Livingstone v Mitchell

[2020] NSWSC 1464

Supreme Court

New South Wales

Medium Neutral Citation:

Livingstone v Mitchell [2020] NSWSC 1464

Hearing dates:

16 October 2020; written submissions 19, 21 October 2020

Decision date:

21 October 2020

Jurisdiction:

Common Law

Before:

Adamson J

Decision:

(1)   Grant leave to appeal.

(2)   Allow the appeal.

(3)   Set aside the orders made by Day LCM on 12 May 2020.

(4)   In lieu of the orders made by Day LCM on 12 May 2020:

(a)   dismiss the proceedings in so far as they claim consultancy payments or rates payments alleged to have become due and payable before 4 October 2017.

(b)   direct the plaintiffs (Elizabeth and Robert Mitchell) to file an amended statement of claim in the Local Court which reflects the order in (4)(a).

(c)   order the plaintiffs (Elizabeth and Robert Mitchell) to pay the defendant’s (Ms Livingstone’s) costs of the notice of motion.

(d)   remit the matter to the Local Court for the determination of the proceedings.

(5)   Subject to an application for a different order being made by written application to my Associate within seven days, order the defendants (Elizabeth and Robert Mitchell) to pay the plaintiff’s (Ms Livingstone’s) costs of the proceedings.

Catchwords:

ESTOPPEL — Anshun estoppel — Decisions to which applicable — No adjudication on the merits — Where proceedings were commenced in Supreme Court and subsequently settled — Where related proceedings were commenced in Local Court — Where Plaintiff’s motion to dismiss or strike out Local Court proceedings was dismissed — Whether magistrate erred in statement and application of Anshun estoppel — Whether magistrate erred by failing to find that Local Court proceedings constituted an abuse of process — Effect of Civil Procedure Act 2005 (NSW) s 91

APPEALS — Procedural fairness — Hearing rule — Whether magistrate failed to afford procedural fairness by taking into account documents which had not been admitted into evidence — Whether error was material

APPEALS — Leave to appeal — Importance of finality of litigation — Effect of amount in dispute

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 91

Local Court Act 2007 (NSW), ss 39–41

Uniform Civil Procedure Rules 2005 (NSW), r 42.1

Cases Cited:

Bazos v Doman [2001] NSWCA 347

Cannuli v Cannuli [2018] NSWSC 937

Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; (2003) 77 ALJR 1088

Ekes v Commonwealth Bank of Australia [2014] NSWCA 336; (2014) 313 ALR 665

Johnson v Gore Wood & Co [2002] 2 AC 1

NSW Trustee & Guardian v Philpott [2017] NSWSC 472

Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589; [1981] HCA 45

R&J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd [2008] NSWSC 232

Rojanasaroj v Rachan (No 2) [2011] WASC 271

Running Pigmy Productions Pty Ltd v AMP General Insurance Co Ltd [2001] NSWSC 431

Seidler v University of New South Wales [2011] FCA 640

Snowy Mountains Organic Dairy Products Pty Ltd v Wholefoods Pty Ltd (2008) 21 VR 43; [2008] VSC 405

Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54

Whelan Kartaway Pty Ltd v Donnelly [2012] VSC 45

Category:

Principal judgment

Parties:

Angela Kay Livingstone (Plaintiff)
Elizabeth May Mitchell (First Defendant)
Robert Gordon Mitchell (Second Defendant)

Representation:

Counsel:
P Boncardo (Plaintiff)
A Crossland / J Widjaja (Defendants)

Solicitors:
Toby Tancred Solicitor (Plaintiff)
Foulsham & Geddes (Defendants)

File Number(s):

2020/168323

 Decision under appeal 

Court or tribunal:

Local Court

Jurisdiction:

Civil

Date of Decision:

12 May 2020

Before:

Day LCM

File Number(s):

2019/244051

Judgment

Introduction

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

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

“The claims of the defendants before the Local Court are not subject to cause of action estoppel because those claims either (i) never formed part of the plaintiff’s cross-claim in Supreme Court Proceedings No 91861 of 2015 (the 2015 Proceedings); or (ii) were abandoned by the plaintiffs at the commencement of the trial in that proceeding and therefore were not part of the claims dismissed by Kunc J in order made in the 2015 Proceedings on 4 October 2017.”

