[2010] NSWCA 33
Clayton v Bant (2020) 95 ALJR 34[2020] HCA 44
Ekes v Commonwealth Bank of Australia (2014) 313 ALR 665[2020] NSWCA 101
Kuligowski v Metrobus (2004) 220 CLR 363[2004] HCA 34
Labracon Pty Ltd v Cuturich (2013) 17 BPR 32,497[2013] NSWSC 97
Liu v The Age Company Pty Ltd (2016) 92 NSWLR 679[2019] NSWCA 292
Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507[2015] HCA 28
UBS AG v Tyne (2018) 265 CLR 77
Judgment (20 paragraphs)
[1]
Introduction
These reasons for judgment concern a notice of motion filed in proceeding 1993/23395 (the 1993 proceeding) by the plaintiff, Mr John Preston, seeking:
1. leave to file in the 1993 proceeding a verified statement of claim dated 17 September 2019 (the verified pleading); [1] and
2. leave to rely on affidavits of Mr Preston and Ms Ivy Zhao that were served after 16 August 2019:
1. in support of the application for leave to file the verified pleading referred to above; and
2. if leave is granted to file the verified pleading, in support of the relief claimed in the verified pleading.
The 1993 proceeding is a "squabble between solicitor and client as to costs." [2] In October 1992, the defendant solicitors sought payment of legal fees totalling $95,749.40 in respect of 20 matters in which they had acted for Mr Preston and various companies controlled by him. Mr Preston disputed that the fees were owing. He and one of those companies commenced the 1993 proceeding seeking orders requiring the defendant solicitors to deliver bills of costs and referring those bills for taxation, orders requiring the solicitors to deliver up the certain files and orders for the taking of an account of certain payments made to the solicitors.
The defendant solicitors delivered itemised bills of costs in 16 of the 20 matters pursuant to orders made by the Court in late 1993 and the Court made orders referring those bills for taxation and, subsequently, assessment. At an early stage of the 1993 proceeding, the plaintiff elected not to pursue a reference that had been ordered by the Court for the taking of the account after he and his representatives had inspected the defendant solicitors' records. The taxation and assessment of the bills in the 16 matters were never completed and, in November 2017, the Court determined that the defendants' entitlement to the costs the subject of those bills had been extinguished by ss 14 and 63 of the Limitation Act 1969 (NSW).
The verified pleading that is the subject of the plaintiff's notice of motion filed on 25 October 2019 (the Motion) claims orders under r 36.15(1) and/or r 36.16(3) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) setting aside:
1. ten costs orders made in the 1993 proceeding during the period from 28 February 1995 to 13 February 2014 (referred to in the verified pleading as the Adverse Costs Orders); and
2. two costs orders made by the Court of Appeal on 12 March 2012 and 21 June 2012 in an application by the plaintiffs in the 1993 proceeding for leave to appeal from a judgment delivered by Black J on 13 September 2011 and orders made by his Honour on 16 September 2011 to give effect to that judgment (referred to in the verified pleading as the Appeal Adverse Costs Orders).
For the reasons that follow, I have determined that it is appropriate in all the circumstances to grant leave to Mr Preston to rely on the affidavits served after 16 August 2019 in support of the application for leave to file the verified pleading, but that leave should not be granted to Mr Preston to file the verified pleading because:
1. the plaintiff is precluded by the doctrine of Anshun estoppel from making his claim under UCPR r 36.15(1) and the first basis of his claim under r 36.16(3) to set aside the Adverse Costs Orders and the Appeal Adverse Costs Orders;
2. further, the verified pleading is an abuse of process; and
3. further, the plaintiff's claims under UCPR rr 36.15(1) and 36.16(3), as pleaded in the verified pleading, are so obviously untenable that they cannot possibly succeed.
[2]
The relationship between the parties and the events leading to the commencement of the 1993 proceeding
In the verified pleading that is the subject of the Motion, Mr John Preston is the plaintiff and Mr Leon Nikolaidis (both in his personal capacity, and in his capacity as executor of the estate of the late Mr Mitrofanis Nikolaidis) and Mr Michael Zwar are the defendants.
Between about 1984 and 1992, M D Nikolaidis & Co (MDN) acted as solicitors for Mr Preston and various companies controlled by him in a number of matters. It is convenient to refer to Mr Preston and the companies he controlled, collectively, as the Preston entities. Mr Leon Nikolaidis, a partner of MDN, acted as principal point of contact between MDN and the Preston entities. [3]
The Preston entities terminated MDN's retainer in early October 1992. [4] It is not in dispute that Mr Preston requested the return of all of MDN's files relating to the Preston entities on several occasions at about this time.
After termination of the retainer, MDN sent Mr Preston a summary of accounts stating that the sum of $95,749.40 was owing for legal services provided by MDN. The amount said to be owing had been the subject of 22 bills issued by MDN to the Preston entities during the period from February 1992 to October 1992. [5]
Subsequent correspondence between MDN and Mr Preston did not result in payment of the fees claimed by MDN or delivery by MDN to the plaintiff of itemised bills or the legal files for work undertaken for the Preston entities. [6]
[3]
Commencement of the 1993 proceeding
By summons filed on 24 August 1993, Mr Preston (as first plaintiff) and Western Suburbs Constructions Pty Ltd (formerly Preston Erections Pty Ltd) (as second plaintiff) commenced the 1993 proceeding against Messrs Mitrofanis and Leon Nikolaidis trading as M D Nikolaidis & Co. It is convenient to refer to this as the 1993 summons to distinguish it from the summons subsequently filed in 2015.
In the 1993 summons, the plaintiffs claimed: [7]
1. orders pursuant to s 208 of the Legal Profession Act 1987 (NSW) (the 1987 Act) that bills of costs be delivered to the plaintiffs in respect of 20 matters (prayer 1);
2. orders referring each of those matters for taxation pursuant to ss 199 and 200 of the 1987 Act (prayer 2);
3. orders that the defendants deliver up to the plaintiffs their documents in relation to four matters (prayer 3);
4. an order that accounts be taken of moneys paid to the defendants for costs in respect of the 20 matters, and the disbursement and application of those moneys (prayers 4(a), 5 and 6);
5. an order that accounts be taken of a specific payment of $50,000 made into the defendants' trust account in respect of one of the 20 matters in or about July 1989, and the disbursement and application of that money (prayers 4(b), 5 and 6).
It is convenient at this stage to record that there have been some changes to the parties to the 1993 proceeding over the course of its very long history.
The Court was informed that Western Suburbs Constructions Pty Ltd has been dissolved in the period since the filing of the 1993 summons. This explains why Mr Preston is the only named plaintiff in the verified pleading and the only applicant on the Motion. References in these reasons to the plaintiff (singular) are references to Mr Preston only. References to the plaintiffs (plural) are references to Mr Preston and Western Suburbs Constructions Pty Ltd at a time when that company was still a plaintiff in the 1993 proceeding.
Mr Mitrofanis Nikolaidis died in July 2002. His wife, Mrs Doreen Nikolaidis, then became the first defendant in the 1993 proceeding in her capacity as executrix of his estate.
Mrs Nikolaidis died in June 2012. Mr Leon Nikolaidis, who is the second defendant in the 1993 proceeding, then became the executor of the estate of Mr Mitrofanis Nikolaidis and represented the interests of the first defendant in that capacity.
Mr Michael Zwar became a partner of MDN in June 1992 [8] and became the third defendant in the 1993 proceeding pursuant to an order made on 11 May 2010.
[4]
Relevant procedural history and factual matters
The unfortunate history of this matter from the filing of the 1993 summons until June 2015 is summarised in a lengthy agreed narrative that the parties prepared pursuant to a direction made by Slattery J in October 2015 for the purpose of the hearing that resulted in his Honour's judgment delivered in November 2017: Preston v Nikolaidis [2017] NSWSC 1527 (the 2017 judgment).
The same agreed narrative was tendered at the hearing of the Motion before me as a record of agreed facts pursuant to s 191 of the Evidence Act 1995 (NSW), subject to leave being granted to the defendants to adduce evidence to qualify one of the agreed facts in the narrative. [9]
What follows is a chronological account of matters relevant to the Motion that emerge from the agreed facts, other evidence adduced by the parties at the hearing of the Motion and certain orders made and judgments delivered previously in the 1993 proceeding which the parties included in the Court Book and asked me to take into account in determining the Motion.
On 9 November 1993, R S Hulme J made orders requiring the defendants to deliver to the plaintiffs bills of costs in 16 of the 20 matters listed in the 1993 summons. [10]
The defendants complied with that order by mid-December 1993. On 16 December 1993, R S Hulme J made orders referring those bills of costs to taxation. [11]
On 16 December 1993, R S Hulme J also made an order requiring the defendants to make all of their files in respect of the matters listed in the schedule to the 1993 summons available to a costs expert appointed by the plaintiffs. The matters listed in the schedule were the 20 matters to which I have referred at [12] above. In the first half of 1994, a costs consultant and expert engaged by the plaintiffs, together with the solicitors for the plaintiffs, attended MDN's offices on a number of occasions and inspected MDN's files in relation to the 16 matters. [12]
On 9 June 1994, R S Hulme J made orders for the taking of an account in relation to payments that the Preston entities had made to MDN and referred the taking of that account to a referee for inquiry and report. [13] It is convenient to set out in full paragraphs 1 to 3 of those orders (incorporating an amendment to paragraph 3(f) that was made by further orders made on 14 October 1994): [14]
" 1. Pursuant to Part 72r(2)(1) refer to Mr G D Needham, QC the account and objections referred to in paragraph 3 below for inquiry and report.
2. In these terms of reference the term 'Plaintiffs' means and includes:
i. Preston International Pty Limited (Thorsten) (ACN 003 792 247)
ii. Preston Erection Pty Limited (Preston Equipment Hire) (ACN 003 991 062)
iii. Nilbrook Pty Limited (ACN 050 070 374)
iv. Gemit Pty Limited (ACN 001 951 239)
v. Mevon Pty Limited (ACN 002 601 363)
vi. Norfeld Pty Limited (ACN 003 792 229)
vii. Four MJ Pty Limited (ACN 001 447 481)
viii. Gateside Pty Limited (ACN 003 798 945)
ix. Down to Earth Springwater (NSW) Pty Limited (Dunwich) (ACN 000 815 172)
x. Everything and Anything Storage Pty Limited (Redewood) (ACN 002 739 399)
xi. Preston Engineering Pty Limited (ACN 000 531 546)
xii. Down to Earth Springwater Pty Limited (ACN 050 058 476)
xiii. Deep Rock Springwater Pty Limited (ACN 056 626 941)
xiv. JC Preston Pty Limited (in Liquidation) (No ACN No.) 1980 litigation
xv. JC & ME Properties (Partnership) (No ACN No.)
xvi. John Preston
xvii. Marjo Preston
xviii. Preston Family Trust
3. Make the following directions for the purpose of facilitating the reference:
(a) within 14 days of the making of this Order the Defendants shall:
(i) serve on the Plaintiffs their detailed account verified by their affidavit of all moneys received by them from the Plaintiffs (or on their behalf) and disbursed by the Defendants on their behalf as solicitors, and of the dealings and transactions of the Defendants therewith upon the trust and other accounts kept by the Defendants in relation to the Plaintiff;
(ii) the said account shall specify in respect of each payment and receipt:
(1) the date and account thereof;
(2) to whom payment was made;
(3) the purpose or account to which the amount was paid, appropriated or received, as the case may be;
(4) the manner in which all payments received in respect of fees and disbursement were dealt with, with reference to particular files and matters;
(b) permit the Plaintiffs to inspect all entries in the Defendants' trust and general account ledgers relating to any work done or accounts charged by the Defendants in connection with the affairs of the Plaintiffs;
(c) The items of account shall be numbered consecutively.
(d) Within 21 days after service upon them of the said account and affidavits, the Plaintiffs to notify the Defendants of their objections and any items in dispute.
(e) The hearing of the inquiry to be before the referee on such date as he may direct.
(f) Permit the Plaintiffs (as defined in Clause 2) to inspect the entries in the Defendants ledgers or other accounting records relating to payments made or alleged to be made to the Defendants. [15]
…
7. The referee shall have power to permit such amendments or additions to the matter in paragraph 3 as the referee sees fit in order to dispose of the true issues between the parties the subject of the reference."
The status of the 1993 proceeding as at June 1994 may be summarised as follows. [16]
First, the plaintiffs' claims for relief in prayers 1 and 2 of the 1993 summons were the subject of the orders made on 9 November 1993 and 16 December 1993.
Second, the plaintiffs' claims for relief in prayers 4, 5 and 6 of the 1993 summons were the subject of the reference that had been ordered on 9 June 1994. As I have noted immediately above, the effect of the orders made on 9 June 1994 was to extend the scope of that reference considerably beyond prayers 4, 5 and 6 of the 1993 summons. It will be necessary to return to the subject of the scope of the reference later in these reasons.
Third, the plaintiffs' claims for delivery of files in prayer 3 of the 1993 summons had been the subject of argument before Hulme J in about October 1993. The plaintiffs sought unconditional delivery of the four files referred to in the 1993 summons and the defendants exercised a lien over those files and resisted delivery of the files unless fees that they claimed were owing to them were paid. Although no formal orders were made, R S Hulme J indicated to the parties his conclusion that "the plaintiffs should pay something of the order of a third of the sum claimed, or a little more, and provide security for the another third, or a little more". [17] At the hearing of the Motion, the Court was informed that the plaintiffs did not pay or provide the security required by R S Hulme J's decision and the defendants therefore did not deliver the four files.
The orders made on 9 June 1994 required the referee to submit his report to the Court by 1 September 1994. [18] On 14 October 1994, R S Hulme J made further orders extending the time for delivery of the report to 30 November 1994 and making additional orders concerning the procedures to apply to the inspection of the defendants' records by or in behalf of the plaintiffs for the purpose of the taking of accounts and the reference. [19]
The defendants commissioned a report referred to by the parties as the DRAW Report. [20]
Although the agreed narrative states that the defendants commissioned Armstrong Wily, chartered accountants to prepare the report, it was in fact issued by DRAW Services Pty Ltd. [21]
The report dated 24 July 1994 describes the scope of the exercise undertaken by DRAW Services Pty Ltd: [22]
"In preparing this report, we have not been instructed to conduct an audit on the transactions contained herein. Our approach has been to obtain from the defendants, a listing of all invoices raised by the defendants during the period under review. From this listing of invoices (as summarised in Annexure No. 1) we have then analysed the defendant's accounting records to arrive at the position concerning each invoice at 16th October 1992. Our report makes no comment on the charge out rates adopted by the defendants as contained in their invoices.
…
The specific question you have asked our office to address is as follows:
We have been asked to prepare a detailed account of all money received by the defendants and disbursed by the defendants on the plaintiffs behalf as their solicitors during the period under review. Our report in respect of each payment and receipt:
(a) The date and account number
(b) To whom the payment was made
(c) The purpose or account to which the amount was paid, appropriated or received, as the case may be
(d) The manner in which all payments received in respect of fees and disbursements were dealt with, with reference to particular files and matters."
The terms of the specific question reflected the scope of the detailed account that the defendants were required to serve on the plaintiffs pursuant to order 3(a)(i) and (ii) made on 9 June 1994. It is clear from Annexure 1 to the DRAW Report that the period under review was the period from 10 July 1994 to 16 October 1992. [23]
The DRAW Report calculated that the plaintiffs were indebted to the defendants in the amount of $116,168.55. [24]
Mr Zwar gave evidence to the effect that, during the period from June to November 1994, Mr Preston and members of his "audit team" attended MDN's offices on several occasions and spent many hours inspecting the files maintained by MDN relating to work carried out for the Preston entities during the entire period of their relationship from 1984 to October 1992, together with MDN's time sheets, draft bills, bills, debtors ledgers, trust and office account receipt books, ledgers, cheque books and deposit books insofar as they related to those matters. [25]
According to Mr Zwar, Mr Preston's "audit team" included: [26]
1. Mr Preston himself;
2. Mr Ian Greenwood, a chartered accountant engaged by the Preston entities;
3. Mr Sami Batarcheree, an accountant within the employ of the Preston entities;
4. Mr R A Humphries, a chartered accountant engaged by Madgwicks Solicitors on behalf of the Preston entities;
5. Mr Tori Kitamura of Madgwicks Solicitors, who were then acting on behalf of the Preston entities in the 1993 proceeding; and
6. Mr Tim Rybak, a solicitor and costs consultant engaged on behalf of the Preston entities.
The plaintiff disputed that he or his representatives inspected MDN's legal files in respect of all of the matters in which MDN had acted for the Preston entities. His evidence was to the effect that Mr Rybak had inspected MDN's legal files in the 16 matters in which the itemised bills had been referred for taxation and the Mr Leon Nikolaidis declined to allow the plaintiff to participate in that inspection because the defendants were exercising a lien over all of the legal files for the Preston entities as security for the fees of $95,749.40 that they claimed were owing to them. Mr Greenwood inspected MDN's ledgers and accounting records, but not legal files, in relation to all matters in which MDN had acted for the Preston entities. Mr Greenwood was the only person involved in this inspection. Although the terms of the orders made on 9 June 1994 and the further orders made on 14 October 1994 permitted the plaintiff to participate in the inspection of those accounting records, he did not accompany Mr Greenwood because the plaintiff did not have accounting expertise. [27]
As will become apparent later in these reasons, the question whether the plaintiff (or his representatives) inspected MDN's legal files in respect of Preston entity matters (other than the 16 matters that were the subject of the order for taxation) has some relevance to the defendants' contentions concerning Anshun estoppel. I do not consider that the evidence establishes, on the balance of probabilities, that the plaintiff or any other person acting on his behalf inspected those legal files. First, the orders made by the Court did not entitle the plaintiff to inspect those legal files, [28] and it is inherently improbable that the defendants would have voluntarily permitted him or his representatives to do so in circumstances where they were exercising a lien over all files. Second, the plaintiff's evidence on this issue is consistent with contemporaneous advice that he received from a chartered accountant concerning the scope of the records to which he should seek access for the purpose of the taking of the account that had been ordered on 9 June 1994. That advice recommended that the plaintiff request access to a wider range of accounting records but did not recommend that the plaintiff request access to MDN's legal files. A copy of the letter of advice dated 6 September 1994 was exhibited to Mr Zwar's affidavit. [29]
On 14 October 1994, R S Hulme J made further orders requiring Mr Preston and Mr Greenwood and any of Mr Greenwood's employees engaged in the inspection of the defendants' records to give undertakings in a form to be agreed between the parties to confine their inspection to records relating to "the Plaintiffs" (as defined in order 2 made on 9 June 1994). His Honour also extended to 2 November 1994 the time for "the Plaintiffs" to notify the defendants of their objections to the defendants' detailed account and any items in dispute pursuant to order 3(d) made on 9 June 1994. [30]
On 15 November 1994, the solicitors then acting for the plaintiffs wrote to the defendants informing them that the plaintiffs no longer pursued the reference for the taking of an account. The letter stated: [31]
"… in consequence of the books of your firm being made available pursuant to the orders made on 9th June 1994, confirmed on 12th October 1994, my clients' accountants have been able to reconcile payments made by my clients to your firm with particular accounts for professional work. It is quite apparent that, in the absence of this examination such reconciliation would have been impossible. Because the reconciliation was effected it will now be unnecessary for the parties to incur the expense of pursuing the reference."
As a consequence of this letter, the taking of an account and the reference before Mr Needham QC was at an end in a practical sense, although orders revoking the reference were not made until mid-1996. [32]
On 2 December 1994, R S Hulme J made directions requiring the plaintiffs and defendants to file and serve the evidence on which they wished to rely, and to identify evidence already filed on which they wished to rely, in respect of the plaintiffs' application for costs, the defendants' opposition to the plaintiffs' application for costs and any application for costs to be made by the defendants. [33]
On 28 February 1995, there was a hearing before R S Hulme J, the purpose of which was described by his Honour as being "to deal with the question of costs, as in substance the substantive relief sought has now all been the subject of orders". [34] It is convenient to refer to his Honour's judgment delivered on that day as the 1995 judgment.
His Honour considered a submission made by the defendants' legal representative that the proceedings were an abuse of process. His Honour said: [35]
"Mr Chippendall, appearing for the defendants, has urged me to find that the proceedings were an abuse of process, and has directed me to evidence which certainly argues in favour of the view that the plaintiffs have been motivated by factors quite extraneous to their rights as reflected in the summons, in instituting and prosecuting the proceedings.
Given the fact that the plaintiffs have not sought to respond, in particular to an affidavit of Mr Nikolaidis of 18 January 1995, I think the proper conclusion that I should draw is not only that there is such evidence, but that I should draw the inference which is suggested. However, it is I think primarily the defendant's fault that the plaintiffs did not obtain what they were entitled to in terms of orders 1 and 2 of the summons without the necessity of coming to court, and I do not regard the plaintiffs' motivation as a reason for disqualifying them from obtaining an order for costs, if that is otherwise appropriate. That motivation thought [sic] would certainly encourage me towards an order for party and party costs rather than on some basis more attractive to the plaintiffs."
R S Hulme J considered that the plaintiffs had been successful in respect of prayers 1 and 2 of the 1993 summons and unsuccessful in respect of prayer 3. [36] In relation to prayer 4, his Honour said: [37]
"The fourth order sought was for the taking of accounts. That issue arose in the context of a claim by the defendants that the plaintiffs were indebted to them in the sum of some $97,000 and the plaintiffs were denying in effect any indebtedness, although the taking of accounts was directed to ascertain the situation.
Ultimately orders were made for the production by the defendants of a detailed statement of the financial transactions with their clients, for the inspection of the defendant's files by or on behalf of the plaintiffs, and for the reference of the question of accounts to Mr Needham QC.
Consequent upon the interlocutory orders made, the defendants engaged Armstrong Wylie & Co to prepare a report analysing the various financial transactions which had occurred between the parties. The conclusion at which that firm arrived was that the defendants [sic - plaintiffs] were indebted to the plaintiffs [sic - defendants] on those accounts - which I interpolate did not reflect any taxation of bills - in an amount of some $116,000, an amount which it will be noted exceeds that which the defendants were claiming. The sum of $116,000 seems to have been arrived at after holding against the defendants the absence of some records of matters which the accountants would have expected.
Following upon the plaintiffs' receipt of that report and consideration of the matter by accountants or other person engaged on their behalf, the plaintiffs indicated that they would no longer purse the topic of their reference before Mr Needham. I think the only proper inference to be drawn from the plaintiffs' conduct in this regard is that the plaintiffs were conceding that the defendants' claim for some $97,000 was, on the basis which was then advanced, correct. Again I interpolate, this is without any taxation.
Accordingly the plaintiffs have lost the issue raised by order 4 in the ultimate …"
R S Hulme J considered that the plaintiffs' success in relation to prayers 1 and 2 of the 1993 summons should carry an order for costs in their favour, absent some countervailing considerations, whilst their lack of success in relation to prayer 3 should carry some costs implications against them and the outcome of prayer 4, considered in isolation, militated in favour of an order for costs in favour of the defendants. His Honour then referred to the history of the proceeding over the previous 18 months and acknowledged that the mere fact that each party had been successful on some issues and unsuccessful on others was not a reason for making no order as to costs without regard to the costs likely to have been generated by the issues. [38] His Honour continued: [39]
"However, when I reflect on the time which has been taken on the respective issues, and reflect on the likely amount of work involved in each, it seems to me that justice in this case will be done if I leave each party to pay his or its own costs of the proceedings. I will make an order to that effect.
… I do intend that the orders which I have envisaged should be made irrespective of the result which ensues upon taxation.
The issues on prayers 3 and 4 of the summons as they have been raised before me, do not depend upon the ultimate result of taxation.
It seems to me that I can effect the intention apparent in the above if the formal orders I made are these:
(1) I confirm existing orders for costs.
(2) Except in so far as orders have previously been made thereon, I dismiss the summons.
I make no order as to costs."
The first Adverse Costs Order that the plaintiff would seek to set aside if leave were granted to file the verified pleading is: [40]
"On 28 February 1995 Hulme J, in relation to the costs of the 1993 Proceeding to date, confirmed the existing costs orders, but otherwise decided to make no order as to costs."
Order 1 made by R S Hulme J on 28 February 1995 confirmed existing orders that had been made in the 1993 proceeding. That was the only order that R S Hulme J made in relation to costs. None of the previous costs orders confirmed by that order were adverse to the plaintiffs. [41] Insofar as the verified pleading relates to orders made on 28 February 1995, the substance of the plaintiff's claim is a claim to set aside R S Hulme J's judgment delivered on 28 February 1995 in which his Honour determined to make no order as to costs other than confirming existing costs orders.
The second Adverse Costs Order that the plaintiff would seek to set aside if leave were granted to file the verified pleading is: [42]
"On 3 May 1996 a registrar ordered that the plaintiff pay the costs of the defendants (which included the third defendant) of the day."
With effect from 1 July 1994, the Legal Profession Reform Act 1993 (NSW) introduced the system of costs assessment to replace taxation of bills of costs by an officer of the Court.
