same document) were fundamental. A decision adverse to Codock on either of those issues must have meant that its case failed. To put it another way, Codock needed to show, on each of these issues (as it needed to show, on the issue in relation to survival of the right of indemnity) that the position for which it contended was correct. If it did not do so it could not succeed. 63 I do not think that it matters that the arbitrator found several different reasons for rejecting the Commonwealth's submission on these matters. Issue estoppel is concerned with the decision of issues, not with the reasoning that supports the decision on the issue." 97 It was common ground that the primary judge was dealing with Issue 3(a) in [57] of his judgment and that in [62] he was dealing with Issue 3(g), and that this division was reflected in the final orders made arising out of the first judgment. 98 Although the Commonwealth raised a number of other matters before the primary judge for the purposes of resisting a finding of issue estoppel, his Honour rejected them all. The only one of those matters relevant for present purposes is that the Commonwealth submitted that the Arbitrator's decision was based on a different contract to that the subject of the Summons. In particular, the contract relied upon in the Arbitration included, so it was contended, all the agreements between the parties since 1933, whereas in the present proceedings Codock's claim was confined to the 1972 TAL. However, at [67] the primary judge determined that the Arbitrator had found in favour of Codock on its claim under the 1972 TAL and that the same agreement was the foundation of its claim in the Summons. The Commonwealth agitated the same point on appeal but, in my opinion, it has no substance. 99 Finally, the Commonwealth relied upon the decision of the House of Lords in Arnold v National Westminster Bank PLC [1991] 2 AC 93 in support of the proposition that the bar created by issue estoppel is not absolute. Rather, the rule that it constituted a complete bar to re-litigating a point once it has been decided, could be relaxed where there were "special circumstances" (per Lord Keith at 109) or "exceptional circumstances" (per Lord Lowry at 112) . 100 Although the primary judge held with some hesitation that the Arnold principle or exception, in the absence of any decision of the High Court or an intermediate appellate court to the contrary, should be accepted by him on the basis that, in principle, the application of the bar created by an issue estoppel may be avoided where there are special circumstances, he considered that there were no such circumstances in the present case. He therefore concluded (at [86]) that no basis had been demonstrated for declining to recognise or enforce the issue estoppels created by the Arbitrator's interim award. 101 The primary judge (at [166]) then returned to Issue 3. His Honour stated and answered the relevant question as follows: "Q: Subject to 2, is the Commonwealth barred, by reason of an issue estoppel arising from the Commercial Case Award, from denying that it is obliged to reimburse to Codock all Workers' Compensation Costs plus (subject to 8) a 7.5% fee? A: No. There are, however, particular issues that the Commonwealth may not maintain by way of defence in these proceedings. See paras [57] and [62] above." 102 The particular issues referred to in [57] and [62] of his Honour's judgment were, as I have indicated, those referred to in Issues 3(a) and (g) of the Statement of Issues, and that is reflected in the formal orders that his Honour ultimately made. (k) Further issues arising out of the Statement of Issues 103 In his second judgment, which was delivered on 4 February 2005, the primary judge noted that as a consequence of his answer to Issue 3 and, in particular, his finding that the Commonwealth was estopped from maintaining Issues 3(a) and (g), Codock wished to argue that a number of the other sub-issues of Issue 3 likewise raised questions of estoppel. One of these was Issue 3(h), the risk issue, which his Honour dealt with at [14] to [27] of this judgment. It was not suggested that this issue raised a question of issue estoppel in the strict Blair v Curran sense but, rather, it was said to raise an issue estoppel in its extended sense, that is, as it is more commonly known, an Anshun estoppel. 104 The Commonwealth submitted that certain clauses of the Standard Conditions permitted some kinds of insurance premiums to be accepted into overhead. In such cases, it was argued, the proper construction of the relevant clauses led to the conclusion that Codock bore the responsibility for the costs of the risks insured under those policies whose premiums were reimbursed by the Commonwealth. Relevantly, to the extent to which those costs were not borne by the relevant insurer, they were not to be taken into overhead and, therefore, were not payable or reimbursable by the Commonwealth. 105 In rejecting this submission, the primary judge found that Codock's costs, both in the arbitration in relation to Workers Compensation Costs incurred by it up until the final cut off date to which the Arbitrator's award extended and in the Summons in respect of costs incurred after that date, were reimbursable to the extent that Codock was either uninsured or did not receive full indemnity from its insurer. 106 In [20] of the second judgment the primary judge made this observation: "It is, I think, clear that Codock's claim in the arbitration, in so far as it related to overhead, included a claim for costs of the relevant kind over and above the amount of indemnity (if any) recovered by Codock from insurers pursuant to relevant policies of insurance. The Commonwealth did not, in its defences to the claim for overheads made against it in the arbitration, raise a defence of the kind now propounded by Issue 3(h)." 107 His Honour then referred to the well-known statement of Sir James Wigram V-C in Henderson v Henderson (1843) 3 Hare 100 at 115; 67 ER 313 at 319 and to the relevant statements of principle in the judgment of Gibbs CJ, Mason and Aickin JJ in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 598–599. It is unnecessary to repeat those principles which were not in issue and which were conveniently summarised by his Honour in [23] of the second judgment. 108 The primary judge then concluded that the Commonwealth was estopped by application of the Anshun extended doctrine of issue estoppel from raising the issue referred to in Issue 3(h) of the Statement of Issues. His reasons are encapsulated in [24] of his judgment in these terms: "The arbitrator held that Codock's entitlement to be indemnified for overheads included overheads comprised of the cost of workers' compensation claims in excess of insurance recoveries (if any) in respect of those claims. The issue now raised, if successful, would have been a complete answer to that component of Codock's claim in the arbitration. If it were raised in the present proceedings and succeeded, it would result in the establishment of inconsistent rights in respect of the same contractual provisions. There has been no explanation of the Commonwealth's failure to raise the issue before the arbitrator; it does not appear whether it was as the result of a deliberate or considered decision or through "negligence, inadvertence, or even accident". Given the significance of this part of the overhead claim, it is something that the Commonwealth would be expected to have raised, as an answer, in the arbitration." 109 His Honour then referred again to the decision in Arnold, noting that the balancing of all "relevant factors" required by the joint judgment in Anshun (at 604) involved a discretionary element which may be different to the kind of discretion described by the House of Lords in Arnold. Nevertheless, assuming they were different, his Honour considered (at [26]) that he would not find that there were "special" or "exceptional" circumstances justifying a refusal to apply the Anshun extended doctrine to Issue 3(h). 110 Accordingly, his Honour held that the Commonwealth was estopped from raising Issue 3(h) in its defence to the Summons. It followed that his Honour's answer to Question 1 was amended to include a reference to Issue 3(h), together with a reference to Issues 3(a) and (g). 111 Before turning to the substantive issues argued on the appeal, it should again be noted that the original order made by the primary judge under Pt 31 r 2 was, relevantly, to determine Issue 1, which expressly raised an issue estoppel point. On its face that order did not include a determination of the alternative sub-issues of Issue 3. Nevertheless, his Honour did determine a number of those sub-issues in both the first and second judgments insofar as they raised an issue estoppel (in either its strict or extended sense). Such an estoppel would clearly be relevant to the general or, as it was referred to in argument, the "overarching" estoppel raised by Issue 3. (l) Did this aspect of the primary judgment amount to a denial of procedural fairness? 112 As a result of these findings, the Commonwealth asserted on the appeal that it had been denied procedural fairness insofar as his Honour, having answered Issue 3 in the negative, went on to provide an exception to that answer with respect to Issues 3(a) and (g): see [50(h)]. I have previously referred to the relationship between Issues 1 and 3 and their sub-issues in [53]–[55] above, and this lays the groundwork for what follows. 113 One of the difficulties with the manner in which Issue 1 was framed and which, according to Codock, dictated a negative answer which it could not dispute, was that it was based upon the assertion that the Commonwealth was barred from denying that it was obliged to reimburse to Codock all Workers Compensation Costs plus a 7.5% fee. The primary judge recognised that the Commonwealth was not barred from asserting that it was not obliged to reimburse to Codock all such costs, for instance, where particular costs were not "reasonable" as required by cl 1.16(d) of the Standard Conditions. Thus, one of the defences raised by the Commonwealth, which could never have been the subject of an issue estoppel, was that reflected in Issue 3(c) which was based on cl 1.16(d). There were other defences of the Commonwealth reflected in other sub-paragraphs of Issue 3 and which were found not to give rise to an issue estoppel by his Honour in the second judgment. 114 It is to be noted that in the Statement of Issues the word "all" in Issue 1 had been placed in square brackets. The significance of this was recognised by the primary judge in [68] of the first judgment where he observed: "There are, of course, other issues that, whilst they may arise now as they arose before the arbitrator, cannot be regarded as having been decided by the arbitrator so as to give rise to an issue estoppel. They would include whether items of cost were incurred reasonably (ie, whether in particular litigation it was reasonable for Codock to incur a particular item of expense); whether they are associated with cross-claims against the Commonwealth; and, no doubt, other matters. The award cannot give rise to any issue estoppel on those issues. They require consideration on a case by case, or claim by claim, basis." 115 Further, when on 14 October 2004 the parties had filed competing versions of the orders each contended his Honour should make arising out of the first judgment and, in particular, his findings with respect to his negative answer to Issue 1, the primary judge, in an ex tempore judgment, said this: "The problem arises because one of the issues dealt with by me was whether the Commonwealth was barred by an issue estoppel from denying that it was obliged to reimburse Codock certain expenses. I came to the conclusion that the question, in that form, must be answered 'no'. that was because, on any view of the application of the doctrine of issue estoppel, there were particular defences to particular claims (putting the matter at its lowest) that the Commonwealth was entitled to maintain and that Codock did not submit were the subject covered by any issue estoppel arising from the relevant award. I did however point out particular issues ( that had been the subject of argument before me ) that the Commonwealth could not maintain." (Emphasis added.) 116 Further, during the hearing that resulted in the second judgment, the Commonwealth submitted that, having regard to the first judgment, it was not open to Codock to raise any of the sub-issues in Issue 3 for determination. The primary judge responded (in [18]) that in the first judgment: "I answered the general question as to issue estoppel (issue 1) 'no'. That was because, on any basis, there were particular defences available to the Commonwealth – if only, as to the quantification of particular elements of the current claim. Mr Taylor accepted that this was so (T 8.38). At the same time, I made it clear that there were particular issues – more accurately, particular defences – that the Commonwealth was estopped, by issue estoppel arising from the arbitrator's award, from raising. When I referred to those in my reasons, I did not intend to give an exhaustive list; nor do I think it is a fair inference from what I said that I was attempting to do so. I therefore think that it is open to Codock to submit, as it has done, that the doctrine applies to other defences sought to be raised by the Commonwealth." 117 As I foreshadowed in [53]–[55] above, Issues 1 and 3 appear to be opposite sides of the same coin. Codock alleged in the Summons that the Commonwealth was obliged to reimburse the Workers Compensation Costs claimed therein by reason of the provisions of the 1972 TAL. The Commonwealth denied that it was so obliged. Issue 1 raised the question of whether the Commonwealth was barred from denying that obligation by reason of an issue estoppel arising from the Arbitrator's determination. 118 The answer to this question turned upon the individual defences that were raised in the Commonwealth's defence to Codock's claim for reimbursement in the Summons. The sub-issues of Issue 3 raised the question of whether, in relation to those individual defences, the Commonwealth was barred by reason of issue estoppel, either in its strict or extended sense, from raising those defences. The answer to this question depended upon the issues before the Arbitrator and the decision he made. 119 For present purposes, the primary judge determined that the Commonwealth was barred from raising the defences encapsulated in Issues 3(a), (g) and (h). Each of those defences, if established, would be a complete answer to Codock's claim as articulated in the first part of Issue 3. Accordingly, if the defences encompassed in Issues 3(a), (g) and (h) were raised and decided against the Commonwealth by the Arbitrator in relation to Codock's claim in the arbitration or ought (in the Anshun sense) to have been raised, and if those defences had been answered in favour of the Commonwealth and would have been a complete answer to that claim, then the question in the appeal is whether his Honour was correct in determining that the Commonwealth was estopped from raising those defences to Codock's claim in the Summons. 120 In turning to the resolution of this question it is appropriate to deal with the issues in the same order in which they were dealt with in the Commonwealth's written submissions and in argument. The negligence issue – Issue 3(g) (a) The Commonwealth's submissions 121 The Commonwealth submitted that the primary judge erred in holding that it was estopped from maintaining the negligence issue on four grounds. First, the estoppel was not pleaded by Codock in pars 7 and 8 of its reply. Second, the Arbitrator's finding related to a different issue. Third, the Arbitrator's finding was not fundamental to his decision. Fourth, there were special circumstances (including the absence of a right of appeal from the Arbitrator's interim award and/or that the Arbitrator's decision was plainly wrong and/or a relevant issue had been abandoned by Codock before the Arbitrator) so as to warrant the Court exercising its extraordinary discretion based on the decision in Arnold to decline a finding that an issue estoppel relevantly arose to bar the Commonwealth from raising the negligence defence. 122 In essence, the first ground was that, in pars 7 or 8 of the Reply, Codock did not allege that the Arbitrator determined the negligence issue so as to give rise to an issue estoppel precluding the Commonwealth from maintaining par C29(a) of its Defence to the Summons. The gravamen of the Commonwealth's argument was that because only Issue 1 expressly raised an issue estoppel and no separate order under Pt 31 r 2 had done so with respect to Issue 3(g), the Commonwealth had been denied procedural fairness for the reasons which I have summarised in [50] above. For convenience, I repeat those which are relevant to this issue. 123 First, the primary judge had, without making a further order under Pt 31 r 2, searched for and found an estoppel substantially different from that he was required to determine under Issue 1. 124 Second, pars 7 and 8 of the Reply did not plead an issue estoppel or any estoppel with respect to Issue 3(g) or, more accurately, par C29(a) and (c) of the Defence. 125 Third, the Commonwealth was denied the opportunity of leading evidence that both this Court and the Dust Diseases Tribunal had found Codock to have been negligent and, therefore, liable to pay damages to its ex-employees arising out of their asbestos-related injuries with the consequence that cl 3.11 of the Standard Conditions disallowed the amounts paid to those employees as "contract cost". As I discuss below, there was no evidence to this effect led in the arbitration. 126 Fourth, the Commonwealth may not have consented to an order under Pt 31 r 2 raising an issue estoppel with respect to Issue 3(g) because such an estoppel, if established, would not be a complete answer to all the pleas raised by the Commonwealth in its defence. This last reason is, to say the least, speculative, lacks merit and therefore need not be further considered. 127 I would reject each of these submissions for reasons that I will discuss further when dealing with the Commonwealth's claim that it was denied procedural fairness. However, it is convenient at this point to note with respect to the second reason my findings with respect to par 8 of the Reply in [62] and [64] above. 128 I turn now to the third reason, which amounts to a suggestion that, had the issue been properly raised, the Commonwealth may have wished to lead evidence that Codock had been negligent in failing to provide its employees with a safe system of work. The Commonwealth may then have argued that its liability to pay that part of the Workers Compensation Costs referred to in par 41 of the Points of Claim and par C24 of the Summons as "Common Law Costs" flowed from such negligence. Even if one assumes that there was evidence of negligence on Codock's part in failing to provide a safe system of work, the critical and antecedent question raised by Issue 3(g) is whether, as a matter of construction, cl 3.11 of the Standard Conditions applies to the incurring by Codock of such costs. If it does not, as the Arbitrator held, then the question of Codock's negligence would be irrelevant. 129 The second ground upon which it is submitted that the primary judge erred with respect to the negligence issue was that the issue, as it was raised in the arbitration, was not the same as that now raised in the Defence. According to the Commonwealth the arbitration concerned its liability: (i) for particular Workers Compensation Costs incurred by Codock between 1990 and October 1995, (ii) which were not covered by insurance, (iii) under a contract (as defined) which comprised a number of specified written agreements as well as " representations, modifications, collateral agreements and other agreements ", and (iv) which were alleged to be indirect costs (overhead) attributable to Commonwealth cost – plus work. 130 It is submitted that each of these matters differs from Codock's allegation in the Summons that the Commonwealth is liable (i) for particular Workers Compensation Costs incurred from November 1995 to June 2003, (ii) unaffected by any insurance cover, (iii) under the 1972 TAL, and (iv) which are alleged to be indirect costs (overhead) attributable to " work undertaken by [Codock] in the course of its operations of the Dockyard ". 131 However, it is not only submitted that the costs claimed in the Summons are different. It is also contended that the contract out of which the Commonwealth's liability is said to arise is different, and that it contains a relevant term which is different in two respects, the latter being a reference to a comparison of sub-paragraphs (ii) and (iv) in [129] to those in [130] above. 132 In my opinion there is no substance in the first two differences asserted by the Commonwealth (that is, the allegations in sub-paragraph (i) and (ii) in [129] compared to those in [130]). The primary judge in [64]–[66] of the first judgment rejected these differences for reasons that were unexceptional. There is no merit in the Commonwealth's submissions on these two points of difference. 133 Nor, in my opinion, is there any substance in the third difference asserted by the Commonwealth to the effect that its liability in the arbitration rested upon a different contract different to that which the Summons now asserts to be the source of its liability. The primary judge was of the same view (see [91]–[95] above) and I respectfully agree with his analysis of the issue. There is no doubt, as the Arbitrator recognised (at 149 of his reasons) that Codock's argument that the Commonwealth was liable to reimburse it for the Workers Compensation Costs incurred from 1 January 1993 to October 1995 was focussed on cl 2(3) and 2(4) of the 1972 TAL. The balance of the Arbitrator's reasons (at 149–161) are all based, as were the Commonwealth's denial of its liability, on questions of construction arising out of the 1972 TAL, including the Standard Conditions it incorporated. It is that same agreement which Codock pleads in the Summons as obliging the Commonwealth to reimburse it for the Workers Compensation Costs it now claims. 134 Finally, under this heading, it is alleged that in the arbitration the relevant costs were said to be attributable to Commonwealth cost–plus work, whereas in the Summons they are alleged to be attributable to work undertaken by Codock in the course of its operation of the Dockyard. In my opinion this distinction does not reveal any true difference and has no substance. 135 I turn now to what I regard as the most difficult aspect of the appeal, that is, the assertion by the Commonwealth that the Arbitrator's rejection of its argument in respect of the negligence issue was not fundamental to his decision and, therefore, could not give rise to an issue estoppel with respect to Issue 3(g) or pars C29(a) and (c) of the Defence. 136 It was submitted that the Arbitrator had rejected the Commonwealth's defence based on cl 3.11 of the Standard Conditions on five grounds, each of which would have been sufficient for Codock to have succeeded in its claim to be reimbursed by the Commonwealth for the Workers Compensation Costs it had incurred. As such, no issue estoppel could be founded on any of these separate grounds as an appeal by the Commonwealth in relation to any one of those grounds would have failed, which would have been fatal to its reliance upon the negligence issue. (b) The Arbitrator's general approach to Codock's claim for Workers Compensation Costs 137 At this point it is convenient to summarise the manner in which the Arbitrator approached what he referred to in his reasons (at 145) as Codock's "asbestos-related common law claims". With respect to those claims by its ex-employees, Codock sought relief in its Points of Claim by way of reimbursement from the Commonwealth in respect of monies paid in the past up to and including the time of its address in reply in the arbitration. Codock also sought relief in the form, in effect, of declarations insulating it from incurring further costs, which might arise from future claims by its ex-employees. 138 On 19 May 1995 (which I assume was the date of Codock's address in reply), Codock abandoned its claim for declaratory relief as to the Commonwealth's future liability to reimburse it with respect to Workers Compensation Costs which it might incur, contending instead that if the Arbitrator found that it had an entitlement to recover those costs as overheads plus 7.5% profit which it had already incurred, sufficient precedent would be set to establish the Commonwealth's liability to reimburse Codock in respect of Workers Compensation Costs incurred by it in the future where those costs had crystallised by way of judgments after contested hearings or as a consequence of settlements. 139 At 148 of his reasons, the Arbitrator noted that Codock put its case for recovery of Workers Compensation Costs already incurred by it in a number of alternative ways. He then observed: "However, the principal way in which the claim is propounded is based upon the terms of the 1972 TAL and its variation by the Substituted Mode of Performance in 1976. In short, Codock calls in aid the relevant provisions of those contracts and resorts to established principles of interpretation and construction and the practices of the parties as the foundation for its submission that it is entitled to recover its overheads such as these costs: (a) as had been billed to 31.12.92 (the date of shutdown of the island and of its handing over to the Commonwealth) plus an ingredient of 7.5% profit; (b) as had been incurred after 31.12.92 to date; (c) on the basis of these two prongs to recovery, so Codock contends that the precedent is set for the future." 140 The Arbitrator then noted at 149 that Codock's argument first focussed upon the terms of cl 2(3) and 2(4) of the 1972 TAL and, in particular, to the references to both "overhead" and "the overhead rate". After referring to evidence that explained the procedure for setting such an overhead rate, the Arbitrator then referred to the variations to the 1972 Trading Agreement affected by the Substituted Mode of Performance Agreement and the Advance Agreement including the increase of the profit rate on overhead costs to 7.5%. 141 The Arbitrator then referred to various provisions of the Standard Conditions including, under the heading "Litigation Costs", cll 4.49, 4.50, 4.51 and to the definition of "Contract Cost" in cl 1.5 which was defined to include, inter alia, "indirect expense". Clause 1.16 then defined "indirect expense" to mean any incurred cost which, inter alia, was "reasonable": cf Issue 3(c) of the Statement of Issues which is based upon cl 1.16(d). 142 Codock submitted to the Arbitrator that the provisions of the Standard Conditions established that litigation costs could be charged to a contract (in this case, the 1972 TAL) if firstly, they were "associated with" the contract or, secondly, if they could be "charged to the contract in accordance with sound accounting principles, appropriate for the purposes of the contract, consistently applied". 143 Codock then submitted that the litigation costs it had incurred, including the amounts it had paid to its ex-employees with respect to their asbestos-related claims, were relevantly "associated with" or could "be charged to" the 1972 TAL and were therefore an "indirect expense" as defined and an "overhead" in respect of which Codock was entitled to be reimbursed by the Commonwealth. 144 The Commonwealth challenged Codock's construction of the contracts and other arrangements referred to by the Arbitrator. It submitted that for Codock to succeed on the construction argument, it must bring itself within sub-paragraphs (a), (c) and (d) of cl 1.16 of the Standard Conditions which required that the relevant cost had been "actually incurred". Accordingly, it contended that Codock's potential liabilities to future unknown plaintiffs could not be recoverable costs under the Standard Conditions and that nothing was payable until Codock accepted legal liability to an individual plaintiff by consenting to judgment in his favour. 145 Noting that Codock no longer contended that it was entitled to a declaration that the Commonwealth was bound to indemnify it for future Common Law Costs in respect of presently unknown plaintiffs without having first incurred those costs, the Arbitrator (at 159) considered that it was therefore strictly unnecessary to deal with the Commonwealth's submissions with respect to such costs. Nevertheless, he considered that he was entitled to approach Codock's submissions upon the basis that liability arose as and when an indirect expense was created – that is, when the relevant cost was "incurred". 146 The Arbitrator then recorded the Commonwealth's submission to the effect that the expression "the contract" in cl 16(a) of the Standard Conditions meant a contract under which Codock was actually carrying out work for the Commonwealth after 1972. He rejected this submission upon the basis that the 1972 TAL was an "umbrella agreement extending over a period of time under which orders are issued for individual jobs". Accordingly, it was not required that the "contract" in cl 1.16(a) be a contract for actual work on a vessel or that it concern specific work orders. 147 The Commonwealth relied upon cl 1.16(d) of the Standard Conditions, asserting that Codock had not discharged the onus of proof in establishing that the past costs it had incurred, "or possible future liabilities of the same class" that it might yet incur, were "reasonable" within the meaning of that term as defined in cl 1.17 of the Standard Conditions. The Arbitrator rejected this submission at 162–163. (c) The Arbitrator's approach to the negligence issue 148 The Commonwealth made one submission to the Arbitrator that directly raised the negligence issue as articulated in Issue 3(g) of the Statement of Issues. The Arbitrator recorded this submission as asserting that the operation of cl 3.11 of the Standard Conditions led quite independently to "the same result". I would understand that by that expression the Arbitrator intended to refer to the Commonwealth's submission, rejected by him, that it was necessary for Codock to establish that the incurred costs were "reasonable" within the meaning of cl 1.16(d) of the Standard Conditions. 