Balnaves v Smith & Anor [2008] QSC 76

SUPREME COURT OF QUEENSLAND CITATION: Balnaves v Smith & Anor [2008] QSC 76 PARTIES: Neil Richard Balnaves Plaintiff v Neil Clifford Smith First Defendant and ACN 060 759 382 Second Defendant FILE NO/S: BS 1391/05 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court of Queensland DELIVERED ON: 18 April 2008 DELIVERED AT: Brisbane HEARING DATE: 8 April 2008 JUDGE: McMurdo J ORDER: 1. Each of the three questions for separate determination is answered in the negative. 2. Paragraphs 34 through 40 of the Further Amended Defence filed on 8 April 2008 are struck out. 3. Defendants to pay the plaintiff his costs of the separate determination the subject of this judgment and of the plaintiff’s application to strike out paragraphs 34 through 40 of the Further Amended Defence, including reserved costs from those matters. CATCHWORDS: ESTOPPEL – FORMER ADJUDICATION AND MATTERS OF RECORD OR QUASI OF RECORD – FORMER ADJUDICATION – JUDGMENT INTER PARTES – Issue estoppel – Matters necessary to the decision – Claim for personal injuries due to boating accident – Where the Federal Court had entered judgment in a claim for property damage resulting from the accident – Where that order was by consent resulting from a compromise between the parties – Whether that judgment was determinative of -- 1 of 14 -- 2 liability in the personal injury claim – Whether the Federal Court’s order determined liability in negligence – Where there had been an agreement not expressed in the court’s order that the Federal Court orders would be without prejudice to the personal injury proceedings ESTOPPEL – FORMER ADJUDICATION AND MATTERS OF RECORD OR QUASI OF RECORD – FORMER ADJUDICATION – JUDGMENT INTER PARTES – Identity of issues – actions based on negligence – Whether contributory negligence must be pleaded for the court to make a determination on the issue ESTOPPEL – FORMER ADJUDICATION AND MATTERS OF RECORD OR QUASI OF RECORD – FORMER ADJUDICATION – MATTERS PRECLUDING ESTOPPEL – Judgment not conclusive – Where the Federal Court’s order was by consent – Where no defence was filed, and contributory negligence was not raised – Whether the Federal Court decides contributory negligence in cases where judgment is entered for the plaintiff by consent PROCEDURE – JUDGMENTS AND ORDERS – EFFECT OF JUDGMENTS – Issue Estoppel – Claim for personal injuries due to boating accident – Where the Federal Court had entered judgment in a claim for property damage resulting from the accident – Where that order was by consent resulting from a compromise between the parties – Whether that judgment was determinative of liability in the personal injury claim – Whether the Federal Court’s order determined liability in negligence – Where there had been an agreement not expressed in the court’s order that the Federal Court orders would be without prejudice to the personal injury proceedings – Whether contributory negligence must be pleaded for the court to make a determination on the issue Convention on the International Regulations for the Prevention of Collisions at Sea 1972 s 10, Law Reform Act 1995 (Qld) Marine Orders, Pt 30 (Prevention of Collisions) Issue 5 s 259, Navigation Act 1912 (Cth) Navigation (Collision) Regulations 1982 (Cth) s 247, Supreme Court Act 1995 (Qld) Transport Operations (Marine Safety) Act 2004 (Qld) r 483, r 150 Uniform Civil Procedure Rules 1999 (Qld) -- 2 of 14 -- 3 Benjamin v Currie [1958] VR 259, applied Blair v Curran (1939) 62 CLR 464, cited Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853, cited Christie v Bridgestone Australia Pty Ltd (1984) 33 SASR 377, cited Fookes v Slaytor [1979] 1 All ER 137, applied Hercules Textile Mills Pty Ltd v K & R Textile Engineers Pty Ltd [1955] VLR 310, applied James v McCarthy [1958] QWN 32, cited Minero Pty Ltd v Redero Pty Ltd (Supreme Court of New South Wales, Santow J, unreported, 29 July 1998, BC9803546), cited North Australian Aboriginal Legal Aid Service Inc v Liddle (1994) 118 FLR 109, applied Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, cited SCF Finance Co Ltd v Masri & Anor (No 3) [1987] QB 1028, cited The Mimosa [1944] 77 Ll Rep 217, cited The Owners of SS "Pleiades" and Page (Master) v Page (Master) and Owners of SS "Jane" [1891] AC 259, cited COUNSEL: Mr S Couper QC with Mr S Given for the plaintiff Mr AW Street SC with Mr A Harding for the defendant SOLICITORS: MacGillivrays for the plaintiff McCabe Terrill for the defendant [1] McMURDO J: On 23 February 2002 two motor vessels collided on the Coomera River. One was driven by the plaintiff and the other by the first defendant and owned by the second defendant. [2] By these proceedings the plaintiff claims damages for personal injuries from the collision, which he says was caused by the negligence of the first defendant for which the second defendant is vicariously liable. The proceedings were commenced on 22 February 2005. A total of $2,382,011.50 is claimed. [3] The defendants plead, amongst other things, that the claim must fail because of an estoppel. This is said to result from a judgment which the present second defendant obtained against the present plaintiff in proceedings it brought against him in the Federal Court. The second defendant there claimed $6,604.22 for the damage to its -- 3 of 14 -- 