Supreme Court New South Wales Medium Neutral Citation: Mason v Cashel Financial Services Pty Ltd [2021] NSWSC 201 Hearing dates: 23 September 2020 Date of orders: 9 March 2021 Decision date: 09 March 2021 Jurisdiction: Common Law Before: Harrison AsJ Decision: The Court orders that: (1) The amended summons filed 10 June 2020 is dismissed. (2) The plaintiff is to pay the defendant's costs on an ordinary basis. Catchwords: APPEAL – Local Court – Leave to appeal – Mixed questions of law and fact – Proper construction of an indemnity clause – Proper construction of deeds of release – Estoppel by representation – Abuse of process – Failure to provide sufficient reasons – Set off – Leave granted in part – Appeal dismissed Legislation Cited: Local Court Act 2007 (NSW), ss 39, 40, 41 Cases Cited: Amaca Pty Ltd v CSR Ltd [2001] NSWSC 324 Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424 BCCL v Ali [2001] 1 All ER 961 Caltex Australia Petroleum Pty Ltd v Troost [2015] NSWCA 64 Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295 Cohen & Co v Ockerby & Co Ltd (1917) 24 CLR 288 Commonwealth v Verwayen (1990) 170 CLR 394 County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 Craine v Colonial Mutual Fire Insurance Company Ltd [1920] HCA 64; (1920) 28 CLR 305 Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 Electricity Generation Corp v Woodside Energy Ltd; Woodside Energy Ltd v Electricity Generation Corp (2014) 251 CLR 640; (2014) 306 ALR 25 Grant v John Grant and Sons (1954) 91 CLR 112 Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 Hussain v Shahidulalam [2018] NSWSC 1742 ICS v West Bromwich BS [1998] 1 All ER 98 Karam v ANZ Banking Group Ltd [2001] NSWSC 709 King v Lynpete Australia Pty Ltd [2012] VSC 140 Lissenden v CAV Bosch Ltd (1940) AC 412 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Limited (2015) 256 CLR 104; (2015) 325 ALR National Roads and Motorists' Association v Whitlam [2007] NSWCA 81 Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 R v PL (2009) 199 A Crim R 199; [2009] NSWCCA 256 Salkeld v Vernon (1758) 1 Eden 64; 28 ER 608 Samways v Workcover Queensland [2010] QSC 127 Sargent v ASL Developments Ltd (1974) 131 CLR 634 Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223 Shepherds Producers Co-operative Ltd v Lamont [2009] NSWSC 294 Stoker v Adecco Gemvale Constructions Pty Ltd [2004] NSWCA 449 The Council of the Upper Hunter County District v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 US Manufacturing Co Pty Ltd v ABB Service Pty Ltd [2008] NSWSC 705 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Zogiannis v Stevens [2012] VSC 264 Texts Cited: Justice Handley, Estoppel by Conduct and Election (2nd ed, Thomson Reuters, 2016) Category: Principal judgment Parties: Brad Mason (Plaintiff) Cashel Financial Services Pty Ltd (Defendant) Representation: Counsel: A Hopkins (Plaintiff) A Kaufmann (Defendant) Solicitors: Williamson Barwick (Plaintiff) CLS Legal (Defendant) File Number(s): 2020/128176 Publication restriction: Nil Decision under appeal Court or tribunal: Local Court Jurisdiction: Civil – General Division Date of Decision: 3 April 2020 Before: Greenwood LCM File Number(s): 2018/326913 JUDGMENT 1. HER HONOUR: This is an appeal from the decision of a Local Court Magistrate dated 3 April 2020. 2. By amended summons filed 10 June 2020, the plaintiff seeks an order that the appeal be allowed, the judgment of her Honour Greenwood LCM ("the Magistrate") be set aside and the defendant's claim in the Local Court be dismissed. 3. The plaintiff in these proceedings is Brad Mason, the defendant in the Local Court proceedings. The defendant in these proceedings is Cashel Financial Services Pty Ltd ("Cashel"), the plaintiff in the Local Court proceedings. The plaintiff relied upon the affidavit of his solicitor, Christopher Fesel dated 15 July 2020. The parties relied upon their written submissions and three volumes of court books (Exs A(i)-(iii)). Background 1. Cashel is the holder of an Australian Financial Services Licence ("AFSL"). Mr Mason is an experienced investment adviser, who required the use of Cashel's AFSL to enable him to provide financial services and advice to his clients. 2. On 24 June 2013, Cashel and Mr Mason entered into an Authorised Representative & Operational Support Agreement ("the Agreement"). 3. Bam Bam Investments Pty Ltd ("Bam Bam") is a company controlled by Mr Mason and a trustee of a trust (now in liquidation). Under the Agreement, Bam Bam was appointed an authorised representative of Cashel and was paid a commission. 4. Mr Mason was appointed a sub-authorised representative for the purpose of providing advisory services under the Agreement. In short, Mr Mason agreed to indemnify Cashel for any liability of Cashel as a result of breaches of the Agreement, any negligent acts or omissions and any transaction under or contemplated by the Agreement. I will set out the relevant clauses of the Agreement, including the relevant indemnity clause, later in this judgment. 5. Proceedings were commenced by investor clients against Mr Mason and Cashel as a consequence of dealings with Mr Mason in respect of transactions under or contemplated by the Agreement, from which they lost their money ("the investor proceedings"). 6. Cashel made a claim for indemnity under its insurance policy, which was granted to both Cashel and Mr Mason in respect of the investor proceedings, as a consequence of which Cashel was liable to its insurer for a retention amount of $50,000. Cashel has paid this amount. 7. After defences were filed by Norton Rose, solicitors on behalf of both Cashel and Mr Mason, the investor proceedings settled on a no admissions basis, with releases given to Mr Mason and Cashel by the investor client plaintiffs. The deeds of release are also the subject of a ground of appeal in these proceedings and are set out later in this judgment. Proceedings in the Local Court 1. On 25 October 2018, Cashel commenced proceedings in debt against Mr Mason pursuant to the Agreement, seeking payment of the sum of $50,000 plus interest. 2. On 29 May 2019, Mr Mason filed a defence denying liability to Cashel under the Agreement on the following bases: 1. Cashel's liability for the retention amount was not: 1. a liability resulting from a Transaction, but rather a liability that arose from the insurance policy; or 2. a loss or liability contemplated by the Agreement, including where the advice provided by Mr Mason to the investor clients was authorised by Cashel; 1. Cashel was estopped from pleading that Mr Mason provided advice and made representations to the investor clients, as those allegations were contrary to the defence of Cashel and Mr Mason in the investor proceedings and the deeds by which the investor proceedings were settled; and 2. any amount for which Mr Mason was found liable to Cashel should be reduced by an amount that Cashel owed Bam Bam, which Cashel said it was withholding to pay towards its costs of defending any claim against it. 1. Mr Mason also defended the claim on the basis that the Agreement was a "sham" as he was an employee of Cashel, and accordingly the indemnity provision of the Agreement was void under s 3(a) of the Employees Liability Act 1991 (NSW). A great deal of time was taken in resolving this issue at hearing in the Local Court. Mr Mason was unsuccessful, and it is not necessary to consider that issue further in this appeal. The hearing before the Magistrate 1. On 12 December 2019, proceedings were heard by the Magistrate and were stood over part heard to 20 February 2020. The arguments made before the Magistrate are largely reflected in the submissions raised in these proceedings. 2. On 20 February 2020, the Magistrate reserved her decision. 3. On 3 April 2020, the Magistrate delivered judgment via telephone, given the restrictions upon attending court during the COVID-19 pandemic. The Magistrate gave judgment for Cashel in the sum of $52,242 plus interest under s 100 of the Civil Procedure Act 2005 (NSW) from 25 October 2018. I have set out the relevant aspects of the Magistrate's decision under the grounds of appeal later in this judgment. The Agreement 1. As Mr Mason's appeal relates to the construction of the Agreement, it is convenient that I set out the relevant provisions here. 2. Under "Parties", Bam Bam is defined as the Adviser. Mr Mason is the Key Consultant. 3. Under "Background", the Agreement states: "E. The Adviser has day to day contact with persons and their respective interests, who now require or may in the future require wealth management service, services or assistance. The Key Consultant is a director of the Adviser. F. The Adviser wishes to act as an Authorised Representative of [Cashel], and the Key Consultant wishes to be appointed as a Sub-Authorised Representative of the Adviser under this Agreement, for the purpose of providing Advisory Services under this Agreement. … I. This Agreement sets out the terms and conditions on which [Cashel], as an AFS Licensee, allows the Adviser to be its Authorised Representative and the Key Consultant to be Sub-Authorised Representative and for them to have access to the Execution and Clearing Facilities, for the purpose of providing Advisory Services, and the terms and conditions on which CPW will permit the Adviser to access and use the other facilities, services and intellectual property referred to in this Agreement for such purposes." 1. Clause 8.3 reads: "Indemnity The Adviser and the Key Consultant hereby indemnity and agree to keep indemnified [Cashel] and its related bodies corporate and their respective directors, officers, contractors, agents and employees (each an Indemnified Person) harmless from and against all liabilities, losses, damages, costs or expenses directly or indirectly incurred or suffered by the Indemnified Person, and from and against all actions, proceedings, claims or demands made against the Indemnified Person (each a Loss) under or in respect of the Execution and Clearing Facilities Agreement or the Execution and Clearing Facilities as a result of: (a) any act or omission by the Adviser or the Key Consultant under or in respect of this Agreement; or (b) [Cashel's] performance of its obligations under this Agreement. Without limiting the foregoing, where [Cashel] incurs an obligation to pay a fee, charge or other amount to any person under the Execution and Clearing Facilities Agreement as a consequence of a Transaction initiated by or on behalf of the Adviser using the Execution and Clearing Facilities, the Adviser shall be liable to [Cashel], and shall indemnify [Cashel] and keep in indemnified from and against its liability to pay that fee, charge or other amount." 