Smith v Wikramanayake

District Court of NSW|2010-05-12|Before: Mr P

CITATION: Smith v Wikramanayake [2010] NSWDC 319

HEARING DATE(S): 12 May 2010, 14 May 2010, 3 June 2010, 22 June 2010

DECISION: The statement of claim is stayed until such time as the facility known as 'Lavender Lodge' at 286 Warren Street, Lavington in Wagga is sold. The Respondent is to pay the Applicants' costs of the Motion on the usual basis.

CATCHWORDS: Stay - Abuse of process - Anshun principles - Prior proceedings between same parties - Identity of proceedings - Scope of agreement giving rise to proceedings

Smith v Wikramanayake [2007] NSWSC 136 Smith v Wikramanayake & Anor [2008] FMCA 1425 Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45 Champerslife Pty Ltd v Manojlovski & Anor [2010] NSWCA 33 CASES CITED: Greenhalgh v Mallard [1947] 2 All ER 225 Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231 General Steel (General Steel Industries Incorporated) v Commissioner for Railways (NSW) (1964) 112 CLR 125 Tang Man Sit v Capacious Investments Ltd [1996] AC 514 Baxter v Obacelo Pty Ltd [2001] HCA 66 Bryant v Commonwealth Bank of Australia [1995] 130 ALR 129

PARTIES: David SMITH Margaret Anne and Penrith Stimate WIKRAMANAYAKE Wagga Road Properties Pty Ltd

COUNSEL: Mr P Bolster Mr G Sirtes SC

SOLICITORS: Verekers Lawyers Macpherson & Kelley

1 By Notice of Motion filed 12 March 2010 the Applicants, Mr and Mrs. Wikramanayake, seek orders that the respondent's (Mr. Smith's) statement of claim be dismissed and, in the alternative, that the proceedings be permanently stayed.

3 To avoid confusion as to the parties given the variety of proceedings, I will refer to the Applicants as Mr and Mrs Wikramanayake and the Respondent to the Motion as Mr Smith. Mr and Mrs Wikramanayake are the Defendants and cross-claimants in the substantive proceedings and were the defendants in earlier Supreme Court proceedings between effectively the same parties. Mr Smith is the Plaintiff and was the First Plaintiff and cross-defendant in the Supreme Court proceedings.

4 Mr Smith was engaged as a consultant by a developer ('Combined House') in the development of an aged care facility, 'Lavender Lodge' at 286 Warren Street, Lavington in Wagga. At the relevant time, Combined House owned the property to be developed. Mr. Smith is experienced in the provision of aged care. He is a qualified accountant and chartered secretary.

5 Mr and Mrs Wikramanayake are chartered accountants. They are the directors and shareholders of the third Defendant, the third defendant being Wagga Road Properties Pty Ltd. ('WRP') in the substantive proceedings. WRP was specifically incorporated for this venture. WRP remains the registered proprietor of the development property - now an aged-care facility ('the facility').

6 Combined House lodged a development application for 24 apartments for the facility. It ran out of money for the development. Mr Smith approached Mr and Mrs Wikramanayake as possible financiers. He entered an agreement with Mr and Mrs Wikramanayake for them to provide loan facilities of up to $1.3 million for the development of the facility. The agreement was contained in a discussion on 12 December 2002. The terms and contents of that agreement are in dispute. It is common ground that, at least at that time, the profits would be split when the aged care facility was sold. That remained Mr Wikramanayake's position when cross-examined in the Supreme Court proceedings. However, it was then asserted that the agreement had been repudiated (T 190, 22-45) and that that arrangement was no longer in place.

7 No specific time was agreed for the sale. It was anticipated that the facility would be sold soon after completion. It was also envisaged that the facility would be completed in June 2004. As I understand the position, neither the property nor the facility have been sold as at the date of these proceedings.

8 In March 2003 Mr and Mrs Wikramanayake advanced monies to Combined House on the basis of a first mortgage. They took a fixed and floating charge over its assets.

9 In January 2004 there was a further meeting between Mr Smith and Mr and Mrs Wikramanayake at which an extension of the loan facility was advanced. That was one of a series of meetings during 2003 and 2004. A series of additional proposals for the development were discussed which would have meant additional finance being provided. In turn, had those additional proposals eventuated, there would have been increased profits. A series of company and trust structures were discussed. One of the issues arising out of those meetings was whether Mr Smith and Mr James (the second Plaintiff in the Supreme Court proceedings) were to receive equity in the facility.

10 In 2004, Combined House defaulted and the loan was called up. The Wikramanayakes' company, WRP, purchased the land and loaned it further monies to enable that purchase to proceed. The facility opened in August 2004. Mr Smith operated it through another company, 55 Plus, pursuant to a lease.

11 There were also disputes about the bond monies received from residents in the facility which were part of the cross-proceedings in the Supreme Court.

12 Mr Smith made an application for approval for the development of further aged care units as part of the facility and for related finance to enable that to proceed. That was unsuccessful and the profitability of the facility was negatively affected. In July 2005, Mr and Mrs Wikramanayake's company, WRP, took possession of the facility. WRP and the Wikramanayakes have operated it since.

13 Mr Smith and Mr James then brought Supreme Court proceedings alleging in their relevant amended statement of claim that they had a share arrangement in the facility as a result of oral agreements or representations made. Mr Smith and Mr James pleaded various express and implied terms. Those were denied by Mr and Mrs Wikramanayake. A cross-claim was brought as part of those proceedings for monies representing bonds paid by residents of the facility.