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

The background facts

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

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

“51 Consideration

51.1    The vendor [the Mitchells] and the purchaser [Ben and Ms Livingstone] acknowledge that the consideration for the sale of the property shall be calculated as follows:

(a)    The purchaser refinancing the following loans:

(i)    ANZ loan accounts:- [xxx] and [xxx]

(ii)    ANZ overdraft account:- [xxx]

(iii)    Rural Assistance Authority loan secured by way of caveats on the property but excluding the loans to the extent that it is connected with rural infrastructure (being a silo and loan value of approximately $26,000 noted as item 513 Hay, grain silage storage facilities in annexure "A")

(iv)    Esanda ANZ Asset Finance Contracts [xxx] (Massy Ferguson Windrower) & [xxx] (New Holland Tractor)

(b)    The engagement of the vendor's Robert Gordon Mitchell and Elizabeth May Mitchell as agricultural consultants either by the purchaser or the farming entity associated with the agricultural operation conducted on the property from time to time and on such terms as agreed between the parties in clause 51.2 and from time to time. The purchaser guarantees the obligation of the farming entity (if they are separate entities) to perform the obligation to pay the consultancy fees required by this clause and 51.2.

51.2   The consultancy agreement detailed on clause 51.1 (b) includes the following provisions:

(a)    Commencement date 1/7/2010;

(b)    Annual fee $25,000.00 (excluding GST);

(c)    The annual fee shall be indexed to the consumer price index on 1 July every year;

(d)    The fee is payable quarterly in advance;

(e)    If a payment of a quarterly instalment is more than 90 days overdue, then the it will be treated as a default and in such circumstances it will be deemed to be the completion of a property disposal for the purposes of clause (f) below on the basis that there is an immediate payment of the present value of 20 years of the consultancy fee as prescribed in clause (f);

(f)    In the event that the purchaser sell the property, or part of it without the written consent of vendor (on such terms acceptable to the vendor in the vendor's absolute discretion), then upon the completion of the sale there shall be a bring forward of consultancy fee payments to Robert Gordon Mitchell and Elizabeth May Mitchell as follows:

(i)    The then annual consultancy fee payment shall be deemed to be payable for an additional 20 year period from that date; and

(ii)    A present value calculation of the 20 years of annual consultancy fee shall be calculated using a discount rate of 5% per annum; and

(iii)    Such present value amount shall be due and payable to Robert Gordon Mitchell and Elizabeth May Mitchell on the completion of the sale of the property (or part of it); and

(iv)    The purchaser grants to the vendor a charge over the property requiring the purchaser to enter into a mortgage to secure the obligations of the purchaser. Such mortgage will be on such terms and conditions as reasonably prepared by the vendor's solicitor and that the purchaser acknowledges that its obligations pursuant to this clause amount to a caveatable interest in the property.”

6. Ben died tragically in an accident on 2 April 2014.

Relevant legislation

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

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

“91   Effect of dismissal of proceedings

(1)     Dismissal of—

(a)     any proceedings, either generally or in relation to any cause of action, or

(b)     the whole or any part of a claim for relief in any proceedings,

does not, subject to the terms on which any order for dismissal was made, prevent the plaintiff from bringing fresh proceedings or claiming the same relief in fresh proceedings.

(2)     Despite subsection (1), if, following a determination on the merits in any proceedings, the court dismisses the proceedings, or any claim for relief in the proceedings, the plaintiff is not entitled to claim any relief in respect of the same cause of action in any subsequent proceedings commenced in that or any other court.”

