Stokes v Toyne

Birks (1990) 19 NSWLR 677 R v Carroll (2002) 213 CLR 635; [2002] HCA 55 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 Reichel v Magrath (1889) 14 App Cas 665 Robinson v Deep Investments Pty Ltd [2018] FCAFC 232; (2018) 364 ALR 305 Rogers v The Queen (1994) 181 CLR 251; [1994] HCA 42 Stokes v Toyne [2019] NSWSC 274 Stokes v Toyne [2021] NSWSC 1049 Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332; [1990] HCA 8 Terry v Permanent Trustee Australia Ltd (1995) 6 BPR 14 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 Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 259 CLR 212; [2016] HCA 44 Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 Toyne v Stokes [2021] FedCFamC2G 148 Toyne v Stokes [2022] NSWDC 292 Trawl Industries of Australia Pty Ltd (In Liq) v Effem Foods Pty Ltd (1992) 36 FCR 406 Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd trading as "Uncle Bens of Australia" (1992) 27 NSWLR 326 UBS AG v Tyne as trustee of the Argot Trust (2018) 265 CLR 77; [2018] HCA 45 Walton v Gardiner (1993) 177 CLR 378; [1993] HCA 77 Webster v Havyn Pty Ltd [2004] NSWSC 227; (2004) 12 BPR 22,119 Williams v Spautz (1992) 174 CLR 509; [1992] HCA 34 Category: Principal judgment Parties: Nicholas Arthur Stokes (Applicant) Molly Harris Toyne (Respondent) Representation: Counsel: A Berger KC / N Oram (Applicant) M Castle / H D Bailey (Respondent)

Solicitors: Baker Deane & Nutt Lawyers (Applicant) Sachs Gerace Lawyers (Respondent) File Number(s): 2022/252874 Decision under appeal Court or tribunal: District Court Jurisdiction: Civil Citation: Toyne v Stokes [2022] NSWDC 292 Date of Decision: 26 July 2022 Before: Russell SC DCJ File Number(s): 2021/195454

