Kermani v Westpac Banking Corporation [2012] VSCA 42 (9 March 2012)

[2012] VSCA 42

Homai Kermani v Westpac Banking Corporation [2010] VSC 556 (Davies J)

PRACTICE AND PROCEDURE - Appeal by a plaintiff against order staying proceedings against defendant bank as an abuse of process - The defendant bank had previously taken proceedings against the plaintiff's company (but not the plaintiff) seeking legal costs under a guarantee - Plaintiff's company argued illegality or breach of public policy by the defendant bank - Whether plaintiff's proceedings raised the same or similar issues to those dealt with in earlier proceedings - Whether plaintiff's proceedings an abuse of process - Plaintiff seeking to re-litigate claims and collaterally attack judgment - Appeal dismissed - Rule 23.01(1)(c) Supreme Court (General Civil Procedure) Rules 2005

PRACTICE AND PROCEDURE - whether order permanently staying a proceeding is a final order for the purpose of a leave application.

1 I have had the advantage of reading Robson AJA's draft reasons for judgment and agree with his Honour, for the reasons he gives, that the appeal should be dismissed.

3 The appellant, Dr Homai Kermani, appeals, and if necessary seeks leave to appeal, against orders made in the trial division of this Court that proceedings brought by Dr Kermani against the respondent, Westpac, be permanently stayed and that Dr Kermani pay the costs of the proceedings.[1]

4 Several proceedings have been undertaken in this Court between Westpac (or its predecessor the St George Bank ('SGB'))[2] and Dr Kermani, her husband Mr Boman Irani, and companies controlled by them. The proceedings all arise out of two loans that were made by SGB to Pinnacle Investments Pty Ltd ('Pinnacle'), a company controlled by Dr Kermani and Mr Irani. The first loan for $3.575 million was made in June 2000. To secure that loan, guarantees and securities were obtained from Dr Kermani, Mr Irani and their companies. In 2001, SGB made a further loan to Pinnacle. Dr Kermani's guarantee also secured that loan. In 2002, Pinnacle defaulted on its loans from SGB.

5 As a result of the default, certain properties of the guarantors were sold by SGB. Litigation ensued. I give further details of that litigation below. For present

purposes it is sufficient to say that the guarantors lost and SGB won. SGB obtained orders that their costs be paid on a party and party basis. Under SGB's securities SGB was entitled to be indemnified for its actual costs. SGB took proceedings against the guarantors, other than Dr Kermani, for those costs. Dr Kermani was not sued by SGB for those costs as she had a limit on her guarantee. A company wholly controlled by Dr Kermani, Shalridge Pty Ltd, was sued as a guarantor by SGB.

6 During those proceedings, the defendants became aware that SGB had an arrangement with its solicitors, Herbert Geer and Rundle ('HGR'), that SGB would receive a rebate from HGR of the fees it was charged, or paid to HGR on a sliding scale, depending on the total fees paid in a year in all matters handled by HGR. Dodds-Streeton J determined that the guarantors were liable for the legal costs incurred by SGB and made declarations accordingly. Her Honour referred the determination of quantum to Whelan J.

7 Whelan J held and declared that the costs and expenses incurred by SGB, for which it was entitled to be indemnified, did not include the amount that was repaid to it by the rebate. His Honour ordered that a Master determine the fees and expenses to which SGB was entitled calculated on that basis. The Master determined the amount owing. The guarantors appealed against the determination of the Master to Whelan J who dismissed the appeal.

8 The guarantors appealed to the Court of Appeal against the decision of Whelan J. The Court of Appeal dismissed the appeal. The Court of Appeal found, however, that the arrangements between SGB and its solicitors HGR for the rebate of fees did contemplate the improper extraction of excessive legal costs from the bank's customers, their guarantors, and other third parties liable to indemnify the bank in respect of its legal costs, including the guarantors. The guarantors sought special leave to appeal to the High Court of Australia. Leave was refused.

9 Dr Kermani, who had not been sued for the indemnity costs, then instituted these proceedings against SGB seeking amongst other orders that SGB repay to Dr Kermani the Pinnacle legal costs, being all the costs that the guarantors had been liable for and not just the excess costs charged by SGB to Pinnacle. The order would include repayment of the costs that the guarantors had been ordered to pay SGB by Whelan J.

10 SGB applied for an order dismissing or permanently staying Dr Kermani's new proceeding as an abuse of process on the basis that Dr Kermani was seeking to re-litigate claims already dealt with by Whelan J and the Court of Appeal in earlier proceedings; to attack the judgment of the Court of Appeal collaterally; and because the proceeding was doomed to fail.

11 The learned trial judge concluded Dr Kermani's proceeding was an abuse of process and ordered that the proceeding should be stayed permanently. Dr Kermani appeals or seeks leave to appeal against this decision.

12 For the reasons that follow, I find that Dr Kermani was entitled to appeal and would dismiss the appeal.

The SGB loans and the proceedings by SGB to recover the loans.

13 On or about 22 November 2001, SGB agreed with its customer, Pinnacle, to provide a facility in the form of a 12-month fully drawn advance in the sum of $1.884 million ('the $1.884 million facility') for certain purposes connected with the development of a landfill operation and a sand quarry on land at 600 Sunbury Road, Bulla. Pinnacle was a company controlled by Boman Irani, its sole director. Its shares were held as to 75 per cent by Shalridge Pty Ltd, which was wholly controlled by Dr Kermani, as its sole director and shareholder.

14 In addition to the $1.884 million facility, SGB provided other facilities to Pinnacle including a bill acceptance facility in the sum of $3.575 million on the security, inter alia, of a bank guarantee given by Westpac Banking Corporation on behalf of Tranteret Pty Ltd in favour of SGB in the sum of $2 million.

15 Mr Irani and Dr Kermani were guarantors of the facilities under two deeds of guarantee and indemnity each dated 16 June 2000. The guarantee given by Dr Kermani was limited to the net realisable value of her family home at 10 Marshall Avenue, East Kew, standing in her name, and a parcel of shares which she also owned. The land and shares were mortgaged by her to SGB as part of the securities held by it. SGB also held guarantees given by other companies in the Irani group, including Shalridge, for the facilities provided to Pinnacle.

16 In 2002, Pinnacle defaulted under its facilities with SGB. In September 2002, a demand was served on Pinnacle which was not satisfied. In October 2002, SGB served demands on Mr Irani and Dr Kermani under their guarantees, which were not complied with. On 12 November 2002, an administrator was appointed to Pinnacle. On 26 November 2002, SGB appointed receivers and managers over Pinnacle's assets.

17 On 23 May 2003 SGB, as mortgagee in possession, entered into a contract of sale whereby land belonging to Pinnacle was sold and the proceeds paid towards repayment of the debt to SGB.

18 The following description of the first proceeding is taken from the trial judge's judgment. In the first proceeding the guarantors, including Dr Kermani, made a number of claims against SGB. SGB counterclaimed, seeking declarations that it was entitled to enforce its securities for Pinnacle's debt.

(a) Irani v St George Bank Limited [2004] VSC 260; on appeal Irani & Ors v St George Bank Limited [2007] VSCA 33

19 Only some of the guarantors' claims were litigated in the first proceeding for reasons that are set out in the judgment of Byrne J delivered 27 August 2004.[3] Those claims concerned alleged breaches by SGB of the terms of its arrangements with Pinnacle and the guarantors. The claims that were litigated were dismissed and SGB was successful in its counterclaim. Byrne J declared that SGB was entitled to enforce its securities. An appeal against Byrne J's judgment was eventually dismissed by the Court of Appeal.[4]

(b) Irani v St George Bank Limited (No 2) [2005] VSC 403; Irani v St George Bank Limited (No 3) [2005] VSC 456

20 In the meantime, the remaining claims of the guarantors were tried by Whelan J.[5] Whelan J dismissed those claims and made an order for costs on an ordinary basis against the defendants to the counterclaim. Whelan J refused a late application by SGB to amend its counterclaim to claim the total money sum owed to it under the various finance facilities.[6] Whelan J also declined to award SGB indemnity costs which were claimed on the basis of a clause in each of the guarantees that the guarantor indemnify SGB against all costs that it incurred in exercising or attempting to exercise any power or right in relation to the recovery of guaranteed money. However, his Honour did not shut SGB out from pursuing a contractual claim for recovery of indemnity costs, should that become necessary following the sale of the securities.[7]

Irani v St. George Bank Ltd [2006] VSC 217 (Dodds-Streeton J) (Liability);

Irani v St. George Bank Ltd [2007] VSC 116 (Whelan J) (Quantum)

21 In 2006, SGB commenced the second proceeding against Mr Boman Irani and six corporate defendants including Shalridge (which I will refer to collectively as the guarantors) but excluding Dr Kermani, seeking recovery of indemnity legal costs from them. Dr Kermani was not sued in the second proceeding as her guarantee and liability was limited to recourse to the securities provided by her (namely her house and the shares), SGB had realised these, and had applied the proceeds of sale in reduction of Pinnacle's debt to SGB.

22 By summons dated 5 April 2006, SGB sought final judgment against the guarantors for $2,877,466.99.[8] In May 2006, Dodds-Streeton J heard the application for summary judgment by SGB. The defendants applied to stay the proceeding against them and sought an order that the statement of claim be struck out. The defendants also sought to rely on an amended defence and also to add a counterclaim. SGB contended that many of the defences raised by the defendants had already been determined against them in the first proceeding and relied on res judicata (issue estoppel, cause of action estoppel or Anshun estoppel).

23 Her Honour delivered judgment on 12 May 2006.[9] In substance, her Honour found in favour of SGB save on the issue of the quantum of SGB's claim. The declaration made was that the defendants were liable to SGB for the moneys claimed in the proceeding, the quantum of which was to be assessed (by Whelan J, who had heard the second part of the first proceeding).

24 Her Honour held that the defendants were estopped from relying on the allegations in the defence and counterclaim by reason of issue estoppel, cause of action estoppel or Anshun estoppel. She found that SGB was entitled to summary judgment against the guarantors on liability for SGB's claims.

25 SGB sought judgment for the quantum claimed in the Dobbs certificate[10] tendered in evidence by SGB. Her Honour held that the qualification in the SGB guarantees that, provided that '[e]xcept in the case of manifest error' a statement of an amount in a certificate would be conclusive, entitled the guarantors to take issue with the certificate. She observed that the guarantors had no discovery in the proceeding. She said:[11]

I am, in any event, of the view that it would be inappropriate to order summary judgment as to quantum in circumstances where the defendants, who are guarantors, have not had access or updated access to all relevant documents which would enable them independently to assess whether or not there was manifest error in relation to the calculation of the amount stated in the certificate.