On 25 July 1996, Young J (as his Honour then was) heard various applications by the parties concerning the ongoing process of taxation of the bills that were the subject of the orders made on 16 December 1993, and an application by the plaintiffs for assessment of costs payable to them in respect of various interlocutory costs orders that had been made in the 1993 proceeding. His Honour made orders referring for assessment pursuant to s 206(1) of the amended 1987 Act the bills of costs that had previously been referred for taxation pursuant to the orders made on 16 December 1993. At the same time, the Court referred to the costs assessor as referee for inquiry and report certain issues that had arisen concerning the terms of MDN's retainer (the retainer issues). [43]
Young J also made an order on 25 July 1996 that each party pay their own costs of notices of motion filed in the 1993 proceeding during 1996 to date, save that the defendant should pay the costs of preparing and filing a notice of motion filed by the plaintiffs on 25 June 1996. [44] That is the third Adverse Costs Order which the plaintiff would seek to set aside if leave were granted to file the verified pleading. [45]
After the orders made by Young J on 25 July 1996, the bills of costs that had previously been prepared for taxation were filed with the Registry in the form required by the new costs assessment regime and the plaintiffs filed objections to those bills. By March 1997, the bills in all of the 16 matters had been referred by the Registry to the costs assessor. [46]
The costs assessor encouraged the parties to seek declarations from the Court establishing the terms and conditions of MDN's retainer rather than having him determine the retainer issues as referee. On 5 November 1998, Young J set aside his order made on 25 July 1996 referring the retainer issues to the assessor for inquiry and report. [47] The orders referring the bills for assessment remained on foot.
After a number of skirmishes between the parties and the filing of points of claim and defence concerning the retainer issues, those issues were listed for hearing in February 2003. [48]
The skirmishes to which I have referred above included a notice of motion filed by Mr Preston on 26 July 2000 seeking leave to amend the 1993 summons by adding eleven additional plaintiffs, adding Mr Zwar as a defendant and adding a prayer for an order that "any sums found, by virtue of the taxation and accounts referred to herein, to have been overpaid by any or all of the plaintiffs to the defendants be repaid". [49]
On 25 August 2000, Master McLaughlin dismissed the application for leave to amend. In the course of his reasons for judgment, his Honour said: [50]
"15. The defendants oppose the present application. The ground for the opposition essentially is that the relief sought in the summons has now been the subject of final orders by Hulme J on 28 February 1995. His Honour granted the relief sought in prayers 1 and 2 in the summons. His Honour otherwise dismissed the summons.
16. In those circumstances it is the submission of the defendants that the proceedings have been brought to a conclusion and that what the first plaintiff now seeks to do is in effect to resurrect proceedings that have been totally and finally dealt with.
17. The fact that the processes of conducting the taxation and the assessment, the subject of orders 1 and 2 in the summons may not yet have been brought to a conclusion does not in my view in any way affect the validity of the foregoing submission on the part of the defendants. It seems to me that what the applicant is attempting now to do is to reinstate proceedings which, if they should have been instituted at all, should have been instituted no later than the making of the final orders by Hulme J five and a half years ago.
18. To accede to the present application would in my view be verging on upon an abuse of the processes of the Court. …
20. I have no hesitation whatsoever in dismissing the present notice of motion."
Master McLaughlin ordered the plaintiffs to pay the defendants' costs of the motion on an indemnity basis. [51] That costs order is the fourth Adverse Costs Order that the plaintiff would seek to set aside if leave were granted to file the verified pleading. [52]
On 11 April 2001, Bryson J (as his Honour then was) ordered the plaintiffs to pay the defendants' costs of a case management hearing conducted before his Honour that day at which orders were made confirming that the Court would determine the retainer issues and directions were made for the filing of amended points of claim and defence on the retainer issues. [53] His Honour's costs order is the fifth Adverse Costs Order that the plaintiff would seek to set aside if leave were granted to file the verified pleading. [54]
The sixth Adverse Costs Order that the plaintiff would seek to set aside is described in the verified pleading as follows: [55]
"On 31 May 2001 Windeyer J ordered that a notice of motion for contempt filed by the plaintiff be dismissed with no order as to costs."
According to the copy of the record of orders in the 1993 proceeding maintained by the NSW Online Registry that was included in the Court Book, that order was made by consent. [56]
Amended points of claim and defence concerning the retainer issues were filed in July and August 2001. On 15 April 2002, the plaintiffs filed further amended points of claim pursuant to leave granted by Gzell J. In the further amended points of claim, the plaintiffs alleged that the second defendant (Mr Leon Nikolaidis) had fraudulently created a letter bearing the date 19 April 1984 and three other documents. The 19 April 1984 letter was relevant to the plaintiffs' contentions concerning the retainer issues to be determined by the Court. The further amended points of claim sought a declaration as to the terms of the retainer, a declaration that the second defendant was guilty of fraudulent conduct as alleged in the points of claim, and a declaration that the defendants' bills of costs in respect of the 16 matters in the 1993 summons were unenforceable as tainted by the second defendant's fraudulent conduct. [57]
The 1993 proceeding was stayed between 21 November 2002 and 12 May 2009 due to the criminal trial and conviction of Mr Leon Nikolaidis on one count of making a false instrument, which was then an offence under s 300(1) of the Crimes Act 1900 (NSW). The instrument in question was the letter bearing the date 19 April 1984. Accordingly, the hearing that had been fixed for February 2003 was vacated. [58] The costs assessment process, which had already stalled pending the determination of the retainer issues, [59] was further delayed.
The stay was discharged by order made by Bergin CJ in Eq on 12 May 2009. [60] Her Honour also made the following orders on that date: [61]
"2. I order that the plaintiff produce to the defendant by no later than 25 May 2009 a list of the fee notes or bills that are in question in the litigation setting out in schedule form the amount rendered in the bill and the amount alleged by the plaintiff to be an overcharging of the plaintiff.
3. The plaintiff to provide copies of those bills placed behind the list and schedule referred to in order 2.
4. I order that the matter proceed on pleadings and that the plaintiff file and serve a statement of claim by not later than 8 June 2009 subject to the defendants' entitlement to raise any objection to the matters pleaded by reason of any claims that the matters raised in the pleading have already been dealt with or have been abandoned or are the subject of the statute of limitations."
On 19 June 2009, the plaintiff filed a statement of claim as envisaged by the Chief Judge's orders. [62]
The statement of claim sought the following orders: [63]
"1. An order that the defendants deliver up to the plaintiffs, or alternatively the court, such files of the plaintiffs as remain in the possession of the defendants.
2. An order for the taking of accounts by the defendants in common form or alternatively on the basis of wilful default as the court may determine.
3. Further or alternatively, an order that such question or questions as the court may determine be referred pursuant to Part 20 of the Uniform Civil Procedure Rules.
4. A declaration that a document generated by Leon Nikolaidis dated 19 April 1984 is void and of no effect.
5. An order that the defendants be ordered to pay the plaintiff such amount as the court may determine.
6. Damages.
7. Equitable compensation.
8. Interest pursuant to s 101 of the Civil Procedure Act 2005 and Part 36.7 of the Uniform Civil Procedure Rules.
9. The defendants to pay the plaintiff's costs."
The defendants responded by filing a notice of motion on 2 October 2009 seeking an order dismissing the 1993 proceeding pursuant to UCPR r 13.4. [64]
The defendants' motion was heard by Barrett J (as his Honour then was) on 17 December 2009 and is the subject of his Honour's reasons for judgment published on 2 March 2010. His Honour declined to dismiss the 1993 proceeding, but struck out the statement of claim that had been filed by the plaintiffs on 19 June 2009.
Barrett J undertook a detailed examination of the history of the 1993 proceeding up to the filing of the plaintiffs' further amended points of claim on 15 April 2002, the stay of the proceeding, and the orders made by Bergin CJ in Eq on 12 May 2009 the lifting of the stay. [65] His Honour then referred to the differences between the plaintiff's case pleaded in the 15 April 2002 further amended points of claim and his case pleaded in the 19 June 2009 statement of claim. In particular, the 19 June 2009 statement of claim introduced for the first time claims for damages or equitable compensation for alleged overcharging in breach of retainer and breach of fiduciary duty. [66]
Barrett J identified three main questions raised for determination by the defendants' motion for dismissal: [67]
"1. Whether orders made in the past disposed of the proceedings in their entirety, so that there is nothing left requiring adjudication.
2. Whether the statement of claim filed on 19 June 2009 is authorised by order 4 made by Bergin CJ in Eq on 11 May 2009.
3. Whether the claims in the statement of claim are statute-barred so that they cannot now be pursued."
In relation to the first question, his Honour said (emphasis added): [68]
"56 … I am of the opinion that orders made in the past disposed of the proceedings in part but not in their entirety. It is true that the orders made by R S Hulme J on 28 February 1995 included the following:
'Except in so far as orders have previously been made thereon, I dismiss the summons.'
57 At an earlier point, however, his Honour had made two orders of significance. On 16 December 1993, he ordered that 'there be referred for taxation' the identified bills of costs. On 9 June 1994, he referred to a referee 'for inquiry and report' what were described as 'the account and objections referred to in paragraph 3 below'. That paragraph 3 contained directions for the preparation of a detailed account of moneys received by 'the Defendants' from 'the Plaintiffs' and of the disbursement of and dealings with those moneys, with provision for 'the Plaintiffs' to notify their objections and 'any items in dispute'.
58 The effect of those two orders was to set in train two separate processes directed towards a final determination of the state of the account between the plaintiffs and the solicitors. This was obviously with a view to the determination of the claims advanced by the summons, as set out at paragraph [4] above. The need to determine those claims remained extant when R S Hulme J made the orders of 28 February 1995. Order (2) of that date quoted at paragraph [17] above was, by its terms, in the nature of a residual order - in the sense that it dealt with matters not already dealt with in some other way. It therefore did not operate to cut across the processes that had already been set in train to determine the liability of the plaintiffs to the defendants for costs and the state of account between the plaintiffs and the defendants as their solicitors.
59 It is clear that there was an expectation on the part of R S Hulme J that the processes set in train by his orders would determine both those matters - subject, of course, to adoption by the court of the report to be prepared by the referee in respect of the second matter; and with the possibility that the court might decline to adopt the report or might adopt it with modifications. As at 28 February 1995, however, his Honour stated that a position had been reached where the taxation of costs was proceeding but neither party wished to pursue the reference to the Honourable G D Needham QC; also that the plaintiffs had conceded, in respect of paragraph 4 of the summons (that is, the claim for an order that accounts be taken), that the defendants' claim for 'some $97,000' was 'correct' (with the question of taxation of costs still left to one side). The letter of 15 November 1994 referred to at paragraph [18] above supported the conclusion that the parties had reached a compromise on the account aspect.
60 The court thus noted on 28 February 1995 that agreement between the parties had produced a result where the plaintiffs were to pay a stated sum to the defendants and there was no need for an account. It was that conclusion that led R S Hulme J to say, 'the plaintiffs have lost the issue raised by order 4 in the ultimate'. The order than [sic] made dismissing the summons '[e]xcept in so far as orders have previously been made' must therefore be taken to have extended to the claim in paragraph 4 of the summons, that is, the claim for an order than accounts be taken. That part of the proceedings was, at that time, concluded and the claims in the summons were, at least to that extent fully adjudicated.
61 What is perfectly clear, however, is that the adjudication of 28 February 1995 did not touch upon or affect the part of the relief claimed in the summons that was concerned with the quantification of solicitor-client costs. When R S Hulme J made what was, in a sense, a residual order of dismissal on that day, the orders of 9 November 1993 and 16 December 1993 were extant with respect to the question of quantification of costs. As a consequence, the proceedings remained alive in relation to the claims in paragraphs 1 and 2 of the summons. I say this because of the effect the orders of 9 November 1993 and 16 December 1993 actually had, having regard to the statutory scheme then in force."
Barrett J then referred to the developments during the period between 1996 and 2000 which had led to the position that the Court was to determine the dispute between the parties concerning the terms of the defendants' retainer. His Honour continued:
"68 Ascertaining of the terms of the retainer has therefore been an established and central part of these proceedings for a long time; and there has been no adjudication on that matter.
69 It is for that reason that I am of the opinion that the proceedings have not been disposed of in their entirety by orders made in the past."
In relation to the second question, his Honour held that the statement of claim filed by the plaintiff on 19 June 2009 was not authorised by order 4 made on 12 May 2009. The order that the matter proceed on pleadings was directed towards delineation of the case already advanced by the plaintiff. It did not entitle the plaintiff to add new claims or causes of action without first obtaining leave to amend. The claims in the further amended points of claim filed on 15 April 2002 went entirely to the retainer issues which were to be determined by the Court in order that the assessment of the costs in the 16 matters could then proceed. The question of fraud raised in the 15 April 2002 further amended points of claim bore a direct relationship to the terms of the retainer. The question of the effect on the retainer of any fraud in relation to the 19 April 1984 letter was within the scope of the necessary inquiry into the terms of the retainer. [69] However, the claims advanced in the 19 June 2009 statement of claim were: [70]
"73 … much wider than and quite different from those in the further amended points of claim. In the first place, there is a claim for the delivery up of 'all such files of the plaintiffs as remain in the possession of the defendants'. Second, there is a claim for an order that accounts be taken by the defendants. Third, there is a claim that unspecified questions be referred out to a referee pursuant to Part 20 of the Uniform Civil Procedure Rules. There is no equivalent or similar relief specified in the further amended points of claim of 15 April 2002. There having been no grant of leave to amend to include those claims, they cannot be pursued. The order that the matter proceed on pleadings is insufficient to allow them to be pursued.
74 In relation to the second of the claims referred to in the immediately preceding paragraph, there is the additional point that, as I have said at paragraph [60] above, R S Hulme J's order of dismissal made on 28 February 1995 extended to the claim in paragraph 4 of the summons for an order that accounts be taken. It follows that that aspect of these proceedings has been determined by the court. That is an additional reason why the claim for an account cannot now be renewed.
75 The same is true, to a certain extent, in relation to the claim in the statement of claim of 19 June 2009 for an order that the defendants deliver up 'such files of the plaintiffs as remain in the possession of the defendants'. There was in the summons of 24 August 1993 a claim for an order that the defendants deliver up the plaintiffs' documents in specified 'matters', each of which appears to have been a court proceeding to which one of the plaintiffs was a party and in which, it may be inferred, the defendants acted as that party's solicitors. The order of dismissal of 28 February 1995 extended to that claim in the summons, with the result that the claim cannot now be renewed with respect to the documents in the particular matters.
76 Returning to the statement of claim filed on 19 June 2009, it may be noted that paragraphs 5, 6, 7 and 8 all advance claims for the payment of money by the defendants to the plaintiffs - in one case (paragraph 5) without any classification of the nature of the obligation to pay and in the others as damages (paragraph 6), equitable compensation (paragraph 7) and interest (paragraph 8). These are all new claims, in that that they have no counterpart in the further amended points of claim of 15 April 2002 or any earlier articulation of the plaintiffs' case. It is therefore not open to the plaintiffs to pursue them in the absence of a grant of leave to amend. The order that the matter proceed on pleadings did not operate to allow any such amendment."
In relation to [75] of his Honour's judgment above, I note that the 1993 summons had sought an order requiring the defendants to deliver up to the plaintiffs the files in four specified matters only. [71] However, over the period from 1984 to October 1992, MDN had acted for the Preston entities in many matters. The plaintiff claims that MDN had acted for Preston entities in more than 50 matters. [72] Barrett J's conclusion that the 19 June 2009 statement of claim was not authorised by the orders made by Bergin CJ in Eq on 12 May 2009 did not preclude the plaintiff from seeking leave to amend to introduce a claim for delivery up of the defendants' files, save in respect of the files in the four matters that had been the subject of order 3 in the 1993 summons that had already been disposed of by R S Hulme J. [73]
Barrett J continued: [74]
"77 The only claim common, at least in substance (although not in precise terms), to the further amended points of claim of 15 April 2002 and the statement of claim filed on 19 June 2009 is the claim for declaratory relief as to the fraudulent character of the letter of 19 April 1984: see prayer (2) in the further amended points of claim and prayer 4 in the statement of claim. The purpose of or pretext for such a declaration is, however, quite different in each case. In the claims of 15 April 2002, the allegedly fraudulent character of the letter of 19 April 1984 goes to the validity or enforceability of the defendants' retainer and therefore their right to the remuneration the quantification of which is the sole remaining purpose of these proceedings. In the claims of 19 June 2009, the allegedly fraudulent character of the letter is not raised in any way in relation to definition of the terms of the retainer for the purposes of quantification of costs. It is put forward as part of a quite separate case seeking an account or equitable compensation or damages for breach or retainer or breach of fiduciary duty. The pursuit of such a case is not open to the plaintiffs in the absence of leave to amend."
His Honour did not find it necessary to deal with the third question identified above in light of his conclusions in relation to the first and second questions. [75]
Barrett J declined to grant the order sought by the defendants dismissing the 1993 proceeding because:
"79 …. When it is recognised that the proceedings as now constituted are not as indicated by the statement of claim filed on 19 June 2009 but, rather, as indicated by the further amended points of claim of 15 April 2002, it is apparent that there remains extant a coherent but quite confined claim of the plaintiffs related to ascertaining the terms of the retainer which cannot be said to be affected by any of the rule 13.4 vices and which ought to be allowed to proceed to trial, assuming that the plaintiffs still wish to see it come to trial. It would therefore not be correct to dismiss the proceedings out of hand."
Barrett J therefore dismissed the defendants' notice of motion. However, his Honour also made an order striking out the statement of claim filed on 19 June 2009, stating:
"81 Although the proceedings will not be dismissed, the record should be set right by ordering that the statement of claim filed on 19 June 2009 be struck out. Such an order is within the subsidiary claim in the notice of motion for 'such further order as the nature of the case may require'. It will then be up to the plaintiffs to decide whether to seek leave to amend by converting the case as pleaded on 15 April 2002 into the quite radically different case indicated by the statement of claim filed on 19 June 2009 …."
The plaintiffs did then apply to amend their case by filing a notice of motion on 30 March 2010 seeking leave to file a proposed statement of claim containing new claims for damages and equitable compensation. That notice of motion was also heard by Barrett J. In his reasons for judgment published on 11 May 2010, his Honour described the proposed amendments in the following terms: [76]
"10 The amended statement of claim now proposed by the plaintiff contains three substantive claims, being a claim for a declaration that the letter dated 19 April 1984 'is void and of no effect', a claim for damages and a claim for equitable compensation. The second and third claims are new, in the sense that they had no counterpart in any of the pleadings put forward by the plaintiff up to further amended points of claim filed on 15 April 2002 (see paragraphs [50] and [51] of the reasons of 2 March 2010). The further amended points of claim claimed the following relief:
'(1) A declaration that the terms of the retainer agreement between the plaintiffs and the defendants in respect of the matters set out in the Schedule to the Summons are as pleaded herein.
(2) A declaration that the second defendant is guilty of fraudulent conduct as alleged in paragraphs 71, 76 and 77 hereof in respect of the matters pleaded in paragraphs 65 to 70, 72 to 75 and 77 respectively hereof.
(3) A declaration that in the events which have happened the defendants' bills of costs in respect of the matters set forth in the Schedule to the Summons are unenforceable as tainted by the fraudulent conduct of the second defendant.
(4) Such further or other declarations, orders and/or relief as the nature of the case may require.
(5) An order that the defendants pay the plaintiffs costs of the proceedings on an indemnity basis.'
11 The claims for damages and equitable compensation now sought to be added by the plaintiff were first contained in the statement of claim of 19 June 2009 that was struck out by me on 2 March 2010. By that time, the proceedings had been on foot for sixteen years and the fraud of Leon Nikolaidis had played a part for some seven years."
It is relevant to note that the plaintiffs did not pursue amendments seeking an order of the kind that had been included in the 19 June 2009 statement of claim for the delivery of all files maintained by the defendants in respect of legal services provided to the Preston entities.
Barrett J dismissed the plaintiffs' motion for leave to file the statement of claim. His Honour said: [77]
"15 Several factors combine to warrant refusal of the amendment the plaintiffs seek. First and as just mentioned, the amendment is not necessary to the determination of the 'real questions' in the proceedings (see Civil Procedure Act, s 64(2)). Second, the amendment is raised without adequate explanation many years after it could have been raised. Third, the amendment adds new factual dimensions many years after relevant events and at a time when recollections have obviously faded."
In relation to the absence of any adequate explanation for the plaintiffs' delay in seeking to introduce the new claims, Barrett J said: [78]
"13 The rationale for the amendment is put as follows in the submissions of counsel for the plaintiff:
'The matter has been complicated and has evolved factually from when proceedings were first filed in 1993 because of the fraud of Mr Nikolaidis. What had begun as a costs exercise has developed because the first plaintiff came to the realisation that he and his companies were routinely overcharged. As a consequence, while the claim is still at its centre a costs exercise, it has taken on a different form in order to ensure the plaintiffs and their related entities are in a position to argue for a recovery of the amounts they have overpaid.'
14 The fact is that the proceedings have always been no more than a 'costs exercise', their objective being to discover the true terms of the retainer so that a pending process of costs assessment may be properly informed. If, as the plaintiff fears, he and his companies 'were routinely overcharged', the costs assessments will show that; and if the assessments establish that the plaintiff and his companies paid more than they should have paid, that of itself will support a claim for recovery."
At the same time as dismissing the plaintiffs' motion, Barrett J ordered that there be no order as to costs in respect of either the defendants' notice of motion seeking an order dismissing the proceedings (being the motion that his Honour had dismissed on 2 March 2010) or the plaintiffs' notice of motion filed on 30 March 2010. [79] His Honour considered that, looking at the totality of the matters litigated on the two motions, each party had "enjoyed an appreciable measure of success and suffered an appreciable measure of failure", such that "the discretion with respect to costs will be appropriately exercised by allowing costs to rest where they fall". [80] That is the seventh Adverse Costs Order that the plaintiff would seek to set aside if leave were granted to file the verified pleading. [81]
The plaintiffs then filed a pleading styled as an amended statement of claim which they subsequently consented to being struck out after they accepted that it sought relief precluded by Barrett J's March 2010 judgment. On 1 October 2010, Rein J made an order by consent striking out that pleading. His Honour also ordered the plaintiffs to pay on an indemnity basis the defendants' costs incurred in relation to that amended statement of claim, including the costs of a notice of motion filed on 23 August 2010. [82] That is the eighth Adverse Costs Order that the plaintiff would seek to set aside if leave were granted to file the verified pleading. [83]
In October 2010, the plaintiffs' solicitors wrote to the defendants' solicitors stating that it appeared that the 1993 proceeding had been rendered futile by the passing of time because the time within which the defendants could bring an action on each of the invoices that the Court had referred to assessment had expired by the end of 1998 by reason of s 14(1) of the Limitation Act 1969 (NSW). The defendants' solicitors replied disputing that the defendants' right to recover outstanding fees in the subject invoices was statute-barred. The defendants' solicitors advised that they intended to press for a date for final hearing of the claims for relief in the plaintiffs' points of claim filed on 15 April 2002. [84]
On 9 May 2011, Bergin CJ in Eq listed the plaintiffs' 15 April 2002 points of claim for hearing on 24 to 26 August 2011 and referred the proceeding to mediation to be conducted on or before 1 July 2011. As Black J recorded in a judgment subsequently published on 11 September 2011, those orders were made in circumstances where it was common ground before her Honour that the remaining issue to be determined by the Court was the hourly rates which were to be applied by a costs assessor in assessing the bills that had been referred for assessment pursuant to the orders made on 25 July 1996. [85]
The mediation ultimately took place on 12 August 2011, and the parties entered into a written agreement in relation to the hourly rates to be applied in assessing the bills. [86] However, the plaintiff then wished to have the Court determine at the hearing that had been listed for 24 to 26 August 2011 whether he was personally liable to pay the defendants' bills in 14 of the 16 matters that had been referred for assessment. The defendants contended that it was not open to the plaintiff to raise that issue in light of orders previously made in the 1993 proceeding. The hearing proceeded on 25 and 26 August 2011 before Black J for the primary purpose of determining whether the issue concerning Mr Preston's personal liability was open in the 1993 proceeding. [87]
Black J held that the issue concerning Mr Preston's personal liability had already been determined by the judgments and orders made in the 1993 proceeding by R S Hulme J. His Honour published reasons for judgment on 13 September 2011 and made orders on 16 September 2011 giving effect to that judgment. Those orders included a determination as to the terms of the retainer in relation to the bills in the 16 matters (reflecting the agreement reached by the parties at the mediation), an order to facilitate the assessment of those bills and an order that the plaintiffs pay the defendants' costs incurred from 18 August 2011 onwards of and incidental to the hearing on 25 and 26 August 2011. [88] This last order is the ninth Adverse Costs Order that the plaintiff would seek to set aside if leave were granted to file the verified pleading. [89]
The Appeal Adverse Costs Orders that the plaintiff would seek to set aside if leave were granted to file the verified pleading were made by the Court of Appeal on 12 March 2012 and 21 June 2012. The orders require the plaintiffs to pay the defendants' costs of the plaintiff's unsuccessful application for leave to appeal from the judgment and orders of Black J and a notice of motion filed by the plaintiff within that appeal proceeding, which was dismissed. [90]
The next step to progress resolution of the 1993 proceeding was to refer the defendants' bills of costs in the 16 matters for assessment in accordance with the orders made by Young J on 25 July 1996 as varied the orders made by Black J on 16 September 2011. [91]
By this stage (2012), the bills of costs and objections thereto that had been filed in 1996 and early 1997 could not be located. Orders were made on 17 May 2013 to facilitate the Court determining what were the documents that constituted those bills of costs and objections if the parties were unable to reach agreement about that matter. A hearing to determine that issue was ultimately listed before Darke J on 13 February 2014. [92]
By the morning of 13 February 2014, the parties had reached agreement and orders were made by Darke J to give effect to that agreement and to facilitate the assessment of the bills. His Honour also ordered that, apart from costs orders previously made, each party bear its own costs between 9 August 2013 and 13 February 2014 of and incidental to the hearing listed for 13 February 2014. [93] This is the tenth Adverse Costs Order that the plaintiff would seek to set aside if leave were granted to file the verified pleading. [94]
The orders made by Darke J on 13 February 2014 required, inter alia, the preparation of a statement of issues by each party relating to the plaintiffs' objections to the bills the subject of the costs assessment. In an amended statement of issues served on the defendants on 10 December 2014, the plaintiff stated his contention that the defendants' entitlement to the costs the subject of the bills had been extinguished by ss 14 and 63 of the Limitation Act, with the result that their right to any debt quantified in a certificate of costs obtained at the end of the assessment process had been extinguished. The plaintiff filed a notice of motion seeking a declaration to that effect on 26 February 2015. The parties subsequently filed points of claim and defence in relation to the limitation issues raised in that notice of motion. [95]
The 26 February 2015 notice of motion also sought the following additional relief in the event that the Court made the declaration sought: [96]
1. an order that the defendants pay the plaintiff's costs of the 1993 proceeding from its commencement until the date of filing the notice of motion;
2. an order that the defendants pay the plaintiff interest on costs; and
3. "an order that the defendants return to the plaintiff copies of all files in which the defendants' possession concerning matters in which M D Nikolaidis & Co acted for the plaintiff or one of his companies" (my emphasis).
