South Somerset District Council v Tonstate (Yeovil Leisure) Ltd

There are before the Court two applications in two connected proceedings between the same parties. In Claim No HC09C0632 (“the Contract Action”), which was transferred to this Court from the Yeovil County Court, Tonstate (Yeovil Leisure) Limited (“Tonstate”) applies for permission to make far-ranging amendments to its Defence, and for the stay of those proceedings imposed by the County Court to be lifted. In that action, South Somerset District Council (“the Council”) is the Claimant. In Claim No HC08C03153 (“the Competition Action”), the Council applies to strike out the claim pursuant to CPR rule 3.4(2) or alternatively for summary judgment against the Claimant. In that action, Tonstate is the Claimant and essentially claims that its contract with the Council, which contract is the subject of the Contract Action, is contrary to the Chapter I prohibition in the Competition Act 1998 (“the CA 1998”).

The essential facts are not in dispute. Tonstate is the current counter-party to a Development Agreement entered into by the Council on 22 December 1999 whereby the Council agreed to transfer the freehold of land and buildings known as The Old Town Station Car Park, Yeovil (“the Property”) for the purpose of carrying out a major leisure development, including the construction of a new car park (“the Car Park”). Tonstate has thereby become the registered freehold owner of the Property.

Clause 26 of the Development Agreement (as amended) provides that the Council and Tonstate “shall complete an agreement … relating to the management of the Car Park and the sharing of income generated from its operation”. In accordance with that provision, on 14 October 2002 the Council and Tonstate (as “the Owner”) entered into a Car Park Management Agreement (“the Agreement”). The Agreement is central to both sets of proceedings and it is necessary to set out a few of its provisions.

Paragraph 1 of the Recitals includes the following definitions:

Paragraph 4 of the Recitals states: “The parties have agreed to enter into this Agreement to provide for the maintenance of the Car Park and other provisions relating to them upon the terms hereinafter contained”.

Under substantive clause 1 of the Agreement, the Council and the Owner (i.e. Tonstate) agree, insofar as material:

Pursuant to the Agreement, Tonstate has operated the Car Park with parking spaces for 400 vehicles since 2002.

On 11 December 2007, the Council commenced the Contract Action in the Yeovil County Court. In essence, the Council claimed monies due under the Agreement. More specifically, the Particulars of Claim plead the Agreement (a copy of which is indeed attached to the Particulars) and clauses 1.3.9 and 1.4 thereof, and state:

The Particulars go on to assert that save for an initial payment of £40,000 in respect of the first annual payment for the accounting period 2002/03, no sums have been paid for any of the accounting periods 2003/04 to 2006/07 nor have any accounts been submitted for those periods, in breach of the Agreement. The Council accordingly sought an order for submission of accounts for those years and payment of all sums due. In addition, since Tonstate had asserted in correspondence that it is not obliged under the Agreement to charge for parking at the Car Park, there was a claim for a declaration that Tonstate is obliged to continue charging members of the public using the Car Park in accordance with the level of charges as set out in recital paragraph 1.15, i.e. by reference to the 1995 Order.

By its Defence dated 31 January 2008, Tonstate admitted the Agreement and that it was required to charge for use of the Car Park pursuant to the provisions of the Agreement referred to in paragraph 4 of the Particulars of Claim in accordance with what is prescribed in the definition of “Shoppers Car Park”. The Defence also admitted the failure to submit accounts for the relevant years but asserted that accounts for all those years save for 2006/07 had now been sent together with a further payment of £40,000, and that accounts for the year 2006/07 would be submitted within 28 days. The Defence further pleaded that:

Although the Defence asserted that Tonstate was not obliged under the Agreement to keep the Car Park open, as regards the claim for a declaration, Tonstate pleaded as follows:

Thereafter, on 25 February 2008, Tonstate duly paid the Council the sum of £103,897.17 referred to in its Defence. There followed two orders in the Yeovil County Court that are critical to the present applications:

On 27 February 2008, District Judge Smith made an order stating: “It appears from the ‘Consent Order’ filed by the defendant that the defendant admits £103,897.17 and £54,169.24;