26 Her Honour referred the proceeding (on quantum) to Whelan J. Subsequently, on 4 August 2006, Dodds-Streeton J made declarations in the proceeding that the defendants were liable to SGB for the money claimed, the quantum of which was to be assessed.

27 On 9 October 2006, the trial on the issue of quantum began before Whelan J. SGB relied on an affidavit of a SGB bank officer, Mr. Bateson, sworn 14 September 2006 certificating under cl 9.4 of the guarantee that the sum of $263,094.93 was owing as at 13 September 2006 with interest accruing at the rate of $75.68 per day.[12] Whelan J ruled on a summons issued by the guarantors seeking a direction that SGB justify the calculation in the certificate of 13 September 2006. Whelan J refused the application but did find that SGB had not given proper discovery of the solicitors' bills of costs in an un-redacted form.[13] Whelan J said this would give Mr Abrahams, the expert retained by the guarantors, the opportunity to have another attempt at correlating the bills of costs with the bank statements. Whelan J ordered that SGB provide to the guarantors unredacted copies of all relevant bills of costs by 10 October and he adjourned the trial to 12 October 2006.[14]

28 Prior to this order, SGB had provided only edited copies of documents, which included edited bills of costs. An affidavit of Brian James Arthur from HGR, sworn on 8 October 2006, had exhibited a small quantity of bills of costs (previously discovered) in completely unedited form showing hourly rates of charges. Until then, the basis on which the bills of costs had been calculated was unable to be ascertained by the guarantors. This prompted a query by the guarantors about whether there were any costs agreements in existence to justify the hourly rates, as these were higher than scale costs. SGB's solicitors replied by affidavit that none existed.

29 The trial resumed on 12 October 2006. The hearing proceeded on the basis that no costs agreement existed to justify the hourly rates charged, as opposed to scale costs. The guarantor defendants' case relied on s 93 of the Legal Practice Act 1996 (Vic), which prescribed that a solicitor charge only scale costs in the absence of a costs agreement, or the reasonable value of the services provided. On the basis that there were no costs agreements in existence, the guarantors argued that, in its absence, SGB was only entitled to party and party costs and not indemnity costs.

30 The quantum hearing was adjourned to 30 October 2006. Shortly before the resumption of the quantum hearing, a confidential affidavit of Peter William Nankivell, a partner at HGR, was sworn on 25 October 2006 and revealed that there was a costs agreement between SGB and HGR and that under that agreement HGR were required to pay to SGB a rebate of fees paid by SGB, calculated by a sliding scale. Copies of the relevant documents and a summary of the total rebates paid were produced as confidential exhibits to the Nankivell affidavit. The quantum of the rebates was not specified.

31 On 30 October 2006, Whelan J ordered that copies of the exhibits be provided to Mr Parncutt, counsel for the guarantors, and to Mr Abrahams on a confidential basis and to such other persons whose access to those documents was consented to in writing by the solicitors for SGB.[15] That order was not lifted until the first day of the hearing before Davies J, the trial judge in this proceeding.[16]

32 In the HGR costs agreement for November 2002 to September 2003, HGR says:[17]

As at the time of preparing this letter we have not had the opportunity to review the issue of the rebate of legal fees paid by third parties (ie the borrower or customer). In submitting this Request for Proposal we assume St George will take responsibility for making any disclosures that it is lawfully required to make to third parties to notify that person or entity that St George is to receive a rebate from fees paid by that third party.

33 This did not appear in the subsequent proposals of HGR for subsequent years. This advice was kept confidential until it was disclosed by Hargrave AJA in his judgment, as discussed below. These documents were not able to be inspected by the guarantors' solicitors nor could instructions be obtained where this involved disclosure of the contents of the agreements.

34 Whelan J adjourned the trial to 12 December 2006 where claims of illegality were first raised. Accordingly, it is necessary to closely examine the claims raised by the guarantors before Whelan J as these were articulated in several different ways on various occasions. It is probably fair to say that the claims were not stated with precision. I will set out the claims, SGB's response to them and Whelan J's response to them in date order. The relevant events are as follows:

(a) Guarantors' oral submissions on 12 December 2006;[18]

(b) SGB's supplementary submissions of 21 December 2006;[19]

(c) Guarantors' written submissions in reply of 31 January 2007;[20]

(d) Guarantors' proposed further amended defence and counter claim of 26 February 2007;[21]

(e) Guarantors' oral submissions of 6 March 2007;[22]

(f) SGB's oral submissions of 6 March 2007;[23] and

(g) Whelan J's reasons for judgment of 2 May 2007.[24]

Guarantors' oral submissions on 12 December 2006[25]

35 At the hearing on 12 December 2006, counsel for the guarantors argued that the rebate arrangements contravened ss 317 of the Legal Practice Act 1996 (Vic) and 2.2.9 of the Legal Profession Act 2004 (Vic), as they amounted to income sharing by the solicitor's firm. Counsel relied in particular upon Beneficial Finance Corporation v Conway (No 2)[26] and Hamilton v Haw.[27] The breaches were claimed to arise because the terms of the agreements involved sharing of legal costs with, or payment of legal costs to, an unqualified person.

36 In Beneficial Finance Corporation v Conway (No 2)[28] the Court considered an allegation that the plaintiff received a share of the receipts of the practice contrary to the Legal Profession Practice Act 1968. The plaintiff finance company agreed that the defendant solicitor would work in its offices. An agreement was made for the plaintiff to supply staff and the like to the solicitor. The solicitor agreed to pay the plaintiff 50 per cent of his gross bill of costs in consideration of these services. The parties fell out and the plaintiff took proceedings relying, inter alia, on the agreement. The court of its own volition considered whether the arrangement breached s 94 of the Legal Profession Practice Act 1968. In substance the Act provided that a solicitor was not to share receipts from his practice with an unqualified person. McInerney J ruled that the arrangement did not offend s 94. He explained where an arrangement would breach s 94, as follows:[29]

If the payment represents a portion of the gross or net profits of the practice and is paid on the footing that the payee has a moral title to that or at all events to some portion thereof, because it was he who performed the work which entitled the solicitor to claim the remuneration, or because he retained the solicitor to do that work or because he introduced the clients who engage the solicitor to do the work for which the remuneration (eg profit costs) were paid, or because the payee has an interest as a proprietor or as one of the proprietors of the goodwill of the practice in the carrying on of which the profits were earned - in all these cases, the payee may be regarded as having received a share in the receipts of the practice. But where the payment is made in consideration of the provision of accommodation - eg office space and facilities without which the practice cannot be carried on - eg services of a telephonist and typist, the position is not necessarily the same.

37 In Hamilton v Haw[30] a solicitor agreed to act for a debt collector in recovering debts owed to clients of the debt collector. The solicitor agreed with the debt collector that he would be paid less than scale costs for his professional fees. The debt collector for its part would provide office accommodation, telephone services and similar administrative support for the solicitor. Under the arrangement with the debt collector, the solicitor would bring proceedings in the name of the debt collector's customers and recover his scale costs. The solicitor was to account to the debt collector for the whole of the moneys recovered including the scale fees. The solicitor would be paid the costs that he had agreed with the debt collector that were less than scale costs. The debt collector would therefore receive the excess of costs paid by the debtor over the actual costs it paid to the solicitor

38 The debt collector took proceedings against the solicitor to recover moneys recovered by the solicitor in proceedings in the name of the debt collector's customers. The debt collector's claim partly failed on the ground that the agreement it relied on with the solicitor was illegal or tainted with illegality. The trial judge found the arrangement between the debt collector and the solicitor contravened the provision against sharing a solicitor's legal costs with an unqualified person. On appeal, Adam J overruled the trial judge's decision on this point. However, his Honour said, by way of obiter, that had the agreement been one by which the solicitor was legally bound to the debt collector to include costs beyond those legally recoverable and to pay such costs to the debt collector, such an agreement would have been illegal as one requiring the commission of a fraud on a third party.

39 As it was, his Honour found that the trial judge did not find that the solicitor was bound by the agreement with the debt collector to make excessive demands for legal costs. Adam J thought it sufficient to taint the agreement with illegality that it contemplated the improper exaction of excessive fees from judgment debtors and bound the solicitor to pay these over, if recovered, to the debt collector.

40 Thus, in the view of Adam J an agreement may be tainted with illegality if it involves:

(b) an agreement contemplating the improper exaction of excess fees;

(c) an agreement that requires a fraud on a third party by requiring the improper exaction of excess fees.

41 The guarantors [when before Whelan J] also relied on Bowmakers Limited v Barnett Instruments Limited[31] where it was held that a party is debarred from recovering moneys if his right to recover the moneys is founded on an illegal agreement.

42 The guarantors contended that if SGB had no liability to pay legal costs to HGR under HGR's cost agreement with SGB, then SGB would not be entitled to recover legal costs purportedly charged under HGR's costs agreement with SGB against the guarantors. The guarantors contended that in that event, the guarantors would only be liable to pay reasonable costs under Rule 63.61(2) of the Supreme Court (General Civil Procedure) Rules 2005. In that event the certificate would overstate the costs and could not be relied on.

43 Mr Parncutt who appeared for the guarantors cited from Hamilton v Haw[32] where Adam J said:[33]

As appears from the learned judge's finding read with the evidence upon which it was based the agreement between the parties contemplated that the respondent would issue warrants of distress to include the scale amounts of 10s and 6d professional fees, regardless of the fact that the professional fees claimable by the solicitor did not exceed 2s, and that as between the appellants and the respondent the appellants were to have for their own use and benefit the excessive costs exacted from the judgment debtors.

44 Mr Parncutt then passed over and did not read the passage that immediately followed, that dealt with an agreement requiring the commission of a fraud on third parties, where Adam J said:

Had the contract been one by which the [solicitor] was legally bound to the [debt collectors] to issue distress warrants to include costs beyond those legally recoverable, and to pay such costs over to the [debt collectors], such an agreement would I consider have been illegal as one requiring the commission of a fraud on a third party. It may well be that, on the evidence accepted by the learned judge, the only reasonable conclusion was that the agreement between the [solicitor and debt collectors] went this far, although the learned judge does not appear to have made an express finding that as part of the agreement the [solicitor] was bound to make such excessive demands for professional costs.

45 Mr Parncutt then read the passage that immediately followed:

Be this as it may I would think it sufficient to taint the agreement with illegality that it contemplated the improper extraction of excessive costs from judgment debtors and bound the respondent to pay these over, if recovered, to the appellants.

Contracts are illegal if they involve the commission of a tort, or if the are contrary to public policy. Under either heading I consider it clear that this agreement is illegal.