I note that the defendants do not appear to have raised any objection to the plaintiff introducing a claim for an order for the return of all files in the 26 February 2015 notice of motion, notwithstanding that Barrett J had struck out that very claim in the 19 June 2009 statement of claim.
The limitation issues raised by the 26 February 2015 notice of motion were heard before Slattery J on various dates between 26 October 2015 and 20 September 2016. During the course of the hearing, his Honour made directions to facilitate the claim for declaratory relief and other claims that had been made by notice of motion being made in the proper manner by filing a fresh summons. The filing of that summons on 11 November 2015 (the 2015 summons) resulted in the commencement of a fresh proceeding which has subsequently travelled together with the 1993 proceeding (2015/331795, or the 2015 proceeding). [97]
During the period in which judgment was reserved before Slattery J in the 2015 proceeding, the defendants applied for an assessment of their costs in relation to the costs orders made in the 1993 proceeding by Rein J on 1 October 2010 and by Black J on 16 September 2011 and the costs orders made by the Court of Appeal in 2012. Those costs were subsequently assessed and certificates of determination of costs were issued on 13 February 2017.
On 17 November 2017, Slattery J delivered his reasons for judgment in relation to the limitation issues raised by the 26 February 2015 notice of motion and the 2015 summons. His Honour held that the defendants' cause of action in contract on MDN's retainer and the bills of costs that were the subject of the 1993 proceeding had accrued in or about October 1992 and had been extinguished by s 63 of the Limitation Act because the defendants had not commenced an action prior to the 6 year period specified in s 14(1)(a) of that Act. The applications filed in compliance with the 25 July 1996 orders and in conformance with the requirements of the 1987 Act for an assessment of costs (as then applicable) did not constitute an "action" that was "brought on the cause of action" before the expiry of the 6 year limitation period. The 1993 proceeding had been brought by the plaintiffs, and was not an action on the defendants' cause of action in contract. It would have been open to the defendants at an earlier time to file a cross-claim for legal fees pending the outcome of the costs assessment, but they had not done so. [98]
The 2017 judgment did not address the plaintiff's claims in the 2015 summons for the return of all files in the defendants' possession, save that his Honour noted that it was unclear whether the plaintiff still pressed for that relief and stated that the Court would allow the parties an opportunity to see if they could agree on orders for the return of the files or some other mutual resolution of that issue. [99]
Slattery J identified that there were issues as to costs that remained to be determined and noted that it was open to either party to apply for a special costs order and/or for a gross sum costs order pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW). [100] The 1993 proceeding and 2015 proceeding were stood over for a time to allow the parties to consider these issues.
According to an email sent by the plaintiff's solicitor to the Associate to Slattery J on 6 February 2018, the plaintiff "expressed interest in the return of his original files held by the defendant the subject of the proceedings" at a directions hearing before Slattery J on 8 December 2017 and "the defendant opposed returning the original files". [101] In that same email, the plaintiff's solicitor advised that "the plaintiff no longer seeks an order for return of his files". [102]
In a subsequent directions hearing before Slattery J on 14 May 2018, his Honour enquired whether the parties had agreed on the terms of an order to dispose of the plaintiff's claim for return of the files. Slattery J referred to the plaintiff's previously communicated position that he no longer sought return of the files. Counsel for the plaintiff failed to unequivocally inform the Court whether that remained the plaintiff's position. Slattery J stated that "pretty soon" the plaintiff would have to state his position in relation to the files irrevocably. [103]
At the 14 May 2018 directions hearing, the parties also informed his Honour that they were in the process of searching the court record of the 1993 proceeding to ascertain the costs orders that had been made prior to the 2017 judgment. [104] His Honour was also informed of the costs orders and determinations referred to at [97] above and that the plaintiffs had filed an appeal from those determinations in the Common Law Division of the Court. [105] That appeal had been commenced by summons seeking leave to appeal on 27 March 2018. I will refer to this as the 2018 proceeding.
His Honour made an order that the 2018 proceeding travel together with the 1993 proceeding and the 2015 proceeding and directed that the parties agree upon what costs orders had been made in the 1993 proceeding and 2015 proceeding (including stating any disagreement as to the extent and scope of those costs orders). The three sets of proceedings were listed before his Honour on 21 and 22 November 2018 for the hearing of what was described as "all … preliminary costs argument" excluding any application for a gross sum costs order. [106]
The plaintiff decided to apply for an order setting aside previous costs orders adverse to him as a preliminary step before applying for a gross sum costs order. [107] However, he did not take any steps to make that application until a few days before the hearing commencing on 21 November 2018, which had been fixed in May 2018. On 15 November 2018, the plaintiff filed a notice of motion in the 1993 proceeding which sought orders pursuant to UCPR rr 36.15 and/or 36.16(3) that "all costs orders made in the proceedings between 1993 and the present adverse to the plaintiff" be set aside. Paragraph 1(e) of the motion alleged that that each of the itemised bills of costs issued by the defendants in the 16 matters pursuant to the orders made by RS Hulme J on 9 November 1993 included:
"i. items of work claimed to have been done which were not done;
ii. time claimed to have been spent on items of work which was excessive;
iii. items of work done with the plaintiffs' authority or instructions; and
iv. items of work which had previously been paid for by the plaintiff."
Paragraphs 1(f) and (g) of the motion stated:
"(f) If the Bills of Costs had not included the items of work and time claimed in paragraph (e) above, the plaintiff would not have commenced the present proceeding.
(g) Further, even if the plaintiff owed the Firm $95,749 in respect of costs and disbursements in the 16 Matters in October 1992, as at October 1992 the Firm held an amount on behalf of the plaintiff, or was liable to account to the plaintiff for an amount, from which the sum of $95,749 could be paid. If the Firm had paid the sum of $95,749 from the amount it held on behalf of the plaintiff, or was liable to account to the plaintiff, the plaintiff would not have commenced the present proceeding."
Paragraph 1 of orders made by Slattery J on 21 November 2018 included the following notation: [108]
"Note that the parties agree that at least three issues need to be determined before the Court decides upon the availability and the quantum of a gross sum costs order. Those issues are: (1) whether any lien is in the circumstances that have occurred still maintainable by the defendants in answer to an application for the return of the 16 files ('the 16 files') the subject of the 1993 proceedings ('the lien issue'); (2) whether the 16 files should be returned to the plaintiff permanently or at least on an interlocutory basis and if so on what terms ('the return of files issue'); (3) whether at any time prior to termination of the former firm's retainer by the plaintiffs that money was paid on account of the former firm's legal bills, which money in the circumstances may now be said to be an overpayment, because the work billed was not in fact done ('the monies on account issue'); and (4) whether there was a basis to set aside costs orders made in the 1993 proceedings by reason of alleged fraud committed on behalf of the firm ('the costs fraud issue')."
It is not apparent to me from the materials placed before the Court on the hearing of the Motion how the "monies on account" issue or the "costs fraud issue" arose in the 1993 proceeding and/or the 2015 proceeding.
In relation to the "monies on account" issue, the bills that had been disputed in the 1993 proceeding were bills in 16 matters that the plaintiff had not paid. The purpose of the orders that had been made the 1993 proceeding for taxation and assessment of those bills had been to determine what, if any, amount the plaintiff was liable to pay to the defendants in respect of those bills. The plaintiff had not pleaded any allegation that, in respect of other bills that he had paid, he had been charged and had paid for work that MDN had not performed. Further, the scope of the reference ordered by R S Hulme J on 9 June 1994 covered MDN's receipt, application or disbursements of all payments made by Preston entities during the 1984 to 1992 period. This included identifying the particular bills to which payments made by the Preston entities had been applied by MDN. However, unless and until the referee permitted an amendment pursuant to the power conferred on him by order 7 made on 9 June 1994, the referee's report was not required to address whether those bills included charges for work that was not in fact done.
I assume that the "alleged fraud" referred to in the description of the "costs fraud issue" in the 21 November 2018 orders is the overcharging conduct referred to in the description of the "monies on account" issue. I make this assumption because the allegations of fraud in connection with costs that had previously been pleaded had related to the terms of the retainer and had been resolved at the mediation in August 2011 with the parties' agreement being incorporated into the terms of the orders made by Black J on 16 September 2016. My observations immediately above in relation to the "monies on account" issue therefore apply equally to the "costs fraud issue" referred to in the 21 November 2018 notation.
It is plain from the terms of the 21 November 2018 notation that the "lien issue" and "return of files issue" were limited to the 16 files that had been the subject of the 1993 proceeding from the outset. Thus, the plaintiff was not pressing his broader claim made in the 26 February 2015 notice of motion and in the 2015 summons for the return of all files in the defendants' possession.
In subsequent correspondence with the defendants' solicitors, the plaintiff sought to keep alive the potential to have all files returned to him.
On 4 January 2019, the plaintiff's solicitors wrote to the defendants' solicitors. After referring to the fact that, during "a number of years prior to the termination of the retainer … in October 1992", the plaintiff and other Preston entities had paid invoices issued by the defendants and paid amounts demanded for work that the defendants claimed to have done, the letter stated: [109]
"2. The plaintiff believes that some invoices issued by the Firm were fraudulently prepared on the basis that:
the invoices charged for alleged work which was not done by the Firm; and
the principal of the Firm was aware that the invoices charged for alleged work which was not done by the Firm.
3. If the plaintiff paid invoices which charged for alleged work not in fact done by the Firm, the plaintiff's position is as follows:
(a) At the time of the termination of the retainer … [in] October 1992, the Firm held money on account for the plaintiff to the extent that the plaintiff paid the Firm for alleged work not in fact done.
(b) If the amount of money held on account for the plaintiff was greater than the amount of $95,749.60 claimed in a letter dated 16 October 1992 and related invoices (which the plaintiff believes it was), then the defendants do not have a lien over the 16 files referred to in order 1 made on 22 November 2018.
4. It follows from the reasoning in paragraphs 1 to 3 that this issue is relevant to the return of files issue referred to in order 1 made on 22 November 2018.
5. Further, this issue is also likely to be relevant to the costs fraud issue referred to in order 1 made on 22 November 2018."
The letter continued by requesting immediate access to the files in the 16 matters that were the subject of the 1993 proceeding and certain other files for the purpose investigating the question whether the invoices had been "fraudulently prepared" as alleged. The letter also stated that, once the "lien issue" had been resolved, the plaintiff would require the defendants to return to him the original files in all matters in which the Preston entities retained MDN during the period from 1984 to 1992. The letter enclosed a list of 83 matters. [110]
The defendants subsequently informed the plaintiff that the files, other than those relating to the 16 matters that were the subject of the orders for taxation and assessment of costs in the 1993 proceeding, had been destroyed or were no longer in the defendants' possession. [111]
On 18 June 2019, Ward CJ in Eq made a direction that the plaintiffs file and serve by 24 June 2019 verified points of claim in relation to the motion filed by the plaintiff on 15 November 2018. [112] Points of claim were subsequently filed in Court on 28 June 2019. It is not necessary to refer to this document in any detail save to mention that it set out some, but not all, of the allegations that are now pleaded in the verified pleading. [113]
It appears from the directions made after 28 June 2019 that the plaintiff's proposed pleading went through several further iterations before the verified pleading was ultimately served.
On 18 July 2019, Ward CJ in Eq made the following orders: [114]
"2. Order the plaintiff to file and serve a verified statement of claim by close of business on 8 August 2019.
3. Direct the plaintiff to file and serve any further evidence in chief by 16 August 2019.
4. Order that the plaintiff not be permitted to rely upon any further evidence in chief not filed and served by close of business on 16 August 2019."
No verified statement of claim was filed within the time required by order 2 made on 18 July 2019.
On 22 August 2019, Ward CJ in Eq made the following orders: [115]
"1. Order the plaintiff to serve on the defendants a revised verified statement of claim by close of business on 13 September 2019.
…
3. Order the plaintiff to serve on the defendants any further evidence in chief on which the plaintiff will seek to rely by 18 October 2019.
4. Order the plaintiff to file and serve any application for leave to file the revised verified statement of claim and for leave to rely on any evidence not served by 16 August 2019 in accordance with the orders made on 18 July 2019, such notice of motion to be filed and served by 25 October 2019…"
The plaintiff filed the Motion on 25 October 2019 seeking leave to file the revised verified statement of claim and the affidavits of Mr Preston sworn on 20 August 2019 and 21 October 2019 and Ms Zhao sworn on 19 August 2019 and 28 October 2019.
That is the Motion that is listed before me for determination.
The plaintiff claims that, in the period up to about June 2015, he paid fees totalling approximately $1.887 million to the various legal representatives acting for him during the 1993 proceeding. [116] I assume that this sum has increased considerably since June 2015.
[5]
The verified pleading
The plaintiff claims an order setting aside the Adverse Costs Orders and the Appeal Adverse Costs Orders pursuant to UCPR rr 36.15(1) or, alternatively, 36.13(3).
There are three categories of allegations pleaded in support of the plaintiff's claim for the setting aside of those orders pursuant to UCPR rr 36.15(1) and/or 36.13(3).
The first category of claims is referred to in the plaintiff's written submissions as the Overcharging Claims and I will adopt the same term. As I have referred to earlier in these reasons the defendants claimed in October 1992 that the plaintiff or the Preston entities owed MDN $95,749.40 in outstanding fees and exercised a lien over all files in matters conducted on behalf of the Preston entities pending payment of that amount. The plaintiff alleges that the amount owed to MDN in October 1992 "was substantially less than $95,749". [117]
The second category of claims is referred to in the verified pleading as the "Nikolaidis Wrongful Conduct" and in the plaintiff's written submissions as the Dishonest Conduct Claims. I will use the second term in these reasons. The plaintiff alleges that, if the second defendant (Mr Leon Nikolaidis) had not engaged in certain allegedly dishonest conduct in relation to MDN's accounts, there would have been available in October 1992 "well over $100,000" for MDN to apply to any fees owed to the firm in matters in which it had acted for the Preston entities. [118]
The third category of claims is referred to in the plaintiff's written submissions as the DRAW Report Claims and I will use the same term. The verified pleading alleges that, as at October 1992, MDN held on the plaintiff's behalf or was liable to account to him for amounts totalling in excess of $95,750, because the DRAW Report provided by the defendants on 1 July 1994 omitted certain payments that the plaintiff had made to MDN. [119]
It is necessary to explain the Overcharging Claims, the Dishonest Conduct Claims and the DRAW Report Claims in more detail.
The plaintiff pleads that:
1. MDN was constituted by Messrs Mitrofanis and Leon Nikolaidis between 1984 and about April 1992, and by Messrs Mitrofanis and Leon Nikolaidis and Mr Zwar from about April 1992 until at least 1995;
2. the Preston entities retained MDN to provide legal services in over 50 matters between about 1984 and October 1992;
3. during that period, the Preston entities paid MDN in excess of $1,300,000 in payment of accounts issued by MDN, in respect of statements of account issued by MDN asserting that certain accounts were unpaid (which were paid without question by the plaintiff), in response to assertions by Mr Leon Nikolaidis that a specified amount was owed to MDN (which amounts were also paid without question by the plaintiff), and in response to requests for specified amounts to be paid to MDN before further work was undertaken in respect of a matter or matters;
4. following the termination of MDN's retainer in October 1992, MDN exercised a lien over all of the files in the matters in which the firm had acted for the Preston entities pending payment of the amount of $95,749.40 claimed by MDN to be owing to it in respect of outstanding fees; and
5. the alleged debt of $95,749.40 related to 16 matters.
In relation to the Overcharging Claims, the plaintiff pleads that:
1. MDN's accounts issued to the Preston entities in October 1992 in respect of two of the 16 matters charged for some work for which the Preston entities had previously paid MDN, in addition to charging for work not in fact done by MDN;
2. in relation to a further three of the 16 matters, MDN "did not do most of the work" for which MDN charged the Preston entities;
3. the amount owing by the Preston entities to MDN as at October 1992 was therefore "substantially less than" the $95,749.40 claimed by MDN;
4. Messrs Mitrofanis and Leon Nikolaidis and Mr Zwar were partners in MDN when the firm issued accounts in the five matters charging for work not done, and Mr Zwar was involved in the preparation of those accounts;
5. Mr Zwar prepared the bills of costs issued to the Preston entities in December 1993 pursuant to the orders made by Hulme J on 9 November 1993.
Thus, having succeeded in establishing that the defendants' cause of action in contract to recover any costs owed to them as at October 1992 has been extinguished by s 63 of the Limitation Act, the plaintiff now wishes to have the Court determine his claim that $95,749 was not in fact owed to the defendants as at October 1992 as part of the determination of his application to set aside the Adverse Costs Orders and Appeal Adverse Costs Orders.
The Overcharging Claims relate to five of the 16 matters in which the defendants delivered itemised bills of costs in December 1993 pursuant to the orders made by Hulme J on 9 November 1993. Those bills were referred to taxation pursuant to orders made by Hulme J on 16 December 1993 and assessment pursuant to orders made by Young J on 25 July 1996, as subsequently varied by orders made by Black J on 16 September 2011. The plaintiffs filed objections to those bills in late 1996 and early 1997. [120] The plaintiffs revisited those objections in the statements of issues filed in 2014 and 2015 pursuant to orders made by Darke J on 13 February 2014. [121]
Notwithstanding the plaintiffs' detailed consideration of the itemised bills in those stages of the 1993 proceeding, the verified pleading is devoid of particulars of the Overcharging Claims.
The first of the two matters in [131(1)] above is referred to in the verified pleading as the Strong Brown Matter. Mr Preston pleads that MDN's account issued on 15 October 1992 for the sum of $13,335 stated that it was for work performed in the Strong Brown Matter in the period from 27 February 1984 to 13 October 1992. [122] The plaintiff then pleads that:
"43. For the following three reasons, on 15 October 1992 the plaintiff was not, and could not be, liable to the Firm for $13,335 in the Strong Brown Matter.
44. First, on or about 10 August 1989 the plaintiff paid all amounts owing to the Firm in respect of billed and unbilled work.
45. It follows that:
(a) In October 1992 the plaintiff could not be liable to the Firm for work done in the Strong Brown Matter up to 10 August 1989.
(b) To the extent that the Strong Brown Account charged for work up to 10 August 1989, the account charged for work which had already been paid for.
46. Second, between about 1984 and 1986 the plaintiff made additional payments to the Firm for work in the Strong Brown Matter between 1984 and 1992.
Particulars
The plaintiff will provide particulars of the payments.
47. The Strong Brown Account did not account for, or take into account, the payments referred to in the above paragraph.
48. It follows that the Strong Brown Account charged for some work for which the plaintiff had previously paid.
49. Third, in December 1993 the defendants served on the plaintiff a bill of costs which itemised the work the Firm claimed to have done in the Strong Brown Matter.
50. The Firm did not do most of the work.
Particulars
The plaintiff will provide particulars of the work not done.
51. It follows that the Strong Brown Account charged for work not done by the Firm."
I note that particulars of the additional payments referred to in paragraph 46 of the verified pleading have not been provided.
Having closely scrutinised the defendants' itemised bills of costs on at least the two occasions referred to in [131(1)] above, the plaintiff must be in a position to identify precisely what work itemised in the defendants' bill for the Strong Brown Matter he alleges the defendants did not perform. Yet the facts on which the plaintiff relies in support of the allegation that the defendants "did not do most of the work" itemised in that bill are not pleaded. Nor has the plaintiff provided particulars identifying the work allegedly not done.
The same problems exist in relation to the pleading of the second of the two matters in [131(1)] above, which is referred to in the verified pleading as the King Matter. That is to say, the verified pleading provides no particulars of the payments that the plaintiff alleges MDN failed to give credit for in its account issued in October 1992 and does not plead or particularise the work included in the defendants' itemised bill of costs issued in December 1993 pursuant to Hulme J's orders that the plaintiff alleges was not done. The pleading simply makes the same bare assertion that was made in relation to the Strong Brown Matter: "The Firm did not do most of the work". [123]
As I have already noted, the three matters referred to in [131(2)] above were also matters in which the defendants delivered itemised bills of costs in December 1993 pursuant to the orders made by Hulme J on 9 November 1993. Curiously, the pleaded overcharging allegations in respect of these three matters make no allegation as to whether or not those itemised bills included work not done by MDN. The verified pleading simply identifies the accounts issued by MDN in each of those three matters in October 1992 and any earlier accounts that were incorporated within the October 1992 accounts. The verified pleading asserts that MDN "did not do most of the work claimed to have been done" in the relevant accounts and that the plaintiff "was not, and could be, liable to the Firm" in respect of those accounts in October 1992. No facts material to those allegations are pleaded. Particulars are neither provided nor foreshadowed. [124]
The section of the verified pleading concerning the Overcharging Claims concludes that, as a result of the facts pleaded in relation to each of the five matters, "the amount owed by the plaintiff to the Firm in October 1992 was substantially less than the amount of $95,749". [125]
The plaintiff pleads that each of the three defendants were partners of MDN at the time the relevant accounts were issued and that each of them therefore "bear responsibility if it is established that the accounts charged for work not done by the Firm". [126]
In the absence of particulars of alleged additional payments and work allegedly not done, it is not possible to discern from the verified pleading the amount by which the defendants are alleged to have overcharged the Preston entities.
The Dishonest Conduct Claims relate to:
1. six matters in which the plaintiff alleges that the defendants charged him, and he paid, fees for work that MDN had not performed;
2. a payment of $97,000 made by the plaintiff and applied by MDN to 15 accounts for fees in various matters in which MDN had acted for the Preston entities; and
3. a sum of $5,000 that the plaintiff claims to have paid to MDN in December 1987 for payment to Citicorp Australia Ltd in settlement of a dispute, which MDN allegedly did not pay to Citicorp in accordance with the plaintiff's instructions.
In relation to each of the six matters referred to in [143(1)] above, it is alleged in the verified pleading that:
1. in an account issued to the Preston entities prior to October 1992, MDN charged fees for work that MDN had not performed;
2. in one of the six matters (referred to in the verified pleading as the GKN matter), funds held by MDN on trust for the Preston entities were applied to pay those fees shortly after the account was issued;
3. in four of the six matters (referred to in the verified pleading as the Kawatetsu and Sumikin matter, the United Kingdom contracts and Girwan matter, the Falcon Steel matter and the Robert Noonan matter), the plaintiff had paid those fees prior to the issue of the account upon the second defendant (Mr Leon Nikolaidis) informing the plaintiff of the amount of fees said to be owing and requesting payment;
4. in one of the six matters (referred to in the verified pleading as the Preston Scaffolding matter), those fees were paid by the plaintiff after MDN issued the account;
5. at the times Mr Leon Nikolaidis informed the plaintiff of the amount of fees in the Kawatetsu and Sumikin matter, in the Falcon Steel matter and the Robert Noonan matter, Mr Leon Nikolaidis knew that MDN's fees in each matter were "substantially less than" the amount that he told the plaintiff;
6. when Mr Leon Nikolaidis informed the plaintiff of the amount of fees in the United Kingdom contracts and Girwan matter, he knew that MDN's fees were "nil or close to nil";
7. Mr Leon Nikolaidis, authorised the issue of the account in each of the six matters and knew that those accounts charged the plaintiff for work that had not been done;
8. in each of the six matters, Mr Leon Nikolaidis also knew that MDN had either received payment of the amount charged or that MDN and taken and used for its own benefit funds held in trust to pay the account in part or in full;
9. in the circumstances, Mr Leon Nikolaidis engaged in dishonest conduct in each matter; and
10. if Mr Leon Nikolaidis had not engaged in that allegedly dishonest conduct, the amount charged in each relevant account "would have been available … for the Firm to apply to the Firm's legal costs and disbursements in other matters in which the Firm provided legal services to the plaintiff or the Preston Companies."
