Livingstone v Mitchell

By summons filed on 5 June 2020 the plaintiff, Angela Livingstone, seeks leave to appeal pursuant to s 40 of the Local Court Act 2007 (NSW) against the interlocutory decision of Day LCM in the Local Court of New South Wales made on 12 May 2020 to dismiss her application to strike out the proceedings in the Local Court as an abuse of process. The Local Court proceedings were commenced by the defendants, Elizabeth and Robert Mitchell. At the hearing of the summons, Mr Boncardo, who appeared for Ms Livingstone in the Local Court and in this Court, was granted leave to amend the summons to make it clear that the order sought was that the proceedings be dismissed or the pleading struck out only with respect to claims for payments due up to and including 4 October 2017.

The Mitchells were granted leave to file in court a notice of contention in which they alleged that the decision of the Court below ought be upheld on grounds other than those relied on by the magistrate. The ground was said to be as follows:

Because Ms Livingstone is the plaintiff in this Court and was the defendant in the Local Court and the Mitchells are the defendants in this Court and were the plaintiffs in the Local Court, it is convenient to refer to the parties by name rather than as plaintiff or defendant.

The Mitchells owned rural properties in the central west of New South Wales, west of Orange. Their holdings included properties on Kurrajong Road in Cudal known as Stirling Chase (which they owned as tenants in common), Highfield East (which Mr Mitchell owned as sole registered proprietor) and Highfield West. The Mitchells’ son, Ben, and Ms Livingstone became de facto partners in 2006 and had three children, born 2008, 2011 and 2013. By an agreement (the sale agreement) made on 23 May 2011, the Mitchells purported to transfer Stirling Chase and Highfield East to Ben and Ms Livingstone as tenants in common.

It was a term of the sale agreement that Ben and Ms Livingstone would pay to the Mitchells, as the purchase price for the properties, the sum of $25,000 per year (indexed to CPI) for 20 years. This amount was described as a “consultancy fee”. Clause 51 of the sale agreement provided:

Ben died tragically in an accident on 2 April 2014.

This Court’s jurisdiction with respect to appeals from the Local Court arises under ss 39 and 40 of the Local Court Act. It was common ground that the decision of Day LCM was an interlocutory decision and that, accordingly, s 40 applied and leave to appeal was required.

Section 91 of the Civil Procedure Act 2005 (NSW), which Day LCM purported to apply to dismiss the motion, provides:

On 27 March 2015, Ms Livingstone commenced proceedings against the Mitchells by statement of claim filed in the Equity Division of this Court (the Equity Proceedings) seeking specific performance of the sale agreement, access to Highfield West and the rights to the crops from Highfield West. Her claim for relief was relevantly as follows:

As at 27 March 2015 consultancy payments in the sum of $32,360.66 were alleged to be in arrears and the rates on Stirling Chase and Highfield East alleged to be outstanding amounted to $1,378.62. The rates had been paid by the Mitchells, but were, under the sale agreement, repayable by Ms Livingstone.

On 3 July 2015 the Mitchells filed a defence in which they denied Ms Livingstone’s entitlement to the relief claimed. On 10 July 2015 they filed a cross-claim in which they sought rectification of the sale agreement to exclude part of Highfield East; liquidated damages in the form of the accelerated payment on the basis that the consultancy fees had been paid late and specific performance of the promise to grant a mortgage to secure the accelerated payment. The relief claimed by the Mitchells against Ms Livingstone (who was the first cross-defendant) was as follows:

The Mitchells also claimed relief against a firm of solicitors, the partners of which were the second to sixth cross-defendants.

In paragraphs [34]-[42] of the cross-claim, the Mitchells claimed damages against Ms Livingstone for breach of cl 51. They alleged defaults in payment of the following sums and that, as a consequence of the payments being made more than 90 days after the due date, they were entitled to payment of an accelerated amount which was required to be secured over the properties by a mortgage:

Ms Livingstone filed a defence to the cross-claim on 10 August 2015 in which she alleged that she had made payments under cl 51 on the following dates:

Ms Livingstone denied that the Mitchells were entitled to an accelerated payment and, accordingly, to a mortgage to secure that sum.

On 27 August 2015, Ms Livingstone filed an amended defence to the cross-claim. No change was made to her defence regarding the payments under cl 51. On 22 July 2016 the Mitchells filed an amended cross-claim. They continued to press their claim for liquidated damages on the basis of the alleged breaches of cl 51. On 10 August 2016, Ms Livingstone filed a defence to the amended cross-claim. On 7 December 2016 Ms Livingstone filed an amended statement of claim in which she no longer pressed her claim for relief in respect of Highfield West.

