Toyne v Stokes

[2023] HCATrans 147

[2023] HCATrans 147

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S43 of 2023

B e t w e e n -

MOLLY HARRIS TOYNE

Applicant

and

NICHOLAS ARTHUR STOKES

Respondent

Application for special leave to appeal

GAGELER J
GORDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA AND BY VIDEO CONNECTION

ON FRIDAY, 20 OCTOBER 2023, AT 11.27 AM

Copyright in the High Court of Australia

GAGELER J:   In accordance with the protocol for remote hearings, I will announce the appearances of the parties.

MR D.R. PRITCHARD, SC appears with MS M. CASTLE and MR A.J. MACAULEY for the applicant.  (instructed by Sachs Gerace Lawyers)

MR A.P. BERGER, KC appears with MR N.J. ORAM for the respondent.  (instructed by Baker Deane & Nutt Lawyers)

GAGELER J:   Mr Pritchard.

MR PRITCHARD:   If the Court pleases.  This application raises for consideration the circumstances in which a court can permanently stay proceedings to preclude the determination of otherwise meritorious claims brought bona fide, such as the claims brought by Ms Toyne, the applicant in the District Court proceedings, in respect of her indisputably contaminated land.

The question arises in the broader context of considering applications frequently brought under legislation both in New South Wales and Victoria entitling a purchaser to seek relief from forfeiture of their deposit under a contract for sale of land. The legislation, of course, is section 55(2A) of the Conveyancing Act1919 (NSW) and section 49(2) of the Property Law Act (Vic). There is no District or County Court jurisdiction to grant relief under those sections.

In particular, this application presents a suitable vehicle to explore the extent to which a vendor in opposing discrete statutory and not contractual or proprietary claims by a purchaser for the return of his or her deposit must bring forward and pursue, both in terms of liability and quantum, any claim, however inchoate, the damages against the purchaser – that is, irrespective of how that claim for loss is to be deployed in opposition to the exercise of this discretionary statutory relief, which relief can otherwise be pursued by way of summons.

GAGELER J:   Now, Mr Pritchard, there are two overlapping doctrines at play here, one is Anshun estoppel, the other is abuse of process.  Are we not just concerned with the application of those relatively well‑understood doctrines to a particular set of factual circumstances?

MR PRITCHARD:   Well, undoubtedly, there is an aspect of that, your Honour.  The court, of course – that is, the Court of Appeal – determined the matter solely on the basis of abuse, that is, having regard to the split in the decisions of the three judges, that is, Justice Ward said neither, Justice Adamson said both and Justice Simpson said just abuse.  So, the ratio, as it were, is the abuse and that is what I intended to primarily deal with.  But, nevertheless, what I will be ultimately contending, your Honour, is that this case does present unique factual circumstances which test – which require the testing of the bounds of the principle of abuse of process.

As I say, your Honour – and I will come to that shortly – the majority rejected Anshun, and we say correctly, having regard to the statutory context in relation to which the claim for relief under that section fell for consideration.

GAGELER J:   I think President Ward indicated that she saw this as a difficult case, or a borderline case, something like that.

MR PRITCHARD:   Indeed, your Honour, and with respect to all concerned, it probably is.  It is reflective of the divergence of the views in the court itself in the way I have already described.

GORDON J:   It is a case where reasonable minds might differ.

MR PRITCHARD:   Yes, your Honour, to use the expression from other contexts of the law.  Yes, your Honour, it probably does.  But the principle, though, which I will come to – and I just remind your Honours of some of the facts – is that the abuse which was primarily found to be operative in the decision of Justice Simpson concerned and only concerned, with respect, conduct of my client after the date of the Equity Division proceedings in 2019 and before the date of the District Court proceedings in 2021.