46 Mr Parncutt then took Whelan J to the passage dealing with courts not lending their assistance to the enforcement of an agreement that is illegal, before taking Whelan J to the Adam J's conclusion:[34]

In the result, I have reached the conclusion not only that the agreement between the parties for the payment by the [solicitor] to the [debt collectors] of the full scale costs awarded by the courts and collected by the [solicitor] was an illegal agreement, but also that the agreement in so far as it required the [solicitor] to pay over to the [debt collectors] these same costs if and when collected by him under warrants of distress was tainted with the like illegality and were irrecoverable from the [solicitor].

47 Mr Parncutt concluded after reading to the court these passages 'so the costs agreement in my respectful submission does constitute a cost sharing agreement with respect to the conduct of the file relating to Pinnacle.'

48 In response to this submission on behalf of the guarantors, SGB claimed it had been given no notice of the argument that the costs agreement was against public policy.[35] Accordingly, Whelan J permitted SGB to serve a written submission on illegality, and the guarantors to reply. His Honour noted that illegality had not been pleaded but he had been invited to take notice of it.[36]

SGB's supplementary submissions of 21 December 2006[37]

49 SGB's written submissions sought to answer the guarantors' contention that the HGR costs agreement with SGB was an illegal costs sharing agreement. SGB also addressed the third principle referred to in Hamilton v Haw dealing with an agreement that required the commission of a fraud on a third party, even though this had not been raised by the guarantors in the oral submissions of Mr Parncutt.[38] SGB said about Hamilton v Haw that 'the illegality was patent: the amount on the face of the warrants for costs was greater than the amount actually payable for costs.'[39] SGB said that this was not the case with Pinnacle. SGB said there was no sufficient connection between the rebate and the claim by SGB for the amount on a bill rendered by HGR. The written submission of SGB contended that the existence of the rebate would not constitute an available defence to a claim by SGB based on the bill of costs rendered by HGR.

Guarantors' written submissions in reply of 31 January 2007[40]

50 The guarantors' submissions included a response to SGB's written submission of 21 December 2006 that denied that the HGR costs agreement required the commission of a fraud on a third party. The guarantors said in response that this argument overlooked the fact that the payment of the gross fees was subject to SGB's contractual right to reimbursement. The guarantors did not elaborate further on the issue of commission of a fraud on a third party.

51 The guarantors elaborated again on the issue of HGR costs agreement being a an illegal costs sharing agreement. Under the heading of 'manifest error contention' the guarantors contended that SGB should not be entitled to the gross fees with reduction of the rebate saying '[t]he terms of the guarantee could not be said to encompass a situation where [SGB] can secretly profit from litigation in the form of the receipt of a proportionate share of the legal fees received'[41] (my emphasis).

52 In dealing with the terms of the guarantee relied on by SGB that precluded cost set-offs, the guarantors submitted:[42]

10.3 If the [guarantors] are required to pay the full amount of the fees without deduction, it is clear that [SGB] is relying on the terms of the guarantee to enable it to retain its share of the fees paid by the [guarantors] and reimbursed by HGR.

10.4 Further, where the rebates form part of confidential arrangements between the solicitor and the client where no disclosure is made to the third party of the rebates, the secret counter payments could not be said to have been in contemplation of the parties at the time of entering into the Guarantee and accordingly, it is submitted, should not now be said to fall within the meaning of deduction. In that regard it is submitted that [SGB] is guilty of non-disclosure or concealment of the arrangement between [SGB] and its solicitors to have Pinnacle pay costs from which rebates would be paid to [SGB] (my italics in last sentence).

53 The written submission of the guarantors concluded that '[i]t has now been demonstrated ... that because the costs agreement is based on sharing of legal fees, it ought not be permitted to be relied upon by [SGB].'[43]

Guarantors' proposed further amended defence and counterclaim of 26 February 2007[44]

54 The proposed amendments to the counterclaim alleged that SGB shared legal fees with HGR and in doing so SGB was guilty of conduct in breach of the Legal Practice Act 1996 and the Legal Profession Act 2004. The guarantors alleged that the HGR costs agreement was not discovered to the guarantors before the deed of guarantee dated 12 [sic 16] June 2000 and not before the third day of the hearing. The guarantors alleged that SGB did not disclose that the legal fees being paid by SGB to HGR were in excess of those being charged by HGR to SGB or that SGB was sharing with HGR the legal costs paid by Pinnacle.[45]

55 The guarantors alleged that SGB failed to credit the reductions to the account of Pinnacle and therefore SGB received a secret profit derived from legal costs from the receipts of the legal practice of HGR recovered from Pinnacle.[46]

56 Further, the guarantors alleged that the HGR costs agreement was illegal as a costs sharing agreement and thus unlawful by statute, against public policy, illegal at common law, tainted with illegality and unenforceable. It is then pleaded the HGR costs agreement is unenforceable by SGB against the guarantors.

(a) the HGR costs agreements are in breach of the Acts and are unenforceable against the guarantors with respect to the recovery of legal costs;

(b) the guarantors are not liable to SGB for any legal costs pursuant to the HGR costs agreement; and

(c) that they are not liable to SGB for any legal costs at all.

58 The guarantors also sought an order that the certificate of indebtedness not be admitted into evidence.

59 Thus, the proposed pleaded claims of the guarantors extended beyond the argument that HGR could not enforce the costs agreement against SGB and thus SGB was not liable for costs to HGR under the costs agreement. The guarantors sought to claim that SGB had been guilty of conduct proscribed by the Acts; that SGB had failed to credit Pinnacle with the costs received by SGB from HGR; that SGB had not disclosed the receipts to the guarantors; and that SGB had received a secret profit from legal costs. The relief claimed included a declaration that the guarantors were not liable to SGB for any legal costs at all.

Guarantors' and SGB's oral submissions of 6 March 2007****[47]

60 At the hearing on 6 March 2007, Whelan J raised with Mr Parncutt the question of how the proposed amendments to the counterclaim could be allowed, as liability had been decided and he was dealing only with quantum. Nevertheless, his Honour said that all the issues raised in the proposed amendments had been raised in the prior submissions save for the allegation in paragraph [47] about the 'secret profit'. Mr Parncutt who appeared for the guarantors said he was prepared to remove the word secret.

61 Whelan J declined to allow any amendments to the pleadings.[48] His Honour said that Mr Parncutt had indicated that nothing was sought to be raised in the amendments that had not already been the subject of submissions by him. His Honour also took into account that SGB said that no point would be taken on the basis of a failure to plead matters which had been the subject of submissions. His Honour said that he would consider the matters raised in the proposed pleading in the context of quantum but not on the issue of liability, as he was anxious not to have the parties embark upon another round of pleadings.[49]

Whelan J's reasons for judgment of 2 May 2007[50]

62 On 2 May 2007, Whelan J delivered judgment. Essentially, he found there was manifest error in the certificate given by SGB of the costs and expenses owing by the guarantors under guarantees given by them in relation to Pinnacle's obligations to SGB. SGB had not given credit for the rebate it received from HGR on its legal costs and it ought to have done. Whelan J ordered the taking of accounts before a Master to determine the amount due to SGB by Pinnacle and ordered that the guarantors pay to SGB the amount found due.[51]

63 His Honour rejected the defendants' submissions on illegality and public policy. He said:

Illegality and public policy

[37] Section 317 of the Legal Practice Act 1996 and s 2.2.9 of the Legal Profession Act 2004 each provide that a legal practitioner may not enter into an arrangement with a non-practitioner under which that person is entitled to share in the income of the practitioner.

[38] The defendants submitted that the arrangements between the Bank and its solicitors contravened this prohibition. Reliance was placed on Hamilton and on Beneficial Finance.

[39] I do not consider that there is any relevant 'sharing' of income provided for by the relevant arrangements. The arrangements provide for a rebate of fees paid. In other words, they are arrangements for a return to the client of a portion of the fees paid by the client. The rebate is calculated on a sliding scale based upon the annual total of fees. This is not sharing income. It is returning a portion of the client's payment as a volume discount.

[40] The cases relied upon do not assist the defendants in this context.

[41] In Beneficial Finance an arrangement whereby 50% of every solicitor's bill was to be paid to a non-practitioner in consideration of the provision of accommodation and secretarial services was held not to contravene the then relevant provision.

[42] Hamilton concerned an arrangement between a solicitor and a debt collector under which the solicitor would issue warrants of distress claiming the judgment debt and specified professional costs and would then account to the debt collector for the total amount recovered less an amount for costs which was less than the specified professional costs purportedly due on the warrants. At first instance it was held that this arrangement was (in part only) tainted with illegality because it (in part) contravened the then relevant provision concerning the sharing of receipts with unqualified persons. On appeal, the Full Court held that this approach was incorrect. There was no 'sharing' of costs because the solicitor was never entitled to any costs other than the lesser amount agreed with the debt collector. The Full Court went on to hold that, although the provision about sharing had not been contravened, the arrangement was still tainted with illegality because '... it contemplated the improper exaction of excessive costs from judgment debtors ...'. It seems to me that the Full Court characterised the arrangement as being one tantamount to an agreement to perpetrate a fraud on third parties, although the Court noted that the trial judge had not made an express finding to that effect.

64 As can be seen from his reasons, his Honour understood the contentions of the guarantors to go beyond the claim that HGR could not enforce its costs agreement against SGB. He understood the guarantors' case to extend to one where the arrangements contemplated the improper extraction of costs, which is the second cause of action referred to in Hamilton v Haw. It is not clear if the arrangements he referred to went beyond the HGR costs agreement.

65 The guarantors appealed Whelan J's decision to the Court of Appeal, save for Dr Irani and one of the corporate appellants (Thirteenth Corp Pty Ltd), as it had gone into liquidation.

66 Hargrave AJA identified three issues on the appeal. First, the appellants contended that SGB's claim should be dismissed on grounds of illegality or public policy ('the illegality grounds'). Second, the appellants contended that the master's determination of the quantum of the amount due under the guarantee should be set aside, and the determination of any residual contractual entitlement of the bank to be paid its legal costs of enforcement of its securities should be deferred until after taxation of the bank's party and party costs awarded in its favour in the earlier proceeding ('the deferral ground'). Third, the appellants sought to raise a new issue, not raised before the trial judge, that the bank should be refused relief on discretionary grounds ('the discretionary ground').

67 One of the objections to Dr Kermani's current proceeding is that it constitutes a collateral attack on the reasons of Hargrave AJA. Accordingly, it is necessary for the proper consideration of the appeal before us, to set out the reasons of Hargrave AJA on the first ground of illegality and public policy as follows:

[36] As appears above, during the course of argument on appeal, senior counsel for the guarantors abandoned the contention that the costs agreements were illegal agreements to share legal fees. On appeal, the guarantors raise the following contentions based on illegality or public policy. As I have said, there is an issue as to whether one or more of these contentions was advanced below and, if not, whether it is procedurally fair to allow the guarantors to raise them on appeal.

