Ebber & Ebber v Isager [1993] QSC 408 [1995] 1 Qd R 150

1 .. State Reporting Burea TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPREME COURT OF QUEENSLAND CIY~JURISDICTION \__~ITE J Writ No 2051 of 1990 CLEMENS and URSULA EBBER and JOHN COLIN ISAGER BRISBANE .. DATE 10/11./93 .. JUDGMENT Plaintiffs Defendant 1 4th Floor, The Law Courts, Georf!e Street. Brisba~- o_ 4nnn -- 1 of 24 -- 101293 dfc (White J) HER HONOUR: In summary, paragraphs 1 to 10 of the statement of claim are estopped from being pleaded and are therefore struck out. Paragraphs 11, 12 and 13 of the statement of claim are struck out. The balance of the paragraphs in the summons are dismissed. 10 I publish my reasons. /Y· 12- ?5' 20 30 40 50 60 JUDGMENT 2 -- 2 of 24 -- IN THE SUPREME COURT OF QUEENSLAND WRIT No. 2051 of 1990 Brisbane Before Justice White [Re; Ebber v !sager] BETWEEN: CLEMENS AND URSULA EBBER Plaintiffs AND: JOHN COLIN !SAGER Defendant REASONS FOR JUDGMENT - WHITE J. Judgment delivered 10 December 1993 CATCHWORDS: Res judicata- issue estoppel -Principle in Henderson v. Henderson - Limitation of Actions Act 1974 s.38 Home owners seeking to sue builder with respect to defects allegedly fraudulently concealed - Not aware at time of earlier trial. Counsel: Mr. M. Amerena for the applicant/defendant Mr. D. Cooper and Mr. C. Franc is fo.r the respondent/plaintiffs. Solicitors: Doyle & Campbell by their town agent Bruce S. Dulley for the applicant/ defendant Kinsey, Bennett & Gill for the respondents/plaintiffs. Hearing Date: 7 October 1991 -- 3 of 24 -- IN THE SUPREME COURT OF QUEENSLAND WRIT No. 2051 of 1990 Brisbane Before Justice White [Re: Ebber v Isager] BETWEEN: CLEMENS AND URSULA EBBER Plaintiffs AND: JOHN COLIN !SAGER Defendant REASONS FOR JUDGMENT - WHITE J. Judgment delivered: 10 December 1993 The applicant/ defendant (the defendant) seeks in his summons to have the respondents'/plaintiffs' (the plaintiffs) statement of claim struck out on the grounds: (i) That paragraphs 1 - 10 are estopped from being pleaded by the judgment of the Honourable Mr Justice Macrossan (as his Honour then was) in Action No. 5239 of 1983 given on 21 December 1984 (res judicata); (ii) That all paragraphs are estopped from being pleaded as they relate to issues which were heard and determined by his Honour in that action (issue estoppel); (iii)That paragraphs 1, 2, and 10 to 21 are estopped from being pleaded in accordance with the principle set out -- 4 of 24 -- 2 in Henderson v. Henderson (1843) 3 Hare 100; 67 E.R. 313; (iv) That the plaintiffs' action is statute. barred by operation of s.10 of the Limitation of Actions Act. The defendant sought to exclude much material relied upon by the plaintiffs in their affidavit material on various grounds, but particularly on lack of relevance. Where the plea is res judicata, only the actual record, that is, the pleadings and the judgment may be looked at in order to determine the plea, Cross on Evidence p. 5024, Spencer Bower on Res Judicata, 2nd ed. (1969) at p.88. Where the plea is issue estoppel, any material may be looked at which will show what issues were raised or decided and that may include the reasons for judgment and the transcript of the evidence, ibid. The plaintiffs have sought to have the impugned material included on the basis that it gives a "complete background" to the facts of the matter, "explains the state of mind of and knowledge of the plaintiffs", explains the delay and shows the defendant has known of the present complaints of the plaintiffs for ~ome ·years. I accept the objections of the defendant that these matters are not relevant to the plea of res judicata and largely irrelevant to matters of issue estoppel. The state of the plaint·iffs' knowledg~ about the subject of the action is relevant, as will become apparent, at least to the extended prinGiple of Henderson V. Henderson and to the limitation plea. _:.It is convenient to state the wider ~acts, bearing in mind though, .that the pleadings and· judgment only may be resorted to fo~ a consideration of res judicata. -- 5 of 24 -- 3 The plaintiffs as owner, and the defendant as builder, agreed by a contract dated 30 January 1983 that the defendant would construct a residence for them on land which they owned at Mt Crosby for a price of $66, 400. The plaintiffs were then recent arrivals to this country from Germany, trained as architects and engineers, and now describing themselves as architects in their affidavits in this application. The contract was comprised in a number of documents and provided for the completion of the house in 14 weeks. It provided for progress payments