Stokes v Toyne

1. [1]

   WARD P: I have had the considerable benefit of Adamson JA’s judgment which sets out the background to the present application and the applicable principles. It is not necessary here to repeat those. I agree with her Honour’s conclusions, for the reasons that her Honour gives, as to grounds 1-3 of the grounds of appeal; and that the bringing of the District Court proceedings does not give rise to the spectre of inconsistent judgments. However, I respectfully disagree with the conclusions that her Honour has reached as to the grounds of appeal relating to Anshun estoppel and abuse of process. Accordingly, I would grant leave to appeal and set aside the orders made in the District Court for the dismissal with costs of Mr Stokes’ notice of motion and would remit the matter for determination of that notice of motion. The reasons for my contrary conclusion on the said grounds may be briefly stated.

2. [2]

   As to the issue of Anshun estoppel, as made clear in Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268 by Street CJ at 272-273 (considered below by Adamson JA), the vendor’s right to forfeit a deposit in the event of a purchaser’s default bears no necessary relation to the damages actually suffered; and an order for the return of the deposit does not necessarily affect the vendor’s right to sue for damages for breach of contract in relation to the purchaser’s default. I accept that, as Adamson JA has noted, the fact that these are independent and parallel rights does not preclude an Anshun estoppel arising to preclude a claim for damages following proceedings in which the issue of recovery of the deposit was raised (nor does it mean that there may not be an abuse of process in raising such a claim in separate proceedings in some cases).

3. [3]

   Rather, as has been made clear in the authorities cited by Adamson JA, the test for Anshun estoppel is fundamentally one of reasonableness, namely whether the subject matter of the subsequent proceeding (here, the claim for damages in the District Court proceeding) is “so connected” with the subject matter of the earlier proceeding as to make it unreasonable for Ms Toyne not to have raised the claim in the earlier proceeding. Unreasonableness for that purpose is thus to be considered in light of the circumstances that existed at the time of the earlier (Equity Division) proceedings.

4. [4]

   There is no doubt that the matters now sought to be raised by Ms Toyne in the District Court proceeding mirror almost exactly the claimed damage that she raised as a discretionary reason in resisting Mr Stokes’ claim for recovery of the deposit (but chose not to ventilate fully) in the Equity Division proceeding (albeit that there appears now to be additional evidence on which she would seek to rely in the District Court proceeding from that which was available to her in the earlier proceeding). Given the identity between (and hence relevant connection with) the issues now sought to be raised (demolition of fences and the shed, asbestos contamination, the removal of trees from the property and the holding costs) and those that were identified but not explored in detail in the evidence relied on by Ms Toyne at the hearing before Rees J, an evaluative exercise is required as to whether in all the circumstances it was unreasonable for Ms Toyne not to have pressed her claims for damages in the earlier proceeding.

5. [5]

   While I consider that issue to be finely balanced, ultimately I am not persuaded that there is the requisite unreasonableness in Ms Toyne making the forensic decision to resist the relief sought by Mr Stokes on discretionary grounds without bringing a cross-claim for damages for breach of contract even though those discretionary grounds included reference (in the reports and in the affidavit served, but not read, in her case) to the damage that she had allegedly suffered as a result of his conduct. In the Equity Division proceeding that damages was in essence simply being relied on as relevant to whether forfeiture and retention of the deposit would be unjust or inequitable in the circumstances of the case; the precise quantification of the damage not being necessary for that purpose.

6. [6]

   In Charben Haulage Pty Ltd (in liq) v Beilby (t/as Costello) [2010] NSWSC 510, it was noted at [46] by Hislop J (there citing Anshun at 602-603) that there are a variety of circumstances in which a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in another proceeding (such as expense) and, as emphasised by Allsop P, as his Honour then was, in Champerslife Pty Ltd v Manojlovski [2012] NSWCA 33 at [4] (and noted by Gageler J in UBS AG v Tyne as trustee of the Argot Trust (2018) 265 CLR 77; [2018] HCA 45 (UBS v Tyne) at [102]-[103] in the context of considering whether later proceedings were an abuse of process), the mere fact that a matter could have been raised in earlier proceedings does not mean that it should have been raised. Relevantly, in UBS v Tyne, Gageler J was of the opinion that what was involved was “a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question” (in that case, this being whether a party was misusing or abusing the process of the court by seeking to raise the issue which could have been raised before); and his Honour considered that lack of funds would not necessarily be irrelevant in that context particularly if it appeared that the lack of funds had been caused by the party against whom it was sought to claim.

7. [7]

   In the present case, Ms Toyne gave evidence as to the reasons that she did not bring a cross-claim for damages in the Equity Division proceeding. Those reasons were not able to be tested by Mr Stokes (hence the conclusion as to the denial of procedural fairness in the primary judge dismissing Mr Stokes’ notice of motion on the basis that her evidence was unchallenged). However, at least on their face, the circumstances to which Ms Toyne has deposed in that affidavit do not seem to me to make it unreasonable for her to have chosen not to bring a cross-claim at that time.

8. [8]

   Nor do I consider that there was an abuse of process in that regard. The situation is nowhere near that which arose in UBS v Tyne (and, indeed, it may be noted that the dissenting members of the High Court considered that even then there was no abuse of process). I accept that Ms Toyne could have indicated when the matter was before Rees J an intention later to bring proceedings claiming damages (or even simply that she was reserving her position in that regard); and that the procedure adopted in Pratt v Hawkins (1991) 32 NSWLR 319 or that foreshadowed in Webster v Havyn Pty Ltd [2004] NSWSC 227; (2004) 12 BPR 22,119 could have been followed. However, it cannot be the case that Mr Stokes was unaware that certain of the damage claimed to have been caused by him had not been assessed at least at the time of the service on him of Ms Toyne’s affidavit affirmed on 7 December 2017 (in particular as to the asbestos contamination) and Rees J expressly noted that there would be a cost “to someone” in the future to remediate the asbestos contamination (see at [160] of her Honour’s judgment).

9. [9]

   I accept that by the time of the commencement of the District Court proceeding, brought some time after the Equity Division proceeding, there had been costs incurred by Mr Stokes in issuing the bankruptcy notice (Ms Toyne having failed to repay the deposit and to meet the costs order) and that the parties continued to incur costs in relation to that notice and Ms Toyne’s application for review of the costs assessment; and that there has been delay in the prosecution of Ms Toyne’s claim (at the very least occasioned by the filing of what was found to be a defective pleading). The drawn out nature of the dispute between the parties is unfortunate to say the least (and to my mind this is a paradigm case in which the parties ought to be referred to court annexed mediation to seek to reach a consensual resolution of the issues between them).

10. [10]

    Nevertheless, in the context of considering principles as to abuse of process, in Williams v Spautz (1992) 174 CLR 509, the High Court observed at 529 that “the power to grant a permanent stay is one to be exercised only in the most exceptional circumstances”. This proposition is well-endorsed and uncontroversial (see, for example, The Trustees of the Roman Catholic Church for the Diocese of Lismore v GLJ [2022] NSWCA 78 at [95] per Mitchelmore JA, with whom Macfarlan and Brereton JJA agreed; Moubarak by his tutor Coorey v Holt [2019] NSWCA 102 at [71] per Bell P, as his Honour then was, with whom Leeming JA and Emmett AJA agreed).

11. [11]

    I understand the concerns raised by Simpson AJA as to the procedural history of this matter to date, and the criticism expressed in UBS v Tyne as to tactical manoeuvring. However, the chronology set out by Simpson AJA seems to me to have the hallmarks of a matter that unfortunately spiralled out of control once the bankruptcy proceeding was instituted by Mr Stokes and Ms Toyne sought to challenge the costs assessment. In that regard, I suspect that there can be blame attributed to both sides. Ultimately, I am not persuaded that the circumstances in which Mr Stokes is now vexed, so to speak, by the claim for damages in respect of his conduct prior to termination of the contract are such as to amount to an abuse of process.

12. [12]

    Thus, in all the circumstances I have concluded that the Anshun estoppel and abuse of process grounds have not been made good; and that the matter should be remitted for determination of Mr Stokes’ notice of motion afresh.

13. [13]

    ADAMSON JA: Nicholas Stokes, the applicant, seeks leave to appeal against the refusal by Russell SC DCJ (the primary judge) of his application for a permanent stay of proceedings 2021/195454 commenced by Molly Toyne, the respondent, in the District Court (the District Court proceedings).

14. [14]

    The facts, which will be set out in greater detail below, are as follows. Ms Toyne contracted to sell two lots of land to Mr Stokes. When he failed to complete, she terminated the contracts and forfeited the deposits (which totalled $110,000). Mr Stokes commenced proceedings 2017/205679 in the Equity Division of the Supreme Court for return of the deposits pursuant to s 55(2A) of the Conveyancing Act 1919 (NSW) (the Equity proceedings). Although Ms Toyne resisted the return of the deposits on the basis that she had suffered losses relating to demolition of fences and sheds (which led to asbestos contamination), felling of trees and holding costs, she did not file a cross-claim for damages.

15. [15]

    Subsequently, Ms Toyne commenced the District Court proceedings and claimed damages relating to those matters. By notice of motion, Mr Stokes applied to stay those proceedings, alleging that Ms Toyne was estopped from commencing or maintaining them on the basis of the principles of Anshun estoppel (Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45 (Anshun)) or that the proceedings are otherwise an abuse of process. He seeks leave to appeal against the primary judge’s dismissal of his notice of motion.

16. [16]

    Further, Mr Stokes contends that he was denied procedural fairness by the primary judge’s refusal to allow his counsel to cross-examine Ms Toyne on her affidavit in circumstances where his Honour proceeded to decide in her favour on the basis of her “unchallenged” evidence.

17. [17]

    Because, for leave to be granted, the points sought to be raised on appeal must be more than “reasonably arguable”, it is convenient to address the merits of the appeal before coming to a conclusion on the grant of leave. In order to do so, I propose to summarise the chronology of events, including the Equity proceedings and the District Court proceedings. Much of the chronology appears from the reasons of Rees J in the Equity proceedings, Stokes v Toyne [2019] NSWSC 274 (the Equity judgment).