4 vessel. That case was commenced on 28 September 2006. In circumstances which I will discuss, there was a consent judgment on 15 January 2007 for that claim in full. [4] In the present proceedings the defendants plead that "as a matter of res judicata, issue estoppel, Anshun estoppel or estoppel by judgment" the plaintiff is estopped from claiming that the collision was caused by the negligence of the first defendant or negligence for which the second defendant is vicariously liable and from denying that his negligence was the sole cause of the collision. They say that to uphold the plaintiff's case to any extent would be contrary to the judgment in the Federal Court. The first defendant was not a party to those proceedings but it is argued that he is a privy of the second defendant and entitled to the estoppels which it pleads. The plaintiff denies the alleged estoppels on several grounds. [5] On 28 March 2008 it was ordered that pursuant to r 483 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”), there be heard and determined as separate questions: (i) whether the plaintiff is estopped from asserting that the collision was caused or contributed to by the negligence of the first defendant or negligence for which the second defendant is vicariously liable; (ii) whether the plaintiff is estopped from denying that his negligence was the sole cause of the collision; (iii) whether the plaintiff is estopped from asserting that he is entitled to damages from the defendants for alleged harm sustained as a result of the collision. This judgment determines those questions. [6] Although the defendants plead various bases for these estoppels, ultimately they have argued only an issue estoppel. They say that the issue is whether the collision was caused solely by the present plaintiff's negligence and that the resolution of that issue against him was a necessary foundation for the judgment in the Federal Court because the second defendant was awarded the whole of the amount which it there claimed. It is necessary then to discuss what was in issue in the Federal Court. [7] The application in the Federal Court claimed "property damages", interest and costs. The applicant was the present second defendant and the respondent was the present plaintiff. The second defendant there pleaded that the plaintiff owed both a common law duty of care and a statutory duty of care to avoid causing property damage to its vessel. The statutory duty was alleged to result from the operation of the Navigation Act 1912 (Cth), together with the Navigation (Collision) Regulations 1982 (Cth) and Marine Orders, Pt 30 (Prevention of Collisions) Issue 5 as well as from the Transport Operations (Marine Safety) Act 2004 (Qld) and the International Regulations for the Prevention of Collisions at Sea. -- 4 of 14 -- 5 [8] The same particulars were given for the allegations that those respective duties were breached. It was then pleaded that "by reason of the (present plaintiff's) negligent breach as alleged, (the present second defendant) has suffered property damage in that its vessel was a complete loss in respect of the hull and its engine was damaged." The loss in total was alleged to have been $6,604.22. [9] The plaintiff was represented in the Federal Court proceedings by different solicitors from those acting for him here, because the defence of the property damage case was in the hands of his insurer. But they attempted to have the Federal Court proceedings transferred to be heard with the present proceedings. That was unsuccessful and the parties were directed to file sealed preliminary acts and the respondent a defence by 11 December. [10] However nothing was filed because the solicitors instructed by the insurer set about negotiating a settlement of the Federal Court proceedings. A settlement was reached, pursuant to which there was a consent order filed in the Federal Court on 15 January 2007. It was ordered that judgment be entered in the (claimed) sum of $6,604.22 together with interest and costs. [11] Because there had been no defence filed, there had been no plea of contributory negligence. Nor had contributory negligence otherwise been made an issue. Had those proceedings not been settled, inevitably contributory negligence would have been pleaded or otherwise raised in response to both the common law and statutory claims. As to the latter, it is common ground that s 259 of the Navigation Act would have provided a defence to the property damage claim to the extent that the present defendant’s vessel was "in fault". Section 259(1) provides as follows: "(1) Where, by fault of 2 or more ships, damage or loss is caused to one or more ships, to their cargoes or freight, or to any property on board, the liability to make good the damage or loss shall be in proportion to the degree in which each ship was in fault: Provided that, if, having regard to all the circumstances of the case, it is not possible to establish different degrees of fault, the liability shall be apportioned equally." And to the cause of action pleaded in reliance upon the Transport Operations (Marine Safety) Act 2004 (Qld), contributory negligence could have been pleaded on the basis of s 247 of the Supreme Court Act 1995 (Qld), by which it is provided that in any cause or proceedings for