Sywak v Visnic

[2010] NSWSC 222

CITATION:	Sywak v Visnic [2010] NSWSC 222
HEARING DATE(S):	7 August 2009 & 4 September 2000
JUDGMENT DATE :	5 March 2010
JURISDICTION:	Equity
JUDGMENT OF:	Slattery J at 1
DECISION:	Paragraphs 2 and 3 of the defendant's amended notice of motion dismissed.
CATCHWORDS:	EQUITY - general principles - equitable doctrines and presumptions - application for permanent stay of proceedings - cause of action estoppel alleged arising out of findings in prior proceedings - Port of Melbourne Authority v Anshun (1981) 147 CLR 589 estoppel alleged - abuse of process alleged - subject matter of the current proceedings not raised in the prior proceedings - different causes of action in the two proceedings subject matter relied upon in the current proceedings not so relevant to the subject matter of the prior proceedings that it would have been unreasonable not to rely upon it in the prior proceedings - no inconsistency in judgments likely between the current proceedings and prior proceedings - no abuse of process - application dismissed
LEGISLATION CITED:	Corporations Act 2001 (Cth) Uniform Civil Procedure Rules 2005 (NSW) rr 13.4, 46 Civil Procedure Act 2005 (NSW) s 67
CATEGORY:	Principal judgment
CASES CITED:	Batistatos v Roads and Traffic Authority (NSW); Batistatos v Newcastle City Council [2006] HCA 27 Brunsden v Humphrey (1884) 14 QBD 141 Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853 Hunter v The Chief Constable of the West Midlands Police (1982) AC 529 Milan Visnic v Peter Sywak [2007] NSWSC 701 Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 Ramsay v Pegram (1968) 118 CLR 271 Reichel v Magrath (1889) 14 AppCas 665 Trawl Industries of Australia Pty Limited (In liquidation) and Others v Effem Foods Pty Limited (1992) 36 FCR 406 Visnic v Sywak & Ors [2007] NSWSC 701 Visnic v Sywak & Ors [2008] NSWSC 427 Visnic v Sywak [2009] NSWCA 173
PARTIES:	Plaintiff: Peter Orest Sywak Defendant: Milan Visnic
FILE NUMBER(S):	SC 1146/09
COUNSEL:	Plaintiff: Mr H Stitt Defendant: Mr A Street SC & Mr R Carruthers
SOLICITORS:	Plaintiff: Polczynski Lawyers Defendant: Lander & Rogers Lawyers

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

SLATTERY J

FRIDAY 5 MARCH 2010

1146/09 PETER OREST SYWAK v MILAN VISNIC

JUDGMENT

1 HIS HONOUR: Late in 1999 Milan Visnic lost confidence in his accountant, Peter Sywak. Mr Sywak had failed to honour an arrangement they made in the mid 1990s. Mr Sywak had undertaken to hold shares in four companies on trust for Mr Visnic. Contrary to their prior arrangement Mr Sywak asserted from 1999 that the shares were his own and were not held on trust. Mr Visnic initiated action in the Supreme Court to vindicate his claim to these shares. He was successful in this in a hearing before Brereton J in 2007. He failed in other proceedings for consequential relief before his Honour in 2008 and on appeal to the Court of Appeal in 2009. Now through these proceedings Mr Sywak has launched a counter action against his adversary. Mr Visnic wants to stay Mr Sywak’s counter action. Mr Visnic says that the issues in these proceedings were decided in the principal action before Brereton J. Mr Sywak says they have not been previously decided. That is the issue for determination in this judgment. Before this issue is considered more background is necessary about the long running disputes between Mr Visnic and Mr Sywak. It is difficult to summarise briefly a dispute that has its origins back in the mid-1980s. Nevertheless it is what must be done.

Introduction to the proceedings

2 Mr Visnic and Mr Sywak were both shareholders in each of four companies until the mid-1990s. The companies were and are valuable. They hold real estate in the Western suburbs of Sydney or business plant and equipment. The companies are Adellos Pty Limited (Adellos), Parlamartu Pty Limited (Parlamartu), Castlove Pty Limited (Castlove), and Donlovi Pty Limited (Donlovi).

3 In the mid-1990s Mr Sywak became the sole shareholder in each of the four companies. There was no share register for any of the companies. Mr Sywak’s sole ownership of the shares in them was ascertained from ASIC searches. Mr Visnic alleged he owned half the shares in the four companies. When it emerged that Mr Sywak owned all the shares Mr Visnic asserted that Mr Sywak promised to hold them on trust for him. Mr Sywak continued to deny that Mr Visnic had any entitlement to shares in the four companies.

4 After corresponding with Mr Sywak from 1999 through to 2002, Mr Visnic commenced Supreme Court proceedings in early 2003 (No 1278/03) claiming declarations that Mr Sywak holds half the shares in his name in the four companies on trust for Mr Visnic (the trust proceedings). Mr Sywak also claimed in the trust proceedings an order that the shares be transferred to him and sought rectification of the register of the four companies. Mr Sywak also claimed equitable compensation and relief under the Corporations Act 2001 (Cth) for oppression and in the alternative an order for the winding up of the corporate defendants either for oppression or on the just and equitable ground.