Background facts

1. [18]

   In 2014, Ms Toyne owned two lots, Lot 68 (the rural block) and Lot 69 (the residential block) which were separated by Crown land, known as Gundaroo Terrace. The lots were on the outskirts of Gundaroo, a town in New South Wales, and had been purchased by Ms Toyne and her late husband, Phillip Toyne, in about March 1998. Mr Toyne died on 13 June 2015. The lots had the following areas, zoning and improvements.

2. [19]

   Ms Toyne obtained development consent from the Yass Valley Council (the Council) to subdivide the residential block into seven lots. The consent was subject to the condition that it would lapse on 27 July 2016 unless the development had commenced. In November 2014, Mr Stokes provided a quotation to undertake the civil works for the development. As Ms Toyne did not have the funds to undertake the subdivision, she and Mr Stokes agreed that he would perform the civil works in return for an agreed share of the sale proceeds of the subdivided lots. Subsequently, in early 2015, Ms Toyne decided to sell the residential block (save for the new Lot 7, on which the house in which she lived and the tennis court were located) and have someone else undertake the subdivision.

3. [20]

   In May 2015, Mr Stokes offered to buy Lots 1-6 of the residential block (leaving Ms Toyne as the owner of Lot 7) for $1.1m. Ms Toyne accepted the offer on 15 May 2015. Mr Stokes obtained permission to deal directly with the Council and engineers and to place materials on site for the development. In the course of this process, he arranged for fences to be removed.

4. [21]

   Between October 2015 and May 2016, Ms Toyne renegotiated her agreement with Mr Stokes with the effect that the residential block would be subdivided into two lots: Lot 106 (to be further subdivided into five lots by Mr Stokes); and Lot 107 (to be retained by Ms Toyne as it contained the house and the tennis court). The agreement was also modified to provide for the sale of the rural block to Mr Stokes, with the intention that it would be “amalgamated” with Lot 106, without any adjustment of the aggregate purchase price of $1.1m.

5. [22]

   On 9 June 2016, Ms Toyne signed contracts for sale of the lots (Lot 106 and the rural block), which contained the standard conditions of the NSW Law Society/Real Estate Institute Contract for the Sale of Land 2005 edition (the 2005 edition). The purchase price for the rural block was $110,000 and the purchase price for Lot 106 (being part of the residential block) was $990,000. The deposit for each was 10% of the purchase price.

6. [23]

   On 14 June 2016, Ms Toyne appointed Phillip Langworthy as her attorney to deal with Mr Stokes regarding the sales, development and subdivision. On 19 June 2016, Mr Langworthy, on behalf of Ms Toyne, confirmed to Mr Stokes that she had no objection to his seeking to acquire or close the easement over Gundaroo Terrace (between the rural block and the new Lot 106), demolishing the shedding structures, or dealing with the Council in respect of the subdivision of the new Lot 106 into five lots. On about 20 June 2016, Mr Stokes signed and exchanged contracts with Ms Toyne and paid deposits which totalled $110,000. This sum was released to Ms Toyne. Settlement of the sales was initially due to take place on 21 September 2016 although Mr Stokes contemplated that it would occur a month later, due to financial constraints (Equity judgment, at [84]).

7. [24]

   On 11 July 2016, Mr Stokes demolished the sheds on the property. The demolition material was placed in three stockpiles near the dam on the rural block. One of the stockpiles was found to contain an unacceptable level of asbestos for a residential development. Asbestos was also found in the topsoil on the rural block where the shed had been.

8. [25]

   Due to Mr Stokes’ difficulties in obtaining finance, the completion date was extended several times. Ultimately, Mr Stokes was aiming for settlement on around 14 December 2016. According to Rees J, as at 7 December 2016, it appeared that “completion was imminent” (Equity judgment, at [111]).

9. [26]

   Justice Rees found that, on 8 December 2016, Ms Toyne validly terminated the contracts for sale in the following circumstances:

   1. (1)

      Ms Toyne had earlier refrained from acting on a notice to complete;

   2. (2)

      Ms Toyne knew that Mr Stokes was spending money and incurring obligations on the assumption that settlement would take place on or before 16 December 2016 and did not alert Mr Stokes of her intention to terminate;

   3. (3)

      Ms Toyne knew that Mr Stokes was in a position to complete; and

   4. (4)

      Ms Toyne intended, following termination of contracts, to enter into new contracts for sale with Mr Stokes on terms which were more favourable to her.

10. [27]

    Following termination, Ms Toyne alleged that she had to renegotiate her financial arrangements as they were contingent on sale and that she intended to proceed with alternative disposal or development options. She also claimed to be entitled to compensation for the “illegal demolition of 100-year-old trees.”

11. [28]

    On 6 July 2017, Mr Stokes commenced the Equity proceedings under s 55(2A) of the Conveyancing Act, seeking return of his deposits of $110,000. Ms Toyne retained King & Wood Mallesons (KWM) to act for her in the Equity proceedings. KWM instructed counsel to appear on her behalf.

12. [29]

    Ms Toyne filed and served evidence in the Equity proceedings which is summarised in the table below and which related to the following issues:

    1. (1)

       her alleged loss as a result of Mr Stokes demolishing her fences;

    2. (2)

       her alleged loss as a result of contamination of the land following Mr Stokes demolishing her sheds and disposing of asbestos in and near the dam on the rural block;

    3. (3)

       her alleged loss arising from the termination of the contracts for sale by reason of the continued holding costs, including monthly mortgage payments, which she incurred; and

    4. (4)

       her alleged loss arising from the felling of trees.

13. [30]

    The evidence in the above table, read with Ms Toyne’s affidavit of 16 November 2021 (relied upon in the District Court proceedings), established the following chronology.

14. [31]

    In about November 2017, Ms Toyne learned that her property had been contaminated by asbestos. On 3 November 2017, samples of fibreboard were collected from a pile of mixed soil. On 5 November 2017, they were provided to David Davies, a licensed builder, to arrange for the samples to be tested for asbestos. The Doherty report, dated 16 November 2017, raised a concern that there was asbestos contamination from the demolition of a shed.

15. [32]

    On 24 November 2017, Robson Environmental produced the Robson report, which confirmed the presence of asbestos fibres in the samples which had been collected from the site by Ms Doherty (which had been provided to Ms Pearson of Robson Environmental through Mr Langworthy and Mr Davies – see above table).

16. [33]

    In May 2018, KWM, on behalf of Ms Toyne, engaged Mr Nuttall of Safe Work & Environments to identify the nature and extent of the asbestos contamination and to provide recommendations for the method and scope of remediation works. The Nuttall report, dated 20 August 2018, set out recommendations for remediation.

17. [34]

    Prior to the finalisation of his report, Mr Nuttall arranged for an indicative quotation for the remediation works to be provided by Aztech Services. That quotation, dated 2 August 2018, indicated that the costs of remediation would be in the order of $86,800, excluding GST. When she received this quotation, Ms Toyne appreciated that the cost of remediation would be substantial. Although she had this report prior to the hearing of the Equity proceedings, Ms Toyne did not file or serve it in those proceedings. She first disclosed it in her affidavit of 16 November 2021 in the District Court proceedings.

18. [35]

    In her affidavit affirmed on 7 December 2017, which was filed and served (but not read) in the Equity proceedings, Ms Toyne set out the (allegedly) “unauthorised” works undertaken by Mr Stokes and the “costs” she had incurred “as a result of the failed sale to Mr Stokes”, as follows:

19. [36]

    On 16 October 2018, the second day of the hearing of the Equity proceedings, Ms Toyne’s counsel informed Rees J that Ms Toyne would not rely on any of the evidence she had filed and served before the hearing apart from the Nuttall report, the Robson report and the Doherty report. A consequence of this forensic decision was that Ms Toyne’s affidavit was not read and, accordingly, she could not be cross-examined. However, evidence of the work which Mr Stokes had done, including the demolition of the fences, the shed and the dairy and the felling of trees, the asbestos contamination and the need for remediation, as well as the holding costs incurred by Ms Toyne, was before Rees J as it was contained in these reports and (as appears from the Equity judgment) was the subject of submissions, both written and oral.

20. [37]

    On 18 March 2019, the Equity judgment was delivered. Judgment was entered in favour of Mr Stokes in the sum of $110,000, being the return of the whole of the deposits which he had paid. On 25 January 2021, judgment for costs was entered in favour of Mr Stokes in the sum of $123,046 (the costs judgment).

21. [38]

    Justice Rees noted, at [25], that neither Ms Toyne nor Mr Langworthy had given evidence and said that, accordingly, she would infer that any evidence either would have given would not have assisted Ms Toyne’s claim: Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8.

22. [39]

    Justice Rees narrated the background to Mr Stokes’ claim in the Equity proceedings as set out at [14] and [28] above). Her Honour addressed the benefit conferred on Ms Toyne by Mr Stokes performing work on the land and the detriment she had suffered as a consequence of the asbestos contamination as follows:

23. [40]

    Justice Rees rejected Ms Toyne’s submission that Mr Stokes had not established that his works conferred a benefit on her. Her Honour concluded, at [159], with respect to the felling of trees:

24. [41]

    Justice Rees addressed the asbestos contamination at [160] as follows:

25. [42]

    In respect of Mr Stokes’ claim in the Equity proceedings, Rees J concluded that:

26. [43]

    On 3 March 2021, a bankruptcy notice was issued to Ms Toyne, which claimed the amount of the Equity judgment, the costs judgment and interest. On 1 April 2021, Ms Toyne commenced proceedings MLG 597 of 2021 in the Federal Circuit Court, seeking to have the bankruptcy notice set aside (the bankruptcy proceedings). Her grounds included that she had a cross-claim and/or set-off against Mr Stokes in relation to loss she sustained as a result of asbestos contamination, removal of fencing and holding costs. She deposed in an affidavit dated 1 April 2021, which was relied on in support of the bankruptcy proceedings, that she had instructed solicitors to prepare a claim for damages against Mr Stokes in relation to these matters.

27. [44]

    In order to address Ms Toyne’s allegation that she had a cross-claim or set-off against him, Mr Stokes applied to this Court for leave to use the material served in the Equity proceedings in the bankruptcy proceedings. His application was necessary as Ms Toyne withheld her consent to such use. His application was granted on 20 August 2021: Stokes v Toyne [2021] NSWSC 1049 (Rein J).