1. The indemnity clause relied on by Cashel in these proceedings is set out at cl 20 of the Agreement. It relevantly reads: "The Adviser and the Key Consultant hereby indemnify and will keep [Cashel], and their respective directors, officers, contractors, agents and employees (each an Indemnified Person) indemnified from and against any claims, actions, damages, losses, liabilities, costs, expenses or payments which any of them suffers, incurs or becomes liable for, whether or not contemplated by the parties, as a result of: (i) a breach of this Agreement or any Transaction Document or any Applicable Law, or any other wrongful or negligent act or omission or other default by the Adviser or the Key Consultant or any Sub-Authorised Representative (whether or not the Authorisation has been revoked or has otherwise been brought to an end); (ii) any liability to any third person resulting from a Transaction including for any fees, charges and other amounts payable in respect of such Transaction under any agreement by which any Indemnified Person is bound (including the Execution and Clearing Facilities Agreement); (iii) any Transaction or proposal contemplated by this agreement including any Loss resulting from a Transaction executed or initiated by or on behalf of the Adviser, the Key Consultant or any Sub-Authorised Representative (whether or not the Authorisation has been revoked or has otherwise been brought to an end). …" 1. Clause 26 of the Agreement contains definitions. Relevantly, it states: "Client means any: (a) Introduced Client; (b) Prospective Client; or (c) Cashel Group Client… … Introduced Client means any person (other than a Cash Group Client) who is (a) a client of the Adviser or the Key Consultant as at the date of this Agreement; (b) a client of any other Sub-Authorised Representative appointed pursuant to this Agreement as at the date of their appointment under this Agreement; (c) a potential client that has actively been identified by the Adviser or the Key Consultant or Sub-Authorised Representative… and who becomes a client of [Cashel] solely and as the direct result of the activities pursuant to this Agreement of the Adviser, the Key Consultant or any Sub-Authorised Representative appointed pursuant to this Agreement… … Prospective Client means any person (or any Associate of that person) with respect to which the Advisor or Key Consultant (or any other Sub-Authorised Representative appointed under this Agreement) has at any time during the currency of any Transaction Document: (a) been introduced or referred by any member of the Cashel Group or any of their Associates (including as a result of the Cashel Group's marketing activities) and including any approach received by, or any opportunity coming to the attention of, the Advisor or the Key Consultant or any other such Sub-Authorised Representative through any facility provided by or on behalf of such Cashel Group member; (b) entered into discussions or negotiations; and/or (c) conducted, prepared or submitted or assisted in conducting, preparing or submitting any proposal or tender or other offer or capability statement; for the purpose of obtaining the custom of that person or any Associate of that person for [Cashel] or CFW or another Cashel Group member, with the exclusion of Cashel Group Clients or Introduced Clients. … Transaction means a transaction conducted by or for a Client and including but not limited to the following: (a) a cash market transaction as defined in the ASX Market Integrity Rules; (b) an equity market transaction as defined in the Chi-X Market Integrity Rules; (c) if applicable any derivatives market contract as defined in the ASX Market Integrity Rules and where the context requires includes the sale or purchase of the underlying financial products following the derivatives contract; and (d) providing one-off or ongoing advice to a Client." The deeds of release 1. It is also convenient that I set out the deeds of release signed by Mr Mason and Cashel in relation to the investor proceedings. Although there were five deeds, the parties agreed (and the Magistrate accepted) that as the deeds were substantially similar, a conclusion with regards to one would apply to all. 2. The key terms of the deeds are as follows: "Cl 1.2: The Cashel Defendants deny the allegations raised in the Proceedings." 1. For the purposes of the deeds, cl 2.1(3) provides: "Cashel Defendants means Cashel and [Mr] Mason." 1. The Acknowledgement contained at 3.1 reads: "Each of the Parties acknowledge that they are aware that they, their advisers, agents or lawyers may discover facts different from or in addition to the facts that they now know or believe to be true with respect to the subject matter of this Deed, but that it is their intention to, and they do, fully and finally settle all Claims between Parties between which releases have been exchanged pursuant to the terms of this Deed." 1. The deeds define "Claim" broadly as meaning: "…any present or future, actual or contingent, claim, cause of action, complaint, liability, demand, cost or expense that any person (whether or not a Party to the Claim) has or might have in connection with or arising in any way from the facts or matters referred to or alleged in the Recitals, the Proceedings, the First Cross-Claim Proceedings, the Second Cross-Claim Proceedings, including the Barry Verinder FHC Unit Trust Investment, the Super Fund FHC Unit Trust Investment, FHC Loan Transaction, Tellus Investment, Force Investment, and Aussie Paws Investment, whether or not the facts, matters or circumstances giving rise to that claim, cause of action, complaint, liability, demand, cost or expense are known to that person or to any other person at the date of this Deed." 1. Each of the proceedings was settled on a no admission basis on the following terms: "By executing this Deed, the Cashel Defendants make no admission of liability in relation to the subject matter of the Recitals and the Proceedings, including the FHC Unit Trust Investment and FHC Loan Transaction." 1. Each of the deeds contained entire understanding clauses as follows: "11 Entire understanding 11.1 This Deed: (1) is the entire Deed and understanding between the Parties on everything connected with the subject matter of this Deed; and (2) supersedes any prior Deed or understanding on anything connected with that subject matter. 11.2 The Parties agree and acknowledge that in executing this Deed no reliance has been placed on any prior Deed, understanding or representation." Appeal generally 1. Section 39 of the Local Court Act 2007 (NSW) provides that a party who is dissatisfied with a judgment or order of the Local Court may appeal to the Supreme Court, but only on a question of law. 2. Section 40(1) of the Local Court Act provides that a party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court. 3. Section 41 of the Local Court Act provides that this Court may determine an appeal either (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal. Grounds of appeal 1. The grounds of appeal can be summarised as follows: 1. that the Magistrate erred by finding that the scope of the indemnity, properly construed, created a liability for the retention amount (Grounds 1 and 2); 2. that the deeds of release between the parties to settle the third party proceedings, when properly interpreted, otherwise released Mr Mason from liability or superseded the indemnity in relation to the retention amount (Ground 3); 3. that Cashel should have been estopped from running a factual case in the Local Court that Mr Mason had provided advice under the Agreement, as Cashel had run a contradictory position in the investor proceedings (Grounds 4, 5 and 6); 4. that the Magistrate's reasons for finding against Mr Mason were inadequate (Ground 7); and 5. that there was an error in failing to include and deduct from the judgment amount monies previously withheld by Cashel by reason of its claim to the retention amount (noting that these monies were payable to Bam Bam) (Ground 8). 1. I will now turn to consider these grounds in order. Grounds 1 and 2 - indemnity construction Mr Mason's submissions 1. A key part of Mr Mason's case before the Magistrate was that, properly construed, the indemnity did not extend to Cashel's claim for the retention amount. Mr Mason submitted that if this was the case, it would be a complete answer to the claim, and the appeal should be allowed and the original proceedings dismissed. 2. According to Mr Mason, the Magistrate erred in both: 1. finding as a matter of contractual interpretation that the retention amount fell within the scope of the indemnity (Ground 1); and 2. taking an incorrect approach to the task of interpreting the indemnity by making a finding as to what a reasonable person would understand the contract to mean, and then simply asking whether a reasonable person would find the retention amount to be covered by the indemnity, as opposed to considering the words of the indemnity (Ground 2). 1. The portion of the judgment below that dealt with this issue appears at p 5 of the judgment transcript as follows: "A reasonable person would find that the surrounding circumstances of the agreement were that [Mr] Mason through Bam Bam was to use Cashel's financial services licence to provide financial services to investors for which a commission would be paid to Bam Bam. This meant that Cashel was assuming risk in relation to its licence. The words of the agreement suggest that it was seeking that Bam Bam and [Mr] Mason would indemnify Cashel in relation to that risk. A reasonable person would find no ambiguity when considering clause 20 in the context of the entirety of the agreement and surrounding circumstances, and would understand it to mean that [Mr] Mason was required to indemnify Cashel in these circumstances." 1. Mr Mason submitted that the finding that Cashel was assuming risk in relation to its licence is correct, but the generality of what follows is not. It is Mr Mason's case that the Magistrate's reasons fail to consider the fact that Cashel stood to profit substantially by way of the Agreement, which must involve some assumption of risk on its part. Further, the idea that as Cashel was subjecting its AFSL to risk it was entitled to be indemnified against all such risk is overly simplistic, and fails to properly approach the task of interpreting the scope of the indemnity. 2. Mr Mason argued that by reasoning in this way, instead of starting with the text of the indemnity, the Magistrate misdirected herself and: 1. made a finding that the words of the Agreement suggested that the indemnity extended to the risk of the retention amount without adequate reasons supporting that conclusion; 2. failed to properly grapple with the words of the agreement and the principles of contractual interpretation (including principles relating to the construction of indemnities); and 3. took an overly broad approach to construing the scope of the indemnity from the point of view of what a reasonable person would understand, instead of construing the actual words of the agreement. 1. Mr Mason submitted that the correct approach for the Magistrate would have been to consider the relevant terms of the indemnity relied upon and conclude whether those terms were engaged and covered the claim, especially given Mr Mason's submissions in the Local Court that they did not. The relevant terms of the indemnity relied upon by Cashel are found at cls 20(a)(ii) and (iii), extracted earlier in this judgment, as is the relevant definition of "Transaction". 2. Mr Mason submitted that in this case, the liability to a third person, being the insurer, did not result from a Transaction. It resulted from a forensic decision to settle litigation by which an insurer exercised its right of subrogation and took control of the investor proceedings. 3. Similarly, the inclusion of "fees, charges and other amounts payable in respect of such Transaction" indicate the types of liability contemplated, being the costs of setting up and executing such transactions, not a broad and general liability for any cost that may in any way have arisen from the provision of advice. Mr Mason submitted that the claim is too far removed, and in circumstances where the indemnity must be strictly construed, it cannot be sustained. 4. Further, for the purposes of cl 20(a)(iii), while "Loss" has been capitalised in the Agreement, it does not appear to be a defined term. Mr Mason submitted that the resultant ambiguity should be resolved in Ms Mason's favour. The Court would not reasonably construe loss as including insurance payments arising from a claim brought by a client which was subsequently settled on a no admissions basis. 5. Importantly, Mr Mason noted that the indemnity is not said to explicitly cover: 1. any contract of insurance or payments under any such contract; or 2. any liability arising from settlement of any legal dispute. 1. This is in contrast to cl 20(a)(i) of the Agreement, which provides for the coverage of "wrongful or negligent act or omission". However, the indemnity is silent as to any loss or cost arising from any claim where such negligence or wrongful act was not established, or where it is simply alleged, as is the case here. Accordingly, Mr Mason submitted that the Court would not broadly construe the terms of cl 20(a)(ii) and (iii) so as to leave subclause (i) no work to do. Clause 20(a)(i) is more specifically applicable to the situation arising in this case, and as such is a more specific clause providing an indemnity in relation to wrongful or negligent acts or omissions. 