5 After a hearing over many days in 2006, Brereton J made orders in the trust proceedings declaring Mr Visnic entitled at law and equity to half the issued shares in each of Adellos, Parlamartu, Castlove and Donlovi: Milan Visnic v Peter Sywak [2007] NSWSC 701. His Honour also made orders, at [120], that Mr Sywak transfer half the shares in the four companies to Mr Visnic and an order rectifying each of their share registers. His Honour also found as a consequence of these orders, at [121 – 122], that each of the four companies was deadlocked with a total breakdown of trust and confidence between the shareholders. As no evidence was adduced in the trust proceedings that the parties wished to buy one another out, his Honour acceded to Mr Visnic's request that a winding up order be made in respect of each of the companies. He appointed a liquidator to them. His Honour left open the possibility that Mr Visnic may have suffered loss as a result of Mr Sywak breaching his duties as a fiduciary in holding the shares. He reserved liberty to apply as to whether an inquiry as to damages would take place. Mr Sywak brought but later discontinued an appeal against the result in the trust proceedings.

6 After his success in the trust proceedings Mr Visnic took advantage of the liberty to apply granted by Brereton J. In October 2007 he filed a motion seeking an inquiry under the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") r 46 to determine what equitable damages were suffered by Mr Visnic as a result of Mr Sywak’s breaches of fiduciary duty (the inquiry motion). Mr Sywak sought to strike out the inquiry motion under r 13.4 UCPR, on the basis that it could not possibly succeed.

7 This time Mr Sywak was successful. In March 2008 Brereton J found that there was no identifiable loss to Mr Visnic from any breach of fiduciary duty by Mr Sywak: Visnic v Sywak & Ors [2008] NSWSC 427. His Honour found on the basis of cases such as Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204, that within the scope of the complaint being brought by Mr Visnic, that Mr Sywak was only required to account to the companies rather than to Mr Visnic himself. His Honour declined to order an inquiry.

8 Mr Visnic did not accept this result. He appealed (the appeal proceedings) but was unsuccessful: Visnic v Sywak [2009] NSWCA 173. The appeal proceedings were determined on 1 July 2009.

9 In the meantime, whilst the appeal proceedings were pending Mr Sywak launched the present proceedings (No 1146/09) in January 2009. The subject matter of the present proceedings will be explained below in the context of the wider disputes between the parties. After the appeal proceedings were determined the present proceedings became active. In August 2009 Mr Visnic filed an amended motion seeking security for his costs of the proceedings. The amended motion also sought dismissal of the present proceedings under r 13.4 UCPR as an abuse of process and a stay pursuant to s 67 Civil Procedure Act 2005 (NSW). That amended motion was heard before me on 7 August 2009 and 4 September 2000.

10 The matters at issue on the amended motion require greater understanding of the disputes between Mr Sywak and Mr Visnic. The next section of this judgment explains relevant parts of those disputes. The material in this section of the judgement is a summary of uncontroversial fact drawn from the judgement of Brereton J in the trust proceedings. Then the arguments on the amended motion are considered.

The Disputes between Mr Sywak and Mr Visnic

11 Mr Visnic was born in Yugoslavia in 1946 and migrated to Australia in 1970 at the age of 24. He had skills in the metal trade and construction industry in Europe. He continued to deploy those skills in Australia. He became quite successful in doing building work, formwork and in property development. He did not do this alone. He worked through a series of business ventures with five other associates (the business associates) Robert Kusic, Peter Kusic, Slavko Zubovic, Frank Juracic and Milos Vasic. Together they used a number of corporate vehicles to do business. Principal among these were United Formwork and Fixing Pty Ltd, Auburn United Formwork Pty Ltd and Auburn United Concrete Pty Limited. Mr Sywak was involved as the accountant for the business associates from the very earliest time that they worked together.

12 The four companies the subject of these proceedings were originally incorporated to act as investment, business and development vehicles for Mr Visnic and the business associates. Donlovi was incorporated in August 1984 and held developable land at Castle Hill. Adellos was incorporated in November 1984 and held investment property in Narellan. Parlamartu was incorporated in March 1985 and owned real property and the plant, vehicles and equipment for a formworking business.

13 By the mid-1990s relations between Mr Visnic and the business associates had deteriorated. The business associates were alleging that Mr Visnic owed a substantial sum of money to Parlamartu. He denied that he owed anything to Parlamartu. There were threats to amend the articles of Association of the four companies to enable them to exercise a lien over Mr Visnic’s shares to secure repayment of the money they said was owing to Parlamartu. The business associates were prepared to negotiate to sell their interests in the four companies. But they did not want to sell to Mr Visnic because of their prior disputes with him about the money he was alleged to owe Parlamartu. Mr Sywak became the intermediary in negotiations between Mr Visnic and the business associates. Mr Visnic did not want to sever his connection with these four companies and the other corporate vehicles.