28. [45]

    By application dated 14 April 2021, Ms Toyne applied for a review of the determination of the Supreme Court costs assessor (which had given rise to the costs judgment in the Equity proceedings). This application was dismissed on 30 July 2021.

29. [46]

    Ultimately, on 15 October 2021, the bankruptcy proceedings were dismissed. Ms Toyne sold Lot 106 (part of the residential block) in November 2021 and paid the judgment debts from the proceeds. Ms Castle, who appeared for Ms Toyne in this Court and in the Court below (but not in the Equity proceedings), informed this Court from the bar table that the rural block has not yet been sold (tr. 25, 10.2.23).

30. [47]

    In her affidavit affirmed on 16 November 2021 (relied on in the District Court proceedings, see below), Ms Toyne explained why she had not filed a cross-claim in the Equity proceedings seeking damages against Mr Stokes as follows:

    1. (1)

       when Mr Stokes commenced the Equity proceedings, she was not aware of the asbestos contamination or had not fully investigated it and was not in a position to pursue a cross-claim for damages;

    2. (2)

       Mr Stokes sought only a return of the deposits;

    3. (3)

       she believed that Mr Stokes had limited prospects of obtaining the return of the deposits;

    4. (4)

       she did not think that Mr Stokes had the financial capacity to meet an adverse costs order and, thus, regarded it as uncommercial to incur the costs of filing a cross-claim against him, which she understood would delay the determination of the Equity proceedings;

    5. (5)

       at the time of the hearing of the Equity proceedings, she had not yet tried to sell the land because of the asbestos contamination;

    6. (6)

       she thought the best way of extracting herself from “the situation” was to use her limited financial resources to defend herself against Mr Stokes’ claim in the Equity proceedings; and

    7. (7)

       she thought that if she wanted to sue Mr Stokes for damages later, she would be able to do so.

31. [48]

    On 5 July 2021, Ms Toyne commenced the District Court proceedings by filing a statement of claim in the District Court. She alleged:

32. [49]

    Ms Toyne applied by notice of motion dated 14 September 2021 for leave to amend her statement of claim. On 10 October 2021, Mr Stokes applied for orders to dismiss or stay the District Court proceedings permanently on the basis of Anshun estoppel or abuse of process. These applications came before the primary judge for hearing on 13 July 2022.

33. [50]

    The primary judge struck out the statement of claim filed on 5 July 2021 and refused Ms Toyne’s application for leave to file the draft amended statement of claim as neither conformed to the requirements of proper pleading. His Honour reserved the question whether she ought be granted leave to replead until Mr Stokes’ application had been determined.

34. [51]

    When Mr Stokes moved on his notice of motion, he relied on a court book, which included the summons and evidence from the Equity proceedings (including that which was filed and served but neither tendered nor read), which has been summarised above. This material was admitted without objection.

35. [52]

    Ms Toyne relied on two affidavits in the Court below (affirmed 16 November 2021 and 11 July 2022), both of which were read. Rulings on objections were made. Mr Stokes’ counsel applied for leave to cross-examine Ms Toyne. The following exchanges record the argument on the issue as well as his Honour’s ruling and the reasons for it.

36. [53]

    As can be seen from the above exchange and his Honour’s reasons, the primary judge refused leave to cross-examine Ms Toyne on two bases: first, that the application was interlocutory; and, second, that the relevant test of reasonableness for Anshun estoppel was an objective one.

37. [54]

    Mr Stokes relied on the background set out above, the material filed and served in the Equity proceedings as well as the Equity judgment.

38. [55]

    It was argued on behalf of Mr Stokes that the commencement and continuation of the District Court proceedings gave rise to an Anshun estoppel and constituted an abuse of the Court’s process because of the degree of connection between the Equity proceedings and the subject matter of the District Court proceedings. He argued that it was unreasonable for Ms Toyne not to have brought a cross-claim in the Equity proceedings, since the matters in the District Court proceedings arose out of the same transaction. He submitted that not only should these matters have been raised, but they were in fact raised in the Equity proceedings and were the subject of evidence filed and served in those proceedings. He submitted further that Rees J determined the proceedings on the basis of those matters.

39. [56]

    Mr Stokes’ counsel submitted that, although Ms Toyne could have brought (and did not bring) a cross-claim in the Equity proceedings, she relied on her losses as a reason why Rees J should not have exercised her Honour’s discretion to order return of the deposits. He contended that, had Ms Toyne established a claim for damages greater than the amount of the deposits, no order for return of the deposits could have been made. He argued that Ms Toyne’s conduct in the Equity proceedings was, therefore, inconsistent with her being entitled to bring the District Court proceedings. Mr Stokes submitted that Ms Toyne’s forensic decisions not to rely on the evidence she had filed and served relating to loss said to arise from the demolition of fences, felling of trees, asbestos contamination and holding costs, or the Aztech Services quotation (which she had not yet disclosed), did not remove these matters from the ambit of the Equity proceedings.

40. [57]

    It was submitted on behalf of Mr Stokes that the cumulative effect of these matters was that the District Court proceedings were an abuse of process. He also relied on the delay of 28 months between the delivery of the Equity judgment and the commencement of the District Court proceedings.

41. [58]

    It is not necessary to set out the submissions made on behalf of Ms Toyne in the Court below, since these were substantially reflected in the primary judge’s reasons, which are summarised below.

42. [59]

    In the course of the primary judge’s reasons, his Honour addressed Ms Toyne’s evidence, including the evidence of her subjective circumstances (the alleged irrelevance of which formed the basis for his Honour’s refusal to allow her to be cross-examined – see above), as follows:

43. [60]

    Ms Toyne’s first affidavit (affirmed 16 November 2021) was significant to his Honour’s decision to dismiss Mr Stokes’ notice of motion, as appears from the following extract from the primary judge’s reasons:

44. [61]

    In his conclusions on Mr Stokes’ Anshun estoppel application, at [59], the primary judge again referred to Ms Toyne putting forward “several unchallenged reasons” (emphasis added) for not litigating her damages claim in the Equity proceedings. The primary judge held, at [60], that it was not unreasonable for her to bring separate proceedings for damages (in the District Court) rather than raising her claim as a cross-claim in the Equity proceedings. Thus, the primary judge found that Anshun estoppel did not apply. The primary judge also found, at [72]-[79], that there was no abuse of process since, had Ms Toyne brought her claim for damages as a cross-claim in the Supreme Court, the Equity proceedings would have “been much longer, more costly and more complicated”: [74]. The primary judge also found, in this context, that Ms Toyne had provided a reasonable explanation for not bringing a cross-claim: [79].

45. [62]

    During the course of the hearing in this Court, Ms Castle handed up the current pleading as filed, being the amended statement of claim filed on 26 August 2022 (pursuant to leave granted by the primary judge on 26 July 2022), which was not in the form of the draft sought to be filed during the hearing in the Court below on 13 July 2022.

46. [63]

    Mr Berger KC, who appeared with Mr Oram for Mr Stokes in this Court, did not object to this Court taking the current pleading into account in the determination of whether the District Court proceedings ought be stayed, notwithstanding that it had not been before the primary judge.

47. [64]

    The amended statement of claim (as filed) included the following allegations:

    1. (1)

       in the course of demolishing a shed, Mr Stokes had caused asbestos contamination on the rural block, which had been further dispersed by earthworks carried out by Mr Stokes and by the wind (paragraphs 6-9);

    2. (2)

       Mr Stokes had, without the consent or knowledge of Ms Toyne and in breach of contract, demolished fences which had, prior to their removal, permitted the land to be used for the agistment of livestock (paragraphs 10 and 30);

    3. (3)

       Mr Stokes had, without the consent of Ms Toyne and in breach of contract, removed a row of evergreen trees from the rural block (paragraphs 11 and 30);

    4. (4)

       On 8 December 2016, Ms Toyne had terminated the contracts for sale of Lot 106 and the rural block (paragraph 13);

    5. (5)

       On 18 March 2019, Rees J ordered Ms Toyne to return the deposits of $110,000 to Mr Stokes (paragraph 18);

    6. (6)

       Mr Stokes owed Ms Toyne a duty of care to carry out any demolition or development works on her land with due care and skill (paragraph 19);

    7. (7)

       Mr Stokes breached his duty of care, including by failing to contain the asbestos released by the demolition of the shed (paragraphs 23 and 24);

    8. (8)

       the asbestos released onto the rural block needs to be removed and has diminished the value of the land, affected its saleability, rendered Ms Toyne liable to prosecution and caused her to incur substantial holding costs (paragraphs 27 and 30); and

    9. (9)

       the damage suffered by Ms Toyne includes the cost of replanting trees and reinstating fences as well as the loss of income that would otherwise have been generated by leasing the land for agistment (paragraph 31).

Consideration

1. [65]

   The grounds of appeal fall into the following four categories (as indicated by the headings in the draft notice of appeal):

   1. (1)

      errors relating to refusing leave to cross-examine Ms Toyne, which resulted in a denial of procedural fairness (ground 1), and subsequent error in referring to Ms Toyne’s evidence as “unchallenged” (ground 2);

   2. (2)

      errors relating to findings regarding Ms Toyne’s evidence (grounds 2 and 3);

   3. (3)

      errors relating to Anshun estoppel (grounds 4, 5 and 6); and

   4. (4)

      errors relating to abuse of process (grounds 7, 8 and 9).

2. [66]

   The substance of the grounds will be addressed by reference to those categories.

3. [67]

   Mr Berger submitted that the primary judge erred in refusing leave to cross-examine Ms Toyne on the (incorrect) basis that subjective factors were not germane to Anshun estoppel or abuse of process. Further, he submitted that this error was compounded when the primary judge relied on subjective factors derived from Ms Toyne’s evidence, which were regarded as “unchallenged” and, implicitly, more reliable as a consequence.

4. [68]

   Ms Castle submitted that the primary judge was entitled to refuse leave to cross-examine as the application was interlocutory. Further, she contended that the failure of Mr Stokes’ counsel to indicate the matters on which he wanted to challenge Ms Toyne provided a further reason to refuse leave. Ms Castle also submitted that, by describing Ms Toyne’s evidence as “unchallenged”, all the primary judge did was record the “benign” fact that she had not been cross-examined, which did not amount to his Honour expressing a view that her evidence was, thereby, either more or less reliable.