On 27 March 2008, District Judge Corrigan made an order by consent (“the Consent Order”), incorporating the terms set out in a draft order signed on 10 March by the solicitors to both parties. The Consent Order provides that Tonstate pay the Council within 14 days the sums of £26,206.26 by way of interest and £54,169.26. Further, the Council was given permission to amend its Particulars of Claim. For completeness, I should record that the parties’ agreed draft of 10 March incorporated recitals which, although not reproduced in the formal order of the Court, explain the agreed basis on which the Consent Order was made, as follows:

The defendant shall pay to the claimant within fourteen days of the date of this Order £26,206.26 by way of interest to 15 February 2008.

The Amended Particulars of Claim add a claim for a declaration “that the Defendant is obliged by the contract to ‘[manage and control the car park] as a Shoppers Car Park available for use by the public at all such times and days when that public use will not conflict with the need to provide free of charge readily available Car Parking Spaces for use by the tenants and occupiers of the Property…’ as required by clause 1.1 of the contract….” and sought an injunction to prevent Tonstate from closing the Car Park.

The monies due in accordance with the Consent Order have been duly paid. Accordingly, I was told that the only issue remaining in the Contract Action prior to the present application to amend the Defence is the question whether or not Tonstate is entitled to close the Car Park. On 26 March 2008, Tonstate gave an undertaking to the Court that it would not close the Car Park without at least 28 days’ notice to the Council. That has taken care of the position in the interim but the issue remains live as between the parties.

On 26 September 2008, after Tonstate had stated that it was going to commence the Competition Action in the High Court, District Judge White stayed the Contract Action. After the present application to lift the stay and amend the Defence was issued by Tonstate on 12 January 2009, the Deputy District Judge ordered on 26 January 2009 that the proceedings be transferred to the High Court.

As already mentioned, the draft amendments sought to be made to the Defence are far-reaching. Tonstate alleges that the Agreement is unenforceable on several grounds, which can be described briefly as follows:

Since the 1995 Order was repealed by a further order of the Council made in 2004, which in turn was subsequently repealed and replaced by further orders, whereas the Agreement refers only to the 1995 Order without reference to future orders, the contractual obligation to account and pay ceased at the time of the repeal of the 1995 Order;

Similarly, the requirement in clause 1.1 of the Agreement to manage and control the Car Park as a “Shoppers Car Park” is unenforceable by reason of the revocation of the 1995 Order;

Clauses 1.1 and 1.4 of the Agreement are void for uncertainty because of the terms in which they are expressed;

The Council acted ultra vires in entering into the Agreement by reason of the requirements of the Road Traffic Regulation Act 1984 (“the RTRA 1984”) and the procedural regulations made thereunder that require public consultation in introducing an arrangement for the provision of off-street car-parking spaces;

The Council acted ultra vires in entering into the Agreement since it was in breach of section 123 of the Local Government Act 1972 (“the LGA 1972”) in failing to obtain the open market value of the land or alternatively the consent of the Secretary of State.

On these cumulative or alternative bases, Tonstate denies that the Council is entitled to the declaration or injunction sought by the Amended Particulars of Claim and seeks a declaration that it is entitled to close the Car Park. Moreover, the draft pleading includes a Counterclaim whereby Tonstate seeks to recover all the sums that have been paid in settlement, with interest, as monies paid under mistake of law.

On 7 November 2008, Tonstate commenced the Competition Action in the High Court. By this it alleges that since the Council independently operates its own car-parks, an agreement with Tonstate that restricts Tonstate’s freedom to set its own rates of charge is an agreement between undertakings which restricts competition and thus infringes the Chapter I prohibition imposed by section 2 of the CA 1998, and that the Agreement, or alternatively clause 1.1, is void. Tonstate seeks a declaration accordingly and claims by way of damages and/or an account all sums paid to the Council by virtue of the Agreement.