As I have already observed, the verified pleading does not disclose the amount of legal costs and disbursements acknowledged by the plaintiff to have been owing to MDN as at October 1992, save that it is alleged to have been an amount "substantially less than $95,749".
The six matters, the date on which the relevant payment was made or the relevant account was issued in each matter, and the amount of fees allegedly charged for work not performed are identified as follows in the verified pleading:
1. the GKN matter - account issued on 20 July 1989 and $41,300 in trust funds applied in part payment of that account at about the same time; [127]
2. the Kawatetsu and Sumikin matter - payment of $8,898.95 made on 25 June 1991 and account dated 25 June 1991 received by the plaintiff "at some time"; [128]
3. the United Kingdom contracts and Girwan matter - payment of $62,345 paid on 24 September 1991 and account dated 23 September 1991 received by the plaintiff "at some time"; [129]
4. the Falcon Steel matter - payment of $9,936 made on 12 September 1990 and account dated 12 September 1990 received by the plaintiff "at some time"; [130]
5. the Robert Noonan matter - payment of $14,760.20 made on 13 August 1990 and account dated 15 August 1990 received by the plaintiff "at some time"; [131] and
6. the Preston Scaffolding matter - account dated 16 February 1989 for $16,123.50 issued to the plaintiff prior to 28 February 1991 and payment of that amount made on that date. [132]
These amounts total $153,363.55.
None of the six matters were the subject of the orders made for delivery of itemised bills on 9 November 1993 and for taxation and costs assessment on 16 December 1993, 25 July 1996, 16 September 2011 and 13 February 2014. [133] However, the verified pleading alleges that the payments in each of the six matters were made by the plaintiff. Accordingly, those payments were within the scope of the taking of accounts that was to be conducted by Mr Needham QC as referee pursuant to the orders made by R S Hulme J on 9 June 1994. Moreover, the payments in question are alleged to have been made and/or the accounts in question are alleged to have been issued within the period covered by the DRAW Report.
In relation to the $97,000 payment referred to in [143(2)] above, it is alleged in the verified pleading that MDN insisted on the payment being made before it would attend to settlement of a loan in relation to which MDN was acting for the plaintiff. The payment was made on 30 January 1992, and documents enclosed with the DRAW Report provided by the defendants to the plaintiffs on 1 July 1994 disclosed that MDN applied the payment to 15 accounts issued by MDN in other matters in which it had acted for the Preston entities. The plaintiff alleges that: [134]
1. in relation to two of those accounts:
1. Preston entities were not liable to pay the fees because the accounts were issued in matters relating to leases under which a Preston entity was lessor, and the lessee was required by the terms of the lease to pay the lessor's legal costs;
2. Mr Leon Nikolaidis knew when MDN applied the $97,000 to these accounts and when the DRAW Report was prepared that the lessee, and not the relevant Preston entity, was liable to pay the account;
3. Mr Leon Nikolaidis authorised and had knowledge of the creation of both of the accounts and their inclusion in the DRAW Report; and
4. Mr Zwar also authorised and had knowledge of the creation of one of the accounts and its inclusion in the DRAW Report;
1. in relation to four of those accounts:
1. MDN did not do the work described in the account;
2. Mr Leon Nikolaidis knew that the work described in the accounts was not done;
3. Mr Leon Nikolaidis authorised and had knowledge of the creation of all four of the accounts and their inclusion in the DRAW Report; and
4. Mr Zwar also authorised and had knowledge of the creation of one of the accounts and its inclusion in the DRAW Report;
1. in relation to one of those accounts:
1. "some or much of the work described in the account was not done";
2. Mr Leon Nikolaidis knew that the work described in the account was not done; and
3. Mr Leon Nikolaidis authorised and had knowledge of the creation of all the account and its inclusion in the DRAW Report;
1. in relation to two of those accounts:
1. the accounts "partially charge for the same work" and "to this extent the payment of $97,000 was applied twice to the same work"; and
2. Mr Leon Nikolaidis authorised and had knowledge of the creation of all the accounts and their inclusion in the DRAW Report;
1. in the circumstances, Mr Leon Nikolaidis engaged in dishonest conduct;
2. if Mr Leon Nikolaidis had not engaged in that dishonest conduct, "in October 1992 there would have been available up to about $22,000 for the Firm to apply to the Firm's legal costs and disbursements in other matters in which the Firm provided legal services to the plaintiff or the Preston Companies."
In relation to the $5,000 sum referred to in [143(3)] above, the verified pleading alleges that: [135]
1. MDN acted for the plaintiff in a dispute with Citicorp Australia Ltd in the years leading up to December 1987;
2. Mr Leon Nikolaidis informed the plaintiff that he had negotiated a settlement whereby Citicorp would accept payment of $5,000;
3. the plaintiff gave Mr Mitrofanis Nikolaidis a cheque for $5,000 in December 1987 and instructed Mr Leon Nikolaidis to pay the money to Citicorp pursuant to the settlement agreement;
4. Mr Leon Nikolaidis neither paid the money to Citicorp nor returned the money to the plaintiff;
5. as at October 1992, Mr Leon Nikolaidis either continued to hold the $5,000 for the plaintiff or was liable to account to the plaintiff for it; and
6. as a consequence of the second defendant's wrongful conduct, "in October 1992 there was available an additional $5,000 for the Firm to apply to the Firm's legal costs and disbursements in other matters in which the Firm provided legal services to the plaintiff or the Preston Companies."
In relation to the DRAW Report Claims, it is alleged that: [136]
1. the DRAW Report omits 61 payments made to MDN by the plaintiff during the period between 1984 and 1992 totalling $207,421.51 (these are referred to in the verified pleading as the Unrecorded Amounts); and
2. if those payments had been included in the DRAW Report, "in the second half of 1994 the parties would have been aware and agreed that in October 1992 the Firm held over $95,570 on behalf of the plaintiff or was liable to account to plaintiff for over $95,570".
Although it is pleaded that the second and third defendants gave instructions and information to DRAW Services Pty Ltd in the course of the preparation of the DRAW Report, there is no allegation that the relevant payments were omitted from the report as a result of any particular conduct or any dishonesty on their part.
Thus, notwithstanding that the plaintiff determined in November 1994 that he no longer required an account to be taken before the referee after:
1. the defendants provided the DRAW Report which calculated that the plaintiffs were indebted to the defendants in the amount of $116,168.55; and
2. the plaintiff's own accountant had inspected the defendants' books and records and reconciled payments made by the Preston entities with particular accounts issued by MDN,
the plaintiff now wishes to pursue allegations that the DRAW Report failed to include all payments he had made to MDN and to have the Court determine the amount that MDN held on behalf of the plaintiff or for which it was liable to account to the plaintiff, as part of determining the plaintiff's applications to set aside the Adverse Costs Orders and Appeal Adverse Costs Orders.
UCPR r 36.15(1) provides:
"A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith."
The plaintiff pleads that:
"205. If the Firm (in respect of which each of Mitrofanis, the second defendant and third defendant were partners at the time) had not claimed in and around October 1992 that the plaintiff owed the Firm money in respect of fees and exercised a lien over all files in the 50 Plus Matters, the plaintiff would not have commenced the 1993 Proceeding.
206. As pleaded in paragraphs 37 to 98 above, the amounted owed by the plaintiff to the Firm in October 1992 was substantially less than $95,749.
207. As pleaded in paragraphs 101 to 186 and 193 to 199 above, the second defendant engaged in … the Nikolaidis Wrongful Conduct.
208. … if the second defendant had not engaged in the Nikolaidis Wrongful Conduct in October 1992 there would have been available well over $100,000 for the Firm to apply to the Firm legal costs and disbursements in other matters in which the Firm provided legal services to the plaintiff or the Preston Companies.
209. Following on from the above paragraphs, if the second defendant had not engaged in the Nikolaidis Wrongful Conduct, the plaintiff would not have commenced the 1993 Proceeding and the Adverse Costs Orders and the Appeal Adverse Costs Orders would not have been made.
210. In the circumstances, the Adverse Costs Orders and the Appeal Adverse Costs Orders should be set aside under rule 36.15(1) of the Uniform Civil Procedure Rules because the orders were made irregularly, and/or illegally, and/or against good faith."
When paragraphs 205 and 206 of the verified pleading are read in isolation, it is not entirely clear whether the plaintiff's pleaded contention is that:
1. he would not have commenced the 1993 proceeding only if MDN had not claimed to be owed any money in respect of fees; or
2. he would not have commenced the 1993 proceeding if MDN had not claimed to be owed fees other an amount "substantially less than $95,749"; and less than the amount held by MDN on trust for the plaintiff or for which MDN was liable to account to the plaintiff.
When those paragraphs are read together with paragraphs 207 to 210, it is tolerably clear in my view that the plaintiff's claim is the second contention referred to immediately above. That is because it is implicit in both paragraphs 206 and 208 that the plaintiff accepts that some money may have been owed to MDN as at October 1992 in respect of the 16 matters, but contends that any such amount was less than the amount which he says MDN held on behalf of the Preston entities or for which MDN was liable to account to the Preston entities, taking into account the alleged overcharging that is the subject of the Dishonest Conduct Claims.
I note that this is consistent with the plaintiff's submission confirming that paragraph 209 reflects that, if there had been funds to his credit in MDN's trust account in October 1992, he would have authorised MDN to apply those funds to pay the bills in the 16 matters and would not have sought taxation of those bills. [137]
The verified pleading does not disclose the upper limit of an amount of fees "substantially less than $95,749" below which the plaintiff contends that he would not have commenced the 1993 proceeding if MDN had claimed only that amount of outstanding fees in October 1992 and if the amount held in trust reflected what the plaintiff now alleges was the true position.
The "well over $100,000" referred to in paragraph 208 of the verified pleading reflects the unquantified extent of alleged overcharging in the six matters that are the subject of the Dishonest Conduct Claims plus the $22,000 referred to in [149(6)] above.
Thus, the plaintiff's pleaded claim to set aside the Adverse Costs Orders and Appeal Adverse Costs Orders under UCPR r 36.15(1) relies principally on the Dishonest Conduct Claims, although it is the combined effect of the Overcharging Claims and the Dishonest Conduct Claims that is said to have resulted in the plaintiff commencing the 1993 proceeding.
The plaintiff characterises the alleged conduct that is the subject of the Dishonest Conduct Claims as a species of fraud, and contends that the Adverse Costs Orders and Appeal Adverse Costs Orders were entered against good faith and that the Court therefore has power to set aside those orders under r 36.15(1).
The verified pleading does not rely on the DRAW Report Claims as a basis for setting aside the Adverse Costs Orders and Appeal Adverse Costs Orders pursuant to UCPR r 36.15(1).
UCPR r 36.16(3) provides:
"In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except in so far as it:
(a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or
(b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief."
It is common ground that the exceptions in r 36.16(3)(a) and (b) do not apply to the Adverse Costs Orders or the Appeal Adverse Costs Orders.
In paragraph 211 of the verified pleading, the plaintiff claims that the Adverse Costs Orders and Appeal Adverse Costs Orders. should be set aside under r 36.16(3) on the basis of the matters pleaded in paragraphs 205 to 209. This is in the alternative to the plaintiff's claim for relief under r 36.15(1) in reliance on those matters.
In addition, the plaintiff pleads:
"212. Further, as pleaded in paragraph 191 above, if the Unrecorded Amounts had been recorded in the DRAW Report, in the second half of 1994 the parties would have been aware of and agreed that in October 1992 the Firm held over $95,750 on behalf of the plaintiff or was liable to account to the plaintiff for over $95,750.
213. Following on from the above paragraph, in the second half of 1994 the parties would have resolved and settled the 1993 Proceeding and the Adverse Costs Orders and Appeal Adverse Costs Orders would not have been made.
214. In the circumstances, the Adverse Costs Orders and Appeal Adverse Costs Orders may, and should, be set aside under rule 36.16(3) of the Uniform Civil Procedure Rules."
[6]
Overview of the parties' contentions and issues for determination
[7]
Introductory observations
Before turning to the parties' contentions and issues for determination on the Motion, it is necessary to make two observations about the nature of the application for leave to file the verified pleading.
The first observation is that a claim for an order setting aside an earlier judgment or order of the Court on the grounds of fraud would ordinarily be made in a fresh proceeding and not by seeking leave to file a fresh pleading in an existing proceeding. The defendants initially relied on this as one basis on which the Court should refuse the plaintiff's application for leave to file the verified pleading.
Counsel for the plaintiff submitted that, having regard to the circumstances that have given rise to his application for leave to file the verified pleading (as explained in [105]-[121] above), the Court should not dismiss his application on the basis that he should have commenced a fresh proceeding.
I accept that submission made by the plaintiff.
If I were to take the course of dismissing the Motion on the basis that a fresh proceeding should have been commenced, that would undermine the objective of the directions and orders made by Ward CJ in Eq in 2019 and would inevitably bring the parties back to Court at a later time for the defendants to make all of the other arguments that they now make in opposition to the Motion but in the context of an application for a stay or summary dismissal of the fresh proceeding and/or an order striking out the pleading filed in the fresh proceeding. That would be a highly inefficient course.
The more efficient course and the approach that seems to me to reflect the intention of the Chief Judge's directions and orders is to approach the parties' respective arguments on the application for leave to file the verified pleading in a manner consistent with the principles that would be applied if those arguments were considered in the context of an application for a stay or summary dismissal of a fresh proceeding commenced by filing the verified pleading and in an application for orders striking out the verified pleading.
I raised this with the parties on the first day of the hearing of the Motion. Subject to two qualifications, counsel for the plaintiff and senior counsel for the defendants accepted that this approach was appropriate. [138]
The first qualification is that, as counsel for the plaintiff acknowledged, [139] it is necessary to determine whether he is precluded from pursuing his claims in the verified pleading by the doctrines of res judicata, cause of action estoppel, issue estoppel or Anshun estoppel, as the defendants contend.
The second qualification is that the defendants submitted that, if those preclusive doctrines do not apply, and if the application of dismissal and/or strike out principles does not result in the plaintiff being refused leave to file the verified pleading, the Court has a discretion to grant or refuse leave applying ss 56-59 of the Civil Procedure Act. The plaintiff disputed this, and it will be necessary to address this issue later in these reasons.
The second observation is that the defendants urged me not only to determine the Motion but also to make certain other orders disposing of aspects of the 2015 summons that the plaintiff informed Slattery J in February 2018 he no longer wishes to pursue and revoking the costs assessment orders given that the plaintiff informed Slattery J in May 2018 that he does not wish to pursue the costs assessment in light of the 2017 judgment. [140]
Whilst I am attracted to the efficiency of that course, it was only the Motion that was listed before me for hearing and the plaintiff therefore did not address the other orders proposed informally by the defendants. However, the orders and directions that are set out at the end of these reasons include directions to facilitate the making of orders in the near future which formally dispose of aspects of the proceedings that are no longer pursed.
In the course of preparing these reasons, I have carefully considered the following submissions made by the parties:
1. written submissions on behalf of the plaintiff dated 17 June 2020;
2. written submissions on behalf of the defendants dated 17 June 2020;
3. oral submissions made on behalf of the plaintiff and on behalf of the defendants at the hearing of the Motion on 18 and 19 June 2020;
4. further written submissions on behalf of the plaintiff dated 8 July 2020;
5. the defendants' further written submissions in response dated 28 September 2020;
6. notes provided on behalf of the defendants dated 6 October 2020 and 10 November 2020 drawing the Court's attention to certain authorities; and
7. a note provided on behalf of the defendants on 3 December 2020 drawing the Court's attention to Clayton v Bant (2020) 95 ALJR 34; [2020] HCA 44.
The parties' written submissions are voluminous and it has therefore been necessary to refer to them in these reasons in summary form. The details of the submissions have been considered, irrespective of whether they are specifically referred to in these reasons.
To the extent that it is relevant to the issues raised by the Motion, the affidavit and other evidence adduced by the parties has been referred to in my account of the history of the 1993 proceeding above and/or is referred to in my consideration of the issues raised by the Motion below.
[8]
Overview of the parties' contentions
The plaintiff contends that the Court should grant leave to file the verified pleading, unless the defendants succeed in persuading the Court that the claims in the verified pleading for orders setting aside the Adverse Costs Orders and Appeal Adverse Costs Orders pursuant to UCPR rr 36.15(1) and 36.16(3) are:
1. precluded by the doctrines of res judicata, cause of action estoppel, issue estoppel or Anshun estoppel; or
2. an abuse of process; or
3. so obviously untenable that they cannot possibly succeed (invoking the test in General Steel Industries Inc v Commissioner of Railways (1964) 112 CLR 125 at 129).
This contention reflects the plaintiff's acceptance of the approach I have referred to in [173]-[175] above and his submission that, because his application for orders setting aside previous orders under UCPR rr 36.15(1) and/or 36.16(3) could have been commenced by simply filing a fresh proceeding, he has a right to file the verified pleading unless the Court accepts one of the defendants' three contentions above.
The defendants dispute that the plaintiff has a right to file the verified pleading if they fail to establish one of the three matters above. As I have already noted, the defendants contend that the Court has a discretion to grant or refuse leave to file the verified pleading even if those matters are not established, and that discretion must be exercised having regard to the requirements of ss 56-60 of the Civil Procedure Act. The defendants identify several matters that they submit are relevant to the exercise of the discretion and overwhelmingly favour refusal of leave to file the verified pleading.
In any event, the defendants contend that the claims in the verified pleading are precluded by the doctrines of res judicata, cause of action estoppel, issue estoppel or Anshun estoppel, by reason of the judgment and orders made by R S Hulme J on 28 February 1995.
The defendants' submissions also contained references to estoppel by record, but the substance of their submissions was directed to:
1. res judicata, cause of action estoppel and issue estoppel, which have been described as the "central, modern manifestations" of estoppel by record; [141] and
2. Anshun estoppel, which has been described as a concept at the periphery of estoppel by record. [142]
The defendants also contend that the claims in the verified pleading are an abuse of process because:
1. the plaintiff is seeking leave to litigate the claims in the verified pleading for an illegitimate purpose; and/or
2. it would be unjustifiably oppressive and unjust to the defendants and would bring the administration of justice into disrepute if the plaintiff were permitted to prosecute the claims in the verified pleading.
Finally, the defendants contend that the claims in the verified pleading are so obviously untenable that they cannot possibly succeed, including because:
1. the verified pleading does not plead the matters that must be established in order to set aside a judgment or order for fraud under UCPR r 36.15(1) in relation to any of the Adverse Costs Orders or Appeal Adverse Costs Orders, and adequate particulars of the alleged fraud have not been provided;
2. the facts pleaded in the verified pleading do not engage the Court's power to set aside judgments or orders under UCPR r 36.16(3), including because the facts pleaded do not identify any matters relevant to the circumstances in which the Adverse Costs Orders or Appeal Adverse Costs Orders were made that could not have been put to the Court at the time that those orders were made;
3. the verified pleading does not disclose any conduct on the part of the third defendant that could possibly warrant costs orders of which he is a beneficiary being set aside as against him; and
4. to the extent that it claims orders setting aside the Appeal Adverse Costs Orders, the verified pleading is incompetent.
I will determine the plaintiffs' application for leave to rely on affidavits filed and served after 16 August 2019 before addressing the issues raised by his application for leave to file the verified pleading.
[9]
Plaintiff's application for leave to rely on affidavits
As stated above at [118] above, order 3 of the orders made by Ward CJ in Eq on 18 July 2019 required the plaintiff to file and serve any further evidence in chief upon which he sought to rely by 16 August 2019. Order 4 provided that the plaintiff was not permitted to rely on any further evidence not filed and served by 16 August 2019.
By the Motion, the plaintiff seeks leave to rely on the following affidavits that were served after 16 August 2019:
1. the affidavit of the plaintiff sworn on 20 August 2019;
2. the affidavit of the plaintiff sworn on 21 October 2019;
3. the affidavit of Ms Zhao sworn on 19 August 2019; and
4. the affidavit of Ms Zhao sworn on 28 October 2019.
The plaintiff's affidavit sworn on 20 August 2019 is directed principally to the substance of the Overcharging Claims, Dishonest Conduct Claims and DRAW Report Claims. Those parts of the affidavit add to other evidence about these subject matters in the plaintiff's affidavit sworn on 14 June 2019, which was read on the hearing of the Motion subject to certain limiting orders under s 136 of the Evidence Act.
Subject to the plaintiff being granted leave to rely on his 20 August 2019 affidavit at all, those parts of it were read at the hearing of the Motion subject to an order under s 136 of the Evidence Act limiting their use to evidence of material that the plaintiff would rely on in support of the claims in the verified pleading if the plaintiff is granted leave to file that verified pleading.
In paragraphs 53 and 54 of the affidavit, the plaintiff explains what he says was his state of mind concerning the decision made in November 1994 not to pursue the accounting reference. Those paragraphs were also read subject to leave being granted to the plaintiff to rely on the affidavit and subject to an order under s 136 of the Evidence Act limiting the use of those paragraphs to evidence of the plaintiff's state of mind.
The plaintiff's affidavit sworn on 21 October 2019 is directed principally to explaining the plaintiff's subjective reasons for not litigating the matters alleged in the verified pleading at an earlier time. As I will refer to below, five paragraphs of the affidavit were read in support of the plaintiff's application for leave to rely on the late served affidavits. The balance of the affidavit was read on the hearing of the Motion subject to the plaintiff being granted leave to rely on the affidavit at all and also subject to various limiting orders under s 136 of the Evidence Act.
Ms Zhao is an accountant employed by the plaintiff and his group of companies. Her affidavits sworn on 19 August 2019 and 28 October 2019 are two and three pages in length respectively. Ms Zhao explains steps that she has taken to review certain documents provided to her by the plaintiff (cheque butts, bank statements and MDN invoices, receipts, trust account statements and ledger cards in the plaintiff's possession) and an updated table that she prepared based on that review of payments made to MDN by the Preston entities during the period 1984 to 1992. Ms Zhao's review and summary of documents was clearly incomplete by the time of her 19 August 2019 affidavit, and she deposes that the plaintiff had provided many documents relevant to her review only a few days prior to 19 August 2019.
Subject to the plaintiff being granted leave to rely on Ms Zhao's affidavits at all, they were read at the hearing of the Motion subject to an order under s 136 of the Evidence Act limiting the use of the affidavits to evidence of material that the plaintiff would rely on in support of the claims in the verified pleading if the plaintiff is granted leave to file that verified pleading. [143] Ms Zhao's evidence is relevant only to the DRAW Report Claims.
In support of this application for leave to rely on the four affidavits served after 16 August 2019, the plaintiff relies on his affidavit sworn on 18 July 2019, paragraph 3 of his affidavit sworn on 20 August 2019, his affidavit sworn on 22 August 2019 and paragraphs 41 to 45 of his affidavit sworn on 21 October 2019. That evidence was read on the hearing of the Motion on the basis that its use was limited pursuant to s 136 of the Evidence Act to the plaintiff's application for leave to rely on the four late served affidavits.
In his affidavit sworn on 18 July 2019, the plaintiff describes the difficulty of identifying potentially relevant documents within his voluminous records in storage, analysing those documents and providing instructions to his legal representatives, at the same time as meeting his other business commitments. The plaintiff deposed that no other person was capable of undertaking this task. As at 18 July 2019, the plaintiff estimated that he would require a further eight weeks to complete that process.
In paragraph 3 of his affidavit sworn on 20 August 2019, the plaintiff complained that the orders made requiring him to serve all further evidence by 16 August 2019 had put him under "enormous time pressure" due to the "vast amount of material for me to locate and review".
In his affidavit sworn on 22 August 2019, the plaintiff deposed that, since the orders were made by Ward CJ in Eq on 18 July 2019, he had "spent about 8 hours each day Monday to Friday" and several hours on weekends collecting and reviewing documents to help his lawyers prepare a verified statement of claim which was signed and served on 9 August 2019, preparing his affidavit sworn on 20 August 2019, working out which documents were to form part of the exhibit to the affidavit of Ms Zhao sworn on 19 August 2019. In light of the amount of work involved, the plaintiff deposed that it was not possible to finalise his affidavit sworn on 20 August 2019 as well as the work required for the affidavit of Mr Zhao sworn on 19 August 2019.
The plaintiff also deposed that the preparation of those affidavits had been hampered by back pain which he had developed earlier in 2019 and which returned whilst moving heavy boxes containing documents relevant to the present proceedings.
In paragraphs 41 to 45 of his affidavit sworn on 21 October 2019, the plaintiff addressed the timing of the service of that affidavit and Ms Zhao's affidavit sworn on 28 October 2019. He deposed that his affidavit of 21 October 2019 was prepared partly in response to the requirement to obtain leave of the Court to file the verified statement of claim, which requirement was first imposed by order 4 made by Ward CJ in Eq on 22 August 2019. The plaintiff deposed that his lawyers had informed him the parts of his affidavit concerning his reasons for not litigating the matters in the verified statement of claim at an earlier time are relevant to the question of whether leave should be granted to file the verified pleading.