[37] The guarantors contend that the Court should infer that the bank intended at all relevant times, and adopted a 'deliberate policy', to conceal the volume rebate provisions of the costs agreements. It was submitted that the bank intended to rely upon the combined effect of those provisions, and the standard form of indemnity costs provisions contained in its facility agreements and related security documents ('transaction documents'), to exact payment from its customers and guarantors of legal costs which, after the rebates were taken into account, exceeded the costs which the bank had incurred in connection with the facilities and their enforcement.

[38] It was submitted that such an inference was inescapable on the facts. Reliance was placed upon the warning given to the bank by its solicitors in 2002 that the volume rebate provisions may require a disclosure to customers and other third parties who may be liable to the bank to indemnify it in respect of its legal costs; the fact that this warning was deleted from subsequent proposals from those solicitors; the bank's failure to disclose the volume rebate provisions of the costs agreements to Pinnacle or the guarantors; the fact that the bank did not discover the costs agreements until a specific order was made that it do so; the fact that the bank persists in its contention that it is not obliged to give credit for the volume rebates in fact received by it; and the fact that the indemnity costs provisions relied upon by the bank were, on their face, obviously standard form provisions contained in its transaction documents.

[39] In these circumstances, it was submitted on behalf of the guarantors that the evidence justified a finding that the bank engaged in the tort of deceit, misleading or deceptive conduct (or unconscionable conduct) in contravention of the (Cth) or, at the very least, intentional sharp practice which was contrary to public policy.

68 His Honour then went on to set out the facts of Hamilton v Haw,[56] which I have summarised above. Hargrave AJA then continued:

[50] Parts of these passages [from Hamilton v Haw] were drawn [to] the trial judge's attention by counsel for the guarantors. However, the submission was not squarely made that the trial judge should find that the bank and its solicitors intended to deceive customers and third parties, such as Pinnacle and the guarantors. Indeed, the reference by Adam J to the costs agreements possibly being illegal because they required the commission of a fraud on a third party was not read to the Court. It appears that counsel for the guarantors limited his submissions to the fact that, viewed as a whole, the costs agreements in this case, like in Hamilton v Haw, 'contemplated the improper exaction of excessive costs'.

[51] It was submitted on behalf of the bank that counsel for the guarantors at the trial relied upon Hamilton v Haw for the sole purpose of supporting an argument based upon illegal sharing of the receipts of an illegal practice and that, for this purpose, counsel for the guarantors sought to distinguish the facts in Hamilton v Haw. I do not accept that submission. Counsel for the guarantors placed express reliance upon the actual decision in Hamilton v Haw and sought to have the trial judge apply it to the facts of this case. The trial judge certainly understood this to be the case. Having dismissed the argument based upon illegal sharing of the receipts of a legal practice, the trial judge stated:

The defendants also submitted that the arrangements here contemplated the improper exaction of costs from third parties just as was found to have been the case by the Full Court in Hamilton.[57]

[52] However, I accept the bank's submission that, before the trial judge, no submission was made on behalf of the guarantors that the evidence justified a finding that the bank engaged in the tort of deceit, conduct in contravention of the Trade Practices Act 1974 (Cth) or that the conduct of the bank constituted intentional sharp practice which was contrary to public policy. Nor was any such case pleaded or particularised. In these circumstances, I would not allow the guarantors to raise these grounds on appeal. However, the submission that the relevant arrangements between the bank and its solicitors on the one hand, and the bank, Pinnacle and the guarantors on the other, contemplated the improper exaction of excessive costs was put before the trial judge and considered by him.

69 As indicated in Hargrave AJA's decision, the Court of Appeal held that the terms of the arrangements between SGB and its solicitors on the one hand, and between SGB and its customers and the guarantors on the other hand, did contemplate the improper exaction of excessive legal costs from SGB's customers by not allowing credit in respect of volume rebates attributable to legal costs debited to the customer's account. However, because credit for rebates had been given in the assessment of quantum, SGB had therefore not exacted excessive legal costs.

70 On 29 May 2009, the appellants applied for leave to appeal to the High Court. Dr Pannam QC, who appeared for the appellants, contended that the Court of Appeal had wrongly failed to find that the guarantee contracts should not be enforced at all as there was an intention at all relevant times by SGB to collect more by way of indemnity costs than in fact it had occurred. Dr Pannam argued the invalidity went to the whole of the obligation to pay costs not just part of it. Mr Walker for SGB argued that there was a fallacy in the appellant's argument. He said that it would be a misunderstood use of the doctrine of illegality if a person who claimed more than the law of contract permitted them to recover was placed at peril of getting nothing, by reason of making that claim. He argued that this was not a case of fraud, but rather a wholly mistaken attempt to characterise as costs sums which were not costs. He said that this mistake, however, did not invalidate the need to pay those costs that were genuinely owing. The High Court refused special leave saying that they 'were not satisfied that any point of general public importance respecting principles of illegality at common law arises from taking of the account in this case so as to make allowance as it did for the credit in respect of the volume rebates.'[59]

71 On 19 July 2009, Dr Kermani issued fresh proceedings against SGB. In substance, Dr Kermani alleges that the HGR costs agreement, the Pinnacle costs agreement, and the guarantee costs agreement were acted upon and enforced by SGB in a manner that was contrary to public policy and/or illegal and accordingly were unenforceable as against Dr Kermani. She seeks to recover the total amount of legal costs recovered by SGB under the Pinnacle mortgage to SGB. By her amended statement of claim of 23 June 2010, after pleading the background facts, Dr Kermani alleges as follows: [I use the paragraph numbering from the amended statement of claim].

....

[6] It was a term of the Pinnacle mortgage that Pinnacle was to fully indemnify SGB fully in respect of all legal costs incurred by SGB (the Pinnacle costs agreement).

[7] That it was a term of the guarantee and of Dr Kermani's mortgage that she was liable to pay to SGB any legal costs that Pinnacle was liable to pay to SGB under the Pinnacle costs agreement (the guarantee costs agreement).

[8] That it was a further term of the guarantee, and of Dr Kermani's mortgage and charge, that SGB was entitled to sell her property and share portfolio to discharge her liability to SGB pursuant to the securities, including in respect of legal costs;

[9] These terms were standard terms employed by SGB in its loan and guarantee agreements with borrowers and guarantors (the default terms);

[10] From year to year between 2002 and 2006, SGB and its solicitors (HGR) entered into a costs agreement (HGR costs agreements) concerning SGB's liability to pay the solicitors' legal costs in which the solicitors were acting for SGB in respect of defaults by borrowers or guarantees under the default term (loan defaults).

[11] It was a term of those costs agreements that SGB was entitled to receive a reduction in, or a rebate of, legal costs calculated by reference to the annual volume of work carried out by the solicitors acting as SGB's solicitors (the costs rebates).

[12] On the date that SGB entered into each of the HGR costs agreements, and at all material times thereafter, SGB intended to, and thereafter did, rely upon and enforce the default terms by exacting from borrowers (including Pinnacle) who were the subject of loan defaults, and from guarantors in respect of those borrowers (including Dr Kermani), SGB's gross legal costs:

(a) without taking into account, or accounting for, the rebate;

(b) without disclosing the rebates to the borrowers (including Pinnacle), or to the guarantors (including Dr Kermani).

[13] After Pinnacle defaulted in respect of repayment of the loan, SGB sold Dr Kermani's property and share portfolio and n reliance upon the terms of the Pinnacle costs agreement and the guaranteed costs agreement, appropriated for its benefit out of the proceeds of sale, the gross amount of the legal costs claimed by HGR to be payable in respect of Pinnacle's default in relation to the loan without taking into account, or accounting for, the rebates (the Pinnacle legal costs).

1. A declaration that SGB's enforcement of, and reliance upon, the Pinnacle costs agreement and the guarantee costs agreement was contrary to public policy and illegal.
2. A declaration that the HGR costs agreement were contrary to public policy, illegal and unenforceable.

1. A declaration that SGB was not entitled to claim or receive the Pinnacle costs.

1. An order that SGB repay to Dr Kermani the Pinnacle legal costs.
2. Interest pursuant to statute.
3. Costs.

72 By summons dated 24 August 2010, SGB applied for orders, pursuant to Rule 23.01(1) of the Supreme Court (General Civil Procedure) Rules 2005 or the inherent jurisdiction of the Court, that the proceeding be dismissed or permanently stayed on the ground that it is vexatious and/or an abuse of process.

73 The learned trial judge dealt with the history of the proceedings as set out above. Her Honour went through the findings of the Court of Appeal in detail, including the conclusions of Hargrave AJA.

74 The trial judge noted that the Court was empowered by Rule 23.01(1)(c) of the Supreme Court (General Civil Procedure) Rules 2005 to stay a proceeding generally that is an abuse of the Court's process. She also noted the Court also has the inherent jurisdiction to control its own processes and to prevent misuse of the Court. Her Honour summarised the arguments put before her by Dr Kermani and SGB. She said that, in her view, the submissions of SGB should be accepted.

75 Her Honour held that the claims in this proceeding are, in substance, the same as the claims that were the subject of judicial disposition in the second proceeding. She held it was not to the point that the judgments in the second proceeding did not determine the merits of those claims. Those claims were raised before, and dealt with by, the Court of Appeal in the second proceeding.

76 Her Honour held that the fact that Dr Kermani was not a party to the second proceeding did not mean that it may not be an abuse of process for her to pursue the claims raised in this proceeding. She cited Spencer Bower and Handley: Res Judicata:[60] 'The doctrine can apply where the claimant or the defendant or both are different'. Her Honour held that that is not to say that a subsequent proceeding will be an abuse of process simply because there were earlier proceedings concerning the same subject matter or because the issues sought to be litigated in the subsequent action could have been raised in the earlier proceedings, but rather that is just one consideration. Another consideration is whether there is a connection between the litigants. Her Honour cited Handley JA in Champerslife Pty Ltd v Manojovlski[61] when he held that earlier proceedings by one litigant could not make later proceedings by another an abuse of process unless there was a relevant connection between the parties.

77 Her Honour held that it does not have to be shown that the litigant in the subsequent proceeding is the privy of a party in the earlier proceeding. She held that there does not have to be an identity of parties or their privies for an action to be dismissed as an abuse of process. Rather it is a factor for consideration that one of the litigants was the corporate embodiment of another litigant in other litigation. The issue of an abuse of process involves a 'broad merits-based judgment', relying on the judgment of Lord Bingham in Johnson v Gore Wood.[62]

78 Her Honour also cited Handley JA in Champerslife Pty Ltd v Manojovlski where he observed that 'realities' must be relevant where the issue is abuse of process and that the 'broad merits-based judgment' excludes any narrow or artificial approach. She said that the principle that underlies abuse of process is that litigation should completely determine a controversy so that there is finality in the judicial disposition of that controversy. Where the claims pursued in a subsequent action 'properly belong to the subject' of the earlier litigation, the subsequent proceedings will be an abuse of process.