On 16 December 2016 the Equity Proceedings were listed before Darke J, who noted that the Mitchells had, in principle, settled their claim against the second to sixth cross-defendants (the solicitors).

On 19 January 2017, the Mitchells filed a further amended cross-claim in which they continued to press their claim for liquidated damages arising from the alleged breach of cl 51.

On 13 February 2017 Darke J made orders by consent dismissing the cross-claim as against the second to sixth cross-defendants and making no order as to costs. Thereafter the only parties to the Equity Proceedings were Ms Livingstone, the plaintiff, and the Mitchells as defendants/cross-claimants.

On 13 March 2017, the Mitchells filed a second further amended statement of cross-claim. They deleted their claim against the second to sixth cross-defendants and added a further claim for damages against Ms Livingstone on the basis of an alleged sale of their stock. Ms Livingstone filed a defence to this cross-claim on 10 May 2017 which maintained her allegation that she had paid sums in accordance with cl 51.

On 12 July 2017, Mr Tancred, Ms Livingstone’s solicitor wrote to the Mitchells’ solicitors, seeking particulars of consultancy payments alleged to be outstanding. Mr Tancred wrote, in part:

The matter was set down for hearing before Kunc J to commence on 3 October 2017. In accordance with directions made by the Court, pre-trial submissions were filed by the parties. In written submissions dated 22 September 2017, Ms Livingstone’s counsel set out the relevant provision and submitted as follows:

In written submissions in response, Mr Crossland, who appeared for the Mitchells in the Equity Proceedings, the Local Court and in this Court, identified as a continuing issue the Mitchells’ entitlement to an accelerated payment and an associated mortgage to secure it. In an annexure, marked “B” to these submissions, Mr Crossland set out the amounts due, the date due, the amounts paid and the dates of payment.

On 25 September 2017, Mr Carswell-Doherty, solicitor for the Mitchells, sent a draft third further amended statement of cross-claim to Mr Tancred and sought his consent to its filing. The claim for an accelerated payment and associated mortgage under cl 51 continued to be pressed in this draft.

On 2 October 2017, the Mitchells’ solicitor wrote to Ms Livingstone’s solicitor and informed him that the relief sought in paragraphs 2, 3 and 4 of the third further amended statement of claim [scil. cross-claim] and paragraphs 34-42A of that pleading were not pressed. As referred to above, these paragraphs claimed relief on the basis of alleged breaches of cl 51.

When the proceedings were called on for hearing before Kunc J on 3 October 2017. Mr Crossland, who appeared with Ms Cowden for the Mitchells filed in court the third further amended statement of cross-claim in which paragraphs 34-42A, which appeared under the heading “Consultancy Payments” were struck through. Mr Toomey SC, who appeared with Ms Silink for Ms Livingstone, informed his Honour that his understanding of the effect of the amendment was that the Mitchells’ claim under cl 51, which he described as “the accelerated payment claim”, was no longer maintained. Mr Crossland appears to have accepted Mr Toomey’s understanding of the concession made by the Mitchells. The matter proceeded on 3 October 2017.

The transcript for the second day of hearing, 4 October 2017, records that the parties asked for time as there were “some discussions taking place”. Kunc J, accordingly, stood the matter down to permit these discussions to continue. Subsequently the parties informed the Court that the matter had resolved and asked the Court to make orders in accordance with the terms of settlement which were signed by counsel for the parties.

There was some discussion about the form of the orders, after which the transcript recorded that his Honour said:

His Honour made the following notations and orders, which were entered on JusticeLink:

Between 9 October 2017 and 13 March 2018 the parties corresponded about various issues, including the consultancy and rates payments. This correspondence was annexed to an affidavit of Mr Tancred sworn on 20 March 2020 which was filed on behalf of Ms Livingstone in the Local Court Proceedings but not read in support of the notice of motion. It was sought to be tendered by the Mitchells by being attached to Mr Crossland’s written submissions dated 21 April 2020 in support of the motion in the Local Court. Mr Boncardo submitted that, as leave had not been granted to rely on it, it did not form part of the evidence and the magistrate ought not to have had regard to it. This is the subject of ground 4. The correspondence relied upon is summarised below.