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] In May 2015, Ms Toyne contracted to sell two lots of land to Mr Stokes. When he failed to complete due to ongoing difficulties in obtaining finance, Ms Toyne terminated the contracts and forfeited the deposits (which totalled $110,000). Mr Stokes commenced proceedings in the Equity Division of the Supreme Court for return of the deposits. 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 undertaken by Mr Stokes on the property and holding costs. She did not file a cross-claim for damages. Subsequently, Ms Toyne commenced proceedings in the District Court and claimed damages relating to those matters. By notice of motion, Mr Stokes applied to stay the proceedings on the basis that Ms Toyne was estopped from commencing or maintaining the proceedings on the basis of the principles of Anshun estoppel, or that the proceedings were otherwise an abuse of process. The primary judge dismissed his notice of motion and found 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, and that Anshun estoppel did not apply. The primary judge also found that there was no abuse of process since the Equity proceedings would have been longer, more costly and more complicated if Ms Toyne brought her claim for damages as a cross-claim. Mr Stokes sought leave to appeal against the primary judge's dismissal of his notice of motion on several grounds including that the primary judge erred in refusing him leave to cross-examine Ms Toyne, resulting in denial of procedural fairness and subsequent error in referring to her evidence as "unchallenged" (grounds 1 and 2), and that there were errors relating to findings regarding Ms Toyne's evidence (grounds 2 and 3), Anshun estoppel (grounds 4, 5 and 6) and abuse of process (grounds 7, 8 and 9). The Court held (Adamson JA, Simpson AJA and Ward P agreeing on Grounds 1 to 3, Ward P dissenting on Grounds 7 to 9, Adamson JA dissenting on Grounds 4 to 6) allowing the appeal: As to the first to third grounds: Per Ward P; Adamson JA; Simpson AJA: (1) All relevant circumstances may be relevant to a plea of Anshun estoppel or a submission that proceedings constitute an abuse of process. The primary judge incorrectly considered the test to be purely objective, amounting to a House v The King error of legal principle which caused the discretion whether to grant leave to cross-examine to miscarry: [69] (Adamson JA). It was not correct to describe Ms Toyne's evidence as "unchallenged", which carries the implication that a party who had an opportunity to challenge the evidence chose not to do so and that the evidence, accordingly, can be more readily accepted. Procedural fairness required that Mr Stokes be given an opportunity to challenge Ms Toyne's evidence as to her subjective circumstances and was denied that opportunity, resulting in practical injustice: [70]-[71] (Adamson JA, Ward P agreeing at [1], Simpson AJA agreeing at [122]). Clayton v Bant (2020) 272 CLR 1; [2020] HCA 44 at [31] (Kiefel CJ, Bell and Gageler JJ), applied. House v The King (1936) 55 CLR 499; [1936] HCA 40, applied. (2) Bringing of the District Court proceedings does not give rise to the spectre of inconsistent judgments: [74] (Adamson JA, Ward P agreeing at [1]). Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 at [38] (Gleeson CJ) As to the fourth to ninth grounds: Per Ward P: (3) On the face of her evidence, it was not unreasonable for Ms Toyne to make the forensic decision to resist the relief sought by Mr Stokes on discretionary grounds without bringing a cross-claim at the time of the Equity proceedings: [5], [7]. UBS AG v Tyne as trustee of the Argot Trust (2018) 265 CLR 77; [2018] HCA 45 at [102]-[103] (Gageler J), considered. (4) The power to grant a permanent stay is to be exercised only in the most exceptional circumstances. Ms Toyne's claim for damages in respect of Mr Stokes' conduct prior to termination of the contract is not such as to amount to an abuse of process: [8], [11]. Williams v Spautz (1992) 174 CLR 509, applied. Per Adamson JA: (5) The almost exact correspondence between the alleged losses relied on by Ms Toyne to resist Mr Stokes' claim for return of deposits in the Equity proceedings and the alleged losses claimed by way of damages in the District Court proceedings made it unreasonable, in respect of Anshun estoppel, for Ms Toyne not to have brought her claim for damages in the Equity proceedings. She is bound by the forensic choice she made not to do so: [112], [114], [117]. Coulton v Holcombe (1986) 162 CLR 1 at 7 and 11 (Gibbs CJ, Wilson, Brennan, Dawson JJ); [1986] HCA 33, applied. (6) 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. There is therefore no utility in remitting the matter to the District Court and prolonging the abuse of process by maintaining the proceedings: [115]. Per Simpson AJA: (7) It has not been shown that failure to commence a claim for damages was so unreasonable as to invoke Anshun estoppel: [132]. (8) In the circumstances, the administration of justice justifies a permanent stay of the District Court proceedings, as to permit the proceedings to go forward would cause "unjustifiable oppression" and be "manifestly unfair" to Mr Stokes: [176].

JUDGMENT

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. 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. 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. 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.

Lots 68 and 69

1. 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. Lot Area Zoning Improvements 68 1.4ha Primary production Dilapidated shed 69 1.7ha RUS village (residential) House and tennis court

The original proposed subdivision

1. 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.

The further proposal

1. 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.

The new proposal

1. 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.

The contracts for sale

1. 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.
2. 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]).

Work done by Mr Stokes which revealed asbestos

1. 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.

Extensions of time for completion

1. 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]).

Ms Toyne's termination of the contracts on 8 December 2016

1. Justice Rees found that, on 8 December 2016, Ms Toyne validly terminated the contracts for sale in the following circumstances: 1. Ms Toyne had earlier refrained from acting on a notice to complete; 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. Ms Toyne knew that Mr Stokes was in a position to complete; and 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.
2. 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."

The Equity proceedings

1. 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.

