Andy Vuong Duc Pham v Enterprise ICT Pty Ltd

[2020] NSWSC 1089

Supreme Court

New South Wales

Medium Neutral Citation:

Andy Vuong Duc Pham v Enterprise ICT Pty Ltd [2020] NSWSC 1089

Hearing dates:

26 June 2020

Decision date:

19 August 2020

Jurisdiction:

Equity - Expedition List

Before:

Sackar J

Decision:

See [72]-[73]

Catchwords:

COSTS – Lump sum or gross costs orders – Whether lump sum costs orders should be made – Appropriate discount to lump sum or gross costs order

CIVIL PROCEDURE — Stay of proceedings — Where proceedings stayed due to security for costs not being provided on time — Where security for costs paid late — Whether stay should be lifted — Whether cross claim barred by res judicata, Anshun estoppel or abuse of process

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Real Property Act 1900 (NSW)

Uniform Civil Procedure Rules2005 (NSW)

Cases Cited:

Barclays Australia (Finance) v Mike Gaffikin Marine (1996) 21 ACSR 235

Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256

Berry Rural Co Operative Society Ltd v Sepak Industries Pty Ltd (No 4) [2018] NSWSC 1902

Blair v Curran (1939) 62 CLR 464

Boles v Esanda Finance Corporation Ltd (1989) 18 NSWLR 666

Carl-Zeiss (No 2) [1967] 1 AC 853

Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502

Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245

Clearly v Jeans (2006) 65 NSWLR 355

Doppstadt Australia Pty Ltd v Lovick and Son Developments Pty ltd (No 2) [2014] NSWCA 158

Edward Ted Lakis and Anor v Michael Victor Lardis and Anor (No 3) [2018] NSWSC 1296

Effem Foods Pty Ltd v Trawlindustries (1993) 43 FCR 510

Fisher-Pollard by her tutor Fisher-Pollard v Fisher-Pollard [2018] NSWSC 807

Five D Pty Ltd v Impact Building Pty Ltd [2007] NSWSC 993

Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231

Hamod v The State of New South Wales [2011] NSWCA 375

Hancock v Rinehart (Lump sum costs) [2015] NSWSC 1640

Harrison v Schipp (2002) 54 NSWLR 738

Henderson v Henderson (1843) 3 Hare at 115

Hutchinson v Nominal Defendant (1972) 1 NSWLR 443

Jackson v Goldsmith (1950) 81 CLR 446

Lawcover Insurance Pty Ltd v Muriniti and Newell [2018] NSWSC 558

Macquarie Bank Ltd v National Mutual LifeAssociation of Australasia Ltd (1996) 40 NSWLR 543

McKeith v Royal Bank of Scotland Group PLC [2016] NSWCA 260

Osborne v Smith (1960) 105 CLR 153

Pham v Enterprise ICT Pty Ltd & Ors (No 8) [2018] NSWSC 1492

Pham v Enterprise ICT Pty Ltd & Ors(No. 10) [2018] NSWSC 1805

Pham v Enterprise ICT Pty Ltd [2019] NSWSC 1857

Pham v Enterprise ICT Pty Ltd and Others [2017] NSWSC 446

Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 11) [2019] NSWSC 115

Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 13) [2019] NSWSC 522

Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 2) [2018] NSWSC 22

Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 3) [2018] NSWSC 381

Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 5) [2018] NSWSC 567

Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 7) [2018] NSWSC 1063

Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 9) [2018] NSWSC 1657

Pham v Mazen Zraika; Pham v Sebie (No. 4) [2018] NSWSC 566

Pham v Sebie [2015] NSWSC 745

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589

Ramsay v Pigram (1968) 118 CLR 271

Ridgeway v The Queen (1995) 184 CLR 19

Rogers v The Queen (1994) 181 CLR 251

Ross v Padget [2016] NSWSC 1851

Sebie v Pham [2018] NSWCA 333

Secretary of State for Trade and Industry v Bairstow [2004] Ch 1

Tasker v Small (1837) 3 Mylne and Craig Reports 63; 40 ER 848

Telesto Investments Limited v UBS AG [2013] NSWSC 503

Tomlinson v Ramsey Food Processing (2015) 256 CLR 507

UBS AG v Tyne (2018) 265 CLR 77

Wong v Van Vlymen [2020] NSWSC 841

Zavodnyik v Alex Constructions Pty Ltd (2005) 67 NSWLR 457

Texts Cited:

Ritchie's Uniform Civil Procedure NSW

Category:

Principal judgment

Parties:

Andy Vuong Duc Pham (first plaintiff)
Thi Huong Giang Pham (second plaintiff)
Enterprise ICT Pty Ltd (first defendant)
Nadine Musabwasoni (second defendant)
Robert Sebie (third defendant)
ENA Development Pty Ltd (cross claimant)

Representation:

Counsel:
B Zipser (plaintiffs)
A Duc (second defendant)
R Sebie (in person)
G Stapleton (cross claimant)

File Number(s):

2015/325044

Judgment

The proceedings

1. There are three motions before the Court.

2. By further amended notice of motion filed 14 May 2019, the plaintiffs seek a series of lump sum costs orders against Mr Sebie and ENA Development Pty Ltd (ENA) (‘the plaintiffs’ costs application’) for costs incurred in proceeding 2015/325044 (‘the 2015 proceeding’) from 29 January 2018 until the conclusion of the proceeding. On 27 February 2020, after part-hearing the plaintiff’s application, I made orders noting that this was an appropriate case for the making of lump sum costs orders.

3. By further amended notice of motion filed 6 March 2020, ENA seeks a lump sum costs order against the plaintiffs arising from Young AJA’s decision on 12 June 2015 in Pham v Sebie [2015] NSWSC 745 at [6] in which his Honour struck ENA out of the proceedings effectively on the basis that they should not have been joined (‘ENA’s costs application’).

4. Finally, by further amended notice of motion dated 26 June 2019, ENA seeks an order that the Court lifts the stay made by Slattery J (in [2018] NSWSC 1063) on its cross claim dated 1 July 2018 (‘ENA’s stay application’). The substance of the relief sought in that cross claim is payment to ENA of net proceeds of sale of a property in Chiswick (held in Court). Those proceeds are the security it claims for repayment of two advances of loans it made to Mr Sebie. The advances it says were $1.37 million in 2005 and $504,000 in 2015. On 13 July 2018, Slattery J ordered that ENA pay $100,000 of security for the costs of the plaintiffs in the proceedings by 27 July 2018. If that security was not paid on time, ENA’s cross claim was to be stayed. The security was not paid on time and the stay on ENA’s cross claim has been in place since 27 July 2018. On 29 March 2019, ENA paid the security for costs into Court.

Submissions

The plaintiffs’ costs application

5. On 30 January 2018, Slattery J made a lump sum cost order in respect of the plaintiff’s costs incurred in the 2015 proceeding up to 26 January 2018.