On 9 October 2017, five days after Kunc J had made orders in the Equity Proceedings, Mr Tancred wrote to Mr Carswell-Doherty in part as follows:

On 21 December 2017, at 2.33pm, apparently in response to Mr Tancred’s request made on 9 October 2017, the Mitchells’ solicitor wrote to Ms Livingstone’s solicitor and alleged that there was an outstanding balance of $52,685 as at 1 October 2017 and that the next payment was due on 1 January 2018. He alleged that the Mitchells had not received payment since 14 July 2017. Mr Tancred responded by email on the same day, informing the Mitchells’ solicitor that he had sent the letter to his client for instructions. His letter concluded:

Mr Tancred’s email of 21 December 2017 contained a footer which said:

By email dated 1 February 2018, Mr Tancred sent Ms Livingstone’s response to the email of 21 December 2017 in the following terms:

In 2018 there was further correspondence between the parties about the subdivision of the property, which led to the matter being listed again in the Equity Division. Ultimately, on 2 August 2018, Ms Livingstone filed a notice of motion for a declaration that the terms of settlement and orders of the Court made and entered on 4 October 2017 required the Mitchells to do various things relating to the subdivision. The matter was listed several further times in 2018 and 2019. Ultimately, the notice of motion was resolved by the parties’ agreement to consent orders which were made by Hallen J on 30 April 2019. The orders provided for the steps to be undertaken by the parties to effect the subdivision contemplated by the sale agreement.

On 6 August 2019 the Mitchells commenced proceedings in the Local Court (the Local Court Proceedings) claiming consultancy payments under cl 51, which were then said to be outstanding in the amount of $53,086.64, and restitution for rates paid in an amount of $6,761.96.

On 21 August 2019 Ms Livingstone filed a defence in which she alleged, in paragraph 1:

These allegations reflected the contents of Mr Tancred’s letter of 1 February 2018 set out above.

By email dated 26 August 2019 to Mr Carswell-Doherty, Mr Tancred said on behalf of Ms Livingstone:

At a directions hearing on 24 September 2019, the Registrar of the Local Court made directions by consent requiring Ms Livingstone to file her notice of motion and supporting affidavits by 22 October 2019, the Mitchells to file any evidence on the motion by 11 November 2019 and standing the matter over for mention on 12 November 2019.

By notice of motion filed on 22 October 2019, Ms Livingstone sought to strike out the Local Court Proceedings on the basis of the allegations in paragraph 1 of the defence. The motion was supported by an affidavit sworn by Mr Tancred on 22 October 2019. Exhibited to that affidavit were all the documents from which the narrative set out above in relation to the Equity Proceedings was derived apart from the correspondence between the parties post-4 October 2017. The orders sought in the notice of motion did not indicate that Ms Livingstone accepted that a claim could be made against her for consultancy payments and rates that had accrued since 4 October 2017 although I regard this as implicit in the basis on which the motion was pressed.

The Mitchells swore and filed affidavits in the Local Court proceedings on 11 November 2019 in which they deposed to their reliance for their income on the consultancy payments under the agreement and the reasons for bringing the proceedings in the Local Court. In her affidavit sworn on 11 November 2019 Mrs Mitchell deposed in part as follows:

Mr Mitchell deposed to similar effect. He also deposed that, as at 4 October 2017 (the day of the settlement), Ms Livingstone owed them $39,935.21 for consultancy fees and $5,335.76 for rates. The evidence of the Mitchells as to their circumstances and reasons for bringing proceedings in the Local Court was relied on by Mr Crossland as being relevant to the discretion whether to grant leave and also the discretion whether to grant relief in the event that Anshun estoppel (so-called because of the leading case of Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589; [1981] HCA 45 (Anshun)) or abuse of process would otherwise be found.

On 12 November 2019, the matter came before Day LCM, who made directions about the filing of submissions by the parties regarding Ms Livingstone’s notice of motion. The notice of motion was listed for hearing on 28 April 2020 with an estimated length of 3-4 hours.

As referred to above, Mr Tancred swore a further affidavit on 20 March 2020 which was filed in the Local Court proceedings but was not read in support of Ms Livingstone’s notice of motion. Annexed to that affidavit was the email from Mr Tancred to Mr Carswell-Doherty dated 9 October 2017 set out above and the further correspondence up to and including Mr Tancred’s email of 1 February 2018.