149 For the purpose of considering the negligence issue it is necessary to refer to other provisions of the Standard Conditions. Section 1 sets out a number of definitions. In cl 1.5 the expression "contract cost" is defined as "the sum of all or any two of the following costs: (a) direct costs; (b) indirect expense; and (c) appropriate credit as hereinafter defined or as otherwise explained." 150 The expression "indirect expense" is defined by cl 1.16 to mean, relevantly, any incurred cost which "(d) is reasonable". 151 Section 3 of the Standard Conditions is headed "General Principles". Under the heading "Avoidable Costs and Unnecessary Costs", cl 3.11 provides as follows: "Costs which could have been avoided or reduced by the exercise of reasonable standards of skill, care and efficiency, to the extent that such could have been avoided or reduced, shall not be allowed into contract cost." 152 The nub of the Commonwealth's argument before the Arbitrator was that it was not obliged to reimburse Codock for the Workers Compensation Costs it had incurred because, firstly, the Common Law Costs incurred by Codock could – by definition – have been avoided by the use of reasonable care, and arose only by reason of the want of such care. Secondly, it would follow that such costs would "not be allowable into contract cost" and would, therefore, not be an "indirect expense" or an "overhead". Accordingly, it was submitted the Commonwealth would not be obliged to reimburse that cost under the 1972 TAL. 153 In my opinion, it is clear that this submission was intended, firstly, to assert that the Common Law Costs could only be incurred by Codock if it negligently failed to provide a safe system of work for its ex-employees. This was clearly the case given that it was common ground that they were required to work in and around asbestos products. Secondly, the Commonwealth was attempting to raise cl 3.11 of the Standard Conditions as a defence to the recovery of such costs as a class. 154 As I have already noted in [147] above, the Commonwealth had submitted that Codock had not and could not discharge its onus of proof, as required by cl 1.16(d) of the Standard Conditions, in showing that both the Common Law Costs it had already incurred and also "all possible future liabilities of the same class" were, or should have been incurred "reasonably" as defined in the relevant sense. 155 It follows that in my opinion the Commonwealth was specifically raising this argument as a complete and independent defence to any obligation it might otherwise have had under the 1972 TAL to reimburse Codock the class of costs defined as Common Law Costs. 156 In other words, Codock claimed in the arbitration that it was entitled to recover from the Commonwealth "asbestos-related common law costs" under the 1972 TAL as "overhead" regardless of whether those costs were incurred before or after 31 December 1992. The Commonwealth denied that entitlement and raised as issues for the determination by the Arbitrator a number of defences including that founded on cl 3.11 of the Standard Conditions. Had the Arbitrator decided that that provision was applicable to the costs claimed, then on the Commonwealth's assertion that "virtually by definition" those costs could have been avoided by the exercise of reasonable care and skill, it would have been a complete defence to Codock's claim. 157 However, at 166, the Arbitrator rejected the Commonwealth's defence based on cl 3.11 as preventing the recovery of Common Law Costs. His conclusion that Codock was entitled to recover such costs incurred by it both before and after 31 December 1992 under the terms of the 1972 TAL was legally founded upon his finding that that entitlement was not denied by cl 3.11 on its true construction. Codock submits that this was the ultimate issue that was relevantly determined by the Arbitrator and it is on that basis that the Commonwealth is now said to be estopped from reasserting it in Issue 3(g) of the Statement of Issues. 158 The Commonwealth accepted that the Arbitrator rejected its defence based on cl 3.11 that is, the negligence issue. However, it correctly contended that Codock sought before the Arbitrator to meet that defence on five grounds, namely: (a) In its defence to Codock's Points of Claim, the Commonwealth did not place reliance upon any contractual exception or exclusion (such as cl 3.11). Had it wished to do so, it was obliged to plead accordingly (the no pleading point). (b) In any event, cl 3.11 was but a general provision and had no application to the specific provisions of the Standard Conditions dealing with " litigation costs " on which Codock relied, namely, cll 4.49 to 4.51. (c) Properly construed, the provisions of cl 3.11 related to the conduct of the litigation by Codock with its ex-employees rather than to the conduct underlying, or resulting in, its liability to compensate those employees for their asbestos-related injuries. (d) Moreover, even if cl 3.11 did apply to the underlying conduct upon which Codock's litigation with its ex-employees was based, it did not follow that the Common Law Costs would be irrecoverable. This was because the Commonwealth had not led evidence of any lack of skill or care on its part which would enliven cl 3.11 (the no evidence point). (e) Finally, the phrase " reasonable standards of skill, care and efficiency " in cl 3.11 should be interpreted by reference to the prior practice of the parties as part of the matrix of facts. It would be proper to construe that provision against that background. 159 The Commonwealth accepted that grounds (b), (c) and (e) all involved the proper construction of cl 3.11 and, together, these points were referred to in its submissions as "the construction point". 160 With respect to the no pleading point, the Arbitrator (at 164) did not consider that the Commonwealth's defence by way of the "all-encompassing denial" of pars 26B, 41 and 43 of Codock's Points of Claim was sufficient to include the contractual exception contained in cl 3.11 and upon which it relied. On that ground alone he determined that he would reject the Commonwealth's argument based on that provision. 161 The Arbitrator also found for Codock on the construction point. Relevantly, he rejected the Commonwealth's submission that cl 3.11 applied to Codock's underlying conduct giving rise to the incurring by it of Common Law Costs and accepted its contention that the provision applied only to the conduct of the litigation itself. 162 The Arbitrator further accepted Codock's no evidence point upon the basis that even if the test of "skill, care and efficiency" did apply to Codock's underlying conduct leading to the litigation with its ex-employees, the costs in question all related to settlement of those actions. As a consequence, there was no evidence that any of them had been given effect by an admission of liability by Codock. 163 So far as ground (e) was concerned, contrary to the Commonwealth's submissions, the Arbitrator determined (at 176) that to the extent to which there was any ambiguity with respect to the scope of the 1972 TAL, the relevant parts of the factual matrix of the agreements could be looked at for the purpose of construing its relevant provisions including cl 3.11 of the Standard Conditions. He then added the following: "As I have said, I am satisfied in any event that on the proper construction of the contracts themselves, such costs are recoverable as part of the overhead expenses from the Commonwealth." (d) The Commonwealth's submission of no estoppel 164 The Commonwealth correctly submitted on the appeal that the finding by the Arbitrator on the no pleading and no evidence points could not of itself give rise to an issue estoppel. If an estoppel arises, it is only because, in its Defence to the Summons, the Commonwealth has specifically alleged (in par 29(a) and in reliance upon cl 3.11 of the Standard Conditions) that the costs claimed by Codock in the Summons arose out of its failure to exercise appropriate standards of skill and care at the Dockyard in not providing a safe system of work. 165 With respect to the no evidence point, the Commonwealth asserted that since the date of the Arbitrator's interim award there had been determinations by both the Dust Diseases Tribunal and this Court that Codock was negligent in respect of the very same costs that are presently the subject of Codock's claim in the Summons. It therefore submitted that the construction point, being the proper interpretation of cl 3.11 of the Standard Conditions in the context of the 1972 TAL, was only one of three separate grounds relied upon by the Arbitrator in reaching the conclusion that the Commonwealth's defence to Codock's claim in respect of the recovery of Common Law Costs should be rejected insofar as it was based on the exclusionary provisions of cl 3.11. 166 Accordingly, it was submitted that there were multiple grounds for the Arbitrator's decision, any one of which would have been sufficient to defeat the Commonwealth's defence based on cl 3.11. That this was so was supported by the Commonwealth's inability to appeal the Arbitrator's decision on the construction point as it was only one of the three bases on which its defence was rejected. It was also not open to it to appeal the Arbitrator's decision on either the no pleading point or the no evidence point, and thus, any appeal would be hopeless. 167 In reliance upon par 205 of Spencer Bower (see [81] above), the Commonwealth contended that the present case was one in which "several factual grounds [were] advanced as alternative bases for a cause of action and the Court [found] more than one in favour of the party who succeed[ed]. No estoppel can be founded upon any of the separate findings, for the party failing on such issues cannot appeal any of them separately. To succeed on appeal, he must succeed on all the issues, and if the finding of one is good, this will be fatal. … [T]he separate issues will not ground issue estoppels because none was fundamental to the decision." 168 The Commonwealth therefore submitted that the Arbitrator's decision on the negligence issue – that is, upon the construction of cl 3.11 – was not fundamentally relevant to his decision to reject the Commonwealth's defence to Codock's claim insofar as it was founded upon that provision. Accordingly, there could be no issue estoppel arising in respect of the construction point and, as a consequence, it was still open to the Commonwealth to argue the defence encapsulated in Issue 3(g) of the Statement of Issues. (e) The effect of the Arbitrator's decision on the construction point 169 The question that must now be answered is whether the Arbitrator's decision with respect to the construction point, which related to cl 3.11 of the Standard Conditions, was fundamental (in the relevant sense) to his rejection of the Commonwealth's defence denying the entitlement of Codock to claim reimbursement for Workers Compensation Costs. 170 I have already set out the relevant principles relied upon by the primary judge with respect to issue estoppel in [79]–[89] above. However, it is necessary to supplement his Honour's statement of those principles to do justice to the Commonwealth's submissions. (i) The doctrine of issue estoppel 171 The primary judge made reference to the classic statement of the doctrine of issue estoppel by Dixon J in Blair v Curran. In that vein, I will set out the relevant passages from Dixon J's judgment (at 531–533) in full: "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, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commanded or be restrained or that rights be declared . 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. Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue-estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. Where the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived . But in neither case is the estoppel confined to the final legal conclusion expressed in the judgment, decree or order. In the phraseology of Coleridge J. in R. v. Inhabitants of the Township of Hartington Middle Quarter, at p. 293, the 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. Matters cardinal to the latter claim or contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous. In the phraseology of Lord Shaw, 'a fact fundamental to the decision arrived at' in the former proceedings and 'the legal quality of the fact' must be taken as finally and conclusively established (Hoystead v. Commissioner of Taxation) . But matters of law or fact which are subsidiary or collateral are not covered by the estoppel. Findings, however deliberate and formal, which concern only evidentiary facts and not ultimate facts forming the very title to rights give rise to no preclusion. Decisions upon matters of law which amount to no more than steps in a process of reasoning tending to establish or support the proposition upon which the rights depend do not estop the parties if the same matters of law arise in subsequent litigation." (Emphasis added.) 172 In Theo v Official Trustee in Bankruptcy (1996) 70 FCR 317, Black CJ, Sackville and Finn JJ, in a joint judgment, after citing the above passage observed (at 324) that: "[a]s Dixon J recognised (at 533), the difficulty in the actual application of these principles is to distinguish matters fundamental or cardinal to the prior decision or judgment, decree or order, or necessarily involved in it as its legal justification or foundation, from matters which even though actually raised and decided, are not, in point of law, the essential foundation or groundwork of the judgment, decree or order." 173 Their Honours also referred to the following statement of Starke J in Blair v Curran at 510 as confining the scope of the doctrine in these terms: "But it is contended that the construction of clause S was the foundation of the declaration and consequently that an estoppel by judgment arises. It is well settled that a judgment concludes not merely the point decided but matters which were necessary to decide and which were actually decided as the groundwork of the decision itself though not then directly the point at issue and that a judgment is conclusive evidence not merely of the facts directly decided but of those facts which are necessary steps to the decision – so cardinal to it that without them it cannot stand." 174 The Court in Theo also referred (at 325) to the following passage from the judgment of Brennan J in Rogers v The Queen (1994) 181 CLR 251 at 262, where his Honour stated that "issue estoppel does not extend to findings of fact which, though contested and probative of the ultimate issue, are not necessary to, or are not the legal foundation of, the decision made." 175 Their Honours then proceeded (at 325) to cite the American Law Institute's Restatement of the Law of Judgments (2nd ed, 1982) s27(h), where it is stated that "[i]f issues are determined but the judgment is not dependant upon the determinations, relitigation of those issues in a subsequent action between the parties is not precluded. Such determinations have the characteristics of dicta and may not ordinarily be the subject of an appeal by the party against whom they were made." 176 Restatement of the Law of Judgments then provides the following illustrations of that principle: "[1] A brings an action against B to recover interest on a promissory note payable to A, the principal not yet being due. B alleges that he was induced by the fraud of A to execute the note, and further alleges that A gave him a release under seal of the obligation to pay interest. The court, sitting without a jury, finds that A had given such a release but that B was not induced by A's fraud to execute the note, and gives verdict for B on which judgment is entered. After the note matures A brings an action against B for the principal of the note. B is not precluded from defending this action on the ground that B was induced by A's fraud to execute the note. [2] A, as owner of a trademark, brings an action against B for infringement. B denies the validity of the trademark and denies infringement. The court finds that the trademark is valid, but that B had not infringed it, and gives judgment for B. Thereafter A brings an action against B alleging that since the rendition of the judgment B infringed the trademark. B is not precluded from defending this action on the ground that the trademark is invalid." 177 These illustrations are, in my view, of some assistance in the determination of the present issue. With respect to the illustration [1], the critical point was that the action was only for the recovery of interest and not the principal, as the latter was not yet due. B's defence to the action was that he had been released from the obligation to pay interest. That defence was made out and constituted a complete answer to the claim. The finding by the court that the execution of the note by B was not induced by A's fraud was not fundamental to the judgment in favour of B on A's claim for interest, which depended on the release. 178 In illustration [2], A's action against B was for infringement of his trademark. The court found that there had been no such infringement. It also found that the trademark was valid. The issue was whether B had infringed A's trademark. Having found that he had not, the court's finding that the trademark was valid was not one upon which the judgment in favour of B (of non-infringement) was dependant. It was not an alternative basis for judgment in B's favour, but in fact a judgment in favour of A, the unsuccessful plaintiff. (ii) The arguments in the arbitration 179 During the arbitration in the present case, Codock claimed in the arbitration in par 26B of its Points of Claim that it was a term of the relevant contract that the Commonwealth would reimburse it for indirect expenses (overhead) which it had incurred and would in the future incur, that it had since 1 January 1993 incurred Workers Compensation Costs (par 41); that those costs were and are overhead costs as defined in par 26B (par 43); and that the Commonwealth was therefore obliged to pay those costs as Dockyard Overhead (par 46). The Commonwealth denied that it was so obliged because Workers Compensation Costs were not indirect expenses as defined and, therefore, were not allowable as part of contract costs because of the provisions of cl 3.11 of the Standard Conditions. 180 The Arbitrator determined that that defence failed. He did so because there was no specific pleading of that provision; because as a matter of construction it did not apply to Workers Compensation Costs; and finally because, even if did apply to such costs, there was no evidence that there had been any lack of care or skill on Codock's part in incurring those costs. 181 The question which then arises is whether, given the nature of Codock's claim for those costs in the arbitration which succeeded before the Arbitrator, the rejection of the Commonwealth's defence based on cl 3.11 of the Standard Conditions was fundamental to that determination or, to put it another way, whether the success of Codock's claim was dependant upon the Arbitrator's determination that cl 3.11 had no application to the costs the subject of that claim. 182 The Commonwealth's contention is that the relevant issue before the Arbitrator was whether cl 3.11 was a defence to Codock's entitlement to recover the Workers Compensation Costs it incurred, and not whether, as a matter of construction, that provision applied to the conduct that underscored Codock's incurring of those costs. It was submitted that the determination of the construction issue did not depend upon the Arbitrator's decision to reject the defence based on cl 3.11, given that his rejection was, or at least included, the failure of the Commonwealth to specifically plead it. (iii) Authorities relied upon by the Commonwealth 183 Before proceeding to determine the issues raised by the Commonwealth, it is necessary to consider the decisions relied upon in Spencer Bower to support the statement of principle in par 205 which I have emphasised in [81] above and to which I have referred in [83]. 184 In James v Commonwealth, Mr James carried on the business of selling dried fruit interstate. He brought an action against the Commonwealth seeking to have the Dried Fruits Act 1928–1935 declared invalid on the basis that it was inconsistent with s92 of the Australian Constitution. The Commonwealth applied by summons to have the action dismissed as vexatious and oppressive on the ground that the question raised in the action had previously been litigated between the same parties in 1928 and decided against Mr James. It was held that the action should not be dismissed, as in the prior case the Court had decided the case in Mr James' favour on other grounds, notwithstanding that it had ruled that s92 did not bind the Commonwealth. 185 Dixon J noted (at 590–591) that the earlier ruling of the Court on the issue of whether s92 bound the Commonwealth, and its conclusion that it did not, were open to very serious question. The difficulty, however, was that Mr James had won his case in 1928 upon a different ground. Had he not done so, he might have appealed to the Privy Council as to whether s92 bound the Commonwealth. Nevertheless, the Commonwealth submitted that Mr James was seeking to re-litigate a question decided against him (namely, that s92 did not bind the Commonwealth) and, therefore, that his proceedings were an abuse of process and oppressive. 186 Dixon J rejected this argument (at 590–591) in these terms: "In one sense it is true that the question was decided against him. He submitted the contention to the Court which announced an opinion that he was wrong: but that opinion was not translated into a decree or order and could not be because, upon an independent contention, he succeeded. There was no judgment from which he could seek special leave to appeal, none which estopped him." 187 It is therefore clear that James is a case that supports the first two sentences of par 205 of Spencer Bower but is not authority for the statement in the balance of that par. This is because Mr James was successful in the 1928 case. Although he lost the issue as to whether s92 bound the Commonwealth, no appeal was available to him in respect of that issue that could change the result in his favour. 188 The next decision is that of the English Court of Appeal in Penn-Texas which, in my opinion, is on all fours with James in that it supports only the first part of par 205, at least so far as its ratio is concerned. The plaintiff commenced an action in the New York Supreme Court and had applied to the High Court of Justice in England for an order, inter alia, that certain documents be produced by the defendant before a Commissioner in England. The Master made an order that certain directors of the defendant should give evidence on commission, but he made no order for the production of its documents, a decision which was affirmed by the Court of Appeal. 189 Penn-Texas then returned to the court with additional material and again sought an order for the defendant company to produce its documents. The Master had originally refused to order the defendant company to produce its documents on the basis that although the court had the power to order their production, it could do so only if the documents were specifically identified. This had not been done. 190 The plaintiff company then remedied the defect with its earlier application and specifically identified the documents which it sought from the defendant. The Master then made an order for their production. The defendant company against whom the order was made appealed to the Court of Appeal, asserting that there was no power to order a limited company to produce documents. Penn-Texas (the plaintiff) responded by asserting that it was not open to the defendant company to raise this issue, as the question of the power of the court to order a limited company to produce documents had already been determined by the Master in favour of Penn-Texas in its earlier application. 191 Lord Denning MR (at 660) posed the question: would the defendant company, in a subsequent case, be bound by the Master's ruling? He answered it as follows: "Clearly not. The English company would not be bound by a ruling from which they could not appeal. … In my opinion a previous judgment between the same parties is only conclusive on matters which were essential and necessary to the decision. It is not conclusive on other matters which came incidentally into consideration in the course of the reasoning … One of the tests in seeing whether a matter was necessary to the decision, or only incidental to it, is to ask: could the party have appealed from it? If he could have appealed and did not, he is bound by it … If he could not have appealed from it (because it did not affect the order made) then it is only an incidental matter, not essential to the decision, and he is not bound … The ruling by this Court in Penn-Texas (No. 1) (that there was power in the court to order a limited company to produce documents) was only an incidental matter. It was not essential to the decision. No appeal lay from it. It is not therefore res judicata between the parties." 192 It is thus apparent that his Lordship considered that there was no estoppel which prevented the defendant company from raising the question of power because it had been successful in Penn-Texas (No 1) in resisting an order for production. This was so notwithstanding that the ground that the power, if it existed, could only apply to documents which were specifically identified and that no such identification had occurred. Quite clearly, there was nothing for the defendant company to appeal in these circumstances. It had succeeded in the initial proceedings before the Master as had Mr James. 193 The only other authority referred to in Spencer Bower in support of the proposition relied upon by the Commonwealth was the decision of the New Zealand Court of Appeal in Talyancick. The relevant part of the headnote in that case states: "Issue estoppel arose where an earlier decision was relied upon, not as determining the existence or non-existence of a cause of action, but as determining, as an essential and fundamental step in the logic of the judgment without which it could not stand, some lesser issue which was necessary to establish (or demolish) the cause of action set up in the later proceedings. An issue estoppel could only be founded on determinations which were fundamental to the decision and without which it could not stand. Other determinations could not support an issue estoppel however definite the language in which they were expressed. A useful test was to ask whether it was possible to appeal against the finding which was being put forward as founding an estoppel. If there could be no effective appeal against a particular determination, it was impossible to regard it as fundamental to the judgment." 194 The facts in Talyancich are somewhat complicated. The Commonwealth relied upon the decision as an endorsement of the second part of par 205 of Spencer Bower. Because the case was decided before the third edition of Spencer Bower was published, the Court cited (at 38–39) the following passage from par 215 of the second edition which has some resonance with the relevant part of par 205 of the third edition on which the Commonwealth now relies: "And a similar argument may apply to cases where, of several available factual grounds alternatively advanced is the basis of a cause of action, the court … has determined more than one in favour of the party who ultimately succeeds on the main issue. No estoppel can be founded on any one of the findings, for it is obvious that the party failing on such issues cannot appeal on any of them separately. In order to succeed on an appeal he must succeed on all the issues, and if the finding on even one of them be good, this would be fatal to an appeal on any of the others." However, it is to be observed that the party against whom an issue estoppel was foreshadowed accepted that no such estoppel arose. 195 Nevertheless, the Court proceeded to consider the concession and whether it had been properly made. It found that it had been properly made because the founding of the estoppel and the effect of a deed (with which that case was concerned) were not separately appealable points. This was so because any such appeal could have been dismissed without any need to deal with the question of the effect of the deed. 196 The case was, therefore, one in which the earlier court's determination of the issue that might otherwise have founded an issue estoppel was not one upon which the ultimate decision of the court was dependant. 197 The Commonwealth also placed reliance on the decision of the New Zealand Court of Appeal in Landco Ltd v Lynch [1995] 1 NZLR 37 at 41–42, 44. It is unnecessary to recite any of the facts or passages in the judgment to which reference was made as I do not consider that the decision directly supported the relevant statement of principle in Spencer Bower. Certainly, there is nothing in the judgment of the Court of Appeal in that case which, in my opinion, has any direct bearing on the issue that this Court has to decide arising out of the arbitration. (iv) Authorities relied upon by Codock 198 In response to the Commonwealth's submissions, Codock relied upon the decision of the Full Court of the Supreme Court of South Australia in Mitsubishi Motors Australia Ltd v Harbord (1997) 69 SASR 75 as authority to the contrary of the relevant statement of principle in par 205 of the third edition of Spencer Bower. In that case, a worker in the employ of Mitsubishi claimed that he had slipped and fallen in a pool of engine oil on 9 May 1989 in the course of his employment, and had sustained an injury to his lower back as a result of that fall. The worker made a claim for damages in negligence against Mitsubishi, claiming that the oil was present as a result of his employer's negligence. The District Court dismissed the claim on the basis that Mitsubishi had taken proper precautions to prevent oil getting on the floor and, therefore, that there was no oil on the floor upon which the worker could have slipped. 199 The worker subsequently made three claims for compensation based upon an alleged compensable disability suffered on 9 May 1989. All claims were rejected by Mitsubishi on the basis that the worker did not suffer an injury to his back on that date and that he was estopped from asserting that he had suffered the injury alleged to have occurred on that date. The worker sought review of each decision. The review officer determined that the District Court's decision to dismiss the claim in negligence did not give rise to an estoppel against the worker. Mitsubishi sought judicial review of that finding, and the trial judge held that the District Court's finding did give rise to an estoppel against the worker. The decision of the review officer was accordingly quashed, and the worker appealed to the Full Court of the Supreme Court of South Australia. 