6. With respect to costs incurred from 27 January 2018 onwards, the plaintiffs seek lump sum costs orders against ENA in relation to the following items for which existing interlocutory costs orders have been made. The below tables are taken from a summary table provided by Mr Zipser on 25 June 2020. Some details have been excluded. The references to past judgments and orders have been added, having been found in Mr Zipser’s written submissions.

ITEM	DESCRIPTION, PERIOD OF WORK	EXISTING COSTS ORDER	BARRISTER’S COSTS	OTHER COSTS
2	Application by plaintiffs to remove caveat lodged by ENA, and defence by plaintiffs to application by ENA to file cross-claim - 30 January to 29 March 2018	ENA pay plaintiffs’ costs (see [2018] NSWSC 381 at [102] (Slattery J))	$53,121	$2,970 for solicitor $807 for disbursements
9	Defence by plaintiffs to application by ENA to stay execution of writ of possession - 12 October to 22 November 2018	ENA pay plaintiffs’ costs (see [2018] NSWSC 1805 at [11] (Lindsay J))	$6,415	Nil
17	Defence by plaintiffs to application by ENA to extend operation of new caveat lodged by ENA over Chiswick Property - 25 to 26 June, 7 December 2019	ENA pay plaintiffs’ costs on indemnity basis (see [2019] NSWSC 1857 at [26] (Kunc J))	$2,888	Nil
Total	$66,210

7. The plaintiffs submit that they ought to receive 100 per cent of these costs on the basis that the work was principally barrister’s work in attending to core legal matters. Alternatively, they submit that if I am inclined to give a discount, taking into account that the calculation is to be on the ordinary or party/party basis, it should only be for 15 per cent (relying in particular upon Hancock v Rinehart (Lump sum costs) [2015] NSWSC 1640 at [57]). They further submit in relation to Item 2 that ENA’s conduct in attempting to delay and frustrate Slattery J’s attempts to deal with their application in a timely way (see the comments made by his Honour in Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 3) [2018] NSWSC 381 at [8]-[40]) is a relevant factor in determining whether they ought to recover all or most of their costs.

8. Belatedly on the morning of the hearing ENA’s director, Mr Ronald Jemmott, provided some short written submissions to the Court in relation to the plaintiff’s costs application. Mr Jemmott stated that he has not been provided with any invoices and the plaintiffs have never asked for their bills to be paid. He then disputed numerous charges for a variety of reasons, for example, on the basis that in his opinion certain charges were repeated or too high for the work said to have been completed. His assertions were not supported by evidence.

9. At the hearing, Mr Stapleton, who appeared for ENA, accepted that Items 2, 9 and 17 are the subject of historical costs orders against ENA and that a lump sum costs order is appropriate. He submits that the normal approach to party/party lump sum costs orders, being a discount of approximately 40 per cent, should be applied, noting that Slattery J ordered costs against ENA on a party/party basis (not an indemnity basis) despite the comments his Honour made in the judgment.

10. The plaintiffs also seek $9,580 for work done in relation their application for security for costs against ENA in respect of its cross-claim which they say are costs in the cause of ENA’s cross claim (see [2018] NSWSC 1063 at [102]) (Item 7). However, the plaintiffs concede they are not yet entitled to recover that money (T.14).

11. Against Mr Sebie, the plaintiffs seek lump sum costs orders in relation to the following Items for which costs orders have been made:

ITEM	DESCRIPTION, PERIOD OF WORK	EXISTING COSTS ORDER	BARRISTER’S COSTS	OTHER COSTS
1	Prepare for and attend hearing on gross sum costs order - 27 January to 1 February 2018	Implicit that Robert Sebie pay plaintiff’s costs (see [2018] NSWSC 22 at [17] (Slattery J))	$4,125	Nil
6	Application by plaintiffs for judgment for possession of Chiswick Property - 14 May to 20 June 2018	Robert Sebie pay plaintiffs' costs (see [2018] NSWSC 1063 at [102] (Slattery J))	$22,863	$330 for solicitor $1,003 for disbursements
8	Application by plaintiffs for writ of possession - 2 August to 9 October 2018	Robert Sebie pay plaintiffs' costs (see [2018] NSWSC 1492 at [1] (Kunc J))	$25,024	$844 for disbursements
10	Defence by plaintiffs to application by Robert Sebie to stay execution of writ of possession - 28 November to 7 December 2018	Robert Sebie pay plaintiffs' costs (see [2018] NSWCA 333 at [32] (Beazley P))	$9,625	Nil
11	Application by plaintiffs for payment of gross sum costs amount of $266,000 out of funds in court and for payment of interest on costs - 21 to 24 May 2018, 6 to 27 June 2018, 9 to 12 December 2018, 21 February 2019	Robert Sebie pay plaintiffs' costs (see [2019] NSWSC 115 at [37] (Slattery J))	$17,211	$370 for disbursements
12	Defence by plaintiffs to application by Robert Sebie for stay of payment out order - 26 March 2019	Robert Sebie pay plaintiffs' costs (Orders of Lindsay J, 26 March 2019)	$1,284	Nil
13	Defence by plaintiffs to application by Robert Sebie and ENA for stay of payment out order - 27 March to 4 April 2019	Robert Sebie and ENA pay plaintiffs' costs (Orders of Lindsay J, 4 April 2019)	$6,876	Nil
16	Defence by plaintiffs to application by Robert Sebie for certain orders - 30 July to 2 August 2019	Robert Sebie pay plaintiffs' costs (Orders of Lindsay J, 2 August 2019)	$4,491	Nil
Total	$94,046

12. Again, the plaintiffs submit that they should receive either all or 85 per cent of these costs on the basis that the costs relate to core legal work and taking into account Mr Sebie’s conduct over the course of the proceeding.

13. Mr Sebie also provided written submissions late on the day of the hearing. They were in “draft mode” and alleged fraud against Mr Pham and Mr Zipser. Mr Sebie asserted Mr Zipser had overcharged. He disputed that Items 1, 8, 10 and 11 are subject to existing cost orders of this Court and submitted that the costs in Items 6, 8 and 13 were ordered against multiple defendants and should therefore be shared. With respect to Item 12, he said there was second order made on the same day with no order as to costs. He also disputed Item 16, stating there was an order “but only part costs”.

14. In response, the plaintiffs submit that when a costs order is made by a judge against two or more parties each party is jointly and severally liable in respect of those costs. They say Mr Sebie did not ask the Court to apportion the costs when the relevant orders were made though it was open to him to do so. They further submit that the principles of equity would permit Mr Sebie to apply for a contribution from the other parties liable to pay costs.