By its Defence, the Council raises a series of defences to the claim, including that the Council was not acting as an “undertaking”, that the Agreement falls within the scope of the Competition Act 1998 (Land Agreements Exclusion and Revocation) Order 2004 and is accordingly excluded from the application of the Chapter I prohibition, and alternatively that the Agreement satisfies the conditions for exemption under section 9 of the CA 1998. And by its Counterclaim, the Council contends that if the Agreement is void, then the transfer of the Property to Tonstate is also void. But at the start of its Defence, the Council pleads that the claim is barred by issue estoppel or alternatively is an abuse of process by reason of the Consent Order made in the Yeovil County Court in the Contract Action.

In the Contract Action, the Council resists Tonstate’s application to amend its Defence on the basis that for Tonstate now to impugn the Agreement as unenforceable is barred by issue estoppel on the basis of the Consent Order, or alternatively an abuse of the process of the Court. And in the Competition Action, the Council applies to strike out Tonstate’s claim altogether on the same basis, as pleaded in its Defence.

At the outset of the hearing, I pointed out to Mr Green QC, appearing with Mr Singla for Tonstate, that to seek to recover by counterclaim in the Contract Action the sums paid pursuant to the Consent Order appeared to be directly inconsistent with that Order made in those same proceedings, and that I did not see how such a case could be advanced without seeking to set the Consent Order aside. But there was no application before the Court to set aside the Consent Order. Such an application would of course raise quite different issues. And if Tonstate could not seek to recover those monies by counterclaim in the Contract Action, it would surely be an abuse of process to seek to achieve the same result by starting separate proceedings claiming those monies. Faced with these objections, Tonstate thereupon informed the Court that it would not pursue its claims (whether by counterclaim in the Contract Action or original claim in the Competition Action) for recovery of the monies already paid. Abandonment of those claims of course does not mean that Tonstate was thereby accepting the validity of the Agreement but only that it would not seek to disturb the direct effect of the Consent Order.

Accordingly, these matters proceed on the basis that the issues now sought to be raised concern the future relations between the parties, although if the Agreement is void or unenforceable that will also affect the question of payment under the Agreement for the year ended 13 October 2009.

The Council did not contend that any of the new points sought to be raised by the proposed Amended Defence, or the claim under the CA 1998 made in the Competition Action, was not arguable or could be summarily dismissed. Therefore, these applications proceed on the basis that the new pleas in the Contract Action and the claim in Competition Action are all arguable.

The case presented by Mr Brealey QC, appearing with Ms Demetriou for the Council, was essentially simple. The Consent Order has the status of a judgment, and being a judgment for monies due pursuant to the Agreement a fundamental basis of that judgment is that the Agreement is valid and enforceable. Accordingly, that issue has been determined by the Court and Tonstate is estopped as against the Council from seeking to argue the contrary, whether on the basis of competition law, the LGA 1972 or, indeed, any other basis. Mr Brealey pointed to the Claim Form in the Competition Action, which asserts: “This is a claim for [a] declaration that an agreement is void….” That is reflected in the prayer of the Particulars of Claim. This, argued Mr Brealey, is clearly inconsistent with the premise of the Consent Order. There is no difference for this purpose between the assertion in the Competition Action that the Agreement is void and the assertions in the draft Amended Defence in the Contract Action that it is unenforceable.

In response, Mr Green advanced two arguments. First, that here there was no issue estoppel as regards the claims Tonstate now seeks to advance. Secondly, that even if Tonstate otherwise would be estopped, the court will not allow an estoppel where the legal claim relied on represents a social policy in the interests of the public generally, an argument that for convenience was referred to as the “public policy exception”.

Mr Brealey relied in particular on In re South American and Mexican Company [1895] 1 Ch 37. There, after the company had failed to pay the Bank of England £100,000 on account of the second of four instalments allegedly due under an agreement, the Bank sued the company on the basis that it was “indebted to the Plaintiffs in the sum of £100,000 being the second instalment of a sum of £514,000 agreed to be paid by the Defendants to the Plaintiffs….” By its defence, the company denied the indebtedness and pleaded: “The Defendants deny the alleged agreement mentioned in the statement of claim. There never was any such or any agreement between the Plaintiffs and the Defendants.” During the course of the trial, the parties reached a settlement and judgment was entered by consent for the Bank with costs for payment of the claim of £100,000. After the company went into liquidation, the Bank claimed to prove in the winding up for the outstanding amount owing out of the £514,000. In response the Official Receiver and Liquidator rejected the Bank’s claim on substantially the same grounds as the defence to the previous action.