and such payments of almost $20,000 were made by the plaintiffs to the defendant prior to the plaintiffs terminating the agreement on 25 February 1983, allegedly for breach by the defendant in that he had failed to proceed with the works with due diligence and failed to adhere to the plans and specifications in a competent manner. The defendant denied the breach as alleged, but accepted the letter of termination as justifying him from discontinuing under the contract. The plaintiffs issued a writ against the defendant on 13 December 1983 and pleadings in which the defendant counterclaimed on a quantum merit were exchanged ( 11 the old action 11 ). By their amended statement of claim the plaintiffs alleged that by failing to excavate to a proper depth, the ground levels of the proposed house were changed and had serious c6nsequences for the whole works. The defendant alleged that his excavation was authorised by the plaintiffs when he struck rock but this was denied .. This was the major complaint ventilated ·at the trial. -Other allegations were that the defendant failed to locate the foundation piers in a proper fashion (to which I shall refer in -- 6 of 24 -- 4 more detail in due course); that· the walls of the south-west corner of the house were not laid on the footings; that the bedroom section of the house and the kitchen/entrance area were reduced from the design size; that the stairwell was of defective design; and the house was incorrectly located on the block. The plaintiffs completed the house after the defendant departed and claimed the cost of rectifying defective work, re-designing parts of the house, and obtaining Council approval for the re-designed areas and a loss in value of the now differently designed house. The total rectification and finish claim was for $177,099.88 and after allowances for savings on P.C. items and a deduction of the contract price, they claimed $108,938.29 for damages for breach of contract and interest. The trial judge found that the plaintiffs, particularly Mrs Ebber, were closely involved in the location of the house on the site and in directing the defendant in his work. ~e preferred the defendant's and his workmen's account of events to that of the plaintiffs. He concluded that the plaintiffs were not entitled to terminate the contract when they did on the grounds set forth but that :the defendant was entitled to accept the notice as a repudiation. The trial judge found that there were no significant deficiencies in the work performed by the defendant up to the date when the contract was terminated beyond any minor matters which could have been attended to by ordinary methods as. the work progressed. Having found that the plaintiffs had breach.ed the contract when they terminated, their claim -- 7 of 24 -- 5 against the defendant was dismissed and there was judgment for the defendant on his counterclaim. The plaintiffs issued the writ in the present proceedings on 20 December 1990. By their statement of claim delivered in March 1991 they plead an agreement with the defendant as builder, whereby the defendant agreed on 30 January 1983 to build a house on the land owned by them for the sum of $66,400. They allege that the defendant erected engaged brick piers about the external boundaries of the house and under its floor and other brick work commencing to form the external walls of the house, and in doing so breached the agreement by failing to construct the house in accordance with the agreement and in a proper and tradesman like manner, in that some twenty-one of the engaged piers were not constructed on footings and that the engaged piers .did not contain starters connected to the footings. The damage alleged to flow therefrom is that the house is thereby rendered unsafe and not constructed in accordance with ordinary or competent building standards, and that the value of the house is "negligible" or "considerably less" than if constructed appropriately. As a consequence the plaintiffs plead that they will have to undertake extensive rectification work to underpin the house. They particularise other damage of a lesser nature such as cracks, minor drops in floors and leakage in internal gutters said to flow from the unsatisfactory state of the engaged piers, (paras 1 10). In the alternative the plaintiffs ple~d breach of a. duty of care to perform the work with care and skill and in a proper and workman like manner, particularised in the same respects as the -- 8 of 24 -- 6 alleged breach of 90ntract with the same damage, (paras. 