79 Her Honour held that it was plain that Dr Kermani did have a real interest in the outcome of the second proceeding. Dr Kermani was not a party to that proceeding, but SGB was suing the other guarantors in reliance on a clause in the guarantees which was contained in the same terms in Dr Kermani's guarantee. The claims raised by those guarantors were equally applicable to Dr Kermani.

80 Her Honour rejected the submission that it was not open to Dr Kermani to take any steps in the second proceeding in her own personal interest.

81 Her Honour accepted that the confidentiality order meant that Dr Kermani was unable to read the terms of the costs agreement. The terms of the confidentiality order also prevented each of the other guarantors from reading the terms of the costs agreement. Her Honour found, however, that the fact that Dr Kermani and the other guarantors could not read the terms of the costs agreement did not prevent them from raising defences to the claims of SGB based on defences of illegality and public policy.

82 Her Honour also accepted that the use of the costs agreement was subject to the Harman undertaking. She said that neither the confidentiality order nor the Harman undertaking would have prevented Dr Kermani from taking steps to have her claims determined in the second proceeding. Dr Kermani was plainly aware of the defences proposed to be agitated by the guarantors by reason that she was the sole director and shareholder of Shalridge, a party to the second proceeding. Armed with that knowledge, Dr Kermani could have applied to be joined as a defendant for the purpose also of relying on those defences.

83 Her Honour also said that proceedings before a court will be stayed as an abuse of process if it amounts to a collateral attack on the judgment in the earlier proceedings. Consistent with this principle - that persons who have a full opportunity to present their whole case will not be permitted to re-argue the case - if a person stands by and waits to see the outcome of a case in which they have a distinct interest without making themselves a party, they will be bound by the result and will not be allowed to re-open the issue in another piece of litigation.

84 The trial judge said that Dr Kermani had that opportunity but stood back, without making herself a party, and in her view it would be an abuse of process for Dr Kermani to re-litigate the same issues in these circumstances. Her Honour said that Dr Kermani could not escape that consequence because Whelan J and the Court of Appeal did not allow the guarantors to put their illegality argument in the way raised in substance by the claims in this proceeding.

85 Her Honour said that the second proceeding finally determined the dispute between SGB and the guarantors based on the costs agreements. The defendants in the second proceeding are bound by the Court of Appeal's decision and in her Honour's view it would undermine public confidence in the administration of justice and bring the system into disrepute to allow Dr Kermani effectively to make a collateral attack on the refusal of the Court to allow the additional claims to be raised, by raising them in this proceeding, in the circumstance where she stood by and waited to see the outcome of the second proceeding.

86 The trial judge said that the income sharing claim was in her view doomed to fail because it was the same issue that was determined adversely to the guarantors in the second proceeding. She said that the claim should be permanently stayed as an abuse of process on that basis alone and the submission that the sharing claim was inextricably bound up with the more general illegality claim and afforded an additional basis for their legal intent and purpose underlying the more general claim should be rejected. Her Honour said that there was no discernible difference in the nature of the claims as pleaded.

87 Her Honour said that it had been submitted for Dr Kermani that there are significant public policy considerations that strongly militated against dismissal of her claim. Her Honour said that if the proceeding constituted an abuse of process because of the circumstances in which Dr Kermani sought to re-litigate issues already decided, there was no occasion for this Court to permit the continuance of the proceeding. She concluded that the proceeding should be permanently stayed as an abuse of process and it was unnecessary to consider the issues about the form of the pleading.

(a) the claims that Dr Kermani had raised in the proceeding were claims that were raised and dealt with in substance in the second proceeding;

(b) that Dr Kermani as the sole director and shareholder of Shalridge, a party to the second proceeding, must have been aware of the claims that were raised in the second proceeding, yet chose to stand by and took no steps to have her claim determined in that proceeding;

(c) that the proceeding amounted to a collateral attack on the decisions made in the second proceeding;

(d) that the proceeding was doomed to fail as the claims were determined in the second proceeding in a way that was adverse to Dr Kermani.

89 The first issue to address is whether her Honour's order was a final or interlocutory order and accordingly whether Dr Kermani needs leave to appeal or has a right of appeal. On 4 March 2011, Ashley and Tate AJJ ordered that the application for leave and, subject to leave being necessary and being granted, the appeal be heard together. In Port of Melbourne Authority v Anshun Pty Ltd[63] the High Court of Australia considered whether an appeal to the High Court from a decision of the Full Court of the Supreme Court of Victoria against a decision of McGarvie J forever staying a proceeding on the grounds that it was an abuse of process, was an appeal from a final order or an interlocutory judgment.

90 Gibbs J, with whom Mason J and Murphy J agreed, held that as a matter of reality the order made did finally dispose of the rights of the parties. He held that on that ground he would consider it a final order. On the basis of that authority I find that her Honour's order staying the proceeding permanently is a final order and leave is not required.[64]

91 In this case, being an appeal from the trial division of this Court, the appeal is in the nature of a rehearing.[65] In Allesch v Maunz[66] the High Court of Australia held that on an appeal by way of rehearing the powers of the appellate court are exercisable only where the appellant can demonstrate, on the basis of the evidence heard below and, when fresh evidence is held to be admissible, that evidence, the order the subject of the appeal is the result of some legal, factual or discretionary error and the court can substitute its own decision based on the facts and the law as they then stand.

92 The authorities also establish that this Court is obliged to give the judgment that in its opinion ought to have been given in the first instance, where error has been demonstrated on the part of the trial judge.[67]

93 Rule 23.01(1)(c) of the Supreme Court (General Civil Procedure) Rules 2005 relevantly provides that where a proceeding generally or any claim in a proceeding is an abuse of process of the Court, the Court may stay the proceeding generally or in relation to any claim, or give judgment in the proceeding generally or in relation to any claim. Thus the power imposed is discretionary and is enlivened where the proceeding generally or any claim in a proceeding is found to be an abuse of process of this Court.

94 Recently, the High Court of Australia in Michael Wilson & Partners Limited v Nicolls[68] reaffirmed what constitutes an abuse of process. They confirmed that what amounts to abuse of process is insusceptible of a formulation comprising closed categories.[69] They cited with approval Ridgeway v The Queen[70] where Gaudron J noted that the concept extended to proceedings 'instituted for an improper purpose' and to proceedings that are 'seriously and unfairly burdensome, prejudicial or damaging'[71] or 'productive of serious and unjustified trouble and harassment.'[72]

95 In Rogers v R[73] McHugh J summarised the categories of abuse as follows:[74]

Inherent in every court of justice is the power to prevent its procedures being abused.[75] Although the categories of abuse of procedure remain open, abuses of procedure usually fall into one of three categories: (1) the court's procedures are invoked for an illegitimate purpose; (2) the use of the court's procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court's procedures would bring the administration of justice into disrepute. Many, perhaps the majority of, cases of abuse of procedure arise from the institution of proceedings. But any procedural step in the course of proceedings that have been properly instituted is capable of being an abuse of the court's process.[76]

96 McHugh J's summary was approved and adopted by the High Court in Wilson,[77] Batistatos v Roads and Traffic Authority (NSW)[78] and PNJ v R.[79]

97 In this case, SGB contends that the abuse is constituted by Dr Kermani bringing the same case as that raised by the guarantors (including her company Shalridge Pty Ltd). In Re AWB Limited No 10[80] I set out what I considered to be the relevant principles applicable to the matter then before me. Some of these principles are apposite to the alleged abuse in this case. I listed the principles as follows:

(1) The court possesses an inherent jurisdiction to stay its proceedings as an abuse of process if the proceedings are unjustifiably oppressive and vexatious or manifestly unfair or otherwise bring the administration of justice into disrepute among right-thinking people: Walton v Gardiner;[81] Rogers v R[82] and PNJ v R;[83] Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd.[84]

(2) The jurisdiction should only be exercised in exceptional cases or sparingly with the utmost caution: Jago v The District Court (NSW).[85]

(3) The jurisdiction to stay for abuse of process is not limited to cases where the proceedings have been brought for an improper purpose or where there is no possibility of the court affording the affected party a fair hearing: Walton v Gardiner;[86] Rogers v R.[87]

(4) The circumstances in which abuse of process may arise are extremely varied and the courts have refrained from limiting the circumstances to fixed categories: Hunter v Chief Constable of the West Midlands Police;[88] Rogers v R[89]; Batistatos v Roads and Traffic Authority (NSW).[90]

(5) In considering whether to grant a stay as an abuse of process, the court should undertake a weighing process involving a subjective balancing of a variety factors and considerations: Walton v Gardiner.[91]

(6) Among those factors and considerations are the requirements of fairness to the accused, the legitimate public interest in the disposition of charges of serious offences and in the conviction of those guilty of crime, and the need to maintain public confidence in the administration of justice: Walton v Gardiner.[92]

98 It is instructive to examine some of the authorities that I relied on in formulating this list of principles.

99 In Moore v Inglis[101] Mason J sitting as a single justice of the High Court of Australia stayed a proceeding instituted in the High Court on the grounds that Mrs Inglis, the plaintiff, had already instituted another action on the same subject matters. Unlike this case, Mason J was dealing with a situation where two proceedings were extant and neither had been determined.

100 The complaints in both proceedings arose out of Mrs Inglis' employment by the Department of the Parliamentary Library. The substance of her complaint related to her transfer from one position to another within the library. In the Supreme Court of the Australian Capital Territory she had alleged a conspiracy against five defendants. In the High Court she alleged five separate conspiracies. The relief she claimed was different in each proceeding. There were some differences in the defendants.

101 Mason J referred to the general principle that it is prima facie vexatious to bring two actions where one will lie. He held that there was no reason why Mrs Inglis could not seek the relief she sought in the Supreme Court proceeding. His Honour said that any difficulties in making the necessary amendments would not arise from jurisdictional limits but from the manner in which Mrs Inglis had presented her case to date. His Honour said:

However, these difficulties do not provide a reason for allowing the plaintiff to maintain a second proceeding in this court relating to the subject matter already in course of litigation in the Supreme Court.

... Although I acknowledge that the plaintiff may not secure all the amendments which she desires it is neither just nor fair that she should, after commencing one action which is about to come to issue on the pleadings, bring another action on the same subject matter, making minor alterations only to the substantive allegations and to the parties. She must make up her mind once and for all as to how she is going to present her case.[102]

102 Leave to appeal was refused.[103] Importantly, his Honour assessed Mrs Inglis' actions as being neither just or fair.

103 In Thirteenth Corporation Pty Ltd v State,[104] Jessup J of the Federal Court of Australia considered an application to stay proceedings instituted in the Federal Court against four directors of a company on the grounds that it was an abuse of process. Like Moore v Inglis,[105] the two proceedings were extant but one had been stayed. That turned out to be a critical factor.