5. [69]

   All relevant circumstances, whether objective or subjective, may be relevant to a plea of Anshun estoppel or a submission that proceedings constitute an abuse of process: Anshun at 603; Clayton v Bant (2020) 272 CLR 1; [2020] HCA 44 at [31] (Kiefel CJ, Bell and Gageler JJ). I consider that a fair reading of the primary judge’s reasons for refusing leave to Mr Stokes’ counsel to cross-examine Ms Toyne indicates that the primary judge incorrectly considered the test to be purely objective. This amounts to a House v The King (1936) 55 CLR 499; [1936] HCA 40 error of legal principle which caused the discretion whether to grant leave to cross-examine to miscarry.

6. [70]

   This error was, as Mr Berger submitted, compounded by the circumstance that the primary judge accepted Ms Toyne’s evidence on the basis that it was “unchallenged” (ground 2). I reject Ms Castle’s submission that “unchallenged” was a benign description of evidence given by a witness who was not cross-examined. The word “unchallenged”, in this context, carries with it the implication (which was incorrect in this case) that a party who had an opportunity to challenge the evidence chose not to do so and that the evidence, accordingly, can more readily be accepted. While it would have been correct to describe Ms Toyne’s evidence as untested, it was not correct to describe it as unchallenged.

7. [71]

   Although it is not necessary to determine how this error of characterisation came about, it would appear that the primary judge may have forgotten both that leave to cross-examine Ms Toyne had been declined and the basis for the refusal. Procedural fairness required, in the circumstances of the present case, that Mr Stokes be given an opportunity to challenge Ms Toyne’s evidence as to her subjective circumstances (the objective circumstances were capable of being proved otherwise, including by the tender of documents) if it was to be taken into account against him in the determination of his notice of motion. He was denied that opportunity. This denial of procedural fairness resulted in “practical injustice” in the sense referred to in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 at [38] (Gleeson CJ), because the acceptance of Ms Toyne’s evidence was central to the primary judge’s conclusion, as his Honour’s reasons reveal.

8. [72]

   It follows from the establishment of this ground that the appeal ought be allowed, at least in part, and the orders made by the primary judge dismissing Mr Stokes’ notice of motion filed on 10 October 2021 and ordering him to pay Ms Toyne’s costs of the motion ought be set aside and the notice of motion remitted (subject to the determination of the remaining grounds) to the District Court for determination. This is sufficient to address grounds 1 and 2.

9. [73]

   Mr Berger contended that the primary judge had erred in making certain findings, which he submitted were inconsistent with the findings made by Rees J:

   1. (1)

      Rees J did not quantify the cost of cleaning up the asbestos contamination (primary judge’s reasons at [54]);

   2. (2)

      it was impossible for Ms Toyne firmly to quantify the potential damages, including the costs of remediation and the effect on a resale price of the land (primary judge’s reasons at [55]);

   3. (3)

      Ms Toyne did not have evidence available to her to litigate the issues in the District Court proceedings in her defence of the Equity proceedings (primary judge’s reasons at [56]);

   4. (4)

      it was only upon receipt of the Nuttall report on 20 August 2018 that Ms Toyne had a proper understanding of the true extent of the asbestos remediation works required and that such works would cost more than $100,000 (primary judge’s reasons at [28] and [56]); and

   5. (5)

      Ms Toyne formed the view that Mr Stokes did not have significant assets, may not have been able to meet a costs order in her favour, and there was no utility in incurring the significant expense of pursuing a cross-claim in the Equity proceedings (primary judge’s reasons at [27], [29(3)] and [56]).

10. [74]

    This ground can be addressed briefly. That subsequent proceedings will lead to inconsistent findings is a factor informing Anshun estoppel and abuse of process. In substance, Rees J, at [160], found that she could not be satisfied on the evidence that Ms Toyne’s loss from asbestos contamination exceeded the benefit which had been conferred on her by Mr Stokes. Thus, the matter was dealt with on the basis of an evidentiary onus. In these circumstances, I am not persuaded that Mr Stokes has established a risk of inconsistent judgments. However, the risk of inconsistent judgments is not the only basis on which an Anshun estoppel or abuse of process may arise. These are the matters that arise in the next category of grounds.

11. [75]

    It is convenient to address the grounds alleging failure to find Anshun estoppel or abuse of process together. Before doing so, I propose to refer to the principles which govern the application of Anshun estoppel and associated abuse of process more generally, accepting that the concepts are fundamentally distinct: Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 (Tomlinson) at [24]-[25] (French CJ, Bell, Gageler and Keane JJ) and UBS AG v Tyne as trustee of the Argot Trust (2018) 265 CLR 77; [2018] HCA 45 (UBS v Tyne) at [62] (Gageler J).

12. [76]

    The starting point is Anshun itself. In that case, a worker sued the Port of Melbourne Authority (the Authority) and Anshun Pty Ltd (Anshun) in negligence. Each of the defendants cross-claimed against the other for contribution. Judgments were entered on the claim and the cross-claims. Subsequently, the Authority brought separate proceedings against Anshun for a liquidated sum based on a contractual indemnity.

13. [77]

    The High Court held that the Authority was estopped from bringing these proceedings, on the basis that its failure to raise the indemnity in its cross-claim for contribution (in the earlier proceedings) was unreasonable. At 598, the plurality (Gibbs CJ, Mason and Aickin JJ) distinguished what has become known as Anshun estoppel from each of cause of action estoppel (otherwise known as res judicata) and issue estoppel, referring to the following passage from Henderson v Henderson (1843) 3 Hare 100 at 115; 67 ER 313 at 319:

14. [78]

    The plurality said, further, at 602, that “there will be no estoppel unless the matter relied on as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it.” Their Honours also referred, at 603, to the estoppel which will arise against a party “bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment.” Their Honours explained, at 604, that a conflicting judgment is one which appears to “declare rights which are inconsistent in respect of the same transaction.”

15. [79]

    The doctrine of abuse of process is inherently broader and more flexible than res judicata, issue estoppel or Anshun estoppel and is capable of applying in any circumstances in which the use of a court’s procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute: Tomlinson at [25]. The plurality in Tomlinson said at [22], of Anshun estoppel:

16. [80]

    The need for a connection between the initial proceedings and the subsequent proceedings (sought to be impugned on the basis of Anshun estoppel) was addressed in Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 259 CLR 212; [2016] HCA 44 (Timbercorp). The plurality (French CJ, Kiefel, Keane and Nettle JJ) rejected the appellant’s submission that an Anshun estoppel arose because of “similarities between the matters raised in the two proceedings” (at [55]) and confirmed the applicability of the test in Anshun at 602, that the matter raised in the second action must be “so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it” (at [56]). In Timbercorp, the “second action” comprised defences raised by individual investors who had been parties to an earlier class action against the plaintiff company. In the result, it was held that it was not unreasonable for the investors not to raise matters germane to them individually in the group proceedings.

17. [81]

    Tomlinson was applied in UBS v Tyne, in which the original trustee of a family trust, an investment company and Mr Tyne, who was their controlling mind, sued UBS in the Supreme Court of New South Wales for alleged negligent advice. These proceedings were permanently stayed on the basis of other proceedings which had been determined in the High Court of Singapore, which gave rise to res judicata. Subsequently, Mr Tyne commenced proceedings in the Federal Court, making substantially the same allegations as he had made in the earlier proceedings which had been stayed. At first instance, the Federal Court proceedings were permanently stayed as an abuse of process. On appeal to the Full Federal Court, the stay was revoked.

18. [82]

    The High Court, by majority (Kiefel CJ, Bell, and Keane JJ and Gageler J), allowed UBS’s appeal and found that the Federal Court proceedings ought be permanently stayed as an abuse of process (cf. Anshun estoppel). The plurality said, of present relevance, at [59]:

19. [83]

    The plurality, at [42] and [45], also emphasised the importance of provisions such as s 56 of the Civil Procedure Act 2005 (NSW) and s 37M of the Federal Court of Australia Act 1976 (Cth), which is in similar terms.

20. [84]

    Trawl Industries of Australia Pty Ltd (In Liq) v Effem Foods Pty Ltd (1992) 36 FCR 406 (Trawl v Effem), although factually very different from the present case, provides a useful example of a instance where Anshun estoppel (cf. abuse of process) was found to bar subsequent proceedings. The applicant (Trawl) had brought proceedings in the Supreme Court of New South Wales against the respondent (Effem) for damages for breach of contract as well as for contraventions of ss 52 and 53 of the Trade Practices Act 1974 (Cth). Effem cross-claimed for damages against Trawl (for alleged repudiation of the contract). By consent, the Supreme Court ordered that liability on the contract claim be determined separately and in advance of other issues, such as assessment of damages, estoppel and contraventions under the Trade Practices Act. Following the hearing on liability for breach of contract, the Supreme Court (Cole J) entered judgment for Effem on Trawl’s claim and Effem’s cross-claim. An appeal against these orders was dismissed by this Court: Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd trading as “Uncle Bens of Australia” (1992) 27 NSWLR 326.

21. [85]

    Subsequently, Trawl sued Effem in the Federal Court for damages in negligence (which had not been alleged in the Supreme Court proceedings) and in respect of contraventions of ss 52 and 53 of the Trade Practices Act. Effem sought a stay of the Federal Court proceedings on the basis of res judicata and Anshun estoppel. Gummow J found, at 418, that the application was to be determined as a matter of substance, not form, particularly as “many controversies … come before superior courts … without pleadings” and, further, that, by reason of the judicature system, strict pleading of a cause of action was no longer required. His Honour proceeded to compare the substance of the allegations in the Supreme Court proceedings with those in the Federal Court proceedings and concluded that, although there were some differences, cause of action estoppel (or res judicata) had been made out.

22. [86]

    Further, his Honour found, at 422-423, that even if there had been no cause of action estoppel, “the negligence claim (and the precise contraventions of the trade practices law not previously pleaded) could and should have been brought forward by Trawl in the Supreme Court” and that therefore Anshun estoppel applied.