In written submissions dated 20 April 2020 filed in the Local Court, Mr Boncardo, who appeared for Ms Livingstone in the Local Court and in this Court, submitted that the proceedings ought be struck out on the following bases: first, that there was a cause of action estoppel based on the doctrine of res judicata; secondly, that an Anshun estoppel arose; and thirdly, that the proceedings were an abuse of process.

Mr Crossland’s written submissions were filed in the Local Court on 27 April 2020. His submissions contained the following passages concerning the application of Anshun estoppel where there was no final adjudication on the merits:

Mr Crossland accepted in this Court that Anshun estoppel applied not only where there had been an adjudication on the merits but also where proceedings had been resolved by the parties. In his written submissions, Mr Crossland referred to authorities to the effect that the decision to strike out proceedings ought not be taken lightly as it is a serious step.

As referred to above, the matter was listed for mention before Day LCM on 28 April 2020. The parties appeared by audio-visual link by reason of the COVID-19 pandemic. His Honour told the parties that he would not hear the matter that day but that he would make another timetable and then appoint a further day “on a for mention only basis” and then deliver judgment. Mr Boncardo confirmed his understanding that the evidence was closed and that Ms Livingstone did not propose to file any further evidence. He also confirmed that he relied, in support of the notice of motion, on Mr Tancred’s affidavit of 22 October 2019 but did not rely on the affidavit of 20 March 2020, which had been filed.

The magistrate directed the parties to file any further submissions by 7 May 2020. His Honour then listed the matter “for mention only” on 12 May 2020. His Honour continued:

Mr Crossland then indicated that he might not be available on 12 May 2020 and told the Court that if there was going to be argument on that day, he would have to be available as no one else would be able to do it. His Honour confirmed that the matter would be for mention only on 12 May 2020 and said, “And if I need matters clarified I will raise that and whoever’s mentioning it for you, Mr Crossland, can tell me your availability.” His Honour also referred to the possibility that there could be further argument later in that week, if need be.

Both parties filed further submissions on 7 May 2020. As referred to above, Mr Crossland sought to tender documents which had been annexed to Mr Tancred’s affidavit of 20 March 2020 by annexing them to his submissions. He said, of present relevance:

Mr Crossland then summarised the correspondence (which is summarised above).

When the matter came back before the Local Court for mention on 12 May 2020, it appears that Day LCM had forgotten what had occurred on 28 April 2020 and had not had access to transcript of that day. It was common ground that the magistrate had attempted to act as expeditiously as possible in determining the matter and had neither appreciated, nor recalled, the effect of his earlier representations about what would occur on 12 May 2020.

When the matter was called on 12 May 2020, Mr Boncardo reminded Day LCM that Mr Crossland was not available, but indicated that the Mitchells’ instructing solicitor was on the phone. His Honour proceeded, without hearing from the parties, to deliver his judgment ex tempore. His Honour dismissed the notice of motion and ordered Ms Livingstone to pay the Mitchells’ costs of the motion.

His Honour identified three bases on which Ms Livingstone sought to have the proceedings struck out in whole or in part: first res judicata estoppel; secondly, Anshun estoppel; and, thirdly, that the proceedings amounted to an abuse of process.

His Honour decided that because the orders were made by consent in the Equity Proceedings, s 91 of the Civil Procedure Act 2005 (NSW) applied. His Honour also noted that the Mitchells’ claim for unpaid rates was not claimed in the Equity Division Proceedings and therefore was not covered by the doctrine of res judicata.

His Honour accepted the submission made by Mr Crossland on behalf of the Mitchells that the effect of Bazos v Doman [2001] NSWCA 347 was to confine the principles of Anshun to cases where there had been a determination of the merits.

However, his Honour proceeded to address the merits of the defence and found that it would have been reasonable for the Mitchells to have pleaded the alternative relief based on the breach of consultancy payments. His Honour also found:

His Honour then proceeded to reject the defence on discretionary grounds. His Honour cited the following passage from McColl JA’s judgment in Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231, in which her Honour said, of present relevance, at [85]:

His Honour found that although the Mitchells could have pleaded the alternative relief available on the sale agreement in their cross-claim in the Equity Proceedings, he rejected the defence of Anshun estoppel by reason of the correspondence from Ms Livingstone’s solicitor to the Mitchells’ solicitor dated 9 October 2017. His Honour extracted the following passage from Mr Tancred’s letter:

It is noteworthy that his Honour omitted to include the reference to payments that were “next” due. Its omission is consistent with his Honour failing to appreciate the significance of that sentence.