200 Doyle CJ, with whom Matheson and Olsson JJ agreed, noted (at 92) the facts that had been asserted by the worker in the District Court proceedings and the issues Mitsubishi had raised with his evidence. The Chief Justice accepted that it was necessary to decide whether the decision in the District Court gave rise to an estoppel as between Mitsubishi and the worker which estopped the latter from claiming that he injured his back on 9 May 1989 as a consequence of slipping on oil at his place of employment. 201 After referring to the well-known statement of principle in the judgment of Dixon J in Blair v Curran, the Chief Justice said (at 93): "It follows from these statements of principle that an estoppel does not arise in relation to each factual matter raised in a case and decided in the judgment. An estoppel arises only as to matters which are '… the essential foundation or ground work of the judgment, decree or order'. But I do not think that that can mean that an issue estoppel is limited to the bare minimum of facts necessary to decide a case. To take an example, which is close to this case, in a claim for damages for personal injury by negligence, a judge might decide that the defendant was not negligent and that the plaintiff did not suffer the alleged injury. A test which limits an issue estoppel to the bare minimum necessary to determine the case is incapable of selecting as between the two findings, because either one of them standing alone was sufficient to dispose of the plaintiff's claim. And there is no way of deciding that one rather than the other should be selected as the essential basis of the decision. It seems to me that in the passages from Blair v Curran that I have cited, Dixon J was referring to what might be called ultimate findings of fact upon which a case is actually decided. He distinguishes between those ultimate findings and factual findings which support them. To use the same example, assume that as well as making the findings referred to above, the judge found that the plaintiff was not at work on the day on which the plaintiff alleged he suffered injury by the defendant's negligence. As I understand the relevant principles, there would be an estoppel as to the occurrence of the fact alleged to be the act of negligence by the employer, and an estoppel as to the occurrence of injury, but not an estoppel on the issue of whether the plaintiff was at work on the day in question. That is something that is raised and decided in the case, but is an evidentiary fact as distinct from an ultimate fact." 202 The Chief Justice then referred to the suggested test for identifying a fundamental fact by asking whether it was possible to appeal against the finding. His Honour cited Murphy v Abi-Saab at 288 per Gleeson CJ and various paragraphs from the second edition (1969) of Spencer Bower. He then continued (at 94): "I am rather cautious about adopting that [the possibility of an appeal] as a test, although I appreciate that it is not suggested as a universal test. In the case in question, if the District Court had decided that [the worker] was injured on the day in question, but dismissed the claim because the employer was not negligent, the finding of injury could not give rise to an estoppel as against Mitsubishi because Mitsubishi could not appeal against the finding. It could not appeal because it would have a judgment in its favour dismissing the claim. On the other hand, in the present case where both factual findings are adverse to [the worker], that is the finding about the presence of oil and the slipping on oil, it is suggested that an issue estoppel does arise. But what if [the worker] thought, on reflection, that the finding of no negligence was beyond challenge? Is he estopped on the other finding because he does not appeal, even though he thinks that the appeal is hopeless, in terms of reversing the final result? On the other hand I acknowledge the force of the view expressed by Gleeson CJ in [ Abi-Saab ] where he said (at 288): 'Since finality of litigation is a primary object for the principle underlying issue estoppel, it would be incongruous if the doctrine operated so as to force a litigant to appeal in order to displace part of the reason of a court whilst having no intention, and perhaps no hope, of displacing the judgment …' I take him to mean that it would be unjust if a party, in whose favour the court decided, was estopped as to issues decided against that party. It could be unjust because that party, having ultimate judgment in the party's favour, was unable to appeal and to challenge the adverse findings made. Perhaps the explanation for the outcome is simply that the fact that the party obtained a judgment despite the adverse finding indicates that the finding could not have been essential to the decision reached. Be that as it may, I do not propose to apply the test of ability to appeal. If I did, the outcome would be adverse to [the worker]." 203 The Chief Justice then referred to the District Court findings and to the allegation that Mitsubishi was in breach of its duty of care on two grounds, first, that it had failed to provide stands with trays to catch oil from engines and, second, that it had failed to ensure that spillages of oil were cleaned up as soon as reasonably practicable. His Honour then continued (at 95): "The judge found that neither allegation had been established. Then the judge said: 'As for the events of 9 May 1989, the plaintiff has failed to persuade me that he slipped on oil in the way that he described.' … It is clear from the judgment that the judge has found that Mitsubishi did not, in the two respects identified, fail to take proper care to prevent spillages of oil. It is equally clear that he has found that the plaintiff did not slip on oil in the manner claimed." 204 His Honour then held (at 96) that the finding that Mitsubishi was not in breach of its duty of care was a matter fundamental to the ultimate conclusion of the trial judge. His finding on that point was something without which the decision could not stand. But the question was whether the worker was still at liberty to litigate the presence of oil and the fact that he slipped on the oil. It was clear that the judge's finding that the worker did not slip on oil in the way that he described reflected the finding that he did not slip, or a finding that there was no oil, or both. The Chief Justice then continued (at 96): "It seems to me that the critical issues before the District Court were these. First whether Mitsubishi failed to take the identified precautions against the presence of oil on the floor. Secondly whether oil was present on the floor. Thirdly, whether the plaintiff slipped on the oil. Fourthly, whether that slip caused injury to the plaintiff's back. A failure to establish any one of these four ultimate facts or groups of facts was sufficient to defeat [the worker's] claim. In my opinion as the passages that I have set out from the judgment of the District Court indicate, the judge found against [the worker] on the first matter and on the third matter. He has not found in terms that there was no oil on the floor, only that Mitsubishi did not fail to take proper precautions. Nor has he found in terms that the plaintiff did not somehow sustain a back injury on 9 May 1989. It seems to me that the two matters which I have identified are 'the actual ground upon which the existence of the right was negatived'. It was not necessary to decide both of them, a decision on either one would have sufficed to defeat the claim. In that sense, neither was essential to the conclusion reached. But I think that Dixon J cannot have intended such a narrow meaning when he referred to 'the essential foundation or groundwork of the judgment'. Accordingly, I agree with the judge below that the two findings referred to do give rise to an estoppel." (v) The Commonwealth's response 205 The Commonwealth responded to this decision by reference to that of the Victorian Court of Appeal in Glen Eira City Council v Kingston City Council [2001] VSCA 150; (2001) 116 LGERA 292. In that case Chernov JA, with the agreement of Winneke P and Charles JA, referred (at 301 [23]) to the passage in the judgment of Gleeson CJ in Abi-Saab to which I have referred in [85] above and to par 205 of the third edition of Spencer Bower. Chernov JA then analysed Penn Texas and James, being the cases cited as supporting the statement in Spencer Bower, and it was held in both that there was no estoppel. 206 Chernov JA (at 302 [26]) noted that Glen Eira sought to distinguish those cases upon the basis that the plaintiff in each had succeeded on one issue but failed on the other. It was therefore understandable that in practice no appeal would lie against the court's determination so that the decision against the successful party could not be treated as raising an issue estoppel. However, it was argued that where the plaintiff succeeds on both issues, that did give rise to an estoppel in respect of each. Mitsubishi was relied upon in support of that contention. 207 However, Chernov JA considered that there was only one cause of action on which the employee relied in Mitsubishi, namely, negligence. He then said (omitting citations): "In an earlier proceeding the District Court judge found against him on two issues – whether Mitsubishi failed to take the identified precautions against the presence of oil on the floor and whether the plaintiff slipped on it. Although Doyle CJ, with whom the other members of the court agreed, considered that 'a decision on either [issue] would have sufficed to defeat the [worker's] claim', he approached the question of whether the findings gave rise to issue estoppel by looking 'in a practical way at what was in fact decided'. … His Honour concluded that, in the circumstances, the findings were 'the actual ground upon which the existence of the right was negative' and that, in the circumstances, both findings were 'the essential foundation or the groundwork of the judgment'. Thus, the two findings in Mitsubishi were not treated as alternative bases for the decision, but rather as forming the essential foundation for the conclusion that the worker had failed to establish his cause of action." (vi) The correct analysis of Mitsubishi 208 With respect, I cannot agree with this analysis of the Chief Justice's reasoning in Mitsubishi. It is true that his Honour concluded (at 96) that there were two issues found by the District Court in favour of Mitsubishi which formed "the actual ground upon which the existence of the [worker's] right was negatived". But, as his Honour added, it was not necessary for the District Court to decide both of them as a decision on either would have sufficed to defeat the worker's claim. In that sense, it might be said that neither was essential to the ultimate conclusion that Mitsubishi had not breached its duty of care. However, the crucial question is not whether either issue was essential in absolute terms but rather whether either of the bases for the District Court's decision was capable of independently supporting its ultimate conclusion. 209 In my view, it would be illogical to surmise that an issue estoppel could not arise simply because two complete but alternative routes may be taken to arrive at the relevant conclusion. Each issue found in favour of Mitsubishi constituted an alternative or separate basis for the District Court's decision, and each of those bases was capable of supporting that decision in its own right. Neither was only ancillary to the other; thus, as I have noted above, a decision on either of the two issues so determined would have sufficed to defeat the workers' claim. As a result, while neither was of itself essential to the conclusion reached (in that they were true alternative bases for the decision), both findings were capable of giving rise to an issue estoppel as each was equally indispensable to the worker succeeding. 210 As Gleeson CJ noted when considering the judgment of Dixon J in Blair v Curran, his Honour could not have intended to give a narrow meaning to what he referred to as "the essential foundation or groundwork of the judgment". Accordingly, the fact that neither issue was essential in the narrow sense did not prevent each issue constituting "the essential foundation" of the District Court's judgment. 211 Chernov JA sought to distinguish Mitsubishi upon the basis that the situation with which he was concerned was "materially different". This was because there was no contest but that the two issues in Glen Eira were alternative findings. His Honour considered that only one of those findings was truly fundamental to the earlier decision. 212 Glen Eira concerned a dispute between the two councils in respect of the amalgamation of each of those councils with the City of Moorabbin. Kingston and Glen Eira Councils entered into an agreement (the amalgamation agreement) under which each council had obligations to contribute to the superannuation liabilities and redundancy costs in respect of Moorabbin's former staff. A dispute arose between the two councils as to their alleged respective obligations to eliminate Moorabbin's significant unfunded superannuation liability. Pursuant to s9(2) of the Local Government Act 1989 (Vic), the dispute was referred to a Board to enquire into and determine the amount that Glen Eira was liable to pay to Kingston under the amalgamation agreement. The Board determined that Glen Eira was to take up some $2.34 million of Kingston's relevant liability. 213 Glen Eira was aggrieved by that determination and applied to the Supreme Court to review the Board's determination under the Administrative Law Act 1978 (Vic) on two grounds. First, it argued that the Board had made errors of law in its interpretation of the amalgamation agreement and second, that in making its determination the Board had failed to observe the rules of natural justice. 214 The matter came before Beach J when Kingston's counsel confirmed that his client did not oppose the orders sought by Glen Eira to set aside the Board's decision upon the basis that it had failed to accord it natural justice. Beach J agreed with that concession but he also found that the Board had erred in law in its interpretation of cl 4 of the amalgamation agreement. Accordingly, he quashed the Board's determination. 215 The following year, Kingston served a notice of dispute on Glen Eira claiming that the parties were in dispute as to the amount Glen Eira was required to pay Kingston in respect of unfunded superannuation liabilities and redundancy costs of the former City of Moorabbin as at the date of amalgamation. Glen Eira also sought arbitration of the dispute. However, a series of disagreements arose between the parties including a dispute about the identity of the arbitrator to be appointed. Kingston therefore commenced proceedings in the Supreme Court seeking an order under the Commercial Arbitration Act 1984 (Vic) that a nominated accountant be appointed as the arbitrator to hear and determine the disputes referred to in the notice of dispute. 216 The originating process was returned before Gillard J. Glen Eira contended that there was no dispute between it and Kingston because Beach J had already determined the issue which was the subject of the notice of dispute. Gillard J found that no estoppel had been created by Beach J's decision. Glen Eira appealed from this decision, contending that the issue sought to be canvassed in the notice of dispute had been authoritatively determined by Beach J against Kingston and, therefore, it was estopped from agitating it in the arbitration. 217 In rejecting Glen Eira's submission that Kingston was estopped from raising the issue as to interpretation of cl 4 of the amalgamation agreement, Gillard J said this: "Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. Whether the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts, the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of a right was negatived." 218 It was this last mentioned requirement that Chernov JA held had not been satisfied. His Honour (at 300 [20]) considered that it was necessary to have regard to the substance of the action that was before Beach J for the purpose of determining whether the finding in question was fundamental to his decision. What was before Beach J was an order nisi for review that was made consequent upon the application of Glen Eira under the Administrative Law Act 1978 (Vic). As I have already noted, the relevant grounds on which the order was made were that the Board erred in law in its interpretation of cl 4 of the amalgamation agreement – there being eight specific alleged errors of interpretation – and that in making its determination the Board had failed to observe the rules of natural justice. His Honour accepted that the principal issue before Beach J was whether the Board had erred in its interpretation of the agreement. 219 Chernov JA acknowledged (at 300 [21]) that Beach J had concluded that the Board had erred in its construction of cl 4 of the amalgamation agreement. However, Beach J did not decide that there was no contingent liability existing in Moorabbin as at 14 December 1994 (the date of amalgamation). On the other hand, his Honour did find that as a matter of construction of the relevant legislation under which the amalgamation occurred, there was no obligation upon Moorabbin to contribute to the fund in respect of contingent liabilities existing in Moorabbin as at that date, and that its only obligation was to pay to the Board a proportion of salaries payable to employees to ensure that there was no relevant shortfall under the legislation. 220 In the Court of Appeal, Glen Eira argued that Beach J's finding of no obligation related to the same issue that was raised in the notice of dispute. It also contended that this finding was indispensable to the ultimate conclusion that the Board had erred in law. However, Chernov JA (at 301 [22]) was not persuaded that that finding was fundamental. This was because "[h]is Honour has resolved the principal ground of the order nisi essentially on the basis that the Board had wrongly construed the amalgamation agreement in the way in which I have earlier described. The conclusion that Moorabbin had no liability as at [the date of amalgamation] formed no relevant part of the judge's reasoning which led him to conclude that the Board had misconstrued the amalgamation agreement. For that reason alone I am of the view that what his Honour said about Moorabbin's relevant liability could not be characterised as being legally indispensable to the ultimate decision." 221 Nevertheless, Chernov JA considered (at 301 [23]) that there were two other reasons for determining that the finding of no liability of Moorabbin as at the date of amalgamation was not fundamental to Beach J's decision. The first was that there was no practical way for Kingston to have challenged it by way of appeal. The second was that Glen Eira had accepted that the finding was an alternative basis for the decision, the other finding being that the Board had failed to accord it natural justice. Accordingly, Beach J's finding that Moorabbin was not subject to the relevant liabilities as at the date of amalgamation did not give rise to an estoppel precluding Kingston from pursuing its claim in the arbitration. 222 Thus Chernov JA's analysis of Beach J's decision to quash the Board's determination was based upon two findings. The first was that Glen Eira had been denied natural justice; the second was that the Board had erred in law in construing cl 4 of the amalgamation agreement. Nevertheless, Beach J went on to consider the relevant legislation governing the amalgamation and concluded from its construction that Moorabbin was not subject to a relevant liability as at the date of amalgamation in respect of which Glen Eira and Kingston were required to contribute under the amalgamation agreement. 223 In these circumstances, it is not surprising that the Court of Appeal found that Beach J's finding as to no liability on Moorabbin's part was not fundamental to his decision to quash the Board's decision. Although that finding was relevant to the parties' obligations or the extent of their obligations under the amalgamation agreement, it was not relevant to the actual bases upon which Beach J had quashed the determination of the Board, namely, that it had misconstrued the amalgamation agreement and had failed to accord Glen Eira procedural fairness. 224 Furthermore, it would not have been open to Kingston to appeal against those findings. This was because, firstly, an appeal only lay against a decision or judgment and not the reasons for the decision and, secondly, an appeal against that finding would not have displaced Beach J's decision to quash the Board's determination. Accordingly, upon the appeal test referred to by Gleeson CJ in Abi-Saab, Glen Eira failed in its submission that Kingston was estopped from raising the issue as to the interpretation of cl 4 of the amalgamation agreement. 225 Returning to Mitsubishi, the District Court had found, firstly, that Mitsubishi had taken proper care to prevent spillages of oil and, secondly, that the worker had not slipped on oil in the manner claimed. It is true that the worker could have appealed against both those findings, notwithstanding that he could only have displaced the judgment in favour of Mitsubishi if he succeeded in reversing both of them. Success on one only would be insufficient. Although success on both findings could not be assured, nevertheless it could not be said that it was not possible for the worker to have appealed those findings or that, had he done so, he had no hope of displacing the judgment against him in the sense referred to by Gleeson CJ in Abi-Saab. 226 On the other hand, in Glen Eira, the finding with respect to which issue estoppel was asserted could not have passed the appeal test because even total success on any such appeal would not have resulted in a reversal of Beach J's decision to quash the Board's determination. This was because one of the grounds upon which the determination was quashed was that Glen Eira was denied natural justice and Kingston conceded as much and did not contend to the contrary. Accordingly, it could not have appealed the final decision which it had conceded. (vii) Conclusion 227 In par 215 of the second edition of Spencer Bower (and which is the predecessor to par 205 in the third edition), the learned authors stated that: "a similar argument may apply to cases where, of several available factual grounds alternatively advanced on the basis of a cause of action, the Court … has determined more than one in favour of the party who ultimately succeeds on the main issue. No estoppel can be founded on any one of the findings, for it is obvious that the party failing on such issues cannot appeal on any of them separately. In order to succeed on an appeal he must succeed on all the issues, and if the finding on even one of them be good, this will be fatal to an appeal on any of the others. It would therefore be unjust to regard the findings of fact on each issue separately as estopping the parties in later proceedings. The parties will indeed be estopped by the result of the trial as to the existence and incidents of the cause of action resting upon the issues, but individually the detailed findings will be regarded as collateral findings, not properly founding on estoppel." (Emphasis in original.) 228 The present case can be analysed in terms of the above principle in two ways, each of which leads to the same conclusion. First, it is apparent that the Arbitrator's conclusion that the 1972 TAL conferred a right upon Codock to recover against the Commonwealth was fundamental to the award that was ultimately made in Codock's favour. A clear cause of action estoppel therefore arose upon the granting of the award. 229 In the alternative, and for the sake of completeness, the principle articulated in Spencer Bower may be analysed in the following manner. First, it is necessary to identify the "main issue". In my opinion, that issue was whether the Commonwealth was liable to reimburse Codock in respect of Workers Compensation Costs incurred by it during the relevant period. That was the basis of Codock's cause of action against the Commonwealth, and that cause of action was the "main issue" in the proceedings. 230 Second, one of the defences advanced by the Commonwealth to defeat Codock's claim was that, as a matter of construction, clause 3.11 excluded from "indirect expense" and, therefore, from "contract cost", costs incurred by Codock which could have been avoided or reduced by the exercise of reasonable standards of skill, care and efficiency. Workers Compensation Costs constituted such costs. 231 Third, the defence so advanced by the Commonwealth depended upon the true construction of clause 3.11 and, in particular, whether it applied to Workers Compensation Costs as a class. 232 Fourth, the Arbitrator determined that question of construction against the Commonwealth finding that cl 3.11 had no application to the incurring by Codock of Workers Compensation Costs. 233 Fifth, the determination of that issue of construction was "the essential foundation or the groundwork" of the Arbitrator's decision that cl 3.11 had no such application. 234 Sixth, the Commonwealth is therefore estopped from asserting in its Defence to the Summons that cl 3.11 constituted a defence to any liability otherwise imposed upon it under the 1972 TAL to reimburse Codock with respect to Workers Compensation Costs incurred by it since 1995. 235 It follows from that, in my opinion, the no pleading and no evidence issues which were advanced in the arbitration, not by the Commonwealth but by Codock to resist the Commonwealth's defence based on cl 3.11, constituted collateral findings and, therefore, of themselves could not give rise to an issue estoppel. To adopt what McHugh J observed in Rogers v The Queen at 283, they were merely evidentiary issues. The true construction of cl 3.11 was the ultimate issue and, therefore, the only issue in respect of which an estoppel could arise. It formed the legal foundation of the Arbitrator's rejection of the Commonwealth's defence based on that provision. 236 To put the matter another way, one is required in the present context to focus on the grounds advanced by the Commonwealth in the arbitration to support its defence based upon cl 3.11 that it was not liable to Codock with respect to Workers Compensation Costs and not on the grounds advanced by Codock to resist that defence. The former was purely construction based and concerned with the judicial establishment of a proposition of law, namely, that as a matter of construction cl 3.11 of the Standard Conditions applied to Workers Compensation Costs as a class. 237 Further, to paraphrase Dixon J in Blair v Curran at 532, for the purpose of the Commonwealth denying Codock's claim that it was liable under the 1972 TAL to reimburse to it Workers Compensation Costs, a state of law was alleged by it, namely, that on its true construction cl 3.11 applied to any such claim. This proposition would have been a complete answer to Codock's claim if it had been decided by the Arbitrator in favour of the Commonwealth. The Arbitrator's decision that cl 3.11 had no such application, on its true construction, was an issue necessarily decided by him for the purpose of upholding Codock's claim. To adopt the language of Dixon J in Blair v Curran, it was cardinal to the rejection of the Commonwealth's negligence issue defence to that claim. 238 Similarly, where the estoppel is said to arise out of an issue advanced in support of a cause of action, as distinct from a defence, then an estoppel can only arise in respect of the ultimate findings with respect to that issue that were essential to the success or failure of that cause of action. 239 I agree with Doyle CJ, who held in Mitsubishi that that test should not be given a narrow meaning. In the context of the present case, it is necessary to identify the fundamental legal basis upon which the Commonwealth's defence based on cl 3.11 failed. In my opinion there is only one answer to that question: the Commonwealth failed on the construction point. The no pleading and no evidence points were purely collateral findings which did not deal with the substance of the defence. The no pleading point involved an exercise by the Arbitrator of his discretion not to permit the defence to be raised because it had not been specifically pleaded. The no evidence point was irrelevant because, as the Commonwealth itself submitted, "virtually by definition, the Common Law Costs could have been avoided by the use of reasonable care and arise by reason of the want of same." (see the Arbitrator's reasons at 163). 240 Furthermore, it does not follow that if the Commonwealth had had an unrestricted right of appeal against the Arbitrator's decision, an appeal limited to the pleading point would have inevitably failed. Although it had not expressly pleaded cl 3.11 by way of defence to Codock's claim, there is much to be said for the view that the Arbitrator's decision to reject the Commonwealth's defence based on that provision (see [162] above) miscarried given that the Commonwealth clearly conducted its defence on the basis of that condition. Its merits were argued by both parties and formally decided by the Arbitrator. 241 A similar observation can be made with respect to the no evidence point. As the Commonwealth submitted (see [158] above), it was self evident that Codock's incurring of Common Law Costs, whether as a consequence of a judgment or settlement, could only be justified if Codock had breached its duty of care to its ex-employees by failing to provide a safe system of work which avoided their exposure to asbestos. In other words, it must have breached cl 3.11. An appeal on the no evidence point if otherwise available, was by no means hopeless. 