23. [87]

    Because Mr Stokes’ appeal is based on the proposition that it was unreasonable for Ms Toyne not to file a cross-claim for damages in the Equity proceedings, it is useful to review the authorities which specifically address cross-claims. It is plain from the authorities that just because a cross-claim could have been raised in earlier proceedings, does not mean that it was unreasonable not to raise it. Indeed, in Anshun itself, Gibbs CJ, Mason and Aickin JJ, when addressing the changes in the rules of pleading, said, at 600, that “[t]o require that the defendant always raise his cross-claim or set-off at the first available time could cause great inconvenience.”

24. [88]

    In Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245; [2010] NSWCA 33 (Champerslife), Giles JA (Allsop P and Handley AJA agreeing), at [43]-[44], addressed the circumstances in which a claim in subsequent proceedings, which could have been brought as a cross-claim in earlier proceedings, would amount to an abuse of process or be the subject of Anshun estoppel. His Honour referred to Tanning Research Laboratories Inc v O’Brien (1990) 169 CLR 332; [1990] HCA 8, in which Brennan and Dawson JJ (but not the other members of the Court) said, at 346, that the Anshun principle would not generally apply to cross-claims, save for a situation in which “the relief claimed in the second proceeding is inconsistent with the judgment in the first.”

25. [89]

    This dicta was considered by the Full Federal Court (Beaumont, Wilcox and Moore JJ) in Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287, which said at 297:

26. [90]

    In Champerslife, Giles JA, at [44], approved the following passage from Wilcox J’s judgment in Ling v Commonwealth (1996) 68 FCR 180 at 183:

27. [91]

    Both a purchaser’s claim for return of a deposit pursuant to s 55(2A) of the Conveyancing Act and a vendor’s claim for damages for breach of contract arise whenever a vendor has validly terminated a contract for sale of land (thereby precluding an order for specific performance).

28. [92]

    Section 55(2A) of the Conveyancing Act creates a statutory jurisdiction to relieve against forfeiture by the putative purchaser of a deposit paid pursuant to a contract for sale of property: Havyn Pty Ltd v Webster [2005] NSWCA 182; (2005) 12 BPR 22,837 (Havyn CA) at [137] (Santow JA). It is a statutory claim rather than a general law cause of action and is to be distinguished from the right of an injured party to the contract (in this case, the vendor) to sue the putative purchaser for damages for breach of contract.

29. [93]

    The relationship between these claims was addressed by Street CJ in Eq in Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268 (Lucas v Victoria), in which the plaintiff (Lucas) agreed to buy property from the defendant (Victoria). Following the discovery of a Council planning scheme that was unfavourable to development of the property, Lucas sought, relevantly, a declaration that Victoria was not entitled to specific performance of the contract and an order for return of the deposit. Its claims for relief were dismissed.

30. [94]

    Street CJ in Eq said, in obiter at 272-273:

31. [95]

    In Lucas v Victoria (which was decided before Anshun), it was not necessary for the Court to determine whether an action by Victoria for damages (the basis of which cannot be determined from the reasons) would be an abuse of process, since no such claim for damages had been brought. His Honour’s dicta regarding the parallel and independent right of a vendor to sue for damages for breach of contract, whether or not the deposit was ordered to be returned, says nothing about the circumstances in which this right may be exercised. I do not understand his Honour to have expressed any blanket principle that a vendor will always be able to sue for damages in subsequent proceedings, irrespective of the ambit of the proceedings for the return of the deposit. Estoppel based on the principles in Henderson v Henderson (which formed the basis for Anshun estoppel) did not need to be considered.

32. [96]

    In Pratt v Hawkins (1991) 32 NSWLR 319, the parties asked the Court to make an order, by consent, that a contract for sale of property be specifically performed. Subsequently, a further consent order was filed to the effect that the contract be rescinded. The Court (Young J), when noting the further consent order, made consequential orders that the vendors were entitled to forfeit the deposit, subject to the purchaser’s application under s 55(2A) of the Conveyancing Act being made within a specified time.

33. [97]

    At 324, Young J quoted the passage from the reasons of Street CJ in Eq in Lucas v Victoria (set out above) as establishing that an order for return of the deposit pursuant to s 55(2A) of the Conveyancing Act did not put an end to all actions on the contract. However, his Honour did not leave the vendors’ potential claim for damages unaddressed. His Honour, at 327, required the vendors to elect whether to pursue their secondary rights under the contract and recover the deficiency on resale (pursuant to the equivalent to cl 9.3 of the 2005 edition), or to claim damages for breach of contract. His Honour dismissed the purchaser’s motion for return of the deposit and referred to the Master the assessment of any damages suffered by the vendors.

34. [98]

    Thus, in Pratt v Hawkins, all of the issues in dispute between the vendors and purchaser were determined in the same proceedings and no issue of Anshun estoppel arose. Had Ms Toyne flagged, in the Equity proceedings, her intention to sue Mr Stokes for damages, directions could have been made in those proceedings for the conduct and determination of any such cross-claim, as they were in Pratt v Hawkins.

35. [99]

    The relationship between the statutory claim by a purchaser for return of the deposit and a vendor’s right to damages for breach of contract (following valid termination by the vendor) was addressed by this Court in Havyn CA. In that case, the vendor terminated a contract for sale of land when the purchaser failed to comply with a notice to complete. The vendor subsequently commenced proceedings by summons seeking a declaration that she had validly terminated the contract. In the course of the hearing, the vendor sought, and was granted, leave to amend the summons and the points of claim to add a claim for damages for breach of contract. Thus, it became necessary to determine what, if any, loss she had suffered, in addition to the loss on resale. In its points of defence, the purchaser sought return of the deposit pursuant to s 55(2A) of the Conveyancing Act.

36. [100]

    The primary judge (Palmer J) found that the vendor had proved (in the proceedings before him, prior to any inquiry by the Master) that her damages were at least $130,000, which was just over 40% of the deposit. His Honour ordered that the deposit be returned to the purchaser but that the order be stayed until the result of the damages enquiry before the Master was known (because there was an issue about the purchaser’s capacity otherwise to pay damages): Webster v Havyn Pty Ltd [2004] NSWSC 227; (2004) 12 BPR 22,119 (Havyn Eq). The purchaser appealed, in part on the basis of a denial of procedural fairness relating to the finding that the damages were at least $130,000.

37. [101]

    In Havyn CA, this Court (Santow JA, Tobias JA and Brownie AJA agreeing), allowed the appeal in part, on the procedural fairness ground, and set aside the finding relating to the sum of $130,000. Of present relevance, Santow JA said, at [73], that although this course is not mandated “[i]t may be desirable for the damages claim to be quantified first, given that in some cases that process would render the proceedings to recover the deposit otiose (as where the contractual damages assessed exceed the amount of the deposit)”. His Honour also observed, at [74], that it was “unusual and not entirely satisfactory for a vendor faced with a s 55(2A) application (even pleaded in the alternative as part of a cross-claim, as here), not to have sought contractual damages in the pleadings by way of early amendment and substantiated by evidence as to the damages actually suffered”.

38. [102]

    A vendor’s claim for damages for breach of contract, as is evident from the authorities referred to above, is separate and distinct from the vendor’s resistance to an application by the purchaser for return of the deposit. However, there is, as Havyn CA demonstrates, a relationship, which may be a close one, between the two.

39. [103]

    While these considerations are relevant to the question whether a vendor’s action for damages will be subject to Anshun estoppel or amount to an abuse of process, they do not determine it, since the reasonableness of a vendor not bringing a cross-claim for damages in the same proceedings as the purchaser’s application for return of the deposit cannot be answered without regard to the facts and circumstances. I do not regard either Lucas v Victoria or Pratt v Hawkins as providing any support for the proposition that Anshun estoppel is never available in circumstances where a vendor in Ms Toyne’s position resists a purchaser’s application for return of the deposit and subsequently, in separate proceedings, brings a claim against the purchaser for damages.

40. [104]

    For completeness, it is also necessary to address Terry v Permanent Trustee Australia Ltd (1995) 6 BPR 14,091 (Terry), since it was raised by Ms Toyne and considered by the primary judge. In Terry, the plaintiff purchaser (Terry) sought specific performance of a contract for sale of real property against Permanent Trustee Australia Ltd, the defendant vendor (Permanent). Terry was unsuccessful in obtaining such relief and, ultimately, agreed to consent judgment against him in favour of Permanent, which had the effect that he forfeited the deposit he had paid. Terry subsequently commenced proceedings for return of the deposit pursuant to s 55(2A) of the Conveyancing Act. Permanent argued that Terry was precluded from pursuing his action by reason of an issue estoppel or of the application of the principles in Anshun, as he was seeking a new remedy on the same facts as the previous action.

41. [105]

    Santow J rejected Permanent’s argument and, relevantly, held that it was not unreasonable for Terry to refrain from litigating the issue of relief against forfeiture (the s 55(2A) action) in the earlier proceedings for specific performance, and that there was no likelihood of conflicting judgments in “the sense of declaring rights which are inconsistent in respect of the same transaction.” Further, his Honour said, at 14,014:

42. [106]

    In Terry, the deposit would not have been forfeited had Terry been successful in his claim for specific performance. Further, because the first proceedings were resolved by consent, the overlap between the factual matters in each set of proceedings could not be determined. The present question, accordingly, did not need to be addressed.

43. [107]

    In order to address the reasonableness of Ms Toyne not bringing, by way of cross-claim in the Equity proceedings, her claim for damages against Mr Stokes, it is necessary to undertake the process undertaken by Gummow J in Trawl v Effem and compare the issues in the Equity proceedings (and the way in which the proceedings were conducted) with the claim in the District Court proceedings as a matter of substance, not form.

44. [108]

    As can be seen from Ms Toyne’s affidavit in the Equity proceedings, she opposed an order that she return the deposits to Mr Stokes on the basis that she had suffered loss as a result of demolition of fences and a shed, felling of trees, asbestos contamination and holding costs. Although much of her evidence (including her own affidavit) was not read in the proceedings, these matters still constituted the basis of her opposition to the order which was eventually made. At the time those proceedings were heard, she had obtained (and tendered) the Nuttall report and had obtained (but not served) the Aztech quotation.