14 The negotiating impasse was broken in April 1996 when the business associates agreed to sell their interests in the companies to Mr Sywak. Mr Visnic and Mr Sywak would continue to operate the companies. The business associates would sell their shares to Mr Sywak who agreed to hold 50% of the shares in his name on trust for Mr Visnic. The arrangements differed slightly between the companies but an important common feature was that $280,000 would be paid to each of the business associates for their shares and their loan accounts with the companies cancelled.

15 It was agreed that most of the business associates would be paid their $280,000 at the time that they transferred their shares. Mr Sywak negotiated a different arrangement with two of them, Mr Frank Juricic and Mr Robert Kusic. To assist the deal to go through despite the then lack of ready available cash to buy out all the business associates, Mr Juricic and Mr Kusic agreed that instead of receiving $280,000 upon sale of their shares they would lend back most of it to Parlamartu to be repaid to them within two years. Mr Kusic is Mr Visnic's uncle. He had become concerned about the effect of the ongoing disputes between Mr Visnic and the business associates on his family. He provided vendor finance because he wanted to facilitate the deal.

16 The precise arrangements with Mr Robert Kusic and Mr Frank Juricic are of importance to the current proceedings. They form the foundation of Mr Sywak's statement of claim. The deal with Mr Kusic and Mr Jurisic had the following principal features:

(a) They agreed to transfer their shares in Parlamartu and Adellos to Mr Sywak for $10 per share on 30 April 1996;

(b) They agreed to resign as directors and officers of the companies immediately upon transfer of their shares;

(c) The companies agreed to indemnify each of them against past present and future claims in their capacity as shareholders directors or officers;

(d) Parlamartu was to pay Mr Juricic the sum of $100,000 on 30 April 1996;

(e) Parlamartu was to repay the balance of the loan owing to Mr Juricic ($180,000) and the whole of the amount owing to Mr Robert Kusic ($280,000) by no later than 30 April 1998 (a total of $460,000);

(f) Parlamartu was to pay interest at 8.5% per annum to each of Mr Kusic and Mr Juricic on the moneys owed to them;

(g) Adellos secured the obligations of Parlamartu by granting a second mortgage of property owned by it in Narellan to Mr Juricic and a third mortgage to Mr Robert Kusic; and

(h) Mr Visnic and Mr Sywak jointly and severally guaranteed all the obligations of Mr Sywak, Parlamartu and Adellos under the deed.

17 There were disputes before Brereton J about the circumstances of the making of the 30 April 1996 deed and whether or not Mr Sywak held the shares he received on trust for Mr Visnic. Those disputes were resolved in Mr Visnic's favour. There were in fact two deeds made on this occasion but only one of them contains the guarantee obligations referred to above. That will be referred to as the Deed in this judgment. There were other disputes between Mr Sywak and Mr Visnic resolved by Brereton J in relation to events in 1999. These included disputes about how Mr Visnic ceased to be a director and shareholder of Donlovi and Castlove in 1999. For present purposes though the arrangements of April 1996 are of central focus. It is now appropriate to examine Mr Visnic's arguments on the amended notice of motion.

Pleadings in the Current Proceedings

18 The statement of claim in the current proceedings is not complex, it is sufficiently straightforward that, without additional particulars, it is reproduced below:

“PLEADINGS AND PARTICULARS

1. On 30 April 1996 Robert Kusic, Frank Juracic, Parlamartu Pty Limited (In Liquidation) (ACN 002 903 371) ( Parlamartu ) and Adellos Pty Limited (ACN 002 869 874) ( Adellos) and the plaintiff ( Sywak ) and the first defendant ( Visnic ) entered into a deed for repayment of loans and transfer of shares.


PARTICULARS

Deed for repayment of loans and transfer of shares dated 30 April 1996 ( Deed ).
2. There were express terms of the Deed that:
2.1. Robert Kusic and Frank Juracic ( the Shareholders ) agreed to transfer all of their shares in Parlamartu and Adellos to the plaintiff and the plaintiff agreed to purchase the shares from the Shareholders for the sum of $10 per share upon the date of the deed [clause 1].
2.2 In respect of the loan to Frank Juracic, Parlamartu undertook to pay Frank Juracic the sum of $100,000 on the date of the Deed [Clause 4].
2.3 In respect of the outstanding balance of the loan to Frank Juracic, being $180,000 and the loan to Robert Kusic being $280,000, Parlamartu undertakes to repay the balance of the loan to Frank Juracic and the loan of $280,000 to Robert Kusic in full by or upon the expiry of 24 months after the date of the Deed.
2.4 Interest was payable monthly in arrears in respect of the outstanding balances of the loan to Frank Juracic and the loan to Robert Kusic at the rate of 8.5% per annum commencing one month from the date of the Deed [Clause 5.1].
2.5 Parlamartu and Adellos each guaranteed the obligations of the other of them pursuant to the Deed [clause 9].
2.6 Sywak and Visnic jointly and severally guaranteed all of the obligations of Sywak, Parlamartu and Adellos pursuant to the Deed, including but not limited to repayment in full of the loan amount plus any interest thereon and the indemnity is given by Sywak, Parlamartu and Adellos pursuant to the deed [clause 10].