242 In my opinion, it follows upon the assumption that a right of appeal against the Arbitrator's finding and reasoning with respect to its defence based on cl 3.11 was available to the Commonwealth, to adopt and adapt the words of Gleeson CJ in Abi-Saab (in [84] above), it would have been open to the Commonwealth to have appealed the Arbitrator's decision to reject its cl 3.11 defence on all three grounds, none of which was without hope of success. In these circumstances, and on the assumption referred to, the Commonwealth would have had an arguable case to displace the whole of the Arbitrator's reasoning in rejecting the defence and, if successful, of displacing the award made in Codock's favour. The fact that the Commonwealth did not have an unrestricted right of appeal from the Arbitrator's award is irrelevant for the reasons I have articulated below with respect to the Commonwealth's Arnold special circumstances argument based on the same point. 243 Accordingly, for these additional reasons, the appeal test referred to in Abi-Saab was satisfied so that the failure of the Commonwealth to succeed on its defence based on cl 3.11 was fundamental to the Arbitrator's decision to uphold Codock's claim for Workers Compensation Costs and thus gave rise to an issue estoppel barring the Commonwealth from pleading that provision by way of defence to Codock's claim in the Summons. 244 In par 3.5 of its written submissions of 26 June 2006 in reply on the procedural fairness issue, the Commonwealth submitted that the negligence issue did not necessarily apply to all Workers Compensation Costs as sought in the Summons. It is true that its primary defence based on cl 3.11 is that, but for Codock's negligence, none of those costs would have been incurred. But it also submitted that some of those costs might have been properly incurred even if Codock had not been negligent. Some of the examples given on this point were, with respect, difficult to comprehend. 245 The Commonwealth also submitted that, in its written submission at Orange 56 par 30, Codock had conceded that the Arbitrator's decision did not prevent the Commonwealth from contesting the recoverability of such costs on a claim-by-claim basis. So much was acknowledged by the primary judge in [68] of the first judgment and [18] of the second judgment. As Codock submits, the fact that the negligence issue did not necessarily apply to all Workers Compensation Costs claimed in the Summons was, therefore, not to the point. 246 But the significant question raised by the negligence issue as encapsulated in Issue 3(g) was whether the Commonwealth was estopped from maintaining that, by virtue of cl 3.11, Codock was disentitled from recovering any Workers Compensation Costs which could have been avoided by its exercising reasonable standards of skill and care in providing a safe system of work for its employees. The issue as so framed directly raises the question of whether, as a matter of construction, cl 3.11 applies to such costs as a class. As Codock submitted, and the primary judge held, that question is at the heart of the negligence issue. 247 In my opinion, it follows that the primary judge was correct when, at [62] of the first judgment, he held that the Arbitrator's decision on the "reasonable standards of skill, care and efficiency" issue (cl 3.11 of the Standard Conditions) was fundamental. A decision adverse to Codock on that issue would have resulted in the failure of its claim for the reimbursement of any Workers Compensation Costs. Furthermore, as his Honour pointed out (at [63]), it did not matter that the Arbitrator found several different reasons for rejecting the Commonwealth's reliance upon cl 3.11 as issue estoppel was concerned with deciding issues, not with the reasoning that supported the decisions on those issues. 248 The Arbitrator rejected the Commonwealth's reliance on cl 3.11 as a defence to Codock's claim insofar as it amounted to a matter of construction of that provision. Two of the reasons for its failure were the no pleading and no evidence points, which constituted part of the Arbitrator's reasoning for rejecting the defence. 249 Had the Arbitrator rejected the defence based on cl 3.11 on the no pleading ground only, then a serious question would have arisen as to whether an issue estoppel arose in that circumstance. This is a matter which is more appropriately dealt with in any determination, if that be necessary, of whether the decision of the House of Lords in Arnold v National Westminster Bank PLC constitutes part of Australian law and, in particular, if it does, whether there were special circumstances that justified a refusal to find that the issue estoppel in question constituted a complete bar to the Commonwealth's reliance upon cl 3.11 in par C29 of the Defence. 250 As Lord Keith of Kinkel observed in Arnold at 109, given that one of the purposes of estoppel is to work justice between the parties, there would be force in the submission that it would work an injustice to hold that the Commonwealth was estopped from raising cl 3.11 in the Defence, if that issue were rejected by the Arbitrator on the sole basis that the Commonwealth had failed to specifically plead it as a defence. 251 I should not leave this aspect of the matter without referring to the recent decision of the English Court of Appeal in Sun Life Assurance Co of Canada v Lincoln National Life Insurance Co [2005] 1 Lloyd's LR 606. This case concerned two arbitrations arising under arbitration clauses in two reinsurance policies. The first arbitration resulted in what was referred to as the Cigna Award. The award relevantly included the following: "(3) WE HOLD and DECLARE that [Cigna] has validly and properly avoided the contracts of reinsurance by which it participated in the OCC/ACC program … (4) WE HOLD that, subject to our decision in (3) above, all the numbered risks in respect of which the claimant sought an indemnity [including the Unicover Whole Account Reinsurance] under the OCC/ACC covers were reinsured by [Cigna]." 252 Disputes then arose between Lincoln and Sun/Phoenix and a further arbitration ensued. A counter-claim was served by Sun/Phoenix seeking a declaration that Lincoln was obliged to indemnify them in respect of the Unicover Whole Account Reinsurances. Lincoln argued that the Cigna arbitrators had found that, subject to Cigna's avoidance of the relevant reinsurances, all the numbered risks in respect of which Sun/Phoenix sought an indemnity under the OCC/ACC covers were reinsured by Cigna including the Unicover Whole Account Reinsurances which were, therefore, excluded from the Lincoln reinsurance. The Lincoln arbitrators rejected that argument and found that the Cigna arbitrators had not directed themselves to the question of whether the Unicover Whole Account Reinsurances were within the Cigna reinsurance, subject to Cigna's avoidance. 253 Lincoln appealed against the Lincoln award on two points of law. One of those points was whether the Lincoln arbitrators were free to depart from the determination of rights and obligations between Sun-Phoenix and Cigna set out in the Cigna award. 254 At first instance, Toulson J held that the Lincoln arbitrators were so bound and it was therefore not open to those arbitrators to hold that the Cigna reinsurance did not extend to the Unicover Whole Account risks. This finding was reversed on appeal. The relevant part of the head note accurately sets out the Court of Appeal's finding: "The finding of the Cigna tribunal as to the coverage of the reinsurances did not give rise to an issue estoppel binding on the Lincoln arbitrators. While the Cigna tribunal did hold and express the view that the Unicover book would have been covered by the Cigna reinsurances, its expression of that view could not be regarded as having been fundamental to its decision on avoidance, or as anything other than collateral. It was clear that the Cigna tribunal would have arrived at precisely the same conclusion as it did regarding avoidance in the light of the way it expressed its central findings of fact, even if it had formed an opposite view to the effect that the Unicover book fell outside or was excluded from the scope of the Cigna insurances. That part of the award was not necessary for the Cigna tribunal's decision. It was directed to an issue which the Cigna tribunal correctly stated did not arise in view of its decision on avoidance. Although expressed as part of the dispositive award it was in fact obiter. Cigna, which won on avoidance, had no basis for appealing against it. If Sun/Phoenix had been able to appeal on the issue of avoidance, then the scope of the Cigna reinsurances might have become a necessary issue for determination, but there was no such appeal." 255 The leading judgment was delivered by Mance LJ (as he then was), with whom Longmore and Jacob LJJ agreed. On the question of estoppel his Lordship noted (at 621 [40]) that it had been submitted on behalf of Sun/Phoenix that it was not "necessary" or "relevant" for the determination of the dispute between Sun/Phoenix and Cigna for the Cigna arbitrators to determine whether the Unicover book of business would or would not have been reinsured by the Cigna reinsurances, if these had not been avoided. The Cigna arbitrators recognised that their determination with respect to the Unicover book was obiter and irrelevant to its conclusion that there had been a valid avoidance. 256 After referring to [201] of the third edition of Spencer Bower, and the passage from the judgment of Dixon J in Blair v Curran at 533, his Lordship referred to the English Court of Appeal's decision in Re State of Norway's Application (No 2) [1990] AC 723 at 743, 751–752 where May and Balcombe LJJ "indicated that the distinction between fundamental and collateral matters is not mechanical but flexible, and that it is to be drawn according to the circumstances and justice of the particular case." 257 His Lordship made further reference to Lord Upjohn's statement in Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 858 at 947 where his Lordship said that all "estoppels are not odious but must be applied so as to work justice and not injustice and I think the principle of issue estoppel must be applied to the circumstances of the subsequent case with this over-riding consideration in mind." 258 Mance LJ then referred (at 621 [43]) to the fact that one test, but not a conclusive test, sometimes applied to determine whether a determination on an issue can have been fundamental, is whether there could have been an appeal from that determination. His Lordship then cited the first two sentences of par 205 of the third edition of Spencer Bower and continued (at 621–622 [44]) in these terms: "A similar passage was approved by Lord Justice Balcombe in Re State of Norway's Application (No. 2) at p. 572. Lord Justice Woolf at p. 772–773 also regarded the absence of any realistic prospect of an appeal as inconsistent in that case with any issue estoppel. In The Good Challenger the Court of Appeal left open, in relation to decisions with two separate ratios leading to the same result, the correctness of the immediately following passage from par 205 in Spencer Bower " [being that part of par 205 that I have emphasised in [81] above]. 259 His Lordship nevertheless applied that statement of principle to the instant case, holding (at 622 [45]) that par 4 of the dispositive part of the Cigna award (see [251] above) was not necessary for the Cigna arbitrators' decision. This was because it was directed to an issue which the Lincoln arbitrators stated correctly in their reasons did not arise in view of the Cigna arbitrators' decision on avoidance. Although expressed as part of their dispositive award, it was in fact obiter and Cigna, who won on avoidance, had no basis upon which it could appeal against that finding. 260 His Lordship considered that the Cigna arbitrators did hold and express the view that the Unicover book would have been covered by the Cigna reinsurances. However, he could not regard that point of view as having been fundamental to their decision or as anything other than collateral. The Cigna arbitrators would have arrived at precisely the same conclusion as they had regarding avoidance even if they had formed an opposite view to the effect that the Unicover book fell outside or was excluded from the scope of the Cigna reinsurances. Accordingly, no issue estoppel arose. 261 It is apparent from the foregoing that Mance LJ was prepared to apply the statement of principle contained in the relevant passage from par 205 of Spencer Bower to the situation before him where it was clear that there was only one ratio in the Cigna award, namely, that Cigna had validly and properly avoided the contracts of reinsurance. It was therefore unnecessary for his Lordship to answer the question left open by the Court of Appeal in The Good Challenger (to which he referred at 621 [44]), in which where two separate ratios led to the same result. 262 In my opinion, the ratio of the Arbitrator's determination in the present case to reject the Commonwealth's defence based on the operation of cl 3.11 of the Standard Conditions was that that provision, properly construed, related only to the conduct of litigation and not to Codock's underlying conduct which led to the litigation; that is, it had no application to the incurring by Codock of Workers Compensation Costs (or, at the very least, Common Law Costs and Excess Costs). Alternatively, the ratio of the Arbitrator's decision was his finding (at 176 of his reasons) that "on the proper construction of the contracts themselves, such costs [the Workers Compensation Costs] are recoverable as part of the overhead expenses from the Commonwealth." 263 In my view the Arbitrator was there referring to the costs in question as a class. In finding that they were recoverable from the Commonwealth he was rejecting its defences to such a construction of the contract, which included the proper construction of that part of the contract constituted by cl 3.11 of the Standard Conditions. In those circumstances there is much to be said in favour of the view that whether or not appealable, the ratio of the Arbitrator's decision so identified was one of the elements fundamental to his decision that the claimed costs were, on the proper construction of the relevant contract, recoverable from the Commonwealth as part of "overhead expenses" and thus gave rise to an issue estoppel. 264 The Commonwealth did seek leave to appeal from the Arbitrator's award pursuant to s38 of the Commercial Arbitration Act 1984 (Vic) which permitted the Court to grant leave where there was any manifest error of law on the face of the award or where there was strong evidence that the Arbitrator had made an error of law and that the determination of the question may or may be likely to add substantially to the certainty of commercial law: Commonwealth of Australia v Cockatoo Dockyard Pty Ltd AC 9602289, Bainton J, 29 May 1996 (unreported). It is true that leave was refused and, as that refusal was interlocutory, it could not therefore give rise to an issue estoppel of itself. The point, however, is that there was a limited right of appeal available to the Commonwealth of which it sought, albeit unsuccessfully, to take advantage. 265 In its further amended summons for leave, the Commonwealth set out the grounds of appeal which it sought to argue. Ground 5 was headed "PERSONAL INJURY CLAIM COSTS" and advanced the following propositions: "12. The Arbitrator determined that Codock was entitled to recover as overheads under the TAL all monies paid in respect of workers' common law claims for asbestos-related injuries (at 190–191 of the Award). 13. The Commonwealth contends that the Arbitrator erred in law in making this determination on the following grounds: (1) There were no grounds for the Arbitrator to determine the question on the basis of a continuum of regulation of commercial dealings between the parties. The Commonwealth maintains that the Arbitrator was obliged to view each trading agreement made between the Commonwealth and Codock and which governed the nature of their relationship since 1933 as a separate and distinct contract, not as a 'continuum' of dealings; (2) Codock had the onus of showing that the personal injury claims for which it sought recompense related to injuries contracted during the currency of the TAL and not contracted in earlier periods or when other trading agreements may have applied. Codock did not discharge this onus; (3) 'Standard Conditions' also applicable between the parties (being [the 1984 Standard Conditions]) excluded the recoverability of these personal injury costs because the costs were 'costs which could have been avoided or reduced by the exercise of reasonable standards of skill, care and efficiency". (Clearly a reference to cl 3.11.) The TAL referred to above was defined both by Bainton J who heard the application and by the parties as the 1972 TAL. 266 When dealing with Ground 5, his Honour noted that the claims in question were those made by former employees after the 1972 TAL had been entered into. To the extent that they were not covered by insurance, they had to be paid by Codock. They were, therefore, an "overhead" expense. So also, according to his Honour, were the legal costs incurred by Codock in respect of these claims, again to the extent to which they were not covered by insurance. His Honour then continued in these terms: "As the Award explains, Codock relied upon clause 2(3) and 2(4) of the 1972 Trading Agreement – specifically that payments it was required to make in respect of asbestos claims, when made, were 'overhead' which was taken into account in 'cost plus' contracts, such as submarine refits and would be taken into account for fixing a price for 'commercial' (i.e. non-Navy work) which would go towards recovery of overheads and thus benefit the Commonwealth because it reduced the overhead to be recovered from Navy work and for the Commonwealth (see Award at 150–155)." 267 His Honour then dealt with the three errors of law alleged in Ground 5. First, he held that the Commonwealth's contention in par 13(1) of the Summons might well be correct but was irrelevant as costs were incurred when they were paid. The fact that liability might have arisen out of pre-1972 events was simply irrelevant. Second, his Honour considered that the contention in par 13(2) was simply wrong. Third, with respect to the reference to the Standard Conditions in par 13(3) his Honour said: "Those [conditions] asserted to be relevant are set out on pages 155–157 [namely, Standard Conditions 4.49, 4.50, 4.51 and the definitions in clause 1.5, 1.16 and 4.1]. They refer to the costs of the LITIGATION, not to any amount awarded. The amounts awarded or agreed to be paid are under the TAL to be considered as overheads not litigation costs. The Arbitrator has expressed his opinion as to how these overheads are to be dealt with on pages 156–166 [which included the Commonwealth's submission as to the applicability of clause 3.11 of the Standard Conditions]. There is not any manifest error of law in this part of the Award. The Arbitrator's view depends upon the effect of many documents, but part of which are set out in full, and in a review of a 'continuum' of agreements, each of which is part of the 'matrix of facts' to be taken into account in construing the 1972 TAL. Furthermore, there is not strong evidence of any error of law. The material I have been asked to consider tends, in my opinion, to negate rather than demonstrate error of law." 268 An application to this Court by the Commonwealth for leave to appeal against the decision of Bainton J was dismissed: Commonwealth of Australia v Cockatoo Dockyard Pty Ltd AC 9602289, Bainton J, 29 May 1996 (unreported). 269 It may well be that Bainton J misunderstood par 13(3) of the Commonwealth's summons setting out the grounds upon which the Arbitrator had allegedly erred in law. It is apparent that the Commonwealth was there submitting that the Arbitrator erred in law by failing to exclude the recoverability of the costs in respect of the workers' common law claims for asbestos-related injuries because they were "costs which could have been avoided or reduced by the exercise of reasonable standards of skill, care and efficiency", being a clear reference to the terms of cl 3.11 of the Standard Conditions. When dealing with that paragraph in his judgment, his Honour determined that the Standard Conditions asserted by the Commonwealth to be relevant were those set out at 155–157 of the Arbitrator's reasons whereas cl 3.11 was set out at 163. 270 On the other hand, his Honour observed that the Arbitrator had expressed his opinion as to how "these overheads" (being the monies paid by Codock in respect of workers' common law claims for asbestos-related injuries) were to be dealt with at 156–166 of his reasons and which included (at 163–166) his consideration of the Commonwealth's defence based on cl 3.11. His Honour then found that there was no manifest error of law "in this part of the Award". In my view the part of the Award to which his Honour is referring is that which appears at 156–166. Accordingly, it must follow that Bainton J considered that there was no manifest error of law or, for that matter, any strong evidence of an error of law, in the manner in which the Arbitrator determined, notwithstanding cl 3.11 of the Standard Conditions, that Common Law Costs were properly to be considered as "overhead" and not litigation costs and, therefore, were recoverable from the Commonwealth as such. 271 It is thus apparent that the Commonwealth sought leave to appeal with respect to the negligence issue on the basis that the Arbitrator had erred in law in his construction of cl 3.11 of the Standard Conditions but also that that application had been rejected upon the clear basis that the material relied upon by the Commonwealth negated rather than demonstrated an error of law on the Arbitrator's part. I should add that, in considering the same material myself, in my opinion the Arbitrator's construction of cl 3.11 was correct. Such a finding is relevant to the Commonwealth's contention that there were special circumstances within the meaning of the Arnold principle. (f) An alternative approach to issue estoppel 272 There would appear to be a more direct approach to the question of whether the Commonwealth is subject to an issue estoppel in relation to the negligence issue. This is because it is possible to view the facts of the present case in terms of the decision in Hoystead v Commissioner of Taxation [1926] AC 155 (as discussed in Spencer Bower at 93–4 [189]). 273 In the arbitration, Codock sought in the Points of Claim to recover a particular category of costs, namely, the Workers Compensation Costs it had incurred before and after 1 January 1993. It relied on the provisions of the 1972 TAL as rendering the Commonwealth liable to reimburse it for those costs. In the Summons it seeks to recover the same category of costs under the identical provisions of the 1972 TAL. 274 The Commonwealth denied that Codock was entitled to recover the costs so claimed. It failed on that issue before the Arbitrator, and it was fundamental to the decision in favour of Codock's recovery of the Workers Compensation Costs that the Commonwealth defences to that claim failed. It does not matter what those defences were: the Arbitrator's decision was that Codock was successful in establishing that a particular category of costs were recoverable from the Commonwealth under the provisions of the 1972 TAL and that those costs included those recovered both before and after the date on which the 1972 TAL expired. 275 It follows that where Codock claims in the summons that the Commonwealth is liable to reimburse it with respect to the identical category of costs under the terms of the identical contract (the 1972 TAL), the Commonwealth is estopped from denying that it is so liable in its defence. It fought that very same issue in the arbitration and lost. It is estopped from fighting it again in the present proceedings. 276 Accordingly, it does not matter whether the Commonwealth failed in the arbitration because it did not plead the negligence issue based on cl 3.11 of the Standard Condition or because it did not lead evidence to support it or otherwise allowed it to go by default. It cannot gain an advantage by raising the negligence issue in the Defence to the Summons because it could have raised the issue in the arbitration but failed, or failed successfully to do so. A fortiori, the Commonwealth did raise and argue the construction of cl 3.11 of the Standard Conditions but lost. 277 In Hoystead at 165–6, Lord Shaw, delivering the advice of the Privy Council, said: "it is settled, first, that the admission of a fact fundamental to the decision arrived at cannot be withdrawn and a fresh litigation started, with a view of obtaining another judgment upon a different assumption of fact; secondly, the same principle applies not only to an erroneous admission of a fundamental fact, but to an erroneous assumption as to the legal quality of that fact. Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted, and there is abundant authority reiterating that principle. Thirdly, the same principle – namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which has not been taken. The same principle of setting parties' rights to rest applies and estoppel occurs". 278 The third proposition stated by his Lordship is of particular relevance in the present case. It was fundamental to Codock's case in the arbitration that the Commonwealth was liable to reimburse it under the provisions of the 1972 TAL with respect to Workers Compensation Costs incurred by it both before and after 1 January 1993, when the 1972 TAL expired. Had it pleaded cl 3.11, succeeded on the issue of its true construction and moved the facts necessary to support its application, it would have had a complete answer to Codock's claim. In that sense a point fundamental to the success of Codock's claim, and which was traversable by the Commonwealth by pleading a defence based on cl 3.11, was not traversed. 279 In the foregoing circumstances, the Commonwealth was therefore bound by the Arbitrator's award in favour of Codock on the issue of the recoverability of Workers Compensation Costs and is estopped from now raising the negligence issue in defence of Codock's claim in the summons. As I have said, the position is, a fortiori, the question of the true construction of cl 3.11 having been determined by the Arbitrator in favour of Codock. (g) Conclusion on the negligence issue 280 In my opinion the Arbitrator's rejection of the Commonwealth's defence based on cl 3.11 of the Standard Conditions was fundamental or essential to his decision that it was contractually bound to reimburse Codock for Workers Compensation Costs incurred by it both before and after 31 December 1992. 281 Accordingly, subject to the Arnold special circumstances argument, the Commonwealth is estopped from re-litigating its defence based on cl 3.11 as encapsulated in Issue 3(g) of the Statement of Issues. It follows that in my view the primary judge was correct in finding that the Commonwealth was not entitled to maintain that defence. The Expiration Issue – Issue 3(a) (a) The Arbitrator's decision on the issue 282 In the first judgment, the primary judge noted (at [56]) that some of Codock's expenses for which it sought and obtained reimbursement in the arbitration had been incurred after 31 December 1992, being the date upon which the 1972 TAL was terminated. In par 41 of the Points of Claim, Codock pleaded that since 1 January 1993 it had continued to incur and would in future incur Workers Compensation Costs. In pars 26E and 46 of the Points of Claim it pleaded that the Commonwealth was obliged to accept into the Dockyard Overhead as at 31 December 1992 a reasonable provision against Workers Compensation Costs to be incurred from 1 January 1993 onwards and to pay Codock the amount of such costs as were incurred plus 7.5% profit. 283 The Commonwealth denied par 46 of the Points of Claim in pars 18 and 19 of its defence. It pleaded in par 22 that Codock's past and future costs as a result of common law personal injury claims by workers at the Dockyard were not recoverable from the Commonwealth as overheads in accordance with the 1972 TAL in respect of the 1990/91, 1991/92 or any other financial years. It is therefore clear that the issue encapsulated in Issue 3(a) of the Statement of Issues was also directly raised by the Commonwealth by way of defence to Codock's claim in the arbitration to be reimbursed Workers Compensation Costs incurred by it after 31 December 1992. 284 During the arbitration Codock abandoned any entitlement to a declaration for an indemnity with respect to the future incurring of Workers Compensation Costs in relation to unknown plaintiffs without having actually so incurred those costs. However, there is no doubt that its claim extended to such costs incurred by it after 31 December 1992 up to the time of final addresses before the Arbitrator in late 1995. 285 An issue arose between the parties in the arbitration as to whether Codock could recover Common Law Costs incurred with respect to conduct that predated the 1972 TAL. The Arbitrator recorded (at 159) that the Commonwealth had submitted that it followed from the provisions of cl 1.16 of the Standard Conditions that Codock's potential liabilities to future unknown plaintiffs could not be recoverable costs under the Standard Conditions and that nothing was payable under those conditions until Codock accepted legal liability to an individual plaintiff by consenting to judgment in his favour. 286 It was at this point that the Arbitrator noted that Codock no longer contended that it was entitled to a declaration as to an indemnity in respect of its incurring such costs in the future. Codock indicated to the Arbitrator that it would be content with a determination that the costs incurred by it up to the date of its latest statement, which included costs incurred after 31 December 1992, would be sufficient for its purposes as it would "set a precedent which will make any further litigation in the matter unnecessary." Prophetic words indeed! The Arbitrator responded to the foregoing in the following terms (at 159): "Thus, it is strictly unnecessary to deal with the Commonwealth submission as regards costs not yet incurred. However, it seems to me that it does not in any event constitute a barrier to Codock's success. I would be entitled to approach the Codock submissions upon the basis that liability arises as and when an indirect expense is created – i.e. a relevant cost is ' incurred' ." 