45. [109]

    An analysis of the statement of claim and the amended statement of claim filed in the District Court proceedings indicates that Ms Toyne claims damages against Mr Stokes on the basis of alleged loss suffered as a result of demolition of fences and a shed, felling of trees, asbestos contamination and holding costs.

46. [110]

    Ms Castle submitted that Ms Toyne was entitled to bring her claim for damages at any time within six years from breach (being the general limitation period provided for in s 14(1) of the Limitation Act 1969 (NSW)) and that she ought not to be “forced on” by the circumstance that Mr Stokes had applied for return of his deposits. She contended that Ms Toyne had many reasons for not bringing her claim as a cross-claim in the Equity proceedings (including that she had not yet sold either of the lots and was concerned that Mr Stokes may not have the money to meet any judgment against him) and that she had adequately explained her forensic choices in her affidavit affirmed on 16 November 2021. Ms Castle also submitted that Ms Toyne was entitled to a determination of her damages claim on the merits and that it was premature to decide whether there was an abuse of process.

47. [111]

    Because of the way Ms Toyne conducted the Equity proceedings, Rees J did not have sufficient evidence to quantify the loss which she was alleged to have suffered as a result of any of these matters. Nor was it necessary to do so for the discretionary exercise which Rees J was required to undertake. As in Havyn CA, to resist the purchaser’s claim for return of the deposits successfully, Ms Toyne bore an evidentiary onus, which she did not discharge, of establishing, in broad terms, that the loss she had suffered as a result of Mr Stokes’ conduct was greater than the benefit he had conferred on her by the work he had performed on the lots. Accordingly, Rees J, in the exercise of her Honour’s discretionary judgment, ordered that the deposits be returned.

48. [112]

    In respect of Anshun estoppel, the fundamental question is whether the claim made by Ms Toyne in the District Court proceedings is so connected with the subject matter of Mr Stokes’ claim for return of the deposits as to make it unreasonable for her not to have brought her claim for damages (by way of cross-claim) in the Equity proceedings. I am satisfied that the almost exact correspondence between the alleged losses relied on by Ms Toyne to resist Mr Stokes’ claim in the Equity proceedings and the alleged losses claimed by way of damages in the District Court proceedings made it unreasonable, in the relevant sense, for her not to have brought her claim in the Equity proceedings.

49. [113]

    In respect of the separate doctrine of abuse of process, as the plurality made clear in UBS v Tyne at [46], “undue vexation” does not arise only when there has been a judgment on the merits on a particular issue. Ms Toyne’s forensic decision not to adduce the evidence which may have permitted Rees J to quantify her loss, or at least to determine whether it exceeded the benefit conferred on her by Mr Stokes’ works, does not make the District Court proceedings any the less a second “vexation” of Mr Stokes.

50. [114]

    Further, because Ms Toyne did not commence proceedings under cl 9 of the 2005 edition within 12 months of 8 December 2016 (the date of termination), her right to sue for damages derived from the common law, rather than cl 9. For this reason, she had no right to sue for deficiency on resale (cl 9.3.1) but could recover such damages at common law as would put her in the same position as if the contract had been performed. Thus, she would be entitled to the difference, if any, between the contract price of the lots and their market value at the date when performance was due (at the latest, 1 December 2016), as well as any consequential losses. It is not to the point that, as Ms Castle informed this Court from the bar table, Ms Toyne has not sold the rural block. For the reasons given above, it is a claim that she could and, in my view, should have brought in the Equity proceedings.

51. [115]

    Mr Berger accepted that it would be open to this Court to set aside the dismissal of Mr Stokes’ notice of motion in the District Court proceedings and remit the matter to the District Court to permit the notice of motion to be determined in accordance with law (relevantly, without a denial of natural justice). However, he contended that there would be no utility in such a course since the subjective matters relied upon by Ms Toyne were not capable of altering the answer to the following two questions: first, whether her claim in the District Court proceedings is so connected with the subject matter of Mr Stokes’ claim in the Equity proceedings as to make it unreasonable for her not to have brought her claim for damages (by way of cross-claim) in the Equity proceedings; or, second, whether the District Court proceedings are otherwise an abuse of process. I agree. There is no basis for prolonging the unreasonableness and abuse of process which is constituted by the commencement and maintenance of the District Court proceedings. The overlap with the facts and issues raised in the Equity proceedings is such as to make the District Court proceedings an abuse of process, irrespective of Ms Toyne’s subjective circumstances, which include her explanations.

52. [116]

    In any event, Ms Toyne’s (untested) subjective explanations given in her affidavit in the District Court proceedings (extracted above) contain admissions that she knew that she had a claim for damages against Mr Stokes, considered whether to bring a cross-claim for damages in the Equity proceedings and decided against doing so. All she needed to do in the Equity proceedings was to alert Rees J and Mr Stokes of her intention to claim for damages. It would have then been a matter for Rees J whether to do what Young J did in Pratt v Hawkins by requiring Ms Toyne to file a cross-claim within a particular time and making directions as to the further conduct of the proceedings, in order that all issues in dispute between the parties could be determined. Alternatively, her Honour could have deferred Mr Stokes’ application for return of the deposit until damages had been assessed (as was suggested in Havyn CA) or stayed the order for return of the deposits pending an inquiry into Ms Toyne’s damages (as occurred in Havyn Eq).

53. [117]

    In these circumstances, Ms Toyne is bound by her conduct of the Equity proceedings, including the forensic choice she made not to bring a cross-claim: see, generally, Coulton v Holcombe (1986) 162 CLR 1 at 7 and 11 (Gibbs CJ, Wilson, Brennan, Dawson JJ); [1986] HCA 33, cf. R v Birks (1990) 19 NSWLR 677 at 684-685 (Gleeson CJ, McInerney J agreeing).

54. [118]

    It is appropriate that there be a grant of leave to appeal: Robinson v Deep Investments Pty Ltd [2018] FCAFC 232; (2018) 364 ALR 305 at [156] (Jagot and Colvin JJ). For the reasons given above, the application made by Mr Stokes in the District Court proceedings should have been upheld.

55. [119]

    It will, absent agreement, be necessary to hear the parties on costs. Accordingly, directions will be made for written submissions on costs, with a view to their determination on the papers.

Proposed orders

1. [120]

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

   1. (1)

      Grant leave to appeal.

   2. (2)

      Allow the appeal.

   3. (3)

      Set aside the orders of Russell SC DCJ made on 26 July 2022 dismissing the applicant’s notice of motion and ordering the applicant to pay the respondent’s costs of the notice of motion.

   4. (4)

      In lieu thereof, permanently stay the proceedings in the Court below.

   5. (5)

      Reserve costs.

2. [121]

   SIMPSON AJA: The facts, circumstances and legal principles relevant to this application for leave to appeal are fully stated in the judgment of Adamson JA, which I have had the advantage of reading in draft. I have also had the advantage of reading in draft the judgment of Ward P. For the following reasons (which diverge from those of her Honour), I have come to the view that the orders proposed by Adamson JA should be made. In order to avoid repetition so far as possible, the following assumes familiarity with each of the other judgments.

3. [122]

   Ground 1 and part of Ground 2 of the draft Notice of Appeal arise out of the refusal by the primary judge to give leave to Mr Stokes’ counsel to cross-examine Ms Toyne, and his Honour’s subsequent observation, in the judgment, that she was not cross-examined (in terms that clearly implied that the absence of cross-examination meant that her evidence could more readily be accepted) and the further observation in which her evidence was expressly described as “unchallenged”. I agree with Adamson JA that, in the circumstances, this amounted to a denial of procedural fairness and that the consequence is (if other grounds are not upheld) that the matter should be remitted to the District Court for rehearing (as proposed by Ward P). That would be a most unfortunate result, but a necessary one if the other grounds are without merit.

4. [123]

   The remaining proposed grounds of appeal relate to the conclusions reached by the primary judge in respect of:

“Anshun estoppel”

1. [124]

   It would be superfluous for me to repeat the legal principles to be applied in determining whether Ms Toyne’s claim is subject to “Anshun estoppel”. The outcome of this case depends upon the application of principles that are essentially uncontroversial. As stated by Ward P, the test is fundamentally one of reasonableness, about which reasonable minds might differ. A relevant consideration is that Ms Toyne sought to defend Mr Stokes’ claim under s 55(2A) of the Conveyancing Act 1919 (NSW) (“the Equity Division proceeding”) for repayment of the deposit that he had paid for the land on the basis that, in commencing work on the property in order to preserve the soon-to-expire development consent, he had caused damage to the property, including by the demolition of sheds and fences, removal of trees and, most significantly, causing asbestos contamination resulting from the shed demolition. That asserted damage is the subject of the proceeding in the District Court, of which a stay, on Anshun principles, was sought.

2. [125]

   In preparation for the presentation of her response to the s 55(2A) claim, Ms Toyne assembled, and served, a substantial amount of evidentiary material. Included in that material was a detailed “Asbestos Assessment Report”. That report does not appear to have included any assessment of the cost of remediation of the asbestos contamination, or other damage: see Stokes v Toyne [2019] NSWSC 274 (“the Equity Division judgment”). Rather, the evidence appears to have been intended to be presented to Rees J as relevant to the exercise of the discretion conferred by s 55(2A). In any event, on the second day of the two-day hearing, it was announced on Ms Toyne’s behalf that she did not propose to read or rely on the bulk of the evidentiary material that had been served.

3. [126]

   As has been observed in the other judgments, Ms Toyne’s evidence explaining her decision not to pursue a cross-claim concurrently with the Equity Division proceeding was not (by reason of the primary judge’s discretionary decision) the subject of cross-examination.

4. [127]

   In par [37] of her affidavit affirmed on 16 November 2021, Ms Toyne stated that she believed that to have pursued a cross-claim at that time would have significantly delayed the Equity Division proceeding, increased its costs, and caused the trial of Mr Stokes’ claim under s 55(2A) of the Conveyance Act to be adjourned. No doubt that was a correct assessment.