The history of litigation

The Equity Proceedings

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

“1.   A declaration that the agreement made between the plaintiff as purchaser and the first defendant as vendor on 23 May 2011 for the sale of the property situated at Kurrajong Road, Cudal, New South Wales, being part of the property comprised in Folio identifier 1/593478 is valid and enforceable.

2.    A declaration that the said agreement contained a term requiring the first defendant to apply to the relevant authority to subdivide the property comprised in folio identifier 1/593478 so as to enable a conveyance by him of title to that land he agreed to sell to the plaintiff.

3.    An order that the first defendant use his best endeavours to secure the consent of the relevant authority to effect the necessary sub-division and, when requested, to sign all authorities and do all things that may be necessary to obtain that consent.

4.    An order that upon the consent being granted, the agreement be specifically performed and carried into execution.

5.    Liberty to each party to apply in the event of any difficulty arising in the implementation of these orders, including for further directions to implement order 3.

6.    Liberty to either party to apply in the event that within a reasonable time the consent for sub-division has not been granted, for such order as may appear just.

7.    A declaration that if it appears upon application made under order 5 that the consent for sub-division will not be granted, and for reasons which are not brought about by any act or default of the first defendant under the agreement, despite the first defendant having used his best endeavours to secure it, and having, when requested, signed all authorities and done all things necessary to obtain it, the agreement is not further specifically enforceable and the court may give such relief to the parties consistent with these orders as may appear just.

8.    Further or in the alternative, damages.

9.    Damages for conversion and detinue;

10.    A declaration that the defendants are estopped from denying the existence of a legal relationship between the plaintiff and the defendants pursuant to which the plaintiff is granted access to the property known as ‘Highfield West’ for the purpose of conducting farming and grazing operations upon that property for her own profit and at her own financial risk.

11.   Interest.

12.    Costs.”

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

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

“1.   An order that the contract for the sale of land executed by the cross-claimants, the first cross-defendant and Benjamin Mitchell on or about 23 May 2011 (the Written Contract of Sale) be rectified so that it identifies as the subject of sale only the land at Auto Consol 6113-155 (Stirling Chase) and that portion of Folio Identifier 1/593478 identified on the plan at Annexure "A" to this statement of cross-claim as the ‘The Highfield East Residue’.

2.    In the alternative, an order rescinding the Written Contract of Sale.

3.    [relief claimed against second to sixth cross-defendants]

4.    An order against the first defendant for liquidated damages in the sum of $261,759.99 or some other sum to be determined by the Court (being liquidated damages payable by reason of the breach of the Written Contract for Sale).

5.    A declaration that the cross-claimants hold a charge over each of Stirling Chase (Auto Consol 6113-155) and that portion of Highfield East (Folio Identifier 1/593478) sold by the Written Contract of Sale, that charge securing the sum of $261,759.99 or some other amount.

6.    An order that the first cross-defendant (both in her own right and as executor of the estate of Benjamin Mitchell) execute a mortgage over each of Stirling Chase (Auto Consol 6113-155) and that portion of Highfield East (Folio Identifier 1/593478) sold by the Written Contract of Sale, such mortgage securing the sum of $261,759.99 or some other amount to be determined by the Court and such mortgage to be prepared by the first cross-claimant's solicitor.

7.    An order that the first cross-defendant return to the cross-claimants certain Farm Machinery (as defined in the statement of cross-claim below).

8.    An order for damages consequent on the first cross-defendant having converted or detained the Farm Machinery (as defined below).

9.    Interest.

10.    Costs.”

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

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

Amount (excl GST)	Date due and payable	Date paid	Accelerated amount claimed
$6,325.60	1 October 2012	3 January 2013	$261,759.99
$6,325.60	1 April 2013	19 July 2013	$282,011.24
$6,476.81	1 October 2013	3 January 2014	$294,511.24
$6,476.81	1 April 2014	9 July 2014	$317,023.14
$6,672.12	1 April 2014	8 October 2014	$323,272.14

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

Date due	Amount due	Date paid	Amount paid
1 October 2012	$6,325.60	Not pleaded	$12,500
1 April 2013	$6,325.60	3 January 2013	$12,500
1 October 2013	$6,476.81	19 July 2013	$6,000
		29 July 2013	$6,500
1 April 2014	$6,476.81	3 January 2014	$12,500

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

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

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

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

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

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

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

“It remains my client’s position that she has complied with her obligations under the contract in relation to payment of the consultancy payments particularly in circumstances where she has invited your clients to identify any shortfall and your clients have refused to do so, and particularly when your clients have been invited to identify and calculate any CPI increase that your clients assert is due.