3. Parlamartu did not make the payments referred to in paragraph 2.2, 2.3 or 2.4 as set out above by the time required or at all.

4. Pursuant to the Deed the plaintiff has made payment to the Shareholders in the aggregate amount of $1,472,254 during the period 1 May 1996 to 12 September 2007.

5. In these circumstances, Milan Visnic, the first defendant is liable to contribute to the payments made by the plaintiff in an amount equal to one-half of the payments the interest paid by the plaintiff being an amount of $736,127.

6. The plaintiff has demanded that the first defendant make payment of the amount of $736,127 but the first defendant has failed, refused or neglected to pay to the plaintiff the amount of $736,127 or any part thereof.


PARTICULARS

Letter Polczynski Lawyers to Thomson Playford dated 4 December 2008.


RELIEF CLAIMED

The plaintiff claims:
(a) $736,127.
(b) Interest.
(c) Costs.”

19 The essential ground of the cause of action relied upon by Mr Sywak in the statement of claim is Mr Sywak’s and Mr Visnic’s joint and several guarantee of all the obligations of Sywak, Parlamartu and Adellos under the Deed: clause 2.6 of the statement of claim. It is then pleaded that Parlamartu did not make the various payments required to Mr Juracic and Mr Robert Kusic under the Deed: paragraph 3 of the statement of claim.

20 It is then pleaded that under the Deed that Mr Sywak had made payments to Mr Juracic and Mr Kusic in amount of $1,472,254. Then a right to contribution for half that amount, $736,127 is pleaded against Mr Sywak.

21 The essential ingredients of the cause of action pleaded in the current proceedings are first, the joint guarantee of the obligations of Parlamartu, second, the failure of Parlamartu to meet those obligations to Mr Juracic and Mr Kusic and third, the fact that Mr Sywak made payments to Mr Kusic and Mr Juracic upon Parlamartu’s failure to make them. Doctrines of contribution then provide the pleaded cause of action by Mr Sywak against Mr Visnic on these facts. The cause of action arises out of Parlamartu’s failure to perform its obligations under the 30 April 1996 Deed.

22 The particulars to paragraph 4 of the statement of claim show that Mr Sywak alleges that he made capital and interest payments to Mr Robert Kusic and Mr Frank Juracic over a lengthy period between May 1996 and September 2007 with the detail of the timing of these payments being set out in the particulars. Thus, the focus of the current pleading is a combination of the joint obligation created on 30 April 1996, Parlamartu’s failure to make payments some two years later and then the making of capital and interest payments over a subsequent ten year period.

Mr Visnic’s Arguments on the Amended Motion

23 Mr Street SC on behalf of Mr Visnic argued for a permanent stay of the present proceedings on the basis, first, that there was a cause of action estoppel preventing the maintenance of the current action, arising out of Brereton J’s decision in the trust proceedings (Visnic v Sywak & Ors [2007] NSWSC 701). He next argued there was also an estoppel preventing the maintaining of the present proceedings on the basis of Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589. Finally it was put that the maintenance of the present proceedings was an abuse of process on the basis of the principles explained in cases such as Reichel v Magrath (1889) 14 AppCas 665 and Hunter v The Chief Constable of the West Midlands Police (1982) AC 529 at 536.

24 I will deal with each of these arguments in turn.

Cause of Action Estoppel

25 To make out estoppel per rem judicatam or “cause of action estoppel” it is necessary to show that the earlier judgment relied upon was a final judgment and that as between the former and present litigation there is an identity of parties and subject matter or “cause of action“: Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853 at 909-10 and Trawl Industries of Australia Pty Limited (In liquidation) and Others v Effem Foods Pty Limited (1992) 36 FCR 406 at 412.

26 There is no issue that Brereton J’s judgment in the trust proceedings was a final judgment. Nor is there any issue in this case, as there commonly is when such applications are brought, as to the identity of parties. Mr Visnic and Mr Sywak are both parties to the trust proceedings and the current proceedings. The point of contest between the parties is whether or not there is an identity of subject matter or cause of action between the trust proceedings and the current proceedings.

27 Mr Visnic submits that at the heart of the trust proceedings is the 13 April 1996 Deed. Mr Street SC points to a number of paragraphs in the judgment of Brereton J to make the point that the Deed is at the heart of his Honour’s reasoning. Mr Street SC specifically points to paragraphs [47] to [50] of the judgment (Visnic v Sywak & Ors [2007] NSWSC 701) which are set out below:

“[47] The transaction was settled by two deeds of 30 April 1996.