damage arising out of a collision between two ships, if both ships should be found to have been in fault, "the rules hitherto in force in the High Court of Admiralty so far as they have been at variance with the rules in force in the courts of common law shall prevail". The consequence of those rules, the plaintiff argues, is that there must be an apportionment of liability equally between the two ships when both are at fault. As to the common law claim in the Federal Court, contributory negligence could have been pleaded pursuant to s 10 of the Law Reform Act 1995 (Qld). -- 5 of 14 -- 6 [12] According to the plaintiff's argument, the suggested differences between these various provisions for contributory negligence are significant. Because the present proceedings involve only a common law claim, it is said that the Federal Court judgment has not necessarily disposed of the same issues as those concerning the existence and extent of the defendants' liability to the plaintiff in the present proceedings. The plaintiff argues that the content of the common law duty owed by each driver was different from the content of any statutory duty, the apportionment rules are different between the various causes of action, and the Federal Court judgment is not shown to rest upon the respective rights and liabilities of the parties under the common law. [13] In my view it is unnecessary to consider those arguments because contributory negligence upon any basis, was not pleaded or otherwise raised in the Federal Court. Until contributory negligence was raised in those proceedings, it was not an issue. That claim required proof that a cause of the collision was a breach of duty by the present plaintiff. It did not require proof that the present defendant or the driver of its vessel was without fault. [14] It is well established that contributory negligence must be raised and proved by a defendant: Hercules Textile Mills Pty Ltd v K & R Textile Engineers Pty Ltd1 ; Benjamin v Currie2 ; Fookes v Slaytor3 ; Christie v Bridgestone Australia Pty Ltd4 ; North Australian Aboriginal Legal Aid Service Inc v Liddle5 . But n relying on those authorities, counsel for the plaintiff addressed what was said to be an inconsistency between those cases and what was said by Wanstall J in James v McCarthy6 . [15] In James v McCarthy a plaintiff claimed damages for personal injury and property damage from a collision between his motor cycle and a car driven by the defendant. Contributory negligence had not been pleaded and the plaintiff argued that it could not be considered. Ultimately Wanstall J was not satisfied that the plaintiff was negligent. But he accepted the defendant's argument that the then equivalent of s 10 of the Law Reform Act, upon its proper construction, required the court to apportion liability justly and equitably whether or not contributory negligence had been pleaded. This was although he accepted that it was a "well established rule of practice that contributory negligence must be pleaded". He referred to The Mimosa7, a collision case in which that judge found negligence on the part of both vessels and held that "the fact that one ship does not allege any fault against the other is immaterial if the court after enquiring into all the facts finds that such fault exists". 1 [1955] VLR 310. 2 [1958] VR 259, 263. 3 [1979] 1 All ER 137. 4 (1984) 33 SASR 377, 393. 5 (1994) 118 FLR 109. 6 [1958] QWN 32. 7 [1944] 77 Ll Rep 217. -- 6 of 14 -- 7 [16] A few months earlier, in Benjamin v Currie, the Full Court of the Supreme Court of Victoria had considered the same point and said8 : "It may be questioned whether it is now necessary to plead contributory negligence when it is not relied upon as a defence, but only as a fact in reduction of damages, as the defendant is not required to plead to damages … . However, our opinion is that not only is it common practice so to plead, but the surprise rule … does require it to be pleaded." [17] In 1979 the question was extensively considered by the English Court of Appeal in Fookes v Slaytor9 , which involved a collision between motor vehicles and where there was an apportionment by the trial judge for contributory negligence although it had not been pleaded. The appeal was unanimously allowed, the court holding that the defence of contributory negligence was only available if pleaded. In the principal judgment, with which Orr and Stamp LJJ agreed, Sir David Cairns said10 : "It appears to me that, with all respect to Judge McDonnell, that it was not right in this case to treat the matter as if there were a plea of contributory negligence before the court. That seems to me to be the rule in relation to procedure. The opposite view would mean that a plaintiff in any case where contributory negligence might possibly arise, even though it wasn't pleaded, would have to come to court armed with evidence that might be available to him to rebut any allegation of contributory negligence raised at the trial. It is true that in the ordinary case it would not be likely to involve anything beyond the evidence he would be giving to establish negligence on the part of the defendant, but circumstances are reasonably conceivable in which it might be." Stamp LJ added 11 : "The action here … was not an action for damages resulting from the negligence of both parties, but an action for damages resulting from the negligence of the defendant. There was no allegation that the plaintiff had been negligent. In my view, it was wrong for the learned judge to make a finding against him of negligence." [18] In Christie v Bridgestone12 , there is support, at least in the judgment of Legoe J, for the view in Fookes v Slaytor. But in that case the trial judge was found to have erred in apportioning for contributory negligence when not only had it not been pleaded, but the point had not been canvassed in the evidence or in the arguments. Legoe J held that a provision equivalent to s 10 provided a defence which had to be 8 [1958] VR 259, 263. 9 [1979] 1 All ER 137. 10 [1979] 1 All ER 137, 140. 11 [1979] 1 All ER 137, 141. 12 (1984) 33 SASR 377. -- 7 of 14 -- 8 pleaded13 . Despite what is indicated by the headnote, the views of the other judges, Mitchell ACJ and White J, were not a clear preference for Fookes v Slaytor. In particular, White J said14 : "Some judges take the view that it is not competent for the parties to adduce evidence of contributory negligence or to address argument on the point unless contributory negligence has been pleaded and a contribution notice served. I prefer the view that it is competent for the parties, by virtue of the force of the section, to examine and cross-examine with respect to contributory negligence and to contend at the end of the trial that there is evidence thereof without any pleading or notice, provided both counsel are on notice throughout the trial that it is an issue in the case. Notice that contribution is a live issue prevents injustice to the other side. Naturally it is desirable to raise the issue on the pleadings so as to give early and express notice to the plaintiff. Without pleadings, the defendant should advise the plaintiff that it is an issue in time for him to examine, cross-examine and address before the opportunity is lost." [19] In North Australian Aboriginal Legal Aid Service Inc v Liddle15 the respondent had been injured in a car accident and instructed the appellant in relation to it. It failed to commence proceedings on his behalf within the limitation period. He sued the appellant for professional negligence and obtained a judgment in default of a defence. There was an application to set aside that judgment in the course of which the appellant indicated that, if allowed to defend the claim, it would argue that the value of the statute-barred action was less for the respondent's contributory negligence. The default judgment was not set aside and there was then a hearing for the assessment of damages in which the trial judge refused to permit the appellant to raise contributory negligence in the accident, on the basis that the appellant should have pleaded it. The trial judge further held that contributory negligence could not be pleaded once the application to set aside the default judgment had been refused. Accordingly, there was no allowance for contributory negligence. The Court of Appeal of the Northern Territory ordered a re-trial on the basis that the trial judge should have permitted the appellant to plead contributory negligence. The principal judgment was given by Martin CJ who held that contributory negligence had to be pleaded under the rules of that court, which required the pleading of any matter which if unpleaded would take the other party by surprise and which further required a party to identify the specific provisions of any Act upon which it relied. The "no surprise" rule is a common one, and applied to the Federal Court proceedings here by the terms of O 11 r 10 of the Federal Court Rules. Mildren J agreed with the Chief Justice. Angel J agreed that the appellant should have been permitted "to raise and contest as an issue upon the assessment of damages" that issue of contributory negligence, without deciding that it had to be raised by a pleading. He expressly agreed with the judgment of White J in Christie v Bridgestone Australia in the passage set out above. 13 (1984) 33 SASR 377, 393. 14 (1984) 33 SASR 377, 389. 15 (1994) 118 FLR 109. -- 8 of 14 -- 9 [20] To these cases can be added The Owners of SS "Pleiades" and Page (Master) v Page (Master) and Owners of SS "Jane"16. In that collision case, there was no suggestion in the pleadings, evidence or argument at the hearing of contributory negligence. But on appeal the defendant sought to argue that upon the evidence it should have been concluded that the plaintiffs' vessel was also at fault. The defendants were not permitted to do so. In Christie v Bridgestone Mitchell ACJ regarded this as authority against the view of Wanstall J and instead in favour of a requirement of a pleading of contributory negligence17 . In my view, that does not clearly appear. Rather, the defendants were not allowed to raise the point on appeal simply because it had not been raised by any means, pleadings or otherwise, as an issue at the trial. [21] In Queensland, contributory negligence must now be pleaded because of the express requirements of r 150 of the UCPR. The Federal Court Rules do not contain that express requirement. I was not referred to any authority as to the relevant rule Federal Court rule, O 11 r 10, which provides that in a pleading subsequent