In relation to the late service of Ms Zhao's affidavit sworn on 28 October 2019, the plaintiff deposed that this affidavit continues the work undertaken by Ms Zhao in her earlier affidavit of 19 August 2019. He was informed by Ms Zhao that she spent over 200 hours on the tasks described in her two affidavits. According to the plaintiff, Ms Zhao's delay in completing her work is partly attributable to his own delay in providing her with instructions and documents (due to the time required to prepare the plaintiff's own affidavit evidence) and partly attributable to other work required of Ms Zhao as an employed accountant for the plaintiff's group of companies in connection with the end of financial year on 30 June 2019.
The parties' submissions paid very little attention to the question whether leave should be granted to the plaintiff to rely on the four late affidavits.
The plaintiff submitted that there was only a small delay after the guillotine order was made on 16 August 2019 in serving the affidavits upon which they now seek to rely. The plaintiff also submitted that the defendants would suffer no prejudice if leave was granted to rely on the affidavits, nor would there be any additional burdens imposed on the Court. The plaintiff asserted that he would suffer prejudice if leave were refused, although this submission was not developed. [144]
The defendants submitted that the guillotine order should not be amended having regard to the history of the proceedings. However, the defendants acknowledged that they would not suffer any prejudice if leave were granted to the plaintiff to rely on the four affidavits. [145]
In exercising the discretion whether to grant leave to the plaintiff to rely on the four late affidavits, I must seek to give effect to the overriding purpose in s 56 of the Civil Procedure Act of facilitating the just, quick and cheap resolution of the real issues in the proceedings, having regard to the provisions of s 57 and the other matters set out in s 58 of that Act.
I accept that it was necessary to examine a large volume of historical documents for the purpose of the preparation of the four late affidavits. I do not consider that the plaintiff has approached this task with appropriate expedition. The process of locating historical records should have commenced no later than November 2018, when the plaintiff first foreshadowed claims of the kind and scope that are now pleaded in the verified pleading. [146] It seems to me that the task could have been undertaken with greater expedition if the plaintiff had enlisted the assistance of his solicitors to locate relevant documents within his voluminous stored records, even assuming (without necessarily accepting) that the task of reviewing and determining the relevance of those documents needed to be undertaken by the plaintiff himself.
However, the 19 August 2019 affidavit of Ms Zhao and the 21 August 2019 affidavit of the plaintiff were served only a few days after the 16 August 2019 deadline and many months before the hearing of the Motion. The second affidavit of Ms Zhao was served more than two months after the 16 August 2019 deadline, but still many months before the hearing of the Motion. As I have pointed out above, both of her affidavits are very short and are really little more than a summary of documents that the plaintiff would be entitled to tender (subject to the determination of any objections to their admissibility) at the substantive hearing of the claims in the verified pleading, if the plaintiff were granted leave to file the verified pleading.
I accept the plaintiff's submission that much of his 21 October 2019 affidavit was seen as necessary only after 16 August 2019 when the orders made by the Court required him to obtain leave to file the verified pleading. Again, the 21 October 2019 affidavit was served many months before the hearing of the Motion.
As I have already noted, the defendants candidly acknowledged that they would suffer no prejudice if leave were granted to the plaintiff to rely on the four late affidavits.
For those reasons, I am of the opinion that the overriding purpose is best served by granting leave to the plaintiff to rely on the four late affidavits on the hearing of the Motion, subject to the orders that were made under s 136 of the Evidence Act limiting the use of parts of those affidavits to which I have already referred. This would not preclude the defendants from objecting to the admissibility of those affidavits at any subsequent stage of the 1993 proceeding if leave were granted to the plaintiff to file the verified pleading.
I now address the plaintiff's application for leave to file the verified pleading.
[10]
Plaintiff's application for leave to file the verified pleading
[11]
Res judicata, cause of action estoppel, issue estoppel and Anshun estoppel
The defendants rely on the order made by R S Hulme J on 28 February 1995 dismissing the 1993 summons (except insofar as orders had been previously made) [147] as attracting the operation of the doctrine of res judicata or one of the abovementioned estoppels to the verified pleading. It is convenient to refer to this order as the dismissal order.
Both parties' submissions proceeded on the basis that the dismissal order had the effect of dismissing the plaintiff's claim in prayers 4 to 6 of the 1993 summons for an order for the taking of an account, as Barrett J held in 2010.
It will be recalled that the scope of the account that the Court had ordered to be taken in the reference to be conducted by Mr Needham QC was a "detailed account … of all moneys received by [the defendants] from the Plaintiffs (or on their behalf) and disbursed by the Defendants on their behalf as solicitors, and of the dealings and transactions of the Defendants therewith upon the trust and other accounts kept by the Defendants in relation to the Plaintiff" and that "Plaintiffs" in the context of this order referred to Mr Preston and numerous Preston entities. [148]
Barrett J held that the dismissal order concluded that that part of the 1993 proceeding, and the claim for the taking of an account, was then fully adjudicated. [149] That is to say, the dismissal order was a final order.
Where the existence of a right has been determined by a final judgment or order of a court, that right ceases to exist independently of the judgment and "merges" in that judgment or order. The successful plaintiff in the proceeding in which the final judgment or order was made cannot subsequently bring an action upon the right that has been extinguished upon merger in the judgment or order. The successful plaintiff's only right is a right of a higher nature to enforce the judgment or order. This is res judicata in the strict sense: Clayton v Bant (2020) 95 ALJR 34; [2020] HCA 44 (Clayton) at [26] (Kiefel CJ, Bell and Gageler JJ) and [66] (Edelman J); Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 (Tomlinson) at [20] (French CJ, Bell, Gageler and Keane JJ).
However, if the right adjudicated upon is determined not to exist, there is nothing to merge into the final judgment or order. In those circumstances, cause of action estoppel, also referred to as "claim estoppel", will preclude the subsequent assertion by the unsuccessful plaintiff of any right determined in the earlier final judgment not to exist: Clayton at [29] (Kiefel CJ, Bell and Gageler JJ), [50]-[51] (Gordon J) and [67], [71] (Edelman J); Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543 at 556E-557G (Clarke JA, Priestley JA agreeing) and the authorities there cited; see also K R Handley, Spencer Bower and Handley: Res Judicata (5th ed, LexisNexis Butterworths, 2019) at [1.04]-[1.06].
It is cause of action estoppel, rather than res judicata in the strict sense, that is potentially relevant to the dismissal order.
In the context of cause of action estoppel, the expression "cause of action" means title to the legal right established or claimed: Clayton at [28] (Kiefel CJ, Bell and Gageler JJ).
For the purpose of cause of action estoppel, it is not necessary that the cause of action or right asserted is identical with a right adjudicated upon in an earlier final judgment or order. It is sufficient if, considered as a matter of substance rather than form, the rights are "of a substantially equivalent nature and cover substantially the same subject matter": Clayton at [33]-[34] (Kiefel CJ, Bell and Gageler JJ).
However, it is not sufficient if the right asserted in the subsequent proceeding or application arises from or is based on the same matters or transactions with which the earlier judgment was concerned. As Kiefel CJ, Bell and Gageler JJ said in Clayton (citations omitted):
"[35] The common law of Australia has not gone down the path that has of late been taken in the United States, of treating rights precluded from assertion in subsequent proceedings as coterminous with the 'transaction' which earlier proceedings concerned. The transactional approach does not so much answer an estoppel problem as reframe the question from 'what are the rights?' to 'what is the transaction?'. 'General adoption of a transactional approach', it has been observed, 'will neither change resolution of the easy problems nor ease resolution of the difficult problems.'
[36] The transactional approach should not be adopted in Australia. It would blur the carefully hewn distinction between claim estoppel and Anshun estoppel. It would diminish the significance of the unreasonableness element of Anshun estoppel. Our approach demands a more granular analysis."
The defendants' submissions concerning the cause of action or right that the plaintiff seeks to assert in the verified pleading focussed on the alleged transactions and other factual matters pleaded by the plaintiff in support of his claims for orders under UCPR rr 36.15(1) and 36.16(3). The defendants failed to engage with the question whether the plaintiff's claim for those orders involves an assertion of the same right or cause of action as his claim for the taking of an account that was dismissed by the dismissal order.
The defendants submitted that the claims to set aside the Adverse Costs Orders and Appeal Adverse Costs Orders as formulated in the verified pleading would require the Court to make a determination about the financial dealings and transactions between the Preston entities and MDN during the period from 1984 to 1992, being the whole of the period in which MDN provided legal services to the Preston entities.
I accept that submission on the basis of my analysis of the verified pleading set out earlier in these reasons, [150] save that the financial dealings and transactions about which the Court would be required to make findings are limited the specific dealings and transactions that are the subject of the Overcharging Claims, the Dishonest Conduct Claims and the DRAW Report Claims. I acknowledge that those specific dealings and transactions are numerous.
The plaintiff accepted that the scope of the reference ordered by R S Hulme J on 9 June 1994 for the taking of an account was relevant to determining whether he is precluded by the dismissal from litigating the claims in the verified pleading by reason of cause of action estoppel, issue estoppel or Anshun estoppel
In my opinion, the substance of the DRAW Report Claims was within the scope of the reference. As I understood the plaintiff's submissions, he did not dispute this. However, I reject the defendants' submission that the substance of the Overcharging Claims and the Dishonest Conduct Claims was also within the scope of the reference.
The orders made on 9 June 1994 expanded the scope of the accounting exercise beyond the claims in prayers 4 to 6 of the 1993 summons by including numerous Preston entities that were not parties to the 1993 proceeding and by covering the whole of the eight year period in which MDN had provided legal services to those entities. However, the account to be taken was an account of the moneys paid by those entities to the defendants as their solicitors, and the defendants' application and disbursement of or other dealings with those moneys. [151]
The substance of the Overcharging Claims and the Dishonest Conduct Claims was that the defendants had charged the plaintiffs, and the plaintiffs had paid for, work that the defendants had not done. [152] The information required to be provided in the defendants' account did not include information establishing or verifying that MDN had performed the work charged for in each of the invoices or accounts against which moneys were applied. [153]
The orders made on 9 June 1994, as varied on 14 October 1994, entitled the plaintiffs and their advisors and representatives to inspect the defendants' trust and general account ledgers relating to work done or accounts charged by the defendants in connection with the plaintiffs' affairs, and other accounting records relating to payments made or allegedly made by the plaintiffs to the defendants. [154]
As the plaintiff submitted, those ledgers and accounting records would not have been relevant to any objections that the plaintiffs might have wished to formulate to the defendants' account on the ground that the defendants had applied the plaintiffs' moneys to the payment of invoices which charged for work not done. In the present context, it is not to the point to consider whether the plaintiffs could have sought orders permitting them to inspect for the purpose of the reference MDN's files recording the legal work done in each of the matters in which they had acted for one of the Preston entities. The point is that the accounting exercise being undertaken pursuant to the orders made in the 1993 proceeding plaintiffs did not give the plaintiffs a right to inspect those legal files, over which the defendants were exercising a lien. For the reasons I have already explained, the evidence does not establish that the plaintiffs in fact inspected the legal files. [155]
Having inspected the ledgers and accounting records, the plaintiffs did not raise any objections to the defendants' account that had been provided in the form of the DRAW Report. Rather, the plaintiffs' solicitors advised the defendants on 15 November 1994 that their accountant had "been able to reconcile the payments made by my clients to your firm with particular accounts for professional work" and that the plaintiffs therefore did not wish to pursue the reference. [156]
As the defendants submitted, the referee had power pursuant to order 7 to permit amendments to the scope of the account and objections referred to him for inquiry and report "as the referee sees fit in order to dispose of the true issues between the parties the subject of the reference". [157] However, there is no evidence to suggest that the referee had permitted any such amendments before the dismissal order was made on 28 February 1995.
For those reasons, neither the claim for an order for the taking of an account in prayers 4 to 6 of the 1993 summons nor the reference ordered on 9 June 1994 extended to the substance of the matters that are the subject of the Overcharging Claims or Dishonest Conduct Claims in the verified pleading.
Although the determination of the plaintiff's application for orders under UCPR rr 36.15(1) and 36.16(3) in the verified pleading would require the Court to make findings about numerous dealings and transactions, including those are the subject of the DRAW Report Claims that were within the scope of the reference, those findings would not be made not in the process of or in connection with the taking of an account with a view to ordering the defendants to pay to the plaintiff (or the plaintiff to pay to the defendants) any amount found to be owing.
The plaintiff asserts two causes of action in the verified pleading.
The first is the right, upon demonstrating sufficient cause and establishing that the Adverse Costs Orders and Appeal Adverse Costs Orders were made irregularly, illegally or against good faith, to obtain an order under UCPR r 36.15(1) setting aside those orders in the exercise of the Court's discretion in accordance with established principles.
The second is the right, upon demonstrating that the exceptions in UCPR r 36.16(3)(a) and (b) do not apply, to obtain an order setting aside the Adverse Costs Orders and Appeal Adverse Costs Orders in the exercise of the Court's discretion in accordance with established principles.
I accept the plaintiff's submission that cause of action estoppel does not preclude him from asserting these causes of action in the verified pleading because they do have not the requisite degree of correspondence with the claim for an order for the taking of an account that was the subject of the dismissal order.
To the extent that the causes of action in the verified pleading rely on the DRAW Report Claims, they cover subject matter that was within the scope of the reference ordered on 9 June 1994. However, I do not consider that the causes of action in the verified pleading can be said to cover substantially the same subject matter because the Overcharging Claims and Dishonest Conduct Claims were not within the scope of that reference, as I have explained above: Clayton at [32]-[34] (Kiefel CJ, Bell and Gageler JJ).
Moreover, the right to an order for the taking of an account on the one hand, and the rights to orders under UCPR rr 36.15(1) and 36.16(3) on the other hand, are not rights of a substantially equivalent nature: Clayton at [33]. The equitable obligation of the defendant solicitors as fiduciaries to account for money received from or held on behalf of their clients is central to the claim for the taking of an account in the 1993 summons and the reference ordered on 9 June 1994. By contrast, the plaintiff's claim and UCPR r 36.15(1) turns on whether the Adverse Costs Orders and Appeal Adverse Costs, at the times they were made, were made against good faith by reason of the defendants' alleged fraud during the period from 1984 to 1992. The claim under r 36.16(3) turns on whether the interests of justice require that the Adverse Costs Orders and Appeal Adverse Costs Orders be set aside.
In characterising the verified pleading by reference to the factual allegations pleaded in support of the claims for relief, rather than by reference to the claims for relief, the defendants have adopted the transactional approach rejected by the plurality in Clayton. [158]
For those reasons, I reject the defendants' contention that the plaintiff is precluded by cause of action estoppel from asserting the causes of action in the verified pleading by reason of the dismissal order made on 28 February 1995.
For completeness, I note that the plaintiff submitted that "it is not evident that an application under the rules of court is a 'cause of action' within the meaning of the doctrine of issue estoppel". The plaintiff did not develop the submission with reference to authority or reasoning applying established principles, or by identifying any new principle contended for by the plaintiff.
It is difficult to comprehend the submission, because issue estoppel is concerned with what ultimate issues of fact or law were necessarily resolved by an earlier judgment or order, and not the cause of action upheld or dismissed in that earlier judgment or order: Tomlinson at [22] (French CJ, Bell, Gageler and Keane JJ); Clayton at [50]-[51] (Gordon J) and [69] (Edelman J). The identification of the cause of action asserted in the verified pleading is relevant to cause of action estoppel, as I have explained above.
In my opinion, the rights asserted in the verified pleading are causes of action or claims to which the doctrine of cause of action estoppel or claim estoppel is capable of applying. I have described the nature of those rights in [238]-[240] above. In Clayton, the High Court treated a claim for an order under s 79(1) of the Family Law Act 1975 (Cth) altering the property interests of parties to a marriage as a claim to which cause of action estoppel was potentially applicable. The Family Court of Australia had a discretionary power under s 79(1) to make such an order, after taking into account certain matters prescribed by s 79(4), if satisfied that it was just and equitable to do so. For the purpose of the potential application of cause of action estoppel, I see no relevant distinction between a claim of that nature and the plaintiff's claims under UCPR rr 36.15(1) and 36.16(3). However, for the reasons I have already explained above, the plaintiff's causes of action or claims in the verified pleading do not correspond with his claim that was the subject of the dismissal order to the extent necessary to attract the operation of cause of action estoppel.
I now address the parties' submissions that were, in substance, directed to issue estoppel.
Issue estoppel operates to preclude the plaintiff from alleging in the verified pleading an ultimate issue of fact or law that was necessarily resolved as a step in making the dismissal order: Tomlinson at [22] (French CJ, Bell, Gageler and Keane JJ); Clayton at [50]-[51] (Gordon J) and [69] (Edelman J).
I have set out at [45] above the key passages of the judgment delivered by R S Hulme J on 28 February 1995 in which his Honour explained his reasons for making the dismissal order.
The plaintiff submitted that the dismissal order was made by consent and that, in order to identify what matters were necessarily resolved by the making of the dismissal order, it was necessary to have regard to the history of the 1993 proceeding prior to the dismissal order, including the scope of the concessions made by the plaintiffs in their solicitor's letter of 15 November 1994 advising the defendants that they would no longer pursue the reference.
I reject the plaintiff's submission that the dismissal order was made by consent to reflect his discontinuance of the accounting claims.
It would have been open to the plaintiff to discontinue the accounting claims. He did not do so, presumably because he did not wish to pay the defendants' costs.
There is no evidence to support the plaintiff's submission that he "was content for his application for the taking of accounts to be dismissed". That is certainly not the position that his solicitors communicated to the defendants in their letter dated 15 November 1994. [159] That letter appears to have been carefully drafted in the hope of bringing the reference to an end without the plaintiff suffering the adverse costs consequences that would ordinarily be likely to follow discontinuing his claims for relief in prayers 4 to 6 of the 1993 summons or those claims being dismissed.
The contest about costs was the occasion for the hearing before R S Hulme J on 28 February 1995. His Honour's reasons for judgment do not refer to the parties having reached any consensus about any aspect of the orders that were made following that hearing. On the basis of the concession that his Honour inferred had been made by the plaintiff that "the defendants' claim for some $97,000 was, on the basis which was then advanced, correct" subject to taxation, his Honour considered that the plaintiffs had been unsuccessful in relation to the issues raised by prayer 4 in the 1993 summons and it was appropriate to include the claim for the taking of an account in the dismissal order. This characterisation of the outcome in relation to prayer 4 of the 1993 summons was, in turn, one of the factors that informed his Honour's decision in relation to the costs of the 1993 proceedings. Contrary to the plaintiff's submission, his Honour's finding about the plaintiff's concession underpinned the dismissal order in addition to being relevant to the costs determination.
R S Hulme J's finding is recorded in his reasons for judgment. This is not a case in which it is hard to say what was decided by the dismissal order. It is not open to the plaintiff to now ask the Court to revisit the terms of the 15 November 1994 letter and to arrive at a different conclusion about the scope and effect of the plaintiffs' concession. For the same reasons, it is not necessary to address the defendants' submissions concerning express and implied representations made in the 15 November 1994 letter.
I accept the following characterisation of his Honour's finding advanced by the defendants: [160]
"What Hulme J decided was that subject to a reduction in the amount (which could be anywhere from $nil to $95,749.40) consequent upon a taxation … , Mr Preston had conceded and it was common ground in the 1993 Proceeding, that Mr Preston owed the Defendants $95,749.40. The amount which Mr Preston might have to pay the Defendants could be anywhere from $nil to $95,740.40 dependent upon the outcome of the taxation…"
In other words, R S Hulme J did not determine what amount the plaintiffs in fact owed to the defendants, subject to taxation. His Honour merely determined what concession the plaintiffs had made as at 28 February 1995. On the basis of his finding about that concession, his Honour characterised the plaintiffs as the losing party on the claim for an order for the taking of accounts and took this into account in determining what costs orders to make in relation to the 1993 proceeding.
This is consistent with Barrett J's assessment of the effect of R S Hulme J's findings and dismissal order in 2010. It is true that Barrett J referred to R S Hulme J as having "noted … that agreement between the parties had produced a result where the plaintiffs were to pay a stated sum to the defendants and there was no need for an account". However, in the immediately preceding paragraph, Barrett J acknowledged that the plaintiffs' concession noted by R S Hulme J was subject to taxation of costs. [161]
In subsequent submissions, the defendants asserted that R S Hulme J had found that "in October 1992, Mr Preston was indebted to the Defendants in the sum of 'some $116,000'", being the amount referred to in the DRAW Report. [162] However, his Honour made no such finding. By merely referring to the conclusion at which the authors of the DRAW Report had arrived in describing the context in which the plaintiffs had indicated that they would no longer pursue the reference, R S Hulme J was explaining his reasons for drawing the inference concerning the concession made by the plaintiffs. His Honour did not make any finding as to whether the conclusion in the DRAW Report was correct, or whether any amount was in fact owed by the plaintiffs to the defendant (subject to taxation).
It is convenient to use the term concession finding to describe the finding in fact made, as referred to in [252]-[260] above.
I accept the defendants' submission that R S Hulme J's dismissal order was based on the concession finding in the context of the wide-ranging scope of the reference for the taking of an account to which I have referred in [229]-[237] above.
However, I reject the defendants' submission that the doctrine of issue estoppel therefore applies to preclude the plaintiff from asserting the matters now pleaded as the Overcharging Claims, the Dishonest Conduct Claims and the DRAW Report Claims, or from asserting in the verified pleading that, as at October 1992, the defendants in fact owed or were liable to account to the plaintiffs for an amount in excess of the $95,750 that they claimed to be owed. As the plaintiff submitted and the defendants accepted, issue estoppel applies only where the a party seeks to put in issue the same question that has necessarily been resolved by an earlier final judgment or order: Blair v Curran (1939) 62 CLR 464 at 531 (Dixon J); Kuligowski v Metrobus (2004) 220 CLR 363; [2004] HCA 34 at [21], [40] and [45] (Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ); Ekes v Commonwealth Bank of Australia (2014) 313 ALR 665; [2014] NSWCA 336 at [110] (Bathurst CJ, Beazley P and Emmett AJA agreeing). In this case, the dismissal order resolved as a matter of fact what concession had been made by the plaintiffs concerning the state of accounts between the plaintiffs and the defendants. The dismissal order did not resolve the true state of the account between the plaintiffs and the defendants as at October 1992. Nor did it resolve any of the matters that the plaintiff now asserts in the Overcharging Claims, Dishonest Conduct Claims and DRAW Report Claims in the verified pleading. To put this another way, the dismissal order did not determine the claims in prayers 4 to 6 of the 1993 summons on their merits.
Having rejected the defendants' contentions that the doctrines of res judicata, cause of action estoppel and/or issue estoppel preclude the plaintiff from making the claims in the verified pleading, it is not strictly necessary to address the plaintiff's contention that Pt 40 r 8 of the Supreme Court Rules 1970 (NSW) applied at the time of the dismissal order, with the consequence that those preclusive doctrines do not apply to the verified pleading. However, in case of any appeal, I briefly state my reasons for the plaintiff's contention.
As at the time of the dismissal order, Pt 40 r 8 provided:
"Where … under these rules … the Court makes an order for the dismissal of proceedings or for the dismissal of proceedings so far as concerns any cause of action or the whole or any part of any claim for relief, the order for the dismissal shall not, subject to any terms or conditions on which the order for dismissal is made, prevent the plaintiff or claimant form bringing fresh proceedings or claiming the same relief in fresh proceedings."
The plaintiff submitted that Pt 40 r 8 applied because the dismissal order was made by consent and the dismissal was therefore "under these rules" within the meaning of the rule. However, for the reasons I have already explained above, the dismissal order was not made by consent. Thus, the plaintiff failed to establish the only basis on which he contended that Pt 40 r 8 applied.
I note that the plaintiff also relied on s 91 of the Civil Procedure Act in the alternative to Pt 40 r 8 of the Supreme Court Rules. However, the plaintiff did not identify any reason why the effect of the dismissal order made on 28 February 1995 is governed by s 91, which commenced some ten years later, rather than by Pt 40 r 8, which applied at the time of the dismissal order.
The plaintiff did not rely on Pt 40 r 8 or s 91 as relevant to Anshun estoppel, to which I now turn.
Like cause of action estoppel and issue estoppel, Anshun estoppel is informed by considerations of finality and fairness. It operates to preclude the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of an earlier proceeding as to have made it unreasonable in the context of that earlier proceeding for the claim not to have been made or the issue not to have been raised: Tomlinson at [22] (French CJ, Bell, Gageler and Keane JJ); Clayton at [29] (Kiefel CJ, Bell and Gageler JJ), [50]-[51] (Gordon J) and [70] (Edelman J).
As the party contending that the plaintiff should be refused leave to file the verified pleading because he is estopped from making the claims or raising the issues in the verified pleading, the defendants bear the onus of establishing the unreasonableness of the plaintiff's choice not to make those claims or raise those issues at an earlier stage in the 1993 proceeding: Clayton at [30]-[31] (Kiefel CJ, Bell and Gageler JJ).
The defendants submitted that: [163]
"… since the issue to be determined in the taking of accounts pursuant to [prayers 4 to 6 of the 1993 summons] was what sum if any was owed by the Defendants to Mr Preston having regard to the invoices sent by the Defendants to Mr Preston and the payments made to the Defendants by Mr Preston, the matters now sought to be raised as part of the Proposed Claim in [208] as to the amount Mr Preston claims the Defendants owe him in relation to his alleged overpayment of those invoices, was a claim that would conveniently belong in the 1993 proceeding. It was unreasonable not to include the claim in the Summons: Port of Melbourne Authority v Anshun Proprietary Limited (1981) 147 CLR 589 at 602-603."