His Honour then referred to the response from the Mitchells’ solicitor of 21 December 2017 which advised that a total sum of $52,685 was outstanding, including arrears. His Honour construed this letter as a waiver by Ms Livingstone of her rights, as is apparent from the following passage, which sets out the reasons why his Honour rejected Anshun estoppel as a matter of discretion:

It was on this basis that his Honour dismissed Ms Livingstone’s notice of motion. Because of his Honour’s analysis, there was no need for his Honour to distinguish between payments that had become due prior to 4 October 2017 and those which became due thereafter. It is plain from the way in which the Mitchells conducted the proceedings in the Court below and in this Court that they at no time accepted that they were estopped or inhibited in any way from pressing their claim for pre-October 2017 consultancy payments or rates. In these circumstances, I am not persuaded that anything flows from the general way in which the relief in the notice of motion was framed which did not identify 4 October 2017 as being the crucial date.

It was common ground that leave to appeal was required by reason of s 40(2) of the Local Court Act as the decision sought to be appealed was an interlocutory judgment. I have decided, for reasons given at the conclusion of my reasons on the grounds of appeal, that leave ought be granted because of the importance to the administration of justice of the issues raised by the grounds of appeal.

The grounds of appeal are as follows:

These will be addressed in the order propounded by Mr Boncardo: 2, 3, 5, 4 and, finally, 1.

Before turning to the individual grounds, I acknowledge that the principles alleged are interrelated. As Lord Millett said in Johnson v Gore Wood & Co [2002] 2 AC 1, HL(E):

As these grounds are related it is convenient to address them together.

As referred to above, Mr Crossland accepted that ground 2 had been made out since he accepted in this Court that the principles in Anshun were not limited to proceedings where there had been a judgment on the merits. He also accepted that Bazos did not stand for the proposition that Anshun could not apply where there had been no determination on the merits and that the Court below was in error in so finding, based on the submission he put to that Court.

The application of the Anshun principles to cases where proceedings have been resolved by agreement is well-established. In Johnson v Gore Wood & Co at 32-33 (Lord Bingham of Cornwall, Lord Hutton agreeing):

This passage was cited with approval in Ekes v Commonwealth Bank of Australia [2014] NSWCA 336; (2014) 313 ALR 665 at [136] (Bathurst CJ, Beazley P and Emmett JA agreeing). As Davies J noted in Whelan Kartaway Pty Ltd v Donnelly [2012] VSC 45 at [24], footnote 37, there are several cases where it has been held that Anshun may apply where the earlier proceeding was settled without adjudication. Her Honour identified the following, in addition to Johnson v Gore Wood & Co: Rojanasaroj v Rachan (No 2) [2011] WASC 271, [39] (Corboy J); R&J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd [2008] NSWSC 232 (Bryson AJ); Seidler v University of New South Wales [2011] FCA 640 (Cowdroy J); Snowy Mountains Organic Dairy Products Pty Ltd v Wholefoods Pty Ltd (2008) 21 VR 43; [2008] VSC 405 (Beach J); Running Pigmy Productions Pty Ltd v AMP General Insurance Co Ltd [2001] NSWSC 431, [36] (Palmer J). The principle that Anshun is available where the earlier proceedings have been compromised is beyond doubt, and was, in this Court, accepted by the Mitchells. For these reasons, ground 2 has been made out.

The parties agreed that it would be appropriate for me to determine whether there was an Anshun estoppel in the present case as this determination did not depend on any matter of contested fact.

Mr Crossland submitted that there was no Anshun estoppel in the present case. In the alternative, he contended that, even if the principles were enlivened, the magistrate’s discretion to refuse relief had not miscarried. In the alternative, he submitted that this Court ought not exercise its discretion to grant the relief in the circumstances of the present case. He emphasised that the original claim in the Equity Proceedings was confined to breaches of the consultancy payments that were alleged to give rise to a right to an accelerated payment, to be secured by mortgage and that no claim was made for outstanding consultancy payments per se. He submitted that a claim for outstanding consultancy payments was a “true alternative” to a claim for an accelerated payment and that it was open to the Mitchells to confine their claim to an accelerated payment without making the alternative claim. He submitted that it was not unreasonable for the Mitchells not to put the alternative claim for outstanding consultancy payments in the Equity Proceedings because they were for a relatively small sum and could conveniently be claimed separately in the Local Court, if need be.