2. It is Mr Mason's case that had the indemnity been intended to be so broad as to cover any payment arising from the settlement of acts not found to be negligent, then the contract would have had to have made that explicitly clear. Similarly, had the intention been to cover the costs of any claim alleging such conduct, even where such a claim is settled on a no-admissions basis, then the contract would have had to have made that explicitly clear. 3. Mr Mason noted that Cashel submitted before the Magistrate that without the Transaction, there would never be an obligation to pay the retention amount. However, Mr Mason submitted that this reasoning is so broad that it fails to be commercially realistic. All manner of things may arise from a Transaction, but it is the identification of specified events and circumstances that inform the scope of an indemnity. This is so that, when a strict approach to construction is taken, these events and circumstances survive unambiguous. On this point, Mr Mason referred to Electricity Generation Corp v Woodside Energy Ltd; Woodside Energy Ltd v Electricity Generation Corp (2014) 251 CLR 640; (2014) 306 ALR 25 ("Woodside Energy") at [35]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Limited (2015) 256 CLR 104; (2015) 325 ALR ("Mount Bruce Mining") at [46]-[52]; as well as National Roads and Motorists' Association v Whitlam [2007] NSWCA 81 at [59]: "[59] When one bears in mind the need to construe the indemnity in the present case to give it a sensible commercial meaning, it is apparent that the full possible range of meanings of 'loss' is not intended to be the subject of the indemnity. If a person in Mr Whitlam's position were to lose some friends as a consequence of carrying out his duties, or to lose some sleep, it is not commercially realistic to expect such a loss to be covered. A choice therefore needs to be made about which of the potential meanings of the word 'loss' is intended to be the subject of this indemnity." 1. Similarly, in Caltex Australia Petroleum Pty Ltd v Troost [2015] NSWCA 64, the Court of Appeal held at [51] and [59]: "[51] ...under an indemnity, the indemnifier promises to make good loss or damage suffered by the other party (usually the principal creditor) as a consequence of some specified event or circumstance. … [59] In the present case, as in any case involving an indemnity, it is necessary to identify the precise event that is the subject of the obligation undertaken by Mr Troost. That requires, in the present case, a careful analysis of the guarantee and indemnity section to determine the event that gives rise to the obligation to indemnity." 1. Mr Mason submitted that as a matter of commercial sensibility, the indemnity must identify some specified event or circumstance. In this case, for the indemnity to unambiguously apply, it could easily have included express identification by way of wording such as "and indemnifies Cashel in relation to any insurance excess or retention amount payable where a claim is made against Cashel by a client of the [defendant], whether or not the claim is successful" or "and indemnifies Cashel for all fees, charges, and amounts payable in relation to Cashel's professional indemnity policies/insurance". This is particularly so when one considers that the indemnity refers expressly in cl 20(a)(i) to situations where liability will be established by "any other wrongful or negligent act or omission or other default by [Mr Mason]". 2. According to Mr Mason, Cashel's obligation to pay the retention amount is better viewed as a result of its contract with the insurer pursuant to the policy of insurance. Mr Mason is not a party to that contract, and by virtue of cl 5.2 of that agreement, Cashel is solely responsible for the payment of the retention amount. The obligation to pay the retention amount did not arise as a result of a Transaction, but rather as a result of Cashel seeking indemnity under its policy to resist and settle legal proceedings (on a no-admissions basis) commenced against it and Mr Mason. Importantly, nowhere in the purported indemnity sued upon does the indemnity expressly deal with an indemnity for the costs of insurance or any excess/retention amount that may arise as a result of a defence to any claim brought against Mr Mason by a client, it is also notably silent as to any costs arising from allegations of negligence/breach of statutory duties that are not proven against Mr Mason (c.f. with cl 20 (a)(i), which does provide for these costs where negligence is made out). 3. Mr Mason submitted that the principle of construction whereby a commercial document that is elliptical or ambiguous should not be given a construction that is commercially unlikely is well established: see Cohen & Co v Ockerby & Co Ltd (1917) 24 CLR 288 at 299-300 per Isaacs J; The Council of the Upper Hunter County District v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 436-437 per Barwick CJ; Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 313-14 per Kirby P. 4. Furthermore, the indemnity must be strictly construed, and to the extent that there is any ambiguity it must be resolved in Mr Mason's favour. Indeed, where the indemnity is extremely broadly expressed, this of itself may found to give rise to an ambiguity. 5. Mr Mason referred to Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424, where in the joint judgment of Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ, their Honours set out at [17]-[23] the principles of construction that are now to be applied to contracts of indemnity. Their Honours noted at [17] that it is a settled principle that in interpreting contracts of guarantee: "...the liability of the surety is strictissimi juris and...ambiguous contractual provisions should be construed in favour of the surety. The doctrine of strictissimi juris provides a counterpoise to the law's preference for a construction that reads a provision otherwise than as a condition. A doubt as to the status of a provision in a guarantee should therefore be resolved in favour of the surety. (Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 at 561, approved in Chan v Cresdon Pty Lfd (1989) 168 CLR 242 at 256.)." 1. Their Honours concluded at [23]: "However, notwithstanding the differences in the operation of guarantees and indemnities, both are designed to satisfy a liability owed by someone other than the guarantor or indemnifier to a third person. The principles adopted in Ankar, and applied in Chan, are therefore relevant to the construction of indemnity clauses." 1. More recently, the approach of Courts when construing indemnity clauses was summarised in the decision of Samways v Workcover Queensland [2010] QSC 127 at [66]-[71] as follows: 1. an indemnity clause falls to be construed strictly, and any doubt as to the construction should be resolved in favour of the indemnifier. The doubt may arise not only from the uncertain meaning of a particular expression but from its apparent width of possible application. 2. The authorities that require ambiguity to be resolved in favour of the indemnifier do not require that ambiguity be detected where the natural and ordinary meaning of the language, taken in its contractual context, requires no such conclusion. Absent statutory authority, a court has no mandate to rewrite a provision to avoid what it retrospectively perceives as commercial unfairness or lack of balance. 3. The clause should be construed in its contractual context which allocates risks of different kinds between the parties. 4. Effect should be given to the ordinary meaning of the language used (absent use of technical expressions or terms of art) so as to provide certainty as to where responsibility may lie, against which insurance may be obtained. 5. The fact that the contract requires a party to take out insurance against the indemnified liability may be taken into account in concluding that the indemnity applies to that liability, whether or not insurance is in fact taken out. 6. The absence of a provision for insurance against the liability may also be taken into account. However, the fact that the indemnifier is not required by the contract to take out insurance, and chooses not to take out insurance should not affect the construction of an indemnity that unambiguously allocates responsibility for the liability against the indemnifier. 7. The outcomes of other cases involving different contractual arrangements and different clauses do not dictate the outcome of a particular case. However, the principles of construction established in those cases should be followed. 8. One line of authority construes contracts of indemnity for a party's own negligence on the assumption that it is inherently improbable that a party would contract to absolve the other party against claims based on the other party's own negligence. The competing view is that at least a principal purpose for obtaining such an indemnity is to protect a party against liability for its own fault. 1. In this case, Cashel took out insurance. As such, unless the costs arising from that decision were specifically considered and covered by the scope of the indemnity, Mr Mason submitted that the Court should not adopt a broad-brush approach that would give the indemnity an unworkably broad scope. 2. On this basis, Mr Mason submitted that the Court would find that the indemnity does not cover the retention amount on the basis that: 1. the ambiguity of the terms and scope of the indemnity to cover the insurance liability should be construed strictly in favour of Mason; 2. the retention amount did not result from a Transaction as defined in the agreement; 3. the indemnity does not expressly cover insurance payments; 4. as a matter of commercial sensibility, the indemnity could not be so construed; and 5. the breadth of the interpretation advocated for by Cashel of itself raises ambiguity and should accordingly be construed in favour of the defendant. 1. As to the finding that Mr Mason gave advice to investors, Mr Mason submitted that the Magistrate, by failing to consider the text of the indemnity, also failed to satisfy herself for the purposes of the indemnity that there was a "Transaction" (as defined in the contract) from which the purported loss flowed. This argument is tied to Mr Mason's grounds of appeal concerning estoppel. 2. In the filed defences to each of the investor proceedings, it was not admitted that Mr Mason provided advice to these clients. In some cases the provision of advice was positively denied. In summary, in each case, it was pleaded that Mr Mason merely forwarded representations made by the parties offering these investments. In those circumstances, Cashel had to satisfy the Court that Mr Mason had offered advice for the purposes of enlivening the definition of Transaction, having previously affirmed affidavits verifying the opposite in the investor proceedings. Cashel's submissions 1. In relation to this ground, Cashel noted that the Magistrate had found that Mr Mason "admitted to telling the investors certain things, but claimed he did so as a mere conduit" (J 3.5-8). After Mr Mason was confronted with contemporaneous documents and admissions, and issued with a certificate under s 128 of the Evidence Act 1995 (NSW), he ultimately admitted that he provided advice to the investors (J 3.8-35). On this basis the Magistrate was "satisfied that he did give advice to the investors", and found that Mr Mason's "inconsistent evidence on this really did adversely affect his credibility in the eyes of the Court" (J 3.35-37). 2. Her Honour then noted that Mr Mason said that there was no finding in relation to Mr Mason under sub-clause 20(a)(i) of the Agreement (J 3.40-45). Cashel does not dispute the correctness of Mr Mason's position on cl 20(a)(i). Cashel claim in debt against Mr Mason was made only under sub-clauses 20(a)(ii) and/or (20)(a)(iii) of the Agreement. By reference to the relevant sub-clauses, and paras [54] and [55] of the Statement of Claim, it was not necessary for Cashel to establish that Mr Mason did in fact provide advice to investors, as her Honour ultimately found. 