It is incumbent upon the parties and their legal representatives to identify the matters truly in dispute and to avoid the Court's time and valuable Hearing time being wasted on non-issues.

I therefore again invite you to seek instructions to identify with precision what shortfall is allegedly due and to calculate any asserted CPI increase that is due.

For avoidance of any doubt my client is ready, willing and able to pay any amounts that are properly due to your clients under clause 51.1(b) and clause 51.2.”

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

“28   The plaintiff denies that any amounts are overdue or were at any time overdue, and says that she has paid all amounts due and payable by way of consultancy fee. Furthermore, she has, through her solicitor, repeatedly asked the defendants for particulars of any amounts outstanding. These have not been provided.

29.    However, even if any amount were overdue, the plaintiffs case that these clauses amount to a penalty and are unenforceable on the basis that they cannot be regarded as a genuine pre-estimate of the damages actually flowing from the breach. …”

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

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

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

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

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

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

“I congratulate the parties on having reached a settlement of this matter. Can I say to the extended members of the family present that it is the experience of the Court that these sorts of disputes are always best settled by a solution that perhaps you may not all like, but you can all live with, rather than have the Court impose a solution upon you. I am conscious that you have come to the Court in circumstances of a double blow, being a tragic family loss combined with the need then to litigate the dispute between you, and that neither of those things should be visited on anybody, but sadly in life they happen, and the Court commends you for having resolved your differences and wishes you all well in the hope that family relations are able to be restored. I also express the Court's gratitude to your legal advisers, both solicitors and counsel, who no doubt provided you with valuable assistance in coming to this outcome.

In those circumstances I note the matters set out in paras 6 and 13 of the document entitled, ‘Terms of Settlement’, which I have amended, initialled and dated today, and placed with the papers, and I make orders and declarations in accordance with paras 1, 2, 3, 4, 5, 7, 8, 9, 10, 11, 12 and 14 of those terms of settlement, and I direct that the exhibits be returned. We can give you a copy of this document after the Court has adjourned.”

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

“The Court notes the matters set out in paragraphs 6 and 13 of the document titled Terms of Settlement, amended and initialled by Kunc J, dated today and placed with the papers. The Court makes orders 1, 2, 3, 4, 5, 7, 8, 9, 10, 11, 12 and 14 of those Terms of Settlement and directs that the exhibits be returned.

1.    A declaration that the agreement made between the plaintiff as purchaser and the first defendant as vendor on 23 May 2011 for the sale of the property situated at Kurrajong Road, Cudal, New South Wales, being the part of the property comprised in Folio identifier 1/593478 outlined in orange and styled Lot 101 in the said agreement is enforceable by the Plaintiff.

2.    A declaration that the said agreement contained a term requiring the first defendant to apply to the relevant authority to subdivide the property comprised in folio identifier 1/593478 so as to enable a conveyance by him of title to that land he agreed to sell to the plaintiff.

3.    An order that the first defendant use his best endeavours to secure the consent of the relevant authority to effect the necessary sub-division and, when requested, to sign all authorities and do all things that may be necessary to obtain that consent.

4.    An order that upon the consent being granted, the agreement be specifically performed and carried into execution.

5.    Liberty to each party to apply in the event that, within a period of three months from the date of these orders, the sub division has not been effected by the registration of a new deposited plan, for such orders as may appear just, including for further directions to implement Order 3.