5. [128]

   Ms Toyne also said that she had been advised that Mr Stokes’ claim had little prospect of success, that she had limited financial means in the wake of her husband’s recent death, that she had had (in 2011) substantial damage to her home that had caused her significant distraction and expense, and that she had not finalised the quantification of her claim for damages. In an affidavit sworn on 11 July 2022, Ms Toyne explained in more detail her personal circumstances. In 2004 her husband was diagnosed with colon cancer. As a result of his illness, he and Ms Toyne were no longer able to operate two businesses in which they had been engaged for 15 years. Mr Toyne died in June 2015. In 2011 a fire destroyed the family home, which was not rebuilt until 2018.

6. [129]

   Prior to Mr Toyne’s death, the family (Mr and Mrs Toyne and their two young sons) decided to move to Melbourne, where the children were settled into a new environment and new schools. Of the period “2017 onwards”, Ms Toyne said:

7. [130]

   These circumstances provide a significant explanation for Ms Toyne’s decision not to pursue her property damage claim against Mr Stokes by way of cross-claim in the Equity Division proceeding. (However, it must be recalled that Mr Stokes’ counsel was not permitted to cross-examine Ms Toyne.)

8. [131]

   Further, in my opinion it was not unreasonable for Ms Toyne, in the light of the advice she said she had been given (that Mr Stokes’ prospects of success in the Equity Division proceeding were poor), to allow that proceeding to go to judgment, and to reserve her rights in respect of her property damage claim.

9. [132]

   I have come to the view, like Ward P, that it has not been shown that Ms Toyne’s failure to commence her claim for damages so that it could be heard concurrently with Mr Stokes’ s 55(2A) claim was so unreasonable as to invoke “Anshun estoppel”. I would reject those grounds of appeal that assert error on the part of the primary judge in declining to stay the District Court proceeding on “Anshun estoppel” principles.

Abuse of process

1. [133]

   An important distinction between a claim for a stay of proceedings by reason of “Anshun estoppel” and a claim for a stay by reason of abuse of process lies in timing. The claim for a stay by reason of “Anshun estoppel” must necessarily be determined by (at the latest) reference to circumstances that pertained at the time of the proceeding in which, it is asserted, a separate and subsequent claim should also have been pursued. A claim for a stay of proceedings by reason of abuse of process is to be determined by reference to circumstances existing, at the earliest, at the time of commencement of the proceeding sought to be stayed.

2. [134]

   Although there may, at times, be some overlap between “Anshun estoppel” and abuse of process, the two are independent and separate. A claim for a stay by reason of abuse of process takes into account a broader range of factors, which may extend beyond those that existed at the time of commencement of the proceeding. Abuse of process is “…inherently broader and more flexible than estoppel”: Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 at [25] (French CJ, Bell, Gageler and Keane JJ) (“Tomlinson”). Their Honours continued:

3. [135]

   In Rogers v The Queen (1994) 181 CLR 251; [1994] HCA 42, McHugh J said, at 286-287:

4. [136]

   That passage from Rogers was endorsed by Gleeson CJ, Gummow, Hayne and Crennan JJ in Batistatos v Roads & Traffic Authority of New South Wales (2006) 226 CLR 256; [2006] HCA 27 at [15] (“Batistatos”). Their Honours added:

5. [137]

   The practical application of the doctrine of abuse of process within McHugh J’s second category can be seen to have arisen most commonly in two specific classes of case: the first class consists of those in which undue delay, resulting in oppression to the defending party, can be seen: examples are Herron v McGregor (1986) 6 NSWLR 246; Walton; Batistatos; and Angeleska (known as Slaveska) v State of Victoria (2015) 49 VR 131; [2015] VSCA 140 (“Angeleska”); see also Moubarak by his tutor Coorey v Holt [2019] NSWCA 102 (“Moubarak”); The Council of Trinity Grammar School v Anderson [2019] NSWCA 292; The Trustees of The Roman Catholic Church for the Diocese of Lismore v GLJ [2022] NSWCA 78 (“GLJ”). Each of the last three decisions involved inordinately delayed allegations of sexual assault on minors.

6. [138]

   The second class of case arises where the circumstances reveal attempts to raise issues that have previously been raised, or to relitigate issues that have been determined. Examples are Reichel v Magrath (1889) 14 App Cas 665, referred to in Walton at 393; and UBS AG v Tyne (2018) 265 CLR 77; [2018] HCA 45 (“UBS AG”), discussed below. This latter class can overlap with, but is not coextensive with, the “Anshun estoppel” cases. In the context of attempted relitigation, in Johnson v Gore Wood & Co [2002] 2 AC 1, Lord Bingham said, at 31, that what is called for (where it is asserted that a claim or defence should have been raised in earlier proceedings) is:

7. [139]

   The circumstances in which abuse of process in McHugh J’s second category may be found are not limited to those two classes (delay and attempted relitigation) although it is difficult to find in the authorities any case of “unjustifiable oppression” that does not also involve delay or attempts to relitigate issues that have been decided or at least raised or that could have been raised in earlier proceedings. There are, however, indications in the authorities that other circumstances may justify a stay of proceedings as an abuse of process. There are many ways of causing oppression to an opponent that do not depend on delay (alone) or attempts to litigate issues that could or should have been raised earlier, or to relitigate issues that have been previously raised (whether or not otherwise determined).

8. [140]

   It has more than once been observed that the circumstances in which proceedings will constitute an abuse of process cannot be exhaustively defined, and that, in some cases, minds may differ as to whether, in a particular case, a proceeding should be stayed as an abuse of process: R v Carroll (2002) 213 CLR 635; [2002] HCA 55, cited at [7] of Batistatos. UBS AG, decided in both the Federal Court of Australia and the High Court by narrow majorities, illustrates the latter point.

9. [141]

   The observations of Gaudron J in Jago v District Court of New South Wales (1989) 168 CLR 23; [1989] HCA 46 illustrate the former point. Her Honour said, at 74:

10. [142]

    Those observations were adopted by Mason CJ, Deane and Dawson JJ in Walton at 394. Prior to that, their Honours had accepted (at 392) that this Court had power to make an order staying proceedings:

11. [143]

    Their Honours gave examples of circumstances in which proceedings would constitute an abuse of process (proceedings doomed to fail, proceedings brought in an inappropriate forum, and proceedings where it is sought to “litigate anew” an already determined case). Citing Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at 536, their Honours referred to:

12. [144]

    In UBS AG, in both the joint judgment (Kiefel CJ, Bell and Keane JJ at [7]) and a separate judgment by Gageler J (at [67]) the passage extracted above from the speech of Lord Bingham in Johnson v Gore Wood & Co was quoted.

13. [145]

    Gordon J (in the minority as to the application of the principles) said at [125]-[126]:

14. [146]

    Her Honour pointed out (at [136] that the onus of satisfying the Court that a proceeding is an abuse of process is “a heavy one”: see also Williams v Spautz (1992) 174 CLR 509 at 542; [1992] HCA 34; Walton; Batistatos; Moubarak at [71]; GLJ at [95].

15. [147]

    The “culture shift” to which Gordon J referred in [125] finds statutory expression in this state in s 56 of the Civil Procedure Act 2005 (NSW) (“the CP Act”). By subs (1) the overriding purpose of the CP Act and the rules of court in their application to civil proceedings is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. By subs (2), in the exercise of its powers, the Court is required to give effect to the overriding purpose. By subs (3) a party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court.

16. [148]

    In UBS AG, Kiefel CJ, Bell and Keane JJ said at [45]-[46]:

17. [149]

    In Moubarak, Bell P (as the Chief Justice then was) drew together, from previously decided cases, nine “uncontroversial propositions”, which may be summarised as follows (I have omitted the citations):

18. [150]

    Of particular importance in the present case, in my opinion, are propositions (2), (3), (5), (6), (7), and (8). With the exception of proposition (2), each of these focuses on the effect of the litigation on the defending party. None requires proof of mala fides on the part of the initiating party.

19. [151]

    In AON (referred to in [45] of UBS AG), Gummow, Hayne, Crennan, Kiefel and Bell JJ observed at [100] that a judge is entitled to weigh in the balance (in that case, in the exercise of a discretionary decision to grant an adjournment and leave to amend) the strain that litigation imposes on litigants. That was in the context of the burden imposed on a corporate insurance broker. Their Honours also accepted that a personal litigant is likely to feel the strain more than a business corporation or a commercial person. Their Honours cited Bomanite Pty Ltd v Slatex Corporation Aust Pty Ltd (1991) 32 FCR 379 at 392 (“Bomanite”), in which French J (as he then was) in the Federal Court said:

Chronology of the present proceedings

1. [152]

   With that preamble, I turn to the relevant chronology. This will necessitate some repetition.

2. [153]

   The starting point for this purpose is the Equity Division proceeding – that is – Mr Stokes’ s 55(2A) application for the repayment of the deposit he had paid to Ms Toyne. In order to resist that application, Ms Toyne assembled an array of evidentiary material, which she served on Mr Stokes. That evidence has been detailed by Adamson JA. I do not need to repeat what her Honour has said. Mr Stokes’ application was heard on 15 and 16 October 2018. On the morning of 16 October, it was announced that Ms Toyne would not read or rely on the evidentiary material she had served, except for the Nuttall report, the Robson report and the Doherty Report. On 18 March 2019, Rees J delivered judgment: Stokes v Toyne [2019] NSWSC 274. Her Honour ordered that Ms Toyne repay to Mr Stokes the deposit of $110,000, (“the judgment debt”) together with any interest earned thereon, and to pay Mr Stokes’ costs.

3. [154]

   On 28 March 2019, by notice of motion, Mr Stokes sought an order that the costs be assessed on the indemnity basis (on the basis of Ms Toyne’s failure to accept a reasonable offer of settlement). On 15 April 2019, by consent, the Supreme Court ordered that, from 12 January 2018, costs be assessed on the indemnity basis. Mr Stokes sought assessment of the costs.

4. [155]

   The costs assessment began in August-September 2020, when a Costs Assessor was appointed by the Supreme Court. Despite repeated communications with her, Ms Toyne did not participate in the assessment. She did not respond to email communications. The costs assessment was ultimately finalised and communicated to Ms Toyne on 10 December 2020. Judgment for costs was made and entered on 25 January 2021 in the sum of $123,046.34 (“the costs judgment”).