15. In relation to other costs incurred by the plaintiffs since 27 January 2018, the plaintiffs seek the following costs against Mr Sebie:

ITEM	DESCRIPTION, PERIOD OF WORK	EXISTING COSTS ORDER	BARRISTER’S COSTS	OTHER COSTS
3	Application by plaintiffs to remove caveats lodged in name of Ramzy Sebie and Maizen Zraika	Ramzy Sebie and Maizen Zraika pay plaintiffs’ costs (see [2018] NSWSC 567 at [48] (Slattery J); [2018] NSWSC 566 at [37] (Slattery J))	$16,331	$861 for disbursements
4	Application by plaintiffs to obtain restraining order against Registrar General- 12 to 14 April 2018	No existing costs order	$8,020	Nil
5	Legal work to ensure completion of contract for sale on 2 May 2018 over opposition and non-cooperation by Robert Sebie- 27 March to 11 April, and 2 May	No existing costs order	$12,849	$5,115 for solicitor $261 for disbursements
14	Application by plaintiffs to evict Robert Sebie from the Chiswick Property following break in and occupation by Robert Sebie- 28 April to 22 May 2019	No existing costs order	$7,836	$842 for disbursements
15	Application by plaintiffs for quantification of interest on costs and payment out of funds in court – 26 February to 13 June 2019	Plaintiffs’ costs reserved (see [2019] NSWSC 522 at [13]; orders of Registrar Hedge, 19 June 2019)	$8,386	Nil

16. In relation to Item 3, the plaintiffs say that, while the existing costs order is against Ramzy Sebie and Maizen Zraika, Mr Sebie caused the caveats to be lodged over the Chiswick property (see findings of Slattery J in Pham v Enterprise ICT Pty Ltd (No 9) [2018] NSWSC 1657) at [18]-[23]).

17. The plaintiffs submit that Item 4 relates to work necessary to prevent Mr Sebie continuing to cause caveats to be lodged over the property, although they did not at the time ask for a costs order against Mr Sebie (T.39).

18. In relation to Item 15, reserved costs, the plaintiffs rely on UCPR r 42.7(1) which states that “unless the court orders otherwise, the costs of any application or other step in any proceedings, including (a) costs that are reserved… are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.” The plaintiffs submit that for each of the principle contests between the plaintiffs and Robert Sebie in the 2015 proceedings, the Court has ordered that Robert Sebie pay the plaintiffs’ costs. They also submit that they succeeded on their claim for quantification of interest and costs should follow the event.

19. Finally, to the extent they are successful, the plaintiffs seek their costs of the present applications (these were Items 18, 19 and 20 in Mr Zipser’s table). They would seek the costs of defending ENA’s costs and stay applications against ENA. However, if I was to decide they were entitled to costs against Mr Sebie and ENA in relation to their costs application, they would ask for those costs to be added to the lump sum costs order against Mr Sebie (T.42).

20. The plaintiffs seek interest on costs pursuant to s 101 of the Civil Procedure Act 2005 (NSW).

ENA’s costs application

21. ENA submits that Young AJA struck ENA out of the plaintiffs’ proceeding on the basis that the suit was one for specific performance but ENA was not a party to the relevant contract (citing Tasker v Small (1837) 3 Mylne and Craig Reports 63; 40 ER 848). Its costs were reserved (see [8] of Young AJA’s judgment). It also submits that while there is only one invoice in the evidence totalling $8,496.22 (Ex.RJ2 p 11), I should infer, from a $7,000 debit from ENA’s bank account in favour of “LAC Lawyers Legal” (Ex.RJ2 p 15), the absence of any disbursement for counsel on the invoice that is in evidence, and Young J’s observation that ENA was represented by counsel (see [6] of his Honour’s judgment), that there was a further invoice of a barrister who appeared in the proceedings which brings the total amount of ENA’s claimed legal costs to $15,496.22.

22. The plaintiffs submit they should not be ordered to pay ENA’s costs of its appearance before Young AJA. They say Young AJA declined to make such an order despite ENA’s express request. They also submit that Young AJA did not suggest that they, instead of Mr Sebie, might be responsible for ENA’s costs. Their application was for specific performance of a contract of sale of the Chiswick property from Mr Sebie to the plaintiffs and an order under s 74MA of the Real Property Act 1900 (NSW) to remove a caveat lodged in the name of ENA over the Chiswick Property. They say that ENA “accepted an invitation from Young AJA to be let out of the proceeding” and “thereby gave away an opportunity to persuade the Court that it had an equitable interest in the Chiswick property”. Following a trial before Pembroke J in April 2017, his Honour ordered the caveat be removed. Yet in 2018, ENA told Slattery J that it wanted to file a cross claim against the plaintiffs to assert, the plaintiffs say, “the claim which it elected in June 2015 not to assert”. The plaintiffs also dispute Young AJA’s reliance on the rule in Tasker v Small and point to ENA’s delay in bringing its costs application which they say has caused deficiencies in the evidence.

23. However, the plaintiffs have indicated that if I am of the view that it is appropriate they pay ENA’s costs, they do not oppose the making of a lump sum costs order. They say that ENA would only be entitled to costs on a party/party basis but submit that there are significant gaps in ENA’s evidence as to the work done by its lawyers and the costs it has actually paid.

ENA’s stay application

24. ENA submits that its payment of the security on 29 March 2019 would in and of itself be sufficient to move the Court to lift the stay. It further submits that the delay did not cause prejudice to the plaintiffs; they are still working out the extent of their interest claim arising from their successful costs order and payment out order. It also says that there is a justiciable controversy as to who is entitled to the balance of the funds that would be left alive if it were unable to prosecute its cross claim and the money would continue to sit in Court. Mr Sebie supported ENA’s case.

25. The plaintiffs submit that the issues ENA seeks to litigate through its cross claim were already determined by Pembroke J in Pham v Enterprise ICT Pty Ltd and Others [2017] NSWSC 446. They say that a central issue in those proceedings was whether there was a secured loan agreement between ENA and Robert Sebie in September 2005 such as to give ENA an equitable interest in the Chiswick Property which might prevent completion of the sale of the Property to the plaintiffs. They submit it would be an abuse of process for ENA to re-litigate them and, on the basis that ENA was a privy of Robert Sebie (who was a party to the proceedings), a res judicata prevents it from doing so. Here, the plaintiffs rely on a 2019 judgment of Berman J in the Family Court in which his Honour stated “ENA is the alter-ego of the husband” (that judgment was anonymised on publication and therefore I do not cite it here).

24. The plaintiffs also submit that ENA’s election to “be let out” of the proceedings before Young AJA gives rise to an Anshun estoppel as the plaintiffs were in those proceedings seeking an order that ENA’s caveat be removed (see above). ENA could have filed a cross claim. They submit there is a risk of inconsistent judgments on the question of whether ENA has an equitable interest in the Chiswick Property arising from a secured loan agreement between it and Robert Sebie.