3. Cashel submitted that it was not necessary to prove that Mr Mason provided advice in order to engage his liability under sub-clauses 20(a)(ii) and/or (iii). The Magistrate's findings that Mr Mason did provide advice only served to further buttress Cashel's claim under the sub-clauses on which it relied and resulted in adverse credit findings against Mr Mason. However, Cashel submitted that the issue of whether Mr Mason provided advice, and whether Cashel was estopped from alleging that, is a distraction from Mr Mason's liability under the indemnity. 4. Cashel submitted that on a proper construction of sub-clauses (20)(a)(ii) and/or (iii) of the Agreement, Mr Mason was liable regardless of whether he provided advice. In her judgment, the Magistrate summarised Mr Mason's arguments in relation to the relevant parts of the indemnity before turning to consider the proper construction of the Agreement. The principles of contractual construction summarised by her Honour were largely drawn from the judgment of McColl JA in County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [149]-[150]. 5. Cashel submitted that these principles are plainly correct. They are consistent with what the High Court has said more recently in Woodside Energy at [35]; see also Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295 ("Cherry") per Leeming JA (Gleeson JA agreeing) at [46]-[48] and [57]-[117], which focused on the primacy of the text and words of wide import, in an analogous construction exercise of an "all monies" guarantee. 6. In applying those principles, the Magistrate found that: 1. "Subclauses [20(a)(i),(ii) and (iii)] cannot be read individually. They must according to the principles of contract interpretation be read together with the rest of the agreement. It is clear from reading...the entire agreement...that the agreement intended that the indemnity was to cover a wide range of circumstances"; 2. "Cashel notes that it's [an] agreed fact between the parties that Cashel maintained a professional indemnity insurance policy. A claim for indemnity was made and granted under that policy, and Cashel was liable to the insurer for the amount in question. It [has] not been suggested that [Mr] Mason's dealings with the investors were not contemplated by the agreement. The settlements [arose] from transactions between the investors and [Mr] Mason as envisaged under the agreement. The litigation was the result of those transactions"; 3. "A reasonable person would find that the surrounding circumstances of the agreement were that [Mr] Mason through Bam Bam was to use Cashel's financial services licence to provide financial services to investors for which a commission would be paid to Bam Bam. This meant that Cashel was assuming risk in relation to its licence. The words of the agreement suggest that it was seeking that Bam Bam and [Mr] Mason would indemnify Cashel in relation to that risk"; 4. "A reasonable person would find no ambiguity when considering clause 20 in the context of the entirety of the agreement and surrounding circumstances, and would understand it to mean that [Mr] Mason was required to indemnify Cashel in these circumstances"; and 5. "The express terms of the agreement, contrary to [Mr Mason's] suggested implied term, say he is responsible along with Bam Bam, for indemnifying Cashel for liabilities and expenses incurred in the performance of the defendant's duties in relation to transactions. The suggested implied term would be inconsistent with the express terms of the contract. I don't accept the implied term as part of the agreement" (J 4.49-6.2). 1. On this basis, Cashel submitted that there was no error in her Honour's analysis, let alone any error of law. Her Honour applied the correct principles to construing the guarantee. In doing so, there was no error in focusing on the primacy of the language in the Agreement itself and, importantly, the width of the circumstances in which the parties to the Agreement expressly agreed the indemnity would apply, by reference to the language. Mr Mason's submissions in reply 1. In his submissions in reply, Mr Mason submitted that Cashel's position that Mr Mason agreed to indemnify Cashel for any liability as a result of any Transaction under or contemplated by the Agreement fails to take into account the context of these words in the indemnity clauses. 2. In summary, Mr Mason's position is that the retention amount was not covered by the relevant clauses because: 1. In this case, the liability to a third person, being the insurer, did not result from a Transaction. It resulted from a forensic decision to settle litigation by which an insurer exercised its right of subrogation and took control of the investor proceedings. 2. The inclusion of "fees, charges and other amounts payable in respect of such Transaction" indicate the types of liability contemplated in (ii); being the costs of setting up and executing such transactions (in a direct sense), not a broad and general liability for any cost that may have arisen from the provision of advice. 3. In cl 20(a)(iii), while Loss is capitalised, but it is not a defined term in the agreement. This inherently creates ambiguity and it should be resolved in the Mason's favour. The Court would not reasonably construe Loss as including insurance payments arising from a claim brought by a client which was subsequently settled on a no admissions basis. 4. The indemnity is not said to explicitly cover any contract of insurance or payments under any such contract, or any liability arising from settlement of any legal dispute. Compare this to cl 20(a)(i), which provides for the coverage of "wrongful or negligent act or omission". 5. To broadly construe the terms of cl 20(a) (ii) and (iii) in the way submitted by the defendant would leave subclause (i) no work to do. Clause 20(a)(i) is more specifically applicable to the situation arising in this case, and as such is a more specific clause providing an indemnity in relation to wrongful or negligent acts or omissions, which it is accepted by both parties did not occur in this case. 6. The loss in this case was too far removed from the loss envisaged by the words of the indemnity and as a matter of law was not covered by the scope of the indemnity. 1. Mr Mason also made several additional submissions in relation to the definition of "Transaction" under the Agreement. Mr Mason submitted that no evidence was led that the purported Transaction fell under any of the other defined scenarios that met the contractual definition of Transaction. The fact that Mr Mason may have accepted in cross-examination that the transactions that resulted in the investor proceedings were effectively Transactions contemplated by the Agreement cannot be used to satisfy a purely legal question of whether the definition of transaction, as it appeared in the contract, was met. 2. Contrary to Cashel's submissions, Mr Mason submitted that it cannot be that simply "a transaction conducted by or for a Client" was enough. If that were the case, any transaction conducted by a person who met the definition of Client would trigger the contractual definition, even if Cashel and Mr Mason were not involved. Mr Mason submitted that the definition requires the subparagraphs to provide meaning and scope to the definition, notwithstanding that the subparagraphs are not exhaustive. Consideration 1. Three is no dispute between the parties that the Magistrate referred to the correct principles of law from Woodside Energy and Cherry, as set out in the parties' submissions (T 13.17; 13.43). Mr Mason's appeal on this ground is on the basis that her Honour erred in applying those principles when construing the Agreement. 2. I note that a question concerning the application of the correct legal principle to the facts of a case is a mixed question of law and fact, such that Mr Mason requires leave to appeal under s 40 of the Local Court Act. Generally, leave is not to be granted where a matter does not involve "issues of principle, questions of general public importance or an injustice which is reasonably clear, that is to say goes beyond merely being arguable": R v PL (2009) 199 A Crim R 199; [2009] NSWCCA 256 at [26]. Neither party addressed the Court on this point. It is my view this case does not involve issues of principle or questions of general public importance. Nor, for the reasons which follow, does it involve an injustice which is more than merely arguable, such that leave to appeal is warranted on this ground. However, I will turn to consider the issues raised in this ground as their resolution is relevant to the grounds of appeal which follow. 3. Mr Mason's and Cashel's divergent constructions of the Agreement primarily arise from their respective interpretations of the terms "Transaction" and "Loss". 4. The meaning of Transaction in the Agreement is significant, as the parties agreed that Cashel pursued its claim against Mr Mason under cls 20(a)(ii) and/or (iii), which refer to Transactions, and not on the basis of negligence under cl 20(a)(i). 5. Clause 20(a)(ii) of the Agreement refers to "any liability to any third person resulting from a Transaction including for any fees, charges and other amounts payable in respect of such Transaction under any agreement by which any Indemnified Person is bound." Clause 20(a)(iii) refers to "any Transaction or proposal contemplated by this agreement including any Loss resulting from a Transaction executed or initiated by or on behalf of [Bam Bam or Mr Mason]". 6. In construing these clauses, counsel for Mr Mason invited this Court to read the words "including for" as words of limitation, such that the retention amount fell outside the scope of the provision. In effect, counsel for Mr Mason submitted that to bind Mr Mason in respect of these proceedings, the Agreement was required to specifically refer to payments arising from the settlement of proceedings for acts not found to be negligent. He submitted that this was especially true in circumstances where such a claim was settled on a no-admissions basis. 7. I do not find these submissions persuasive. For one thing, in Cherry, Leeming JA stated that the word "including" serves to broaden the scope of such a provision, rather than confine it (at [101]). The inclusion of references to fees, charges and other amounts payable does not therefore serve to limit the reference in cl 20(a)(ii) to "any liability". Similarly, the reference to "any Loss resulting from a Transaction" does not serve to limit the reference in cl 20(a)(iii) to "any Transaction or proposal contemplated by this agreement". 8. I also do not agree that "Loss" should be construed so as not to refer to the retention amount. Both in written submissions and at the hearing of these proceedings, counsel for Mr Mason submitted that the term is undefined in the Agreement, and as such gives rise to an ambiguity that should be construed in favour of Mr Mason. However, although Loss is not defined in cl 20, it is defined in cl 8, set out earlier in this judgment. Cl 8.3 defines Loss as "all liabilities, losses, damages, costs or expenses directly or indirectly incurred or suffered by [Cashel], and from and against all actions, proceedings, claims or demands made against [Cashel]". This definition specifically refers to liabilities, in addition to actions, proceedings and claims. I note that the term "Indemnified Person" also remains consistent between cls 8 and 20. 9. Finally, Mr Mason submitted that the Magistrate failed to satisfy herself that there was in fact a Transaction of the kind defined in the Agreement. 10. The Magistrate set out her finding on this point at (J 5.11-14), stating, "It [has] not been suggested that [Mr] Mason's dealings with the investors were not contemplated by the agreement. The settlements [arose] from transactions between the investors and [Mr] Mason as envisaged under the agreement. The litigation was the result of those transactions." Her Honour concluded at (J 5.47-50), "The express terms of the agreement, contrary to [Mr Mason's] suggested implied term, say he is responsible along with Bam Bam, for indemnifying Cashel for liabilities and expenses incurred in the performance of the defendant's duties in relation to transactions." 