287 At 166 the Arbitrator determined that it was "quite artificial" to distinguish between overheads which were then being generated by the incurring of Common Law Costs by allocating them as overhead to a pre-1972 trading agreement and thus claiming that they were irrecoverable. In the Arbitrator's opinion they were recoverable as being within the scope of "contract costs". 288 In support of its argument in the arbitration that Common Law Costs were "associated with" or could be "charged to" the 1972 TAL, Codock pointed to what it described as the "practices of the parties". The Arbitrator then dealt with the evidence relating to those practices at 166–189 of his reasons. This included what was referred to in the evidence as the "Ridge claim". That was a case where an ex-employee of Codock sued at common law in the Supreme Court for damages following his contraction of mesothelioma. The jury accepted that his contraction of this disease arose by reason of Codock's negligence in exposing him to asbestos at the Dockyard between 1945 and 1950 and awarded him a substantial amount of money by way of verdict. That verdict was handed down in or about May 1987. A dispute then apparently arose as to whether the verdict amount should be paid by the Commonwealth or, if paid by Codock, whether the Commonwealth should reimburse the amount so paid. 289 Apparently, at least according to the Commonwealth, it agreed to pay not only the Ridge claim, but also three other claims of a like nature that were then on foot against Codock. Two of those were settled prior to 31 December 1992, and the third was settled on 17 March 1993. 290 The Arbitrator concluded his analysis of the relevant evidence (at 190) in the following terms: "In my view it places a quite unacceptable strain upon reality to contend as the Commonwealth does, that the admission of the Ridge claim to normal dockyard overhead was other than an explicit recognition in the commercial dealings between these two parties that Common Law Costs of the same type were to be treated in precisely the same way . Given that Codock had gone to such pains to make it clear that the costs were to be so treated, it would have been the simplest thing in the world for the Commonwealth, as careful negotiators, to distinguish the Ridge claim as a one-off for 1986/87 only! They did no such thing. They explicitly recognised it as normal workers compensation costs. " (First emphasis added, second emphasis in the original) 291 The reference in the above passage to "Common Law Costs of the same type were to be treated in precisely the same way" makes it clear that the Arbitrator, and no doubt the parties, were dealing with such costs as a class. 292 The Arbitrator then concluded this aspect of his reasons in the following terms (at 190–191): "The practices of the parties to which I have referred, satisfy me that the parties accepted that the Common Law Costs for these asbestos-related claims are to be treated as ' associated with ' or ' can be charged to ' the TAL. It follows in my opinion that asbestos-related Common Law Costs may be recovered under the TAL as overheads regardless of whether the costs were incurred before or after 31 December 1992 and regardless of whether the original events which give rise to the claim, so far as they may ever be able to be known with precision – as is the nature of asbestos-related diseases – occurred under earlier Trading Agreements than the 1972 TAL." (Emphasis added.) 293 The issue of Codock's claim for reimbursement of Common Law Costs in respect of claims for damages for asbestos-related diseases after the Dockyard closed on 31 December 1992 was referred to by the Arbitrator (at 193) in the context of its claim for the cost of administering those damages claims. The Arbitrator's conclusion with respect to that head of claim (at 194) was as follows: "In my opinion, those costs were ordinarily part of overhead in the period when the Dockyard was functioning and were clearly recoverable as such. Now, with other activity ceased, yet the administration of such claims going on and likely to do so for some little time yet, those costs stand out starkly. In my opinion they continue to be recoverable as overhead under the TAL and are recoverable as such even though they arise after the expiry of the TAL. The treatment of these costs is relevantly indistinguishable from that to be afforded the Common Law Costs associated with asbestos-related claims ." (Emphasis added.) 294 Further, one of Codock's claims in the arbitration related to what was referred to as "Share Depot Costs", being the costs of removal of a wharf and the timber fender adjacent to it. The Arbitrator noted that the Commonwealth refused to pay those costs but that no submissions had been made on the matter "save only for its apparent reliance on the inability of Codock to recover from it costs otherwise within overhead if they were incurred after the cessation of the TAL." 295 As to that reliance, the Arbitrator said (at 195): "I have already dealt with that general submission. In the circumstances, I am satisfied that the expense is within the category of overhead under the TAL and the fact that the cost was incurred after the expiry of the TAL is not a bar to its recovery." 296 The Arbitrator then found (at 195–196) that Codock was entitled to recover Workers Compensation Costs incurred by it since 31 December 1992 in the sum of $512,719.51 (of which $424,127.55 comprised Common Law Costs) plus 7.5% profit. 297 In my opinion it follows from the foregoing that there was a specific finding by the Arbitrator that Workers Compensation Costs incurred by Codock after 31 December 1992 were recoverable under the 1972 TAL. It also follows that that finding constituted a rejection of so much of par 19 of the Commonwealth's defence as denied pars 26E and 46 of the Points of Claim and so much of par 22 as denied that past and future Common Law Costs were irrecoverable from the Commonwealth as overhead in accordance with the terms of the 1972 TAL after the end of the 1989/90 financial year. (b) The decision of the primary judge 298 The primary judge (at [57] of the first judgment) held that it was essential to the Arbitrator's decision that Codock retained its right of indemnity not withstanding the expiry of the 1972 TAL. He continued by noting that: "A determination that the right of indemnity survived expiry of the agreement under which it was granted was fundamental to the entitlement. A decision the other way must have meant that Codock's claim in the arbitration failed." This might have been a slight overstatement but, certainly, a decision " the other way " would have resulted in the failure of that part of Codock's claim as related to Workers Compensation Costs incurred after 31 December 1992. (c) The Commonwealth's submissions on the appeal 299 On the appeal, the Commonwealth repeated the submissions it had made in respect of the negligence issue. First, it contended that Codock had not pleaded an estoppel specifically based on Issue 3(a) in pars 7 and 8 of the Reply. Second, the Commonwealth argued that it was not the same issue as the costs, the contract and the terms that Codock now alleges are different from those alleged in the arbitration. Third, it was submitted that special circumstances existed within the meaning of Arnold. 300 Fourth, and finally, the Commonwealth contended that the decision of the Arbitrator was not fundamental to the finding that Workers Compensation Costs were recoverable as overhead under the 1972 TAL, regardless of whether they were incurred before or after 31 December 1992, because that was not an element of Codock's cause of action. In addition, it was submitted that the expiration of the 1972 TAL was not an issue in the arbitration as the Commonwealth had neither pleaded nor argued any expiration point in that litigation. 301 The first of the above grounds raises an aspect of the Commonwealth's allegation that it was denied procedural fairness, which I have dealt with in [60] to [66] above. The second I would reject for the reasons I relied upon in rejecting the negligence issue. The third I shall deal with when considering the application of Arnold. The fourth ground, which I shall deal with now, contains some elements with which I agree, and others with which I disagree. (d) The Commonwealth's fourth ground 302 The Commonwealth's fourth ground is wrong insofar as Codock's right to recover the Workers Compensation Costs it had incurred after the expiration of the 1972 TAL on 31 December 1992 was an issue that included costs incurred after that date, and upon which Codock succeeded. The Commonwealth's contention is partly correct only in the sense that neither pars 18,19 or 22 of its defence to the Points of Claim expressly pleaded that costs incurred after 31 December 1992 were irrecoverable because the 1972 TAL had expired. 303 Nevertheless, there is no doubt that the Commonwealth denied (in pars 18 and 19) the allegations in pars 26E and 46 of the Points of Claim that it was obliged to accept into Dockyard Overhead any Workers Compensation Costs incurred from 1 January 1993 onwards. In so doing, it seems to me that the Commonwealth joined issue with Codock on its entitlement to recover such costs incurred from 1 January 1993 onwards. 304 However, it would seem to be correct that the Commonwealth did not expressly argue the expiration point at the arbitration. At 7234–7235 of the transcript of final addresses on 17 May 1995, junior counsel for Codock made the following submission: "One of the things the Commonwealth did not argue, which was canvassed in our opening submissions, was that this is affected by the expiry, by influx (sic) of time of the Trading and Lease Agreement. At one point that seemed to be the basis of some of the objection to costs, particularly costs like excesses which were paid right up to 1972 and have not been paid since. It is not submitted anywhere in the Commonwealth submission, that is, that makes a difference and that has the happy consequence that we had put the argument as an alternative, in case that argument was put we were going to say: Well, we don't accept the termination of the agreement makes a difference but if it does you have to give us a provision, it would be ridiculous if we were left with no cover. That is no longer necessary to deal with because that is an argument that hasn't been made by the Commonwealth. On that basis I don't need to address any submissions to you on the provision argument. You don't need to deal with it in your judgment." 305 This submission was made notwithstanding that in its final written submissions dated 12 May 1995 Codock (at par 23) advanced the following: "Nor is there any basis for the suggestion that even if common law costs incurred prior to 31 December 1992 can be recovered in accordance with the above principle, costs incurred after that date cannot." 306 Nevertheless, the Arbitrator expressly dealt with the issue insofar as he held (at 194) that such costs continued to be recoverable as overhead under the 1972 TAL even though they had been or would be incurred after its expiry on 31 December 1992. Furthermore, it is clear that on the pleadings an essential element in Codock's cause of action was its legal entitlement to recover from the Commonwealth any Workers Compensation Costs incurred by it after that date under the 1972 TAL. The Arbitrator found that it was so entitled. 307 Codock thus submitted that the expiration issue gave rise to an issue estoppel in the strict sense. As I have observed, the establishment of an ongoing contractual entitlement to recover Workers Compensation Costs incurred by it after 1 January 1993 was an element of Codock's claim. That claim was so pleaded in par 26E(b) and 46(b) of the Points of Claim. 308 Moreover, by denying those paragraphs in pars 18 and 19 of its defence, the Commonwealth joined issue on that element of Codock's claim. It was then submitted that the Arbitrator's determination that they were so recoverable created an issue estoppel as his finding was fundamental to Codock's entitlement to recover that class of costs. (e) Conclusion on the expiration issue 309 In my opinion, Codock's submissions should be accepted. The expiration issue, being that the 1972 TAL had expired and that as a consequence Workers Compensation Costs incurred by Codock after 1 January 1993 were irrecoverable, is not precluded merely because the Commonwealth did not specifically plead this point. As Higgins J said in Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537 at 562: "A point or an issue may be actually controverted, may be in actual controversy, in actual litigation, although it is not argued or argued properly. A point may be in controversy although counsel may address no arguments to it, or may overlook certain aspects." 310 The above passage was cited with approval by the High Court in Kuligowski at 386 [61] where the Court noted that the "form of the first proceeding, particularly the issues joined or admitted on any pleadings, will be important." 311 For present purposes, one can accept that Issue 3(a) was not pleaded by the Commonwealth in the arbitration in the express terms in which it was pleaded in pars C16(a), 21 and 24 of the Defence. Further, one can accept that the point was not ultimately argued before the Arbitrator. But the fact remains that the issue was joined by the Commonwealth on Codock's claim to recover the Workers Compensation Costs it incurred after 31 December 1992, and that the claim, being distinctly put in issue by the Commonwealth, had been "solemnly found" or necessarily decided by the Arbitrator against it: Kuligowski at 386 [61], [62]. 312 Unless that issue was determined in favour of Codock, it would have been disentitled from recovering the costs in question. It follows in my opinion that an issue estoppel in the strict sense arose with respect to Codock's entitlement to recover Workers Compensation Costs incurred by it after 1 January 1993 and that the primary judge was correct in holding that the Commonwealth was now precluded from asserting in the Defence that it had no obligation to reimburse such costs because of the expiration of the 1972 TAL on 31 December 1992. The risk issue – Issue 3(h) (a) The origins of the risk issue 313 This issue is raised by par C30 of the Commonwealth's Defence to the Summons, the terms of which I have summarised in [44] above. In the second judgment the primary judge concluded that the Commonwealth was estopped by application of the Anshun extended doctrine of issue estoppel from raising Issue 3(h) in the present proceedings. As his Honour acknowledged (at [20]), this issue was neither pleaded nor otherwise raised by the Commonwealth by way of defence to Codock's claim in the arbitration. However, if it had been and had succeeded, it would have constituted a complete defence to that claim. So much was recognised by the primary judge at [24] of the second judgment and was not challenged by the Commonwealth on the appeal. 314 Neither was there any challenge to the Arbitrator's finding that Codock's entitlement to indemnification for overheads included the cost of workers compensation or common law claims in excess of the insurance recoveries (if any) in respect of those claims. As the Arbitrator noted (at 147), Codock's claim as pleaded in par 41 of the Points of Claim was in respect of compensation payments, medical costs and legal costs resulting from common law claims for asbestos-related injuries "to the extent that these costs are not covered by Codock's insurance". (b) The basis of the Commonwealth's contention with respect to the issue 315 The contractual basis relied upon by the Commonwealth in raising the risk issue in the Defence is sourced in cll 4.41(b)(iv) and 4.42(d) of the Standard Conditions. Under the heading "Insurance", cl 4.41 relevantly provides: "4.41 Premiums, including statutory imposts incurred by the contractor in relation to risks usually insured against in the contractor's industry shall be allowable to the extent they come within the definition of contract cost and … (b) shall not include premiums (or the applicable portion thereof, as appropriate) for insurance: (iv) against risks in respect of which the conditions of the contract provide that the Commonwealth accepts liability for loss or damages. 4.42 Premiums for insurance: … (b) charged by the contractor for risk carried by the contractor (provided any loss is to be borne by the contractor); shall be allowable to the extent they come within the definition of contract cost and are available under par 4.41." 316 The Commonwealth's contentions are as follows. First, cl 4.42(b) provides for insurance premiums charged by the contractor (Codock) for risk to be allowable to the full extent under cl 4.41. Second, such premiums are to be so allowed as they would usually be insured against in the contractor's industry. Third, they were not excluded by cl 4.41(b)(iv) as insurance against risks in respect of which the conditions of the 1972 TAL provided that the Commonwealth accepted liability for loss or damages. Fourth, as the relevant premiums were allowed by the Commonwealth, it must follow that they were premiums for insurance against risks carried or borne by Codock. 317 It was submitted that the rationale for those provisions of the Standard Conditions was that the Commonwealth, as a self-insurer, would not wish to incur the cost of insuring itself but was willing to accept the reasonable costs of the contractor's usual insurance in respect of which the contractor was at risk. As there was no dispute that Codock claimed reimbursement of the relevant premiums (and the Commonwealth was obliged to, and did, reimburse them) it followed, so it was contended, that the parties had agreed or accepted that the premiums so reimbursed were paid by Codock in respect of risks to be borne by it. 318 Accordingly, the Commonwealth now seeks in par C30 of the Defence to rely upon that matter to establish that the 1972 TAL contemplated that Common Law Costs were to Codock's account and the Commonwealth was not obliged, having accepted the relevant premiums into overhead, to also reimburse those costs to the extent to which they were not paid by the relevant insurer. As those costs were not to be taken into overhead, it follows that they were not payable or reimbursable by the Commonwealth. (c) The decision of the primary judge on the issue 319 As the primary judge noted in [19] of the second judgment, Codock was either uninsured or only partially insured with respect to some of the claims brought against it by its ex-employees. As observed in [105] above, Codock's case both before the Arbitrator and in the Summons was that the costs in respect of which Codock was uninsured should be accepted into overhead. Thus I repeat for convenience the observation of the primary judge (at [20]): "It is, I think, clear that Codock's claim in the arbitration, in so far as it related to overhead, included a claim for costs of the relevant kind over and above the amount of indemnity (if any) recovered by Codock from insurers pursuant to relevant policies of insurance. The Commonwealth did not, in its defences to the claim for overheads made against it in the arbitration, raise a defence of the kind now propounded by Issue 3(h)." 320 His Honour then considered in [21]–[23] of the second judgment the relevant principles applicable to what is known as an Anshun estoppel. He continued in these terms (at [24]): "The arbitrator held that Codock's entitlement to be indemnified for overheads included overheads comprised of the cost of workers' compensation claims in excess of insurance recoveries (if any) in respect of those claims. The issue now raised, if successful, would have been a complete answer to that component of Codock's claim in the arbitration . If it were raised in the present proceedings and succeeded, it would result in the establishment of inconsistent rights in respect of the same contractual provisions." (Emphasis added.) 321 Accordingly, his Honour concluded (at [25]) that the Commonwealth was estopped by application of the Henderson or Anshun extended doctrine of issue estoppel from raising Issue 3(h) in its Defence to Codock's claim in the Summons. (d) The Commonwealth's submissions on the appeal 322 The Commonwealth relied upon arguments that were similar to those advanced in respect to the negligence issue. It submitted that the risk issue was not the same as that determined in the arbitration and that it was not fundamental to the Arbitrator's decision. However, these contentions related only to the question of issue estoppel in the strict sense and not to what has been referred to as extended issue estoppel based on Henderson and Anshun. It is clear that those contentions can have no application to the latter type of estoppel. (i) Submissions on Anshun estoppel 323 Consistent with its procedural fairness contentions, the Commonwealth then submitted that the primary judge erred insofar as Anshun estoppel was neither pleaded nor argued before him with respect to this issue. It submitted that neither party led evidence or made submissions relevant to the factors that might have impacted upon the unreasonableness of the Commonwealth in not pleading the risk issue before the Arbitrator. The "no explanation" point, which was that the Commonwealth had not raising that issue by way of defence in the arbitration (referred to by the primary judge in the last sentence of [24] of the second judgment), was, it was asserted, not a matter argued before his Honour. 324 The Commonwealth's assertion that an Anshun estoppel was not pleaded by Codock was, like its submissions with respect to the negligence issue and the expiration issue, based upon pars 7 and 8 of the Reply. For the reasons already referred to with respect to the same submission raised by the Commonwealth on the negligence and expiration issues, that contention should be rejected. 325 As I observed in [61] and [62] above, par 8(b) of the Reply asserts that the plea in par C30 of the Defence is not maintainable by reason of the previous arbitration proceedings. In my view, the only basis upon which it could be asserted by Codock that that plea was "not maintainable" by the Commonwealth was because of the previous arbitration proceedings. It was of particular relevance that the plea that the Workers Compensation Costs were and are "overhead costs", to which it was contractually entitled to be reimbursed, ought to have been raised by the Commonwealth in the arbitration proceedings but was not. Accordingly, only an Anshun estoppel could prevent it being maintained in the Defence. The Commonwealth did not (and could not) suggest otherwise. 326 The Commonwealth sought to answer the foregoing proposition by asserting in its procedural fairness submissions that Codock had never submitted or foreshadowed that it was relying on an Anshun or Henderson extension of an issue estoppel with respect to the risk issue (Issue 3(h)), in either in par 8(b) of the Reply or in argument before the primary judge on the second hearing. 327 The Commonwealth argued that to raise such an estoppel, it was incumbent upon Codock to plead it with particularisation. It was required to allege that the risk issue was relevant to Codock's claim in the arbitration; that it was unreasonable for the Commonwealth not to have raised it by way of defence; and that there were no circumstances which could have justified the Commonwealth in refraining from litigating the issue in the arbitration. 328 This submission was said to find support in the following paragraph in the joint judgment of Gibbs CJ, Mason and Aickin JJ in Anshun at 602–603: "In this situation we would prefer to say that 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 proceedings. 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 be justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings eg expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few." 329 The Commonwealth therefore submitted that it had been denied the opportunity to adduce evidence to show why it failed to raise the risk issue in the arbitration notwithstanding that it had not challenged the primary judge's finding in [24] of the second judgment. That finding was that "[t]he issue now raised, if successful, would have been a complete answer to that component of Codock's claim [the costs of worker's compensation claim in excess of insurance recoveries (if any) in respect of those claims] in the arbitration." 330 That finding of itself (the correctness of which is self evident) would, in my opinion, satisfy the requirement that the Commonwealth's defence based on the risk issue was "so relevant" to Codock's Workers Compensation Costs claim in the arbitration that "it would have been unreasonable" for the Commonwealth not to have relied on it. 331 Nevertheless, the Commonwealth submitted that there were other obvious evidentiary matters that it could have raised to any alleged Anshun estoppel had it been specifically pleaded in the Reply. When challenged to identify such evidence, the Commonwealth replied that it was "not for [it] to bring to the Court of Appeal affidavits of former counsel, solicitors, and public officers dealing with the reasons why decisions in the [arbitration] were made until an Anshun estoppel is properly pleaded and put in issue." 332 As I have already recorded, the Commonwealth submitted that the general terms of par 8(b) of the Reply did not bring to its notice that Codock was asserting an Anshun estoppel with respect to the risk issue, or any other issue. It wished to rely upon an estoppel to specifically assert in the Reply that the issue was not raised and that it was so relevant that it was unreasonable for the Commonwealth not to have raised it and that there were no circumstances which could have justified the Commonwealth's non-reliance upon it. 333 No authority was cited by the Commonwealth to support the above proposition. It found no support in the passage from the joint judgment in Anshun that I have recorded in [328] above. Furthermore, as I have already found, par 8(b) of the Reply could only be understood, insofar as it alleges that by reason of the arbitration proceedings the Commonwealth's plea in par C30 of the Defence was "not maintainable", as asserting an Anshun estoppel with respect to that plea. 334 I have already mentioned that the Commonwealth's request for particulars of par 8(b) was deficient. It submitted that that fact was irrelevant as the assertion of any Anshun estoppel was a matter of pleadings, not particulars. It is probably both. But in the present case it does not matter as Codock's pleading with respect to the risk issue could only be understood as asserting an Anshun estoppel. If that was not obvious to the Commonwealth or otherwise was not so understood by it, it ought to have said so in express terms at the time, either by seeking further or better particulars or moving to strike out par 8(b) of the Reply. It did neither. It cannot now be heard to complain. 335 Finally, I do not accept that it was open to the Commonwealth on the appeal to decline to identify the evidence which it might otherwise have called to establish that it was justified in refraining from raising the risk issue in the arbitration. In any event its justification for not doing so was that an Anshun estoppel had neither been pleaded nor put in issue. In this it was wrong. Accordingly, no procedural unfairness arising out of the Commonwealth's complaints referred to above has been established. 336 The Commonwealth then submitted Codock did not argue for an Anshun estoppel with respect to the risk issue at any stage during the course of the hearing that gave rise to the second judgment. As recorded by his Honour in that judgment at [16], "Codock submits that this was an argument that would have been an answer to significant parts of its claim in the arbitration. It submits that the amount awarded to it by the arbitrator included substantial amounts for which the Commonwealth, if its present construction of the relevant clauses of the 1984 Standard Conditions were correct, would not have been liable. Thus Codock submitted, there was an issue estoppel." 337 I have already expressed the view that pars 7 and 8(b) of the Reply are broad enough to encompass both issue estoppel in the strict sense and Anshun estoppel. Furthermore, as I understand it, it was common ground that Issue 3(h) was not raised by the Commonwealth by way of defence at the arbitration; nor did the Arbitrator determine any such issue. It must, therefore, also have been common ground that issue estoppel in the strict sense simply did not arise with respect to the plea in par C30 of the Defence. 338 Assuming that his Honour accurately recorded Codock's submission in [16] of the second judgment, then apart perhaps from the last sentence, the submission appears to me to be framed in terms of an Anshun estoppel. It may well be that the last sentence of that paragraph was simply a shorthand way of referring to a submission that there was an issue estoppel in the Anshun sense: that is, an extended issue estoppel. 339 As will become apparent those submissions were made in to the context of the relevant principles relating to an Anshun estoppel which had been set out in some detail by the primary judge in the first judgment: see at [122]–[124]; [149]–[165]. Thus, at 61 of the transcript of argument of 27 July 2004 in the first hearing before the primary judge, Codock's counsel raised what he referred to as "a Henderson type extension" with respect to the "other points" he had previously addressed and which, had they been established by the Commonwealth in the arbitration, would have been an answer to Codock's claim. Because they had not been pleaded in the arbitration there was, he said, "no issue estoppel in the strict sense". 340 At 58 of the same transcript, Codock's counsel referred to "the specific issues, subject of the Agreed Statement of Issues". He then expressly referred to the expiration issue ("the post 1992 point"), submitting that it raised an issue estoppel in the strict sense "to use the phrase from Anshun" as it was "essential to the determination [by the Arbitrator] of the case in our favour". At 60, counsel referred to the "negligence point" which he submitted had been "explicitly raised and was rejected" by the Arbitrator. Accordingly, it was in the foregoing context that counsel for Codock then addressed the "other points" in terms of a "Henderson type extension". 