25. The plaintiffs submit that ENA’s conduct in relation to the consolidated proceedings ultimately determined by Pembroke J in 2017 also gives rise to an Anshun estoppel. They say ENA was aware of the claims in those proceedings. Finally, they submit that Berman J heard and determined the plaintiffs’ defences of Anshun estoppel and abuse of process in 2019 (see AP-3 pp 313-327) and those findings are binding on ENA and the plaintiffs.

26. Ms Musabwasoni also submits that ENA is barred by a res judicata or Anshun estoppel. With respect to the privy issue, she submits that the interests of ENA and Mr Sebie are the same in that each seeks to undo the sale of the property to the plaintiffs. She said the identification between ENA and Mr Sebie arises in Mr Sebie’s constant interventions on behalf of ENA during Court proceedings (as demonstrated by Berman J’s decision); the Family Court’s finding that ENA is the alter ego of Mr Sebie; Pembroke J’s finding that Mr Sebie was a director of ENA for four years and at the time of the “fictitious unsecured loan agreement”; and the many references to ENA in judgments of this Court.

27. Ms Musabwasoni further submits that if ENA is now allowed to run its case it will create oppression on her in circumstances where ENA is committing an abuse of process (UBS AG v Tyne (2018) 265 CLR 77). She says that ENA is Mr Sebie and Mr Sebie’s “fraudulent” case to try and assert the secured loan agreement as having priority failed before Pembroke J who described the purported loan document to be a “fiction”. She submits that there are other proceedings on foot in the Family Court, and the money in Court forms the basis of the property pool in that Court for distribution pending hearing. The present case has been far from just, quick and cheap; Ms Musabwasoni’s life has been on hold, her finances have suffered and a ten-year case in the Family Court is yet to be decided.

28. In response, Mr Stapleton for ENA submits that no estoppel or res judicata arises with respect to the proceedings before Young AJA and Pembroke J on the basis that ENA was not a proper party to those proceedings. He said ENA “didn't have an obligation at any other time until the money was in the bank to actually assert its interest in this money” (TT.53-54).

29. Mr Jemmott provided some additional submissions and materials to my chambers by email on 1 July 2020. Mr Jemmott was it seems attempting to assist the Court by answering questions I raised during the hearing. However, I did not invite the provision of further material and therefore have not taken it into account.

Legal principles

32. I have set out the relevant principles concerning lump sum or gross sum cost orders in several past decisions (see, e.g., Edward Ted Lakis and Anor v Michael Victor Lardis and Anor (No 3) [2018] NSWSC 1296 at [52]-[58]; Lawcover Insurance Pty Ltd v Muriniti and Newell [2018] NSWSC 558 at [6]-[10]; and most recently Wong v Van Vlymen [2020] NSWSC 841 at [106]-[112]).

33. In summary, section 98(4)(c) of the Civil Procedure Act 2005 (NSW) permits the Court to order payment of costs in a specified lump sum instead of assessed costs. The discretion is wide and the order may be made whenever the circumstances warrant it (Harrison v Schipp (2002) 54 NSWLR 738 at [21] (‘Harrison’); Hamod v The State of New South Wales [2011] NSWCA 375 at [813] (‘Hamod’)). With respect to determining the lump sum, the Court is to take a broad-brush approach (Harrison at [22], [33]).

34. In Hamod, Beazley JA (as her Honour then was) pointed out that the costs ordered should be based on an informed assessment of the actual costs having regard to the information before the Court. The approach to be taken in arriving at the estimate must be logical, fair and reasonable. However, the exercise will necessarily be impressionistic and may involve a “discount of the costs actually incurred or estimated, in order to take into account the contingencies that would be relevant in any formal costs assessment” (at [820]).

35. Experience, I think, has shown that a discount of 10-30% is typically appropriate (see Ross v Padget [2016] NSWSC 1851 at [16] and [21]; Fisher-Pollard by her tutor Fisher-Pollard v Fisher-Pollard [2018] NSWSC 807). Stevenson J adopted this approach in Berry Rural Co Operative Society Ltd v Sepak Industries Pty Ltd (No 4) [2018] NSWSC 1902 (at [6]).

36. However, as Mr Zipser pointed out, Brereton J in Hancock v Rhinehart(Lump sum costs) [2015] NSWSC 1640 stated (at [57]):

While it is undoubtedly the usual practice of the court when making a lump sum costs order to apply a discount for the reasons mentioned, that does not mean that the Court must apply a percentage discount to the sum sought by the successful party, and the Court "must be astute not to cause an injustice to the successful party" by applying "an arbitrary 'fail safe' discount on the costs estimate submitted to the court". Thus if the court can be confident that there is little risk that the sum includes costs that might be disallowed on assessment, the case for a discount is seriously undermined.

37. Ultimately, within the broad brush approach, and absent any expert evidence, I must have regard to the particular evidence in the case and my own experience.

38. With respect to the existing costs orders that were made against ENA and Mr Sebie, the position is that when a costs order is made against two or more parties, each party is jointly and severally liable in respect of those costs. This was explained by McLelland CJ in Eq in Barclays Australia (Finance) v Mike Gaffikin Marine (1996) 21 ACSR 235 at 238:

It is in my opinion incontestable that (subject to the rule against double satisfaction) a judgment or order for the payment of money against two persons jointly can be enforced against either or each of them individually: see eg in relation to costs orders Ex parte Bishop (1803) 8 Ves Jun 333; 32 ER 383; (1838) CP Cooper 262; 47 ER 497; Ryan v South Sydney Junior Rugby League Club [1975] 2 NSWLR 660; (1974) 3 ACLR 486; Thiess Watkins White Construction v Witan Nominees [1992] 2 Qd R 452; and in relation to other judgments or orders Miller v Myn n 1859 1 E1 & El 1075; 120 ER 1213; Re Low [1895] 1 QB 734; Re a Debtor [1936] 1 Ch 292; D J Colburt & Sons Pty Ltd v Ansen (1966) 85 WN (Pt 1) (NSW) 64. This does not depend on any implication that a money judgment or order against two persons is to be interpreted as joint and several, rather than as merely joint. The distinction between a joint liability of two persons and a joint and several liability of those persons has no significance in the context of a judgment or order against both those persons. Even in a contractual context, a joint (and not several) liability of two persons under a contract may be enforced against only one of them by action (subject to a discretionary power in the court, to require the party jointly liable to be added as a defendant to the action or to stay the proceedings until that party is added) (Halsbury's Laws of England, 4th ed, vol 9 paras 616 and 617, Glanville Williams Joint Obligations at pp 33-4, Supreme Court Rules Pt 8 r 5(2), King v Hoare (1844) 13 M & W 494 at 505; 153 ER 206 at 210; Re Hodgson (1886) 31 Ch D 177 at 188-9 per Bowen LJ; Norbury Natzio & Co v Griffiths [1918] 2 KB 369). Principle and authority alike support the simple proposition stated by Abbott J in Richards v Heather (1817) 1 B & Ald 29 at 35, 106 ER 11 at 13:

“By the law of England, where several persons make a joint contract, each is liable for the whole, although the contract be joint.”