11 - 1 3) .. In the further alternative . the plaintiffs plead that by constructing the engaged piers with a plinth wall around the base of each engaged pier and placing concrete around the base of the engaged piers which precluded ascertaining if the piers were constructed· on footings and by leaving steel rods in the concrete core of the engaged piers, the defendant created the impression that there were starter bars connected to the footings and the piers were on the footings. The plaintiffs alleged that those representations were untrue in that the defendant _knew or ought to have known that the engaged piers were not in fact constructed on the footings but were constructed on clay soil; that the construction of the plinth wall was not part of the plans and that wall and concrete spillage were constructed or placed for the purposes of, and had the effect of, concealing the fact that the engaged piers were not constructed on the footings; and that the steel rods situated in the concrete core in the engaged piers were not starer bars and were not connected to the footings and were placed or allowed to remain there for the purpose of, and had the effect of, concealing the fact that the engaged piers contained no starter bars connected to the footings. These representations are alleged to have been made fraudulently, recklessly or negligently and the plaintiffs alleged that they relied upon the truth of those representations and completed the house on those , eng(iged · piers with the consequential damage pleaded, (_paras. 17 - 21). Res Judicata and Issue Estoppel -- 9 of 24 -- 7 The old action relied upon a written agreement to build a house. The express terms were pleaded as follows in para. 4: "(a) That the Defendant would execute the works in a proper and tradesman like manner; (b) That the Defendant would execute the works in accordance with the drawings, plans and specifications agreed between the parties; (c) That the Defendant would complete the works within 14 weeks of the commencing date 28th day of January1983." The present action pleads the identical contract. The relevant express terms are pleaded in para. 5 as follows: "(a) that the Defendant would execute and complete the works in a proper and tradesman like manner; (b) that the Defendant would execute and complete the works in accordance with the agreement." In the old action the plaintiffs, by para. 5, pleaded: "In breach of the agreement, the Defendant fai],ed to proceed with the works with due diligence and failed to adhere to the plans and specifications as agreed orin a competent manner, particulars of which allegation are as follows .... " There follow particulars mentioned above at p. 4, but for these purposes para. 5(b) should be set out in full: 11 (b) The Defendant failed to properly locate thefoundation piers as per the plans, .further particulars of which allegation are as follows:- (i) The plans do not properly identify all the necessary foundation piers where they occur in conjunction with footings and provide for inadequate foundation piers; (ii) The foundation works and footings under the lounge/living are of the house were out ofsquare and insufficient piers were supplied; ( iii) The footings on the northern and southern side of the laundry/kitchen pantry area were stopped 450 mm shorter than the plan resulting in the western wall being 450 mm to the eastern side of its proper location -- 10 of 24 -- 8 resulting in conseqUent reduction in width of the house in that area; (iv) -Ther·e were insufficient piers to permit proper construction under the bedroom section of the house; (v) No tie down bolts were installed .. piers on the south wall of the section. in the bedroom (vi) The _footings ~re out of square at the southwest corner of the house." The Scott Schedule on the plaintiffs' side was not more detailed than the particulars pleaded. In the present action by para. 9 the plaintiffs plead: "The Defendant breached the agreement in that:- (a) the Defendant failed to execute and complete the works in a proper and tradesman like manner; (b) the Defendant failed to execute and complete the works in-accordance with the agreement." The particulars of breach are as follows: "A. Twenty-one of -the engaged brick piers as shown as S1-S12, W1-W8 (except W3) and E1-E12 on Plan 'A' attached hereto ('the said engaged piers'):- (i) have not been constructed on footings; (ii) are free standing on clay soil. B. The said engaged piers do not contain starter bars connected to the footings, or at all. C. The said ·engaged piers have not been built in accordance with the provisions of Appendix 4 to the Building Act 1975 (as amended) (and in particular Section 40. 2 thereof) . 