341 In my opinion, it is apparent from the foregoing that Codock did raise the negligence issue and the expiration issue as giving rise to issue estoppel in the strict sense in the first hearing before the primary judge and that "other points" were also referred to as giving rise to an issue estoppel in the extended Henderson or Anshun sense. That was the way the case was conducted and explains the primary judge's determination of Issues 3(a) and (g) in [57] and [62] of the first judgment. (ii) Codock's Outline of Submissions on Preliminary Issues 342 When the penultimate version of the Statement of Issues (to which I have referred in [50(a)] above) was handed up to the primary judge by counsel on 23 July 2004, Codock also presented his Honour with a document entitled "PLAINTIFF'S OUTLINE OF SUBMISSIONS ON PRELIMINARY ISSUES" dated 23 July 2004. That document addressed parts of the Statement of Issues, and made reference (in par 11) to the Arbitrator's finding to which I have referred in [290] above, it being contended (in par 12) that it was a "key finding" upon which Codock founded the issue estoppel in the present case. It was asserted that that finding was the basis for the Arbitrator's award that Codock be reimbursed with respect to the Workers Compensation Costs incurred by it both before and after 31 December 1992. 343 Under the heading "Codock's Claim in these Proceedings", Codock submitted to the primary judge (at par 13) that the basis upon which it sought entitlement to the amount claimed in the Summons was identical to its successful claim for the recovery of Worker's Compensation Costs in the arbitration "at least insofar as the Arbitrator's Award extended to Workers Compensation Costs which were incurred by Codock after the expiry of the TAL on 31 December 1992. The claims in these proceedings arise upon the same construction of the contractual documents as underpin the Arbitrator's Award." 344 Under the heading "Analogous Authorities", Codock referred (in par 15) to Humphries v Humphries [1910] 2 KB 531 (affirmed by the Court of Appeal in [1910] 1 KB 796), and noted that that decision was referred to by the High Court in Anshun at 601. In particular, Codock cited the proposition that a defendant could not raise a plea which was inconsistent with a traversable allegation in the prior litigation. Accordingly, it was submitted (in par 18) that there was no "relevant distinction" between Codock's claim for reimbursement of the Workers Compensation Costs which were the subject of the Summons and the claim for such costs that was the subject of the Arbitrator's award. 345 Under the heading of "The Scope of the Issue Estoppel", it was asserted (at par 20) that the Commonwealth was issue estopped from raising the defences set out in Issues 3(a), (b) and (d). It was contended that if any of those defences were upheld the court would necessarily find that that the Commonwealth was not obliged to reimburse Codock for the Workers Compensation Costs the subject of the Summons, and that such a finding would directly contradict the Arbitrator's award. Indeed, so it was contended, the very arguments raised by the Commonwealth in Issues 3(a), (b) and (d) were considered by the Arbitrator and rejected by him. 346 With respect to Issue (g), it was submitted (at par 23) that the Commonwealth's defence as set out in that issue rested on an interpretation of cl 3.11 of the Standard Conditions. The interpretation contended for by the Commonwealth (that is, that cl 3.11 applied to the underlying conduct of Codock which gave rise to the asbestos related common law claims of its ex-employees) was capable of being (and was in fact) raised as an answer to Codock's claims for reimbursement of Workers Compensation Costs in the arbitration. It was then submitted that the Arbitrator's award "necessarily, and expressly, involved a rejection of that construction. Accordingly, that contention is also the subject of an issue estoppel." 347 In par 24 it was noted that, consistent with the Arbitrator's decision, Codock accepted that if there were particular litigation costs which, through the exercise of skill, care and efficiency, would not have been incurred, the Commonwealth was not estopped from disputing liability for those costs on that basis. However, this was not the ground of dispute to which Issue 3(g) was directed. I interpolate that it is clear from these last-mentioned submissions that Codock, with respect to Issues 3(a) and (g), was contending that the relevant issue estoppel arose with respect to Workers Compensation Costs as a class. 348 It is also apparent that this was the basis upon which it was submitted to the primary judge that an issue estoppel arose relevantly in respect to Issues 3(a) and (g) and, further, that this was the basis upon which Codock sought to uphold his Honour's finding in its favour with respect to that issue on the appeal. In fact, in its additional written submissions dated 26 June 2006 on the procedural fairness issue, the Commonwealth accepted that before the primary judge Codock contended that the Arbitrator's award decided that Workers Compensation Costs as a class, were recoverable under the 1972 TAL. It was also accepted that, as a consequence, the Commonwealth's defences which denied the recovery of such costs as a class were barred by issue estoppel in the strict sense as those defences were put in issue at the arbitration. (iii) Codock's written submissions to the primary judge 349 Issue 3(h) was also the subject of Codock's written submissions of 23 July 2004 to the primary judge. Paragraphs 21 and 22 of those submissions were in the following terms: "21. Codock submits that the Commonwealth's contention at Issue 3(k) is governed by the same reasoning, as extended by Humphries v Humphries . If the Commonwealth contention is correct, the Arbitrator would have been wrong to award, as he did, full reimbursement to Codock for workers compensation costs (or any other overheads). The contention which is made in Issue 3(k) is thus inconsistent with Codock's claim in the arbitration. Although Codock's claim for reimbursement of overheads was not traversed in this manner by the Commonwealth before the Arbitrator, it was plainly traversable as such. Accordingly, Issue 3(k) is not now available to the Commonwealth. 22. Codock submits the same considerations apply to Issue 3(h), as with 3(k). The defence set out in Issue 3(h) would have been an answer to Codock's claim for reimbursement of at least some of the workers compensation costs which were the subject of the Arbitrator's award." 350 In my opinion, it follows from the foregoing that at the first hearing Codock contended that the Commonwealth was issue estopped, in the extended Anshun sense, from raising the defences set out in Issues 3(a) and (g), which were dealt with in the first judgment, as well as those in 3(h), which were dealt with in the second judgment. (iv) Consent orders on the risk issue 351 The risk issue was the subject of consent orders made on 22 October 2004 that, having regard to his Honour's first judgment, there be a further hearing as to whether "such issue estoppel" extended to, inter alia, Issue 3(h). Although the Commonwealth complains that during the second hearing no mention was made of Anshun or Henderson, for reasons already canvassed, the risk issue could only have been decided by his Honour on the basis of an issue estoppel in the extended Anshun or Henderson sense. 352 The question of a further preliminary hearing to determine whether the Commonwealth was estopped in asserting defences other than those encapsulated in Issues 3(a) and (g), was canvassed at a further hearing before the primary judge on 14 October 2004. Argument then took place as to the appropriate form of order to be made following the first judgment. After discussions between counsel, Codock requested that his Honour fix a date for the hearing of an application for a preliminary determination of issue estoppel with respect to the "disputed sub-issues of Issue 3". 353 The Commonwealth submitted that if such a course was to be taken it would inevitably involve an amendment to the Reply to identify the precise issue estoppel that Codock asserted as precluding the Commonwealth from pleading the defences set forth in the Issue 3 sub-issues. His Honour then commented that par 8 of the Reply "says specifically what it is in Codock's view of the world the Commonwealth is estopped from denying." 354 At the end of the day his Honour indicated that he would not force a hearing on further preliminary questions upon the parties without their agreement. However, as I have already noted in [351], consent orders were eventually made for such a hearing in respect of a number of the sub-issues of Issue 3 including 3(h). (v) Further written submissions on the risk issue before the primary judge 355 Paragraph 7 of Codock's written submissions at the second hearing asserted that the Commonwealth's argument with respect to Issue 3(h) was not easy to discern but appeared to be that "(a) some insurance premiums were accepted into overheads; (b) such acceptance means the Commonwealth had accepted liability for the relevant liabilities for the purposes of clause 4.4.1(b)(ii) or (iv) of the Standard Conditions; (c) therefore costs going beyond those insurance premiums (such as costs now being incurred) are excluded by clause 4.41(b) of the Standard Conditions." 356 Paragraph 8 of the written submissions then asserted that if that argument was correct, it would mean that no claim could be sustained for any of the costs claimed in the Summons or indeed for any asbestos related costs. It was then submitted that the argument would have been a complete defence to the claim before the Arbitrator. 357 The Commonwealth's written submissions in reply asserted (at par 24) that it was plainly not possible for Codock to establish that the Commonwealth maintained before the Arbitrator that the effect of the provisions of the Standard Conditions referred to in [355] above was to preclude reimbursement of some costs; or that the effect of those provisions was an issue in the arbitration; or that the Arbitrator made any determination with respect thereto. Accordingly, it was submitted that there was no relevant estoppel. (vi) Oral pleadings on the risk issue before the primary judge 358 The second hearing took place before the primary judge on 16 December 2004. During the course of oral argument with respect to Issue 3(h), and after referring to the relevant provisions of the Standard Conditions relied upon by the Commonwealth in par C30 of the Defence, Codock submitted that the Arbitrator's finding in Codock's favour that the relevant costs were recoverable necessarily involved, as a fundamental matter, a finding that there was no other provision in the Standard Conditions which included such costs. Accordingly, there was an issue estoppel. This would appear to be the language of issue estoppel in the strict sense. 359 However, the transcript of argument reveals that Codock then submitted that the particular contention encapsulated in Issue 3(h) was not advanced by the Commonwealth before the Arbitrator but that there was "absolutely no reason why it should not have been. It would have been a complete answer to the claim if it were correct … All the Commonwealth can point to is that this matter was not debated [before the Arbitrator] while other matters were fully debated. But, the reason it was not debated is because it was not raised by the Commonwealth. There is no reason why that was not done. If this argument was considered to have legs, then it would have been worth raising." 360 The Commonwealth submitted orally that there was no issue estoppel which operated with respect to, inter alia, Issue 3(h). As I understand the submission, it was again asserted that Codock had not specifically pleaded issue estoppel in the Reply with respect to that issue. Reference was then made to the expiration and negligence issues and the fact that they involved questions of construction. After referring to [68] of the first judgment, which I have recorded in [114] above, the Commonwealth submitted that Codock had not pleaded "any particular estoppel in the form of the one they seek to maintain today". 361 The submission continued: "The reason we say why no particular estoppel is pleaded, is because it would be quite clearly able to be demonstrated that a finding in that form was not made by the Arbitrator – he did not make a finding – on the first basis he never found anything about the future costs, because they were expressly abandoned – but, in terms of cross-claims and I accept my friend is now not pressing it – but in terms of 4.4(2) of the Standard Conditions –." 362 The following exchange then took place: "His Honour: A fundamental test, is it not, is whether a determination of the issues propounded by Codock and you, would, if your argument succeeded, be inconsistent with the relevant determination of the Arbitrator? Taylor: No His Honour: Why is it not inconsistent, but (sic) lies at the heart of the issue of estoppel? Taylor: We say it has to be necessarily inconsistent and that is significant because – His Honour: Accepting that qualification, we are ad idem are we? Taylor: Yes, subject to one matter [not presently relevant]." 363 The Commonwealth's submission then continued to the effect that the four issues the subject of the hearing, which included Issue 3(h), had not been raised before the Arbitrator and were not the subject of an express finding by him. After referring to the decision in Humphries, the Commonwealth reiterated its submission that as the provisions of the Standard Conditions which were the foundation of Issue 3(h) had not been raised before the Arbitrator, the issue could not give rise to an issue estoppel. However, in response to this argument, his Honour said: "Yes, that is why again inconsistency remains the touchstone. Only to act inconsistently to what I said, you would say that that applies to an extended estoppel as opposed to the classic estoppel?" 364 After further submissions relating to questions of pleading, the Commonwealth submitted that, in effect, Issue 3(h) was not the subject of any pleading by either party before the Arbitrator and, therefore, "we say, if it may be that there was a particular defence available to some cost before the arbitrator, but a party did not seek to plead it in respect of that cost, but it never got ventilated as an answer in the arbitration, then it is not an issue that was before him." 365 In response, the primary judge suggested that if the Arbitrator awarded costs in respect of risks that were insured against, and in respect of which the Commonwealth had reimbursed Codock's premium costs, as part of Codock's claim upon which it succeeded, then leaving aside that they were different claims in different years "it is an issue of general defence to a traversable allegation. It is like the pre-post December 31 issue. But, how in principle does it differ from that?" 366 The Commonwealth's response was that that matter had not been pleaded and as the Arbitrator made no findings about it, then it could not bind a future judgment about other costs. The following exchange then took place: "Taylor: … There may be a defence [to a claim of $450 or $900], and is the defendant obliged to run every possible construction point of the TAL in answer to a particular cost, not because it is of any commercial value in those proceedings, but if, down the track, more costs are sought by the parties, that if it does it the first time, it cannot do it again? We say it is entitled to make a decision as to whether it runs those defences that it had pleaded to maintain, or not. His Honour: But, that is the effect of the decision in Humphries and it is the principle underlying Henderson v Henderson and, indeed, Anshun . It is coming back to the defences of traversable allegations. Taylor: Is your Honour saying that we are obliged to run that, or is it a question whether in circumstances it is reasonable for us to maintain it – His Honour: 'Reasonable' is the question." (vii) Did the primary judge err in respect to the risk issue? 367 In my opinion, as his Honour clearly recognised, Mr Taylor's language in the first part of the above exchange was plainly redolent of what was said in the joint judgment in Anshun at the top of 603. It is clear, in my opinion, that the Commonwealth was fully aware that what was being maintained in respect of Issue 3(h) was a Henderson or Anshun extended issue estoppel. 368 Examining the transcript of the argument I have been unable to find any evidence that Mr Taylor submitted to his Honour that it was not open to his Honour to determine Issue 3(h) upon the basis of a Henderson or Anshun extended issue estoppel because the Commonwealth was caught by surprise and had not had the opportunity of putting on evidence to establish that it was not unreasonable for it not to have raised Issue 3(h) by way of defence to Codock's claim in the arbitration. Nor was any part of the transcript on this point referred to by the Commonwealth in its written submissions in the appeal. Accordingly, in my opinion, the Commonwealth has not established that it was denied procedural fairness by the primary judge when he determined that the Commonwealth was estopped from raising Issue 3(h) in its defence to Codock's claim in the Summons. 369 The procedural fairness point notwithstanding, the Commonwealth maintained before this Court that in undertaking the balancing exercise in respect of all "relevant factors" when considering the application of the extended doctrine of issue estoppel to Issue 3(h), the primary judge had failed to acknowledge the expense, importance and "other reasons" why the Commonwealth did not plead the risk issue in the arbitration. 370 It was also contended that, in particular, the primary judge failed to consider that during closing oral submissions in the arbitration, Codock abandoned any relief in respect of future Workers Compensation Costs such as a declaration or an order that provision be made for such costs incurred in the future. The Commonwealth submitted that Codock's claim in the arbitration for those costs was thereby reduced "from something like $15 million to a level involving a relatively small sum in a very complex arbitration involving other claims of tens of millions of dollars." 371 I am prepared to accept that the arbitration was complex. However, the fact that Codock reduced its claim to Workers Compensation Costs that it had actually incurred up to the date of the interim award in December 2005, did not prevent the Arbitrator devoting some 51 pages of his reasons to that issue: see 145–196. During the course of dealing with that issue he also dealt with a significant number of points raised by the Commonwealth for the purpose of resisting Codock's claim for those costs. 372 Although the Commonwealth suggested that the primary judge had not given any reasons as to why, in [24] of the second judgment, he regarded this part of Codock's overhead claim in the arbitration as being of "significance", the obvious answer is that to which I have referred, namely, that it was clearly so considered by the Arbitrator in terms of the extent to which his reasons were devoted to the issue and, in particular, to the significant number of defences raised by the Commonwealth to resist that claim. In any event, as I have noted in [296] above, the Arbitrator awarded Codock the sum of $512,719 plus 7.5% profit with respect to this part of its claim, a not insignificant amount. 373 The Commonwealth also submitted that an Anshun estoppel involved more accurately an extended doctrine of res judicata, or cause of action estoppel, rather than an extension of issue estoppel. His Honour recognised this in [123] of the first judgment. However, I do not see how the question of classification can be relevant to the present issue. 374 Finally, the Commonwealth submitted that his Honour, having recognised in the first judgment at [163] that Anshun estoppel applied where otherwise the bringing of the second action would result in a judgment in conflict with an earlier judgment (a principle that his Honour recognised in [23(4)] and [24(5)] in the second judgment), nevertheless there could be no question of inconsistent judgments in the present case. 375 The relevance of conflicting judgments was referred to in the joint judgment in Anshun at 603–604 in the following terms: "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. … The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgments is obviously an important factor to be taken into account in deciding whether the omission to plead can found an estoppel against the assertion of the same matter as a foundation for a cause of action in a second proceeding. By 'conflicting' judgments we include judgments which are contradictory, though they may not be pronounced on the same cause of action. It is enough that they appear to declare rights which are inconsistent in respect of the same transaction." 376 At [163] of the first judgment, where his Honour dealt with a claim by the Commonwealth for an Anshun estoppel against Codock, the claim failed for the reason, amongst others, that no question of inconsistency could arise in respect of the issue in question as it was not a common issue to both sets of proceedings but was "discreet or unique". 377 The issue to which [163] of the first judgment related was a claim by the Commonwealth that Codock was barred from reimbursement of ongoing Workers Compensation Costs by reason of an Anshun estoppel (Question 7 referred to in the Statement of Issues as Issue 7). The issue so raised was based upon the Commonwealth's submission that although Codock had made a claim for relief in respect of expenses incurred after 31 December 1992, that claim was not "dealt with" by the Arbitrator in his interim award of 8 December 1995 and, therefore, fell within cl 1 of his final award and had been dismissed. Alternatively, had the claim not fallen within cl 1 of the final award, nonetheless there would have been an issue estoppel of the extended kind recognised by the High Court in Anshun. 378 However, the claim in respect of which this estoppel was said to have arisen related to Workers Compensation Costs which Codock had not yet incurred at the time of the award. Its claim was for a declaration in respect of the Commonwealth's liability to pay those costs in the future which had been withdrawn by the time of final addresses before the Arbitrator. There had, however, been no withdrawal by Codock of its claim for reimbursement of such costs incurred after 31 December 1992 up to the time of the award. 379 Of greater significance, however, is the fact that Issue 7 was based on par C23 of the Defence to the Summons which provided as follows: "In further answer to [Codock's] Contentions the [Commonwealth] says: (a) [Codock's] claim for reimbursement for personal injury costs incurred from October 1995 was put forward by [Codock] for determination in the previous arbitration proceedings between the parties; (b) [Codock] by its counsel abandoned the claim during the final submissions in the previous arbitration proceedings; (b1) the claim was dismissed by the arbitrator and the final award of the arbitrator dated 15 May 1997; (c) in the circumstances [Codock] is estopped from claiming in these proceedings reimbursement for personal injury claim costs incurred from October 1995 onwards on the basis of Anshun principles." 380 In my opinion, the defence in par C23 is significantly different from those raised by the Commonwealth in pars C21 and C24 (the expiration defence), par C29 (the negligence defence) and par C30 (the risk defence). Each of those defences constituted, first, a denial of any liability on the part of the Commonwealth in respect of any Workers Compensation Costs incurred after 31 December 1992 (pars C21 and 24). Second, they amounted to a denial of any costs claimed by Codock arising out of its failure to exercise appropriate standards of skill and care in not providing a safe system of work (par C29). Finally, the defences were also a denial of any loss arising from personal injury claims in respect of which Codock was insured and had claimed reimbursement of the insurance premiums paid in respect of that insurance (par C30). 381 In other words, each of the defences raised in the nominated paragraphs would, if established, constitute a complete defence to Codock's present claim to reimbursement as "overhead" of Workers Compensation Costs incurred by Codock as a class. This would result in a judgment in favour of the Commonwealth, which would be in direct conflict with the Arbitrator's decision that those costs were recoverable as a class. 382 That being so, a judgment upholding any one of the defences referred to would, at the very least, appear to declare a right in respect of the same transaction, being Codock's right to reimbursement of Workers Compensation Costs (considered as a class) under the 1972 TAL. Such a judgment would contradict the Arbitrator's judgment even though not pronounced in the same cause of action in the narrow sense that the particular costs claimed are different although the legal basis for the claim is the same. I would therefore reject the Commonwealth's argument that to allow the subject defences would not, if they or any of them succeeded, result in inconsistent judgments. (e) Is the Commonwealth defence based on the risk issue arguable on its merits? 383 Codock submitted that irrespective of any question of an Anshun estoppel, the Commonwealth's reliance upon the risk issue was hopeless as a consequence whereof leave to appeal against his Honour's decision with respect thereto should be revoked. In this respect, it is to be noted that although this Court granted lave to appeal on 24 October 2005, the judgment of Mason P of that date expressly reserved to the Court hearing the appeal the right to decide, on fuller consideration, that all or any of the matters in respect of which leave was granted were "not appropriate to be addressed". The three matters in question related to the negligence issue, the expiration issue and the risk issue. 384 Although it was not directly the subject of an order under Pt 31 r2 of the Rules, the primary judge nevertheless gave consideration to this aspect of the matter when dealing with the Commonwealth's submission based on the decision of the House of Lords in Arnold that the Court had a discretion to decline to apply not only the doctrine of issue estoppel in its strict sense but also the Anshun extended doctrine if there be "special circumstances". Codock submitted to his Honour that one of the matters which it would be appropriate to have regard to if the Arnold discretion was to be applied, was the strength of the suggested defence. In response to this submission, his Honour said (at [27]): "Given the view to which I have come, I do not think that it is necessary for me to discuss this at length. It is sufficient to say that I find it very difficult to see how, on an application of the ordinary principles of construction to the contractual provisions on which the Commonwealth relies, one could reach the conclusion for which it contends, and which is summarised in Issue 3(h)." 385 The basis of Codock's submission in this regard was that it was either uninsured or only partially insured in respect of some of the claims for damages brought against it by its ex-employees in respect of asbestos-related injuries. So much was recognised by his Honour in [2] of the first judgment and [19] of the second. 386 Accordingly, Codock's claim both before the Arbitrator and in the Summons was only in respect of Workers Compensation Costs incurred by it in respect of which it was either uninsured or inadequately insured. It therefore followed that it was not claiming reimbursement from the Commonwealth of such costs as were covered by insurance arising from asbestos related personal injury claims by its ex-employees which had already been met by the relevant insurer and in respect of which the Commonwealth had reimbursed Codock the cost of the relevant insurance premiums as "overhead" under the 1972 TAL. 387 The risk issue was pleaded by the Commonwealth in par C30 of the Defence in the following terms: "In further answer to the Plaintiff's Contentions the Defendant says: (a) the only insurance premiums subject to reimbursement under the 1972 Trading Agreement as varied were those in relation to risk carried by the Plaintiff, where loss was to be borne by the Plaintiff; (b) the Plaintiff claimed reimbursement of premiums paid for insurance against personal injury claims as 'overhead' under the 1972 Trading Agreement as varied; (c) the Defendant reimbursed the Plaintiff the cost of insurance premiums paid for insurance against personal injury claims as 'overhead' under the 1972 Trading Agreement as varied Particulars Sub-paragraph 4.41(b)(iv) and 4.42(b) of the 1984 Standard Conditions (d) in the premises, the loss arising from personal injury claims was agreed between the Plaintiff and the Defendant to be borne by the Plaintiff." 388 No particulars were given of the asserted agreement in par C30(d). It was, as I understand it, said to arise out of cll 4.41(b)(iv) and 4.42(b) of the Standard Conditions which I have set out in [43] above. The latter provision provided for premiums for insurance charged by the contractor for risk carried by it to be allowable to the extent that they came within the definition of "contract cost" and were otherwise allowable under cl 4.41. 389 As to this provision, reliance was placed on cl 4.41(b)(iv) which excluded from "contract cost" premiums for insurance against risks in respect of which the conditions of the contract provided that the Commonwealth accepted liability for loss or damages. It was not suggested that there were conditions in the 1972 TAL that provided so. Nevertheless, the Commonwealth's submission was that the rationale for cll 4.41 and 4.42 was that the Commonwealth as a self insurer did not wish to incur the cost of insuring itself although it was willing to accept the reasonable costs of Codock's usual insurance where it bore the risk. 390 The rationale referred to, however, was given effect by the fact that in the arbitration Codock did not and had not in the Summons, sought reimbursement from the Commonwealth of Workers Compensation Costs which had been met by Codock's insurers pursuant to policies the premiums for which were otherwise allowable under the clauses of the Standard Conditions referred to. On the contrary, in respect to the incurring of the Workers Compensation Costs which Codock claimed reimbursement for in the arbitration and claims in the Summons, were costs in respect of which no insurance cover existed and, therefore, no insurance premiums were claimed or allowed as part of "contract cost". 