On a summons that the decision of the Official Receiver and Liquidator be reversed and the Bank’s proof be admitted, Vaughan Williams J held that the Official Receiver was estopped by the judgment. After holding that it made no difference that the judgment was by consent as opposed to a judgment after full trial, the judge held that it would have been impossible for the Bank to have recovered in that action without establishing the agreement. Referring to the pleadings in the earlier action, he stated (at 47):

Mr Brealey contended that it does not matter if the validity of the agreement sought to be challenged subsequently was assumed rather than expressly determined by the earlier judgment. In this regard, he relied on Hoystead v Commissioner of Taxation [1926] AC 155, a decision of the Privy Council on appeal from the High Court of Australia. Giving the judgment of the Board, Lord Shaw stated (at 165-66):

There was an established exception to this principle, said Mr Brealey, when the issue sought to be advanced depended on new facts or a change in the law. But neither of those circumstances operates in the present case.

However, in my judgment, the contention that issue estoppel applies in the present case to bar all the arguments now raised, or sought to be raised, involves applying the principle too broadly. I accept that a consent order is to be treated like a judgment. But it is necessary to identify what is the issue, or issues, now sought to be advanced and then to consider whether each such issue has been “determined”, in the proper sense of that term, by the Consent Order. It is of course clear that none of the grounds now advanced in objection to the Agreement was expressly raised in the County Court prior to the Consent Order. Nor do I consider that any of the issues can be regarded as implicitly determined. The approach to issue estoppel urged upon me on behalf of the Council involves the fallacy of confusing the result which the party said to be estopped now seeks to achieve with the determination of issues implicit in the previous judgment.

Hence, in the South American and Mexican Company case, the “circumstances” referred to in the passage quoted from the judgment of Vaughan Williams J were that the defendants there had expressly controverted the existence of the agreement in their case before the court in the previous action. That question was accordingly directly involved in that action, and the consent order was therefore to be interpreted as resolving it. That this is the correct approach is made clear by the judgments of the Court of Appeal, where Lord Herschell LC refers (at 50) to the need “to give a fair and reasonable interpretation” to the earlier consent judgment, so as not to allow “questions that were really involved in the action to be fought over again in a subsequent action.” (at 50). See also per Lindley LJ (ibid): “It is impossible to read the compromise without seeing that the necessary result of it is – and I believe the intention of the parties to it was – that the dispute between them should be brought to an end.” The “dispute between them” in that case was explicitly whether or not there was an agreement.

Similarly, in Hoystead, the issue directly raised in the first action found to give rise to the estoppel was whether six children of the testator entitled under his will to certain properties were taxable as joint owners, and thus whether the number of deductions from the capital for the purposes of land tax for a particular year of assessment should be one or six. The assumption was made that the children were joint owners and the High Court held that six deductions could be made. When the assessment came to be made for the following year, the Commissioner reverted to the position that only one deduction should be allowed. It was in those circumstances that the Board concluded that the Commissioner was estopped from raising that issue by the previous judgment. The prescription of deduction “was as conclusively settled in the former litigation as language could settle it” (per Lord Shaw at 165, immediately before the passage set out above). It is in my view significant that the judgment sets out and emphasises the terms of the objection raised by the taxpayer to the previous assessment that were therefore central to the previous proceedings. See at 161: “In the opinion of the Board it is highly important to keep fully in view what were the exact terms of that objection”. And subsequently, after citing authorities, Lord Shaw referred to the principle covering not only points expressly decided but also extending “to any point, whether of assumption or admission, which was in substance the ratio of and fundamental to the decision” (at 170) (my emphasis).