Further, Mr Crossland relied on the circumstance that the claim for an accelerated payment was expressly not pressed on the first day of the hearing in the Equity Proceedings and that a third further amended statement of cross-claim was filed which had those paragraphs struck through. He submitted, on this basis, that no claim pursuant to cl 51 of the sale agreement was ultimately pressed in the Equity Proceedings and referred to the notice of contention. He also relied on the circumstance that no claim was made in the Equity Proceedings for outstanding rates, although he accepted that the claim for rates arose under the sale agreement which was the source of the other rights which were the subject of the Equity Proceedings.

I consider that the Court below was correct to find Anshun estoppel in relation to the consultancy payments. Ms Livingstone’s alleged breach in making the consultancy payments was either such as to entitle the Mitchells to an accelerated payment with the associated mortgage or it was such as to entitle them to arrears. To make a claim for an accelerated payment but not for the arrears was a forensic choice the Mitchells made but it disentitled them (subject to a favourable exercise of the discretion) from suing for arrears thereafter if the proceedings were determined or resolved. I reject the submission that it was reasonable for them not to claim the alternative (at a time when the primary claim for accelerated payment was still being pressed) because of the limited amount of the arrears. It is not to the point that the Mitchells ultimately failed to press their claim for an accelerated payment and filed the third further amended statement of cross-claim on 3 October 2017. That such a claim had been made in the pleading and arose from the same sale agreement as other claims which were pressed is a powerful indication that it fell within the purview of the Equity Proceedings for the purposes of an Anshun estoppel. Thus the alternative basis for the magistrate’s decision set out in the notice of contention has not been made out. That basis would be incorrect as a matter of principle.

The Court below failed to address the claim for rates. The claim for rates also arose squarely under the sale agreement. It was, in my view, unreasonable of the Mitchells not to press their claims for arrears of consultancy payments and rates in the Equity Proceedings. I consider the dicta of Lord Millet in Johnson v Gore Wood & Co to be relevant here, where his Honour said:

I regard the present case as a clear circumstance in which the principles of Anshun estoppel apply. Ms Livingstone (and the Court) must be taken to have believed, on objective grounds, and understood that all extant disputes between the parties under the sale agreement had been resolved by the signed terms of settlement which became the subject of the orders of Kunc J.

The magistrate’s principal error derived, in my view, from a misreading of Mr Tancred’s letter of 9 October 2017. This contaminated the exercise of discretion. His Honour considered that Mr Tancred’s inquiry was consistent with there being consultancy payments outstanding. However, in my view, it ought not be read as doing other than enquiring about how the Mitchells contended that such payments ought be made, and in what amount, in the future so that similar disputes would not arise again. The use of the word “next” in the letter was telling (in the sentence, “It would be of assistance if your clients were able to calculate the consultancy payment that they say is next due by reference to the CPI figure that they say applies.” [Emphasis added]). The wording ought to have indicated to the magistrate that Mr Tancred was inquiring about future payments. Mr Tancred’s inquiry was, in my view, a prudent measure which was intended to have a prophylactic effect. While Ms Livingstone accepted that she was obliged to make future payments of consultancy fees, it was important that the amount payable be identified in advance so that she could avoid the prospect of being taken to be in breach when she made the next payment. Because the amount of the payment depended on a calculation of CPI increases, it was a potential area of dispute, as it had been in the Equity Proceedings.

That the Mitchells’ solicitor took the opportunity, in responding to Mr Tancred’s letter, to claim arrears which dated back well before the settlement of the Equity Proceedings was something which could not reasonably have been expected by Mr Tancred, having regard to the settlement which had resolved the Equity Proceedings. Further, his failure to outline the principles in Anshun immediately after he received the letter is understandable given that the letter from the Mitchells’ solicitor was received on 21 December 2017 at 2.33pm and his office was to close at 1pm on Friday 22 December 2017 for a three-week summer break.

In my view, the Court below misunderstood the effect of the correspondence between the parties. On no reasonable view could it have provided a basis for exercising the discretion to refuse Anshun relief. The reasons for the misunderstanding may derive from the way the hearing was conducted. These matters will be addressed in connection with ground 4. I am satisfied that the magistrate’s discretion miscarried and that it is necessary to exercise it afresh.