11. It is Mr Mason's case that in the case run before the Magistrate, none of the definitions of Transaction from the Agreement other than the provision of ongoing advice to a Client was open to her Honour. He says that as the case had been defended in the investor proceedings on the basis that such advice was not given, Cashel cannot rely on that definition of Transaction in these proceedings. 12. For the purpose of this ground of appeal, I note that in her judgment, her Honour made a finding that Mr Mason did provide advice to clients (J 3.35-37). Whether Cashel is estopped from relying on this position on the basis that it is contrary to its defence to the investor proceedings is a separate issue I will consider under Grounds 4, 5 and 6. 13. However, even if Cashel were estopped from relying on this fact, I do not accept that the only definition of Transaction relevant to the Magistrate's construction of cls 20(a)(ii) and (iii) was where it means "providing one-off or ongoing advice to a Client." 14. "Client" is relevantly defined in the Agreement as meaning "any Introduced or Prospective Client". The definitions of those terms are broadly defined, as set out earlier in this judgment. In addition to meaning providing advice to a such Prospective and Introduced Clients, Transaction also relevantly means "a cash market transaction as defined in the ASX Market Integrity Rules"; "an equity market transaction as defined in the Chi-X Market Integrity Rules"; and "any derivatives market contract as defined in the ASX Market Integrity Rules and where the context requires includes the sale or purchase of the underlying financial products following the derivatives contract". 15. Amongst other evidence before the Magistrate was the account opening form of Mr Verinder, one of the clients involved in the investor proceedings (Ex A(ii) at pp 88-100), as well as a letter of offer from Mr Mason for a placement of shares, and its acceptance form signed by Mr Verander (Ex A(ii) at pp 288-292). 16. Moreover, at the hearing in the Local Court, Mr Mason gave the following evidence with respect to the Agreement (Ex A(i), p 59): "Q. Essentially, by that agreement, Cashel authorised Bam Bam and sub-authorised you to use their AFSL, correct? A. Yes. Q. And allowed one or both of you to use their trade execution and other facilities, correct? A. Yes. Q. That was so that you could advise your or Bam Bam's existing clients about transactions they wished to enter into, correct? A. Yes, that's correct. Q. You recommended certain transactions to your existing clients, didn't you? A. Yes. Q. You advised them on those transactions, didn't you? A. Yes. Q. You discussed those transactions with clients before they agreed to execute them, correct? A. Some of them yes, some of them not. Q. You assisted clients with preparing their client application forms in order to trade through Cashel, didn't you? A. Yes, absolutely. Q. And when you did that, you ensured that you were listed as their adviser in the client application forms, correct? A. Yes. Q. That was the process that you followed with each of the clients that subsequently sued you and the plaintiff, correct? A. Yes." 1. Mr Mason continued (Ex A(i), p 84): "Q. Is it your position that that was similarly you conveying information to these people and that was typical of the way in which the transactions were conducted, was it, that ended up being part of the proceedings? A. Yes, that's correct. ... Q. When these transactions were ultimately entered into by the parties that became plaintiffs to the other proceedings, you were conveying this information to them with a view to them entering into the transactions as sub-authorised representative for Cashel, correct? A. Yes, that's right." 1. Again, I note that whether there is evidence to support a finding of fact, or inferences drawn, is a question of fact for which leave is required: see Hussain v Shahidulalam [2018] NSWSC 1742 per Rothman J at [87]. I am of the view that leave should not be granted for the reasons given earlier. Regardless, these documents and Mr Mason's own evidence before the Magistrate support a finding that Mr Mason was engaged in Transactions with Prospective and/or Introduced Clients of the kind contemplated by cls 20(a)(ii) and (iii) of the Agreement. 2. Mr Mason's submissions before this Court that there was no evidence to support the Magistrate's construction of the Agreement cannot be accepted. Nor, for the reasons given, is there any basis on which to conclude that the Magistrate erred in her application of the accepted legal principles in her construction of the Agreement. This ground of appeal fails. Ground 3 - deed construction Mr Mason's submissions 1. It was Mr Mason's submission below that even if liability existed due to the indemnity, it had been extinguished by virtue of the releases provided in each of the deeds entered into to settle the third party proceedings. 2. Mr Mason submitted (and Cashel agreed) that the general approach to construction of contracts, including a deed of release, is that set out by the High Court in Mount Bruce Mining. Mr Mason also referred to Woodside Energy, where the plurality of the High Court held at [35]: "...this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable business person would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties...intended to produce a commercial result'. A commercial contract is to be construed so as to avoid it making commercial nonsense or working commercial inconvenience'." 1. The specific principles governing the construction of deeds of release were summarised by Santow J in Karam v ANZ Banking Group Ltd [2001] NSWSC 709 at [406], cited with approval by Einstein J in Shepherds Producers Co-operative Ltd v Lamont [2009] NSWSC 294 at [11]: 1. In construing a release, here embodied in a letter of variation to the terms of lending, the Court should ascribe to the release the meaning that the release would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties at the time that they signed the document containing the release: ICS v West Bromwich BS [1998] 1 All ER 98 per Lord Hoffman at 114. 2. In order for the Court to give effect to what in an objective sense the contracting parties intended, it is clear that a party may agree to release claims or rights of which it is unaware and of which it could not be aware, provided clear language is used to make plain that that is its intention: see Salkeld v Vernon (1758) 1 Eden 64; 28 ER 608 per Lord Keeper Henley. 3. Consistent with this emphasis on intention, general words in a release are limited to what was specifically in the contemplation of the parties at the time when the release was given: Grant v John Grant and Sons (1954) 91 CLR 112 per Dixon CJ, Fullagar, Kitto and Taylor JJ; lletrait Pty Ltd v Mclnnes (NSWCA, 17 April 1997, unreported) per Priestley JA with whom Grove AJA and Handley JA agreed). 4. Although there are no special rules of construction, such as a contra proferentem requirement, in the absence of clear language courts have been slow to infer that a party intended to surrender rights and claims of which it was unaware and could not have been aware: BCCL v Ali [2001] 1 All ER 961 ("BCCL") at 966 per Lord Bingham. 5. Although each release should be considered against its own matrix of facts, an example of this line of "cautionary principle" (Lord Bingham's phrase) is the frequently cited judgment of the High Court of Australia in Grant v John Grant & Sons Pty Limited, where Dixon CJ, Fullagar, Kitto and Taylor J (at 125). 6. Despite the fact that, strictly speaking, releases are subject to no special rules of construction, a transaction in which one party agrees in general terms to release another from any claims upon it does have special features: BCCL at 984 per Lord Hoffman. 7. In such circumstances it may well be appropriate to imply an obligation upon the beneficiary of such a release to disclose the existence of claims of which it actually knows and which it also realises might not be known to the other party: BCCL at 984 per Lord Hoffman, for such an obligation is consistent with a concern to protect parties from sharp practice, by preventing advantage being taken of the known ignorance of the conceding party; BCCL per Lord Nicholls at 973. The Bank made no such disclosure in this case. 8. In Amaca Pty Ltd v CSR Ltd [2001] NSWSC 324, Bergin J (as her Honour then was) adopted the principles of construction broadly as outlined above, including the "cautionary principle" and taking into account the purpose of the contract and the circumstances in which made. 1. In the circumstances, Mr Mason submitted that the meaning that the release would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties at the time that they signed the document containing the release would be that the parties intended to finally and fully settle the dispute arising out of the subject matter. Importantly none of the deeds carve out, or expressly preserve, any dispute as to indemnification or contribution as between the plaintiff and defendant. Similarly, the effect of the entire understanding clauses was such that the original contract containing the indemnity was left with no work to do in relation to the subject matter of the disputes, a further contextual factor favouring Mason's interpretation. 2. As a matter of interpretation, the payment of the insurance liability has to be "connected with the subject matter of this Deed" and as such any contractual right to such indemnity, where not expressly preserved or dealt with in the deeds of settlement, has been extinguished by virtue of the fact that the deeds "supersede any prior Deed or understanding on anything connected with that subject matter". 3. In determining the matter her Honour found as follows (J 10.21): "A reasonable person would find that the deed operates to release various parties from obligations, but not as between Cashel and Brad Mason. The deed does not supersede or extinguish the indemnity, and there was therefore no inducement for Brad Mason to assume the deeds extinguished any claims between him and Cashel." 1. In so doing, Mr Mason submitted that the Magistrate conflated the issue of whether the deed superseded or extinguished the indemnity by reason of its clauses with the arguments put regarding estoppel. Mr Mason submitted that: 1. The Magistrate preferred the argument that the use of "fully and finally settle all Claims between Parties between which releases have been exchanged pursuant to the terms of this Deed" meant that only parties who had exchanged releases had reached full and final settlement, as opposed to the more natural reading that the deeds were intended to fully and finally settle all claims between parties between which releases have been exchanged in a global sense. 2. The Magistrate's reasons do not adequately address the separate issue as to the effect of cl 11 (the entire understanding clause) which it is submitted superseded and extinguished the indemnity, being in relation to an earlier "Deed or understanding" connected to the subject matter. Cashel's submissions 1. Cashel submitted that the Magistrate applied the correct principles to construing the deeds as follows (J 10.12-10.26): 1. "The purpose [of] each deed was to fully and finally settle litigation with investors, over amongst other things, information provided to them by [Mr] Mason while using Cashel's licence"; 2. "A reading of cl 6 of the deed shows that various parties to the deed discharge each other. But there is no discharge or release as between Cashel and [Mr] Mason. A reasonable person would find that the deed operates to release various parties from obligations, but not as between Cashel and [Mr] Mason"; and 3. "The deed does not supersede or extinguish the indemnity, and there was therefore no inducement for [Mr] Mason to assume the deeds extinguished any claims between him and Cashel. The promissory estoppel argument therefore fails". 1. In concluding with the estoppel defence, her Honour also noted that, at the time he signed the deeds, "[Mr] Mason knew by then that Cashel was after him for money" (J 13.42). Importantly, that was a reference to the fact that Cashel had put Mr Mason squarely on notice, in the most clear and unequivocal terms, prior to him signing the deeds that they intended to pursue him in the manner that they ultimately did under the Agreement. 