Other background facts which are not derived from the Equity judgment

Evidence filed and served by Ms Toyne in the Equity proceedings

1. 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. her alleged loss as a result of Mr Stokes demolishing her fences; 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. 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. her alleged loss arising from the felling of trees. Deponent/author Issue(s) to which relevant Substance of evidence Ms Toyne deposed that Mr Stokes had felled an entire row of old trees and demolished fences, a horse shed and also a dairy building. He had disposed of asbestos in the dam located on the property. Affidavit of Ms Toyne dated 7 December 2017 Felling trees, demolition of fences, demolition of shed and dairy and disposal of asbestos; also holding costs Around November 2017, she realised that her property was contaminated by asbestos because of the demolition of sheds and retained Robson Environmental to conduct an analysis of the materials. [extracted in part below] She annexed the Robson fibre identification certificate of analysis dated 24 November 2017 (see below) which confirmed the presence of asbestos. She deposed: the "[c]ost of inspecting and cleaning the asbestos which was dumped into the dam - cost to be assessed and provided." Affidavit of David Davies dated 10 May 2018 Asbestos in fibreboard from demolished sheds On 8 November 2017, Mr Davies met Mr Langworthy (see below) at his home in the ACT and received a sample to be tested by Robson Environmental. Mr Davies delivered the sample to Robson Environmental on 23 November 2017. Affidavit of Phillip Langworthy dated 10 May 2018 Asbestos in fibreboard from demolished sheds Attended Lots 106 and 68 on 3 November 2017 with Fiona Doherty and saw her collect samples of fibreboard which she gave him for safekeeping, pending analysis. He delivered the samples to Mr Davies on 8 November 2017. Affidavit of Natasha Pearson dated 11 May 2018 Asbestos in fibreboard from demolished sheds Ms Pearson, an employee of Robson Environmental, examined the sample which was provided on 23 November 2017. She determined that it contained chrysotile asbestos and issued the certificate of analysis (see below) Report of Quantity Surveyor Fiona Doherty dated 16 November 2017 Filed and served in response to report of Donald Cant Watts Corke, quantity surveyors retained by Mr Stokes. (the Doherty report) Quantification of work done by Mr Stokes on property Included item 2.20: "[a]llowance to demolish old sheds and structures including asbestos." Quantified reasonable cost of works Mr Stokes had performed on site to be $36,156.75 excl GST. Fibre identification certificate of analysis by Robson Environmental dated 24 November 2017 (the Robson report) Presence of asbestos on property Confirmed presence of asbestos on Ms Toyne's property, including chrysotile asbestos at "old dam site". Asbestos assessment report by Luke Nuttall of Safe Work & Environments dated 20 August 2018 Presence of asbestos on property and requirements for remediation Assessment of site for presence of asbestos; sampling; analysis; recommendations for remediation of site to remove asbestos. (the Nuttall report)

[The italicised entries denote the evidence not read or tendered by Ms Toyne at the hearing of the Equity proceedings.]

1. 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.
2. 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.
3. 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).
4. 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.
5. 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.

Ms Toyne's affidavit affirmed on 7 December 2017

1. 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: "Works 87 Mr Stokes undertook the following unauthorised works at the Properties: a. felled an entire row of beautiful very old pine trees which, in my view, provided value to the Property as they provided a beautiful vista and privacy; b. demolition offences along Rosamel Street; c. demolition of horse shed which was located on the boundary of the Goodfellows Property; d. demolished of the dairy building and disposal of asbestos in the dam located on the property. A copy of the inspection report is at page 103 of MT 1 [the Robson report]. Costs 88 I have incurred the following costs as a result of the failed sale to Mr Stokes: a. Ongoing monthly mortgage payments on my properties as follows: i. the Property - approximately $2,150 per month; ii. Melbourne house - approximately $3,146 per month. b. fees charged by Velocity Conveyancing for the conveyancing work - $1,600; a copy of the tax invoices from Velocity Conveyancing is at pages 104 to 105 of MT1; c. cost to repair the fencing which was demolished by Mr Stokes - at an estimate of $300.00; d. Costs paid to PHL in respect of the Staged Works - $7,680. A copy of the receipt is at page 106 of MT1. e. Costs paid to Yass Valley Council for Staged Works - $7,318.24. A copy of the receipt is at page 107 of MT1. f. Cost of inspecting and cleaning the asbestos which was dumped into the dam - costs to be assessed and provided."

Evidence relied on by Ms Toyne at the hearing of the Equity proceedings

1. 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.