39. The Court has a discretion whether or not to lift the stay. In general, a stay may be lifted where proper grounds can be shown or where it is just and proper to do so (see Hutchinson v Nominal Defendant (1972) 1 NSWLR 443). In that case, Isaacs J said (at 447-448):

A judge has power to vary, discharge or suspend any order made by any other judge where, for example, the order was conditional and the conditions have been fulfilled, necessitating some formal order, or circumstances arise which warrant in the judge's view a cessation of the continuance of the order as earlier made. Such power is an inherent power of the court or judge and any such variation, discharge or suspension is not in any sense an appeal from the order made by an earlier judge, because it does not proceed upon any supposed error in the initial making of the order. It predicates the validity of such an order and deals solely with the question as to whether there is established such change of circumstances that it is just and proper that the further continuance of the order should be varied, suspended or discharged.

40. As I have outlined, the plaintiffs and second defendant base their opposition to the lifting of the stay on the doctrines of res judicata, Anshun estoppel and abuse of process. Despite their common underlying basis, there are technical legal distinctions between these doctrines (see discussion in my previous judgment Telesto Investments Limited v UBS AG [2013] NSWSC 503 at [172]-[259] (‘Telesto’)). In Jackson v Goldsmith (1950) 81 CLR 446 (at 466 and 467) Fullagar J said in relation to res judicata:

where an action has been brought and judgment has been entered in that action, no other proceedings can thereafter be maintained on the same cause of action.

...

Where the plea is of res judicata, only the actual record is relevant. Where the plea is of issue estoppel, any material may be looked at which will show what issues were raised and decided. Reasons given for the judgment pronounced are likely to be particularly important for this purpose.

[My emphasis]

41. In Blair v Curran (1939) 62 CLR 464, Dixon J said (at 532):

the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence...

42. In Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, Gibbs CJ, Mason and Aickin JJ cited both Jackson v Goldsmith and Blair v Curran and said (at 597):

The rule as to res judicata comes into operation whenever a party attempts in a second proceeding to litigate a cause of action which has merged into judgment in a prior proceeding.

43. This statement was subsequently approved by Deane, Toohey and Gaudron JJ in Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 507. Somewhat more recently, in Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245 Handley AJA said (at [106]) that the test for res judicata is whether the cause of action in the later proceedings is in substance the same as that litigated to judgment in the former.

44. In Macquarie Bank Ltd v National Mutual Life Association of Australasia Ltd (1996) 40 NSWLR 543, the Court of Appeal considered the proper approach to be taken to identify the relevant cause of action for the purpose of the doctrine of res judicata. Clarke JA (with whom Priestley JA agreed) reviewed the relevant authorities (at 558-559) and concluded:

What I think is necessary is an examination of the factual circumstances relied upon to establish the right to relief in each case in order to determine whether there is a sufficient identity between them to found the conclusion that the same cause of action was in question in both cases...

45. The plaintiffs and Ms Musabwasoni assert that ENA’s cross claim is barred by res judicata on the basis that ENA was a privy of Mr Sebie. In Carl-Zeiss (No 2) [1967] 1 AC 853, Lord Reid said (at 910):

It has always been said that there must be privity of blood, title or interest: here it would have to be privity of interest. That can arise in many ways, but it seems to me to be essential that the person now to be estopped from defending himself must have had some kind of interest in the previous litigation or its subject-matter.

46. The plaintiffs’ submission must be based on privity of interest. They cited the decision in Effem Foods Pty Ltd v Trawlindustries (1993) 43 FCR 510. Ms Musabwasoni’s submission was put on that basis. She referred to Osborne v Smith (1960) 105 CLR 153. More recently, in Tomlinson v Ramsey Food Processing (2015) 256 CLR 507 (‘Tomlinson’) the High Court re-affirmed the principle governing privity of interest stated and applied by Barwick CJ in Ramsay v Pigram (1968) 118 CLR 271. French CJ, Bell, Gageler and Keane JJ said (at 515-523):

17 That principle, in the language of Barwick CJ, is that the “basic requirement of a privy in interest is that the privy must claim under or through the person of whom he is said to be a privy” (31). It is not argued that some wider principle, along the lines of that which has since come to be adopted in the United Kingdom (32) or New Zealand (33) or Canada (34), should now be adopted in Australia.

…

31 Barwick CJ’s explanation of the application of that statement of principle in Ramsay v Pigram is useful in illustrating its content. The result was to deny that the Government of New South Wales, then sued by the respondent for damages in negligence arising out of a collision with a police car, was privy in interest with the police officer driving that car, who had earlier sued the respondent for damages in negligence arising out of the same collision. His Honour explained (68):

“In every respect the action between the respondent and the police officer was personal to each of them, neither being in any sense in relation to the action or any of the issues involved in it, representative of another. Nor can it be said that the Government in any sense claims under or in virtue of the police officer or of any right of his, or that it derives any relevant interest through him.”

32 It is important to recognise that Barwick CJ’s explanation of the application of his statement of principle had two limbs. The conclusion that the Government was not privy in interest with the police officer was based on the absence of either representation of interest or derivation of interest.

33 Consistently with the rationale for the principle, the explanation demonstrates that a party to a later proceeding (A) can be privy in interest with a party to an earlier proceeding (B) on either of two bases. One basis is that A might have had some legal interest in the outcome of the earlier proceeding which was represented by B, or that B has some legal interest in the outcome of the later proceeding which is represented by A. The extent to which the representation by A or B will be sufficient to bind the other is the critical issue which will be explored later in these reasons. The other basis is that, after that earlier proceeding was concluded by judgment, A might have acquired from B some legal interest in respect of which B would be affected by an estoppel which A then relies on in the later proceeding.

34 Other bases on which a person might potentially be privy in interest with a party need not be explored. For present purposes, it is sufficient to focus on one operation of the first basis illustrated by the application of the principle in Ramsay v Pigram: where A has a legal interest in the outcome of the earlier proceeding which was represented by B.

