South Somerset District Council v Tonstate (Yeovil Leisure) Ltd

Issue estoppel arising from a consent order is confined to issues actually determined or compromised, including issues shown by the antecedent circumstances to have been expressly raised. It does not generally extend to unraised assumptions that an agreement was valid for all purposes. A statutory rule protecting wider public interests may, in an appropriate case, prevent reliance on issue estoppel. Abuse of process remains a separate, flexible doctrine requiring a broad merits-based assessment of all the circumstances. A party is not necessarily abusing the process merely because an issue could have been raised earlier.

Two connected proceedings concerned a car park management agreement between the Council and Tonstate. In the Contract Action, the Council claimed sums and declarations concerning Tonstate’s obligations. A consent order required payment of specified sums, after which Tonstate sought to amend its defence to raise contractual, ultra vires and competition-law objections. In the Competition Action, Tonstate claimed that the agreement infringed the Chapter I prohibition in the Competition Act 1998.

The Council contended that both the proposed defence and the Competition Action were barred by issue estoppel or constituted an abuse of process because of the consent order.

1. Issue estoppel. A consent order is treated like a judgment, but the court must identify the particular issue said to be estopped and decide whether it was determined in the proper sense. The doctrine does not arise merely because the later relief is inconsistent with the earlier order. Issues not raised, argued or otherwise shown by the circumstances to have been compromised are not ordinarily implicit in the order.
2. The authorities concerning consent orders, including In re South American and Mexican Company, [1895] 1 Ch 37, Hoystead v Commissioner of Taxation, [1926] AC 155, and Khan v Golechha International Ltd, [1980] 1 WLR 1482, turn on the issue having been expressly raised, admitted or compromised in the earlier proceedings. Here, the proposed statutory and competition-law objections had not been raised before the consent order and were not implicitly determined.
3. Public policy. Even if an issue estoppel otherwise arose, the principle in Kok Hoong v Leong Cheong Kweng Mines Ltd, [1964] AC 993, represents English law. Issue estoppel may be unavailable where the party relies on legislation expressing a social policy requiring the court to protect the public or a protected class. That principle applied to the proposed objections based on the Road Traffic Regulation Act 1984, the Local Government Act 1972 and the competition claim under the Competition Act 1998, but not to the purely contractual objections.
4. Abuse of process. Applying Johnson v Gore Wood & Co, [2002] AC 1, the question is whether, in all the circumstances, raising the issue later is an abuse. It is not enough that the issue could have been raised earlier. The Council would not suffer oppressive harassment by having to meet arguments not previously advanced.
5. The amendment was allowed except for the counterclaim seeking recovery of sums paid under the consent order, and the stay in the Contract Action was lifted. The strike-out application in the Competition Action succeeded only in relation to claims for sums already paid for 2002/03 to 2006/07; it was otherwise dismissed.

The judgment records that the Contract Action was commenced in the Yeovil County Court, where a consent order was made on 27 March 2008. The proceedings were later stayed and transferred to the High Court. The present court determined the connected applications.