6.    The parties agree that if it appears upon application made under order 2 that the consent for sub-division will not be granted, and for reasons which are not brought about by any act or default of the first defendant under the agreement, despite the first defendant having used his best endeavours to secure it, and having, when requested, signed all authorities and done all things necessary to obtain it, the agreement is not further specifically enforceable, then the court may give such relief to the parties consistent with these orders as may appear just, including equitable damages in lieu of specific performance.

7.    That by 5pm 12 October 2017 the Plaintiff take all steps that may be necessary to ensure that all items listed at Annexure B to the Third Further Amended Statement of [Cross] Claim are on the property known as Stirling Chase (Auto Consol 6113-115) (‘Items’).

8.    The Plaintiff to permit the Defendants or their agents or servants to enter upon the property known as Stirling Chase (Auto Consol 6113-115) during the hours between 9am to 4pm on weekdays and 7am to 7pm on weekends, and upon providing 24 hours' notice to the Plaintiff's Solicitor by email of their intention to come on to the property, in the period 13 October 2017 to 16 October 2017 inclusive, for the purposes only of removing from the property those items which are listed Annexure B to the Third Further Amended Statement of [Cross] Claim.

9.    That the Defendants on or before 4pm on 16 October 2017 remove the Items from Stirling Chase.

10.    The Plaintiff to take all reasonable steps to allow the Defendants or their servants or agents, limited to seven (7) people on the property at any time, to undertake the steps set out in Orders 7 to 9.

11.    That the Defendants take all reasonable steps to remove the Items as expeditiously as possible.

12.    Cross-Claim otherwise dismissed.

13.    The parties agree that there is to be no order as to costs with the intention that each party pay his or her own costs.

14.    Liberty to each party to apply to the Court for further orders in the event of any difficulty arising in the implementation of these orders.”

Correspondence between the parties following the making of orders in the Equity Proceedings on 4 October 2017

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

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

“I refer to the orders and declarations made by Mr Justice Kunc. It would be of assistance if your clients were able to calculate the consultancy payment that they say is next due by reference to the CPI figure that they say applies. Obviously the consultancy payments will be paid by my client in accordance with the terms of the contract for sale however I wish to avoid any further dispute about what payments are properly due. I look forward to hearing from you in this regard.”

[Emphasis added.]

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

“Given the time of year I doubt that I will receive instructions and be able to respond before my office closes tomorrow.”

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

“This office will close on Friday, 22 December 2017 at 1.00pm and re-open on Monday, 15 January 2018 at 9.00am. Emails will not be checked during this period.”

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

“I refer to your email dated 21 December 2017 attaching a letter dated 21 December 2017 and a document said to contain a schedule of payments due by my client to your clients. I have had an opportunity to seek instructions and now respond on those instructions.

Plainly the question of arrears of consultancy payments and CPI on consultancy payments was in issue in the Supreme Court proceedings. That issue fell away when your clients abandoned the claim by the filing of their third further Amended Statement of Cross-claim. It is not now possible for your clients to properly agitate the question of arrears of consultancy payments in the form of CPI due and any attempt by them to do so will obviously be met with the argument as set out in Port of Melbourne Authority v Anshun Pty Ltd, or alternately an argument of issue estoppel.

In any event it is noted that correspondence from your firm confirmed that there were no arrears of consultancy payments due. Additionally, attempts by my client to have your clients advise her about the way in which CPI had been calculated and alleged CPI that was due were rebutted.

My client is willing to pay CPI on the payment due 1 January 2018. It is not clear from the schedule attached to your 21 December 2017 letter what CPI figure has been used. As you would know the Australian Bureau of Statistics publishes figures on a quarterly basis. Clause 51.2(c) requires the consultancy fee to be indexed to Consumer Price Index on 1 July every year. Please clarify the figures your client proposes to use for CPI.”