11 The old action pleaded only breach of contract while the present action adds negligence and negligent/fraudulent representations. In·Port of Melbourne Authority v. Anshun Pty Ltd [1981] 147 C.L.R. 589, Gibbs, CJ, Mason, Aicken JJ held at p. 597: "The rule as to res judicata comes into operation whenever a party attempts in a second proceeding to -- 11 of 24 -- 9 litigate a cause of action which has merged into judgment in a prior proceeding." They had, in the preceding paragraph, dealt with the difference between res judicata and issue estoppel as follows:- "The distinction between res judicata (in England called 'cause of action estoppel') and issue estoppel was expressed by Dixon J. in Blair v. Curran (1939) 62 C.L.R. 464 at p. 532, in these terms: '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'. The distinction was restated by· Fullagar J. in hisdissenting judgment in Jackson v. Goldsmith (1950) 81 C.L.R. 446, at p. 466. His Honour expressed the rule as to res judicata by saying: 'where an action hasbeen brought and judgment has been entered in that action, no other proceedings can thereafter be maintained on the same cause of action. This rule is not, to my mind, correctly classified unde~ theheading of estoppel at all. It is a broad rule of public policy based on the principles expressed in the maxims "interest reipublicae ut sit finis litium" and "nemo debet bis vexari pro eadem causa." ' His Honour went on to discuss issue estoppel, citing the comment of Dixon J. in Blair v. Curran (1939) 62 C.L.R., 464 at p. 531: '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.' " Deane, Toohey and Gaudron JJ. in Chamberlain v. The Deputy Commissioner of Taxation (1988) 164 C.L.R. 502 observed at pp. 510-11: "And, so long as that [the first] judgment stands, it is not competent for the respondent to bring furtherproceedings in respect of the same cause of action. It is no answer to say that the Court· might, if appropriate, stay the second action as an abusive process. The impediment goes deeper than that; res judicata may sustain a plea of abusive process but in that case the appropriate remedy is to strike out the later action: Greenhalgh v. Mallard [1947] 2 All E.R. 255 at p. 257; Dallal v. Bank Mellat [1986] Q.B. 441 at pp. 451 - 454. So long as the respondent ~hooses, -- 12 of 24 -- 1 0 as ~e does~ to take no step -to set aside the judgment and to raise no issue in the second action as to the circumstances tn which that judgment was obtained, he must accept the consequences :of res judicata." The question th~n is whether, in pleading the same contract in this action as was pleaded in the old action with the same allegations of breach but with qifferent particulars of breach, the plaintiffs are. pleading a . cause which has merged in the judgment on the old action. In Conquer v. Boot [1928] 2 K.B. 336, the defendant contracted to build a bungalow for the plaintiff in a good and workman like manner. The plaintiff successfully brought an action in the County Court for breach of contract to complete in a good and workmanlike manner, setting forth particulars of what he alleged required to be done to fulfil the contract for which he obtained damages. The plaintiff afterwards brought another action, claiming in identical terms for breach of the same contract except as to the amount claimed and the addition that the contract was to build with proper materials. This was followed by particulars different from but of the same character as those in the first action. The defendant pleaded res judicata in relation to the second action. Sankey LJ. observed at pp. 342 - 3: "The cause of action here is: ( 1 ) The contract to complete in a good and workman like manner a bungalow, and (2) the breach of it. I do not think that every breach of it - every particular brick or particular room that is faulty - gives rise to a separate cause of action. ~ am of opinion that the cause of action her was the contract and the breach of it, both of which had been assigned in the original action. I do no·t think it possible to say·· that every one of these breaches is_a separate cause of action. In that I am confirmed -by the notes in Bullen· and . Leake' s Precedents of Pleadings, 3rd ed. (1868), p. 625, where the law is correctly stated as follows: "Where the -- 13 of 24 -- 1 1 plaintiff has recovered judgment in a previous action for part only of the amount claimed, the judgment affords a good defence to ·a subsequent action for the same claim." Numerous cases are there cited which show it is quite impossible to treat every breach of contract of this sort as giving rise to a separate cause of