5. [156]

   Ms Toyne did not then pay either the judgment debt or the costs judgment.

6. [157]

   On 3 March 2021, on Mr Stokes’ application, a bankruptcy notice was issued to Ms Toyne in respect of the judgment debt, the costs judgment and interest. The total amount was $247,268.97.

7. [158]

   On or about 1 April 2021, in the Federal Circuit and Family Court of Australia (“the FCF Court”), Ms Toyne sought an order that the bankruptcy notice be set aside (“the FCF Court proceeding”). She claimed, relying on s 40(1)(g) of the Bankruptcy Act 1966 (Cth), that she had:

8. [159]

   Ms Toyne supported her application in the FCF Court with an affidavit sworn by her on 1 April 2021 and an affidavit of her solicitor (Mr Penman) sworn on 1 July 2021. Ms Toyne stated that she was unaware of Mr Stokes’ application for costs assessment and had not been provided with an opportunity to respond or review the costs claimed. She said that she did not know and did not understand why the Court order of 15 April 2019 stated that she had agreed to pay Mr Stokes’ costs of the Equity Division proceeding on an indemnity basis – the implication being that the order was made without her knowledge or consent.

9. [160]

   On 2 July 2021, significantly out of time, Ms Toyne sought an extension of time to apply for a review of the costs assessment. She nominated, as grounds for her application for review, that she was not aware of Mr Stokes’ application for costs assessment and was not provided with an opportunity to review the costs claimed, and was not able to and did not make any objections to the costs claimed. She said that she first became aware of the costs assessment when it was served on her on 11 March 2021.

10. [161]

    On 5 July 2021 Ms Toyne filed, in the District Court, a statement of claim by which she pleaded that Mr Stokes had caused damage to her land by improperly demolishing a shed, as a result of which her land was affected by asbestos, and by improperly demolishing fences. She claimed damages for remediation.

11. [162]

    On 30 July 2021 the Manager, Costs Assessment (“MCA”) declined to grant the extension of time sought for review of the costs assessment, giving reasons. The essential reason was that the MCA did not accept Ms Toyne’s assertion that she had not been provided with a reasonable opportunity to participate in the costs assessment. The MCA noted that the Costs Assessor had been satisfied, on the basis of email evidence, that Ms Toyne had been kept informed of communications with respect to the costs assessment. That that is so is confirmed by affidavit evidence filed in the District Court on behalf of Mr Stokes.

12. [163]

    In order to defend Ms Toyne’s claim in the FCF Court, Mr Stokes proposed to rely on the evidentiary material that Ms Toyne had assembled, filed and served for the purposes of the Equity Division proceeding. He filed an affidavit affirmed by his solicitor to which was exhibited that material. Recognising that he might be precluded from relying on that material by reason of the “implied undertaking” explained in Harman v Secretary of State for the Home Department [1983] 1 AC 280, Mr Stokes’ solicitor sought, on three occasions, Ms Toyne’s consent to the use of the evidence in his response to the FCF Court proceeding. The first two letters brought no response. The third was met with a letter from Ms Toyne’s solicitor asserting that the evidence was subject to “the Harman undertaking”; that the use of the evidence was in breach of the “Harman undertaking” and prima facie constituted contempt of court; and that Mr Stokes had neither explained why he wished to use the material in the FCF Court proceeding, nor why he had not sought consent prior to filing the affidavit. It may here be interpolated that the first part of this final response (asserting failure to explain why he wished to use the material in FCF Court proceedings) could fairly be described as specious. It would have been apparent to any qualified lawyer that the reason Mr Stokes wished to use that material in response to Ms Toyne’s FCF Court application was to counter her assertion that her “counter claim, set off or cross demand” was one that “she could not have set up” in the Equity Division proceeding.

13. [164]

    Ms Toyne did not consent to Mr Stokes’ request. Mr Stokes, accordingly, by notice of motion, sought an order in the Equity Division of the Supreme Court that, to the extent necessary, he be released from the “Harman undertaking” (if, indeed, he was bound by such an undertaking) (“the Harman undertaking proceeding”).

14. [165]

    The notice of motion was listed for hearing in the Equity Division Duty List on 13 August 2021; Ms Toyne sought and was granted an adjournment in order to file and serve evidence in response to the application. On the date then fixed for hearing (18 August 2021) Ms Toyne’s solicitors advised the court that she neither consented to nor opposed the relief sought, save as to costs. She did not file an appearance and did not appear.

15. [166]

    Mr Stokes was represented by counsel. On 20 August 2021 Rein J delivered judgment: Stokes v Toyne [2021] NSWSC 1049. His Honour doubted that the “Harman undertaking” applied, but held, nevertheless, that if Mr Stokes were bound by such an undertaking, it would be “manifestly unjust” for him to be deprived of the opportunity to resist Ms Toyne’s application to set aside the bankruptcy notice by relying on evidence plainly material to one of the questions in issue, that is, whether the “counter claim, set off or cross demand” was one that Ms Toyne could not have “set up” in the Equity Division proceeding. His Honour made orders accordingly. While he considered that Ms Toyne’s refusal to consent to the use of the material was unreasonable and disentitled her to any order in her favour for costs, he ultimately made no order for costs, with the result that Mr Stokes was responsible for the payment of all of his own costs.

16. [167]

    A contested hearing of Ms Toyne’s application to set aside the bankruptcy notice took place in the FCF Court on 27 August 2021. Ms Toyne relied on the statement of claim that she had, by that date, filed in the District Court and on her proposed amended statement of claim. Mr Stokes was represented by counsel. On 15 October 2021 Judge Riley dismissed the application “with costs to be taxed if not agreed”: Toyne v Stokes [2021] FedCFamC2G 148. The principal reason was that Ms Toyne did not establish, as she was required by s 40(1)(g) of the Bankruptcy Act to do before the bankruptcy notice could be set aside, that her claim could not have been “set up” in the Equity Division proceeding.

17. [168]

    By notice of motion filed in the District Court on 14 September 2021 Ms Toyne sought leave to file an amended Statement of Claim in, or substantially in, a form annexed to a supporting affidavit. By notice of motion filed on 10 October 2021, Mr Stokes sought, in the alternative, orders that the proceeding represented by the statement of claim filed on 5 July 2021 be dismissed on the ground that it constituted an abuse of process, on the basis of “estoppel”, or on the basis that the statement of claim disclosed no reasonable cause of action, and, in the further alternative, that the statement of claim be struck out pursuant to Uniform Civil Procedure Rule 14.28, on essentially the same grounds.

18. [169]

    On 29 November 2021 Ms Toyne paid Mr Stokes $252,269.30, representing the judgment debt of $110,000, the costs judgment of $123,046.34, and interest.

19. [170]

    The notices of motion came before the primary judge on 13 July 2022. On 26 July 2022 his Honour made orders:

20. [171]

    There was before the primary judge evidence of the costs, including unrecovered costs, incurred by Mr Stokes in the various proceedings. The total of the costs, including disbursements incurred in relation to the Equity Division proceeding were $166,366.81. The costs order in his favour (including indemnity costs) was in the amount of $123,046.34. The shortfall was $43,320.47.

21. [172]

    In causing the issue of the bankruptcy notice, made necessary by Ms Toyne’s failure to pay the judgment debt of $110,000 and the assessed costs, Mr Stokes incurred an obligation to pay legal fees of $9,000. It was expected that these, or part of these, would be recoverable under the costs order made by the FCF Court, but the quantum of any shortfall, if yet calculated, was not in evidence.

22. [173]

    Mr Stokes then incurred further costs in relation to the failed attempt by Ms Toyne to have the bankruptcy notice set aside. The total of those costs is $67,558.26. While Mr Stokes has a costs order in his favour, no amount has yet been recovered. It may be expected that, as is usual, the amount of costs recovered will be less than the amount expended. Mr Stokes’ solicitor anticipates that the shortfall will be in the order of $18,000, and that, in addition, there will be further costs incurred in a costs assessment, estimated to be $8,000-$10,000.

23. [174]

    Mr Stokes incurred further costs, in excess of $5,000, in resisting Ms Toyne’s application for review of the costs assessment.

24. [175]

    Mr Stokes incurred further costs in relation to the Harman undertaking proceeding in the Equity Division. Those costs amount to $27,000. Because Rein J declined to make an order for costs in Mr Stokes’ favour in that proceeding, none of those costs are recoverable.

25. [176]

    I have come to the conclusion that in this combination of circumstances the administration of justice justifies a permanent stay of the District Court proceedings. To permit the District Court proceeding to go forward would be to cause “unjustifiable oppression” and be “manifestly unfair” to Mr Stokes. That conclusion does not necessarily imply “moral delinquency” (Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 at 247; [1988] HCA 32 (Deane J)) on the part of Ms Toyne, although it is also fair to say that the history recounted above does her little credit. Certainly, it is not indicative of adherence to the obligations expressly imposed on litigants since 2002 by the CP Act.

26. [177]

    That Ms Toyne’s applications for costs review and to set aside the bankruptcy were within the rules of the courts and within her rights, and that withholding her consent to the use of the evidentiary material from the Equity Division proceeding in the FCF Court proceeding was also within her rights, is not to the point. In UBS AG, Kiefel CJ, Bell and Keane JJ spoke of “tactical manoeuvring” and “attempts to manipulate other parties” as conduct which there is no reason for the courts to tolerate. In Batistatos, Gleeson CJ, Gummow, Hayne and Crennan JJ spoke of the litigation of issues that are frivolous and vexatious, and the taking of procedural steps and other delay in the conduct of proceedings as conduct capable of constituting an abuse of the process of the court. Each of the steps taken by Ms Toyne, while within her rights, proved to be without merit.

27. [178]

    There was no direct evidence of any personal effect on Mr Stokes arising out of the conduct of the litigation. However, AON and Bomanite recognise that a concomitant of engagement in litigation is a strain imposed on its participants.

28. [179]

    The events giving rise to the District Court proceeding occurred in 2016. There has been a virtually constant stream of litigation since. Both the original statement of claim and the proposed amended statement of claim have been held (and conceded) to be defective.

29. [180]

    For those reasons I agree with the orders proposed by Adamson JA.