The allegation in paragraph 208 of the verified pleading is that, if Mr Leon Nikolaidis had not engaged in the alleged overcharging that is the subject of the Dishonest Conduct Claims, there would have been "well over $100,000" in October 1992 for MDN to apply to its legal costs and disbursements in the 16 matters. This allegation is central to the plaintiff's claims in the verified pleading for orders setting aside the Adverse Costs Orders and Appeal Adverse Costs Orders under UCPR r 36.15(1), and is also relevant to this claim for relief under r 36.16(3). [164]
In this very unusual case, the plaintiff's conduct relied on as creating an Anshun estoppel occurred in an earlier stage of this 27 year old proceeding, rather than in an earlier separate proceeding. The defendants contend that the plaintiff's allegation in paragraph 208 of the verified pleading was so connected with the plaintiff's claims in the 1993 summons for the taking of an account that it was unreasonable for the plaintiff not to have pleaded the allegation in the 1993 summons prior to the dismissal of the accounting aspect of the 1993 proceeding on 28 February 1995.
The determination of the reasonableness (or otherwise) of the plaintiff's conduct of the 1993 proceeding without raising the allegation prior to 28 February 1995 involves "a value judgment to be made referable to the proper conduct of modern litigation". That value judgment is to be made objectively, taking into account any facts relevant to the proper conduct of the 1993 proceeding in the period leading up to the dismissal order. The Court is not limited to considering the pleadings: C G Maloney Pty Ltd v Noon [2011] NSWCA 397 at [59]-[68] (Campbell JA, Tobias AJA agreeing) and [154]-[163] (Handley AJA), citing Champerslife Pty Ltd v Manojloviski (2010) 75 NSWLR 245; [2010] NSWCA 33 at [3] (Allsop P) as to the "value judgment" to be made; Beck v Weinstock [2012] NSWCA 289 at [72]-[73] per Campbell JA (McColl and Meagher JJA agreeing).
As referred to at [175] above, counsel for the plaintiff submitted at the hearing of the Motion that the issues raised by the defendants' grounds of opposition to leave to file the verified pleading required the Court to determine, at this stage, whether the plaintiff is estopped from making the claims pleaded in the verified pleading. [165]
However, in written submissions served after the hearing, the plaintiff submitted that the question to be determined on the Motion in relation to Anshun estoppel is not whether the plaintiff is precluded from making the claims in the verified pleading, but only whether it is at least arguable that the plaintiff is not so precluded. It was submitted that, if the Court considers that it is at least arguable that Anshun estoppel does not preclude the plaintiff from making the claims in the verified pleading, then those claims should be allowed to proceed to trial and it would be open to the defendants to contend at that trial that the claims should be dismissed on the basis of Anshun estoppel.
Counsel for the plaintiff did not offer any explanation for this change of heart. The hearing of the Motion occupied two days, the parties canvassed the history of the 1993 proceeding extensively in their evidence and submissions, and no reason had been identified to suggest that the Court may not be in as a good a position now as it would be on any final hearing of the verified pleading to determine whether Anshun estoppel precludes the plaintiff from maintaining the claims in the verified pleading. In those circumstances, I consider it appropriate to adhere to the course for which counsel advocated at the hearing of the Motion, thereby dealing in a consistent manner with the defendants' contentions concerning res judicata, cause of action estoppel and issue estoppel and Anshun estoppel. However, as noted at [271] above, I accept that the defendants bear the onus of proving the requisite unreasonableness.
Given that the defendants bear that onus, it is regrettable that their submissions in relation to Anshun estoppel were not developed beyond the assertion of unreasonableness in the submission that I have extracted at [272] above.
However, in my opinion, it is plain from uncontested evidence adduced on the hearing of the Motion that the Dishonest Conduct Claims and the allegation now made in paragraph 208 of the verified pleading were so closely connected with the plaintiff's claims in the 1993 summons for the taking of an account that it was unreasonable for the plaintiff not to have pleaded those matters prior to the dismissal of the accounting aspect of the 1993 proceeding on 28 February 1995.
As Barrett J held in 2010, the orders made by R S Hulme J on 16 December 1993 referring the bills of costs in the 16 matters to taxation and the orders made on 9 June 1994 referring the taking of an account to Mr Needham QC "set in train two separate processes directed towards a final determination of the state of the account between the plaintiffs and the solicitors". [166]
In my opinion, it was contrary to the proper conduct of modern litigation (even in 1993) for the plaintiff to keep in reserve a further matter that he considered was relevant to the state of that account, namely his claim that the defendants had charged him (and he had paid) for some work not done and for some work for which he had previously paid.
I refer to this matter as having been kept in reserve because the plaintiff does not contend that he was not aware in February 1995 of the facts forming the basis for the Dishonest Conduct Claims and his allegation in paragraph 208 of the verified pleading.
On the contrary, the plaintiff gave evidence that, at the time that he commenced the 1993 proceeding, he was concerned that MDN "might" have overcharged Preston entities by issuing invoices charging for work that had not been done. Correspondence between the plaintiff and MDN in the months prior to the commencement of the 1993 proceeding reveals that the subject matter of these concerns included invoices issued in matters that are now the subject of the Dishonest Conduct Claims in the verified pleading. [167] The invoices that are now the subject of those Dishonest Conduct Claims were within the scope of the DRAW Report, as I have noted at [148] above.
The plaintiff's evidence is to the effect that he understood that it was "preferable" to obtain some evidence to support those concerns before commencing proceedings to recover overpayments. To that end, the plaintiff wanted to obtain all of MDN's legal files in relation to the Preston entities' matters. However, MDN had exercised a lien of all of those files since the termination of the retainer in October 1992 as security for the $95,749.40 that it claimed was owing in outstanding fees. [168]
In those circumstances, the plaintiff says that he intended to pay any amount that the taxing officer found was owing to MDN in respect of the 16 matters (although he expected that no amount would be found to be owing) and to then obtain the legal files in all of the Preston entities' matters and review them for the purpose of determining whether to take action in respect of his concerns about overcharging. Counsel for the plaintiff referred to this as the plaintiff's "plan". The plaintiff's evidence is that this was one reason why he did not include in the 1993 summons the overcharging allegations that are now the subject of the Dishonest Conduct Claims and paragraph 208 of the verified pleading. [169]
A further reason, according to the plaintiff's evidence is that, he had made a complaint to the Law Society of New South Wales about Mr Leon Nikolaidis, including a complaint that he had been overcharged and had paid for work not done by MDN. The plaintiff says that he expected that the Law Society would use its statutory powers to obtain relevant files of MDN, and that he would be able to obtain access to those files through the Law Society in order to determine whether take legal action against MDN in respect of the overcharging complaints and that he would be able to rely on the findings of the Law Society in any such legal action. [170]
The plaintiff gave evidence that his concerns about overcharging had not been resolved when he instructed his solicitor to send the 15 November 1994 letter to which I have referred at [40]-[41] above. He deposed that he expects that he authorised his solicitor to send that letter because he did not have access to MDN's legal files that he believed he needed in order to investigate his overcharging concerns and he understood that the letter would not prevent him from challenging accounts on the grounds of overcharging once he obtained access to those files. [171]
The plaintiff's evidence to which I have referred at [284]-[288] above was read subject to an order under s 136 of the Evidence Act limiting its use to evidence of the plaintiff's state of mind.
The reasons for my opinion that it was contrary to the proper conduct of the 1993 proceeding for the plaintiff to keep in reserve the overcharging allegations on which he now seeks to rely in paragraph 208 of the verified pleading may be summarised as follows.
First, it was not submitted on behalf of the plaintiff that access to MDN's legal files was necessary in order to plead his overcharging allegations in the 1993 summons when it was filed in August 1993 or at some time prior to February 1995. On the contrary, he had raised those allegations in confident terms in correspondence with MDN in the months prior to the commencement of the 1993 proceeding.
Second, if those overcharging allegations had been pleaded in the 1993 summons, orders would have been made in due course for the discovery and inspection of records relevant to the allegations, including the legal files which comprised MDN's contemporaneous record of the work done in relation to each of the matters in which the plaintiff claimed to have been overcharged. It may be that the discovery orders would have included a regime for access to and inspection of those files so as minimise interference with the defendants' lien pending the taxation of the bills in the 16 matters in respect of which the defendants claimed to be owed fees totalling $95,749.40. Even so, the plaintiff and/or his legal representatives would have access to the legal files for the purpose of prosecuting the overcharging allegations in the 1993 proceeding,
Third, by keeping the overcharging allegations in reserve rather than adopting the course to which I have referred immediately above, the plaintiff was putting the defendants (and, if the reference had been completed and the referee's report considered by the Court, the Court-appointed referee and the Court) to work in connection with the taking of an account that the plaintiff planned to later undermine by raising new allegations about some of the invoices and payments that formed the basis of that account. It is irrelevant that this was part of a "plan" formulated by the plaintiff that he may have believed was reasonable. Considered objectively, it was an unreasonable and irresponsible manner in which to conduct the 1993 proceeding.
Fourth, if and to the extent that the plaintiff subjectively believed that this waste of the defendants' resources and the public resources of the Court might be avoided by the Law Society providing him with access to MDN's legal files, there was no reasonable basis for that belief. The plaintiff could not reliably predict the course that the Law Society's investigation might take or its outcome. I also note the plaintiff's submissions did not address the question whether it would have been consistent with the Law Society's statutory powers and responsibilities for investigating complaints to provide documents obtained during the course of an investigation to the complainant for use in private proceedings.
Fifth, even assuming in the plaintiff's favour (and contrary to what I have said at [291] above) that he could not reasonably have pleaded the overcharging allegations in 1993 without access to the relevant files, the reasonable course would have been to include in the 1993 summons a claim for an order for delivery up of all files (instead of the four files that were the subject of order 3 in the 1993 summons), to obtain access to those files upon payment into court of an amount as security for the defendants' allegedly outstanding fees pending the taxation of the defendants' bills in the 16 matters in which they claimed those fees were owing, and to promptly seek leave to amend the 1993 summons to include any overcharging allegations that the plaintiff wished to pursue after reviewing all of the files. I note that this approach was adopted by R S Hulme J to facilitate the plaintiff having access to the four files that were the subject of prayer 3 in the 1993 summons, although the plaintiff did not provide the security. [172]
I reject the plaintiff's submission that it was "clearly not unreasonable" for him to withhold the Dishonest Conduct Claims from the 1993 summons "in circumstances where a purpose of the 1993 Proceeding at the time that Mr Preston filed the 1993 Summons in August 1993 was to obtain his original files in the 50 Plus Matters so that he could then properly investigate the Dishonest Conduct Claims." The plaintiff's contention that obtaining all of his files was one of his purposes in commencing the 1993 proceeding does not sit well with the objective fact that the 1993 summons sought an order for delivery up of only four of those files. However, assuming that this was one of his subjective purposes in commencing the 1993 proceeding, it was unreasonable for the plaintiff not to adopt one of the approaches that I have identified above as being available to him within the 1993 proceeding in order to obtain those files.
For all of those reasons, I have concluded that the plaintiff is precluded by the doctrine of Anshun estoppel from making the claims in paragraph 208 of the verified pleading (including the Dishonest Conduct Claims referred to in paragraph 208), Because the plaintiff's claim to set aside the Adverse Costs Orders and Appeal Adverse Costs Orders under UCPR r 36.15(1) and the first basis of his claim under r 36.16(3) are based on the alleged combined effect of the Dishonest Conduct Claims and the Overcharging Claims, [173] it follows that the Anshun estoppel applies to the whole of the plaintiff's claim under r 36.15(1) and the first basis of his claim under r 36.16(3). Leave to file the verified pleading should therefore be refused in respect of the Dishonest Conduct Claims and paragraphs 205 to 211 of verified pleading.
I note that the defendants did not submit the plaintiff was precluded from making the DRAW Report claims by reason of Anshun estoppel. The defendants' submissions in relation to the plaintiff's claim under UCPR r 36.16(3) insofar as it relies on the DRAW Report were directed to res judicata, cause of action estoppel, issue estoppel, abuse of process and the question whether the claim is so obviously untenable that it cannot possible succeed.
For completeness, I note the plaintiff's submission that "a consent judgment does not give rise to an Anshun estoppel" and his alternative submission that different considerations apply if an Anshun estoppel arises from the conduct of a matter in which there has been a consent judgment rather than a judgment following a contested hearing. [174] For the reasons I have already explained, the dismissal order was not made by the consent. It is therefore not necessary to say anything further about those submissions.
[12]
Abuse of process
My conclusion in relation to Anshun estoppel means that it is not strictly necessary to consider the defendants contentions concerning abuse of process and summary dismissal principles to the extent that they relate to the plaintiff's claim under UCPR r 36.15(1) and the first basis of his claim under r 36.16(3) [175] . However, I will record my conclusions in relation to those contentions in case of any appeal and because it is not necessary to address those contentions in relation to the alterative basis of the plaintiff's claim under r 36.16(3) [176] in any event.
As McHugh J observed in Rogers v The Queen (1994) 181 CLR 251 at 286, in a passage subsequently cited with approval by Gleeson CJ, Gummow, Hayne and Crennan J in Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256; [2006] HCA 27 at [15]:
"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."
The defendants' principal submission is that the verified pleading is an abuse of process in the first sense referred to by his Honour.
However, the defendants also rely on the second and third sense of abuse of process referred to by McHugh J in Rogers v The Queen (supra).
In UBS AG v Tyne (2018) 265 CLR 77; [2018] HCA 45, Kiefel CJ, Bell and Keane JJ said (at [1]):
"The varied circumstances in which the use of the court's processes will amount to an abuse, notwithstanding that the use is consistent with the literal application of its rules, do not lend themselves to exhaustive statement. Either of two conditions enlivens the power: where the use of the court's procedures occasions unjustifiable oppression to a party, or where the use serves to bring the administration of justice into disrepute."
Gageler J agreed that the appeal should be allowed and the permanent stay of the proceeding reinstated for the reasons given by their Honours. However, his Honour made the following observations (at [72], citations omitted):
"Although undoubtedly capable of application in circumstances in which use of a court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute, the doctrine of abuse of process has repeatedly been recognised to be insusceptible of a formulation which would confine it to closed categories. In the context of the application of the doctrine to the bringing of successive proceedings … I think it better in weighing the private and public interests involved to eschew the extremes of private 'oppression' and of public 'disrepute'. The relevant public interest is ordinarily appropriately identified in more general and less emotive terms as timely and efficient administration of civil justice."
The defendants submit that it would be unjustifiably oppressive to the defendants and would bring the administration of justice into disrepute if the plaintiff were permitted to litigate the claims in the verified pleading by reason of one, or perhaps a combination, of the following matters:
1. the plaintiff seeks to re-litigate issues already determined by the Court, and the re-litigation of these matters would give rise to a risk of inconsistent findings;
2. the verified pleading also includes new claims that ought reasonably to have been made at an earlier stage of the 1993 proceeding (referring to the Dishonest Conduct Claims and the DRAW Report Claims); and
3. the substantial passage of time since the events pleaded in the verified pleading occurred means that it would be unjustifiably oppressive to the defendants if they were now required to defend the claims.
[13]
(1) Alleged illegitimate purpose
The defendants submitted that the plaintiff seeks to pursue the claims in the verified pleading for the predominant purpose of pursuing Mr Leon Nikolaidis for the alleged conduct pleaded in the verified pleading - being conduct that allegedly occurred more than 25 years ago - by:
1. having the Court, on an application to set aside the Adverse Costs Orders and Appeal Adverse Costs Orders, determine and make findings of repetitive acts of fraud against Mr Nikolaidis, comprising the Dishonest Conduct Claims;
2. using the prosecution of the claims in the verified pleading as a vehicle to obtain third party documents and to put them into evidence so that they are publicly known;
3. embarrassing and causing distress and harm and economic cost to Mr Leon Nikolaidis;
4. providing any evidence which is adduced in a proceeding based on the verified pleading to NSW Police, and having NSW Police charge and prosecute Mr Nikolaidis for fraud or dishonesty; and
5. pressuring the defendants to bring the 1993 proceeding to an end "by paying [the plaintiff] a very significant sum, well in excess of $1 million" in circumstances where the plaintiff has allegedly spent well in excess of that sum in legal costs in relation to the 1993 proceeding.
The defendants submitted that the Court should infer that this is the plaintiff's predominant purpose because:
1. R S Hulme J found in his reasons for judgment delivered on 28 February 1995 that the plaintiff had been "motivated by factors quite extraneous to [his] rights as reflected in the summons" [177] ;
2. the plaintiff failed to proceed expeditiously to have the costs in the 16 matters taxed or assessed following the orders for taxation made on 16 December 1993 and the orders for assessment on 26 July 1996; and
3. during the course of the 1993 proceeding, the plaintiff has repeatedly (but unsuccessfully) attempted to raise fraud allegations "under the guise of other issues in the 1993 Proceeding", particularly:
1. by filing the notice of motion on 26 July 2000 seeking leave to amend the 1993 summons, which motion was dismissed by Master McLaughlin on 25 August 2000 with the plaintiff ordered to pay indemnity costs; [178] ;
2. by filing the amended statement of claim filed on 19 June 2009, which was struck out by Barrett J on 2 March 2010 [179] ;
3. by subsequently seeking leave to file an amended statement of claim, which leave was refused by Barrett J on 11 May 2010 [180] ; and
4. by filing in June 2010 a statement of claim which contained amendments substantially the same as those in respect of which the plaintiff had previously been refused leave, which statement of claim was then struck out by Rein J on 1 October 2010 [181] ; and
1. almost all of the 214 paragraphs of the verified pleading are devoted to the plaintiff's allegations about events during the period from 1984 to 1992 and "barely refer to the costs orders the subject of the relief".
The defendants also rely on more recent events as providing further evidence of the plaintiff's alleged illegitimate purpose. Particular attention was directed to the plaintiff's changing position concerning the return of the files [182] . The defendants emphasise:
1. that the plaintiff's solicitor's email dated 6 February 2018 to Mr Zwar stated that the plaintiff no longer sought return of the files in the defendants' possession;
2. that the plaintiff refused to commit to this position before Slattery J on 14 May 2018;
3. that the plaintiff's solicitor's sent an email to Mr Zwar on 5 June 2020 in which he requested that the defendants "not destroy the remains of the 16 original files on or shortly after 10 June 2020" because, firstly, the NSW Police are "still considering whether to initiate, or refer to the DPP for further consideration, criminal charges against [Mr Nikolaidis] and/or [Mr Zwar]" based on a complaint made by the plaintiff in 2010, and secondly, that as the verified pleading makes allegations relating to some of those files, the defendants should not destroy those files pending the determination of the leave application (and any appeal that may be subsequently brought).
As the plaintiff submitted, the onus of satisfying the Court that there is an abuse of process lies upon the defendants as the party asserting the abuse of process, and that the onus is "a heavy one": Williams v Spautz (1992) 174 CLR 509 (Williams) at 529 (Mason CJ, Dawson, Toohey and McHugh JJ).
The plaintiff submitted that the defendants have not discharged this onus. He denied that his predominant purpose in applying to set aside the Adverse Costs Orders and the Appeal Adverse Costs Orders is an illegitimate purpose.
The plaintiff referred to the two kinds of case identified by the plurality in Williams (at 522 and 526), namely:
1. where a litigant has a genuine cause of action which he wishes to pursue in any event but can also be shown to have an ulterior purpose in view as a desired by-product of the litigation; or
2. where a litigant does not wish to pursue a cause of action to its conclusion because he or she intends to use the proceedings for a collateral and improper purpose.
In this context, the expressions "ulterior purpose", "collateral purpose", "improper purpose" and "illegitimate purpose" refer to a purpose that the Court's process is not designed to achieve: Williams at 529.
As the plaintiff's submissions acknowledged, the first kind of case involves an abuse of process if the pursuit of the ulterior purpose is the plaintiff's predominant purpose for using the Court's process. The second kind of case also involves an abuse of process.
It is tolerably clear from reading the defendants' submissions as a whole that the defendants characterise the plaintiff's conduct as the first kind of case referred to in Williams. The defendants contend that the plaintiff's predominant purpose in seeking to pursue the claims in the verified pleading is to achieve the ends set out at [307] above. The plaintiff addressed the defendants' contentions on that basis.
In his affidavit sworn on 18 June 2020, the plaintiff deposed that he wants to apply for a gross sum costs order and that he wishes to set aside the Adverse Costs Orders and Appeal Adverse Costs Orders so as to improve his position when he applies for the gross sum costs order. The plaintiff understands that, unless those previous costs orders are set aside, any gross sum costs order made in his favour now will not relieve him of the obligation to pay the defendants' costs that he has been ordered to pay under those previous costs orders. The plaintiff also deposed that he believes that "all of the costs I have incurred in the 1993 Proceeding were caused by the fraud of Mr Nikolaidis" and he understands that a costs order may be set aside if it was obtained by fraud.
It was submitted on behalf of the plaintiff that his purpose in seeking leave to file the verified pleading and in prosecuting the claims in the verified pleading is to obtain the orders sought under UCPR rr 36.15(1) and 36.16(3), which would be financially advantageous to him in his application for a gross sum costs order.
In my opinion, this aspect of the plaintiff's evidence and submissions merely state what is obvious from the position that the plaintiff is in, having achieved substantial success in what remained of the 1993 proceeding in November 2017.
I decline to draw the inference for which the defendants contended on the grounds summarised at [308] and [309] above.
The relevant question is: what is the plaintiff's predominant purpose now in seeking leave to file the verified pleading and, if leave is granted, in prosecuting the claims in the verified pleading? In all the circumstances of this case, I do not consider that it is relevant to hark back to what might have been the plaintiff's purpose twenty-five years ago, as the defendants urged me to do. I have set out at [44] above the passage in the reasons for judgment of R S Hulme J on which the defendants relied in support of this submission. His Honour's statement about "motivation" is coupled with an observation that it was "primarily the defendants' fault that the plaintiffs did not obtain what they were entitled to in terms of orders 1 and 2 of the summons without the necessity of coming to court" and a conclusion that the plaintiffs' motivation was not a reason for depriving them of an order for costs. I do not regard this as a finding that the plaintiff's predominant purpose in pursuing the 1993 proceeding was an illegitimate purpose.
Nor do I consider that the purpose that might have motivated the plaintiff to seek to amend the pleadings in the 1993 proceeding to raise allegations of fraud, and to seek damages or equitable compensation, in 2000, 2009 and 2010 at a time when he was still in dispute with the defendants about whether he owed them any amount in outstanding fees, have any rational bearing on the plaintiff's predominant purpose in seeking leave to file the verified pleading in 2019 after establishing that the defendants are statute-barred from pursuing him in respect of outstanding fees.
The extraordinary delay that beset the taxation and assessment of costs in the 16 matters from December 1993 to late 2015 cannot be attributed entirely the plaintiff. The detailed history that I have set out at [18]-[123] above demonstrates that the dispute between the parties concerning the terms of MDN's retainer, the referee's reluctance to resolve that dispute, the fraud allegations that emerged in the course of the parties taking steps towards the resolution of those retainer issues by the Court, the criminal charges, conviction and imprisonment of Mr Leon Nikolaidis for fraudulently creating one of the documents relied on in support of the defendants' contentions concerning the terms of the retainer, and the resulting stay of the 1993 proceeding, contributed significantly to the delay of the taxation and assessment processes. That is a further reason why I do not consider that any inference concerning the plaintiff's predominant purpose in seeking leave to file the verified pleading can be drawn from the historical conduct of the 1993 proceeding.
The fact that most of the 214 paragraphs of the verified pleading are devoted to the plaintiff's allegations about events during the period from 1984 to 1992 and only a few paragraphs refer to the Adverse Costs Orders and Appeal Adverse Costs orders is merely a function of the nature of the matters that the plaintiff seeks to prove in order to establish the alleged fraud on which he relies as the basis for setting aside the orders under UCPR r 36.15(1) and the matters on which he relies as warranting the exercise of the discretion under r 36.16(3). As the plaintiff submitted, neither this, nor the fact that the plaintiff seeks to have the Court make findings about the alleged facts, has any bearing one way or the other on whether or not the plaintiff has a predominant illegitimate purpose.
The plaintiff's changing position concerning the return of the files is highly unsatisfactory, but I regard it as evidence of indecision and prevarication rather than evidence of a predominant illegitimate purpose.
For all of those reasons, I am not persuaded that the plaintiff's predominant purpose in seeking leave to file the verified pleading is other than to obtain the orders sought under UCPR rr 36.15(1) and 36.16(3), thereby enhancing his prospects of achieving a favourable outcome (or a better outcome than might otherwise be achieved) in his planned application for a gross sum costs order.
[14]
(2) Unjustifiable oppression and bringing the administration of justice into disrepute
I now turn to consider in more detail the defendants' submissions in support of their contention that the claims in the verified pleading are an abuse of process because they are unjustifiably oppressive and/or because they bring the administration of justice into disrepute.
As I have explained at [154]-[167] above, it is clear from paragraphs 205 to 214 of the verified pleading that the plaintiff's claim under UCPR r 36.15(1) and the first basis of his claim under r 36.16(3) are founded on the Overcharging Claims and the Dishonest Conduct Claims, whereas the second basis of the plaintiff's claim under r 36.16(3) is founded on the DRAW Report Claims.