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

The Local Court Proceedings

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

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

“In answer to the proceedings in their entirety, and to the entirety of the allegations in the Statement of Claim, the Defendant says:

i.    the Plaintiffs are prevented from bringing and maintaining the proceedings and claiming the amounts claimed by operation of the principle of issue estoppel,

ii.    the Plaintiffs are prevented from bringing and maintaining the proceedings and claiming the amounts claimed by operation of the principle of estoppel arising from the decision of Port of Melbourne Authority v Anshun [1981] HCA 45,

iii.    the Plaintiffs are prevented from bringing and maintaining the proceedings and claiming the amounts claimed by operation of the principle of res judicata,

iv.    there is no justiciable action that this Court has jurisdiction to determine;

v.    the Statement of Claim is an abuse of process;

vi.    upon the court determining the proper venue for these proceedings an application will be made by the Defendant to have the Statement of Claim struck out, and or for summary dismissal, with costs.”

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

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

“These proceedings are considered to be an abuse of process and liable to dismissal. It could not be clearer that by agreeing to a dismissal of their Cross-Claim by the Terms of Settlement dated 4 October 2017 your clients agreed that their claim for alleged unpaid consultancy payments to that point was to be dismissed.

You are aware of what has transpired since 4 October 2017, the filing by my client of a Notice of Motion, and further Orders made by His Honour Mr Justice Hallen on 30 April 2019. It was open to your clients during the period from 4 October 2017 to 30 April 2019 to raise and seek to agitate the question of alleged unpaid consultancy payments. They did not do so.

These proceedings should be dismissed. If the Plaintiffs agree to a dismissal of these proceedings, within 14 days, my client will bear her own costs. In the event that your clients do not agree to a dismissal of the proceedings, within 14 days, my client will file a Notice of Motion seeking a dismissal of the proceedings/or Summary Judgment. If that application is successful she will seek an order that your clients pay her costs of the proceedings on the indemnity basis.”

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

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

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

“We rely on the consultancy payments to pay for living expenses, I have noticed that my living costs have increased dramatically since 2010 and have also increased since 2017.

At the time the proceedings ended, the amount in arrears in terms of consultancy payments was $45,270.97. It was my hope that because the matter of the arrears had been brought to her attention in the earlier Supreme Court proceedings, that Angela [Ms Livingstone] would from that point forwards pay the arrears and would pay the correct amount (including CPI increases) going forwards. As it turns out, that has not happened.

My decision to bring these proceedings is based in part on the fact that since the end of the Supreme Court proceedings, Ms Livingstone has failed to pay the CPI increases for the consultancy payments. It is also based in part on her failure to pay the arrears that had accumulated by the time of the end of the Supreme Court proceedings.”

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

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

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

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

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

“Anshun doctrine apparently does not apply where there has been no adjudication of the merits (Bazos v Doman and Ors [2001] NSWCA 347 at [37]-[45]).

…

It follows that even if Anshun estoppel did apply to the present circumstances (i.e., where there was no adjudication on the merits – which it does not), Ms Livingstone’s claim on this score should for the following reasons be rejected.”

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

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

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

“It will be for mention only, and we can entertain a little bit of discussion and or a bit of argument, and I might have to then go over for another two weeks…”

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

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

“3.   Secondly, when the matter was before the Court on 28 April 2020, counsel for Ms Livingstone said his client would not be reading the affidavit of Mr Tancred sworn 20 March 2020 (Mr Tancred’s Second Affidavit) – a position which presumably extends to the annexures to that document.

4.    That being the case, the Mitchells do themselves tender on the notice of motion the correspondence at p.5-25 of the annexures to Mr Tancred’s Second Affidavit, being a bundle of correspondence between the parties in the period 9 October 2017 to 13 March 2018.”

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

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

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

The Judgment of the Court below

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

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

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

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

“The claim in this Court is the same subject matter of part of the Cross Claim in the Supreme Court proceedings in that the fact of the Consultancy Agreement was pleaded, its breach by non-payment of instalments was pleaded, and the quantum of each breach was particularized.”