104 The four directors had been the subject of separate proceedings in the Supreme Court of Victoria. The proceedings had been terminated by a self-executing order through the failure of the plaintiff to provide security for costs. Jessup J held that the Federal Court proceeding would have been vexatious and stayed as an abuse of process but for the fact that the Supreme Court proceeding had been terminated.

105 The applicant, Thirteenth Corporation, had lent Mactec $500,000. Mactec defaulted. Thirteenth Corporation commenced proceedings in the Supreme Court against the four directors alleging that Mactec had traded whilst insolvent contrary to s 588M of the Corporations Act 2001 and that the directors were liable for the debt. After those proceedings were stayed for want of security for costs, Thirteenth Corporation took proceedings in the Federal Court alleging that the directors had engaged in misleading and deceptive conduct in representing that Mactec could repay the loan and that they had no reasonable grounds for doing so.

106 Jessup J referred in detail to Mason J's decision in Moore v Inglis.[106] He drew from it the following principle:

[41] The important, perhaps critical, point was that the court in which the earlier proceeding was commenced had jurisdiction to deal with everything raised in the later proceeding and there was no reasonable justification, based on legitimate considerations of convenience, cost or the like, for commencing the second proceeding rather than seeking to amend the earlier. One sees the same underlying values as to the requirements of a fair and efficient system for the administration of justice here as are to be seen, in a different but analogous context, in Anshun.

[42] In the present case, were it not for one factor to which I shall turn next, I would consider that the commencement of the present proceeding was an abuse of process in the sense of being a course preferred by the applicant over what I would regard as the more obvious, more convenient, less costly and less vexing expedient of seeking to make the necessary amendments to the pleadings in the Victorian proceeding. The applicant was, as plaintiff in the Victorian proceeding, suing to achieve compensation for the very loss around which this proceeding is constructed. It was suing the same parties as are respondents here. Broadly speaking, it was putting the same series of transactions in 2000 into controversy. Had the Victorian proceeding still been on foot when this proceeding was commenced, I would have regarded the present case as covered by Williams v Hunt, and Moore.[107]

107 It can be seen that Jessup J applied a test in assessing whether there was an abuse of process of the Federal Court of Australia by asking whether 'there was no reasonable justification, based on legitimate considerations of convenience, cost or the like, for commencing the second proceeding rather than seeking to amend the earlier.'

108 In Branir Pty Ltd v Wallco Pastoral Co Pty Ltd,[108] Mildren J of the Supreme Court of the Northern Territory held that an action in the same court as another action may be stayed on the grounds that it is vexatious and oppressive, just as it may be stayed where the actions are in different courts.[109] Mildren J referred with approval to Finn J in Lidden v Composite Buyers Ltd[110] where Finn J said:

It is the case that, where proceedings have been started in one court, it is an abuse of process to duplicate proceedings in another court when a complete remedy is available in the first court. It likewise seems the case that where proceedings are pending in a court, a separate action in the same court should at least by (sic) stayed where both actions involve the same parties and the same subject matter and where the hearing of the first will effectively dispose of the need for the hearing of the second.[111]

109 In Rippon v Chilcotin Pty Ltd[112] the New South Wales Court of Appeal (Mason P, Handley and Heydon JJA) upheld an appeal for a stay against second proceedings brought against an accountant after first proceedings against the vendor of a business failed on a s 52 claim under the Trade Practices Act 1974.

110 The Court held that a precise identification of the issues was necessary. In the earlier proceedings the plaintiffs had not succeeded against the vendors of a business when alleging misleading and deceptive conduct by the vendors in relying on certain financial statements provided to the plaintiffs by the vendors. It was held that the plaintiffs did not rely on the statements provided to them by the vendors. In the second proceedings the plaintiffs sued the accountant who prepared those financial statements. The court held that the second proceeding 'was an attempt to litigate or re-litigate issues which were either decided in or are barred by the earlier proceedings.'[113]

111 Handley JA (with whom Mason P and Heydon JJA agreed) outlined some matters that should be considered in addressing a claim for a stay based on abuse of process, including the guiding considerations of oppression and unfairness to the other party.[114] Mason P held that there was no question of oppression and unfairness in the matter before the court because the accountants were not a party to the earlier litigation. He said, however, that 'these proceedings do threaten the integrity of the administration of justice and raise the prospect of conflicting judgments.'[115]

112 In considering abuse of process where second proceedings are taken raising the same or similar issues, it is not necessary that the plaintiffs or claimants be the same, if they are otherwise connected. In Johnson v Gore Wood & Co[116] Lord Bingham said:[117]

Two subsidiary arguments were advanced ... in the courts below and rejected by each. The first was that the rule in Henderson v Henderson ... did not apply to Mr Johnson since he had not been the plaintiff in the first action ... In my judgment this argument was rightly rejected. A formulaic approach to application of the rule would be mistaken. [The company] was the corporate embodiment of Mr Johnson. He made decisions and gave instructions on its behalf. If he had wished to include his personal claim in the company's action, or to issue proceedings in tandem with those of the company, he had power to do so.

113 This principle was cited with approval by Handley AJA in Champerslife Pty Ltd v Manojlovski.[118] Handley AJA went on to say:[119]

That decision is hardly surprising. Earlier proceedings by one litigant could not make later proceedings by another an abuse of process unless there was a relevant connection between the litigants. Since the issue was abuse of process realities must be relevant. The 'broad merits-based judgment' excluded any narrow or artificial approach.

114 The 'broad, merits-based judgment' is a reference to the approach adopted by Lord Bingham in Johnson v Gore Wood & Co that was also referred to by her Honour in this case. His Lordship said:[120]

The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the Court is satisfied ... that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings would be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the Court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before ... while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim.

115 A major issue between the two parties on the appeal was whether or not Dr Kermani's case is fundamentally the same as that heard by Whelan J and the Court of Appeal. This issue is not squarely raised until ground 5 of the Notice of Appeal but lies behind many of the precise grounds of appeal and should be dealt with before going to the specific grounds.

116 SGB contends that the case is the same as was heard by Whelan J and the Court of Appeal. Dr Kermani submits that her claims are entirely different from those raised already.

117 Dr Kermani says that the central issue before Whelan J at the hearing of 12 December 2006 was whether the certificate of indebtedness could be relied upon or whether it disclosed manifest error. She submits that Mr Parncutt, who appeared for Dr Kermani before Whelan J, relied on the contention that the HGR costs agreements were an illegal sharing of costs. Dr Kermani says that Mr Parncutt then argued that because the HGR costs agreements were illegal the costs certificate should be rejected in its entirety.

118 Dr Kermani submits that the claims made in the earlier proceedings were based on an allegation that the HGR costs agreements were illegal in themselves. Dr Kermani submits that in her proceeding the claim is not based on the illegality of either the HGR costs agreements or Dr Kermani's guarantee in themselves. Rather, Dr Kermani's claim attacks the improper purpose for which those otherwise valid agreements, were used.

119 Dr Kermani says that both agreements were lawful standing alone, but the purpose for which they both were used by SGB, and HGR acting as SGB's agent, was an unlawful purpose or contrary to public policy.[121] That purpose was akin to the committing of fraud on third parties: namely, HGR billing for the full indemnity costs and SGB appropriating part of those costs for its own benefit. Dr Kermani says that as the indemnity costs agreement was used for an illegal purpose, under the common law of illegality SGB is not entitled to rely on the indemnity costs agreement at all (even though it was otherwise legal) and SGB would have to found any claim for costs elsewhere.[122]

120 Dr Kermani refers to the judgment of Gibbs ACJ in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd[123] where Gibbs ACJ said:

There are four main ways in which the enforceability of a contract may be affected by a statutory provision which renders particular conduct unlawful: (1) The contract may be to do something which the statute forbids; (2) The contract may be one which the statute expressly or impliedly prohibits; (3) The contract, although lawful on its face, may be made in order to effect a purpose which the statute renders unlawful; or (4) The contract, although lawful according to its own terms, may be performed in a manner which the statute prohibits.

121 Dr Kermani says that the broad issue of illegality was not raised before Whelan J. She argues that of the four grounds referred to by Gibbs ACJ the first two were put to Whelan J but the last two were not, and that Dr Pannam QC, counsel for the guarantors, sought to argue category four before the Court of Appeal

122 Dr Kermani says that Whelan J understood the issue before him to be whether the court should lend its assistance to grant the relief sought. Dr Kermani says that this meant that all that was before Whelan J was whether the certificate should or should not be acted upon.[124] She submits that she had no interest in that issue or the whole of the proceeding.[125]

123 Dr Kermani says that at the hearing before Whelan J on 6 March 2007, Mr Garratt QC for SGB complained that the proposed draft amended defence and counterclaim appeared to go beyond the illegality of the HGR costs sharing agreement, where it referred to a 'secret profit'. Mr Parncutt said he was happy to delete 'secret' as he hadn't raised that issue earlier and it was of no moment to his claim as the law states that a party cannot make a profit out of legal costs.[126]

124 Dr Kermani says that whatever flirtation there was with any wider point before Whelan J, the guarantors were no longer persisting with it when the hearing concluded on 6 March 2007.[127] She submits that Whelan J refused leave to amend, instead saying that he would take into account the matters that Mr Parncutt had previously relied on to challenge the certificate, which Dr Kermani says was limited to the illegal sharing of legal costs. Dr Kermani says that the argument that the HGR costs agreements required the commission of a fraud on a third party was not advanced by the guarantors.

125 Dr Kermani concedes that the guarantors contended that the HGR agreement was unlawful as it contemplated it would be used to extract excessive costs from clients.[128] But unlike the matter before Whelan J, Dr Kermani argues that the costs she seeks to recover have already been obtained whereas the issue before Whelan J was whether costs should be paid and the claim was intercepted before the costs were shared. In the case before Whelan J, HGR was found not to have shared the costs, as Whelan J found that the rebate should be taken into account in the taxation.[129]

126 SGB contends that the earlier proceeding went beyond merely asserting that the HGR costs agreement was illegal. SGB says that the argument that the SGB had improperly extracted excessive costs relied on the manner in which the HGR costs agreements and the guarantee were used to charge Pinnacle for an excessive amount. The earlier proceeding also relied on the allegation that the terms of the HGR costs agreements were not disclosed to Pinnacle or the guarantors. SGB says that this argument was rejected by Whelan J, as the excessive costs were not extracted before quantum was decided and Whelan J relied on the fact that the conduct was discovered before the costs could be extracted.

