Preston v Nikolaidis

Introduction

1. 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.
2. 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.
3. 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).
4. 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).
5. 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.

The relationship between the parties and the events leading to the commencement of the 1993 proceeding

1. 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.
2. 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]
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.
4. 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]
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]

Commencement of the 1993 proceeding

1. 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.
2. 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).
3. 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.
4. 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.
5. 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.
6. 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.

Relevant procedural history and factual matters

1. 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).
2. 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]
3. 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.
4. 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]
5. 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]
6. 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]
7. 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 verified pleading

1. 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).
2. 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).
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]
4. 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]
5. 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]
6. It is necessary to explain the Overcharging Claims, the Dishonest Conduct Claims and the DRAW Report Claims in more detail.
7. 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.

Overview of the parties' contentions and issues for determination

Introductory observations

1. 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.
2. 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.
3. 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.
4. I accept that submission made by the plaintiff.
5. 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.
6. 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.
7. 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]

Overview of the parties' contentions

1. 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).
2. 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.
3. 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.
4. 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.
5. 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]
6. 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.

Plaintiff's application for leave to rely on affidavits

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.

Plaintiff's application for leave to file the verified pleading

Res judicata, cause of action estoppel, issue estoppel and Anshun estoppel

1. 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.
2. 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.
3. 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]
4. 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.
5. 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).
6. 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].

Abuse of process

1. 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.
2. 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."
3. The defendants' principal submission is that the verified pleading is an abuse of process in the first sense referred to by his Honour.
4. 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).
5. 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."
6. 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."

(1) Alleged illegitimate purpose

1. 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.
2. 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".

(2) Unjustifiable oppression and bringing the administration of justice into disrepute

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.

Are the plaintiff's claims so obviously untenable that they cannot possibly succeed?

1. 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.
2. 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.
3. 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'."
4. 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)."

Cause of action under UCPR r 36.15(1)

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.
2. 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.
3. 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).
4. 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.
5. 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.

Cause of action under UCPR r 36.16(3)

1. 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.
2. 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.
3. 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).
4. 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.
5. 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."

Discretionary considerations

1. 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.

Conclusion and orders

1. 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.
2. 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.
3. 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.
4. 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.

Endnotes

1. Court Book, pages 75-105.
2. Preston v Nikolaidis, Supreme Court of New South Wales, Young J, 25 July 1996, unreported, page 1.
3. Exhibit 7, paragraphs 1-2 (Court Book, page 1452).
4. Exhibit 7, paragraph 3 (Court Book, page 1452).
5. Exhibit 7, paragraph 4 (Court Book, page 1452).
6. 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.
7. Court Book, pages 1-4.
8. Affidavit of Michael Zwar sworn on 27 December 2019, paragraph 7 (Court Book, page 1249).
9. Exhibit 7; transcript, page 80 (line 6) - page 82 (line 10) and page 84 (lines 24-34).
10. Exhibit 7, paragraphs 9-11 (Court Book, pages 1454-1456); Preston v Nikolaidis [2017] NSWSC 1527 ("2017 judgment") at [52]-[55].
11. Exhibit 7, paragraphs 13-15 (Court Book, pages 1456-1457); 2017 judgment at [56]-[58].
12. Exhibit 7, paragraphs 13-15, 17 (Court Book, pages 1456-1457); 2017 judgment at [59]-[61].
13. Exhibit 7, paragraphs 18-20; 2017 judgment at [63]-[65].
14. 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).
15. As amended on 14 October 1994 (Court Book, pages 1548-1549 and 1552).
16. Exhibit 7, paragraphs 21-23 (Court Book, page 1458); 2017 judgment at [66]-[68].
17. 1995 judgment, pages 2-3.
18. Order 6(c) at Court Book, page 1550.
19. Exhibit 7, paragraph 27 (Court Book, page 1459); 2017 judgment at [73]; Court Book, pages 1552-1553.
20. Exhibit 7, paragraph 24 (Court Book, page 1458); 2017 judgment at [69].
21. The letterhead names H J Wily and A H Wily as two directors of DRAW Services Pty Ltd: Exhibit 1 (at Court Book, page 241).
22. Exhibit 1 (at Court Book, pages 241 and 242).
23. Exhibit 1 (at Court Book, pages 245-250).
24. Exhibit 1 (at Court Book, page 243); Exhibit 7, paragraph 24 (Court Book, page 1458); 2017 judgment at [69].
25. Affidavit of Michael Zwar sworn 27 December 2019, paragraphs 1-6, 52 and 62-67 (Court Book, pages 1246-1249 and 1259-1264).