Hence in New Brunswick Ry Co v British and French Trust Corp [1939] AC 1, Lord Maugham LC expressed the principle in these terms (at 20):

And in Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853 (a case that was not directly cited before me but referred to in several of the judgments that were) where for various reasons the House of Lords held that an estoppel did not arise, Lord Upjohn referred to the New Brunswick case, stating (at 947C-E):

Although these observations in Carl Zeiss are obiter, they are clearly entitled to considerable weight. In the present case, there is no question of the issues being at first raised and then abandoned; they simply were not raised at all. And while it is perhaps artificial to speak of the “ratio” of a Consent Order, if one asks what would be the ratio had the case gone to judgment on the pleadings as they stood at the time of that Order, I do not see how the new issues could be regarded, in any meaningful sense, as being part of the ratio of such a judgment. The purpose of issue estoppel is to bring finality to litigation and thus legal certainty out of justice to the parties. To take an example, the Agreement here includes (in clause 1.3.4) the obligation on Tonstate to keep the Car Park so far as reasonably possible free of ice or snow. If one winter the Council considered that Tonstate was in breach of this obligation whereas Tonstate considered that it had done all that was reasonable, and the Council then went to court to seek an injunction, an order of the court against Tonstate or a consent order embodying an undertaking would determine the issue of whether or not Tonstate’s snow-clearing efforts had been reasonable. But just because any such order inevitably was based on there being a binding contractual obligation, I do not see that it could fairly be said that it was implicit in the order or judgment that the Agreement was valid for all purposes, or that the order should be regarded as raising an estoppel to prevent Tonstate contending at any time thereafter that the Agreement was ultra vires the Council under the LGA 1972 or infringed the CA 1998. To hold otherwise would be to adopt an interpretation of issue estoppel that ignores the practical realities of litigation and, in my view, would be conducive of oppression rather than justice. The fact that the Agreement here is of indefinite duration only serves to highlight this conclusion.

The decision of the Court of Appeal in Khan v Golechha International Ltd [1980] 1 WLR 1482, which was relied on by Mr Brealey, does not undermine this analysis. There, the plaintiff who defaulted on his repayments of money advanced by the defendant company for the purchase by him of a house, brought an action in the Queen’s Bench division seeking to set aside his contract with the defendant. The plaintiff contended that the contract constituted a “loan” for the purpose of the Moneylenders Act 1927, and was therefore void and unenforceable as the memorandum of contract did not comply with the requirements under section 6 of that Act. At first instance, the judge held that it was a loan within the statute but that the memorandum satisfied the statutory requirements. On the plaintiff’s appeal, the company served a respondent’s notice contending that the agreement was not a loan for the purposes of the Act. At the start of the hearing of the appeal, the plaintiff threw in his hand, his Counsel explaining to the Court of Appeal that he accepted, on the basis of an authority he had been shown, that the transaction was not a loan. The appeal was thereupon dismissed by consent. Some years later, the plaintiff started a fresh action, this time in the Chancery division, contending that the debt was statute-barred by the limitation period imposed by a different section of the Moneylenders Act. Accordingly, the issue of whether the transaction was a loan for the purpose of the statute arose again. Although the Court of Appeal in the second action, upholding the trial judge in those proceedings, found that the transaction was indeed a loan (and thus the concession in the previous action had been wrongly made), the Court held that the consent order meant that the plaintiff was barred by estoppel from raising this issue.

After citing passages from Hoystead and Carl Zeiss, Brightman LJ stated (at 1490E-G):

Khan is clear authority that an issue estoppel can be founded on a consent order. But the reference to an issue being “implicit in a consent order” refers to the situation which there arose, i.e. that although the consent order does not in terms set out the issue which the parties have compromised, the circumstances antecedent to the making of the order reveal what issues were by implication compromised through the agreement to the order. Hence the express dispute in the first action, and Counsel’s express concession in the appeal in that action, were critical. This is emphasised by Cumming Bruce LJ in his brief, concurring judgment; and similarly by Bridge LJ, also concurring, who said (at 1492E-F):