127 SGB says that Hargrave AJA recognised that the conduct complained of was the arrangements as a whole. Hargrave AJA accepted that the relevant arrangements taken as a whole did contemplate the improper exaction of excessive legal costs from SGB's customers, their guarantors and other third parties liable to indemnify SGV in respect of its legal costs[130] (my italics). SGB says that this is precisely the claim that Dr Kermani now wishes to make in her proceedings.

Is Dr Kermani's proceeding the same or different to that before Whelan J?

128 The issues raised by the guarantors were raised to defeat SGB's claim for all legal costs under the guarantors' agreements of indemnity of Pinnacle's liability. In my opinion, the guarantors did raise before Whelan J the argument that the HGR costs agreements contemplated the improper extraction of costs from the guarantors. The guarantors raised the allegation that the extraction was to be effected without being disclosed by SGB to Pinnacle or the guarantors. That is, that Pinnacle and the guarantors would be told that the gross fees were added to Pinnacle's account as charged by HGR but were not being told that SGB was receiving a rebate of those fees without crediting Pinnacle. These allegations went to the alleged improper purpose for which the agreements were used.

129 This conclusion is consistent with the decision of Hargrave AJA in the Court of Appeal where his Honour expressly found that the improper extraction of costs issue was raised in addition to the allegation of illegal sharing of solicitor's fees.

130 As indicated above, in essence, Dr Kermani says her proceeding materially differs from that before Whelan J as the guarantors case rested on the illegality of HGR costs agreement whereas her proceeding rests on the manner in which SGB acted upon and enforced the relevant agreements, but not the illegality of the agreements themselves.

131 As I have found, the allegations raised before Whelan J did extend to the manner in which the excessive fees were obtained and the purpose for which the agreements were used. In particular the guarantors raised the conduct of SGB in not disclosing the HGR costs agreement and SGB's conduct in charging Pinnacle's account with excessive fees.

132 The extent of the guarantors' case was acknowledged in the Court of Appeal. Hargrave AJA accepted that the relevant arrangements taken as a whole did contemplate the improper exaction of excessive legal costs from SGB's customers, their guarantors, and other third parties liable to indemnify SGB in respect of its legal costs [131] (my italics).

133 In my opinion, although not on all fours, the substance of the complaint raised in Dr Kermani's proceeding was raised below before Whelan J and pursued in the Court of Appeal.

134 I will now consider each of the appeal grounds in turn.

135 Dr Kermani contends that the learned trial Judge erred in finding that it was open to Dr Kermani to have intervened as a party in the proceeding before Whelan J to protect her own discrete financial interest when

(a) there was no amount alleged by the respondent to be owing by her;

(b) the legal costs agreements giving rise to the defence of illegality in the proceeding were not the subject of pleadings and had not been discovered or disclosed to her; and

(c) there was no evidence that she was aware, or ought to have been aware, of the facts and circumstances that have given rise to her claim for relief.

136 In my opinion, the trial judge did not err as alleged. Dr Kermani's indirect interests were at stake in the proceeding before Whelan J, as she was the sole director and owner of Shalridge Pty Ltd. The trial judge was entitled to infer that Dr Kermani was fully aware of the proceedings and provided instructions to Shalridge's solicitors. No evidence was given by Dr Kermani to the contrary, where one would have expected it to be given if that were not the case. Once the HGR costs agreements were discovered, although Dr Kermani was not entitled to read the costs agreements, she was aware that they provided for a rebate and was aware of the quantum of that rebate, according to SGB, and according to Shalridge's witness, Mr Abrahams. Her Honour was entitled to proceed on the basis that Dr Kermani was fully aware of the submissions and issues being raised on behalf of Shalridge.

137 I accept that Dr Kermani was not aware of the advice by HGR to SGB about disclosing the agreement. Her Honour acknowledged the same. This did not prevent the guarantors from raising the claims of illegality and public policy that they did. The guarantors raised the issue of non-disclosure and SGB making a 'secret profit', although Mr Parncutt withdrew that allegation, admittedly with encouragement from Whelan J. The guarantors raised a claim based on the effect of the arrangements that included the guarantee and the HGR costs agreements.

138 In view of my finding that the claim in Dr Kermani's proceeding is substantially the same as that made before Whelan J and pursued on appeal, it then follows that there was evidence that Dr Kermani was aware or ought to have been aware of the facts and circumstances that have given rise to her claim for relief in her proceeding.

140 Dr Kermani alleges that the learned trial judge erred in failing to consider and give proper weight to the following matters:

(a) it was not until the initial close of evidence in the proceeding that the legal costs agreements were belatedly discovered by the respondent;

(b) the illegality issues raised by the defendants in the proceeding were not permitted by the trial judge to be pleaded and were only permitted to be argued by counsel for the parties in their closing addresses;

(c) whether an application by the appellant to intervene as a party in the proceeding ought to have been made by her and, if so, whether the application was likely to have been granted;

(d) the respondent could have applied to join the appellant as a party to the proceeding if it wanted her to be bound by any judgment in the proceeding;

(e) the culpability and responsibility of the respondent in respect of the matters and circumstances described in (a) to (d) above;

(f) there was no proper or reasonable legal basis for the appellant to have applied to be joined as a defendant in the proceeding.

141 Her Honour did expressly refer to the fact that liability had been determined by Dodds-Streeton J, and that Whelan J was only dealing with quantum. She also implicitly accepted that the HGR costs agreements were not disclosed until the liability had been determined. Her Honour recites the judgment of Hargrave AJA that does disclose that Whelan J refused to permit the defence and counterclaim to be amended.

142 Whelan J had made it clear to the guarantors that he would only consider the illegality and public policy issues they raised in the context of the quantum hearing. Mr Parncutt initially sought to use the HGR costs agreement as an attack on the certificate being relied on by SGB. In the written submissions and the proposed amended defence and counterclaim, however, the guarantors went further to seek an order that they were not liable to pay any costs at all.

143 Whelan J declined to allow the guarantors to amend their defence and counterclaim although he did say that he would take their submissions into account. He made express reference to wishing to avoid another round of pleadings as the hearing on quantum had begun in October 2006 and ran through to March 2007.

144 If Dr Kermani was to pursue her claim, she would have needed to institute separate proceedings and ask that they be heard at the same time as the quantum hearing or seek to be joined as defendant to SGB's proceeding and serve a counterclaim against SGB. To be added as a defendant Dr Kermani would have had to have applied under Rule 9.06(b)(ii) that provides that a party may be added 'where there may exist a question which it was just and convenient to determine between that person and a third party as well as between the other parties.'

145 It is true that her Honour did not consider SGB joining Dr Kermani. In my view nothing turns on this point.

146 In my opinion, if Dr Kermani wished to pursue the proceeding that she has instituted then, as the issues she seeks to raise were currently before the court in a proceeding where she was indirectly involved through her wholly owned company being a party, it was incumbent on her to seek to be joined or institute the proceeding and seek for it to be heard with the other proceeding. There is no reason why under the rules of court the application should not have been allowed in view of the fact that Dr Kermani wished to raise the very issue that Whelan J was about to determine.[132]

148 Dr Kermani contends that the trial judge erred in finding that she had had a full opportunity to present her case in the proceeding when:

(a) the proceeding (and the subsequent appeal to the Court of Appeal) proceeded solely on the basis of the limited information disclosed in the confidential affidavit of Peter William Nankivell filed after the initial close of evidence;

(b) the information described in (a) was not permitted or able to be communicated to the appellant or to her legal advisors for the purpose of giving legal advice to her;

(c) there was no basis in fact or in law for finding that the appellant could, or should, be bound by the limited basis on which the illegality case was conducted by counsel for the defendants in the proceeding.

149 It is true that the information about HGR advising SGB to consider disclosure was not make known until the judgment of Hargrave AJA. Also the widespread nature of the profiting of SGB was not made known until Hargrave AJA referred to the 1600 customers possibly affected by similar conduct. If, however, Dr Kermani had taken proceedings, then this information would probably have come out in the discovery stage and she could have sought to amend on the new information. The trial judge did take into account the limitations on Dr Kermani under Harman and the confidentiality order.

150 The failure of SGB to disclose what it was doing was raised before Whelan J and the Court of Appeal. The fact that SGB were advised to disclose and did not may be relevant to the assessment of SGB's conduct, but it is not to the point. The abuse arises through the bringing of a claim that is substantially the same as that which was raised by Dr Kermani's company, on the same guarantee, against SGB. The fact that the current claim has an additional aggravating factor is beside the point. The aggravating factor does not found a separate cause of action.

152 Dr Kermani contends that the trial judge erred in not taking into account, or giving little or no weight to, the fact that it was SGB's conduct, rather than that of Dr Kermani, that resulted in the illegality case being conducted without pleadings and without Dr Kermani being entitled to become aware of the facts and circumstances that would have enabled her to seek legal advice as to whether any discrete financial or other interest she had might be affected by any orders made, or judgment delivered, in the proceeding.

153 The behaviour of SGB was less than admirable in the manner they conducted the case. Withholding the HGR costs agreement, in circumstances where SGB were receiving a rebate, was a relevant factor that the trial judge referred to.[133] As indicated above in the discussion of the authorities on abuse of process, a relevant factor is the consideration of any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceedings.

154 SGB's conduct, however, was known to Dr Kermani in December 2006, further submissions were made in January 2007, and an amended pleading put forward in February of that year. The conduct of SGB was well known and was the basis for the claims raised before Whelan J and in the Court of Appeal. SGB's conduct is the very thing that Dr Kermani did know about. It was the basis of the claims made by her company before Whelan J and in the Court of Appeal. Dr Kermani stood by and allowed the issues to be played out between SGB and her company. She is now relying on basically the same facts and an identical guarantee to re-litigate those issues in her current proceeding.

156 Dr Kermani contends that in all the circumstances there was no proper or reasonable basis for the trial judge to find that the appellant could, or should, have had the illegality case she raised before the trial judge heard and determined in the earlier proceeding.

159 Dr Kermani contends that the findings of fact made and relied upon by the trial judge in [37] and [38] of her judgment were not justified by the evidence or the weight of the evidence. Those findings were:

[37] It is plain that Dr Kermani did have a real interest in the outcome of the second proceeding. Dr Kermani was not a party to that proceeding but SGB was suing the other guarantors in reliance on a clause in their guarantees, which was contained in the same terms in Dr Kermani's guarantee. The defences raised by those guarantors were equally applicable to Dr Kermani. I reject the submission that it was not open to Dr Kermani to take any steps in the second proceeding in her own personal interest. I accept that the confidentiality order meant that Dr Kermani was unable to review the terms of the costs agreement, but equally so, the terms of the confidentiality order prevented each of the other guarantors from reviewing the cost agreement. This did not preclude them from raising defences based on claims of illegality and public policy. I also accept that the use of the costs agreement was subject to the Harman undertaking. Neither the confidentiality order nor the Harman undertaking would have prevented Dr Kermani from taking steps to have her claims determined in the second proceeding. Dr Kermani was plainly aware of the defences proposed to be agitated by the guarantors by reason that she was the sole director and shareholder of Shalridge, a party to the second proceeding. Armed with that knowledge, Dr Kermani could have applied to be joined as a defendant for the purpose also of relying on those defences.