35 Subsequent applications of the principle in Ramsay v Pigram have for the most part correctly emphasised that the interest of the privy must in each case be a legal interest: an economic or other interest on the part of A in the outcome of the earlier proceeding is insufficient. Those applications have also correctly emphasised that, absent a legal interest, such influence as A might have had over the conduct of the earlier proceeding is irrelevant even if that influence amounted to control…

…

37 The first strand of the reasoning in [Young v Public Service Board [1982] 2 NSWLR 465] illustrates that a person does not become bound by an estoppel by reason of a party having represented legal interests of that person in an earlier proceeding merely as a consequence of that party having lawfully asserted a claim which, if accepted, would have resulted in a determination enhancing or enforcing a legal entitlement of the person. In the absence of the person having authorised the assertion of the claim, the representation must at least have been of such nature as to have protected the person from being unjustifiably subjected to an unwanted estoppel.

38 Why that should be so is not difficult to explain. It is a principle at the core of our legal system that a party claiming or denying the existence of a legal right or obligation should have an opportunity to present evidence and arguments to establish the facts and law on which the claim or denial is founded. There are countervailing considerations, some of which operate to create exceptions to that principle. Finality and fairness, including maintaining the certainty of past adjudicated outcomes and ensuring the predictability of future adjudicated outcomes, are amongst those countervailing considerations, and the estoppels informed by those considerations are amongst the exceptions to the principle. The operation of an estoppel, it must be remembered, is to preclude the assertion in a subsequent proceeding of what is claimed to be the truth.

[My emphasis]

47. Turning to Anshun estoppel, the High Court in Port of Melbourne Authority v AnshunPty Ltd (1981) 147 CLR 589 at 598 referred with approval to the principle expressed Sir James Wigram V.C. in Henderson v Henderson (1843) 3 Hare at 115:

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

48. Their Honours then stated at 602-604:

In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding.

...

It has generally been accepted that a party will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment.

...

The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgments is obviously an important factor to be taken into account in deciding whether the omission to plead can found an estoppel against the assertion of the same matter as a foundation for a cause of action in a second proceeding. By "conflicting" judgments we include judgments which are contradictory, though they may not be pronounced on the same cause of action. It is enough that they appear to declare rights which are inconsistent in respect of the same transaction.

[My emphasis]

49. As I noted in Telesto, a question of Anshun estoppel may also arise where a matter is not brought as a cross-claim, or where a matter is not brought as a claim in earlier proceedings but is later raised as a cause of action (Boles v Esanda Finance Corporation Ltd (1989) 18 NSWLR 666 at 673; Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245 at [41], citing Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287 and Zavodnyik v Alex Constructions Pty Ltd (2005) 67 NSWLR 457). Although, the matter must have been so relevant in the first proceedings that it was unreasonable not to raise it or rely on it (Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245 at [3]-[4] per Allsop P and at [52] per Giles JA; see also Tomlinson at 518 [22]). And as McColl JA (with whom other members of the Court of Appeal agreed) stated in Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231 at [83], “an Anshun estoppel will apply even though the parties to the second proceeding are not the same as the first”.

50. Finally, the Court has the power to stay proceedings for an abuse of process so as to safeguard the administration of justice, to protect the integrity of the court’s process or to prevent serious and unjustified prejudice or harassment (Rogers v The Queen (1994) 181 CLR 251 at 286 per McHugh J; Ridgeway v The Queen (1995) 184 CLR 19 at 74-75 per Gaudron J; Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at [9]-[16] per Gleeson CJ, Gummow, Hayne and Crennan JJ).

51. The High Court recently considered the doctrine of abuse of process in UBS AG v Tyne (2018) 265 CLR 77. Kiefel CJ, Bell and Keane JJ said (at 95-96):

43 This is not to say that in England or here the circumstance that a claim could have been raised in earlier proceedings makes the raising of it in later proceedings an abuse of process (61). It is to recognise that in some circumstances the bringing of a claim which should have been litigated in an earlier proceeding will be an abuse and that that may be so notwithstanding that the later proceeding is not precluded by an estoppel. So much is made plain in Tomlinson (62):

“[I]t has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel. Similarly, it has been recognised that making such a claim or raising such an issue can constitute an abuse of process where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to that earlier proceeding, nor the privy of a party to that earlier proceeding, and therefore could not be precluded by an estoppel.” (Footnotes omitted.)

44 The circumstance that the Trust’s claim has not been heard on its merits, and that a fair trial may still be had, cannot be determinative of whether the proceeding is unjustifiably oppressive to UBS or whether its continuance would bring the administration of justice into disrepute.

45 The courts must be astute to protect litigants and the system of justice itself against abuse of process. It is to hark back to a time before this Court’s decisions in Aon and Tomlinson and the enactment of s 37M of the FCA to expect that the courts will indulge parties who engage in tactical manoeuvring that impedes the “just, quick and efficient” resolution of litigation. To insist, for example, on “inexcusable delay” as a precondition of the exercise of the power to stay proceedings as an abuse of process is to fail to appreciate that any substantial delay is apt to occasion an increase in the cost of justice and a decrease in the quality of justice. And other litigants are left in the queue awaiting justice. Further, there is no reason why the courts should tolerate attempts to manipulate other parties and the courts themselves by the deployment, by a single directing mind and will, of different legal entities under common control for such a purpose. The concern is as to whether the processes of the court are being abused. Given that this is the central concern, the circumstance that the abuse is effected by the use of multiple entities orchestrated by a single mind and will is no reason to tolerate it.

52. The plaintiffs also referred to Clearly v Jeans (2006) 65 NSWLR 355 (‘Jeans’), in which Bryson JA (at [45]) quoted from the judgment of Morritt V.C. in Secretary of State for Trade and Industry v Bairstow [2004] Ch 1 (‘Bairstow’):

In case law collected by his Lordship the decision or the aspect of the earlier decision which was under a collateral challenge characteristically related to an issue, whether of fact or law, which the party making the challenge disputed in the earlier proceedings, or would have contended with if the course of events had given him the opportunity. At the conclusion of his review Morritt VC stated propositions which the English cases established...

38 In my view these cases establish the following propositions. (a) A collateral attack on an earlier decision of a court of competent jurisdiction may be but is not necessarily an abuse of the process of the Court … (c) If the earlier decision is that of a court exercising a civil jurisdiction then it is binding on the parties to that action and their privies in any later civil proceedings. (d) If the parties to the later civil proceedings were not parties to or privies of those who were parties to the earlier proceedings then it will only be an abuse of the process of the Court to challenge the factual findings and conclusions of the judge or jury in the earlier action if (i) it would be manifestly unfair to a party to the later proceedings that the same issues should be relitigated or (ii) to permit such relitigation would bring the administration of justice into disrepute.

53. As the plaintiffs point out, the propositions in Bairstow were considered and applied in Five D Pty Ltd v Impact Building Pty Ltd [2007] NSWSC 993, where Harrison AsJ noted (at [26]) that “in Jeans the NSW Court of Appeal adopted the reasoning in Baistow in finding that abuse of process can apply where parties to later civil proceedings were not parties to the earlier proceeding”. In that case, the plaintiff in the second action was a director of the defendant in the first action.