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

“In considering whether an Anshun estoppel has been established it is necessary to bear in mind that ‘shut[ting] out a claim … a party wishes to pursue, without determination of its intrinsic merit, on the ground that it ought to have been raised in earlier litigation … is a serious step, [and] a power not to be exercised except ‘after a scrupulous examination of all the circumstances’: Ling v Commonwealth (1996) 68 FCR 180 (at 182) per Wilcox J, approved in Bazos (at [45]) per Stein JA (Priestley and Beazley JJA agreeing); see also Brisbane City Council v A-G(Qld) [1979] AC 411 (at 425) per Lord Wilberforce.”

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

“I refer to the orders and declarations made … Obviously the consultancy payments will be paid by my client in accordance with the terms of the contract for sale however I wish to avoid any further dispute about what payments are properly due. I look forward to hearing from you in this regard.”

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

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

“Whilst the principle of that ‘which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process’ (Tomlinson (supra) at [26]), there is an acceptance by Livingstone in the solicitor's letter of 9 October 2017 that she was liable under the contact for sale (clause 51) for the Consultancy Fees, the subject of these proceedings. The letter of 9 October is suggestive of a waiver (and see Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394 on waiver). There is also a flavour of approbation and reprobation in her position shift from 9 October 2017 to 1 February 2018.

In my opinion there is difficulty attaching to that acceptance of liability by Livingstone in her now relying on abuse of process estoppel. This evidence renders the application of this estoppel ‘doubtful’ and applying above judgment of Emmett J. to the conduct of Livingstone immediately after the dismissal of the Cross Claim persuades me to exercise my discretion against striking out Paragraphs 3, 4, 7 and 8 of the Statement of Claim herein.”

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

Consideration

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

66. The grounds of appeal are as follows:

“1 The Learned Magistrate erred in law in holding that the orders made by Kunc J on 4 October 2017 dismissing the Defendants’ Cross-Claim in Supreme Court proceedings 2016/91861 fell within s 91(1) of the Civil Procedure Act 2005 (NSW).

Particulars

(a) The Learned Magistrate erred in construing the orders made by Kunc J as not being intended, objectively, to be of the same force and effect as if there had been a hearing on the merits, such that s 91(1) of the Civil Procedure Act 2005 (NSW) did not apply.

(b) The Learned Magistrate erred in his construction of s 91(1) of the Civil Procedure Act 2005 (NSW) as capturing all orders made by consent dismissing proceedings.

2    The Learned Magistrate erred in law in holding that the principles in Anshun were only capable of being engaged where there had been a judgment following a hearing on the merits.

Particulars

(a)   The Learned Magistrate applied a wrong principle and/or applied the wrong test in holding that the principles in Anshun were incapable of applying where a Court made orders by consent.

3    The Learned Magistrate erred in law in holding that because the Unpaid Rates Claim was not ventilated in the Supreme Court proceedings, the principles in Anshun were incapable of applying.

Particulars

(a)   The Learned Magistrate acted on a wrong principle and/or applied the wrong test by failing to ask whether:

(i)    the Unpaid Rates Claim was sufficiently closely related to the Supreme Court Proceedings that it could and should have been raised in them; and

(ii)    it was unreasonable for the Defendants not to raise the Unpaid Rates Claim in the Supreme Court Proceedings.

4    The Learned Magistrate erred in law in taking into account evidence of an affidavit of the Plaintiff’s solicitor which was not read on the hearing of the Notice of Motion in determining to exercise his discretion against dismissing the Consultancy Fee Claims as an abuse of process.

Particulars

(a)    The Learned Magistrate denied the Plaintiff procedural fairness by taking into account evidence which was not read and which the Plaintiff had informed the Court was not read in the Plaintiff’s case.

(b)   The Learned Magistrate denied the Plaintiff procedural fairness by failing to put the Plaintiff on notice that he intended to take affidavit evidence into account which had not been read by either party.

5    The Learned Magistrate erred in law in failing to consider and determine the Plaintiff’s contention that the Unpaid Rates Claim was an abuse of process.