action. The cases are all discussed in Mr Spencer Bower's recent book on Res Judicata, pp. 192, 193, and he quotes the case of Brunsden v. Humphrey 14 QBD 147, which says that there may be two actions in respect of the same facts where the facts give rise to two distinct causes of action. In my -view the plaintiff in this case having recovered on the contract for the breach he alleged, cannot recover in another action upon precisely the same particulars of claim, but adding further particulars of damages only. Having recovered judgment in the one action he is debarred from bringing a second action." Talbot J. at p. 345 noted: ''The test whether a previous action is a bar is not whether the damages sought to be recovered are different, but whether the cause of action is the same: per Bovill CJ. Gibbs v. Cruikshank (1873) L.R. 8 C.P. 454, 460. If this were not so the rule would be nullified. But the question is not whether, as the action was actually brought, the plai_ntiff could or could not go· into certain matters, but whether he could if he had given the proper particulars or proved the whole of what he claims in the second action under the cause of action for which he sued in the first: see Death v. Harrison ( 1870) L.R. 6 Ex. 15, 19, especially the judgment of Cleasby B., and Newington v. Levy (1870) L.R. 6 CP 180. The giving of such particulars as are necessary to enable the defendant to know what case he has to meet is merely incidental to the bringing of the action, and the plaintiff cannot give himself a right to bring an action which otherwise he could not bring by failing to specify all the matters which go to make up his one cause of action, or to claim all the relief to which he entitled in respect of it." At p. 346 he added: "There are many authorities on this subject or connected with it, but they all come back to the same test, is the cause of action in the second action the same as that for which the plaintiff had a judgment in the first? If it is, the second action cannot be· maintained, and (speaking generally) it is immaterial· whether the plaintiff knew or might have known, when he brought the first action,· the facts on which he relies in the second: see Clegg v. Dearden (1848) 12 -- 14 of 24 -- 1 2 QB ~76 and the judgment of Holroyd J. in Howell v. Young (1826) SB & C 259, 266." The reasoning in Conquer v. Boot, has generally been followed, see for example, Alfred Rowntree and Sons Ltd v. Frederick Allen and Sons· (Poplar) Ltd (135) 41 Corn. Cas 90; Van Amstel v. Country Roads Board [1961] V.R. 780; Onerati v. Phillips Constructions Pty Ltd (1989) .16 N.S.W.L.R. 730; and Dorter and Sharkey, Building and Construction Contracts in Australia, 2nd ed. p. 14.710; Spencer Bower and Turner, op cit, p. 376; and McGregor on Damages, 14th ed. (1980) paras. 282-4. The plaintiffs do not seriously challenge the propositions enunciated in Conquer v. Boot insofar as it relates to defects known or which ought to _have been known on the occasion of the previous.action. They say that an exception operates or ought to operate when the defects complained about were not_within the means of knowledge of the plaintiff at the time of the former trial or, a fortiori, if the defects were concealed by the fraud of the defendant. In Onerati v Phillips Constructions Pty. Ltd., (1989), supra, a case similar to the present although without allegations of fraudulent misrepresentation by conduct, Giles J, formulated three propositions derived from an examination of the authorities, at p. 746, as follows:- "1 . In curial proceedings, for the purposes of the principal of res judicata there is but one cause of action for breach of contract founded upon breach of a promise such as to carry out the work in a good and workmanlike manner. There is not a number of causes of action according to particular defects or classes of defect resulting from the breach. 2. Accordingly, judgment in one proceeding will be a bar to ~econd proceedings to recover damages with respect of the defects or classes of defect not the subject of the first_ proceedings. -- 15 of 24 -- 1 3 3. This will be so even-where the defects or classes of defects the subject of the second proceedings were not apparent to the plaintiff at the time of th~ first proceedings. 4. 