It is the Dishonest Conduct Claims that provide the basis for the pleaded allegation that the plaintiffs would not have commenced the 1993 proceeding if:
1. the defendants had acknowledged that the amount of fees owing to them in respect of the 16 matters was "substantially less than" $95,749.40, this being the true position according to the plaintiff as pleaded in the Overcharging Claims; and
2. there was "well over $100,000" available for the defendants to apply to the payment of such fees as were owing to them in the 16 matters, this being the true position according to the plaintiff if Mr Leon Nikolaidis had not engaged in the conduct that is the subject of the Dishonest Conduct Claims.
The second basis of the plaintiff's claim under UCPR r 36.16(3) is that the parties would have settled the 1993 proceeding in the second half of 1994 if they had been aware that MDN held on behalf of the plaintiff, or was liable to account to the plaintiff for, a sum greater than the $95,749.40 claimed by MDN in outstanding fees. The plaintiff alleges that this was the true position, of which both parties would have been aware if the Unrecorded Amounts had been included in the DRAW Report.
If the plaintiff were granted leave to file the verified pleading, the prosecution of his claims under UCPR rr 36.15(1) and 36.16(3) would require the Court to determine the Overcharging Claims, the Dishonest Conduct Claims and the DRAW Report Claims on their merits. The determination of those three sets of allegations would be relevant only to the plaintiff's foreshadowed application for an order that the defendants pay his costs of the 1993 proceeding in a gross sum specified by the Court. The plaintiff's objective is to establish a starting point for that application that is more advantageous to him, in that he wishes to include in his application the costs of the interlocutory applications and stages of the 1993 proceeding in respect of which the Adverse Costs Orders and Appeal Adverse Costs Orders were made.
To the extent that it relates to the Overcharging Claims, the defendants' submission that the verified pleading represents an attempt by the plaintiff to litigate issues already determined by the Court cannot be accepted. The Overcharging Claims would, in substance, have been determined as part of the costs assessment ordered by the Court on 25 July 1996, if it had been concluded. The costs assessment was not concluded. Both parties bear some responsibility for this state of affairs, as I have said at [322] above. Ultimately, it became unnecessary to conclude the costs assessment once the plaintiff succeeded in establishing that the defendants are statute-barred from commencing an action to recover such costs as may be assessed as payable to them in respect of the bills in the 16 matters.
The Dishonest Conduct Claims have not been determined by the Court because the plaintiff chose to keep those allegations in reserve, as I have referred to at [282]-[288] above. For the reasons I have explained at [290]-[296], the Dishonest Conduct Claims ought reasonably to have been made in the 1993 proceeding at the outset or at least prior to the dismissal order.
To the extent that it relies on the DRAW Report Claims, the verified pleading is an attempt to litigate matters that were conceded by the plaintiffs on 15 November 1994, which concession resulted in the Court dismissing part of the 1993 proceeding. As Barrett J held in March 2010, that dismissal order adjudicated the plaintiffs' claim for the taking of an account and consequential orders for payment. Because the dismissal order was based on the concession finding, litigation of the DRAW Report Claims on a final hearing of the verified pleading would not result in any finding inconsistent with the concession finding. However, it would amount to litigation of claims already dismissed. The plaintiff could have avoided this outcome by raising his allegations about the Unrecorded Amounts prior to his concession made on 15 November 1994. There is no explanation for his failure to do so. It appears that he has simply taken the opportunity to revisit the analysis of the DRAW Report conducted on his behalf in 1994 and now wishes to withdraw his concession.
In my opinion, in the circumstances that I have summarised at [331]-[333] above, it is an abuse of process for the plaintiff to now raise the allegations pleaded in the Overcharging Claims, the Dishonest Conduct Claims and DRAW Report Claims for determination by the Court for the purpose of his foreshadowed application for a gross sum costs order.
As the procedural history set out at [18]-[123] above demonstrates, the Adverse Costs Orders and Appeal Adverse Costs Orders were made in the context of specific interlocutory applications within, or specific stages of, the 1993 proceeding. Each of the orders reflects the Court's assessment of conduct of the parties, and the measure of success or failure of each of the parties in relation to each such application or stage, and any other matters that the Court considered relevant to the orders to be made in relation to the costs of each application or stage. None of the orders were conditional upon the ultimate outcome of the 1993 proceeding. Nor were the orders made on the basis of any explicit or implicit assumption about that ultimate outcome.
If the plaintiff opposed the Adverse Costs Orders and Appeal Adverse Costs Orders at the time they were made on the basis that costs should be reserved pending the final determination of the 1993 proceeding, those submissions failed. If the plaintiff did not oppose the orders on those grounds, there is no reason why he could not have done so, although the submission may have lacked force given the limited remaining scope of the 1993 proceeding and the nature of the interlocutory steps that occasioned each costs order on the pleadings. As the defendants' submissions emphasised, the plaintiff does not contend that the any of the Adverse Costs Orders and Appeal Adverse Costs Orders was affected by error. (Any such contention would have needed to be raised in an application for leave to appeal made promptly after the relevant costs order was made.) Nor does the plaintiff contend that the alleged conduct that is the subject of the Overcharging Claims, the Dishonest Conduct Claims and the DRAW Report Claims had any relevance to the Adverse Costs Orders and Appeal Adverse Costs Orders, save that he asserts that the parties would not have been litigating at all (or at least after the end of 1994) but for that alleged conduct.
It is not uncommon for proceedings to be adjudicated in a manner that does not involve a determination of all of the matters put in issue by the successful party. In those circumstances, the Court does not engage in a determination of those matters on their merits solely for the purpose of deciding what order should be made in relation to the costs of the proceeding. Nor does the Court determine matters that were not put in issue by the successful party, solely for the purpose of resolving a dispute about costs. That is the process that the plaintiff seeks to have the Court embark upon in this case, with a view to setting aside costs orders already made.
In my opinion, it would bring the administration of justice into disrepute if the Court were to grant leave to the plaintiff to file the verified pleading and allow its process to be used to embark on the time-consuming exercise of determining these ancient allegations for this purpose in all the circumstances of this case. The plaintiff's deliberate decision to keep the Dishonest Conduct Claims in reserve until now, and his wish to withdraw from the concession that he made 25 years ago in respect of the DRAW Report, do not warrant allocating significant publicly funded judicial resources to this exercise while other litigants wait in the queue for justice: UBS AG v Tyne (supra) at [38]-[46] (Kiefel CJ, Bell and Keane JJ) and the authorities there cited.
That is one reason why I have concluded that the verified pleading is an abuse of process. For the avoidance of doubt, that conclusion applies to the plaintiff's claim under UCPR r 36.15(1) and both bases of his claim under r 36.16(3).
I am also of the opinion that the verified pleading is an abuse of process because the use of the Court's procedures to prosecute the Dishonest Conduct Claims and the DRAW Report Claims in support of the application for orders under UCPR rr 36.15(1) and 36.16(3) would be unjustifiably oppressive to the defendants.
A very long period of time that has passed since the alleged events that are the subject of the Dishonest Conduct Claims and the DRAW Report Claims.
During that time, MDN's legal files relating to the Preston entities have been destroyed (other than the files in the 16 matters that were the subject of the costs assessment), and all of its accounting books and records have been destroyed, in circumstances where the accounting aspect of the 1993 proceeding was dismissed in February 1995 and the only matters remaining to be determined were the retainer issues and the completion of the costs assessment in respect of the 16 matters. The legal files were destroyed at some time prior to 2000 in accordance with MDN's policy to destroy files after ten years (subsequently reduced to seven years) after closure of the file. The accounting records were destroyed on dissolution of the firm in 2010. [183]
I accept the evidence of Mr Leon Nikolaidis and Mr Zwar that, if the allegations that are now made in the verified pleading had been made earlier, they would have taken steps to retain MDN's legal files and its accounting books and records. [184]
Having regard to the nature of the allegations pleaded in the verified pleading, I also accept that the inability of Mr Nikolaidis and Mr Zwar to refer to those files and records in preparing any defence to the verified pleading and any evidence in support of that defence would be prejudicial to their ability to defend the allegations in the verified pleading in resisting the orders sought under UCPR rr 36.15(1) and 36.16(3). To the extent (if at all) that this prejudice might have been ameliorated by calling evidence from witnesses involved in maintaining MDN's accounts, the preparation of draft bills and the issuing of bills to Preston entities, two of those witnesses (Mrs Nikolaidis and Mr Heat) are now deceased.
I reject the plaintiff's contention that the defendants' submissions concerning prejudice seek to take advantage of the defendants' own wrong in destroying the files and records (other than the files relating to the 16 matters). Contrary to the plaintiff's submissions, I do not consider that the destruction of files created between 1984 and 1992 involved any wrong on the part of the defendants in circumstances where the plaintiff had made no claim for the return of those files in the 1993 proceeding, with the exception of the four files specifically referred to in the 1993 summons. The plaintiff appeared to have abandoned his claim for the delivery up of those four files by failing to pay the security required by the Court in 1993. [185]
The submission that the plaintiff "never withdrew" a request made in correspondence in October 1992 for the return of all files flies in the face of the reality that the plaintiff made a claim for the return of four files only in the 1993 proceeding. The submission that the defendants engaged in wrongdoing by destroying the files without first notifying the plaintiff that they intended to do so and inviting him to seek an order from the Court restraining them from doing so ignores the fact that the plaintiff had commenced proceedings and there was no reason why the defendants should not have proceeded on the basis that those proceedings included all claims that the plaintiff wished to pursue in relation to the files.
The plaintiff referred to the Revised Professional Conduct and Practice Rules that applied to solicitors with effect from 24 August 1995 until 2013, which required solicitors to retain documents to which a client is entitled for the duration of the retainer "and at least 6 years thereafter or until such time as the solicitor delivers them to the client or another person authorised by the client to receive them, or the client instructs the solicitor to deal with them in some other manner". [186] However, the plaintiff's submissions did not articulate why, in the circumstances of this case, the defendant solicitors were not entitled to destroy the documents 6 years after the termination of their retainer in October 1992.
The evidence available to the defendants to defend the claims in the verified pleading has been impoverished over the course of time not only due to the destruction of relevant documents but the fading of Mr Leon Nikolaidis' recollection of relevant events during the period from 1984 to 1992. He gave evidence to the effect that he has a poor recollection of details or events relating to the Preston entity matters. [187] I have no reason to doubt that evidence, which is entirely consistent with well known observations about the effect of the passage of time on the quality and reliability of human recollection: see Nominal Defendant v Cordin [2017] NSWCA 6 at [165]-[167] (Davies J), and the authorities there cited.
I accept the plaintiff's submission that each case must be considered on its own facts, and that the facts of the present case differ in several respects from the facts in Batistatos v Roads and Traffic Authority of New South Wales (supra). I accept that lengthy delay does not, in itself, render a proceeding an abuse of process. I acknowledge that the defendants would be entitled to a fair trial of the claims in the verified pleading, and that this is not necessarily synonymous with a perfect trial: The Council of Trinity Grammar School v Anderson (2019) 101 NSWLR 762; [2019] NSWCA 292 at [424]-[429] (Bathurst CJ, Payne JA and Simpson AJA agreeing) and the authorities there cited.
In the present case, the effect of the delay on the evidence available to the defendants to defend the claims in the verified pleading is such that any trial of those claims would necessarily be unfair to them. It is difficult to comprehend how they could defend allegations that MDN did not do any or most of the work charged for in the absence of relevant records and without a witness with a reasonable recollection of the nature of the matter, the scope of the instructions and the work done and not done. It would be oppressive to the defendants to require them to defend those allegations without that evidence. In my opinion, it would also bring the administration of justice into disrepute, particularly in circumstances where the plaintiff has offered no adequate explanation for the delay that has occasioned this prejudice to the defendants.
The plaintiff's only explanation for the delay is his plan to raise the Dishonest Conduct Claims at some later time after obtaining access to all of the defendants' legal files. That plan is a wholly inadequate explanation for all of the reasons referred to at [291]-[297] above, including because the plaintiff failed to include a claim for delivery of those files in the 1993 summons. Moreover, the plan provides no explanation at all for the delay in making the allegations that are now the subject of the DRAW Report: see [333] above. In those circumstances, I reject the plaintiff's submission that any oppression to the defendants that would flow from a grant of leave to the plaintiff to file the verified pleading would not be unjustifiable oppression.
For those reasons, I have concluded that leave to file the verified pleading should be refused on the ground that it is an abuse of process.
For the avoidance of doubt, this conclusion applies to the whole of the verified pleading and is not dependent or consequential upon my conclusion in relation to Anshun estoppel at [297] above.
[15]
Are the plaintiff's claims so obviously untenable that they cannot possibly succeed?
My conclusions in relation to Anshun estoppel and abuse of process are sufficient to dispose of the plaintiff's application for leave to file the verified pleading. However, in case a different view may be taken on any appeal, I now address the defendants' contention that the claims to set aside the Adverse Costs Orders and Appeal Adverse Costs Orders are so obviously untenable that they cannot possibly succeed.
The principles that would be applicable on an application for summary dismissal of a proceeding constituted by the verified pleading are relevant to the determination of the plaintiff's application for leave to file the verified pleading for the reasons explained at [168]-[174] above.
Those principles are well known. Barwick CJ expressed the test in the following terms in General Steel Industries Inc v Commissioner of Railways (1964) 112 CLR 125 (General Steel) at 129:
"… the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; 'discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would involve useless expense'."
The demanding nature of the test has been emphasised in many cases, including the following passage from the judgment of Emmett JA, with whom Macfarlan JA and Simpson J in New South Wales v Williams (2014) 242 A Crim R 22; [2014] NSWCA 177 at [71]:
"The requirement for establishing that there is no triable issue is a demanding one and the power to strike out a pleading on the basis that it discloses no reasonable defence, or is an abuse of process, should be exercised only in plain and obvious cases. The power should not be exercised in cases of doubt or difficulty or where the pleading raises a debatable question of law. Once it appears that there is a real issue, whether of fact or law, and that the rights of the parties depend upon it, a court should not dismiss a defence raising such an issue, either on the basis that no reasonable defence is disclosed or as an abuse of process (see Dey v Victorian Railways Commissioners [1949] HCA 1 ; 78 CLR 62 at 91; General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69 ; 112 CLR 125 at 129-130; Commonwealth v Griffiths [2007] NSWCA 370 ; 70 NS WLR 268 at [11]-[12] and Spencer v Commonwealth [2010] HCA 28 ; 241 CLR 118 at 139-140)."
[16]
Cause of action under UCPR r 36.15(1)
As the plaintiff acknowledged, the matters alleged in the Dishonest Conduct Claims in the verified pleading are a species of fraud. As set out in detail at [124]-[165] above, the plaintiff pleads that the Adverse Costs Orders and Appeal Adverse Costs orders were made irregularly, illegally or against good faith because he would not have commenced the 1993 proceeding at all, and so those orders would never have been made, if Mr Leon Nikolaidis had not engaged in the alleged fraudulent conduct.
The defendants' submissions attack the plaintiff's claim under UCPR r 36.15(1) on numerous grounds. In respect of many of these grounds, insufficient care has been taken to direct the submissions to the principles referred to above.
The principal ground raised by the defendants that does strike directly at the heart of the test articulated in General Steel is that the matters pleaded in support of the claim under UCPR r 36.15(1) occurred prior to the commencement of the 1993 proceeding and were known to the plaintiff when each of the Adverse Costs Orders and Appeal Adverse Costs Orders were made. It is not pleaded that there has been any "new discovery of something material, in the sense that fresh facts have been found which, by themselves or combination with previously known facts, would provide a reason for setting aside the judgment": Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534 at 538E (Kirby P, Hope and Samuels JJA agreeing).
At the hearing of the Motion, after some prevarication, counsel for the plaintiff acknowledged that there is no new discovery that would satisfy this requirement in this case. Counsel sought leave to put on a further submission that "puts the argument that the proposition stated by Kirby P … apply to an application to set aside a final judgment but don't [sic] apply to an application to set aside an interlocutory judgment". [188] That leave was granted. However, the further submission was limited to reiterating that the costs orders were interlocutory and stating that Wentworth v Rogers (No. 5) and subsequent cases in which the requirements articulated by Kirby P had been applied involved applications to set aside final judgments on the basis of fraud, with one exception.
The exception is Bhagat v Smith [2000] NSWCA 89 (Bhagat), in which the Court of Appeal dismissed an application for leave to appeal from a decision of Young J (as his Honour then was) striking out and refusing leave to amend a claim to set aside an earlier judgment of Studdert J for fraud. The judgment of Studdert J was an interlocutory judgment dismissing a motion for dismissal of a defamation action for want of prosecution or as an abuse of process. The fraud alleged was that the defendants had procured the judgment through false evidence.
The Court of Appeal dismissed the application for leave to appeal from Young J's decision, reasoning that it was utterly futile and hopeless in circumstances where Studdert J had not even referred to the allegedly false evidence in his reasons for judgment and the matters relied on as demonstrating the falsity of the evidence had been known to the applicant prior to the hearing before Studdert J.
The Court of Appeal was not informed that the judgment of Studdert J was an interlocutory judgment until late in the hearing of the application for leave to appeal. This is recorded in the penultimate paragraph of the reasons for judgment, where the Court of Appeal (Handley and Sheller JJA) observed (at [21]):
"The Court was surprised therefore when, in answer to questions from the bench, we were informed that the judgment of Studdert J was interlocutory, and involved the dismissal of a motion by the claimant that a defamation action pending against him be dismissed for abuse of process or want of prosecution. That action is still pending and awaits a trial on its merits. While, in theory, there is power to set aside an interlocutory decision for fraud, the jurisdiction is rarely, if ever, invoked where the underlying proceedings remain on foot awaiting a trial on the merits. The present proceedings constitute satellite litigation of an extreme kind and were, potentially at least, an abuse of process. The setting aside of the judgment of Studdert J of 5 June 1996 would not, in itself, lead to the dismissal of the defamation action against the claimant but would simply lead to a rehearing of the claimant's motion that the action be dismissed. The fact that Studdert J did not even refer to the supposedly false evidence given by Ms Mountford demonstrates the utter futility and hopelessness of the present proceedings."
The plaintiff submitted that, whilst Bhagat appeared to provide some support for the proposition that the test for setting aside an interlocutory order on the grounds fraud is the same as the test for setting aside a final order on the grounds of fraud, the Court did not discuss "the juridicial basis" for this proposition and it was not part of the ratio of the Court of Appeal's dismissal of Mr Bhagat's application for leave to appeal. The plaintiff submitted that the ratio was limited to the Court of Appeal's assessment that the application constituted "satellite litigation of an extreme kind".
I reject these submissions. Reading the judgment as a whole, it is plain that the Court of Appeal was not satisfied that there was an issue of principle, a question of general public importance, or an injustice to the applicant which was reasonably clear (in the sense of going beyond what was merely arguable) [189] for all of the reasons summarised at [363]-[364] above.
In the context of a judgment dismissing an application for leave to appeal, there was no occasion for the Court of Appeal to discuss the reasons why the requirement to identify a "new discovery of something material" in applying to set aside a judgment on the grounds of fraud, identified long ago in Wentworth v Rogers (No. 5) and applied in countless subsequent cases, applies to an application to set aside an interlocutory judgment in the same way as it applies to an application to set aside a final judgment.
As the defendants' submitted, the rationale for the requirement for "new discovery of something material" was explained as follows by Kirby P in Wentworth v Rogers (No. 5) (at 538F-G, Hope and Samuels JJA agreeing) (my emphasis):
"It is based upon a number of grounds. There is a public interest in finality of litigation. Parties ought not, by proceeding to impugn a judgment, to be permitted to relitigate matters which were the subject of the earlier proceedings which gave rise to the judgment. Especially should they not be so permitted, if they move on nothing more than the evidence upon which they have previously failed. If they have evidence of fraud which may taint a judgment of the courts, they should not collude in such a consequence by refraining from raising their objection at the trial, thereby keeping the complaint in reserve. It is their responsibility to ensure that the taint of fraud is avoided and the integrity of the court's process preserved."
In my opinion, the highlighted part of the rationale in the passage above plainly applies with equal force to interlocutory judgments as it does to final judgments.
The plaintiff's submissions did not address this rationale, or articulate any basis on which it might be argued at a final hearing of the verified pleading in due course that an applicant for an order setting aside an interlocutory judgment on the grounds of alleged fraud under UCPR r 36.15(1) need not demonstrate the discovery of fresh facts after delivery of the judgment which, by themselves or combination with previously known facts, would provide a reason for setting aside the judgment. Indeed, the plaintiff's submission did not rise higher than alluding to the possibility of such an argument, without articulating even in broad outline what the substance of the argument might be.
The plaintiff did submit that, at a final hearing of the plaintiff's claims in the verified proceeding, the principle to be applied by the Court in determining whether to set aside the interlocutory Adverse Costs Orders and Appeal Adverse Costs Orders under UCPR rr 36.15(1) and/or 36.16(3) would be what the plaintiff described as the "overriding principle" that "the court should do whatever the interests of justice require in the particular circumstance of the case". He then identified several matters said to support his claim that it is in the interests of justice to set aside the Adverse Costs Orders and Appeal Adverse Costs Orders. The plaintiff submitted that the Court should not refuse leave to file the verified pleading because his arguments that the interests of justice require the setting aside of those orders in all the circumstances of this case are not so obviously untenable that they cannot possibly succeed.
This submission unhelpfully failed to differentiate between the plaintiff's applications under UCPR rr 36.15(1) and 36.16(3). If the plaintiff intended to submit that the "overriding principle" displaces the requirement for a new discovery of something material in application under r 36.15(1) to set aside a judgment order for fraud, I reject that submission. The requirement for such a new discovery is the manifestation of the overriding principle in cases where a judgment or order is said to be tainted by fraud, for the reasons explained by Kirby P in Wentworth v Rogers (No 5) in the passage at 538F-G which is reproduced at [368] above. In any event, I consider that the plaintiff's arguments that the interests of justice require the setting aside of the costs orders under UCPR r 36.15(1) are so obviously untenable that they cannot possibly succeed, for the same reasons I have given below in relation to the plaintiff's claim under UCPR r 36.16(3).
For all of those reasons, it is my opinion that the plaintiff's cause of action under UCPR r 36.15(1) as pleaded in the verified pleading is so obviously untenable that it cannot possibly succeed because it fails to plead facts establishing a new discovery of something material in the sense referred to in Wentworth v Rogers (No. 5). The plaintiff has not articulated any real issue or debatable proposition of law that calls into question whether this requirement applies to an application to set aside interlocutory costs orders.
That is a further reason, independently of my conclusions in relation to Anshun estoppel and abuse of process, for dismissing the plaintiff's application for leave to file the verified pleading insofar as it pleads a cause of action under UCPR r 36.15(1).
In the circumstances, it is unnecessary to address the other issues raised by the defendants in the context of their submissions concerning UCPR r 36.15(1), including the defendants' complaints about the deficiencies in the pleading and particulars of the alleged fraud. However, this should not be taken as an indication that those complaints lacked force. The plaintiff's submission that any deficiency in the pleading or particulars of the alleged fraud could be overcome by the defendants and the Court trawling through the plaintiff's evidence in order to discern the plaintiff's case, or by requiring the plaintiff to provide particulars after filing the verified pleading, needs only to be stated in order to be rejected, particularly in circumstances where the plaintiff has already been afforded the time to prepare several alterations of the draft pleading.
[17]
Cause of action under UCPR r 36.16(3)
The defendants accepted that the Adverse Costs Orders neither determined any claim for relief or question of fact or law arising upon any claim for relief nor dismissed the whole or part of the 1993 proceeding. Accordingly, it was common ground between the parties that the Court has power under UCPR r 36.16(3) to set aside the Adverse Costs Orders.
I am inclined to accept the defendants' submission that a single judge of this Court lacks power to set aside the Appeal Adverse Costs Orders. The Court of Appeal is part of the Supreme Court of New South Wales, as the plaintiff submitted. However, a Judge of the Court, who is not a Judge of Appeal, does not constitute the Court of Appeal and the plaintiff did not identify any provision of the Supreme Court Act 1970 (NSW) that has the effect of assigning to the Equity Division of the Court an application to set aside a previous order of the Court of Appeal. [190] However, given the very limited submissions that the parties made about this issue, I will address their remaining submissions as to the whether the plaintiff's claim for an order under UCPR r 36.16(3) is manifestly groundless in relation to both the Appeal Adverse Costs Orders and the Adverse Costs Orders.
The remaining question then is whether the plaintiff's claim for an order under UCPR r 36.16(3) setting aside the Adverse Costs Orders and Appeal Adverse Costs Orders is so obviously untenable that it cannot possibly succeed, having regard to the principles applicable to the exercise of the power under r 36.16(3).
As I have referred to at [371] above, the plaintiff submitted that the principle to be applied by the Court in determining his claims to set aside the interlocutory Adverse Costs Orders and Appeal Adverse Costs Orders under UCPR r 36.16(3) would be the "overriding principle" that "the court should do whatever the interests of justice require in the particular circumstance of the case". The defendants' submitted that the power in r 36.16(3) must be exercised with great caution having regard to the importance of finality of judgments and orders, in a manner that gives effect to the overriding purpose in s 56 of the Civil Procedure Act and in accordance with the dictates of justice and the objects set out in ss 57-60 of that Act.