Particulars

(a)    The Learned Magistrate did not engage with or otherwise consider the Plaintiff’s case that the Unpaid Rates Claim was an abuse of process.

(b)    The Plaintiff’s contention that the Unpaid Rates Claim was an abuse of process was a separate integer of the Plaintiff’s claim as to why the proceedings should be dismissed.

(c)    In failing to determine this aspect of the Plaintiff’s case, the Learned Magistrate denied the Plaintiff procedural fairness.

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

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

“While the exact relationship between the principle expounded by Sir James Wigram V-C and the defences of res judicata and cause of action and issue estoppel may be obscure, I am inclined to regard it as primarily an ancillary and salutary principle necessary to protect the integrity of those defences and prevent them from being deliberately or inadvertently circumvented.

In one respect, however, the principle goes further than the strict doctrine of res judicata or the formulation adopted by Sir James Wigram V-C, for I agree that it is capable of applying even where the first action concluded in a settlement. Here it is necessary to protect the integrity of the settlement and to prevent the defendant from being misled into believing that he was achieving a complete settlement of the matter in dispute when an unsuspected part remained outstanding.

However this may be, the difference to which I have drawn attention is of critical importance. It is one thing to refuse to allow a party to relitigate a question which has already been decided; it is quite another to deny him the opportunity of litigating for the first time a question which has not previously been adjudicated upon. This latter (though not the former) is prima facie a denial of the citizen's right of access to the court conferred by the common law and guaranteed by article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1953). While, therefore, the doctrine of res judicata in all its branches may properly be regarded as a rule of substantive law, applicable in all save exceptional circumstances, the doctrine now under consideration can be no more than a procedural rule based on the need to protect the process of the court from abuse and the defendant from oppression.”

The Anshun estoppel grounds (grounds 2 and 3)

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

Ground 2: the misapprehension that Anshun is confined to judgments on the merits

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

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

“The second subsidiary argument was that the rule in Henderson v Henderson did not apply to Mr Johnson since the first action against GW had culminated in a compromise and not a judgment. This argument also was rightly rejected. An important purpose of the rule is to protect a defendant against the harassment necessarily involved in repeated actions concerning the same subject matter. A second action is not the less harassing because the defendant has been driven or thought it prudent to settle the first; often, indeed, that outcome would make a second action the more harassing.”

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

Ground 3: whether an Anshun estoppel arose in the present case and whether relief ought be granted

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

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

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

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

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

“… it is necessary to protect the integrity of the settlement and to prevent the defendant from being misled into believing that he was achieving a complete settlement of the matter in dispute when an unsuspected part remained outstanding.”

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

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

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

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

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

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

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

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

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

Ground 5 (alleged failure to address the claim for unpaid rates)

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

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

Ground 4 (alleged denial of procedural fairness)

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

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

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

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

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

Ground 1 (alleged erroneous application of s 91 of the Civil Procedure Act)

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

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

Further ground

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

Whether leave ought be granted

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

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

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

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

Costs

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

Orders

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

1. Grant leave to appeal.

2. Allow the appeal.

3. Set aside the orders made by Day LCM on 12 May 2020.

4. In lieu of the orders made by Day LCM on 12 May 2020:

1. dismiss the proceedings in so far as they claim consultancy payments or rates payments alleged to have become due and payable before 4 October 2017.

2. direct the plaintiffs (Elizabeth and Robert Mitchell) to file an amended statement of claim in the Local Court which reflects the order in (4)(a).

3. order the plaintiffs (Elizabeth and Robert Mitchell) to pay the defendant’s (Ms Livingstone’s) costs of the notice of motion.

4. remit the matter to the Local Court for the determination of the proceedings.

5. Subject to an application for a different order being made by written application to my Associate within seven days, order the defendants (Elizabeth and Robert Mitchell) to pay the plaintiff’s (Ms Livingstone’s) costs of the proceedings.

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Decision last updated: 21 October 2020