In simple terms, your Honours, her Honour Justice Simpson, who delivered the main judgment, identified five matters.  The five matters she identified as effectively constituting the conduct amounting to abuse were, firstly, my client Ms Toyne’s delay – and this is 55 to 69 of the judgment – in paying the $110,000 judgment debt which was the 55(2A) relief in the Equity Division proceedings, which judgment was, in any event, ultimately paid with interest.

Secondly, Justice Simpson was focused on my client Ms Toyne’s application to review costs assessment relating to the Equity Division proceedings, which was unsuccessful and out of time, and arose in circumstances where, apparently, we did not participate in the original assessment – that is 55 to 62.  Thirdly . . . . . in Justice Simpson’s mind to establish the abuse was Ms Toyne’s application to set aside a bankruptcy notice issued in 2021 based on Equity Division proceedings judgment, which application was unsuccessful due to Ms Toyne’s inability to show that her cross‑claim could not have been set up in the Equity Division proceedings.  Your Honours are familiar with that concept from bankruptcy.  So, she failed in setting aside the bankruptcy notice.

The fourth matter relied upon by Justice Simpson – and this is at 166 of the judgment – was Ms Toyne’s refusal to consent to Mr Stokes being released from the Harman v Secretary of State for the Home Department undertaking, so as to tender in the bankruptcy proceedings material Ms Toyne served in the Equity Division proceedings, which went to the issue of Ms Toyne’s asserted cross‑claim, and apparently that resulted in the need for an application by Mr Stokes to Justice Rees in the Supreme Court to be released from that undertaking.  That is at 166.

Finally, the fifth matter which directed her Honour’s reasoning was the fact that the original statement of claim and the proposed statement of claim – the first proposed statement of claim was in the District Court – were defective, and that is 179 of the judgment.  Albeit, leave was ultimately granted to file a revised and current amended statement of claim, that is at 62 of the judgment.

Now, we contend that her Honour’s focus on conduct of that type – external to the original proceedings and which all had merit or otherwise on a standalone basis – does not provide a principle basis to deprive Ms Toyne of her right to bring the District Court proceedings to vindicate what she contends are meritorious claims.  That Ms Toyne took steps that were, to borrow Justice Simpson’s words, “within her rights” – even if they were determinative without merit, cannot be determinative of why she should be precluded from now prosecuting the District Court proceedings.

And a particular moment, in consequence, in this application, your Honour – as is for leave, special leave – is the fact that Mr Stokes’ shortfall and his major prejudice, as identified by Justice Simpson in the matters I have just recited, those five matters, was really the shortfall in recovering costs from those litigious events, aggregating to around $100,000 on the evidence – at 171 to 174 of the judgment.

GAGELER J:   So, how much is at stake all up in this litigation, Mr Pritchard?

MR PRITCHARD:   In Judge Russell’s judgment there is a reference to my client’s claim constituting $257,500, relating to contamination of the land and the failure to insure.  Thank you, your Honour.  And that is why I turn to this issue of the costs aggregation of Mr Stokes, which, with respect, seems to be the main issue, and, we contend – with respect, obviously – that there is a policy reason about the difference between party‑party costs and actual costs.

In any event, your Honour on the evidence of that $100,00 deficit, $43,000 – that is a $43,000 deficit – represents the difference between party‑party and actual costs in the District Court proceedings, we having paid ‑ ‑ ‑ 

GAGELER J:   Mr Pritchard, just so, again, I understand where all this would go if you were successful if you came here, you have your appeal, you are successful in the appeal, and what you want is for the application for a stay to go back to the District Court to be argued again?

MR PRITCHARD:   Heard on its merits.  Yes, your Honour.  As a result, there were some issues of procedure, which Judge Russell permitted, which have been corrected by the Court of Appeal, which is not the subject of any complaint by anyone today.  Not of any cross‑examination and the like, but that is just where that lies.  But the Court of Appeal in its decision, as you know, decided to take the opportunity to permanently stay the proceedings.

But if I can return to the issue of the costs, your Honour, because I will be submitting that the court could have – and ought have – tailored the relief and not granted a permanent stay, even if abuse was found, was there was the possibility of alternate relief.