[48] By Deed for Repayment of Loans and Transfer of Shares, each of Mr Peter Kusic, Mr Zubovic and Mr Vasic agreed to transfer all their shares in Parlamartu and Adellos to Mr Sywak, who agreed to purchase them for $10.00 per share on 30 April 1996. Parlamartu and Adellos agreed to indemnify each of the outgoing shareholders against any past, present and future actions, costs, damages or other claims or liabilities in respect of which the shareholders might have been liable in their capacity as shareholders, directors or other officers of those companies. Parlamartu agreed to pay to each of those shareholders or as directed the sum of $280,000 on 30 April 1996, upon which each of those shareholders released the companies and their present and future directors and officers from all claims except any in respect of which they were to be indemnified under the deed. Mr Sywak and Mr Visnic each jointly and severally guaranteed all the obligations of Mr Sywak and Parlamartu and Adellos under the deed, including but not limited to repayment in full to each of the shareholders of the loan accounts and performance of the indemnities.

[49] By deed for deferred repayment of loans and transfer of shares, each of Mr Robert Kusic and Mr Juracic agreed to transfer their shares in Parlamartu and Adellos to Mr Sywak, who agreed to purchase them for $10.00 per share on 30 April 1996. Each of those shareholders agreed to resign as directors and other officers of the companies immediately upon transfer of their shares. The companies undertook to indemnify each of them against any past, present and future actions and claims in their capacity as shareholders, directors or other officers. Parlamartu was to pay Mr Juracic the sum of $100,000 on 30 April 1996. Parlamartu was to repay the balance of the loan owing to Mr Juracic ($180,000) and the whole of that owing to Mr Kusic ($280,000) by no later than 30 April 1998 (a total of $460,000). Parlamartu was to pay interest at 8.5% per annum to each of Mr Kusic and Mr Juracic on the moneys owing to them. Adellos was to secure the obligations of Parlamartu and itself by granting a second mortgage of property owned by it in Cobbitty Road Narellan to Mr Juracic and a third mortgage to Mr Kusic. Mr Sywak and Mr Visnic jointly and severally guaranteed all of the obligations of Mr Sywak, Parlamartu and Adellos under the deed.

[50] In connection with the settlement, at a shareholders extraordinary meeting of Adellos and Parlamartu on 30 April 1996, F. Juracic, R. Kusic, P. Kusic, M. Vasic and S. Zubovic resigned as directors, and the transfer of their shares to Mr Sywak was approved. Mr Visnic, having tendered his apology, was not present in person, and Mr Sywak held his proxy. Adellos granted mortgages to R. Kusic and F. Juracic securing repayment of $280,000 and $180,000 respectively.”

28 Mr Street SC also points to the fact that the repayment of the business associates was expressly the subject of a finding in paragraph [110] of Brereton J’s judgment which provides as follows:

“[110] On behalf of Mr Sywak, it was submitted that there was significance in the circumstance that he contributed some of the funds required to pay out the Business Associates, while Mr Visnic contributed none. However, under the Deeds of 30 April 1996, Parlamartu was primarily liable to pay the Business Associates. The asset which it had available to satisfy that obligation was its Wetherill Park property. Mr Sywak and Mr Visnic both guaranteed Parlamartu’s obligations to the Business Associates. Three of the Business Associates were paid out immediately on settlement. Two of them provided vendor finance and were to be paid out over a period of time. Ultimately, Mr Sywak, to the exclusion of Mr Visnic, appears to have paid out at least some of what was due to the two Business Associates who provided vendor finance. He did so because they sued him. But although he asserts that this is some indication of an intention that he and not Mr Visnic be beneficially entitled, the fact is that Mr Visnic was his co-guarantor, and Mr Sywak had a perfectly good claim for contribution against his co-guarantor to meet that liability. To my mind, far from favouring the view that Mr Sywak alone was to be beneficially entitled, this circumstances tend to favour the view that both were to be beneficially entitled.”

29 Mr Street SC also took me to other paragraphs of that judgment where the deferred payment arrangement to Mr Visnic and Mr Kusic were referred to, see for example paragraphs [41] and [46] of the judgment.

30 The other principal matter Mr Street SC relies upon in this part of the argument is what happened in relation to the inquiry motion. Liberty to apply for an accounting was reserved by paragraph [123] of Brereton J’s judgment in the trust proceedings as follows:

“[123] The plaintiff has sought an order that it be referred to an Associate Judge to inquire into and certify the damages allegedly suffered by reason of the first defendant’s breaches of fiduciary duty, and that the first defendant be directed to file an affidavit accounting for his dealings with the assets and income of the four corporations. I accept that, at least, in respect of the negotiations with the Business Associates, and as the legal owner of shares of which Mr Visnic was a beneficiary, that Mr Sywak was a fiduciary. However, the Statement of Claim identifies no damage resulting from a breach of fiduciary duty, other than depriving Mr Visnic of his shareholdings. It seems to me that the only damage that could have been occasioned to Mr Visnic is loss of the dividend that he might otherwise have received, but there is no evidence that dividends were declared or paid during the relevant period. Accordingly, as presently advised, it seems to me that there is not the necessary evidence of some damage that would be required to refer the matter for an inquiry. The orders that I have already pronounced will restore to him his shareholding. If there has been some breach by Mr Sywak of some obligation owed by him to any of the companies – whether as their accountant or as a director – prima facie, that is a matter for the liquidator to pursue. Lest I have overlooked something in this respect, however, I will reserve liberty to apply if it is desired to pursue an inquiry as to damages.”