Consideration

The plaintiffs’ costs application

54. Many of the amounts claimed against ENA and Mr Sebie are subject of existing costs orders of this Court. During argument, Mr Zipser referred to the various Items in his table (modified above) which were cross-referenced to his written submissions and evidence. For each Item where there is an existing costs order, Mr Zipser referred me to the past relevant order as well as invoices married up to the particular order. Notably, the plaintiffs were required to pay $250 per hour immediately but the higher rate of $500 per hour if they obtained a costs order in their favour and there are funds or a source available for the costs order to be paid. Those contingencies appear to have been satisfied by the various existing costs orders and the Sebie Supreme Court fund.

55. Neither ENA nor Mr Sebie put on evidence in opposition to the plaintiffs’ lump sum costs application. They made in my view no plausible criticism of the charges made by Mr Zipser or their extent. At the hearing, Mr Sebie sought additional time to put on evidence to challenge the actual quantum of costs. He said he wanted to go through notes he had accumulated for each court appearance, the time each took and the evidence that was provided (T.32). This was refused. Mr Sebie had the plaintiffs’ materials for several months prior to the hearing before me on 26 June 2020, and the evidence he proposed to put on was unfortunately not relevant to my assessment of the reasonableness of Mr Zipser’s fees.

56. I am of the view that it is appropriate to make lump sum costs orders against ENA and Mr Sebie in relation to each amount for which there is an existing costs order. That is, I would make lump sum costs orders in relation to Items 2, 9 and 17 against ENA, and in relation to Items 1, 6, 8, 10, 11, 12, 13 and 16 against Mr Sebie. I would also make a lump sum costs order against Mr Sebie in relation to Item 15. Costs were reserved, however, the plaintiffs ultimately succeeded on their claim for quantification of interest. During argument, Mr Sebie submitted that some of the costs in Items 6, 8 and 13 were ordered against multiple defendants. However, it is open to the plaintiffs to seek these costs from Mr Sebie, and Mr Sebie may later seek a share of those costs from the other defendants (see Barclays Australia (Finance) v Mike Gaffikin Marine (1996) 21 ACSR 235, 238 and the cases cited there).

57. However, I am not prepared to make the orders sought by the plaintiffs with respect to those Items for which there is no existing costs order. The plaintiffs should have sought orders for those costs from the judges that heard the relevant applications at the time. Every decision on costs involves a significant amount of discretion on the part of the trial judge. I am not prepared to delve into past judgments and second guess what those judges have said. Similarly, with respect to Item 3, I am not prepared to disturb existing orders of the Court. The approach to be taken in relation to lump sum applications has to be broad brush and pragmatic.

58. Turning to quantum, I agree with Mr Stapleton’s suggestion that recoverability of 100 or 85 per cent would be too generous for costs payable on the party/party basis. However, I note that most of the costs are barristers’ fees and other disbursements. In my assessment, having regard to the evidence that has been provided, I should apply a discount of 20% to the costs claimed by the plaintiffs against ENA and Mr Sebie which I have allowed.

59. Therefore, in summary, I would make lump sum costs orders against ENA in relation to Items 2, 9 and 17, and against Mr Sebie in relation to Items 1, 6, 8, 10, 11, 12, 13, 15 and 16, applying a 20 per cent to each amount. However, I would refuse to make lump sum costs orders in relation to Items 3, 4, 5 and 14. I note during argument the plaintiffs agreed they were not yet entitled to recover the costs in Item 7 which relate to work done in respect of ENA’s cross claim. Items 18, 19, 20 relate to the present applications and I would hear the parties further in relation to those costs.

60. I would also order that ENA and Mr Sebie should pay interests on costs pursuant to the s 101(4) of the Civil Procedure Act at the prescribed rate. This is the ordinary position against which no submissions have been made and reflects the compensatory purpose of s 101 (see Ritchie's Uniform Civil Procedure NSW [s 101.10]; Doppstadt Australia Pty Ltd v Lovick and Son Developments Pty ltd (No 2) [2014] NSWCA 158 at [403]; see also McKeith v Royal Bank of Scotland Group PLC [2016] NSWCA 260 at [52]–[60] where the previous s 101(4)-(5) is discussed). The plaintiffs seek interest on costs from the date on which the costs were paid. That is the default position under the previous s 101(5) which applies to proceedings commenced prior to 25 November 2015. Under the current s 101(5), the default position is that interest is payable “from the date the order was made or any other date that the court orders”. The parties did not address me on the question of which version of the provision is applicable and I would hear them further as to the date from which interest should run.

ENA’s costs application

61. Young AJA struck ENA out of the plaintiffs’ proceedings on 12 June 2015 because, on the authorities, and on the circumstances before his Honour, ENA was not a proper party. The plaintiffs did not appeal this decision, and at the time, costs were reserved. In my view, it is entirely appropriate that the plaintiffs be ordered to pay ENA’s costs thrown away as a result of being improperly joined.

62. Mr Stapleton invited me to infer that the total costs incurred by ENA in relation to these proceedings were $15,496.22 rather than $8496.22, there being $7000 in counsel’s fees for which there is no invoice. Whilst it may be accepted from the bar table and some comments made by Young AJA in his Honour’s judgment that counsel was retained, I am not satisfied that ENA has discharged its onus in relation to what counsel’s fees were and how much it actually paid. There was for example no contemporaneous support or affidavit by counsel concerning the time spent or work done. I would I think be left to speculate as to precisely what work was done. Proper records should be kept and there was no excuse proffered as to why they were not.

63. With respect to the $8496.22 amount, for which there is an invoice, I am satisfied this is an appropriate case for a lump sum costs order. However, I would also apply a 20 per cent discount to this amount. I am also of the view that the plaintiffs should pay interest on these costs at the prescribed rate.

ENA’s stay application

64. ENA wants to assert that it advanced loans to Mr Sebie to purchase the Chiswick Property which were secured by charges over the Chiswick Property, and therefore that it has an equitable interest in the funds held in Court. In the 2017 proceedings, Pembroke J was required to determine whether the plaintiffs’ interest in the Chiswick Property was defeated by a transfer of that property to Enterprise ICT, and if not, whether the plaintiffs were entitled to the order for specific performance sought against Mr Sebie, in addition to other relief (see Pham v Enterprise ICT Pty Ltd and Others [2017] NSWSC 446 at [56], [58]).