GORDON J:   Is that paying the costs into court?  Is that the relief you mean?

MR PRITCHARD:   Yes, your Honour.  Exactly.  Rather than the draconian or extreme step of a permanent stay so as to preclude my client on the evidence, at least . . . . . a $257,000 claim, by reason of, primarily, these additional costs, the court could have fashioned an alternate order.  That is, a conditional stay, conditional on the payment to the court or securing the payment of whatever shortfall amount the court felt appropriate.  That is one of the particular matters which we say this application presents to the Court.

I am not aware of any authority where, on an abuse application, considerations of this type have been before the Court.  That is, is there something alternative to a permanent stay on the facts which would relieve against the unjustifiable oppression of the other party so as to mean that my client can continue on with the otherwise meritorious and bona fide – for present purposes – claim.  It is that fashion, the potential ability to fashion the relief, particularly in the context of the proportionality of a permanent stay, and in this particular factual case, the apparent prejudice being the $100,000 non‑recovered shortfall incurred by Mr Stokes in respect of the bankruptcy matters that I have already related.

To get to the nub of it, your Honours, leave ought be granted because this is a vehicle in relation to which two propositions to be tested in relation to the bounds of, admittedly, very flexible principle of abuse of process.  First is the necessary relationship between the conduct and the outcome.  That is tested in two ways, as I say.  Does the principle – the extent to which the principle can preclude the exercise of rights by reason of conduct that does not relate to or impugn the existence of those rights or their enforcement.

Now, we do observe, your Honours, that even within the flexible principles of equity, Ms Toyne’s conduct as focused on by Justice Simpson would not have constituted unclean hands for the purposes of barring equitable relief.  To use the words of Justice Isaacs in this Court in Meyers v Casey (1913) 17 CLR 70 at 124, there would be no immediate and necessary relation between Ms Toyne’s conduct, identified by Justice Simpson, and the claims sued upon in the District Court to constitute unclean hands.

GAGELER J:   There is no unnecessary relationship between abuse of process which is, or at least can be, an objective question and unclean hands, which involves some element of moral turpitude.  Why are you suggesting you need any vehicle to explore that, Mr Pritchard?

MR PRITCHARD:   Well, your Honour, perhaps not.  You would need to explore the raw position, though, that what is the extent, this principle of abuse of process applies when the relevant conduct does not relate to or impugn the existence of those rights or their enforcement.  That is, how close to the relevant right and the relevant enforcement of it must this conduct said to constitute or give rise to the abuse be?  We contend that, as analysed by Justice Simpson, the matters that were relied upon by her were outside a recognised scope of the application of the principle of abuse of process, or at least in relation to cases of which we are aware.

The second aspect, which is one I have already touched upon already as to why this case provides a proper vehicle, is the test of proportionality between the abuse found and the relief necessary to relieve the other party from the unjustifiable oppression including, as we have already mentioned, the possibility of alternate relief on conditions, particularly, as already submitted, in circumstances where the primary matters for Justice Simpson were monetary concerns that were readily quantifiable.

It is those two issues, your Honours, which, in my submission, this application presents to this Court for determination in relation to what is acknowledged by all the authorities to be a very flexible relief but nevertheless ought be the subject of some bounds and limits and matters

that we contend we have put before the Court on the application would serve that purpose.

That is effectively the submissions, your Honours.

GAGELER J:   Yes, thank you, Mr Pritchard.  Mr Berger, we do not need to call upon you.  We are not persuaded that this case presents as an appropriate vehicle for the exploration of any question of legal principle as to the bounds or application of the principle of abuse of process.  We are also not satisfied that it would be in the interests of justice for this litigation to be prolonged by a further appeal to this Court.  Special leave to appeal is refused, with costs.

The Court will now adjourn until 12.30 pm.

AT 11.45 AM THE MATTER WAS CONCLUDED