31 In his later judgment on the inquiry motion (Visnic v Sywak & Ors [2008] NSWSC 427) Brereton J makes some observations about the concepts that he had referred to in paragraph [123] of the earlier judgment and said the following:

“[3] At the outset, I make some observations about some of the concepts referred to in paragraph 123 of my previous judgment. First, I accepted that, in some limited respects – namely, the negotiations with the business associates and as legal owner of shares of which Mr Visnic was a beneficiary – that Mr Sywak was a fiduciary. Secondly, I recorded that there appeared to be no evidence, nor even allegation, of damage resulting from any breach of fiduciary duty, other than Mr Visnic being deprived of his shareholdings. Thirdly, I identified a possibility that there might have been some breach by Mr Sywak of some obligation owed by him to the companies (as distinct from to Mr Visnic), which would be a matter for the liquidator to pursue.”

32 As the earlier history of the proceedings set out in this judgment records that the inquiry motion was contested by Mr Sywak and in the course of that contest Mr Sywak adduced evidence of a letter of 1 November 2007 which included a record of payments to Mr Kusic and Mr Juracic. Mr Visnic lost the inquiry motion and appealed.

33 Mr Street SC goes on to deal with other matters in support of his claim that there is a res judicata but it is convenient to deal with each of his points as they arise.

34 For cause of action estoppel to operate the cause of action in each proceeding must be the same: Ramsay v Pegram (1968) 118 CLR 271 at 280.

35 Mr H Stitt of counsel on behalf of Mr Sywak points out that the contribution issue the subject of the current proceedings was never raised before Brereton J, that his Honour did not make any judgment about guarantee liabilities arising under the Deed nor about any contribution that might arise from the failure of Parlamartu to make payments under the Deed after 30 April 1996. Mr Stitt’s submission is that Brereton J referred to the Deed in the trust proceedings only to explain how the shares the subject of the litigation were dealt with but he made no other decision about liability as between Mr Visnic, Mr Sywak and Parlamartu arising under the Deed.

36 Mr Stitt’s submission is persuasive. There is nothing in the further amended statement of claim in the trust proceedings nor in any of the submissions in which anything like a cause of action for contribution of the kind brought in the current proceedings is agitated.

37 In the trust proceedings there is no pleaded cause of action for contribution with the elements pleaded in the current proceedings. Nor did Brereton J make any finding about such a cause of action. Thus on a narrow view of “cause of action” a cause of action estoppel cannot arise in the current proceedings.

38 The phrase “cause of action estoppel” is used imprecisely and in several senses. These include:

(i) the series of facts which the plaintiff must allege and prove to substantiate a right to judgment;

(ii) the legal right which has been infringed;

(iii) the substance of the action as distinct from its form: Port of Melbourne Authority v Anshun Pty Limited ( Anshun’s case ) (1981) 147 CLR 589 per Brennan J at 610-613.

Another way of looking at the third sense of the expression is to ask “whether the same sort of evidence would prove the plaintiff’s case in the two actions”: Brunsden v Humphrey (1884) 14 QBD 141 at 146 and Trawl Industries of Australia Pty Limited (In liquidation) and Others v Effem Foods Pty Limited (1992) 36 FCR 406 at 418. Looked at even on this wider basis a cause of action estoppel does not arise here. This is so for the following reasons.

39 First, Mr Stitt’s characterisation of the role of the Deed in the trust proceedings is correct. The only role of the Deed in the trust proceedings was to explain how the shares the subject of the trust proceedings were dealt with, with a view to determining whether or not the shares, when transferred into Mr Sywak’s name, were held on trust by him for Mr Visnic. The terms of the Deed and the actions taken by the parties in transferring shares under it was certainly an important part of his Honour’s reasoning to the conclusion that Mr Sywak held the shares that he obtained on trust for Mr Visnic. Although it must be said that the Deed itself was only one factor in his Honour’s finding that there was a trust. The most decisive factors lay elsewhere and related to the allotment of additional shares in Adellos and Parlamartu: Visnic v Sywak & Ors [2007] NSWSC 701 at [111].