The Equity judgment

1. 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).
2. 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.
3. 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: "137 The range of figures from the quantity surveyors is therefore between $53,000 and $83,000. Ms Doherty's work is generally more detailed and comprehensive and I prefer her calculations and approach. Some portion of the $35,000 of expenses incurred by Mr Stokes should be added, such as council fees, as Ms Toyne would otherwise have incurred these costs herself. It is not necessary to reach a precise figure for the purpose of this application, save to say that Ms Toyne has benefited from the works done and expenses paid should she choose to pursue the approved subdivision herself or sell the land to someone who does. 138 Against this, Mr Stokes' approach to demolishing an old shed and disposing of the materials was cavalier. It wasn't necessary to demolish the shed on Lot 68 to keep the Development Approval alive and so I infer that the shed was demolished in order to improve the saleability of the sub-divided lots in Lot 106. I consider that a person of Mr Stokes' experience would have readily perceived that the shed likely contained asbestos, and should be handled accordingly. Mr Stokes submitted that the standard which Mr Nuttall used to assess whether the level of contamination of asbestos was acceptable was that applicable to a home site. However, Lot 68 was a rural parcel which was not zoned residential. Further, the asbestos already existed on the site, albeit it the form of a shed. The state of the shed was poor and the asbestos sheeting can be seen on the photographs to have been in a poor state in any event. That may be true, but spreading it around makes it more expensive to pick up. 139 In the result, Mr Stokes has conferred a benefit and a detriment on Ms Toyne. Mr Nuttall recommended that, having regard to the sporadic distribution of asbestos materials within the topsoil and stockpiled materials, the most appropriate method of remediation was removal via excavation and disposal as asbestos waste at an appropriately licenced waste facility. This would include removal of one of the stockpiles, removal of topsoil to a depth of at least 15 centimetres below the existing ground level over the area of topsoil examined, with removal of soil to a depth of at least 30 centimetres in the area of topsoil particularly affected. What remediation would be required for a rural lot is not in evidence. 140 Mr Stokes did confer a benefit on Ms Toyne by performing civil works which she would otherwise have had to pay someone to do in order to satisfy the conditions of the Development Approval and register a plan of subdivision for Lot 106. This was a project which Ms Toyne and her husband had spent some years endeavouring to progress. It is reasonable to think that the civil works are of value to her. The cost of cleaning up the asbestos is not known. The extent of remediation required for a rural lot is not known. It will, however, be a cost which a potential purchaser of Lot 68 will likely factor into their purchase price, or that Ms Toyne will herself have to bear. Overall, I consider that Mr Stokes' improvements are a modest factor."

The aftermath of the Equity proceedings

1. 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.
2. 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).
3. 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.
4. 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).
5. 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. 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. Mr Stokes sought only a return of the deposits; 3. she believed that Mr Stokes had limited prospects of obtaining the return of the deposits; 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. 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. 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. she thought that if she wanted to sue Mr Stokes for damages later, she would be able to do so.

The pleadings

1. On 5 July 2021, Ms Toyne commenced the District Court proceedings by filing a statement of claim in the District Court. She alleged: "1 The plaintiff is and was at all material times: a. a natural person capable of suing; b. the registered proprietor of: i. Lots 68 DP 754883 and 69 DP 754883, 2B Rosamel Street, Gundaroo (the Rural Land); and ii. Lot 106 DP 1218394, 2A Rosamel Street, Gundaroo (the Subdivision Land). (together, the Plaintiff's Land) 2 The defendant is and was at all material times a natural person capable of being sued. 3 In or about June 2016, the parties entered into an agreement to subdivide, develop and sell part of the Plaintiff's Land (Agreement). 4 The Agreement contained the following terms: a. the defendant would pay the plaintiff the purchase price of $1.1 million and plaintiff [sic] a deposit of $110,000.00; and b. the Agreement was subject to the defendant obtaining financial approval by a date agreed to between the parties. 5 In or about July 2016, at the defendant's request and in furtherance of the Agreement, the plaintiff permitted the defendant limited access to part of the Plaintiff's Land for the purpose of making it ready for subdivision. 6 In or about July 2016, the defendant caused damage to the Plaintiff's Land. PARTICULARS The defendant improperly demolished sheds on the Plaintiff's Land which contained asbestos, causing the Plaintiff's Land to be affected by asbestos. The defendant improperly demolished fences on the Plaintiff's Land. 7 By reason of paragraph 6 above, the plaintiff has suffered loss and damages. PARTICULARS The cost for the plaintiff to remedy and remove the asbestos from the Plaintiff's Land is $235,080.00 . A copy of Aztech Services Australia's Project Tender dated 30 April 2021 is in the possession of the plaintiff's solicitor and may be inspected upon request. The cost for the plaintiff to reinstate the fences on the Plaintiff's Land is approximately $2,500.00. The plaintiff has suffered loss of income of $8,400.00 due to being unable to lease the Plaintiff's Land for agistment purposes, due to the defendant demolishing the fences. Further particulars to be provided prior to trial, including the devaluation of the Land."