There is no real difference of substance between the parties' submissions in this regard, as the provisions of ss 56-60 of the Civil Procedure Act necessarily inform what the interests of justice require in the circumstances of any particular case. Even before that Act commenced, the "overriding principle" on which the plaintiff relied was informed by the need for disputes to be determined in a just and efficient manner That is clear from judgment of McLelland J in Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 (Brimaud) from which the plaintiff extracted the "overriding principle". In that case, his Honour said (at 46-47, emphasis added):
"The private injustice and public undesirability of permitting the relitigation of matters already litigated once is recognised in a number of principles of law, notably the rules relating to res judicata and issue estoppel, the more flexible rules under the rubric of vexation and abuse of process illustrated in such cases as Stephenson v Garrett [1891] 1 QB 677 and Hunter v Chief Constable, West Midlands Police [198 2] AC 529 ; [1981] 3 All ER 727 , and the restrictive provisions governing the adducing of further evidence on the hearing of an appeal even by way of rehearing: see, for example s 75A(8) of the Supreme Court Act 1970 (NSW).
Interlocutory orders, of their very nature, create no res judicata or estoppel, and the court retains jurisdiction to set aside, vary or discharge an interlocutory order up to the time of the final disposition of the proceedings. However, the general rationale of the principles last referred to applies even in the case of interlocutory orders. It would be conducive to great injustice and enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order relitigated at will.
The overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances of the case. In giving effect to that general principle, and in recognition of the public and private interests earlier referred to, rules of practice have been developed in accordance with which the discretionary power of the court to set aside, vary or discharge interlocutory orders will ordinarily be exercised. Not all kinds of interlocutory orders attract the same considerations. For present purposes one may put to one side orders of a merely procedural nature (as to which see for example Wilkshire & Coffey v Commonwealth (1 976) 9 ALR 325 ) and injunctions (or undertakings) made or given by agreement and without contest "until further order" (as to which see for example Warringah Shire Council v Industrial Acceptance Corp (unreported, SC(NSW), McLelland J, 22 November 1979).
In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application: see Woods v Sheriff of Queensland (1895) 6 QLJ 163 at 164-5 ; Hutchinson v Nominal Defendant [1972] 1 NSW LR 443 at 447- 8 ; Chanel Ltd v F W Woolworth & Co [198 1] 1 All ER 745 ; [19 81] 1 WLR 485; Adam P Brown Male Fashions v Philip Morris (1981) 148 CLR 170 at 177-8 ; 35 ALR 625 at 629- 30 ; Butt v Butt [1987] 1 W LR 1351 at 1 353 ; Gordano Building Contractors Ltd v Burgess [1988] 1 WL R 890 at 8 94."
The plaintiff also relied on Bajrmovic v Calubaquib [2015] NSWCA 139 in which Emmett JA, with the concurrence of Leeming JA and Adamson J, said (at [40]-[41], citations omitted):
"[40] Interlocutory orders create no res judicata or issue estoppel and the Court has jurisdiction to set aside, vary or discharge an interlocutory order. Similarly, where an application for interlocutory relief is refused, the Court has jurisdiction to entertain a second application for the same relief. However, clearly enough, it would be conducive to injustice and would be an enormous waste of judicial time and resources if there were no limits imposed on the entitlement of a party to re-litigate at will an application for interlocutory relief. That is to say, it may well be an abuse of process for a party who has been unsuccessful in obtaining interlocutory relief or in resisting interlocutory relief to re-litigate the very same question. However, there will be circumstances in which it will not be an abuse of process.
[41] It would not ordinarily be an abuse of process to endeavour to do so where there has been a change of circumstances or where evidence has become available that was not available at the time of the original hearing. However, that is not an exhaustive statement of the circumstances in which a second application after an initial unsuccessful application may be made or in which an application may be made to set aside, vary or discharge an order already made. The overriding principle is that the Court must do whatever the interests of justice require in the particular circumstances of the case. While the ordinary rule of practice is that an application to set aside, vary or discharge an order or a second application after a first application has been refused must be founded on a material change of circumstances, or the discovery of new material that could not reasonably have been put before the Court on the hearing of the original application, that is no more than an ordinary rule of practice. The interests of justice must prevail in the particular circumstances of any case. In particular, Balla DCJ accepted, and it has not been disputed in this Court, that there is no general principle that a second interlocutory application that raises additional evidence that was available at the time of the first application cannot be entertained."
Finally, the plaintiff referred to Liu v The Age Company Pty Ltd (2016) 92 NSWLR 679; [2016] NSWCA 115, in which McColl JA said (at [168]-[169] and [199], citations omitted):
"[168] Because the preliminary discovery order was interlocutory, it created no res judicata, issue estoppel or any extension of either doctrine in the Henderson v Henderson sense. Accordingly, the primary judge (and the court generally) had jurisdiction to set it aside, vary or discharge it. However, that does not mean there was no constraint upon the court's power to do so. Rather, the general rationale of the principles relating to res judicata and issue estoppel, being the private injustice and public undesirability of permitting the relitigation of matters already litigated once, also applies to reconsideration of interlocutory orders. It would be conducive to great injustice and enormous waste of judicial time and resources if that was not so.
[169] The constrained approach courts take to permitting interlocutory orders to be revisited reflects the proposition that a court must remain in control of its interlocutory orders but, too, that a further order will be appropriate whenever, inter alia, new facts come into existence or are discovered which render its enforcement unjust.
…
[199] In summary, accordingly, the overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances of the case. That consideration also applies to a second interlocutory application concerning the same, or what is substantially the same, issue or an attempt by a litigant who has unsuccessfully resisted an interlocutory application to re-agitate the same question. However, in determining what the interests of justice require, the court will have regard, among other matters, to the nature of the first interlocutory application, the nature of the change in position and whether any matter relied upon to change the basis upon which the challenged earlier order was made, was open to be advanced at the earlier hearing."
Ward JA said (at [292]):
"… I agree with McColl JA (at [199]) that the overriding principle governing the approach of the court to interlocutory applications is to do what the interests of justice require in the particular circumstances of the case (as was recognised by Emmett JA in Bajramovic v Calubaquib (2015) 71 MVR 15; [2015] NSWCA 139 at [40]-[41]). For that reason, had it been necessary to revisit the approach of the majority in Nominal Defendant v Manning (2000) 50 NSWLR 139; [2000] NSWCA 80, I would have concluded that it was correct; and that the question whether there was an abuse of process by the newspaper in the present case in seeking a stay of the preliminary discovery orders was to be determined having regard to all the circumstances of the case, as well as to the case management principles mandated by ss 56-60 of the Civil Procedure Act 2005 (NSW) and the public interest in the finality of litigation."
The defendants' submissions emphasised that the plaintiff seeks to set aside the Adverse Costs Orders and Appeal Adverse Costs Orders without demonstrating any material change in circumstances since those orders were made.
I accept the plaintiff's submission that on a final hearing of his application under UCPR r 36.16(3) the question to be determined by the Court would be whether the interests of justice require that any or all of the Adverse Costs Orders and Appeal Adverse Costs Orders be set aside in all the circumstances of the case.
The plaintiff submitted that the Court should not refuse leave to file the verified pleading unless his arguments that the interests of justice require the setting aside of the Adverse Costs Orders and Appeal Adverse Costs Orders in all the circumstances of this case are so obviously untenable that they cannot possibly succeed.
The plaintiff articulated a separate list of matters that he submitted were relevant to the interests of justice in relation to each of the three sets of claims relied on in support of the application under UCPR r 36.16(3) (noting that the Overcharging Claims and Dishonest Conduct Claims are also relied on in support of the application under r 36.15(1)).
In relation to the Dishonest Conduct Claims, the plaintiff submitted that:
1. Mr Leon Nikolaidis engaged in the wrongful conduct that is the subject of the Dishonest Conduct Claims. If he had not done so, there would have been available "well over $100,000" for MDN to apply to its legal costs in the 16 matters and the plaintiff would not have commenced the 1993 proceeding and the Adverse Costs Orders and Appeal Adverse Costs Orders would not have been made;
2. the plaintiff did not litigate the Dishonest Conduct Claims earlier because of his plan to obtain MDN's legal files relating to the Preston entities, to which I have already referred at [286] above. He did not obtain access to those legal files during the inspection of the defendants' records in 1994 for the purpose of the taking of an account in the 1993 proceeding. For the purpose of the taxation and assessment of costs in the 16 matters, he obtained access only to the legal files in those 16 matters;
3. the plaintiff raised the Dishonest Conduct Claims with Mr Leon Nikolaidis in correspondence prior to the commencement of the 1993 proceeding;
4. if the plaintiff had known earlier than January 2019 that MDN's legal files relating to the Preston entities had been destroyed, he "may have litigated the Dishonest Conduct Claims at an earlier point in time, including in an argument in opposition to one or more of the previous adverse costs orders at the time a judge of the court was considering making the costs orders";
5. the plaintiff has served evidence in support of the Dishonest Conduct Claims which, it was submitted, "is probative and identifies a prima facie case of dishonest conduct";
6. the plaintiff ultimately succeeded in the 1993 proceeding by reason of the declaration made by Slattery J in November 2017. The plaintiff seeks to ventilate the question whether earlier interlocutory costs orders adverse to him can be set aside by a combination of his ultimate success in the 1993 proceeding and the fact that the 1993 proceeding "was originally caused by the wrongful conduct of Mr Nikolaidis the subject of the Dishonest Conduct Claims"; and
7. it would be unjust to the plaintiff if his claim for relief under UCPR r 36.16(3) is not heard and determined on its merits based on the Dishonest Conduct Claims.
In relation to the Overcharging Claims, the plaintiff submitted that:
1. if MDN had not overcharged the plaintiff for work in the five matters that are the subject of the Overcharging Claims, and if Mr Leon Nikolaidis had not engaged in the conduct that is the subject of the Dishonest Conduct Claims, there would have been available "well over $100,000" for MDN to apply to its legal costs in the 16 matters and the plaintiff would not have commenced the 1993 proceeding and the Adverse Costs Orders and Appeal Adverse Costs Orders would not have been made;
2. each of those five matters were the subject of the taxation and assessment processes ordered in the 1993 proceeding. The plaintiff was, in effect, litigating the Overcharging Claims in the 1993 proceeding until the costs assessment process "fell away" as a result of the declaration made by Slattery J in November 2017. The plaintiff did not raise the Overcharging Claims in opposition to the Adverse Costs Orders and Appeal Adverse Costs Orders at the time they were made because it would have been premature to do so before the outcome of the assessment was known. It would be unjust to the plaintiff if, having litigated the Overcharging Claims since 1993, he is not now "permitted to attempt to prove the matters in a legitimate application to set aside previous costs orders". By contrast, there is no injustice to the defendants in permitting the plaintiff to rely on the Overcharging Claims in that manner because they had an opportunity since 1993 to prepare evidence in support of the fees charged since 1993;
3. the plaintiff has served evidence in support of the Overcharging Claims which, it was submitted, "is probative and identifies a prima facie case of dishonest conduct";
4. the plaintiff ultimately succeeded in the 1993 proceeding by reason of the declaration made by Slattery J in November 2017. The plaintiff seeks to ventilate the question whether earlier interlocutory costs orders adverse to him can be set aside by a combination of his ultimate success in the 1993 proceeding and the fact that the 1993 proceeding "was originally caused by a combination of overcharging by the Firm in five matters and the wrongful conduct of Mr Nikolaidis the subject of the Dishonest Conduct Claims"; and
5. it would be unjust to the plaintiff if his claim for relief under UCPR r 36.16(3) is not heard and determined on its merits based on the Overcharging Claims.
The plaintiff submitted that "it is arguable that the interests of justice based on the DRAW Report Claims are weaker than the interests of justice in relation to the Dishonest Conduct Claims and the Overcharging Claims" because the DRAW Report Claims do not allege any wrongdoing against the defendants and there is a "notable degree of overlap" between the DRAW Report Claims and the taking of accounts in the 1993 proceeding. The plaintiff nevertheless submitted that his applications to set aside the Adverse Costs Orders and Appeal Adverse Costs Orders based on each of the Dishonest Conduct Claims, the Overcharging Claims and the DRAW Report Claims are arguable. As a "fall back position", the plaintiff submitted that those applications based on the Dishonest Conduct Claims and Overcharging Claims only were arguable.
For present purposes, I will proceed on the assumption that the evidence relating to the Dishonest Conduct Claims and Overcharging Claims is of the calibre that the plaintiff asserts, and that the factual allegations the subject of the three categories of claims are not so obviously untenable that he could not possibly succeed in pressing them.
The remaining matters relied on by the plaintiff in relation to the Dishonest Conduct Claims do not reveal a tenable argument that could be raised at the final hearing that the interests of justice be in his favour. On the contrary, the second and third matters referred to at [388] above are reasons why the verified proceeding is an abuse of process: see [326]-[353] above. In relation to the fourth matter, the plaintiff had no proper basis to assume that MDN would retain all of its legal files while he took his time in conducting the 1993 proceeding in accordance with his plan, for the reasons I have explained at [345]-[346] above.
It does not follow from the plaintiff's success in November 2017 that he interests of justice now favour allowing the plaintiff to ventilate the questions whether the Adverse Costs Orders and Appeal Adverse Costs orders can be set aside by reason of that success and the fact (if it were proved) that the 1993 proceedings was commenced as a result of the alleged conduct that is the subject of the Dishonest Conduct Claims and the Overcharging Claims.
For the reasons explained above, I do not consider that the plaintiff has a tenable argument that the interests of justice require the setting aside of the Adverse Costs Orders and Appeal Adverse Costs Orders on the basis of the DAW Report Claims.
My use of the phrase "tenable argument" above is intended to refer to an argument that is not so untenable or manifestly groundless that it could not possibly succeed.
For all of those reasons, it is my opinion that the plaintiff's cause of action under UCPR r 36.16(3) cannot possibly succeed because neither the verified pleading nor the plaintiff's submissions identify a basis on which it could possibly be said that the interests of justice in the circumstances of this case require that any or all of the Adverse Costs Orders or Appeal Adverse Costs Orders should be set aside.
[18]
Discretionary considerations
In all the circumstances of this case, I do not consider that there are any discretionary considerations that are relevant to the plaintiff's application for leave to file the verified pleading that have not already been canvassed in considering the parties' contentions concerning Anshun estoppel, abuse of process and the General Steel principles.
[19]
Conclusion and orders
For all of those reasons, the plaintiff has succeeded in his application to for leave to rely on the affidavits referred to in [191] above, but his application for leave to file the verified pleading fails and there will be an order dismissing prayer 1 of the notice of motion filed on 25 October 2019. There will also be orders dismissing the plaintiff's notice of motion filed in the 1993 proceeding on 15 November 2018 (referred to at [105] above) and the points of claim filed on 29 June 2019 (referred to at [116] above), being the predecessors to the verified pleading.
There is no reason why the costs of and incidental to the Motion should not follow the event. I regard the costs associated with the predecessors to the verified pleading referred to immediately above as being costs incidental to the Motion. In substance, the event is that the plaintiff has failed in his application for leave to file the verified pleading. The application for leave to rely on the late served affidavits was not the subject of extensive evidence and occupied almost no time at the hearing of the Motion. I note that, in his written submissions served prior to the hearing of the Motion, the plaintiff acknowledged that "it appears difficult to resist an order that the plaintiff pay the defendants' costs" if "the plaintiff loses on the Batistatos point". The plaintiff has been unsuccessful on that point and others. Whilst the Court has not accepted every submission made by the defendants, there was a substantial degree of overlap between the evidence and submissions relevant to each issue raised and I do not regard this as a case that lends itself to an order which separates the costs outcome of the Motion according to issues.
In their written submissions served prior to the hearing of the Motion, the defendants submitted that the plaintiff should be ordered to pay their costs on an indemnity basis and an order that those costs be determined by the Court on a "fixed/lump sum basis" and by payable forthwith. I assume that the defendants were thereby foreshadowing an application under s 98(4)(c) of the Civil Procedure Act for an order awarding costs to the defendants in a specified gross sum instead of as assessed.
The plaintiff should have an opportunity to be heard, after studying these reasons for judgment, about whether he should be ordered to pay the defendants' costs on an indemnity basis. The orders and directions that I will make will facilitate this. Whilst I have concluded that the plaintiff is to pay the defendants' costs of the Motion, I will defer making any order to the effect pending resolution of the questions whether these costs are to be paid on the indemnity basis or on the ordinary basis.
The directions will also facilitate the defendants making an application pursuant to s 98(4)(c) of the Civil Procedure Act.
In circumstances where the Court is yet to make orders concerning the costs of the remainder of the 1993 proceeding and 2015 proceeding (to the extent that those costs are not the subject of previous orders made during the course of those proceedings), I am not inclined at this stage to order the plaintiff to pay the defendants' costs of the Motion forthwith, whether on an ordinary or indemnity basis and whether as agreed or assessed, in a gross sum specified by the Court. The directions and orders that I will make will also provide for the parties to take the steps necessary to facilitate the Court making a determination as to the costs of the 1993 and 2015 proceedings.
I make the following orders, directions and notations:
Proceeding 1993/23395
1. Grant leave to the plaintiff to rely on the following affidavits in support of his application in paragraph 1 of the notice of motion filed on 25 October 2019 (the Motion):
1. the affidavit of John Preston sworn on 20 August 2019;
2. the affidavit of John Preston sworn on 21 October 2019;
3. the affidavit of Ivy Zhao sworn on 19 August 2019; and
4. the affidavit of Ivy Zhao sworn on 28 October 2019.
1. Note that order 1 above disposes of paragraph 2 of the Motion.
2. Order that the Motion is otherwise dismissed, save for the question of the costs of and incidental to the Motion.
3. Order that the notice of motion filed by the plaintiff on 15 November 2018 is dismissed.
4. Order that the points of claim filed by the plaintiff on 28 June 2019 is dismissed.
5. Direct that, by close of business on 16 February 2021, the defendants shall file and serve written submissions relied on in support of their application that the plaintiff pay their costs of the Motion on the indemnity basis rather than on the ordinary basis, such submissions not to exceed four pages in length.
6. Direct that, by close of business on 23 February 2021, the plaintiff shall file and serve any written submissions relied on in opposition to an order that they pay the defendants' costs of the Motion on the indemnity basis rather than on the ordinary basis, such submissions not to exceed four pages in length.
7. List the matter before Williams J at 9:00am on 5 March 2021 for directions to facilitate:
1. the preparation for hearing of the defendants' foreshadowed application for an order pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) in respect of the costs of the Motion;
2. the preparation for hearing of the plaintiff's foreshadowed application for an order pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) in relation to the costs of this proceeding and proceeding 2015/331795 (other than the costs of the Motion); and
3. any other directions or orders necessary to formally bring this proceeding and proceeding 2015/331795 to an end (subject to the questions of costs referred to (a) and (b) above).
Proceeding 2015/331795
1. Note the directions and orders made in proceeding 1993/23395 on this date.
2. List the matter before Williams J at 9:00am on 5 March 2021 for directions.
Proceeding 2018/96873
1. Note the directions and orders made in proceeding 1993/23395 on this date.
2. List the matter before Williams J at 9:00am on 5 March 2021 for directions.
[20]
Endnotes
Court Book, pages 75-105.
Preston v Nikolaidis, Supreme Court of New South Wales, Young J, 25 July 1996, unreported, page 1.
Exhibit 7, paragraph 5 (Court Book, page 1452); Preston v Nikolaidis, Supreme Court of New South Wales, R S Hulme J, 28 February 1995, unreported ("1995 judgment"), pages 1-2.
Court Book, pages 1-4.
Affidavit of Michael Zwar sworn on 27 December 2019, paragraph 7 (Court Book, page 1249).
Exhibit 7, paragraphs 18-20; 2017 judgment at [63]-[65].
Court Book, pages 1547-1551. This is the matter in respect of which the defendants were given leave to adduce additional evidence pursuant to s 191 of the Evidence Act 1995 (NSW).
As amended on 14 October 1994 (Court Book, pages 1548-1549 and 1552).
Affidavit of Michael Zwar sworn 27 December 2019, paragraphs 1-6, 52 and 62-67 (Court Book, pages 1246-1249 and 1259-1264).
Affidavit of Michael Zwar sworn 27 December 2019, paragraphs 6 and 62 (Court Book, pages 1247-1249 and 1263).
Affidavit of John Preston sworn on 18 February 2020, paragraphs 13-21 (Court Book, pages 888-890).
Orders 3(b) and 3(f) made on 9 June 1994 (at Court Book, pages 1547-1551), as set out in [24] above; orders made on 14 October 1994 (at Court Book, pages 1552-1553), as referred to at [39] below.
Affidavit of Michael Zwar sworn on 27 December 2019, paragraph 68 (Court Book, pages 1264, 1340-1342).
Defendants' written submissions dated 17 June 2020, paragraphs 8-15 and 20-21.
Labracon Pty Ltd v Cuturich (2013) 17 BPR 32,497; [2013] NSWSC 97 at [139].
Ibid.
Transcript, page 74 (lines 30-45).
Plaintiff's written submissions dated 17 June 2020, paragraphs 43 and 44.
Transcript, hearing, page 50 (lines 22 - 29).
See [107]-[114] above.
See [43]-[46] above.
See [24] above.
Preston v Nikolaidis [2010] NSWSC 66 at [56]-[61], reproduced at [71] above.
See [124]-[167] above.
See orders 1 and 3 at Court Book, pages 1547-1551, reproduced at [24] above.
See [126]-[150] above.
See order 3(a) at Court Book, pages 1547-1551, reproduced at [24] above.
Orders 3(b) and 3(f) made on 9 June 1994 at Court Book, pages 1547-1551, as set out in [24] above; orders made on 14 October 1994 at Court Book, pages 1552-1553, as referred to in at [39] above.
Defendants' written submissions dated 17 June 2020, paragraph 154.
Preston v Nikolaidis [2010] NSWSC 131 at [56]-[61], which paragraphs are reproduced at [71] above.
Defendants' written submissions dated 28 September 2020, paragraph 94.
Defendants' written submissions dated 28 September 2020, paragraph 101.
See [155]-[167] above.
Transcript, page 17 (line 35) - page 18 (line 8).
Preston v Nikolaidis [2010] NSWSC 131 at [57]-[59], reproduced at [71] above.
Affidavit of John Preston sworn on 14 June 2019, paragraphs 12-14 (Court Book, page 106) and pages 81-92 of Exhibit JP-1 to that affidavit (Court Book, pages 204-215); affidavit of John Preston sworn on 21 October 2019, paragraph 6 (Court Book, pages 646-647).
Affidavit of John Preston sworn on 21 October 2019, paragraph 7 (Court Book, page 647).
Affidavit of John Preston sworn on 21 October 2019, paragraph 8-9 (Court Book, page 647).
Affidavit of John Preston sworn on 21 October 2019, paragraphs 10-14 (Court Book, pages 647-648).
Affidavit of John Preston sworn on 14 June 2019, paragraph 20 (Court Book, pages 109-110).
See [28] above.
See [154]-[166] above.
Plaintiff's written submissions dated 8 July 2020, paragraphs 101-103.
See [167] above.
See [167] above.
See [44] above.
See [56]-[58] above
See [64]-[78] above
see [79]-[83] above
See [84] above.
See [101]-[102], and [111]-[115].
Affidavit of Leon Nikolaidis sworn on 14 January 2020, paragraphs 113-126, 150-154 (at Court Book, pages 1367-1368 and 1371-1372); affidavit of Michael Zwar sworn on 27 December 2019, paragraphs 143-145 (Court Book, pages 1273-1274).
Affidavit of Leon Nikolaidis sworn on 14 January 2020, paragraphs 150-154 (at Court Book, pages 1371-1372); affidavit of Michael Zwar sworn on 27 December 2019, paragraphs 143-145 (Court Book, pages 1273-1274).
See [28] above.
Rule 8.2.
Affidavit of Leon Nikolaidis sworn on 14 January 2020, paragraph 147 (at Court Book, pages 1370-1371).
Transcript, page 103 (lines 10-40).
James v Australia and New Zealand Banking Group Ltd (2020) 380 ALR 566; [2020] NSWCA 101 at [48].
Supreme Court Act 1970 (NSW), ss 38-56.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 03 February 2021
Preston v Nikolaidis, Supreme Court of New South Wales, Master McLaughlin, 25 August 2000, unreported
Rogers v The Queen (1994) 181 CLR 251
The Council of Trinity Grammar School v Anderson (2019) 101 NSWLR 762; [2019] NSWCA 292
Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28
UBS AG v Tyne (2018) 265 CLR 77; [2018] HCA 45
Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534
Williams v Spautz (1992) 174 CLR 509
Texts Cited: K R Handley, Spencer Bower and Handley: Res Judicata (5th ed, LexisNexis Butterworths, 2019)
Category: Procedural rulings
Parties: In proceeding 1993/23395:
John Preston (First Plaintiff/Applicant)
Western Suburbs Constructions Pty Ltd (formerly Preston Erections Pty Limited) (Second Plaintiff)
Leon Nikolaidis in his capacity as the executor of the estate of the late Mitrofanis Demetrius Nikolaidis (First Defendant/First Respondent)
Leon Nikolaidis trading as M.D. Nikolaidis & Co (Second Defendant/Second Respondent)
Michael Zwar (Third Defendant/Third Respondent)