40 The contest in the trust proceedings on the further amended statement of claim was whether Mr Sywak had taken control of the negotiations with the business associates, whether there was a relationship of trust and confidence between himself and Mr Visnic in relation to the negotiations and whether Mr Sywak had promised to hold the shares on trust for Mr Visnic. None of that was concerned with the subject matter of making payments under the Deed or the rights that might arise between the parties to the Deed by the making of such payments. Indeed, but for an essentially unrelated dispute about share transfers in 1999, all of the action in the trust proceedings takes place before 1996 and all of the action in the current proceedings, for contribution, takes place from 1996 to 2007. The Deed of 30 April 1996 is the only point of cross over.

41 Second, looking at the substance of the two actions and asking the question asked by Sir William Brett MR “whether the same sort of evidence would prove the plaintiff’s case in the two actions”, the answer is clearly in the negative. Unless Mr Sywak went into evidence in the trust proceedings to prove his making of payments to Mr Juracic and Mr Kusic under the Deed, an essential part of the evidence to found the cause of action in the current proceedings was absent from the trust proceedings. Indeed, the only point of evidentiary contact between the two is the Deed. Merely because that document has become evidence in the trust proceedings does not mean that all causes of action that might arise under it are thereby decided by Brereton J’s judgment.

42 Third, the findings in Brereton J’s judgment in the trust proceedings do not support an issue estoppel arising. Paragraphs [47]-[50] of Brereton’s judgment, set out above clearly set out the terms of the deeds in a descriptive way together with a description of the execution of transfers of shares in mortgages under the deeds as part of the 30 April 1996 transactions. None of that material is particularly controversial. Paragraph [110] does not take Mr Visnic’s argument any further.

43 Paragraph [110] deals with an argument advanced by Mr Sywak that because he contributed some of the funds to pay out the business associates that is consistent with his case in the trust proceedings that he was a beneficial owner of the shares. His Honour rejects the idea that this is an indication of an intention that Mr Sywak and not Mr Visnic should be beneficially entitled. His Honour observes that the existence of the claim for contribution to meet that liability in fact tends “to favour the view that both would be beneficially entitled”. Importantly, Brereton J evaluates the existence of a possible right of contribution as purely subsidiary to the main argument in the trust proceedings about whether Mr Sywak’s conduct was consistent with exclusive or shared, beneficial ownership of the shares. His Honour was not implying or identifying this as the occasion for such a claim to be brought.

44 Fourthly, reference to the inquiry motion also does not assist Mr Street SC’s argument. There was mention in the inquiry motion of payments by Mr Sywak to Mr Kusic and Mr Juracic. However, the subject matter of the inquiry motion was whether or not there was any evidence of damage to Mr Visnic’s interests from Mr Sywak’s breaches of fiduciary duty, other than the mere deprivation of Mr Visinc of its shareholding, which was resolved by Brereton J’s judgments in the trust proceedings. Mr Sywak was entitled to resist the taking of accounts on the basis that Mr Visnic had suffered no identifiable loss. The mere fact that in resisting the motion, Mr Sywak’s payments were referred to does not decide his rights of contribution against Mr Visnic when he was successful having the motion dismissed. Also it should be observed that if there were an account ordered on the inquiry motion, that the taking of accounts was not the appropriate place to deal with Mr Sywak’s claim for cause of action against Mr Visnic for contribution for payments made under the Deed. The claim for an account was only in respect of Mr Visnic’s alleged losses arising out of Mr Sywak’s established breaches of fiduciary duty. An unresolved claim for contribution could not have been decided during such an inquiry.

45 Fifth, the other matters raised by Mr Street SC do not in my view advance the cause of action estoppel argument any further. Mr Street referred me to paragraphs [36] and [39] of Brereton J’s judgment in the trust proceedings and to the “outline of defendant’s submissions” and to aspects of the defence in the trust proceedings, which refer to Mr Sywak making payments to Mr Kusic and Mr Juracic. But these matters show that in substance rights to contribution under the 30 April 1996 deed were not determined by Brereton J in the trust proceedings.

Anshun Estoppel

46 An estoppel of the kind identified in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, arises when the subject matter relied upon in the second action was so relevant to the subject mater of the first action, that it would have been unreasonable not to rely upon it in the first action: Anshun at [602]. There are a variety of circumstances where a party may justifiably refrain from litigating an issue in one proceeding and yet wish to litigate the issue in later proceedings. Expense, importance of the particular issue and motives extraneous to the actual litigation are examples: Port of Anshun Authority at 603. It has generally been accepted that a party will be estopped from bringing an action which if it succeeds will result in a judgment that conflicts with an earlier judgment: Port of Anshun Authority at 603.

47 Mr Street SC’s argument is that the subject matter of the current proceedings was clearly so closely connected with that of the trust proceedings that Mr Sywak was “required to bring forth his whole case on the disputed ownership including alleged rights of contribution”. Mr Street SC argued that the issue of contribution now raised went directly to the question of the beneficial ownership of Mr Sywak’s shares and that to now allow the issue to be raised, raises the prospect of conflicting judgments.

48 I do not accept Mr Street SC’s submission on this subject for several reasons. First, for the reasons described above in relation to cause of action estoppel, the subject matter of the current proceedings is not so relevant to that of the trust proceedings that it would be unreasonable for Mr Sywak not to advance it by way of cross claim or defence in those proceedings.