391 There being no other basis advanced by the Commonwealth in support of the risk issue, there is much to be said for the view that the Commonwealth's reliance upon the plea raised in par C30 of the Defence to the Summons has little merit. However, it is unnecessary and inappropriate to form a final view on the merit of the defence as it was not directly in issue in the second hearing. I would therefore decline to accede to Codock's submission that leave to appeal in respect of the risk issue should be revoked. Issue estoppel and cll 3 and 4 of the Deed of Settlement – Issue 2 392 Issue 2 relates to whether Codock was precluded from relying upon any issue estoppel by reason of cll 3 and 4 of the Deed of Settlement. Clause 3 of the Deed of Settlement provided that the Commonwealth and Codock release each other in respect of specified claims. Each release was expressed to be subject to cl 4 and Codock's release was also subject to cl 2. Relevantly, cl 3 provided as follows: "3.1 Subject to Clause 4, the Commonwealth hereby releases Codock from all claims and liabilities of any nature (including Legal Costs) , the subject of, or connected with, or associated with the subject matter of: (a) the Arbitration; … 3.2 Subject to clauses 2 and 4, Codock releases the Commonwealth from all claims and liabilities of any nature (including Legal costs), the subject of, or connect with, or associated with the subject matter of: (a) the Arbitration; …" 393 Clause 4 limited the operation of cl 3 by relevantly providing as follows: " 4 LIMITATION ON RELEASES The provisions of this Deed shall not operate so as to extinguish or limit: … (b) any claims Codock may have under the Trading Agreements for reimbursement of expenses incurred by Codock as a result of any Personal Injury Claim; or (c) any defence available to the Commonwealth in relation to any claim by Codock. " 394 The primary judge recorded at [92] of the first judgment that the Commonwealth submitted that the release given by cl 3.2 extended to Codock's issue estoppel case. Codock responded by submitting that issue estoppel was not advanced as a contention in the Summons but in reply to the Commonwealth's defence. The latter nonetheless submitted that issue estoppel was a claim or liability "the subject of, or connected with, or associated with the subject matter of … the Arbitration". 395 Codock responded by submitting that in any event cl 3.2 did not operate to extinguish or limit its claims in the Summons which were preserved by cl 4(b). In rejoinder, the Commonwealth asserted that the effect of cl 4(c) was to preserve "any defence available to the Commonwealth in relation to" such claims. Accordingly, the Commonwealth was free to raise by way of defence to a claim brought by Codock under cl 4(b) a matter that had been considered and decided in Codock's favour by the Arbitrator notwithstanding that that decision might have given rise to an issue estoppel with respect to that matter. 396 The primary judge held (at [102]) that to the extent that the doctrine of issue estoppel applied to a matter, the Commonwealth was prevented from raising that matter in defence to Codock's claim in the Summons. As a matter of language, cl 3.2 could not support the Commonwealth's argument as it was subject to cl 4(b). Once it was shown that a claim by Codock was within cl 4(b), cl 3.2 ceased to have any operative effect. That was so not only where the claim was established by proof in the conventional sense but also where it was established by the operation of the doctrine of issue estoppel. 397 His Honour then proceeded to deal with the Commonwealth's submissions in the following terms: "103 Codock's release under cl 3.2 is subject to cl 4. Clause 4 establishes that cl 3.2 does not extinguish or limit Codock's claims of the relevant kind for reimbursement. Where the establishment of that claim involves the establishment of a condition that has been determined by the arbitrator, then (subject to the point that I consider next) application of the doctrine of issue estoppel binds Codock and the Commonwealth to that determination. Clause 4(d) has nothing to say about the impact, on the Commonwealth's position, of that doctrine. But it does not follow from this that the claim is one that (apart from the saving reference to cl 4) would fall within cl 3.2. 104 Nor do I think that the effect of cl 4(d) is, as the Commonwealth submits, to overcome the doctrine of issue estoppel if that doctrine is applicable. Clause 4(d) preserves from the operation of "[t]he provisions of this Deed" any defence that is "available to the Commonwealth". Where the Commonwealth is bound by the doctrine of issue estoppel, the consequence is that it cannot raise the matter that is the subject of the estoppel. That matter is not "available" to it. The provisions of cl 4(d) have no application unless the defence is "available". 105 Further, the saving effect of cl 4 is only in relation to "[t]he provisions of this Deed". It means that nothing in the Deed takes away a defence that is otherwise available. The doctrine of issue estoppel applies (to the extent that it does) as a result of the arbitrator's award, not as a result of the operation of any provision of the Deed. 106 I therefore conclude that cll 3 and 4 of the Deed do not prevent Codock from relying on its reply of issue estoppel, and do not preserve to the Commonwealth any defence that, apart from the operation of the Deed, it would be estopped from raising." 398 The Commonwealth submitted that the primary judge erred in failing to find that Codock's assertion of an issue estoppel (a) was not within cl 3.2 of the Deed; or (b) was or was part of a claim under the Trading Agreements (as defined in the Deed), Accordingly, his judgment was not properly dispositive of the Commonwealth's submissions. 399 Technically, the Commonwealth's submission is correct. His Honour found that cl 3.2 had no operation because, firstly, cl 4(b) preserved Codock's claim for reimbursement of the relevant costs and, secondly, the defences upon which the Commonwealth relied were not "available" to it as it was estopped from asserting them. However, in my view Codock was correct when it submitted that cl 3.2 of the Deed only released the Commonwealth from "claims and liabilities of any nature … the subject of, or connected with, or associated with the subject matter of" the proceedings resolved by the Deed and did not extend to its reply to the Commonwealth's defences based on estoppel. 400 In its context the "claims and liabilities" referred to in cl 3.2 were constituted by entitlements, alleged or actual, of Codock for payment of money by, or other relief, from the Commonwealth. Furthermore, the issue estoppels contended for by Codock could not give rise to any "claim" or "liability" of this kind. Whether or not issue estoppel was a rule of law or a rule of evidence, its effect was to restrict a party from asserting either a claim or a defence. Of itself, it could not give rise to any claim or liability. Thus in the Summons, Codock's claims are ones for payment of money under the 1972 TAL. 401 The Commonwealth pleads certain defences to those claims which, Codock alleges in the Reply, are not maintainable because the Commonwealth is estopped from asserting them. Accordingly, I would reject the Commonwealth's submission that Codock's claims for reimbursement in the Summons are based upon issue estoppel and, therefore, precluded by cl 3.2 subject only to cl 4. On the contrary, its claims are based upon an alleged right of Codock and a corresponding liability of the Commonwealth arising under the 1972 TAL. It follows that if Codock is otherwise entitled to advance its claims in the Summons, cl 3.2 does not preclude it from resisting the Commonwealth's defences to those claims upon the basis asserted in pars 7 and 8 of the Reply. 402 It therefore followed, so Codock submitted, that cl 4 was irrelevant as cl 3.2 did not prevent it from resisting a number of the Commonwealth's defences upon the basis that it was estopped from asserting them. In other words, if cl 3.2 had no relevant extinguishing or limiting effect, there was nothing to trigger cl 4. 403 I am not prepared to accede to this last submission. It seems to me that cl 4 had an operation which was independent of cl 3. Certainly, the release in cl 3.2 was subject to cl 4. As I have indicated, I agree with Codock's submission that that of itself it did not prevent Codock from raising an issue estoppel by way of reply to the Commonwealth's defences. But it does not follow that cl 4 had no relevance to the present issue. In my opinion it did. 404 It was common ground that the effect of cl 4(b) was to preserve any claims Codock might have under 1972 TAL for reimbursement of the Workers Compensation Costs it incurred. But cl 4(c) also preserved any defence available to the Commonwealth in relation to any such claims. The question, therefore, is whether cl 4(c) prevented Codock from asserting that any of the defences which the Commonwealth pleaded in answer to Codock's claims in the Summons were not "available" to it because the Commonwealth was estopped from asserting them. His Honour answered this question in the negative. 405 The Commonwealth submitted that cl 4(c) was intended to preserve any Commonwealth defence and that this intention would be frustrated if it was estopped from doing so. It was further submitted that the purpose manifested by cl 3 of the Deed was to wholly terminate the impact of the arbitration which, so it was submitted, included any issue or other estoppel. 406 In my opinion the Commonwealth's submissions purported to give a wider operation to cl 3.2 than the parties intended or its language permitted. The release in cl 3.2 was of "all claims and liabilities of any nature … the subject of, or connected with, or associated with the subject matter of " the arbitration. In my opinion, cl 3.2 only released all claims by Codock upon the Commonwealth and all liabilities of the Commonwealth to Codock which were connected with the arbitration. 407 As I have already observed and noted in [400] above, there was nothing in cl 3.2 which purported to release the Commonwealth from the effect that any decision of the Arbitrator might have in terms of giving rise to an issue estoppel. Any such estoppel only arose as a consequence of the Commonwealth seeking to plead defences to the Summons which it unsuccessfully raised, or should have reasonably raised, in the arbitration. In my opinion, cl 3.2 is silent as to that situation. I would therefore not accept the Commonwealth's submission that the effect of cl 4(b) is that it "purportedly resurrects the effect of issue estoppel in the Arbitration". The only provision in the Deed that has any bearing upon Codock's right to raise an issue estoppel is cl 4(c) insofar as it preserves to the Commonwealth the right to raise any defence "available" to it in relation to a claim made by Codock pursuant to cl 4(b). 408 However, I agree with the primary judge (at [104] of the first judgment) that cl 4(c) only preserved from the operation of the provisions of cl 3.2 any defence that was "available to the Commonwealth". Where the Commonwealth is disentitled from maintaining a defence by virtue of the operation of an issue estoppel or, for that matter, an Anshun estoppel, it must follow that that defence was not "available" to the Commonwealth within the meaning of cl 4(c). I would therefore reject the Commonwealth's challenge to his Honour's negative answer to Issue 2. Recovery of a fee under cll 3 and 4 of the Deed of Settlement – Issue 8 409 The next issue which must be addressed is whether Codock is estopped from recovering a 7.5% fee by reasons of cll 3 and 4 of the Deed of Settlement. The answer to this question turns on the meaning of the words "to extinguish or limit" in the chapeau of cl 4 of the Deed. As I have indicated, it was common ground that cl 4(b) of the Deed preserved any claim Codock might have under the 1972 TAL for reimbursement of Workers Compensation Costs incurred by it as a result of any asbestos related personally injury claim. Profit, so it was submitted, could not qualify as a claim under the 1972 TAL which was to be reimbursed. The word "reimburse" only applied to the repayment of costs incurred, to repay, restore or give back money already spent and thus excluded any notion of profit. This meaning, so it was submitted, was emphasised by references in the Deed to "expenses" and "incurred by Codock". 410 The primary judge (at [108]) accepted that the word "reimbursement" connoted repayment for expense or loss incurred and that it would not be seen ordinarily to extend to the garnering of a profit margin on that expense. However, the word was required to be construed in context and, in particular, it was to be noted that what was preserved under cl 4(b) of the Deed were claims under the Trading Agreements for "reimbursement of expenses incurred". That, his Honour considered, invited attention to the terms of the Trading Agreements to understand what it was that was to be reimbursed. 411 His Honour analysed the relevant provisions at [109] to [117] of the first judgment and then concluded in these terms: "118 When cl 4(b) of the Deed is construed purposively and in context, I think that it was intended to preserve, and should be read as preserving, the existing rights of Codock under whatever agreement, or combination of agreements, might be applicable to claims of the kind referred to. That is to say, I think that the reference to claims under those agreements for reimbursement is a shorthand way of referring to the totality of the contractual provisions that govern those claims. 119 There are two matters that confirm this construction. The first is the introductory words of cl 4: 'The provisions of this Deed shall not operate so as to extinguish or limit' such claims. It is clear that the intention of cl 4 was to preserve, unaffected by the release in cl 3.2, whatever rights Codock otherwise had in respect of the relevant claims. It would be quite extraordinary, in the face of those opening words, if the use of the tag 'reimbursement of expenses' had the effect of limiting those rights. 120 The second matter is that the agreements themselves do not use the word 'reimburse', nor do they refer to 'reimbursement'. The use of the word 'reimbursement' in cl 4(b) is not picking up some contractual phrase. That, to my mind, confirms that the use of the word 'reimbursement' is intended to be descriptive rather than limiting. 121 I therefore conclude that cll 3 and 4 do not take away whatever right Codock otherwise had to be paid the 7.5% profit margin or 'fee'." 412 The Commonwealth submitted, firstly, that cl 4(b) of the Deed did not expressly preserve all of Codock's rights in relation to personal injuries claim costs but only preserved claims for "reimbursement". Secondly, the word "reimburse" was one commonly used in the Standard Conditions as well as in the Wartime Agreement in cl 5(a) in contrast with a management fee. I have examined these provisions but I did not find them of any assistance in resolving the present issue. 413 In particular, it is to be noted that the Commonwealth did not challenge the primary judge's analysis of the Trading Agreements as defined in the Deed at [109] to [117] of the first judgment. Although it is true, as the Commonwealth submitted, that the word "reimburse" is a word commonly used in the Standard Conditions and, as his Honour accepted at [120], was not a word picked up by some contractual phrase in the Trading Agreements, that only confirmed that the use of the word "reimbursement" in cl 4(b) of the Deed was intended to be descriptive rather than limiting. 414 As Codock submits, the word "reimburse" is used in the Standard Conditions to constituted a set of conditions which related to the "contract cost" but did not define the particular proportion of the cost in respect of which Codock was entitled to be reimbursed. That was achieved by the 1972 TAL, and none of the agreements which comprise that contract used the word "reimbursement" to mean or differentiate between a cost component as distinct from a profit component. 415 Although the Commonwealth accepted that cl 4 did not "limit" any claims Codock might have under the Trading Agreements for reimbursement of the relevant expenses, it did submit that in its context the word "limit" could not operate to widen the meaning of "reimbursement" so as to include profit. With respect, I do not agree. By cl 3.2 of the Deed, Codock released the Commonwealth from "all claims … of any nature". That clearly included claims for 7.5% profit on overheads as the Arbitrator found. 416 Clause 4 provided that the provisions of the Deed (such as cl 3.2) were not to operate so as to either extinguish or limit any claims Codock might have for reimbursement of expenses incurred by it as a result of any "Personal Injury Claim" (as defined). It would seem to me that the purpose of cl 4(b) was to constitute a complete exception to cl 3.2 so as to permit Codock to make claims for reimbursement of expenses incurred by it as a result of asbestos related costs which otherwise would have been extinguished by that provision. 417 Accordingly if, but for cl 3.2, claims for reimbursement would have included the profit element as they clearly did, then in my opinion cl 4(b) should be construed according to the approach used by the primary judge. This construction places Codock in the same position that it would have been with respect to expenses incurred by it as a result of asbestos-related claims if cl 3.2 had not been in force between the parties. I would therefore reject the Commonwealth's challenge to the primary judge's negative answer to Issue 8 of the Statement of Issues. Arnold special circumstances 418 I will now turn to the question of whether the decision of the House of Lords in Arnold v National Westminster Bank PLC applies in Australia. If it does, it will then be necessary to consider wheter, as a matter of discretion, the primary judge should have rejected Codock's reliance upon issue estoppel and Anshun estoppel in respect of the negligence issue, the expiration issue and the risk issue. 419 The primary judge considered whether the decision in Arnold applied in Australia at [69] to [77] of the first judgment, concluding "with some hesitation" that in the absence of any decision of the High Court or an intermediate appellate court in Australia, he should accept that, in principle, the application of the bar created by an issue estoppel might be avoided where there were "special circumstances". (a) The decision in Arnold 420 Arnold was a case where a dispute arose between the defendant landlords and the plaintiff tenants as to the meaning of a rent review clause in which the expression "fair market rent" at the relevant review date was to be fixed by arbitration. The expression "fair market rent" was defined in the clause. The issue which arose on the first rent review date was whether, under the definition of "fair market rent", the rent under a hypothetical lease for the unexpired residue of the term fell to be fixed on a certain basis. The arbitrator decided that it should and determined the rent accordingly. The landlords appealed on the point of construction to Walton J who determined that the arbitrator was wrong and that the hypothetical lease should be treated as not containing any provision for rent review. The rent was consequently determined at a higher amount than that fixed by the arbitrator. 421 The unsuccessful lessees then applied to Walton J for leave to appeal and for a certificate under the relevant provision of the Arbitration Act 1979 (UK) that there was a question of law of general public importance which ought to be considered by the Court of Appeal – but both were refused. The lessees then sought to appeal to the Court of Appeal against the refusal of Walton J to grant the certificate, but that Court held it had no jurisdiction to entertain such an appeal. 422 Subsequently, in another case, Sir Nicholas Browne-Wilkinson V-C had to consider a later review under the same clause and in the course of so doing, approached its construction in a manner which was in direct conflict with that adopted by Walton J. The Vice Chancellor's decision was followed by the Court of Appeal in two subsequent cases. Accordingly, Lord Keith of Kinkel, with whom the other Law Lords agreed (Lord Lowry adding some observations of his own), concluded (at 103) that it "therefore appears that there are powerful grounds for the view that Walton J wrongly construed the rent review clause in the parties' lease, and that he did so by virtue of an approach to the question of construction which was wholly incorrect in law." 423 In these circumstances, the lessees sought to reopen the question of construction of the rent review clause on the second review date. The landlords applied to strike out the claim on the ground that the lessees were barred by issue estoppel from re-litigating the very point decided by Walton J. A preliminary issue came before the Vice-Chancellor who held that the lessees were not so barred. He took the view that the law admitted of special circumstances which could prevent an issue estoppel from arising, and that those circumstances included the situation where relevant new material, not available at the time of the first decision, had come to light and that such new material might include not only discovery of new facts but also a change in the law. The Court of Appeal dismissed the landlords' appeal who then appealed to the House of Lords. 424 After reciting the facts and expressing the opinion that Walton J had adopted an approach to the question of construction which was "wholly incorrect in law", Lord Keith then turned to the distinction between cause of action estoppel and issue estoppel. His Lordship noted (at 104) that the former extended also to points which might have been, but were not, raised and decided in the earlier proceedings for the purpose of establishing or negating the existence of a cause of action. 425 In support of that proposition, he cited the well-known passage from the judgment of Sir James Wigram V-C in Henderson at 114–115, in which the Vice-Chancellor stated the rule that "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 a 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." (Emphasis added.) 426 Lord Keith then noted (at 105) that this passage in Henderson "opened the door towards the possibility that cause of action estoppel may not apply in its full rigour where the earlier decision did not in terms decide, because they were not raised, points which might have been vital to the existence or non-existence of a cause of action." 427 His Lordship then turned to the principle of issue estoppel and, at 107, observed that although Henderson was a case of cause of action estoppel, the statement of Wigram V-C "has been held to be applicable also to issue estoppel. That statement includes the observation that there may be special circumstances where estoppel does not operate. The instant case is concerned with the nature of such special circumstances." 428 His Lordship then observed (at 107) that there were indications that special circumstances might exist where the earlier proceedings had resulted only in a default judgment. After considering a number of authorities, his Lordship (at 109) concluded in these terms: "In my opinion your Lordships should affirm it to be the law that there may an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided, being material which could not by reasonable diligence have been adduced in those proceedings. One of the purposes of estoppel being to work justice between the parties, it is open to courts to recognise that in special circumstances inflexible application of it might have the opposite result". 429 His Lordship then proceeded to consider whether a change in the law might result in, or be an element in special circumstances enabling an issue to be re-opened. He thus said (at 109): "If a judge has made a mistake, perhaps a very egregious mistake, as is said of Walton J's judgment here, and a later judgment of a higher court overrules his decision in another case, do considerations of justice require that the party who suffered from the mistake should be shut out, when the same issue arises in later proceedings with a different subject matter from re-opening that issue?" 430 After considering further authorities, his Lordship answered this question in the negative, observing (at 110) that "[e]stoppel per rem judicatam, whether cause of action estoppel or issue estoppel, is essentially concerned with preventing abuse of process". 431 Accordingly, his Lordship considered (at 111) that the instant case presented special circumstances such as to require the lessees to be permitted to re-open the question of construction found against them by Walton J, being a decision which Lord Keith regarded "as plainly wrong". 432 Lord Lowry also reviewed a number of authorities and concluded (at 112) that: "[i]t appears from this review that there are significant arguments in favour of the proposition that issue estoppel constitutes a complete bar to relitigating a point once it has been decided but I am now of the opinion that the court can, and in exceptional circumstances should, relax that rule." 433 Although his Lordship used the "exceptional circumstances" expression in the above passage, like Lord Keith he adopted (at 113) the phrase "special circumstances". He considered the circumstances of the instant case to be "special and indeed exceptional". (b) The primary judge's consideration of Arnold 434 The primary judge then reviewed the authorities in Australia and elsewhere where Arnold had been considered. He noted (in [70]) that Brennan J in O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 258 had observed that Arnold "rests on an uncertain foundation", a doubt shared by Callaway JA in Linsley v Petrie [1998] 1 VR 427 at 449. 435 The only decision in New South Wales where Arnold had been referred to was Tiufino v Walland (2000) 50 NSWLR 104 where Handley JA, with whom Mason P and Powell JA agreed, referred to Arnold and to Brennan J's comment with respect to it in O'Toole. His Honour said this (at 110 [29]): "The special circumstances referred to by the House of Lords in Arnold v National Westminster Bank PLC were the existence of further material which had become available since the earlier decision, relevant to the correct determination of a point involved in that decision which could not, by reasonable diligence have been brought forward in the earlier proceedings. This material might relate to matters either of law or fact. It is doubtful whether the existence of later material relevant only to a question of law could be a special circumstance where there was a right of appeal on questions of law from the earlier decision. But in Arnold v National Westminster Bank PLC there had been no such right." 436 Reference was then made to the observation of Batt J in Briggs v Hall (unreported 8 November 1994) of the Victorian Supreme Court that absent High Court authority to the contrary, considerations of "good sense and justice" required "that the exception of special circumstances should apply here in the case of fresh evidence" and to the fact that the decision in Arnold had been followed and applied in Canada and by the Court of Appeal of New Zealand. 437 With some hesitation and in the absence of any decision of the High Court or an intermediate appellate court in Australia to the contrary, the primary judge considered (at [77]) that he "should accept that, in principle, the application of the bar created by an issue estoppel may be avoided where there are special circumstances. What are 'special circumstances' must be a matter to be decided from case to case. With Batt J, I doubt that those special circumstances would include that the decision giving rise to the estoppel has been overruled in some subsequent case". Such circumstances would include cases where there was no, or no effective, right of appeal from the earlier decision. 438 However, his Honour noted (in [70]) that in the present case the Commonwealth had no general right of appeal from the Arbitrator's interim award and that by s38(2) of the Commercial Arbitration Act 1984 (Vic), and subject to subsection (4), an appeal only lay on a question of law arising out of an award and then absent consent of the other party, only with the leave of the court. 439 The primary judge then noted that the special circumstances relied upon by the Commonwealth to support its argument that the estoppel bar should not apply in the present case were first, that there was no right of appeal from the Arbitrator's decision and second, that his decision was, in any event, wrong on the relevant points. 440 The primary judge rejected the first of these bases. At [83] he observed that "The parties have chosen arbitration as their means of dispute resolution. They have chosen it with all its advantages (including privacy and relative informality) and all its disadvantages (including, if it be one, the absence of a right of appeal). Arbitration is inherently a process that, because there is no right of appeal, is more conducive to what might be called immediate finality than conventional litigation where there is (usually) a right of appeal. Presumably the parties weighed all these considerations before they decided to adopt arbitration as their preferred method of dispute resolution. Presumably, the parties understood that one of the features of arbitration was the absence of a right of appeal." 441 Accordingly, the parties had consensually chosen a method of dispute resolution that included as one of its characteristics an absence of a right of appeal. The primary judge (at [85]) considered it difficult to see that that absence could be regarded as a special circumstance to enliven the application of the Arnold exception. 442 So far as the second circumstance relied upon by the Commonwealth was concerned, namely, that the Arbitrator's decision on the relevant issues was wrong, his Honour (at [80]) considered that there was no manifest error of law on the face of the Arbitrator's interim award. On the contrary, on the relevant questions of construction (which included that involved in the negligence issue and, possibly, the expiration issue), the Arbitrator's decision was correct. His Honour therefore concluded (at [86]) that special circumstances had been demonstrated for declining to recognise or enforce the issue estoppels created by the interim award. 