2. As her Honour found, in dealing with a waiver by election issue raised by Mr Mason, "By the time the proceedings were dismissed by consent, the parties had signed the deeds of releases which I have found did not operate as releases between Cashel and Brad Mason. Further Brad Mason knew by than that Cashel was after him for money. Waiver by election did not operate at that point because there was no election between inconsistent positions" (J 12.37-12.41). 3. Although perhaps of less importance by reason of the language in the deeds, such that her Honour did not consider it necessary to make findings about this in the judgment, the deeds were deliberately amended when drafted to include after the words "fully and [formally] settle all claims between [the] parties" to add "between which their releases have been exchanged pursuant to the terms of this deed". Cashel submitted that only the investor plaintiffs released Cashel and Mr Mason in the deeds, and that Cashel did not release Mr Mason. Consideration 1. Ground 3 raises a question of the proper construction of the relevant provisions of the deed of release. This gives rise to a question of law: see Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [46]. 2. In construing the deed, the Magistrate preferred the construction that "fully and finally settle all Claims between Parties between which releases have been exchanged pursuant to the terms of this Deed" meant that only parties who had exchanged releases had reached full and final settlement. On this reading, the deeds did not supersede any liabilities Mr Mason might have to Cashel under the Agreement. 3. Counsel for Mr Mason submitted that a more natural reading of the deeds is that they were intended to fully and finally settle all claims between parties between which releases have been exchanged more broadly, such that the deeds settle any claims Cashel might seek to bring against Mr Mason. 4. There are several reasons not to adopt Mr Mason's construction. To begin with, I do not accept that it is the more natural reading of the plain wording of the deeds. It was entirely open to the Magistrate to conclude that a reasonable businessperson would understand the reference to "all Claims between Parties between which releases have been exchanged pursuant to the terms of this Deed" to be a reference to Mr Mason and Cashel's exchanged releases with the investor plaintiffs. Nowhere under the deeds did Mr Mason and Cashel exchange releases between each other. 5. Moreover, the construction preferred by the Magistrate is more broadly consistent with the meaning that the release would convey to a reasonable person having all the background knowledge available to the parties at the time. 6. For one thing, "Bar to Claim" clauses within early drafts of the deeds were expressly amended by solicitors for Cashel and Mr Mason so as not to release Mr Mason from liabilities otherwise owed to Cashel (A(i) CF1, pp 93-105). Although evidence of the parties' statements and actions reflecting their actual intentions and expectations are not admissible in construing the deeds (Mount Bruce Mining at [53]), it is clear that both Cashel and Mr Mason were aware of, and consented to, these amendments (A(i) CF1, p 95). They form part of the events and circumstances known to the parties which assist in identifying the purpose and object of the deeds. 7. Furthermore, by letter dated 26 July 2018, Cashel issued a demand to Mr Mason through its solicitors setting out the alleged breaches of the Agreement and Cashel's intention to pursue Mr Mason for excesses in relation to the investor proceedings (Ex A(i), CF1, pp 11-13). The Magistrate noted that this letter put Mr Mason on notice that Cashel wished to pursue him for the retention amount, two months before Cashel signed the deed in September 2018 (J 13.42). 8. Mr Mason's submissions concerning the "entire understanding" clauses under the deeds do not further his position. These clauses state that the deeds form the "entire understanding of the Parties on everything connected with the subject matter of [the deeds]" and supersede "any prior Deed or understanding on anything connected with that subject matter". On the Magistrate's construction, Mr Mason's liabilities to Cashel under the Agreement are not the "subject matter" of the deeds, such that they are superseded. 9. As such, on a plain reading of the deeds, in context, there is no basis on which to conclude that the construction preferred by the Magistrate was not open to her Honour, such that her decision reveals an error of law. This ground of appeal fails. Grounds 4, 5 and 6 - estoppel Mr Mason's submissions 1. Mr Mason submitted that the investment proceedings were jointly defended by Cashel and Mr Mason. Mr Mason submitted that the following findings of the Magistrate are not contested and provide the relevant background to these grounds: 1. At issue in the investment proceedings was whether Mr Mason had provided investment advice to the investors. Mr Mason and Cashel filed joint defences in each of the higher court proceedings maintaining that only information, and not advice, was given to the investors. 2. Importantly, Brad Mason and Angus Mason verified the defences. 3. Estoppel or waiver by election arises because of Cashel's conduct in the nature of its forensic decisions to file its defence to the statement of claim in the investment proceedings. 4. Another live issue during the hearing was whether Mr Mason gave advice. 5. The joint defences claim that advice was not given, and to the extent anything was said, it was merely as a conduit of information between the investment offeror, and the potential investor. 6. The statement of claim in the proceedings before the Magistrate alleges that Mr Mason provided financial services advice to the investors. 7. Reviewing the actual documents, the Magistrate found that a more correct characterisation is that Mr Mason admitted to telling the investors certain things, but claimed he did so as a mere conduit. 8. Norton Rose, acting for the insurer, sent to Cashel in April 2017 some material including following text: "From our conference with [Mr] Mason, he admits to making virtually all of the representations being alleged, and admits that the plaintiff investors relied on him as a trusted advisor, and that in many instances, his conduct fell below the level of care and skill expected of an investment advisor in his position." 1. Waiver by election seems to be specifically raised in the following ways: that following legal advice from Norton Rose, Cashel proceeded in the investor proceedings by filing verified joint defences with [Mr] Mason on the basis that no advice was given by him to the investors, and by not cross-claiming against him. 2. Mr Mason says that Cashel now seeks to move away from those positions by arguing in this Court that [Mr] Mason did give advice, and it should be able to sue [Mr] Mason in the Local Court even though it chose not to cross-claim against him in the investor proceedings. 3. Cashel's Director says that things have changed in that Cashel has recovered deleted emails from [Mr] Mason's computer, showing that [Mr] Mason misrepresented to Cashel his dealings with the investors. But the Norton Rose advice sent to Cashel shows Cashel already knew [Mr] Mason had made admissions to Norton Rose about his dealings with the investors. Cashel had this information for a number of months before the claims were settled in 2018. So Cashel had knowledge of the facts of [Mr] Mason's dealings with the investors, as well as of its right to elect before the verified defences were filed. 4. The pleadings in the investor proceedings operate as admissions on Cashel's behalf in the Local Court proceedings. Leave to withdraw those pleadings does not appear to have been sought in the higher courts, and it's difficult to see how Cashel would, could or would be permitted to reopen its pleadings, given that consent orders have been entered. 1. Having set out these findings, the Magistrate turned to consider the question of whether, as a matter of law, Cashel could run the opposite case in the Local Court than it did in the investor proceedings, and claim that the indemnity was triggered by virtue of loss arising from a Transaction. 2. Mr Mason submitted that the Magistrate fell into error in her reasons by finding that waiver by election did not operate until such time as consent orders were entered in the investor proceedings. The reasons fail to grapple with whether Cashel had, by its conduct, created an estoppel in relation to the issue of whether it could now run a case on the basis that Mr Mason had provided advice. 3. In so doing, the Magistrate based her reasons on an extract from Handley's text and seemingly ignored the passages of Commonwealth v Verwayen (1990) 170 CLR 394 at 411 per Mason CJ ("Verwayen"), which her Honour was taken to, as follows: "Traditionally, estoppel by conduct has been classified as a rule of evidence, available where there is a cause of action, to prevent a person from denying what he previously represented, and has not itself constituted a cause of action: Grundt, at p 658; Low v. Bouverie (1891) 3 Ch 82 at pp 101, 105. Being an evidentiary principle, estoppel by conduct achieved, and could only achieve, the object of avoiding the detriment which would be suffered by another in the event of departure from the assumed state of affairs by holding the party estopped to that state of affairs. The rights of the parties were ascertained and declared by reference to that state of affairs." 1. Mr Mason also referred to Verwayen at 454 per Dawson J: "While the role of estoppel at common law was largely as a rule of evidence, its role has been vastly expanded in equity to raise questions of substance." 1. Toohey J in Verwayen concluded at 470 that waiver in the present context involved "election" and, for that reason, differed from estoppel. At 470-471 his Honour addressed the questions, "In what circumstances does waiver operate? In particular, when is a defendant precluded from relying upon a defence such as a plea of limitations?" Mr Mason submitted that his Honour pointed out that this involved no confusion with variation of contract or promissory estoppel. It was regarded as an election by a party between inconsistent rights, or the choice to take a jurisdictional point, plead a particular defence, or take some other step in proceedings, or not to do so. The party may not take up inconsistent positions. 2. Mr Mason also referred to Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 per Gaudron J at 458: "The expressions 'common law estoppel' or 'evidentiary estoppel', on the one hand, and 'equitable estoppel', on the other hand, serve to distinguish estoppels which operate by reference to an assumption of fact and those which operate by reference to an assumption as to rights. Common law or evidentiary estoppel compels adherence to an assumption of fact by denying the person estopped the right to assert a contrary matter of fact. By so doing, it may operate to fashion a set of facts by reference to which is imposed a liability which otherwise does not exist. This operation is illustrated by Laws Holdings Pty. Ltd. v Short (81) (1972)46 A.L.J.R. 563. In that case the defendant was held liable in an action for goods sold and delivered and work done because it was estopped from asserting facts inconsistent with the plaintiffs' assumption that they were dealing with the defendant." 1. The requirement of knowledge by a party in so doing was addressed by Gaudron J at 484 of Verwayen as follows: "Perhaps there is a principle of wider application, but it is clear that a party to litigation will be held to a position previously taken (that position having been intentionally taken with knowledge) if, as a result of that earlier position, the relationship of the parties has changed." 1. Mr Mason submitted that in this case, Cashel, with full knowledge, made a forensic election from the options presented by its solicitors, Norton Rose, to which it should be held. It is clear that the relationship of the parties changed as a result of the position taken, as Mr Mason executed deeds in reliance on that position. 