The contrast with the present case is manifest. The Consent Order here cannot be regarded as carrying the implication that the Agreement was not ultra vires by reference to the RTRA 1984 or the LGA 1972, or that it did not infringe the Chapter I prohibition under the CA 1998, as none of these issues was raised in the Contract Action. The same applies to the various other defences sought to be raised by the draft Amended Defence. Had that action run its course on the pleadings as they then stood, none of those issues would have been determined by the County Court (cf Bridge LJ in Khan at 1493B). If I use, as I believe I should, the yardstick of “justice to the parties” in determining whether issue estoppel should apply, then I consider that there would be an injustice if the Council were able to prevent Tonstate from raising these issues because of the Consent Order: see Arnold v NatWest Bank Plc [1991] AC 93 at 110H, where Lord Keith of Kinkel cited with approval the passage in the judgment of Sir Nicholas Browne-Wilkinson V-C at first instance.

Accordingly, I conclude that none of the new issues put forward in the draft Amended Defence is barred by issue estoppel; nor is the claim under the CA 1998 advanced in the Competition Action.

I should add that I am fortified in this approach by the observations of Lord Bingham of Cornhill in Johnson v Gore Wood & Co [2002] AC 1 at 31A-B:

Given my conclusion as to the lack of an issue estoppel, this point does not strictly arise. But it has been fully argued, and in case I am wrong as regards point (i), I should address it. Mr Green’s contention, that even if an issue estoppel might otherwise have arisen it will not do so where the law relied upon is based on a statute that safeguards a wider public interest, is founded on the decision of the Privy Council in Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993, an appeal from the Supreme Court of Malaya. There, the appellant had obtained a default judgment for arrears of rent under an agreement for the hiring of machinery. In a subsequent action claiming for rent for a further period, when the respondent pleaded that the transaction fell within the Malayan Moneylenders Ordinance, or alternatively was a bill of sale that did not satisfy Bills of Sale Ordinance, and that accordingly the loan agreement was unenforceable, the appellant alleged that the respondent was estopped from challenging the validity of the transaction by reason of the earlier judgment. Dismissing the appeal, the Privy Council held that the default judgment on the pleading in the earlier action did not give rise to an estoppel as regards the issue the respondents now sought to raise; and further that an estoppel based on the first judgment could not exclude a defence based on the Moneylenders Ordinance or the Bills of Sale Ordinance. The Board’s reasoning as regards the latter conclusion was expressed in the Opinion delivered by Viscount Radcliffe as follows:

The statutory defences raised by Tonstate in the Contract Action, and the claim in the Competition Action, are all said to come within this principle. In response, on behalf of the Council Mr Brealey submits, first, that the reasoning of the Privy Council in Kok Hoong is restricted to a default judgment; and secondly, that it does not represent the law of England. I consider that the former submission is unsustainable, and the second is bold. It is unsustainable to regard the reasoning as confined to the circumstance of a default judgment because the Opinion of the Privy Council is in my view very clearly expressed in terms of two distinct grounds on which the appeal was dismissed: see at 1014. There is nowhere a suggestion that the ‘public policy’ ground was somehow contingent on the earlier judgment being given in default nor would it make sense to restrict it in that way. The reasoning applies just as much to a consent judgment (as here) or indeed to a judgment after trial in which the statutory issue was not expressly considered by the court.

The submission that Kok Hoong does not represent English law is founded on two more recent Court of Appeal judgments. But first I should refer to Arnold v NatWest Bank Plc [1991] 2 AC 93, where the House of Lords considered whether there is an exception to issue estoppel based on new material. They held that there is, whether the new material be newly discovered facts or a change in the law. Giving the leading judgment (with which all their Lordships agreed), Lord Keith of Kinkel stated (at 109A-B):

Mr Brealey relied on Co-Flexip SA v Stolt Offshore MS Ltd (No 2) [2004] EWCA Civ 213, [2004] FSR 708, where in a joint, majority judgment, Peter Gibson LJ and Sir Martin Nourse stated, at [146]:

On this basis, Mr Brealey submits that the only exceptions to an issue estoppel are fraud or collusion concerning the first action or new material, whether of fact or law, as determined in Arnold. However, I consider that the words used by the Court of Appeal are not to be construed as if they were a statute. I do not see that the judgment in the Co-Flexip case, relying as it does on Arnold, is to be read as definitively excluding any other possible exception to the scope of issue estoppel, still less as excluding a public policy limitation as delineated by the Privy Council in Kok Hoong which was not relevant to the issues in the Co-Flexip case. Indeed, in BIM Kemi, Longmore LJ (with whose judgment May and Kennedy LJJ agreed) refers at [35] to Kok Hoong and distinguishes it as a case of issue estoppel arising out of a default judgment whereas in BIM Kemi the court was concerned with cause of action estoppel. He does not suggest that it is not good law so far as issue estoppel is concerned.