11 With respect to the third proposition his Honour observed at- p.748:- "It may thus be said that the third proposition in.the summary is not beyond question. The earlier decisions suffer from a failure to distinguish clearly between res judicata and the principle in Henderson v. Henderson to which the plaintiff's knowledge or means of knowledge may be relevant. But in my opinion the third proposition is correct. As a matter of principle, if a cause of action 'passes into judgment' it must do so regardless of the state of mind or knowledge of the plaintiff. Where the cause of action upon which the plaintiff proceeds is determined by judgment, it does not matter that the plaintiff chose to conduct his case in a particular way or to limit the evidence which he called; subject to the possibility of leave to call fresh evidence on appeal, it does not matter that he may have conducted his case in a particular way because he did not know o( some relevant evidence, or that the result might have been different had he known of, and called, that evidence. As Fitter v. Veal shows, it does not matter that after judgment further consequences of the injury done to him appear. The only question is whether or not he has a separate cause of action upon which he can proceed in a second proceedings." The plaintiffs allege fraudulent concealment. The authorities do establish certain affirmative answers to a plea of res judicata as an estoppel and fraud is one, " ... although it is not permitted to show that the Court was mistakeri, it may be shown that they were misled. Fraud is an extrinsic collateral act, which vitiates the most solemn proceedings of Courts of justice," Duchess of Kingston's Case (1776) 2 Smith L.C. (13th ed.) 644 at p. 651. The plaintiffs in their submissions state that they do not wish to set aside or go behind the judgment in the old action. It seems plain that the fraud must go to the -- 16 of 24 -- 14 very matter litigated .and that is not the case here, for there was no obligation upon the defendant in the old action to reveal the matters which he is alleged to have.concealed. Even if that be an incorrect approach, the present pleading does no more than surmise and infer fraud from circumstances which do not of themselves necessarily lead to that conclusion and that is insufficient to displace the estoppel, Meddoncroft v. Huguenin (1844), 4 Moo P.C. 386 at pp .. 398-9; 13 E.R. 352; Perry v. Meddoncroft (1846) 10 Beav. 122 at p. 137; 50 E.R. 529; Spencer Bower and Turner, op. cit, p. 322. Accordingly, I conclude that the plaintif~s are estopped from litigating the contract again and those paragraphs ought to be struck out. It is then necessary to consider whether the whole pleading is estopped because the issues raised therein have been heard and determined. I shall not consider further paragraphs 1 to 10 relating to the plea in contract. The question is whether "a state of fact or law is alleged or denied, the existence of which is a matter necessarily decided by the prior judgement", Blair v. Curran, supra, per Dixon J. at p. 532. In Brewer v .. Brewer (1953) 88 C.L.R., 1· Fullager J at p. 15, discussing Hoysted v Federal Commissioner of Taxation (1926) A.C. 155 observed:- nin' Hoysted' s Case the Commissioner was not merely seeking to raise on the second appeal a point which he might have raised but had omitted to raise on the first appeal. He was seeking to raise the point which could not be decided in his favour consistently with the decision on the first appeal. The point had not .been argued on the first appeal, and there was therefore no express decision on· the point. But the Commissioner had allowed it to be assumed against him, and the assumption was fundamental to the decision in ·the sense. that, if the assumption had not been made, -- 17 of 24 -- 1 5 the decision must have been different. As Somervell L.J. said:- 'He was therefore seeking to obtain an order which was on the face of it in form in direct conflict with the order which had been made previously.' (1949) Ch. at p. 360. The point in question had been 'the groundwork of the decision itself, though not then directly the point in issue' (per Coleridge J. in Reg. v. Township of Hartington (1855) 4 El & Bl 780 at p.794; 119 E.R. 288 at p. 293. 11 .. In the present action the plaintiffs seek to recover damages for // breach of a duty of care to carry out the work in a tradesmanlike ///' manner or alternatively by virtue of fraud or negligent misrepresentation. The ambit of the duty of care is identical with the obligation under the contract. The question is whether, as a consequence of the pleas in those claims based on negligence or negligent/fraudulent misrepresentation there would be concurrent and inconsistent judgments, that is, ther.e would be a necessary finding that the judgment of Macrossan J. was erroneous, Port of Melbourne Authority v. Anshun Pty. Ltd., supra, per Brennan J. at p. 609. The breach of a duty to carry out the work