2. Furthermore, Mr Mason submitted that the Court system is not a game whereby parties can elect to plead whichever case is most convenient to their interests in whichever forum. This would give rise to an abuse of process. This is why a party will not be permitted to plead inconsistent defences: see King v Lynpete Australia Pty Ltd [2012] VSC 140 at [27]: "There is a clear inconsistency in the facts pleaded to support the equitable defences. Those equitable defences rely on the factual position that Lynpete holds its shares in NZPL on trust for Mr King. The pleas of election, approbation, reprobation and estoppel are thus wholly inconsistent with the pleaded case that there is no trust. This is not merely the pleading of claims in the alternative, as the foundation setting up those equitable defences is a set of facts wholly at odds with the primary defence. They are totally inconsistent cases. In these circumstances, it was not open to the defendants to put those defences as they are factually inconsistent with the way in which they conducted their primary defence." 1. In this case, permitting Cashel to adduce evidence inconsistent with its pleaded position in the investor proceedings allowed Cashel to take two inconsistent positions in two proceedings. It ought not to have been allowed, and evidentiary estoppel should have been found to operate. 2. Were it not estopped as submitted above, Mr Mason submitted that there was a similar estoppel by virtue of the doctrines of waiver or election, or that the conduct was an abuse of the Court's processes. 3. As the High Court said in Craine v Colonial Mutual Fire Insurance Company Ltd [1920] HCA 64; (1920) 28 CLR 305 ("Craine") at 326-7, waiver is "a doctrine of some arbitrariness introduced by the law to prevent a (person) in certain circumstances from taking up two inconsistent positions". The expression "taking up two inconsistent positions" is wider than the expression "asserting two inconsistent rights". It is the assertion of inconsistent rights that is generally understood to be at the heart of what is called "election": see Sargent v ASL Developments Ltd (1974) 131 CLR 634, per Stephen J at 641; Lissenden v CAV Bosch Ltd (1940) AC 412, per Lord Wright at 435-436. 4. Mr Mason submitted that Cashel ought to be estopped from attempting to prove a case inconsistent with the pleadings it verified in the investor proceedings (with knowledge that such facts were not be the true state of affairs, given the Norton Rose advice). Cashel should have been held to its previous position that no advice was provided by virtue of the operation of the doctrines of estoppel and election, even if the true factual position may have been different. This is so given the reliance placed by all parties to those proceedings on the factual representations by Cashel and the reliance by the parties on that position in executing the various deeds of settlement. On that basis, a common law estoppel of fact ought to have been found to have operated to prevent Cashel from running its case as it did. 5. If these grounds are accepted it follows that Cashel, as a matter of law, should have been estopped from leading evidence that Mason gave advice, and as such a necessary pre-cursor for the triggering of the indemnity was not satisfied, meaning the appeal should be allowed and Cashel's claim should be dismissed. Cashel's submissions 1. The first of Cashel's submissions in relation to this ground were that the estoppel defence was not supported by the evidence. In her judgment, the Magistrate noted the varying ways in which Mr Mason framed the "estoppel defence". Mr Mason's submissions covered all forms of estoppel, as well as election, waiver and abuse of process, which were not pleaded (J 8.34 - 8.44). 2. At the heart of the estoppel defence was the contention that the deeds of release by which the investor proceedings were settled extinguished any claim by Cashel against Mr Mason. Mr Mason submitted that the deeds led him to believe that was the case. 3. Apart from Cashel's written notice to Mr Mason prior to him signing the deed, which was directly contrary to his contention, and the fact that the deeds were amended with his knowledge prior to him signing them to make it clear that the deeds did not operate as a releases as between Mr Mason and Cashel, this argument was disposed of by reference to the language of the deeds themselves. The deeds were also directly contrary to Mr Mason's alleged belief. 4. Her Honour found, in similarly applying the correct principles to construing the deeds (doing so only by reference to one of the five deeds, due to their similarities, for efficiency with the agreement of the parties): 1. "The purpose [of] each deed was to fully and finally settle litigation with investors, over amongst other things, information provided to them by [Mr] Mason while using Cashel's license"; 2. "A reading of cl 6 of the deed shows that various parties to the deed discharge each other. But there is no discharge or release as between Cashel and [Mr] Mason. A reasonable person would find that the deed operates to release various parties from obligations, but not as between Cashel and [Mr] Mason"; and 3. "The deed does not supersede or extinguish the indemnity, and there was therefore no inducement for [Mr] Mason to assume the deeds extinguished any claims between him and Cashel. The promissory estoppel argument therefore fails" (J 10.12-10.26). 1. In concluding with the estoppel defence, her Honour also noted that, at the time he signed the deeds, "[Mr] Mason knew by then that Cashel was after him for money" (J 13.42). 2. Cashel submitted that importantly, that was a reference to the fact that Cashel had put Mr Mason squarely on notice, in the most clear and unequivocal terms, prior to him signing the deeds that they intended to pursue him in the manner that they ultimately did under the Agreement (J 9.48 - 9.50). 3. As her Honour found, in dealing with a waiver by election issue raised by Mr Mason which was, in substance, part of his estoppel defence "By the time the proceedings were dismissed by consent, the parties had signed the deeds of releases which I have found did not operate as releases between Cashel and [Mr] Mason. Further [Mr] Mason knew by than that Cashel was after him for money. Waiver by election did not operate at that point because there was no election between inconsistent positions" (J 12.37-12.41). 4. Cashel submitted that only the plaintiffs in the investor proceedings released Cashel and Mr Mason in the deeds. Cashel did not release Mr Mason. The wording that was included in the deed at Cashel's request, with Mr Mason's knowledge, was important. Cashel submitted that Mr Mason sought to ignore that part of the clause (J 47.10-48.9). 5. As to the investor proceedings, Cashel submitted that the Magistrate had already found upon a careful analysis of the pleadings that the admissions in those proceedings by Cashel and Mr Mason were not as Mr Mason contended for the purposes of his estoppel defence. 6. Upon reviewing the actual documents, her Honour summarised her findings as follows: "it seems to me that a more correct characterisation is that [Mr] Mason admitted to telling the investors certain things, but claimed he did so as a mere conduit" (J 3.5-3.8). In those circumstances, and by reference to the actual pleadings themselves noting what was actually alleged and what the actual response was in the defences, there was no need to address this aspect of Mr Mason's estoppel defence further. 7. In any event, her Honour identified further and other reasons why the estoppel defence, dealt with in the context of waiver, was not maintainable, noting that there could be no estoppel or waiver as "Cashel could seek to amend its pleadings right up until the matter was finalised and consent orders were entered" (J 12.31-12.32). Cashel and Mason were not irrevocably tied to their pleadings, which could have been amended at a later time. 8. Her Honour also dealt with a number of other ways in which Mr Mason sought to frame his defence, which were not pleaded, although her Honour considered that, given their broad similarity to the estoppel defence, Cashel were sufficiently on notice of them (J 9.6-9.10). In dealing with the alleged "abuse of process" point, her Honour said that "Cashel could have, but did not cross-claim" against Mr Mason in the investor proceedings. 9. Her Honour then found that "Cashel could have sought to amend those pleadings until the matter was dismissed by consent, by that time the parties had signed deeds of release which did not operate as release between Cashel and [Mr] Mason", and that "Further, [Mr] Mason knew by then that Cashel was after him for money" (J 13.36-13.42). In other words, the deeds intervened before any issue in the investor proceedings was determined with finality. Her Honour ultimately concluded that she "cannot find a[n] illegitimate or collateral purpose in Cashel's claims in this Court...There has been, in my view, no abuse of process" (J 13.42-13.45). 10. Cashel submitted that that finding was correct, based upon the anterior finding as to what was actually pleaded in the investor proceedings, contrary to Mr Mason's contentions (J 3.5-3.8). 11. Cashel further submitted that there is no justification for the criticism made of her Honour at [50] for having undertaken independent research and referred to the text by Justice Handley, Estoppel by Conduct and Election (2nd ed, Thomson Reuters, 2016). Texts which summarise principles are often referred to as a "neat" summary of relevant principles. The statements in text written by a former Judge of Appeal should not simply be dismissed, particularly where Mr Mason has not identified why it was incorrect. 12. Cashel submitted that Mr Mason's complaint seems to be that her Honour did not go through and refer to, consider and analyse each one of the cases referred to in Mr Mason's written submissions. There was no requirement for the Court to do so. 13. Even leaving aside the evidentiary issues with Mr Mason's "advice" estoppel argument, by reference to the actual pleadings, there was no proper basis for Cashel to have been estopped from raising the provision of advice to the plaintiffs in the investor proceedings. If anything, the defences filed investor proceedings constituted representations to, or a state of affairs by conduct with, the plaintiffs, and not by Cashel to Mr Mason. 14. The Magistrate's reference to the principles summarised in Justice Handley's text came after some considerable analysis of a number of other cases by her Honour (J 8.34-12.24). 15. In any event, there was no basis for Mr Mason to suggest that he would suffer prejudice or detriment if Cashel were allowed raise the "advice" issue as a further part of their claim that he should be liable under the indemnity. That was a critical element to the estoppel claim, but there was no evidence upon which Mr Mason was able to make that element out. 16. Mr Mason has also submitted that the "detrimental reliance" that he took, based upon the way in which Cashel (and Mr Mason himself) had pleaded in answer to the investor proceedings, was that he "executed deeds.. .in reliance on that position". 17. Cashel submitted that that submission does not withstand any scrutiny. Mr Mason executed the deeds at a time when he was squarely on notice that Cashel was intending to pursue him under the Agreement, and that Cashel was not releasing him, as her Honour noted (J 12.36-12.41). 18. In those circumstances, it is difficult to see what prejudice or detriment he suffered by executing the deeds. All that did was bring to an end proceedings against him (and others including Cashel) claiming significant sums of money. Cashel submitted that there was no evidence of detriment suffered by Mr Mason in reliance on the alleged representations in the investor proceedings, in "executing various deeds of settlement", as Mr Mason has submitted. As such, there was no error, let alone any error of law, in her Honour disposing of Mr Mason's claimed "advice" estoppel defence, as her Honour did. 19. There was, in any event, no error in the judgment sought to be appealed, even if error were demonstrated in the advice estoppel ground. Mr Mason was liable under the indemnity even in the absence of any evidence of him having provided "advice". Consideration 1. There are several questions raised by this ground. The first is whether in fact Cashel's defence to the investor proceedings was inconsistent with its claim against of Mr Mason. The second is whether, in the event that it is, this inconsistency gives rise to an estoppel. 