LPD HOLDINGS (AUST) PTY LTD v RUSSELS (A FIRM) [2017] QSC 45

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FACTS

LPD Holdings made an application for assessment of legal costs invoiced for the May 2010- May 2014 period. Russells had obtained a default judgment (the default judgment) in respect of unpaid legal fees pursuant to a costs agreement entered into in September 2013 (the 2013 Agreement). Russells contended that LPD holdings had lost the ability to exercise their right to have costs assessed because:

  1. The costs owed by LPD were estopped res judicata; and/or
  2. LPD’s application was barred due to issue estoppel; and/or
  3. It was unreasonable (in the Anshun sense) for LPD not to have pursued its right to an assessment of costs at an earlier date.

LPD sought a declaration that the 2013 Agreement did not compromise LPD’s rights to an assessment of the entirety of the costs owed to Russells. Alternatively, that the 2013 Agreement is void to the extent that it did compromise LPD’s rights to a cost assessment.

ISSUES

  1. Was LPD’s application barred because the costs owed by LPD were res judicata
  2. Was LPD’s application barred owing to issue estoppel
  3. Is it unreasonable (in the Anshun sense) for LPD not to have pursued a right to assessment of costs at an earlier time

LEGAL FINDINGS

Following Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW)[1] –  a case must be very clear before it will justify summary intervention of the court to prevent the application being heard on its merits. That principle was held to apply in respect of each of the respondents three contentions.

Res Judicata requires that the very right or cause of action has already passed into judgment, and no longer exists independent of that judgment. [2] Russells submitted that the default judgment amounted to a final judicial determination of the costs owed to Russells, and that the same question was being agitated by the present application.

Issue estoppel applies where a state of law or fact has already been determined in prior proceedings. The doctrine will apply where three conditions are met:

  • The same question has been decided;
  • The judicial decision which is said to create the estoppel was final; and
  • The parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.[3]

Condition 3 was not disputed. Russells submitted that LPD sought to agitate the question of the amount owed by LPD to Russells, and that this had been decided as a necessary fact in the default judgment.

As it was not clear what the default judgment had in fact determined, the court rejected the submissions in respect of res judicata and issue estoppel.

The causes of action which resulted in the default judgment and the present application are different. The default judgment was in respect of a debt, the present action was an application for a costs assessment under a statutory regime.

Default judgments are distinct from judgments which make a determination on the merits of the case.[4]

As no part of the default judgment proceedings, or other earlier proceedings, made a determination as to whether LPD may seek an order for assessment of costs, the respondent’s contentions 1 and 2 were rejected.

That the applicant had previously signed the 2013 agreement did not determine whether the applicant was otherwise entitled to a costs assessment.

In respect of Anshun unreasonableness, it was not, in the courts view, appropriate to summarily dismiss the proceedings where questions of the unreasonableness of LPD’s conduct were yet to be determined.

TAKE AWAYS

Default judgments which did not involve a consideration of merits of the case, or where it is not clear what those judgments determined, will not ordinarily give rise to res judicata or issue estoppel should the same issues arise in a latter case.

Furthermore, an application for a costs assessment and proceedings in respect of a debt are separate causes of action. And the determination in one does not necessarily give rise to res judicata or issue estoppel in the other.

The rule of res judicata is that where judgment has been entered in an action no other proceedings can thereafter be maintained on the same cause of action. The rule of issue estoppel is that a judicial determination directly involving an issue of fact or of law disposes once and for all of the issue so that it cannot be raised again between the same parties or their privies. It is a broad rule of public policy, that it is in the interest of the state that there be an end to disputes: Warner v Hung, in the matter of Bellpac Pty Ltd (recs and mgrs apptd) (in liq) (No 3) [2012] FCA 819

[1] (1964) 112 CLR 125 at 129.

[2] Blair v Curran (1939) 62 CLR 464 at 532.

[3] Per Lord Guest in Carl Zeiss Stiftung v Rayner & Keeler Ltd [No 2] [1967] 1 AC 853 at 935.

[4] Mango Boulevard Pty Ltd v Spencer & Ors [2010] QCA 207, at [116] per Fraser JA.