Mr Crossland relied on the evidence given by the Mitchells in the Local Court as amounting to a reason why the discretion ought be exercised in their favour. I consider that, far from providing a reason why the discretion ought be exercised to allow the claims to be made, the evidence provides a powerful reason why it ought not be exercised in their favour. The Mitchells were, and continue to be, dependent on the consultancy payments to support them. Ms Livingstone asserted, in the Equity Proceedings that she had made the consultancy payments in accordance with the sale agreement. The Mitchells denied this allegation and contended that, not only had Ms Livingstone breached her obligation, but that she had breached it in a way which entitled them to an accelerated payment to be secured by a mortgage which they contended that Ms Livingstone was obliged to grant them. The settlement of their dispute, which included the dispute about consultancy payments, was final on 4 October 2017.

It would appear that the Mitchells had second thoughts about the pre-settlement claims because of increases in the cost of living after the settlement and also because they believed that Ms Livingstone was not abiding by the sale agreement. That the Mitchells had second thoughts does not constitute a good reason why they ought not be held to their settlement and estopped from pursuing claims which fell within the purview of the claims they raised in the Equity Proceedings. Indeed, this evidence shows that they thought about foregoing the past claims for consultancy fees when they settled the Equity Proceedings and decided to do so in order to resolve them. The decision to reagitate the claim was, apparently, the result of a conscious deliberation on their part.

I am not persuaded that there is any reason not to grant relief in accordance with the principles of Anshun estoppel. My powers under s 41 of the Local Court Act enable me to vary the order made by the magistrate or to set it aside. As referred to above, the parties urged me to take this course, in the event that I was persuaded that the orders of the magistrate ought be set aside.

For these reasons I am persuaded that Anshun estoppel applies to prevent the Mitchells from claiming consultancy payments or rates payments which were due and payable prior to 4 October 2017. Ground 4 has been made out and the appeal ought be allowed.

In these circumstances, the other grounds do not arise. However, it is necessary to address them briefly and to set out my reasons why the present is an appropriate case for the grant of leave.

As referred to above, the Court below failed to address the claim for unpaid rates which Ms Livingstone also contended was covered by an Anshun estoppel. A court at first instance is obliged to determine all matters in dispute and address the arguments put by the parties. A failure to address a party’s clearly articulated argument amounts to an error of law, at least in the form of failure to accord procedural fairness: Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; (2003) 77 ALJR 1088 at [24] (Gummow and Callinan JJ).

I can only assume that, by reason of the way the matter was conducted (on the papers), the magistrate omitted to address the rates question. This ground has been made out. Because of the view to which I have come with respect to ground 3, it is not necessary to say anything further about ground 5.

It is apparent from the narrative of the way the hearing proceeded, which I have set out in detail above, that the Court below both anticipated and expected that there would be further argument and that, in light of statements made by the magistrate in court, the parties expected that they would have an opportunity to address the court. However, this did not occur and the magistrate delivered judgment on 12 May 2020 without prior notice. Such a slip is an understandable consequence of the disruption to live hearings caused by the COVID-19 pandemic and the regrettable unavailability of transcript in the Local Court, which makes it difficult for magistrates to remind themselves of what has happened in interlocutory hearings, except by reference to their own handwritten notes.

As referred to above, the Mitchells sought to tender the correspondence, which Mr Crossland annexed to his supplementary submissions. Mr Boncardo took the point that the documents were not in evidence. This was correct since they had not been ruled on as there had been no hearing after their tender. The magistrate then took them into account as if they had been admitted into evidence without hearing further from Mr Boncardo as to their effect.

Mr Crossland submitted that there was no denial of natural justice since it would have been open to Mr Boncardo to put the substance of his submissions to this Court in his written response to Mr Crossland’s submissions. Mr Crossland submitted that, having failed to avail himself of that opportunity, Mr Boncardo could not complain that he had not had an opportunity to be heard. The difficulty with this submission is that both parties expected that they would have a chance to be heard on 12 May 2020 or, if Mr Crossland was not available that day, some time later that week, since that was the clear indication given by the magistrate when the matter was before his Honour on 28 April 2020. It was reasonable for Mr Boncardo to consider that he could flag his objection to the correspondence in written submissions and be heard on this question at that later time.

In these circumstances, I am satisfied that the magistrate deprived Ms Livingstone of the opportunity to make submissions on the true construction of the letter of 9 October 2017. This amounted to a denial of procedural fairness: Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145; [1986] HCA 54. It cannot be said that, had procedural fairness been accorded, the result would have been the same because, for the reasons given above, the letter admitted of a better construction: namely, that Mr Tancred was referring to future payments rather than payments which had accrued in the past.