The notices of motion heard by the primary judge

1. 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.

Ms Toyne's application for leave to amend the statement of claim

1. 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.

Mr Stokes' application for dismissal or a permanent stay of the District Court proceedings

1. 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.

Mr Stokes' application for leave to cross-examine Ms Toyne

1. 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. "HIS HONOUR: Now, you want to cross-examine Ms Toyne. Is Ms Toyne here? CASTLE [Ms Toyne's counsel]: Yes, your Honour, she is here. HIS HONOUR: Mr Oram [Mr Stokes' counsel], this is interlocutory. If something's estopped because of the [Anshun] principle, it ought to be plain from much simpler material than a thousand pages of documents that I've been given and then cross-examination of someone about credit. What are the issues you want to cross-examine Ms Toyne upon? ORAM: Your Honour the grounds are both abuse [of process] and [Anshun]. The question of the unreasonableness in respect of [Anshun] is to be determined by the question of the relationship between the subject matter of the two rights. But it's also to be informed by other circumstances, in particular those that are put forward by the plaintiff as justifying not having brought a cross-claim in the original Supreme Court proceedings. This is an application that will in effect finally determine, has the potential to finally determine the proceedings. It's appropriate for such an application to be brought as an interlocutory application given that in one sense, it's to the continuation of the proceedings is what gives rise to the unfairness of the abuse, but it's relatively unfair for Ms Toyne to put forwards reasons as to why it was reasonable or not oppressive to bring action in the Supreme Court proceedings without my client being able to test those assertions, when they're matters that are entirely within the knowledge of Ms Toyne. HIS HONOUR: Ms Castle, I must say, I have great difficulty seeing how subjective matters in Ms Toyne's life, and I'm referring to medical matters, financial matters and things like that, I don't see how they have any relevance to the [Anshun] principle do they? I mean the [Anshun]-- CASTLE: Yes, your Honour, I think that's right, and your Honour will note that in the submissions, much of the evidence that's given about those matters, in fact most of it is disregarded. It is in our view an objective reasonableness, and a reasonableness that is judged by reference to matters such as whether there is a chance that there will be inconsistent verdicts, and the [Anshun] factors, although it is said from the highest authority, that it's a test of reasonableness, it doesn't mean subjective reasonableness, and it's also not akin to an application for an extension of time, in which to commence proceedings, in that no explanation is required, and none of the cases say that it is, so we would say that the Court ought not grant leave to cross-examine and that all the matters that the Court will need to decide the matter, are here on the documents. HIS HONOUR: Yes. I refuse leave to cross-examine Ms Toyne on her affidavits. In [Anshun] itself in the High Court, the Court said generally speaking, it would be unreasonable not to plead a defence, and I interpolate there, or bring an action, if having regard to the nature of the plaintiff's claim and its subject matter, it would be expected that the defendant would raise the defence, and I interpolate, or a cross-claim, and thereby enable the relevant issues to be determined in the one proceeding matters that explain in a party's mind why they didn't bring forward a claim during some earlier litigation, irrelevant to the exercise of discretion. For that reason, I refuse leave to cross-examine."

Mr Stokes' submissions in the Court below

1. Mr Stokes relied on the background set out above, the material filed and served in the Equity proceedings as well as the Equity judgment.
2. 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.
3. 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.
4. 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.
5. 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.

The primary judge's reasons for decision

1. 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: "29 In par 35 of the affidavit [of 16 November 2021] Ms Toyne summarised her reasons for not bringing a cross-claim against Mr Stokes in the Supreme Court proceedings [the Equity proceedings] relating to relief against forfeiture of the deposit. Those reasons were: (1) At the time Mr Stokes commenced his Supreme Court proceedings, Ms Toyne was not aware of the significant level of asbestos contamination and had not had an opportunity to properly investigate that matter. (2) Since the only relief sought by Mr Stokes was an order for return of the deposits paid, the issue of whether Mr Stokes had been negligent in demolishing the shed containing the asbestos did not form part of the claim made by Mr Stokes. (3) Ms Toyne was of the understanding, based upon advice, that the claim made by Mr Stokes had limited, if any, prospects of success, and that Mr Stokes had little chance of paying an adverse costs order. Thus she took the view that there was no utility in incurring the significant expense of pursuing a cross claim. (4) At the time of the hearing in the Supreme Court Ms Toyne had not attempted to re-sell the land, due to the asbestos contamination. The true extent of the contamination was only identified to her in the period shortly before the trial in the Supreme Court. 30 In par 37 of her affidavit Ms Toyne said that she was not in a position to pursue her cross claim and that if she had done so it would have significantly delayed the Supreme Court proceedings, increased the costs of those proceedings, and caused the trial of the action brought by Mr Stokes to be adjourned. Ms Toyne took the view (par 38) that in the light of those matters she did not want to increase the complexity and cost of the Supreme Court proceedings by bringing a substantial cross claim for damages. 31 The balance of the first affidavit dealt with subsequent attempts to re-sell the land. At the time of affirming the first affidavit, Ms Toyne did not know what effect the asbestos contamination would have on the price she might receive for re-selling the land. 32 The second affidavit of Ms Toyne was dated 11 July 2022 (PX 1). This affidavit firstly covered the dealings between Ms Toyne and Mr Stokes in relation to the sale contracts. I do not propose to summarise that part of the evidence, and I will rely upon the findings of Justice Rees in that regard. 33 From par 17 onwards in the affidavit, Ms Toyne dealt with attempts to re-sell the land and problems in doing so caused by the asbestos contamination. When her second affidavit was affirmed, Ms Toyne believed she was in a position where nobody would buy Lot 68 because of the contamination (par 27). 34 There was no cross-examination of Ms Toyne on anything contained in her affidavits."

The current pleading in the District Court proceedings

1. 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.
2. 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.
3. The amended statement of claim (as filed) included the following allegations: 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. 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. 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. On 8 December 2016, Ms Toyne had terminated the contracts for sale of Lot 106 and the rural block (paragraph 13); 5. On 18 March 2019, Rees J ordered Ms Toyne to return the deposits of $110,000 to Mr Stokes (paragraph 18); 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. 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. 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. 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).

Grounds of appeal

1. The grounds of appeal fall into the following four categories (as indicated by the headings in the draft notice of appeal): 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. errors relating to findings regarding Ms Toyne's evidence (grounds 2 and 3); 3. errors relating to Anshun estoppel (grounds 4, 5 and 6); and 4. errors relating to abuse of process (grounds 7, 8 and 9).
2. The substance of the grounds will be addressed by reference to those categories.

Alleged denial of procedural fairness (ground 1) and referring to Ms Toyne's evidence as "unchallenged" (ground 2)

1. 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.
2. 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.
3. 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.
4. 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.

Alleged errors relating to findings regarding Ms Toyne's evidence (ground 3)

1. 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. Rees J did not quantify the cost of cleaning up the asbestos contamination (primary judge's reasons at [54]); 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. 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. 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. 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]).
2. 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.

Alleged error in failing to find Anshun estoppel (grounds 4, 5 and 6) or abuse of process (grounds 7, 8 and 9)

1. 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).

General principles

1. 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.
2. 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: "where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."
3. 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."

The question of cross-claims

1. 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."
2. 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."
3. 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: "… [Brennan and Dawson JJ] made an exception of cases where the relief claimed in the second proceedings is inconsistent with the judgment in the first. In making this distinction, their Honours may have had in mind a situation, such as the one before them in that case, where the cross-claim depended on facts remote from those of the principal claim. Questions of substantive degree may be involved; and in contrast to defences, many cross-claims may have little or no connection with the principal claim in the action; there may be no more than an identicality of parties. Where that is so, there may be no policy justification for forcing defendants to litigate their claims as cross-claims rather than as principal claims in separate actions in the forum of their choice. But, where, as here, a defendant's claim is intimately connected with that of the plaintiff, in the sense that each arises, substantially, out of the same matters of fact, there is every reason to require that both be litigated at the one time; thereby minimising costs and avoiding the possibility of inconsistent judgments (cf Federal Court of Australia Act 1976 (Cth), s 22)."

The relationship between a claim for return of a deposit pursuant to s 55(2A) of the Conveyancing Act and a claim for damages for breach of contract

1. 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).
2. 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.
3. 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.
4. Street CJ in Eq said, in obiter at 272-273: "It is clear enough that at law a vendor's right to forfeit a deposit to himself in the event of a purchaser's default bears no necessary relation to the damages actually suffered by a vendor. At law a forfeited deposit could result in a vendor making a profit which in justice and equity he ought not to be permitted to enjoy at the purchaser's expense. In a complementary sense, an order for the return of the deposit does not necessarily affect the vendor's right to sue a defaulting purchaser at law and recover against him such damages as the vendor can prove. The jurisdiction under s. 55 (2A) does not give to a court an overall discretionary supervision of monetary adjustments between parties to a contract under which a deposit was paid but which has been terminated. A vendor who forfeits a deposit in strict enforcement of his legal rights is not to be deprived of it under s. 55 (2A) unless it is unjust and inequitable to permit him to retain it. If the court would not, in its discretion, specifically enforce the contract against the purchaser, then it may follow that it would be unjust and inequitable to allow the vendor to retain the deposit. In appropriate cases he should be left to prove the damages payable to him by the defaulting purchaser in accordance with the established rules governing the measure of damages, rather than simply pocketing the deposit, which might in some cases exceed the damages which would properly be recoverable by him at law. Equity has always looked with disfavour upon penalties or stipulations which result in a party to a contract making a profit at the expense of a defaulting party. It is clear that where the court in its discretion refuses specific performance, whether or not it also orders repayment of the deposit under s. 55 (2A), it will still remain open to the vendor to sue the defaulting purchaser and recover against him whatever damages may be due to the vendor at law in the event of the contract having gone off through the purchaser's breach. The ordinary principles of contract law and of damages stand untouched by this section except in so far as it operates to qualify the ordinary right of a vendor to forfeit and retain a deposit."

The present case

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.

Proposed orders

1. For the reasons given above, I propose the following orders: 1. Grant leave to appeal. 2. Allow the appeal. 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. In lieu thereof, permanently stay the proceedings in the Court below. 5. Reserve costs.
2. 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. 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. The remaining proposed grounds of appeal relate to the conclusions reached by the primary judge in respect of: (i) Mr Stokes' claim that Ms Toyne's District Court proceeding is subject to "Anshun estoppel" (Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45 ("Anshun") as refined, explained and applied in subsequent authorities, all of which are considered by Adamson JA); (ii) Mr Stokes' claim that, in any event, and independently of the principles stated in Anshun, the District Court proceeding constitutes an abuse of process.

"Anshun estoppel"

1. 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. 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. 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. 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.

Abuse of process

1. 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. 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: "Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court's procedures would be unjustifiably oppressive or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment of the system of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel."
3. In Rogers v The Queen (1994) 181 CLR 251; [1994] HCA 42, McHugh J said, at 286-287: "Inherent in every court of justice is the power to prevent its procedures being abused. Although the categories of abuse of procedure remain open, abuses of procedure usually fall into one of three categories: (1) the court's procedures are invoked for an illegitimate purpose; (2) the use of the court's procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court's procedures would bring the administration of justice into disrepute. Many, perhaps the majority of, cases of abuse of procedure arise from the institution of proceedings. But any procedural step in the course of proceedings that have been properly instituted is capable of being an abuse of the court's process. In Walton v Gardiner, Mason CJ, Deane and Dawson JJ said that the jurisdiction to stay proceedings that are an abuse of process 'extends to all those cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness'." (internal citations omitted) The reference to Walton v Gardiner was a reference to the earlier decision of the High Court in Walton v Gardiner (1993) 177 CLR 378; [1993] HCA 77, ("Walton") as to which, see below.

Chronology of the present proceedings

1. With that preamble, I turn to the relevant chronology. This will necessitate some repetition.
2. 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. 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. 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. Ms Toyne did not then pay either the judgment debt or the costs judgment.
6. 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. 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: "…a counter claim, set off or cross demand equal to or exceeding the amount of the judgment debt … that … she could not have set up in [the Equity Division proceeding]."

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