to a statement of claim, a party shall plead specifically any matter of fact or point of law that makes a claim not maintainable or which if not specifically pleaded might take the other party by surprise or which raises issues of fact not arising out of the preceding pleading. It is unnecessary to venture a view of the requirements of that rule for a case such as this. But what is clear from each of the authorities which I have discussed, including James v McCarthy, is that contributory negligence must in some way be raised by a defendant for it to become an issue. Some judges have held that it must be raised by a pleading. Others have said that it can be raised by the defendant's conduct of the case as long as the absence of prior notice results in no prejudice to the plaintiff. The critical thing for present purposes is that contributory negligence is not an issue simply because there is a claim for breach of a common law or statutory duty of care. In the Federal Court proceedings here, contributory negligence, either under s 10 of the Law Reform Act, s 259 of the Navigation Act or otherwise, was not an issue until it was made so, by something done by the present plaintiff as the respondent to that claim. But nothing had been done in that respect before the judgment. [22] Accordingly, the judgment did not involve a determination of an issue of the negligence of the present defendants. So far as issue estoppel is concerned, this case is thereby analogous to Port of Melbourne Authority v Anshun Pty Ltd18. The parties there had each been adjudged liable to an injured worker and there had been cross-claims between them for contribution pursuant to s 24 of the Wrongs Act 1958 (Vic). The Port Authority was held responsible for 90 per cent of the damages and Anshun for 10 per cent. In subsequent proceedings, the Authority sought a full indemnity from Anshun upon the basis of an agreed indemnity which it could have pleaded in the earlier proceedings. This action was stayed, not because of an issue estoppel but because the Authority was otherwise estopped. As to the argument for an issue estoppel, Gibbs CJ, Mason and Aickin JJ said19 : 16 [1891] AC 259. 17 (1984) 33 SASR 377. 18 (1981) 147 CLR 589. 19 (1981) 147 CLR 589, 597-598. -- 9 of 14 -- 10 "For a similar reason this is not a case of issue estoppel in the strict sense. The Full Court was correct in deciding that the existence of an indemnity is a defence to a claim for contribution under s. 24(1)(c) of the Wrongs Act and that the absence of an indemnity is not an ingredient in the cause of action for contribution. It was not a necessary step to the decision that Anshun was entitled to contribution for the Court to decide that the Authority was not entitled to an indemnity against Anshun: Carl Zeiss. Had the Authority pleaded the indemnity as a defence to Anshun's claim for contribution, a decision on that defence would have been a necessary step to the ultimate decision that Anshun was entitled to contribution. The defence of indemnity not having been raised, the judgment for Anshun did not involve a determination of that issue." Their Honours there referred to Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2)20 where Lord Wilberforce said21 : "[I]t is permissible to look not merely at the record of the judgment relied on, but at the reasons for it, the pleadings, the evidence … and if necessary other material to show what was the issue decided … The fact that the pleadings and the evidence may be referred to, suggests that the task of the court in the subsequent proceeding must include that of satisfying itself that the party against whom the estoppel is set up did actually raise the critical issue, or possibly, though I do not think that this point has yet been decided, that he had a fair opportunity, or that he ought, to have raised it." [23] In the present case there being no issue as to the negligence or otherwise of the operation of the defendant's vessel, it cannot be said that that is a matter "necessarily decided by the prior judgment"22 . The argument for an issue estoppel fails. [24] It is unnecessary then to discuss the arguments which concerned whether the alleged issue estoppel would preclude also the claim against the first defendant, he not being a party in the Federal Court. But something should be said of an alternative argument for the plaintiff, which is that the dealings between the plaintiff and the second defendant, which preceded the consent judgment, have the effect that any issue estoppel would itself be precluded. This argument would be relevant to a question, which does not directly arise in the present hearing, of whether the Federal Court judgment creates an issue estoppel on the issue of whether a cause of the collision was the negligence of the present plaintiff. Absent this argument, it would seem that the Federal Court judgment necessarily involved the determination of the issue of his negligence. [25] The point is pleaded by the plaintiff in his Amended Reply as follows: 20 [1967] 1 AC 853. 21 [1967] 1 AC 853, 965. 