In these circumstances, I am persuaded that ground 4 has been made out.

Ms Livingstone argued that s 91 had been misapplied by the Court below and that it did not cover the present situation where the dismissal had been made as a consequence of a negotiated settlement of the whole proceedings. There are dicta to the effect that s 91 does not apply in such situations. The reasoning in NSW Trustee & Guardian v Philpott [2017] NSWSC 472 (Davies J) would appear to proceed on the footing that s 91 did not preclude an Anshun estoppel: see the discussion of the authorities on the question in Cannuli v Cannuli [2018] NSWSC 937 (Darke J) at [19]-[35].

Although the Court below decided that s 91 did not, in terms, operate to preclude the proceedings, his Honour did not consider that this finding meant that the question of Anshun estoppel did not need to be considered. Thus, his Honour must be regarded as holding that s 91 was subject to the principle in Anshun. I regard this conclusion as correct. The principle of legality would apply to preserve the principle of finality as established by the common law (including in Anshun itself) in the absence of clear statutory language to the contrary. I regard the magistrate’s approach as consistent with the law in that his Honour did not regard s 91 of the Civil Procedure Act as determining the question. I am not persuaded that error has been shown. I note that Mr Boncardo put ground 1 only as an alternative to ground 3, which, for the reasons given above, has been made out.

Mr Boncardo, at the conclusion of the hearing asked for leave to add a further ground: that it was an abuse of process for the Mitchells to press their claim for unpaid consultancy fees and rates in the Local Court. This was put as an alternative to ground 3. As I have found that ground 3 has been made out, it is not necessary to determine this proposed further ground.

Whether leave ought to be granted is a matter of discretion which is informed but not constrained by the authorities. In Gibson v Drumm [2016] NSWCA 206, the Court of Appeal (Beazley P and Simpson JA) listed various factors and principles which are relevant to the exercise of the discretion. These include whether there are substantial reasons that call for appellate review and whether there is a reasonably clear error of principle, matter of public importance, or injustice: Gibson v Drumm at [19]. The amount in issue is also relevant. At [20] their Honours said that while the mere fact of there being a small sum in issue would not disentitle an applicant for leave from obtaining leave, it was a relevant factor and could be decisive.

As referred to above, I am persuaded that leave ought be granted. It is important that the processes of the court be protected and that parties whose disputes have been resolved by settlements reflected in court orders, or which are arrived at within the purview of litigation, not be subjected to further litigation on the same area or within the same purview. This is a substantial issue of public importance. Although the amount at issue is relatively small, the principle is a large one. It ought not be thought that the principles which apply to prevent abuse of the court’s processes or which deprive compromises of proceedings of their force and effect can be put aside where the amount in issue in subsequent proceedings is small. Indeed, claims for amounts in courts such as the Local Court might be all the more vexing because of the risk that costs will exceed any ultimate judgment.

I reject Mr Crossland’s submission that leave ought be refused because there was no particular vexation in Ms Livingstone being required to defend Local Court proceedings since she would have to defend claims in respect of payments which became due and owing after 4 October 2017 in any event. As Lord Millet said in Johnson v Gore Wood & Co the administration of justice must be protected as well as the parties. The settlement of the proceedings in the Equity Division was not a solemn farce: its evident objective purpose was intended to resolve issues between the parties arising under the sale contract up to and including the date on which orders were made, 4 October 2017. For an estoppel to operate in a substantial way it must operate in the Local Court as well as in courts with higher jurisdictional limits. It can be more vexing to have to confront a claim which one has resolved following litigation than to confront a new claim.

The principles expressed by the High Court in Anshun are fundamental. They enshrine the importance of the finality of litigation. They are consistent with the principles enunciated in Part 6 of the Civil Procedure Act. Their application was, in substance, what was at stake in Ms Livingstone’s application for leave to appeal. I am satisfied that the importance of the principles per se and their importance in the present case warrants the grant of leave.

I did not hear the parties on costs. The general rule is that costs ought follow the event: Uniform Civil Procedure Rules 2005 (NSW), r 42.1. The costs of the notice of motion in the Local Court should follow the event in this Court. It would appear that the costs of the proceedings in this Court should also follow the event. I will make a conditional order to that effect. However, if any party wishes to contend for a different order, such application is to be made within seven days. In that event, I will make directions in chambers in order that the matter of costs can be determined on the papers.

For the reasons given above, I make the following orders: