Toyne v Stokes

Decision of Justice Rees

1. Her Honour summarised the background to the proceedings brought by Mr Stokes as follows: "1 This is an application under section 55(2A) of the Conveyancing Act 1919 (NSW) by Nicholas Stokes, a purchaser under two contracts for sale of land, for the return of the deposits from Molly Toyne, the vendor. The deposits total $110,000. 2 The case is somewhat unusual in that the process of purchasing the properties stretched over more than two years. It began with efforts by Ms Toyne and her husband to develop and subdivide the properties using Mr Stokes' services as a contractor. Over time, it was proposed that Mr Stokes would develop and subdivide one property and be paid from the sale of the sub-division. Ultimately, Mr Stokes purchased both properties with a view to developing the land between exchange and completion. This did not happen due to inclement weather and difficulties obtaining finance given the characteristics of the deal as ultimately agreed. Neither Mr Stokes nor Ms Toyne were commercially sophisticated, although Mr Stokes appears to have engaged in some local property development. Both were advised by local conveyancers and a local real estate agent who was Ms Toyne's agent but ultimately acted in the role of intermediary in an attempt to get the deal 'over the line'. Whilst the protracted process caused both Mr Stokes and Ms Toyne significant frustration, the question for the court is whether Ms Toyne should refund or retain the deposits."
2. Her Honour summarised the law in relation to the statutory power to order the return of a deposit as follows: "3 Section 55(2A) of the Conveyancing Act 1919 (NSW) provides (emphasis added): … in any proceeding for the return of a deposit, the court may, if it thinks fit, order the repayment of any deposit with or without interest thereon. 4 The provision was enacted in 1930 and, with comparable legislation in Victoria (Property Law Act 1958 (Vic), section 49(2)) and the United Kingdom (Law of Property Act 1925 (UK), section 49(2)), there is ample case law as to how it should be applied. The authoritative judgment is that of Santow JA in Havyn Pty Ltd v Webster (2005) 12 BPR 22,837; [2005] NSWCA 182, with whom Tobias JA and Brownie AJA agreed. His Honour traversed the history of deposits as an earnest of performance and noted that the vendor's right to retain the deposit upon default was of ancient origin. At [131]: The common law would never have doubted the justice of the vendor retaining the deposit, even though it exceeded the measure of the vendor's true loss. 5 The remedy created by section 55(2A) created a statutory jurisdiction hitherto unknown to courts of equity: at [137]. His Honour approved of Street CJ in Eq's observations in Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268 at 272: (emphasis added) The section was designed to provide relief to a purchaser against an unjust and inequitable consequence of forfeiture of a deposit. 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 injustice and equity ought not to be permitted to enjoy at the purchaser's expense… A vendor who forfeits a deposit in strict enforcement of his legal rights is not to be deprived of it under section 55(2A) unless it is unjust and inequitable to permit him to retain it."
3. After consideration of authorities decided under s 55(2A) of the Conveyancing Act her Honour summarised the principles applicable as follows: "23 In light of these cases, in contracts for sale of land where the purchaser takes possession and does work before completion but the contract is terminated, the Court may 'think fit' to order the repayment of the deposit having regard to: (a) whether the purchaser is a sophisticated commercial person such as a developer; (b) whether the purchaser was responsible for the lack of finance to complete the purchase; (c) whether the contract contains a special condition which governs the parties' rights in respect of the improvements in the circumstances; (d) whether the vendor has received other benefits or compensations aside from the deposit, such as an occupation fee, rates and outgoings, mesne profits, damages or interest on a deposit released on exchange; or (e) whether the vendor has on-sold the property for an higher price, where the uplift appears referable to the work done by the purchaser. Each case will necessarily turn on its facts as to whether, having regard to these and other matters, 'unjust and inequitable consequences' will result from forfeiture of the deposit."
4. Her Honour summarised the facts and the evidence at [25]-[145] of the judgment. At [128]-[140] the judgment dealt with the value of improvements effected to the land by Mr Stokes. The evidence by quantity surveyors was that the work was worth between $53,000 and $83,000. Her Honour found that Mr Stokes' "approach to demolishing an old shed and disposing of the materials was cavalier". At [139] Justice Rees came to the conclusion that: "Mr Stokes has conferred a benefit and a detriment on Ms Toyne. The detriment was the need to deal with the asbestos which the work of Mr Stokes had spread across the land, thus contaminating it."
5. At [140] Justice Rees said: "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."
6. The judgment dealt at [141]-[145] with the evidence in relation to the value of the land.
7. Her Honour summarised the submissions put by the parties at [146] as follows: "146 Put shortly, Mr Stokes says it would be unjust for Ms Toyne to retain the deposits in circumstances where he has performed civil works on the properties and Ms Toyne retains the benefit of those works. Further, Mr Stokes says that Ms Toyne terminated the contracts when she was on notice that Mr Stokes was in a position to complete, having experienced financing difficulties of which he had kept Ms Toyne appraised. Ms Toyne disclaims any benefit conferred by the civil works and says there is nothing unjust in retaining the deposits in circumstances where Mr Stokes agreed to a deal which he was unable to perform and where she gave him ample time to arrange finance."
8. The conclusion of Justice Rees was expressed at [162]-[166]. At [163] her Honour said: "Terminating the Contracts at the moment when Mr Stokes appeared to finally have finance in order was within Ms Toyne's contractual rights but was harsh in the circumstances. Ms Toyne would have appreciated, when she did so, that it would likely inflict financial loss on Mr Stokes from which he would be unlikely to recover."
9. The judgment then continued at [164-166] as follows: "164 Ms Toyne did this in circumstances where Mr Stokes had been labouring on the site for months to her knowledge, including by improving the portions of the property which she wanted to continue to live on. Ms Toyne must have appreciated that it was necessary for the works to be done in order to make the sale of land feasible at all. 165 Ms Toyne has received other benefits from the failed contracts in the form of a Development Approval which remains on foot and partially completed civil works. These have resulted in an increase in the value of the property. There is some asbestos on Lot 68, which was there before but is now in a form which may need to be remediated. This detracts from the benefits conferred on Ms Toyne, in the terms of the improvements undertaken and the increase in value of Lot 68, but not greatly. 166 Mr Stokes has sustained substantial losses as a result of his attempt to complete the contracts of sale. He has spent some $35,000 on building costs and council fees; he has spent time working on the site which he could otherwise have spent working for his company; he has spent some $100,000 on finance costs and is now committed to a home loan at a higher interest than he enjoyed before. All of these losses may be ones which a developer could be expected to bear, having gambled and lost. But in this case it seems to me that it was only when Mr Stokes appeared to have finally overcome the multitude of hurdles in his path - many of which were there at Ms Toyne's request - that Ms Toyne exercised her right to terminate. Overall, I consider that it would be unjust in all of the circumstances for Ms Toyne to retain the benefits of the work done by Mr Stokes and also the deposit. Mr Stokes will hardly be a winner in all of this: it will simply reduce his losses."
10. The orders ultimately made by Justice Rees are set out at [167]. Those orders are: "(1) Order pursuant to section 55(2A) of the Conveyancing Act 1919 (NSW), that the Defendant repay to the Plaintiff deposits of $110,000 together with any interest earned on the deposits. (2) The Defendant to pay the Plaintiff's costs."

Evidence on the Defendant's Notice of Motion

1. The evidence was contained in Court Book (CB) of 981 pages (DX 1) and in two additional affidavits (DX 2 and PX 1).

Evidence for Mr Stokes

1. The first affidavit filed for Mr Stokes was that of his solicitor Ms White dated 8 October 2021 (CB 44). This affidavit annexed a large amount of the material put before Justice Rees. It also annexed correspondence regarding attempts to recover the judgment debt, Federal Court bankruptcy proceedings and the current proceedings. The material referred to in this affidavit, and exhibited to it, is at CB 95-855. I do not think it appropriate to set out that material in detail, and I will instead adopt the summary of the evidence from the decision of Justice Rees. The material concerning costs incurred after the delivery of the Supreme Court judgment is also dealt with in the second affidavit of Ms White, referred to below.
2. The second affidavit of Ms White was filed on 2 February 2022 (CB 96). Ms White acted for Mr Stokes in the proceedings before Justice Rees and subsequent proceedings attempting to recover the debt and in relation to costs of the Supreme Court action. Judgment was entered in favour of Mr Stokes in the Supreme Court on 18 March 2019 in the amount of $110,000 plus costs. A judgment for costs was entered on 25 January 2021 in the amount of $123,046.34. Mr Stokes incurred legal costs during the Supreme Court proceedings of $166,366.81. The difference between incurred legal costs and those recoverable was $43,320.47. The judgment debt plus the assessed costs and interest was paid by Ms Toyne on 25 November 2021.
3. Mr Stokes also incurred costs of $9,000 in relation to preparation of a Bankruptcy Notice and legal costs of $67,558.28 in respect of subsequent bankruptcy proceedings. Ms White estimated that $18,000 of this amount would be unrecoverable.
4. There was a second set of proceedings in the Supreme Court before Justice Rein: Stokes v Toyne [2021] NSWSC 1049. His Honour gave a decision in relation to use of the Supreme Court material in the bankruptcy proceedings. Ms White estimated that Mr Stokes incurred $27,000 in legal costs in relation to that Supreme Court motion.
5. Mr Stokes incurred $6,000 in legal fees as a result of a failed costs review application made by Ms Stokes. In the current proceedings Mr Stokes has incurred costs in excess of $23,000. Ms White estimated that if proceedings continued to a final hearing the costs for Mr Stokes would total $113,000.
6. The third affidavit of Ms White is dated 12 July 2022 (DX 2). This concerns a lapsing notice in relation to a caveat.

Evidence for Ms Toyne

1. The first affidavit for Ms Toyne was that of her solicitor Mr Penman dated 14 September 2021 (CB 40). This document annexed a proposed Amended Statement of Claim, which counsel for Ms Toyne very wisely disavowed.
2. The second affidavit for Ms Toyne was her own affidavit dated 16 November 2021 (CB 55). This dealt with her personal circumstances and contained material providing an explanation for not making a damages cross claim in the Supreme Court proceedings heard by Justice Rees. Ms Toyne had obtained a report from Robson Environmental dated 23 November 2017 which confirmed the presence of asbestos on the land arising from the demolition of an old meat shed by Mr Stokes. While Ms Toyne was aware of the asbestos contamination, she did not know the extent of it, what was required to remediate the contamination, the cost of remediation, or the effects which the contamination would have on her ability to sell the land after the contracts with Mr Stokes were terminated.
3. Ms Toyne said (par 26) that she made a decision to refrain from trying to re-sell the land until those issues were resolved. She had discussions with the Yass Valley Council regarding the contamination. She was made aware that the contamination of the land would have to be disclosed to a prospective purchaser. Ms Toyne formed the view that there were significant risks in selling the land when it was affected by asbestos.
4. In November 2017 searches were conducted which led Ms Toyne to the view that Mr Stokes did not have significant assets and may not be able to meet a costs order in her favour if he failed in the claim for refund of the deposit. Ms Toyne was also aware that Mr Stokes had failed to complete another contract to purchase land in Gundaroo and that the vendor of that land had kept the deposit which Mr Stokes had paid.
5. In early 2018 Ms Toyne became aware that the asbestos contamination was more serious than she had previously believed. In May 2018 Ms Toyne engaged Safe Work and Environments to conduct a further asbestos assessment. At the end of July 2018 this firm produced a report. Ms Toyne then appreciated that the land was significantly affected by asbestos contamination and that substantial remediation works would need to be carried out. On 2 August 2018 Aztech Services provided an indicative quote for the remediation works. Safe Work and Environments produced a report on 20 August 2018, which was six weeks before the commencement of the trial of the proceedings before Justice Rees. Ms Toyne said that it was only upon receipt of that report that she had a proper understanding of the true extent of the asbestos remediation works required, and that such works would cost more than $100,000.
6. In par 35 of the affidavit Ms Toyne summarised her reasons for not bringing a cross claim against Mr Stokes in the Supreme Court 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.
7. 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.
8. 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.
9. 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.
10. 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).
11. There was no cross-examination of Ms Toyne on anything contained in her affidavits.

Anshun Estoppel: Principles

1. The facts in Anshun are well known. The Port of Melbourne Authority (the Authority) hired a crane to Anshun. While the crane was in use a worker was injured. He sued the Authority and Anshun for damages for personal injury for negligence. The Authority and Anshun claimed contribution from each other. In the written agreement which governed the hiring of the crane, there was an indemnity given by Anshun to the Authority. However, the Authority did not seek indemnity in the proceedings for the worker's damages and for contribution between the tortfeasors.
2. A jury awarded damages to the worker and attributed responsibility for the damages 90% against the Authority and 10% against Anshun.
3. By later proceedings the Authority commenced an action in the Supreme Court of Victoria against Anshun claiming, in effect, a refund of the damages paid by it to the plaintiff, relying upon the indemnity in the written crane contract. The defence raised by Anshun to the claim was "one of estoppel, the substance of the defence being that the Authority could have raised its claim against Anshun in the [worker's] action" at [7].
4. The High Court referred to the English decision of Henderson v Henderson (1843) 67 ER 319 where the Vice-Chancellor said: "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."
5. At [28] the High Court referred to earlier authorities, including United States authorities, and said: "The general rule is that a defendant, having a claim available by way of set-off, counterclaim or cross petition, has an election so to plead it, or to reserve it for a future independent action, and a prior action in which a claim might have been asserted as a set-off, counterclaim or cross petition is no bar to a subsequent independent action thereon."
6. The High Court went on to put the matter more broadly at [37] as follows: "In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon 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. Generally speaking, it would be unreasonable not to plead a defence 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 thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few. See the illustrations given in Cromwell v. County of Sac. (1876) 94 US (24 Law Ed, at p 199)."
7. The reference made by the High Court to Cromwell v County of Sac in the Supreme Court of the United States, is to the following passage at (1876) 94 U.S. 351 at 356 per Justice Field: "Various considerations, other than the actual merits, may govern a party in bringing forward grounds of recovery or defence in one action, which may not exist in another action upon a different demand, such as the smallness of the amount or the value of the property in controversy, the difficulty of obtaining the necessary evidence, the expense of the litigation, and his own situation at the time. A party acting upon considerations like these ought not to be precluded from contesting in a subsequent action other demands arising out of the same transaction."
8. At [38] the High Court said: "It has generally been accepted that party will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment."
9. In that regard the High Court said at [15] and [16]: "Indeed, by making a claim for contribution the authority asserted a right which was inconsistent with the right which it asserts in the present action. In the [worker's] action it might have asserted a right to indemnity and in the alternative a right to contribution. Instead, for reasons which have not been explained, the authority confined itself to the claim for contribution. The judgment which the authority seeks to obtain in the present action is one which would contradict the judgment which has been entered in the [worker's] action."
10. The ultimate conclusion of the High Court at [42] was that the indemnity sought to be raised by the Authority in the second proceedings was a defence to Anshun's claim for contribution in the first proceedings. The indemnity claim was "so closely connected with the subject matter of that action that it was to be expected that it would be relied upon as a defence to that claim and as a basis for recovery by the Authority from Anshun".
11. Thus the High Court held that it was unreasonable not to have pleaded the indemnity in the earlier proceedings raising contribution between tortfeasors. The indemnity, if successful (a matter which was conceded), was a complete answer to the claim for contribution. The determination of the contribution claim, without raising the indemnity, followed by a later claim for indemnity, gave rise to conflicting judgments.
12. The decision of the High Court in Anshun has been considered on many occasions by intermediate appellate courts. In Champers Life Pty Ltd v Manojlovski [2010] NSWSC 641 at [4] Allsop P said: "The mere fact that the matter could have been raised does not mean that it should have been raised (for the operation of the principle). Rather, it has to be so relevant as to make it unreasonable not to raise it".
13. It is insufficient that the rights which are the subject of the estoppel claim arose from the same transaction or that the two proceedings are closely related: Hannigan v Inghams Enterprises Pty Ltd [2021] NSWSC 641 at [18].
14. The Anshun principle can operate both in cases where a defence is not pleaded in the earlier action and in cases where the matter that could have been brought as a cross claim in earlier proceedings is sought to be brought subsequently. In Tanning Research v O'Brien [1990] HCA 8; (1990) 169 CLR 332 Brennan and Dawson JJ said: "It may be that the application of the Anshun principle to a failure to cross-claim is limited to situations where the relief claimed in the second action is inconsistent with the judgment in the first."
15. Seeking a strikeout of proceedings on the basis of an Anshun estoppel is not a step to be taken other than in very clear cases - see the authorities cited in the plaintiff's written submissions (MFI 1, par 28(e)).
16. There are a number of authorities specific to a claim under s 55(2A) of the Conveyancing Act which have some bearing upon whether a party would be estopped from bringing a subsequent claim arising out of arrangements for sale of land. Counsel for Ms Toyne cited two cases in par 28(g) of the written submissions (MFI 1). The written submissions said: "(g) A number of cases recognise the right of an owner who has forfeited a deposit to defend those proceedings and later run a claim for damages arising out of the failure of the sale transaction: (i) '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. In appropriate cases [the vendor] 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': Lucas and Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268 at 272-273 per Street CJ in Eq; (ii) 'an order for return of the deposit under s 55(2A) merely stops a vendor's summary remedy and stops a vendor who has in fact suffered no loss from getting a windfall, but does not put an end to any other remedy which the vendor may have to sue for damages': Pratt v Hawkins (1991) 32 NSWLR 319 at 324D per Young J;"
17. Counsel for Ms Toyne also said (MFI 1, par 28): "(h) In Terry v Permanent Trustee Australia Ltd (1995) 6 BPR 14,091 the plaintiff sought relief under s.55(2A). The plaintiff had earlier brought proceedings for specific performance, in which no relief was sought in relation to the deposit. Those proceedings were settled by consent in favour of the defendant. In the later proceedings the defendant contended that the plaintiff was estopped by the Anshun doctrine from bringing the claim. Santow JA disagreed: 'It is clear that the plaintiff's current action for relief against forfeiture and return of the deposit arises from the same matrix of facts as underlay the previous proceedings between the plaintiff and the defendant, and that the plaintiff could have sought the current relief in those proceedings, being for specific performance of a contract…. The critical test is thus whether the failure of the plaintiff to bring the current claim for relief against forfeiture in the prior proceedings for specific performance was unreasonable such that the plaintiff ought to be precluded from bringing the current action, because of the relevance of the current claim to the prior proceedings, and because of the legitimate expectation held by the defendant that the plaintiff would ensure all relevant issues arising from the termination of the contract of sale would be determined in the one proceedings. … I am satisfied that, in the circumstances, it is not unreasonable for the plaintiff, having refrained from litigating the issue of relief against forfeiture in a prior proceedings, to instead bring the claim for such relief in the current proceedings. First, even if the plaintiff's current action succeeds, it will not result in a judgment conflicting with the earlier judgment, in the sense of declaring rights which are inconsistent in respect of the same transaction. A judgment by this court to order repayment of the deposit is consistent with the previous consent judgment that the contract was at an end and specific performance was to be refused. The joint judgment in Anshun held (at 603) that the likelihood that an omission to plead a matter will contribute to the existence of conflicting judgments is an important factor to be taken into account in determining whether that omission can found an estoppel against the assertion of the same matter as a foundation for a cause of action in a second proceeding. Second, I am satisfied that in the circumstances, there were reasons why the plaintiff could justifiably refrain from litigating the issue of the return of the deposit in the initial proceedings. The fact that the defendant has been able to resell the subject property for an amount greater than the price in the contract of sale is relevant evidence in this action, and such evidence only became available after judgment was delivered in the previous proceedings. If the current claim for relief had been brought in the previous proceedings, the plaintiff would not have had the benefit of such evidence…."

Anshun Estoppel: Consideration

1. There will not be an Anshun estoppel unless it appears that the matter relied upon in the second proceedings was so relevant to the subject matter of the first proceedings that it would have been unreasonable not to rely on it - Anshun at [37].
2. Firstly, it must be recognised that if the damages claim brought by Ms Toyne against Mr Stokes in the present proceedings succeeds, that will not result in a judgment which conflicts with the earlier judgment.
3. Secondly, Justice Rees relied upon several findings in coming to the ultimate conclusion that discretionary relief should be granted against the unjust and inequitable consequences of forfeiture of a deposit. Her Honour's reasons are expressed at [162]-[166]. Most importantly, her Honour found that termination of the contracts at the moment when Mr Stokes appeared to finally have finance in order was "harsh in the circumstances". Further, her Honour took into account the work which Mr Stokes had done in improving portions of the property, and in obtaining a Development Approval. Her Honour also took into account that Mr Stokes had sustained substantial losses as a result of attempts to complete the Contract of Sale, including $35,000 spent on building costs and Council fees, time spent working on the site and $100,000 in finance costs. Justice Rees did take into account that Mr Stokes had conferred a benefit and a detriment upon Ms Toyne, the detriment being the need to clean up the asbestos. This was just one factor taken into account, but not quantified, by Justice Rees.
4. Thirdly, while the need for decontamination of the land was the subject of evidence before Justice Rees, it is clear from the affidavit of Ms Toyne, summarised above, that much of the evidence in that regard was not deployed during the Supreme Court proceedings, and indeed at the time of those proceedings it was impossible to firmly quantify any potential damages, including the costs of remediation and the effect on a re-sale price for the land (ie a reduction in value of the land).
5. Fourthly, in Anshun the High Court recognised at [37] that there are a variety of circumstances justifying a party from refraining from litigating an issue in one proceeding and yet wishing to litigate the issue in other proceedings. The High Court referred to expenses, importance of the particular issue and motives extraneous to the actual litigation. In my view the affidavit of Ms Toyne, summarised above, provides a complete explanation as to why she did not embark upon running a damages cross claim in the Supreme Court proceedings. She did not have the evidence available to her at that time. She had the view, based upon advice, that the action brought by Mr Stokes did not have good prospects of success. Further, she was concerned that if, as she was advised, Mr Stokes was likely to fail, he would not be able to pay the costs of the Supreme Court proceedings, let alone the additional costs incurred if a damages cross claim was brought in those proceedings.
6. The cases after Anshun cited by counsel for Ms Toyne (referred to above) indicate that the mere fact that the matter could have been raised earlier does not mean it should have been raised. In particular, cases concerning relief against forfeiture under s 55(2A) of the Conveyancing Act have recognised that a claim for damages arising out of non-performance of a contract (or in this case arising out of the actions of the purchaser between exchange and settlement) do not necessarily have to be brought in the relief against forfeiture proceedings.

Anshun Estoppel: Conclusions

1. The present proceedings for damages in negligence, arising out of contamination of the land by the actions of Mr Stokes, even if successful, would not result in a judgment in any way in conflict with the decision of Justice Rees.
2. Ms Toyne has put forward several unchallenged reasons, which I accept, why the damages claim was not litigated in the relief against forfeiture proceedings in the Supreme Court.
3. I find that was not unreasonable to bring separate proceedings for damages against Mr Stokes, instead of raising such a claim by way of a cross claim in the Supreme Court proceedings.
4. This is not a case where Ms Toyne is estopped by Anshun principles from litigating her claim in this court. Subject to consideration of abuse of process (dealt with below) I would dismiss the Notice of Motion brought by Mr Stokes with costs.

Abuse of Process: Principles

1. Counsel for Mr Stokes relied primarily upon the decision of the High Court in UBS AG. The High Court was divided 4-3 as to whether there had been an abuse of process.
2. The decision of Kiefel CJ, Bell and Keane JJ in UBS AG commenced as follows at [1]: "This appeal is concerned with the power to permanently stay proceedings as an abuse of the process of the court. The varied circumstances in which the use of the court's processes will amount to an abuse, notwithstanding that the use is consistent with the literal application of its rules, do not lend themselves to exhaustive statement. Either of two conditions enlivens the power: where the use of the court's procedures occasions unjustifiable oppression to a party, or where the use serves to bring the administration of justice into disrepute. The issue in this appeal is whether one or both of those conditions is met in circumstances in which the factual merits of the underlying claim have not been determined and any delay in prosecuting the claim has not made its fair trial impossible."
3. Keifel CJ, Bell and Keane JJ said at [7] that whether there is an abuse of process "is a determination that requires consideration of all the circumstances". Their Honours cited Lord Bingham of Cornhill in Johnson v Gore Wood & Co [2002] 2 AC 1 at [31] where his Lordship said that the consideration requires the court to make: "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 whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not."
4. Justice Gageler in UBS AG, agreed with the plurality judgment, and also referred to this passage from Johnson.
5. UBS AG certainly provides an example of how minds may differ in coming to the "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". Eleven judges in total considered the question. The primary judge held that there was an abuse of process. On appeal this decision was overturned when two judges of the Full Court of the Federal Court of Australia held that there was no abuse of process and a third judge dissented, holding that there was an abuse of process. In the High Court, four of the seven judges held that there was an abuse of process and three held that there was no abuse of process. In those circumstances there is little point in analysing the facts in UBS AG.
6. One is reminded of the aphorism of Justice Potter Stewart of the Supreme Court of the United States in Jacobellis v Ohio (1963) 378 U.S. 184 at 197, in which the court considered whether a motion picture was hard-core pornography. His Honour said: "I shall not today attempt further to define the kinds of materials I understand to be embraced within that shorthand description, and perhaps I could never succeed in intelligibly doing so. But I know it when I see it."
7. The plurality judgment in UBS AG identified the following factors which are relevant to determining whether there has been an abuse of process: 1. The timely, cost-effective and efficient conduct of modern civil litigation takes into account wider public interests than those of the parties to the dispute - at [38]. 2. The courts must be astute to protect litigants and the system of justice itself against abuse of process - at [45]. 3. For the Federal Court to lend its procedures to the staged conduct of what is factually the one dispute prosecuted by related parties under common control with the attendant duplication of court resources, delay, expense and vexation, is likely to give rise to the perception that the administration of justice is inefficient, careless of costs and profligate in its application of public monies - at [59].
8. While the plurality judgment, and that of Justice Gageler, reached the conclusion that there had been an abuse of process, the joint judgment of Nettle and Edelman JJ in UBS AG came to the opposite conclusion. Their Honours held that: 1. UBS AG was not twice or otherwise unduly vexed. 2. There was no material delay, additional cost or inconvenience. 3. There was no change of position in reliance on discontinuance of earlier proceedings brought in the Supreme Court of New South Wales. 4. A right-thinking person would not regard the Federal Court proceedings as an abuse of process.
9. Justice Gordon in UBS AG was also of the view that there had not been an abuse of process. At [136]-[137] her Honour said: "The onus of satisfying the court that a proceeding is an abuse of process is 'a heavy one'. Although the power to grant a permanent stay is one to be exercised 'only in the most exceptional circumstances', the exercise of the power can be justified by considerations which may include finality, fairness, and the maintenance of public confidence in the administration of justice. This appeal is concerned with an alleged attempt to raise or re-litigate issues that were said to have been the subject of earlier proceedings. Where a party attempts to raise issues in successive proceedings, that conduct may be assessed as an abuse of process if it is contrary to the principle of finality: that is, that 'controversies, once resolved, are not to be reopened except in a few, narrowly defined, circumstances'. This fundamental principle protects 'parties to litigation from attempts to re-agitate what has been decided'.
10. In coming to agreement with Nettle and Edelman JJ that there had been no abuse of process, her Honour said at [136]-[164] that: 1. There was no issue of costs, vexation or delay. 2. There was no effect on the administration of justice. 3. The trustee had provided an explanation for its conduct and that explanation was not unreasonable.

Abuse of Process: Consideration

1. The plurality judgment in UBS AG held that either of two conditions enlivens the power to permanently stay proceedings as an abuse of process of the court. The first is where the use of the court's procedures causes unjustifiable oppression to a party and the second is where the administration of justice is brought into disrepute.
2. Courts are required to take into account the timely, cost effective and efficient conduct of modern civil litigation, as well as wider public interests than those of the parties to the dispute.
3. In relation to this factor, it must be recognised that had Ms Toyne brought forward a cross claim in damages (including the costs of remediation of the land and any effect on this value), the proceedings before Justice Rees would have been much longer, more costly and more complicated. While there was some evidence in the Supreme Court concerning the fact that the land had been contaminated by the actions of Mr Stokes, that did not take up a large part of the hearing. Justice Rees said at [140] that the extent of remediation required was not known and the cost of cleaning up the asbestos was not known. That is because her Honour was not presented with evidence on those matters or with a full-blown contest which would have occurred had Ms Toyne filed a cross claim for damages.
4. Counsel for Mr Stokes pointed out that Mr Stokes had incurred a significant expense by way of the difference between party/party costs and assessed costs. That is so, but every party has the opportunity to protect themselves against such a gap, and seek an indemnity costs order, by making a suitable offer of settlement. I infer that this was not done in the Supreme Court proceedings.
5. Bringing the damages action now in the Supreme Court is not conduct which was anything like the "staged conduct of what is factually the one dispute prosecuted by related parties under common control with the attendant duplication of court resources, delay, expense and vexation" as the UBS AG litigation was described by the plurality judgment in the High Court at [59]. There is little if any duplication of court resources, as Justice Rees was not presented with evidence and submissions concerning a damages claim. Nor is there delay caused by the present proceedings. Instead, Mr Stokes has been able to successfully run his claim for relief against forfeiture, without the complication, expense and delay which would have been caused by a cross claim for damages being brought in the Supreme Court.
6. I do not think that it can be said that bringing separate proceedings in this court for damages would give rise to the perception that the administration of justice is inefficient, careless of costs or profligate in its application of public monies.
7. I find that Mr Stokes would not be twice or otherwise unduly vexed by having to deal with the damages claim in the District Court. The Supreme Court proceedings were so much shorter because the claim was not brought there. I also find that there was no material delay, additional costs or inconvenience caused by Ms Toyne bringing her action in this court. There was no change of position on her part. There is no attempt to raise or re-litigate issues which were determined in the earlier proceedings. There is no attempt to re-agitate what has already been decided. There has been no effect on the administration of justice.
8. Finally, Ms Toyne has provided an explanation for her conduct and that explanation I find to be reasonable.

Abuse of Process: Conclusions

1. For reasons set out above, I do not consider that these proceedings constitute an abuse of process which should be permanently stayed.
2. I have therefore come to the view that the Notice of Motion brought by Mr Stokes should be dismissed with costs.
3. I have also come to the view that the Notice of Motion brought by Ms Toyne should be dismissed with costs. Ms Toyne certainly needs to amend her pleadings as the present version is utterly defective. Further, the proposed amendment put forward in the affidavit of Mr Penman is not much better. I will grant leave to amend the Statement of Claim within 28 days. Ms Toyne seeks an indulgence from the court to make an amendment, and provides no explanation as to why the matter was not properly pleaded in the first place, or in the version of the proposed amended pleading put forward in support of her Notice of Motion.

Orders

1. The orders of the court are: 1. Dismiss the plaintiff's Notice of Motion filed on 14 September 2021. 2. Strike out the Statement of Claim filed on 5 July 2021. 3. Grant leave to the plaintiff to file an Amended Statement of Claim by 23 August 2022. 4. Order the plaintiff to pay the defendant's costs of the Notice of Motion filed on 14 September 2021. 5. Dismiss the defendant's Notice of Motion filed on 10 October 2021. 6. Order the defendant to pay the plaintiff's costs of the Notice of Motion filed on 10 October 2021.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 July 2022