22 Blair v Curran (1939) 62 CLR 464, 532. -- 10 of 14 -- 11 "14 (f) The judgment particularised in paragraph 38 of the Amended Defence- (i) was entered by consent of the effective parties to the application; (ii) reflected a commercial compromise of a limited cause of action in a small amount; (iii) occurred on the strict understanding between the effective parties to the litigation, including the Insurer which is indemnifying the First Defendant and/or the Second Defendant in these proceedings: A. that payment of an amount was made confidentially; B. that such payment was made without prejudice to any arguments to be made in the Queensland litigation, the subject of these proceedings; C. that such payment did not amount to an admission of liability in respect of the incident the subject of this application; D. that such payment was made to avoid unnecessary legal costs being incurred and on a commercial basis only; (iv) is not capable in law or in fact of the effect alleged in paragraph 40 of the Amended Defence." [26] As ultimately argued, this involved two alternative propositions. First, it was a term of the compromise by which there was the consent judgment that the plaintiff would not be estopped in relation to these proceedings by that judgment. Second, there is the same result from an estoppel by convention. As to that second argument, I am not persuaded that the present defendants in fact assumed that there would be no issue estoppel. I would find that the plaintiff had that assumption. But it is at least as likely that on the defendants' side there was simply no assumption one way or the other about that matter. The evidence does not permit an exploration of that beyond what might be inferred from the documents which passed between the parties. It is the objective view of those documents which is relevant for the alternative argument that it was a term of the settlement that there would be no estoppel from the judgment. But I am not persuaded that the documents establish what was actually thought by the relevant persons for the second defendant. [27] The principal argument was that the parties agreed to compromise the Federal Court proceedings by a consent judgment, upon the condition that the present proceedings would not be affected. The relevant negotiations began on 1 December 2006 when McCullough Robertson, acting for the insurer of the present plaintiff, wrote to the solicitors for the present defendants relevantly in these terms: "As we have discussed with you at length and as has now been ventilated in the Court, our client is concerned that the proceedings brought by your client in the Federal Court at Sydney are unnecessary and could have been commenced in Queensland and heard together with one or both of the personal injuries claims -- 11 of 14 -- 12 currently on foot in the Supreme Court of Queensland at Brisbane as a result of this accident to ensure that all liability issues are determined at the same time. Our client considers the legal issues currently being determined in the Federal Court at Sydney could have been determined by the Supreme Court of Queensland, and as a result both your client and our client are incurring unnecessary legal costs which could have been avoided by a consolidation of all claims. The claims commenced by Mr Balnaves and Mr Malone in the Supreme Court of Queensland have been on foot for some time and your client is already a party to both claims, so is fully aware of the issues involved in those matters. However, on a purely commercial basis to save the future legal costs, our client is offering to settle your client's Federal Court claim on the basis that our client pays to your client: (a) the sum sought in the Federal Court proceedings of $6,604.22 for properly damage; (b) interest on the property damages sum pursuant to section 51A Federal Court Act 1976 (Commonwealth); and (c) costs on the applicable Federal Court scale to be agreed, and failing agreement, to be assessed. The offer to settle is also conditional upon your client agreeing to judgment being entered to finalise its claim in the Federal Court upon acceptance of this offer to settle. Our client's offer to settle the Federal Court proceedings is made in the strict understanding that such a payment is made confidentially and without prejudice to any arguments that our client may make in the proceedings brought by Mr Balnaves or Mr Malone in the Queensland litigation, and therefore does not in any way reflect our client's view as to liability for your client's property damages claim. No admission of liability in relation to the incident the subject of the Federal Court claim and Queensland litigation is made by this offer to settle." (It seems that there was another proceeding in which there was a claim by Mr Malone who was injured in the same collision.) [28] On 7 December 2006, the solicitors for the present defendants replied as follows: "Thank you for your letter of 1 December 2006. Our client's (sic) are prepared to finalise this matter on the following terms which substantially reflect the substance of your client's offer, but which precise terms as identified record the basis upon which our client is willing to accept the resolution and settle this matter in the Federal Court of Australia: 1. Judgment be entered for the applicant against the respondent in the sum of $6,604.22. -- 12 of 14 -- 13 2. The respondent pay interest in accordance with Order 35 rule 8 upon the said judgment sum from 23 February 2002 to date under s section 51A of the Federal Court of Australia Act 1976. 