The recent decision of van Heeren v Kidd  NZCA 401 provides invaluable appellate guidance on precisely when "issue estoppel" should operate to bar a party to a proceeding from re-litigating matters already the subject of a prior judgment.
The case concerned a long term business relationship between Messrs van Heeren and Kidd. Messrs van Heeren and Kidd terminated their business relationship using five key documents. A dispute arose as to the effect of those documents on the distribution of various assets between the parties.
Mr Kidd sued Mr van Heeren in both South Africa and New Zealand. The New Zealand proceeding was stayed in 1997 pending the South African courts' determination of the validity of an indemnity between the parties, which, if valid, would have prevented Mr Kidd from bringing claims to some of the business assets.
That issue was determined by the South African High Court on 20 May 2013 in favour of Mr Kidd. Mr Kidd then applied to revive the New Zealand proceeding for the purposes of taking an account between the parties, as well as for payment of the amount ascertained as owing. Mr van Heeren argued that his liability in the New Zealand proceeding depended upon a finding of partnership; that the relationship was a joint venture; and while the South African High Court had made a finding of partnership, that finding was not objectively necessary for determination of the challenges to the validity of the indemnity. Mr Kidd in turn argued that issue estoppel operated to bar Mr Van Heeren from re-litigating the partnership issue.
The Court of Appeal, in agreement with Fogarty J below, found for Mr Kidd and held that the question of whether issue estoppel arises requires examination not only of what the first court decided but also as to whether what was decided was necessary for the decision. However, the Court of Appeal rejected the argument for Mr van Heeren that the second court should determine whether or not the findings were "objectively necessary" for the judgment in the first court. The Court held it would be sufficient to show that the finding sought to be impugned formed part of the "ground work" of the first decision, whether or not that finding was directly the point in issue.
The Court upheld Fogarty J's order for an account between the parties, and an interim payment of US$25 million from Mr Van Heeren to Mr Kidd.
See the Court's decision here.