49 Secondly, contrary to Mr Street SC’s submission, I do not agree that pursuing the claim for contribution is essential to Mr Sywak’s case in relation to the disputed ownership of the shares. It is difficult to see how bringing or not bringing a claim to contribution could make any difference to the issue of whether Mr Visnic was beneficially entitled to the shares. So much really emerges from Justice Brereton’s judgment at paragraph [110].

50 Third, there is no obvious inconsistency between any judgment for contribution Mr Sywak may obtain against Mr Visnic in the amount claimed, and any aspect of either the judgments in the trust proceedings or on the inquiry motion. The current proceedings do not seek to assert, nor do they need to assert for the cause of action relied upon that Mr Visnic is not the beneficial owner of the shares. Indeed the cause of action for contribution is wholly consistent with Brereton J’s findings that Mr Sywak held 50% of the shares in the four companies on trust for Mr Visnic. The claim for contribution is quite consistent with the substance of the ownership findings made by Brereton J. After all, Mr Sywak is now seeking contribution from Mr Visnic for his proportionate share of payments to vendors in respect of shares now enjoyed in the same corresponding proportion with Mr Visnic.

51 Mr Street SC faintly pressed in support of his Anshun estoppel argument that there were District Court proceedings in which Mr Robert Kusic sued Mr Sywak, Adellos and Parlamartu for payments under the deed. The contention appears to be that Mr Sywak could have brought his current action in those proceedings. The problem for this argument is that those proceedings were brought by Mr Robert Kusic and Mr Visnic was not a party to them. In order to litigate the current proceedings in the District Court proceedings Mr Visnic would have had to be joined as a party. This is not a fertile basis for an Anshun estoppel.

52 Finally, there was much argument in the case about whether or not Mr Sywak did in fact seek to propound a cross claim in the trust proceedings but withdrew it for tactical reasons. In light of my reasoning I do not think that much of this argument matters. This is because even if the cross claim were to have propounded the causes of action now being advanced and it was served but then withdrawn, my findings in relation to Anshun estoppel mean that Mr Sywak was entitled to contemplate but not advance that cross claim in respect of the subject matter of the current proceedings. Whether Mr Sywak actually did so or not does not advance Mr Street SC’s case any further.

53 Mr Stevenson SC who represented Mr Sywak in the trust proceedings did indeed attempt to file a statement of cross claim on 21 February 2006 during the hearing of those proceedings. A copy of the cross claim was tendered before me (exhibit A). That form of cross claim does not seek to advance any contribution cause of action against Mr Visnic under the deed. In a short judgment given on that day per Brereton J declined to allow it to be filed.

Abuse of Process

54 Mr Street SC also submits that these proceedings are oppressive and a vexatious abuse of process. Mr Street SC refers the Court to various passages in Batistatos v Roads and Traffic Authority (NSW); Batistatos v Newcastle City Council [2006] HCA 27; (2006) 226 CLR 256 at [6] which identified the Court’s inherent power to prevent misuse of its procedure which would be manifestly unfair to a party to litigation because it would otherwise bring the administration of justice into disrepute among right thinking people. What amounts to abuse of Court processes is insusceptible of a formulation comprised of closed categories but development continues: Batistatos v Roads and Traffic Authority (NSW); Batistatos v Newcastle City Council [2006] HCA 27; (2006) 226 CLR 256 at [9].

55 In view of my findings in relation to cause of action estoppel and Anshun estoppel it is difficult to see what room is left for the operation of any doctrines of abuse of process. This is not a case where a judgment in the current proceedings will create an inconsistent judgment attracting that category of abuse of process considered in Reichel v Magrath (1889) 14 AppCas 665 and Hunter v The Chief Constable of the West Midlands Police (1982) AC 529 at 536.

56 In light of the failure of Mr Visnic’s contentions that the current proceedings should be barred either by cause of action estoppel or Anshun estoppel I can see no other basis for concluding that the current proceedings are an abuse of process. For these reasons I propose to dismiss paragraphs 2 and 3 of Mr Visnic’s amended notice of motion.

Conclusion and Orders

57 Accordingly, I dismiss paragraphs 2 and 3 of Mr Visnic's amended motion. I will hear any argument as to costs. In the absence of any contest about costs the usual order would be that costs follow the event.

58 This leaves open the claim in order 1 of Mr Visnic's notice of motion, which seeks an order, that Mr Sywak pay security for Mr Visnic's costs of the proceedings. As some time has gone by since I heard argument the evidence as to this issue may have changed. Unless that issue can be agreed between the parties I will determine it. I direct the parties within seven days to bring in short minutes of order to manage the balance of the amended motion.

59 Once the motion is finalised I am prepared to consider giving future directions in the proceedings. As a result of this motion I am now familiar with the matter. It is desirable to finalise a dispute which has now been in existence since at least 1999.

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