3. The respondent pay the applicant's costs as to taxed or agreed. 4. Pursuant to Order 62 rule 36A that there be no reduction by reason of the quantum recovered being below $100,000. We trust that these terms are acceptable and look forward to hearing from you." [29] There was a response the next day from the insurer's solicitor saying that she was obtaining instructions "from my client and Mr Balnave's solicitors in his personal injuries claim regarding the terms of the offer". Then on 22 December 2006, she wrote to the solicitors for the present defendants as follows: "We refer to our discussions earlier today and confirm that we have our client's instructions to accept your client's offer to settle as set out in your facsimile dated 7 December 2006. We note you will prepare the necessary documents for filing in the Federal Court in order to confirm the settlement of the property damage claim and will provide them to us in early January 2007." [30] It was common ground that there was a concluded agreement for the compromise of the Federal Court proceedings on the sending of that letter of 22 December. For the plaintiff it is argued that he showed an intention to be bound only on terms that the present proceedings would not be prejudiced, as was made clear in the letter of 1 December. For the defendants, it is argued that such a term was no element of the counter-offer which was made on 7 December and that it was that counter-offer which was accepted on 22 December. In my view, the plaintiff's argument should be accepted. [31] As was known to the defendants, McCullough Robertson were retained by an insurer, who was concerned with the defence of the property damage claim but not with the prosecution of the present proceedings. It could hardly have been thought by the defendants that the plaintiff through McCullough Robertson was intending to reach a settlement which would put paid to the plaintiff's personal injuries claim, especially when that claim was for in excess of $2 million as against the very small amount involved in the Federal Court proceedings. In the letter of 1 December it was made clear that although the present plaintiff was proposing a judgment by consent, this was not to prejudice the present litigation. It is not as if a consent judgment had been proposed first by the present defendant, which might have indicated that it was rejecting that condition. The expression of that condition was awkward, in that it was said that the offer to settle was made "in the strict understanding that such a payment is made confidentially and without prejudice to any arguments that our client may make in the proceedings brought by Mr Balnaves …". But as the defendants appeared to accept in their submissions, that was a -- 13 of 14 -- 14 sufficiently clear qualification. Their point was however that the qualification was omitted in the counter-offer of 7 December. There is no specific reference to that condition in the letter of 7 December. Given the terms in which the condition had been proposed as a "strict understanding", the absence of any reference to it is hardly a clear rejection of it. Instead, the response was that the matter could be settled on terms which "substantially reflect the substance of your client's offer". The terms they proposed were more precise in relation to interest and costs. Their response would not have "substantially reflected the substance of the offer" if it had rejected the condition that settlement of this very small claim should not affect the present case. And in the letter of 22 December McCullough Robertson referred to the preparation of the necessary documents "to confirm the settlement of the property damage claim", which on its face, was an intended distinction from the present personal injuries claim. [32] Accordingly, it was a term of this compromise that the present proceedings would not be affected. Consequently, the second defendant is precluded by the terms of its contract from advancing the alleged issue estoppel. The first defendant's entitlement to the benefit of that estoppel could only be as the privy of the second defendant so that his position is also affected by that contract. The present case involves more than a consent judgment which had been coupled with an expressed non-admission of liability23 . Rather, this is an example of what is referred to in Spencer Bower, Turner and Handley’s Res Judicata at paragraph 374 where it is said that "a contract that any decision given on a specified point will be disregarded is a complete answer to an estoppel based upon such a decision". Ultimately, counsel for the defendants accepted that if the compromise contained the term argued by the plaintiff, then it would preclude any estoppel from the judgment. [33] Each of the three questions for separate determination should be answered in the negative. It follows that the relevant paragraphs of the Amended Defence, being paragraphs 34 through 40 of the Further Amended Defence filed on 8 April 2008, will be struck out. I will hear the parties as to costs. 23 Cf Minero Pty Ltd v Redero Pty Ltd (Supreme Court of New South Wales, Santow J, unreported, 29 July 1998, BC9803546) and SCF Finance Co Ltd v Masri & Anor (No 3) [1987] QB 1028. -- 14 of 14 --