in a tradesmanlike manner was a cause of action available to be pursued against the defendant in the old action and the plaintiffs elected not to do so. The allegations of fact to establish the duty, breach and damage are identical with those setting up the contract, its breach and subsequent damage. In Brunsden v. Humphrey (1884) 14 Q.B.D. 141, Bowen L.J. observed at p. 149 that the rule depends, 11 not upon technical consideration of the identity of forms of action, but upon matters of substance 11 • Here the damage sought to be recovered -- 18 of 24 -- 1 6 is different only as. to particulars and if the plaintiffs are successful there must necessarily be a finding inconsistent with the judgment in ··the old action. Acc-ordingly, paras. 11, 12, and J 13 of the statement of claim are struck out. It seems to me, however, that a different conclusion must be reached in respect of the plea of fraudulent/negligent representation. There is no identity of issues with the old proceedings and the present proceedings. It is true that the contractual relationship between the parties will constitute the substratum of facts to be considered but that is all it will be. It is said by the defendant that the matters in issue in these proceedings have already been canvassed in the old trial concerning the footings and piers. A perusal of the present pleading and the evidence and reasons for judgment in the old action indicates that this action relates substantially to different piers and areas of the house. It is unnecessary to go further than that for these proceedings. Of some assistance is the case of Gibbs v. Gibbs (1974) 1 N.S.W.L.R. 259. In that case a husband and wife entered into a deed sanctioned by the court with respect t~ mainten~nce and settlement of property based on values of stock which the wife alleged, on _ subsequent ascertainment, were fraudulently undervalued. She brought.· an action for fraudulent misrepresentation claiming dam~ges. The husband pleaded, inter alia, estoppel being the order of the cou.rt sanctioning the deed. Hutley J.A. considered. that there was no question of a genuine issue estoppel, the original court's attention was not directed -- 19 of 24 -- 1 7 to any question as to the consensus embodied in the deed. He said, at p. 267: "Nothing short of an allegation that prior tosanctioning the deed the Court investigated and rejected an allegation that the defendant had knowingly concealed the true value of the plaintiff's interest in Shooters' Home Pty Ltd would suffice." Whilst there may well be a finding as to credit by the Court considering this matter, as in the former case, it will be in relation to quite different matters from those litigated previously. Paragraphs 3 and 4 of the summons so far as they refer to paragraphs 15 - 21 of the statement of claim are not made out. Henderson v. Henderson The defendant contended that the principle in Henderson v. Henderson, supra, precludes the plaintiffs from pursuing any of the matters pleaded. In view of my findings on paras 1 - 13 it is unnecessary to consider this submission further in relation to those paragraphs. I shall consider it in relation to paras. 15 - 21. In that case Wigram V-C stated at p. 115 (Hare), p. 319, (E.R.): "In trying this question I believe I state the rule ofthe Court correctly when I say 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 tobring forward their whole case, and will not (exceptunder special circumstances) permit the same partiesto open the same subject of litigation in respect of matter which might have been brought forward as partof the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of theircase. The plea of res judicata applies, except in special cases, not only to points upon which the Courtwas actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, -- 20 of 24 -- 1 8 and which the parties, exercising reasonable diligence, might have brought forward at the time." That principle was affirmed in Port. of Melbourne Authority v. Anshun Pty Ltd at p. 598 and in Chamberlain v. Deputy . Commissioner of Taxation, supra, at p. 509. It is to be distinguished from both res judicata and issue estoppel. The case itself was not strictly concerned with res judicata, but ratner with its implications when an issue was sought to be raised which could, and should have been litigated in the earlier proceedings, Chamberlain v. Deputy Commission of Taxation, at p. 509. It is unnecessary to consider the ambit of "special. circumstances" there referred to. It is plain that the question of the reasonable diligence of the plaintiffs in investigating all the piers and