65. The transfer to Enterprise ICT came about following proceedings commenced by ENA against Mr Sebie in which ENA sought possession of the Chiswick Property on the basis of Mr Sebie’s default under the alleged loan agreement (see [29]). Those proceedings were concluded one month later by consent orders, including apparently an order that ENA Development have possession of the Chiswick land (see [33]). Pembroke J then recorded (at [34]) that:

A fortnight later, a strange document was created described as ‘Deed of Arrangement Between ENA Development and Enterprise ICT Pty Ltd’. It was signed by Rose Sebie as a director of ENA Development and Richard Sebie as director of Enterprise ICT. It provided that ENA Development will transfer the property at Chiswick to Enterprise ICT and that although the value of the transfer will be calculated at $2.04 million, no moneys will be exchanged for the transfer due to the identical shareholders in the companies. It then stated that ENA Development obtains possession of this property as full and final settlement for the loan against the property.

66. Pembroke J held that the transfer to Enterprise ICT was fraudulent within the meaning of ss 42 and 43 of the Real Property Act, the designed object being to “cheat the plaintiffs of their existing rights”, and therefore the plaintiffs’ right under the 2014 contract for sale was not defeated (see [56]). In the course of his Honour’s reasoning, Pembroke J made several findings against Mr Sebie and ENA. See for example:

At [25] and [26]:

On 11 February [2015] Mr Sebie sent an email to Mr Pham and the plaintiffs’ solicitor responding to the 6 February letter requesting confirmation of the existence of the loan agreement …

Accompanying the email was a three page document headed Secured Loan Agreement between ENA Development Pty Ltd as lender and Robert Sebie as borrower … The signatures of the witness to the two signatures on the loan agreement purported to be that of Shelyn Gallado but they were forgeries and she denied that they were her signatures. The signature on behalf of ENA Development Pty Ltd was that of Raymonda Gayed but she did not become a director of ENA Development until July 2007 … At the bottom of the third page there appears a section headed “Required Disclosures” which refers to the National Credit Code, but it did not come into existence until 2010.”

At [30]:

“ENA’s statement of claim [filed in the Supreme Court on 15 May 2015] was verified by an affidavit signed by Richard Sebie … Richard Sebie … had no idea, no recollection, no effective role in the affidavits of the company; and no idea what he was purporting to sign. He was ... acting at the request of [Robert] or with his connivance.”

At [37]:

… Robert Sebie, probably shortly before 11 February 2015, created the alleged secured loan agreement and the alleged 10 February 2015 letter from ENA Development which went with his 11 February email.”

67. While this material is clearly prejudicial to ENA’s position, I do not think that it is enough to give rise to a res judicata. Pembroke J determined that the particular loan agreement relied on by Mr Sebie was falsified, however, his Honour did not it seems to me finally determine the question as to whether ENA advanced loans to Mr Sebie and therefore has an equitable interest in the funds held in Court. The loan document was produced by Mr Sebie on 11 February 2015 in response to a request from the plaintiffs’ solicitors for confirmation of the loan between Mr Sebie and ENA. Pembroke J was not considering the same cause of action as that asserted by ENA in its cross claim. As his Honour stated (at [52]):

I should return to the supposed loan to Mr Sebie. There may well have been some sort of financial arrangement within the Sebie family and one or other of the companies controlled by them, to assist Robert Sebie to purchase the Chiswick property in [2005]. But the documented secured loan agreement on which he based his case was a fiction. I accept that Mr Sebie made a number of ‘repayments’ to ENA Development.

[My emphasis]

68. I am also not satisfied on the material before me that ENA is properly conceived as a privy of Robert Sebie with respect to the 2017 proceedings. Mr Sebie’s interest was in defeating the transfer of the property to the plaintiffs; ENA’s interest is in establishing an equitable interest in the property and seemingly the proceeds of its sale. That interest it seems was not fully represented and determined, neither was it necessary to be determined, at the trial before Pembroke J. As the plurality emphasised in Tomlinson (at [38]), it is a principle at the core of our legal system that a party claiming the existence of a right should have an opportunity to present evidence and arguments on which the claim is founded.

69. In my view, the claim of Anshun estoppel and abuse of process must also fail. ENA was effectively struck out of the 2015 proceedings by Young AJA. Those proceedings were “consolidated” with the plaintiffs’ proceedings against Enterprise ICT and ultimately determined by Pembroke J in 2017. Although it is likely ENA remained aware of what was going on in those proceedings, I am not convinced that the cross claim was “so relevant” to the 2017 proceedings that it was “unreasonable” not to pursue it then, given what I have said about the issues that were before Pembroke J and the initial striking out of ENA. As to the question of abuse of process, there are now significant funds sitting in Court and the Court will have to determine who is entitled to what portion. While these proceedings have had ongoing and significant impact on the lives of those involved, justice requires the matter to be determined at an appropriate stage if it is sought to do so.

70. Further, I am not convinced that the plaintiffs’ and Ms Musabwasoni’s reliance on Berman J’s judgment in the Family Court assists their cause. The issue before his Honour was whether ENA’s cross claim (which was in similar terms as that before this Court) should be struck out on the basis of abuse of process, issue estoppel or Anshun estoppel. Berman J found that ENA was at all material times aware of the issues being ventilated in the Supreme Court and had the opportunity to participate when the interests of ENA may have been adversely affected. His Honour said that it must be an abuse of process for ENA to seek relief in respect of matters that have been heard and determined simply on the basis that they were not a party. However, it seems his Honour’s decision to strike ENA’s cross claim out of the Family Court for abuse of process was predicated to some extent on the basis that the cross claim was already before the Supreme Court. His Honour noted that the Supreme Court is properly seized of the dispute, and that the resolution of the cross claim will determine all outstanding matters as to the Chiswick Property.

68. In early 2018 Slattery J permitted ENA to file its cross claim on the condition that the plaintiffs could promptly apply for an order that ENA provide security in respect of the plaintiffs’ costs, which the Court granted and ordered the proceedings be stayed in the meantime. The stay was contingent upon the payment of security for costs. As far as I am aware there is no argument that the cross claim is unarguable. The security has now been paid, albeit late, and I think it reasonable that the stay is lifted accordingly. Although, I would hear the parties further as to what conditions if any should apply to the lifting of the stay.

Conclusion

72. I would make lump sum costs orders in favour of the plaintiffs against ENA in relation to Items 2, 9, 17 and against Mr Sebie in relation to Items 1, 6, 8, 10, 11, 12, 13, 15 and 16 in Mr Zipser’s table. However, I would discount each amount claimed by 20 per cent. ENA and Mr Sebie should pay interest on costs pursuant to s 101(4) of the Civil Procedure Act, but the dates from which interest should run are yet to be determined. I would also make a lump sum costs order in favour of ENA against the plaintiffs with respect to the amount of $8496.22. I would also discount the total amount claimed by ENA by 20 per cent and order interest on those costs. Finally, I am of the view that in principle the stay on ENA’s cross claim should be lifted.

73. I would hear the parties further as to the precise orders to be made, including the conditions if any that should apply to the lifting of the stay, the date from which interest on the various amounts should run, the cost consequences of the present applications and next steps.

**********

Decision last updated: 19 August 2020