2. Although the first question of fact is not subject to appeal in this Court, I will consider it briefly as it informs the reasoning of the Magistrate in relation to the issue of estoppel generally. 3. As to whether Cashel acted inconsistently, as at April 2017, Cashel (by letter from its legal representatives, Norton Rose) was fully aware that Mr Mason had admitted to providing "virtually all of the representations being alleged" by the investors in those proceedings (Ex A(iii), p 598). Cashel was also made aware in that letter that Mr Mason had assisted some of the plaintiffs in those proceedings, including his mother, in bringing their claims against Cashel. Cashel's pleaded position in relation to this advice in the investor proceedings was not a blanket denial, as alleged by Mr Mason. By way of example, in the pleaded defence to the Verinders proceedings, Cashel admitted that Mr Mason discussed an opportunity for investment with the plaintiff, and also did not admit to (rather than denied) the provision of certain advice (Ex A(iii), p 512). 4. On this basis, I do not accept Mr Mason's submissions in this Court to the effect that by pursuing a claim against him, Cashel sought to deny what it had previously represented. This is not a case where Cashel has elected to exercise inconsistent rights, such that evidentiary estoppel arises. This was the position taken by the Magistrate at J 12.37-12.41 as extracted in Cashel's submissions on this ground. 5. Furthermore, as I have set out in relation to ground 3, there is no evidence that Mr Mason relied on this position to his detriment. As noted by the Magistrate, Mr Mason was fully aware that Cashel intended to pursue him for the retention amount in July 2017, three months before he signed the deeds of release. He was also aware that Cashel had amended those deeds for the purpose of not releasing him of his liabilities to Cashel under the Agreement. Mr Mason stood to benefit from the settlement of the investor proceedings, by which the substantial claims against him fell away. The Magistrate considered each of these factors in concluding that there was no abuse of process in Cashel pursuing its claim against Mr Mason under the Agreement. 6. For completeness, I note that even if Mr Mason was successful in establishing error in relation to this ground, and Cashel was estopped from maintaining in these proceedings that he provided advice to Clients, Mr Mason is still liable under the Agreement under the other definitions of Transaction as set out in relation to Grounds 1 and 2. 7. For these reasons, it is my view that the Magistrate did not err in her decision that no estoppel arose in relation to Cashel's pleaded defence to the investor proceedings. Grounds 4, 5 and 6 fail. Ground 7 – sufficiency of reasons Mr Mason's submissions 1. Mr Mason submitted that in relation to each of the errors alleged in its grounds of appeal, the Magistrate failed to provide sufficient reasons for her decision. Particularly, he submitted that her Honour failed to adequately explain why she construed the terms of cl 20(a)(ii) and (iii) of the Agreement such that they indemnified Cashel in relation to the retention amount. Cashel's submissions 1. Cashel submitted that s 39 of the Local Court Act relevantly provides for Mr Mason to appeal to this Court only on a question of law. An error in point of law may include: 1. a finding made where there is no evidence to support it or draws an inference from facts that cannot be reasonably drawn; 2. a finding that no person acting judicially and properly instructed as to the relevant law could have made; and/or 3. where a Court has misdirected itself in law: see US Manufacturing Co Pty Ltd v ABB Service Pty Ltd [2008] NSWSC 705 ("US Manufacturing") at [54] per Hall J. 1. The requirement for a Magistrate to provide reasons depends upon the particular matter. Similarly, the content of the reasons depends on the particular circumstances of the matter being considered by the Court: US Manufacturing at [96]. It is unnecessary for a judge (or Magistrate) to refer to all evidence led in the proceedings. Further, reasons need not necessarily be lengthy or elaborate (at [97] and [99]). 2. A judicial officer is not required to spell out in minute detail every step in the reasoning process or refer to every piece of evidence. It is sufficient if the reasons adequately reveal the basis of the decision, expressing the specific findings critical to the determination of the proceedings: see Stoker v Adecco Gemvale Constructions Pty Ltd [2004] NSWCA 449 ("Stoker") at [41]. It is essential to expose the reasoning on a point critical to the contest between the parties: Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 at [58]. 3. In applying those principles to the facts of this case, Cashel submitted that this Court should not be satisfied that Mr Mason's appeal grounds have not been established, and that the Magistrate's reasons were not inadequate. Consideration 1. I have set out the Magistrate's relevant reasons in relation to the matters raised in Mr Mason's grounds of appeal, including her Honour's construction of cl 20(a)(ii) and (iii) of the Agreement. For the reasons given, none of these errors has been established. In my view the Magistrate adequately set out the reasons for her decision on the evidence before her, and made findings in relation to that evidence: see Stoker at [41]. This ground of appeal fails. Ground 8 - set-off Mr Masons' submissions 1. In the alternative to its other grounds of appeal, Mr Mason submitted that the Court below erred in calculating Cashel's loss by failing to take into account the sum of $4,289.03 (which was otherwise payable to Bam Bam, a company then beneficially owned by Mr Mason) which was withheld by the plaintiff as a result of the dispute giving rise to the proceedings. 2. Accordingly, the judgment of the Court would result in a windfall of $4,289.03 to Mr Mason. This is because cl 20(c) of the Agreement allowed Cashel to set off any amount owed to Mr Mason or Bam Bam as a result of its right to indemnity. 3. Cashel did in fact exercise this right (seemingly accepted by the Magistrate), but her Honour found that it was Bam Bam and not Mr Mason who was entitled to the money. The relevant passage is as follows: "Under 15.3 of the agreement, Cashel was to make commission payments [to] the advisor, and that's Bam Bam. It was to make those payments into Bam Bam's bank account. This means Brad Mason had no entitlement to be paid any commission. That means his claim for set off must fail. I FIND FOR THE PLAINTIFF ON ITS STATEMENT OF CLAIM." 1. Even if the Magistrate's conclusion were to be accepted, Mr Mason submitted that her Honour erred in awarding the entire amount sought by Cashel in its Statement of Claim. This is because even if the payment withheld was to otherwise be paid to Bam Bam, it follows that Cashel in exercising its right to withhold commission had already taken steps to remedy its loss and obtained a financial benefit. As such, there was a windfall amount (or a double dip) to Cashel of the amount withheld from Bam Bam. 2. Mr Mason submitted that the Magistrate's reasons for articulating why a set off was not available failed to engage with whether awarding Cashel the full amount of its claim would amount to double-dipping in relation to the amount already withheld from Bam Bam. Cashel's submissions 1. In disposing of Mr Mason's claimed entitlement to have any liability to Cashel set off by an amount owing by Cashel, the Magistrate found that, under clause 15.3 of the Agreement, Cashel was to make commission payments to Bam Bam, not Mr Mason. 2. As her Honour noted, "This means [Mr] Mason had no entitlement to be paid any commission. That means his claim for set off must fail" (J 14.3-5). 3. Clause 20(c) of the Agreement gave Cashel a right (but not an obligation) to set off debts. There is no evidence that Cashel actually exercised that right under the Agreement. 4. Cashel submitted that there was no error in the Magistrate's reasoning on this aspect of claim. Mr Mason's submissions in reply 1. Mr Mason submitted that Cashel's submission that "There is no evidence that Cashel did actually exercise that right under the Agreement" is demonstrably incorrect, considering Mr Mason's of the evidence of non-payment and withholding of the monies. 2. All that was ever put to Mr Mason, and reflected by the judgment, was that the payment which was withheld was otherwise payable to Bam Bam and not Mr Mason, and therefore the set-off claim as pleaded by Mr Mason could not succeed. While Mr Mason accepted that the Magistrate was correct in her analysis that a set off was not available for this reason, this still does not deal with the fact that the judgment sum could not double dip for this amount. As such, this ground must succeed, and as a minimum the judgment amount reduced by $4,289.03. Consideration 1. Clause 15.3 of the Agreement provided for Cashel to pay commission payments to the Adviser, Bam Bam. Clause 20(c) of the Agreement allowed Cashel to set off any amount owed to Mr Mason or Bam Bam as a result of its right to indemnity. 2. Whether Cashel engaged in a set off is a question of fact, of which Cashel has submitted that there was no evidence. However, the evidence before the Magistrate included an email dated 29 February 2016 from the Director of Cashel on its behalf to Mr Mason stating, "We [Cashel] will be withholding any commissions for the month of February to pay towards the costs of Cashel defending any claim against it associated with actions taken by your clients" (Ex A(i) CF1, p 65). The payment of some $4,289.03 to Bam Bam was withheld on that day Ex A(i) CF1, p 74). Nothing was put to Mr Mason on this point in cross-examination. 3. For her part, the Magistrate did not address the evidence that any payment had been withheld. Instead, her Honour stated that as those payments were to be paid to Bam Bam under the Agreement, Mr Mason was not entitled to any commission. Counsel for Mr Mason accepted that the Magistrate was correct in her conclusion on this point. 4. As this ground of appeal concerns the Magistrate's application of the correct legal principles to the facts of the case, it raises a mixed question of law and fact such that Mr Mason requires leave to appeal under s 40 of the Local Court Act. 5. For the reasons which follow, it is my view that leave to appeal on the questions raised in this ground should not be granted. The Magistrate's conclusion that Mr Mason was not entitled to commissions paid to Bam Bam involved a straightforward construction of the Agreement, and one which is not challenged by Mr Mason. Rather, Mr Mason advances this ground of appeal on the basis that the Magistrate should have nevertheless reduced the award by the retention amount to reflect that Cashel had withheld payment from another party to the Agreement. I am not satisfied that these submissions raise an issue of principle or a question of public importance. Nor does her Honour's decision not to deduct the commission payment withheld (by Cashel to Bam Bam) from the retention amount owed (by Mr Mason to Cashel) involve an injustice which is more than merely arguable. 6. Leave to appeal on this ground is refused. Result 1. The result is that the plaintiff's appeal fails. Costs 1. Costs are discretionary. Costs usually follow the cause. The plaintiff is to pay the defendant's costs on an ordinary basis. The Court orders that: 1. The amended summons filed 10 June 2020 is dismissed. 2. The plaintiff is to pay the defendant's costs on an ordinary basis. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 March 2021