footings is a matter which needs to be considered at a hearing. There is material, particularly the affidavit and report of Mr Errol Watkins (especially paragraph 7(k)), which suggests an arguable case for the plaintiffs in that regard. Accordingly, I dismiss that part of the summons. The defendant has sought an order that this question be set down for hearing and determination prior to trial because if it . . is decided adversely to the plaintiffs, there will be nothing left to litigate. On the other hand the range of evidence that would need to be considered would be almost identical to that which would be adduced in the trial of that matter and it seems that if the plaintiffs are successful there would be a duplication of costs. It seems therefore appropriate that the question whether the plaintiffs could with reasonable diligence, have ascertained the alleged defects, can be considered at the trial. -- 21 of 24 -- 19 Limitation of Actions Act The final matter concerns the allegation that the causes of action in the statement of claim did not arise within six years before the commencement of the action and are thus barred by s.10 of the Limitation of Actions Act 1974. It is clear that the causes pleaded fall within the ambit of s. 1 0 unless fraud can be established on the part of the defendant or his agents in which case the period of limitation does not begin to run until the plaintiff has discovered the fraud or could, with reasonable diligence, have discovered it, (s.38). In an ordinary cause founded upon contract or tort (and the balance of the al tern a ti ves pleaded apart from contract are founded in tort) the period of limitation is 6 years. The cause of action in contract arises at the time of the breach,, At the best this would have been March 1983 when the contract was brought to an end. The writ was issued on 20 December 1990, that is, beyond the limitation period. Causes of action framed in tort were complete when the damage was sustained by the plaintiffs and time runs thereform. The plaintiffs allege that certain relatively minor damage such as cracks, leakage and floor drops mani~ested itself in November 1990. This they allege is attributable to the defective foundations. Those defective foundations are alleged to have been productive of damage from the start since the value of the house was diminished by such a defect and it was unsafe, therefore, apparently, calling for rectification. The Full Court in Gilespie v. Elliott [1987] 2 Qd. R. 509 accepted the -- 22 of 24 -- 20 .. proposition enunciated by the House of Lo~ds in Pirelli General Cable Works Ltd. v. Oscar Faber and Partners (a firm) [1983] ·2 A.C.1, per_ Macrossan .J. (as he then was) at p. 514: " the. cause of action accrued when the physical damage occurred .... even though that was before the owner was or could reasonably become aware of their existence ... '' The question of when the damage occurred is not without difficulty, but it seems that the loss said to have ben suffered at the outset when the defective foundations were laid was economic only and I would not preclude that going ahead for argument at this stage. On the available evidence the minor damage certainly is not statute-barred. The plaintiffs in any event rely only upon s.38 in relation to the foundations. The defendant accepts that in the context of the Act, fraud means "inequitable" or "uncof!scionable" conduct, Kitchen v. RAF Association [1958] 2 All E.R. 241, 249. The plaintiffs allege, as has been mentioned, that the manner in which the footings were concealed and the starter bars left, kept their defective state from the plaintiffs and points to unconscionable conduct on the part of the defendant. Mr Watkins' report goes some way to support this, in a prima facie way. The inference may be drawn that the defendant or his agents did this deliberately. The further question is whether the plaintiffs could, with reasonable diligence, have earlier discovered the alleged fraud. As a matter of practice such questions are regularly heard as a preliminary point of law in order to save the costs of the trial. The same observations apply to this matter as to the Henderson v. Henderson point. Since the issues will cover much of the -- 23 of 24 -- 21 • trial evidence it will be more economical if all the issues are decided together. There is no reason why the evidence given in the earlier action could not be tendered in this action and a direction be given that no further evidence be led on those matters. I will hear submissions as to costs and make appropriate directions for the further conduct of this matter. -- 24 of 24 --