[38] Fourthly, proceedings before a court will be stayed as an abuse of process if it amounts to a collateral attack on the judgment in the earlier proceeding. Consistent with the principle that a person who has a full opportunity to present their whole case will not be permitted to reargue the case, if a person stands by and waits to see the outcome of a case in which they have a distinct interest without making themselves a party, they will be bound by the result and will not be allowed to reopen the issue in another piece of litigation. As I have held, Dr Kermani had that opportunity but stood back, without making herself a party. In my view, it would be an abuse of process for Dr Kermani to re-litigate the same issues in these circumstances. Dr Kermani cannot escape that consequence because Whelan J and the Court of Appeal did not allow the guarantors to put their illegality argument in the way in which I have held that the claims in this proceeding also raise in substance. The second proceeding finally determined the dispute between SGB and the guarantors based on the costs agreement. The defendants in the second proceeding are bound by the Court of Appeal decision. In my view it would undermine public confidence in the administration of justice and bring the system into disrepute to allow Dr Kermani effectively to make a collateral attack on the refusal of the court to allow the additional claims to be raised, by raising them in this proceeding in the circumstance where she stood by and waited to see the outcome of the second proceeding.

160 In my view, all these findings were justified by the evidence and the weight of the evidence.

161 The Court of Appeal did not permit the guarantors to argue that the trial judge should have found that SGB and its solicitors intended to deceive customers and third parties, such as Pinnacle and the guarantors. No such allegation is made in Dr Kermani's proceeding. I do not accept her Honour made any errors that bear on the issue of whether or not Dr Kermani's proceeding constitutes an abuse of process of this Court.

163 Dr Kermani contends that the trial judge ought to have found:

(a) the proceeding was a taking of account claim by the respondent, in which she had no ostensible financial or other interest;

(b) the respondent's initial concealment of the legal costs agreements, the confidentiality orders sought and obtained by the respondent in the proceeding when the legal costs agreements were belatedly discovered, and the Harman undertaking binding on counsel for the defendants in the proceeding in relation to the legal costs agreements, had the legal and practical consequence of precluding the appellant from being properly informed about or becoming aware of, and giving instructions on her own behalf in relation to, any discrete financial or other interest she might have in relation to the matters being determined in the proceeding;

(c) the evidence, and the weight of the evidence, did not justify a finding that the appellant was a person who:

(i) had stood by and awaited the outcome of the proceeding;

(ii) was aware she had a distinct financial or other interest that was being determined in the proceeding;

(ii) ought to have applied to be joined as a defendant to the proceeding;

(iv) had a full opportunity in the proceeding to present the illegality case she now seeks to raise in proceeding number 7750 of 2009.

(d) it was open to the respondent to have joined the appellant as a party to the proceeding if it wanted her to be bound by its outcome but it did not do so;

(e) the illegality case the appellant seeks to raise in the present proceeding was not considered or determined in the proceeding and does not amount to a collateral attack on any decision made in that proceeding;

(f) the claims in the present proceeding are reasonably arguable;

(g) in the circumstances the present proceeding is not an abuse or misuse by the appellant of the processes of the Court such that it should be permanently stayed.

164 In my opinion, none of these matters raise any fresh ground that has not otherwise been dealt with.

166 In my opinion, her Honour was correct in finding that Dr Kermani's proceeding constituted an abuse of process of this Court and ought to be permanently stayed. In my opinion, the evidence before her Honour disclosed that Dr Kermani's conduct in bringing the proceeding was unjustifiably oppressive to SGB and brought the administration of justice into disrepute. There is no suggestion of injustice to Dr Kermani. The Court was informed that SGB has refunded to its clients the cost rebates it received.

[1] Kermani v Westpac [2010] VSC 556.

[2] For ease of reference I will refer to Westpac and St George Bank as SGB.

[3] Irani v St George Bank Limited [2004] VSC 260 (Byrne J).

[4] Irani v St George Bank Limited [2007] VSCA 33 (Buchanan, Chernov & Neave JJA).

[5] Irani v St George Bank Limited (No. 2) [2005] VSC 403 (Whelan J).

[6] Irani v St George Bank Limited (No 3) [2005] VSC 456 (Whelan J).

[8] St George Bank Ltd v Boman Irani & Ors [2006] VSC 217, [3].

[9] St George Bank Ltd v Boman Irani & Ors [2006] VSC 217.

[10] A Dobbs certificate is a certificate issued by a bank conclusively certifying the amount owed to the bank. The certificate is named after the High Court case in which its validity was upheld: Dobbs v The National Bank [1935] HCA 49; (1935) 53 CLR 643.

[11] St George Bank Ltd v Boman Irani & Ors [2006] VSC 217, [125].

[12] St George Bank Limited v Irani & Ors (No. 2) [2007] VSC 116W, [5].

[26] [1971] VicRp 72; (1971) VR 594.

[27] [1962] VicRp 32; (1962) VR 215.

[28] [1971] VicRp 72; (1971) VR 594.

[30] [1962] VicRp 32; (1962) VR 215.

[31] [1945] KB 65.

[32] [1962] VicRp 32; [1962] VR 215.

[51] St George Bank Limited v Irani & Ors (No. 2) [2007] VSC 116W, [49].

[52] Hamilton v Haw [1962] VicRp 32; [1962] VR 215, 219.

[53] Reliance was placed upon Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1, 7; Whisprun Pty Ltd v Dixon [2003] HCA 48.

[54] Reliance was placed upon s 93 Legal Practice Act 1996 (Vic) .

[55] Reference was made to Rule 63.61(1) Supreme (General Civil Procedure) Rules 2005 (Vic).

[56] Hamilton v Haw [1962] VicRp 32; [1962] VR 215.

[57] St George Bank Limited v Irani & Ors (No 2) [2007] VSC 116, [44].

[58] David Securities Pty Ltd & Ors v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353, 379.

[60] 4th Edition 2009 316 [26.15(c)].

[61] [2010] NSWCA 33; (2010) 75 NSWLR 245.

[63] Port of Melbourne Authority v Anshun Pty Ltd (No 1) (1980) 147 CLR 35.

[65] Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531, 551-552; Fox v Percy [2003] HCA 22; (2002) 214 CLR 118, 27-30; Financial Wisdom Ltd v Newman [2005] VSCA 110; (2005) 12 VR 79, 81 (Eames and Nettle JJA and Williams AJA); Simonovski Bendigo Bank Ltd [2005] VSCA 125, 66 (Warren CJ, Charles and Nettle JJA); Sahin v NAB [2011] VSCA 64; CSR Ltd v Maddalena [2006] HCA 1; (2006) 224 ALR 1; (2006) 80 ALJR 458.

[66] [2000] HCA 40; (2003) 203 CLR 172, 23 (Gaudron, McHugh, Gummow and Hayne JJ); followed and applied by the Court of Appeal in Financial Wisdom Ltd v Newman [2005] VSCA 110; (2005) 12 VR 79, 81 (Eames and Nettle JJA and Williams AJA).

[67] Fox v Percy [2003] HCA 22; (2003) 214 CLR 118, 23 (Gleeson DJ, Gummow and Kirby JJ).

[68] [2011] HCA 48 (Wilson) (Gummow ACJ, Hayne, Crennan and Bell JJ).

[69] Wilson [89]; and Batistatos v Roads Traffic Authority (NSW) (2006) 226 CLR 265 (Batistatos), [9] (Gleeson CJ, Hayne and Crennan JJ).

[70] [1995] HCA 66; (1995) 184 CLR 19, 74-75.

[71] Oceanic Sun Line Special Shipping Co Inc v Fay [1988] HCA 32; (1988) 165 CLR 197, 247.

[72] Hamilton v Oades [1989] HCA 21; (1989) 166 CLR 486, 502.

[73] (1994) 181 CLR 251.

[75] Hunter v Chief Constable of the West Midlands Police [1981] UKHL 13; (1982) AC 529, 536.

[76] (1994) 181 CLR 251, 286.

[78] [2006] HCA 27; (2006) 226 CLR 256, [15] (Gleeson CJ, Gummow, Hayne and Crennan).

[79] [2009] HCA 6; (2009) 252 ALR 612, 613 (French CJ, Gummow, Hayne, Crennan and Kieffel JJ).

[80] [2009] VSC 566.

[82] (1994) 181 CLR 251.

[83] (2009) HCA 6.

[84] [2009] HCA 43.

[85] [1989] HCA 46; (1989) 168 CLR 23, 76 (Gaudron J).

[87] (1994) 181 CLR 251.

[88] [1981] UKHL 13; [1982] AC 529.

[89] (1994) 181 CLR 251.

[90] [2006] HCA 27; (2006) 226 CLR 256.

[91] (1993) 177 CLR 378, 398 (Mason CJ and Deane and Dawson JJ).

[93] (1991) 25 NSWLR 190, 206-207 (Kirby P).

[94] (1993) 177 CLR 378, 396-398 (Mason CJ and Deane and Dawson JJ).

[95] (1976) 9 ALR 509.

[96] [2006] FCA 979; (2006) 232 ALR 491.

[97] [2006] NTSC 70.

[98] (1976) 9 ALR 509.

[99] [2006] FCA 979; (2006) 232 ALR 491, 505.

[100] [2001] NSWCA 142; (2001) 53 NSWLR 198, [32].

[101] (1976) 9 ALR 509.

[103] 51 ALJR 207 [D].

[104] [2006] FCA 979; (2006) 232 ALR 491.

[105] (1976) 9 ALR 509.

[106] (1976) 9 ALR 509.

[107] [2006] FCA 979; (2006) 232 ALR 491, [41]-[42].

[108] [2006] NTSC 70.

[110] (1996) 139 ALR 549.

[111] (1996) 139 ALR 549, 559.

[112] [2001] NSWCA 142; (2001) 53 NSWLR 198.

[113] Ibid, [28] (Handley JA with whom Mason P and Heydon JA agreed).

[114] These matters were listed in [14] of the judgment in Re AWB Limited No 10; see [95] of this judgment.

[118] [2010] NSWCA 33, 113 (with whom Allsop P agreed).

[121] Court of Appeal transcript 14 lines 21-28.

[122] Court of Appeal transcript 22 lines 5-10.

[123] [1978] HCA 42; [1978] 139 CLR 410, 413.

[124] Court of Appeal transcript 38 lines 4-6.

[132] See the obligation on the court under s 29(2) of the Supreme Court Act 1986.

[133] Kermani v Westpac [2010] VSC 556, [9].