443 In its amended notice of contention, Codock asserted that the special circumstances exception to the bar created by an issue estoppel recognised in Arnold should not be part of Australian law. However, it was only necessary to determine this issue and to consider the authorities relied on by the Commonwealth but not referred to by the primary judge, if otherwise the Commonwealth had demonstrated that, assuming the Arnold exception of special circumstances applies in this State, such circumstances existed in the present case to avoid the bar that would otherwise result from a finding that the Commonwealth was estopped from raising Issues 3(a), (g) and (h). 444 I should note, however, that the Arnold exception could only apply to the issue estoppels raised by Codock with respect to Issues 3(a) and (g). In its further amended notice of contention, Codock sought to support the primary judge's decision on those issues upon the ground that if his Honour had not found that the estoppels barring the Commonwealth from relying on those issues were issue estoppels in the strict sense, he ought to have found that they were issue estoppels in the Anshun sense. 445 In my opinion, there can be no doubt that the primary judge regarded Issues 3(a) and (g) as raising issue estoppels in the strict sense and that he was correct in so characterising them. Indeed I do not understand the Commonwealth to contend to the contrary. Equally, Issue 3(h) could only give rise to an Anshun estoppel to which the Arnold special circumstances exception had no application. In this respect it was clear from a consideration of Anshun on the one hand and Arnold on the other, that the former was concerned with circumstances which existed at the time of the earlier decision, whereas the latter was concerned with circumstances which had arisen subsequent to that decision. (c) Were there special circumstances within the meaning of Arnold ? 446 The special circumstances relied on by the Commonwealth in resisting the application of the bar, which would otherwise be the result of an issue estoppel with respect to Issues 3(a) and (g), were common to both. The first of those circumstances was that although the primary judge was prepared (at [82]) to assume, without finally deciding, that in principle the absence of a right of appeal might constitute a ground for declining to recognise the effect of issue estoppel, he erred in holding that that ground did not apply where the absence of an effective right of appeal flowed from the parties' consensual adoption of arbitration as their dispute resolution procedure. 447 The primary judge adopted (in [83]) the principle that, because there was no right of appeal from an arbitration, its processes are more conducive to what might be called immediate finality whereas, by contrast, conventional litigation usually gives rise to a right of appeal. It was submitted that this finding was not a proper foundation to disregard the absence of any such right of appeal in an arbitration as not constituting a special circumstance, either as a matter of authority, principle or policy. It would not be appropriate policy, so it was contended, to widen the ambit of issue estoppel in the case of arbitrations. This was especially so because Arnold itself was a case where the parties had agreed that their dispute should be resolved by arbitration. 448 It was common ground, acknowledged by the primary judge in [47] of the first judgment, that an arbitral award may give rise to an issue estoppel. As such, and as his Honour recognised, there was no right of appeal from the Arbitrator's interim award by reason of the provisions of s38 of the Commercial Arbitration Act 1984 (NSW). Nevertheless, as his Honour found (at [77]) that the consensual adoption of arbitration by the parties was their means of resolving their disputes. That fact, Codock submitted, could not necessarily amount to a special circumstance such as to negate the operation of an issue estoppel merely on the ground that there was no general right of appeal from the Arbitrator's interim award. 449 Codock thus submitted that the primary judge's approach on this issue was correct, given that otherwise the restriction on the right of appeal created under the Commercial Arbitration Act 1984 (NSW) would negate the operation of an issue estoppel arising from an arbitration conducted under the auspices of that statute. 450 In my opinion there is substance in that submission. Furthermore, in Arnold itself the relevant special circumstance was that further material relevant to the correct determination of the issue involved in the earlier proceedings had subsequently become available and could not have been adduced by reasonable diligence in those proceedings. It is true that in Tiufuno Handley JA cast doubt upon whether the existence of later material relevant only to a question of law could be a special circumstance. However, he did so upon the basis that there was a right of appeal on questions of law from the earlier decision in that case, and noted that there was no such right in Arnold. 451 In other words, a special circumstances is not created by the absence of a right of appeal. Rather, the key is that the absence of any such right would prevent the error of law relied upon to found the issue estoppel from being corrected in circumstances where that error was not only plain on the face of the award but possibly one which had been corrected in later or other proceedings. 452 In this case, and subject therefore to the question of whether the Arbitrator's determination of Issues 3(a) and (g) was plainly wrong, the fact that there was no right of appeal from his decision with respect to those issues, except with leave of the court and then subject to the limitations in s38(4) and (5) of the Commercial Arbitration Act, does not in my opinion of itself give rise to a special circumstance within the meaning of Arnold. There is nothing in Arnold or any of the cases which have applied it which suggests to the contrary. 453 The second special circumstance advanced by the Commonwealth (at least on the appeal) was that the parties did not intend for the arbitration to govern the recoverability of future Workers Compensation Costs incurred by Codock after 31 December 1992. As I have already noted, during final addresses before the Arbitrator, Codock abandoned any claim for relief of a declaratory or other nature in respect of future incurred costs. At the time of that abandonment, Codock submitted to the Arbitrator (recorded in his reasons at 159) that it was only seeking the reimbursement of costs incurred up to that point (and which included costs incurred after 31 December 1992) as it anticipated that their recovery would set a precedent which would make any further litigation in the matter unnecessary. If it did become necessary, it would simply institute proceedings at a later stage and "have the argument again when more costs are incurred." 454 The Commonwealth latched onto this last statement as indicating that Codock was prepared to litigate the various issues in new proceedings when further costs had been incurred. As such, it was argued that it would be unfair to apply an issue estoppel arising out of the Arbitrator's decision where such proceedings had been instituted in respect of "the very issue [the subject of those proceedings which] was withdrawn from determination". By this I understand the Commonwealth to be submitting that Codock had intentionally withdrawn the issue that it was entitled to recover costs not yet incurred by it after 31 December 1992 when the 1972 TAL expired, leaving that issue to be determined in later proceedings after the relevant costs had in fact been incurred. 455 In my view there is no substance in this submission. The argument is tantamount to saying that by withdrawing its claim for relief for costs incurred after what was referred to by the primary judge (at [130]) as the "cut off date", being the date after which costs had not then been incurred, Codock was abandoning, in effect, any later reliance upon the Arbitrator's decision to accede to its claim for costs actually incurred after 31 December 1992 as raising an issue estoppel in any later proceedings that Codock might institute in relation to such costs. 456 The fact is that Codock's entitlement to recover the costs it incurred after the 1972 TAL expired was raised by the Commonwealth as an issue before the Arbitrator, who then decided it in Codock's favour. As Codock submitted to the Arbitrator, the precedent was thereby set. I do not regard its abandonment of any form of declaratory relief with respect to costs not yet incurred as constituting a special circumstance justifying the rejection of the issue estoppel created with respect to the Arbitrator's finding that Workers Compensation Costs incurred by Codock after the expiration of the 1972 TAL were recoverable. 457 The third and final special circumstance relied upon by the Commonwealth was that the Arbitrator's decision as to the construction of cl 3.11 of the Standard Conditions was not only attended with doubt but, indeed, was clearly wrong. This question of construction was the subject of an application for leave to appeal which was rejected by Bainton J and to which I have referred in [267] and [268] above. 458 As I have observed, Bainton J did not consider that the Arbitrator's construction of cl 3.11 revealed any manifest error of law within the meaning of s38(5)(b)(i) of the Commercial Arbitration Act. His Honour considered that within the meaning of s38(5)(b)(ii) of that Act, there was "not strong evidence of any error of law" in those pages of the Arbitrator's reasons which included his construction of cl 3.11 as being confined to the conduct of litigation with respect to a claim rather than Codock's underlying conduct, which gave rise to the claim. 459 By raising the issue of the proper construction of cl 3.11 of the Standard Conditions as a special circumstance, the Commonwealth effectively sought to re-argue the construction question. Its reasons for contending that the Arbitrator's construction of the clause was wrong are set out in [65]–[73] of the Commonwealth's written submissions on the appeal (Orange 33–35). For present purposes it is unnecessary to deal in detail with those submissions. They were made before the Arbitrator and rejected by him. 460 The issue in Arnold was whether later decisions, including those of the Court of Appeal which had held that the construction of the relevant rent review clause by Walton J was plainly wrong, constituted a special circumstance in respect of which justice required that the party suffering from the wrong decision should not be shut out from reopening that issue when it arose in later proceedings between the same parties. What is apparent from Lord Keith's speech in Arnold is that, at least on the facts of that case, Walton J had not only made a mistake but a "very egregious mistake". 461 Further, a later judgment of the Court of Appeal in a case between different parties but involving a similar rent review clause had overruled Walton J's decision. In my opinion, there is nothing in Arnold, or any of the cases in which it was applied, that supported the Commonwealth's submission that it was sufficient to demonstrate that the decision in the earlier proceedings was arguably wrong as distinct from patently wrong. Or to put the matter a different way, for the purposes of issue estoppel "special circumstances" will not be constituted by merely establishing that there is some doubt as to the correctness of the earlier decision. 462 In my opinion, it follows that Gillard J was in error when in Kingston City Council v Monash City Council [2001] VSC 41 at [108], he observed that one of the important facts in Arnold, which was held to constitute a special circumstance was that the decision of Walton J, "was attended with doubt". On the contrary, it was held to be "plainly wrong". His Honour, with respect, repeated this error when (at [137]) he opined that a plea of issue estoppel "could in rare cases cause an injustice where there is doubt as to the correctness of the issue decided." 463 In my opinion mere doubt as to the correctness of the earlier decision is insufficient to constitute special circumstances. To hold otherwise would be inconsistent with his Honour's apparent acceptance (at [139]) that special circumstances only arise to preclude the application of the plea of issue estoppel in "rare cases". Thus his Honour was correct when he observed in the same paragraph that it was "important to confine the category of special circumstance otherwise it would defeat the very object of issue estoppel which is to bring litigation to an end and avoid repetitious litigation." 464 Although, as stated by Sir Nicholas Browne-Wilkinson V-C in Arnold at first instance ([1998] Ch 63 at 70–71), a change in the law subsequent to the earlier decision is capable of bringing the case within the exception to issue estoppel upon the basis that otherwise injustice would flow from such change, it is not sufficient to merely cast doubt upon the correctness of the earlier decision that is otherwise arguably correct. To characterise such a situation as a special circumstance would be contrary to the public policy of the finality of litigation which is the underlying principle upon which issue estoppel and res judicata or cause of action estoppel are based. 465 In particular, if no more can be advanced than that the earlier decision was open to doubt, but could not be said to be plainly or manifestly wrong, then the circumstances in which issue estoppel could be avoided would no longer be "special" or "exceptional" or "rare" in the required sense. Furthermore, in a case such as the present, it would permit in practice a right of appeal against the Arbitrator's decision after extensive argument where no such appeal otherwise existed by reason of the agreement between the parties as to the mode of resolving their disputes. 466 I am prepared to accept for present purposes that the Commonwealth's construction of cl 3.11 of the Standard Conditions which it advances in its submissions is at least arguable. On the other hand, so also are Codock's contentions which were accepted by the Arbitrator in his reasons at 164–165. 467 It is true that litigation costs, including costs incurred in defending actions brought by third parties against Codock on matters associated with its contract with the Commonwealth, were allowable as part of the "contract cost" by virtue of cll 4.49 and 4.51 of the Standard Conditions. The qualification as to the permissibility of such costs in cl 3.11 is that they could not have been avoided or reduced by the exercise of reasonable standards of skill, care and efficiency. As the Commonwealth correctly submitted, there is no inconsistency between cl 3.11 in its application by way of qualification to the recovery of litigation costs and cll 4.49 and 4.51 of the Standard Conditions. 468 But it does not follow from that fact that cl 3.11 is, as a matter of construction in the context of the contract as a whole, also applicable to the underlying conduct of Codock that gave rise to its entitlement to recover as litigation costs those incurred in defending actions brought by third parties with respect to that conduct. 469 Further, as the Arbitrator observed (at 165), considerable difficulties would arise where a claim against Codock (by an ex-employee or, for that matter, by any other third party) is compromised. Certainly, it may well be that cl 3.11 would require Codock to exercise reasonable standards of skill, care and efficiency in compromising any such claim in order to qualify the amount of the compromised claim as an allowable overhead. But the Commonwealth's construction in such a case would require a mini trial or enquiry as to whether the circumstances out of which the claim arose (and which may have been many years in the past) could have been avoided by the exercise of a reasonable standards of skill, care and efficiency by Codock, which itself could give rise to the incurring by both Codock and the Commonwealth of significant further costs which, in the case of Codock, would be subject to cl 3.11 for them to be reasonable. 470 In this respect it is important to remember that cl 3.11 of the Standard Conditions is a general provision and, on the construction advanced by the Commonwealth, would be applicable to any claim by a third party said to arise out of some conduct or other on the part of Codock or those for whom it was legally responsible which could have been avoided by the exercise of reasonable standards of care, skill and efficiency. 471 Furthermore, as the Arbitrator observed, it may well be that litigation costs in defending such a third party claim would not be recoverable until the end result of any particular individual case was determined. If such a claim was the subject of a settlement, so that there was no finding by a competent tribunal of any failure by Codock to exercise reasonable standards of skill and care in the circumstances, then the difficulties of determining in the administration of a contract such as the 1972 TAL whether any particular costs fell within "overhead" or not, would create impracticable, if not insuperable, difficulties. The purpose of the foregoing observations is merely to demonstrate that no justifiable basis exists to support the Commonwealth's assertion that the Arbitrator's construction of cl 3.11 was plainly or unarguably wrong. 472 As was pointed out in the joint judgment of Peter Gibson LJ and Sir Martin Nourse in Coflexip SA v Stolt Offshore MS Ltd (2004) 60 IPR 202 at 234 [158], Arnold was a case decided on exceptional facts in which Walton J, in holding that in a dispute on a rent review under a lease an arbitrator was wrong in his construction of the rent review clause, had himself plainly erred, as decisions of the Court of Appeal later demonstrated, and had not himself permitted the point to be taken on appeal. 473 The circumstances of the present case are very different from those in Arnold in which Lord Keith made it clear that the special circumstances exception to issue estoppel was limited: see Coflexip at 231 [146]. In my opinion the Commonwealth's submissions relating to the construction of cl 3.11 fall well short of demonstrating the existence of special circumstances in the Arnold sense. 474 The Commonwealth also raised the question of special circumstances with respect to the expiration issue. It was submitted, firstly, that the Arbitrator's decision to extend the Commonwealth's obligation to indemnify Codock with respect to Workers Compensation Costs incurred after 31 December 1992 was "plainly wrong"; secondly, that the claim in respect to future costs was abandoned and, thirdly, there was no appeal available from the Arbitrator's interim award with respect to that issue. 475 In my view, there is no substance in the Commonwealth's submissions. The matters relied upon do not amount to "special circumstances" in the Arnold sense. I have already dealt with each of the matters relied upon with respect to the lack of appeal and the claim for future costs being abandoned. Neither detract from the fact that the Arbitrator determined that costs incurred after 31 December 1992 were recoverable from the Commonwealth. 476 As to the submission that the Arbitrator's decision with respect to Workers compensation Costs incurred by Codock after 31 December 1992 is concerned, the Commonwealth submitted that such costs as claimed in the Summons were not recoverable as they cannot be charged to the 1972 TAL nor are they "associated with the TAL". Reliance was belatedly placed upon the failure of the Arbitrator to consider the effect of the decisions of the High Court in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457, 476–477 and Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361, 375, 379–380, notwithstanding that they were not referred to him by the Commonwealth. 477 Furthermore, it was submitted that neither the Arbitrator nor the primary judge dealt with the expiration issue "in terms". In particular, although the Arbitrator rejected the Commonwealth's argument that because Common Law Costs arose out of events prior to 1972 and were, therefore, unrelated to the 1972 TAL, he did not provide any separate reasoning to support his undoubted finding that such costs incurred by Codock after the expiration of the 1972 TAL were recoverable from the Commonwealth. 478 The difficulty with the Commonwealth's submission that the Arbitrator's decision on the expiration issue was "plainly wrong", is that on its own case it concedes that in the arbitration it neither pleaded nor argued that the expiration of the 1972 TAL was a bar to Codock succeeding in its claim with respect to costs incurred after the 1972 TAL expired so that the matter was not, so it submitted, "distinctly put in issue". In fact the Commonwealth relies on that circumstance as being "special" in the Arnold sense. 479 There is therefore an inconsistency between asserting that the Arbitrator's decision on the expiration issue was wrong on the one hand and asserting that the Commonwealth did not raise the issue for determination on the other. How can it now be heard to criticise as wrong a decision of the Arbitrator on an issue upon which it did not advance a contrary argument at the time? 480 Even if it be supposed that the decision was wrong (a matter upon which I express no opinion), it can hardly constitute special circumstances in the Arnold sense to resist a plea of issue estoppel (if otherwise established) on the expiration issue where, knowing that Codock was claiming in the arbitration Workers Compensation Costs incurred by it after 1 January 2003, the Commonwealth failed to advance before the Arbitrator the argument it now seeks to assert as to why that issue should have been determined in its favour. 481 As Handley JA observed extracurially in an article entitled "A Closer Look at Henderson v Henderson" based on a lecture given by him to the Chancery Bar Association and the Institute of Advanced Legal Studies on 6 December 2001, "[a]n issue estoppel prevents an issue litigated for one cause of action being re-litigated for another, and unless displaced by the [ Arnold ] exception, it bars evidence and arguments whether they were raised in earlier proceedings or not." 482 As is already apparent, one issue litigated before the Arbitrator was Codock's claim that it was entitled to recover Workers Compensation Costs incurred by it after the 1972 TAL expired on 31 December 1992. That issue was decided in its favour. It now seeks in the Summons to recover such costs incurred by it after December 1995. The issue raised bars the Commonwealth from raising Issue 3(a) whether or not it was expressly raised by it in the arbitration. However, as I have observed, the Commonwealth claims special circumstances because it neither pleaded nor argued in the arbitration that the expiration of the 1972 TAL was a bar to Codock succeeding in its claim with respect to costs incurred after the 1972 TAL expired. However, it does not necessarily follow, as the Commonwealth submitted, that the point was not "distinctly put in issue". 483 As I have already found (at [302] above), I do not accept that the Commonwealth did not join issue with Codock's claim in pars 26E and 46 that it was entitled to be reimbursed Workers Compensation Costs incurred by it from 1 January 1993 onwards in its defence to the Points of Claim in the arbitration. While it is true that the Commonwealth did not argue the expiration point in final addresses (see [304] above), that does not mean that the Commonwealth is not barred from now raising the argument even though it did not ultimately argue it before the Arbitrator. That fact does not, as I have indicated, amount to a special circumstance in the Arnold sense. Accordingly, the issue of whether the Arbitrator's finding in the expiration issue was right or wrong is irrelevant to the question of special circumstances. 484 Finally, the Commonwealth also raised special circumstances with respect to the risk issue encapsulated in Issue 3(h). In so doing it relied on the same considerations as it had advanced with respect to the negligence and expiration issues. Having found that there were no special circumstances which were relevant to those issues, the same result follows with respect to the risk issue. 485 More relevantly, there is no room for the application of the Arnold special circumstances exception to the risk issue. The estoppel relied on with respect to that issue is of the Anshun type. The Anshun doctrine provides for its own circumstantial test: see Anshun at 602–604. Arnold applies only to issue estoppel in the strict sense. The Commonwealth's reliance on Arnold special circumstances with respect to the risk issue is, therefore, misconceived. 486 It thus follows that in my opinion the Commonwealth has failed to demonstrate that there were any special circumstances in the Arnold sense which would preclude Codock from maintaining in pars 7 and 8(b) of the Reply that the Commonwealth was estopped (in one form or another) from relying on those defences to Codock's claim in the summons encapsulated in Issues 3(a), (g) and (h) of the Statement of Issues. 487 In these circumstances it is neither necessary nor appropriate to resolve the question raised by Codock's amended Notice of Contention of whether Arnold is part of the law of New South Wales. Was the Commonwealth denied procedural fairness by the primary judge in either the first or second hearings? 488 The propositions advanced by the Commonwealth in support of the submission that it was denied procedural fairness by the primary judge are set out in [50] above. In essence, they raise the following questions: (a) Whether the Commonwealth was denied procedural fairness by Codock's failure to specifically plead in par 8(b) of the Reply that the Commonwealth was estopped from maintaining its defences to the Summons encapsulated in Issues 3(a), (g) and (h) and to identify whether it was relying on issue estoppel in the strict sense or issue estoppel in the extended Anshun sense. (b) Given that Issue 3 was not one of the issues the subject of the order made by the primary judge under Pt 31 r2 of the Rules, whether his Honour denied the Commonwealth procedural fairness when he determined in the first judgment that the Commonwealth was estopped from asserting the defences to the Summons encapsulated in Issues 3(a) and (g). (c) Whether the Commonwealth was denied procedural fairness in the second hearing because Codock did not rely either in par 8(b) of the Reply or in its written and oral argument before the primary judge that it was asserting an Anshun estoppel with respect to Issue 3(h). 489 With respect to question (a), in my opinion par 8(b) of the Reply was framed in terms (discussed in [61] and [62] above) which alleged that the Commonwealth was estopped from maintaining the pleas encapsulated in Issues 3(a), (g) and (h). 490 As to question (b), the written and oral submissions made to the primary judge during the first hearing (and referred to in [340]–[348] above) that Codock asserted before the primary judge that he should determine, given the form of Issue 1, that the Commonwealth was issue estopped in the strict sense for relying upon its defences to the Summons encapsulated in the expiration issue (Issue 3(a)) and the negligence issue (Issue 3(g)). In my opinion there can be no doubt as to the basis upon which the first hearing proceeded, whereupon it was clearly open to his Honour to determine that his negative answer to Issue 1 was subject to the exception that the Commonwealth was estopped with respect to those issues. 491 As to question (c), it must have been clear to the Commonwealth, as it was to his Honour, that any estoppel with respect to Issue 3(h) could only be a Henderson or Anshun type estoppel as it was common ground that the risk issue had been neither pleaded, argued nor the subject of a finding by the Arbitrator. Accordingly, par 8(b) of the Reply, insofar as it asserted that the Commonwealth's plea in par C30 of the Defence was "not maintainable", could only have been understood upon the basis that it was not so maintainable because the Commonwealth was Anshun estopped from relying upon it. 492 Furthermore, the written and oral argument during the second hearing and, in particular, the exchanges between the Commonwealth's counsel and his Honour to which I have referred in [358]–[363] above, made it tolerably clear that the estoppel being relied upon by Codock with respect to Issue 3(h) was a Henderson or Anshun extended estoppel. 493 The form of the consent order made by the primary judge on 22 October 2004 raised for determination whether the findings of his Honour in the first judgment in relation to issue estoppel should be extended to, relevantly, Issue 3(h). 494 Although the Commonwealth submitted that the only findings of his Honour in that judgment were confined to issue estoppel in the strict sense, it is clear from that judgment that his Honour gave consideration, at least with respect to Issue 7, to the question of an Anshun estoppel. Further, it was common ground that Anshun estoppel was an extended form of issue estoppel in the strict sense. Given that the risk issue was not raised in the arbitration, it followed that the only issue estoppel which could be raised with respect to it was of the Anshun variety. The Commonwealth could not have been under any misunderstanding that that was so and, in any event, as the exchange in [367] above makes clear, the question of an Anshun estoppel was put fairly and squarely to the Commonwealth's counsel during the course of the second hearing. 495 It follows from the foregoing that in my opinion, the Commonwealth was not denied procedural fairness in either the first or second hearings. Conclusion 496 The Commonwealth's challenges to the primary judge's findings with respect to Issues 1, 2, 3(a), (g) and (h) and 8 as well as the general challenge to his decisions on the ground of a denial of procedural fairness, have raised a number of complex issues. Having addressed each of these, my opinion is that each of those challenges should be rejected. I therefore propose that the Commonwealth's appeal be dismissed with costs. ********** 24/11/2006 - Reference to lower court number incorrect. - Paragraph(s) Headnote, body of judgment 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.