Of more relevance is the Court of Appeal decision in Khan v Golechha International, discussed at paras 36-38 above. The defence there raised was that the agreement was unenforceable by reason of the Moneylenders Acts but the court held that this was barred by issue estoppel. Therefore the statute that was sought to be relied on enshrined the same public policy as the Malayan Ordinance involved in Kok Hoong. There is no suggestion in the judgments in Khan that the nature of the statutory defence afforded any exception to the application of issue estoppel. However, it appears that no such argument was advanced before the Court of Appeal and Kok Hoong was not cited. Furthermore, there may be a difference between a case where the issue of a statutory defence had been expressly raised in the first proceedings and a case where, as in the present proceedings, it is said that the issue was determined only indirectly and by implication. In short, I do not consider that Khan provides authority to reach the conclusion that the decision of the Privy Council in Kok Hoong does not represent English law.

It may be observed that the Privy Council speaks of the law of England “as applicable to the Federation of Malaya”, but I see nothing in the Opinion in Kok Hoong that can be taken to suggest that the Board thought that it was articulating a different principle from that which would apply in England. The reasoning set out by Viscount Radcliffe obviously applies as much for this country as elsewhere. Approaching the matter on principle, since the doctrine of issue estoppel is founded on a rationale of public policy, it seems to me consistent with that rationale that a party should not necessarily be barred from relying, albeit in its own interest, on a legislative provision that is designed to promote or protect the interests of the public more widely. I say “necessarily” because there may well be circumstances where it would be unjust and oppressive for a party to re-litigate the same issue that has previously been argued and determined against him. But the court can prevent such injustice by application of the more flexible doctrine of abuse of process, which enables all the circumstances to the taken into account.

Accordingly, I hold that Kok Hoong indeed represents English law. However, the principle there set out will not save all the pleas which Tonstate seeks to raise in its Amended Defence in the Contract Action. Mr Green very properly recognised that the contractual defences sought to be introduced by paragraphs 3.12, 5, 6 and 7 of the draft Amended Defence do not rely upon any law that represent a social policy within Viscount Radcliffe’s test. Equally, Mr Brealey accepted that if that test applies, then it is satisfied by the defences that seek to rely on the RTRA 1984 and the LGA 1972, and by the competition claim based on the CA 1998 advanced in the Competition Action.

As an alternative to issue estoppel, the Council relies on abuse of process. I can take this more shortly. The principles to apply to an argument of abuse are set out in the seminal passage in the judgment of Lord Bingham of Cornhill in Johnson v Gore Wood & Co [2002] AC 1 at 31B-F:

Applying such a broad, merits-based approach, if there is here no issue estoppel then I do not see that it is oppressive to the Council to have to confront, for the first time, arguments in the Contract Action based on construction of the Agreement or that the entry into the Agreement was ultra vires. The Council has had the benefit of the payments made for the first five years of the operation of the Agreement and, for the reasons set out above, it will retain those monies. But if there is an objection either in contract to its right to recover for further years or a statutory argument as to the validity or enforceability of the Agreement, it hardly amounts to harassment of the Council if it has to confront that argument. The same applies to the contention that the Agreement, or an aspect of it, infringes the CA 1998. The Council has not been faced with that contention prior to the commencement of the Competition Action. There is no abuse in this case.

Accordingly, for reasons set out above:

In the Contract Action, I allow the amendment save as regards the Counterclaim and order that the stay of the proceedings be lifted;

In the Competition Action, the application to strike out is allowed as regards the claim in respect of monies paid for the years 2002/03 to 2006/07 but in all other respects is dismissed.