14 The Supreme Court proceedings took place before Justice Hammerschlag in February 2007. The Plaintiff's claim was dismissed - the relevant judgment is set out in Smith v Wikramanayake [2007] NSWSC 136.

15 Justice Hammerschlag made findings as to credit of the parties. His Honour preferred the evidence of Mr and Mrs Wikramanayake over that of Mr Smith, whose evidence His Honour found not to be truthful. He also found that the evidence of Mr Smith and Mr James was unsatisfactory in a number of respects - see judgment [109] - [110].

16 The essential finding on the main issue was at [128], namely, that the Plaintiffs had failed to prove that there was a conversation in the terms alleged to constitute the agreement; further, that none of the preceding discussions on the loan facility and the operation of the loan facility as well as the acceptance of bond monies established the oral agreement asserted by Mr Smith. The discussions were all equally consistent with a profit-share arrangement. The allegation of the share ownership was inconsistent with the commercial probabilities of the agreement. The claims and the terms asserted as to the change from a profit-share agreement to a shared ownership agreement were not upheld. As part of their case, Mr Smith and Mr James referred to a letter sent in March 2005. Justice Hammerschlag said [52] that that was '…the first objectively corroborated instance of the assertion of that entitlement'.

17 As the principal claim failed the Court did not consider it necessary to consider the implied terms alleged. There were findings on the claim for loan monies which also failed. The company associated with Mr Smith and Mr James was ordered to account for the residents' bond monies payments.

18 The Supreme Court proceedings clearly involved a hearing and testing of the evidence of what took place at the meetings and discussions which were said to give rise to what is submitted are the implied terms - see judgment [69] - [107].

19 During the evidence and the cross-examination of Mr Wikramanayake, an application was made to amend the Plaintiffs' pleadings to seek a declaration of an entitlement to a one-third share of profits from the sale of the property. An application was also made for an adjournment to enable that amendment to be made. That application was made on the final day of the hearing and following cross-examination. Counsel for Mr and Mrs Wikramanayake opposed that adjournment application and the application for leave to amend. The application was refused. It was noted at that time - at [5] - that '…an earlier agreement to split the profits on sale is, or is effectively admitted by the defendants on the pleadings and its original existence was accepted by both the defendant and the second defendant in their original testimony. There is no evidence of any imminent sale of the facility.'

The leave sought to amend was referred to as: '…declarations as to an entitlement to a share of profits on the sale of the Wagga Road property'.

It was also noted by Justice Hammerschlag (ex 1 transcript 191.55 - 192.8) that the amendment was to insert a declaration that: 'the first and second defendants are each beneficially entitled to a one-third share of any profit gained from the sale of the property…'

The judgment contains the following paragraphs: "70 Although the Further Amended Statement of Claim sought an order that each of Messrs Smith and James is beneficially entitled to a one-third right and interest in the shareholding of the Company, no term of the agreement to sustain that claim was pleaded. During final submissions I gave the plaintiffs leave to amend the pleading to plead that term. The amendment made was as follows: 'It was a further express term of the Oral Agreement that the first and second plaintiffs would be allocated a one-third share each in the shareholding of the asset company, the third defendant.' 71 The defendants deny the oral agreement and each of the express and implied terms pleaded".

Justice Hammerschlag found - at [128] ff - that "128 The plaintiffs have failed to prove to the reasonable satisfaction of the Court that there was a conversation in terms that the defendants agreed that Messrs Smith and James would each have a one-third share in the unit trust and trustee company which owns the facility. I consider that the defendants have established that no such conversation took place. 129 So far as the pleading of implied parts of the oral agreement (as opposed to the implied terms pleaded) is concerned, namely preceding discussions, work on the facility, funding by the Wikramanayakes, the operation of the facility, and acceptance by the defendants of bond moneys paid to Plus 55, none of these establish the oral agreement. They are all equally consistent with the profit share arrangement, and the arrangement that when the decision to hold rather than sell was taken, Plus 55 would operate the facility. 130 In the circumstances the plaintiffs' principal claim fails."

20 There were proceedings between the parties in the Federal Magistrates Court: Smith v Wikramanayake [2008] FMCA 1425. Those proceedings resulted from Mr and Mrs Wikramanayake taking action to recover their costs and then issuing a Bankruptcy Notice. Those proceedings are on-going and have been apparently adjourned part-heard to September, 2010. I do not propose to canvass the evidence taken in those proceedings as objection was taken to the relevance of the transcript evidence; a consequential objection was made to the reliance by counsel for Mr and Mrs Wikramanayake on the views of the then counsel for one of the parties in those proceedings. Without canvassing the content of those proceedings - to which I consider a valid objection has been taken - the only relevant matter is that, as a matter of public record, there were proceedings between essentially the same parties arising out of a consequential related issue. That fact can only be relied on as part of an overall submission that the Anshun principles (Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 - 'Anshun') embody the policy that there should be an avoidance of multiplicity of, and an end to, litigation.

21 One of the issues between the parties is the terms of an undertaking given by counsel for Mr and Mrs Wikramanayake during the Supreme Court proceedings. Justice Hammerschlag expressed the undertaking given by Dr. AS Bell SC as being: '… that in the event these proceedings were determined on the present issues and thereafter, the Plaintiffs wish to prosecute a claim as envisaged in the proposed amendment, no Anshun or issue estoppel or analogous point would be taken.' (para 10 at 389.)

That undertaking was expressed in response to the amendment proposed outlined above.

His Honour refused the application for an adjournment to amend the pleadings to claim a share of profit. At that time there was no imminent sale of the property.

22 Mr. Bolster of counsel, who appears on this Motion, appeared with Dr. Bell SC in those Supreme Court proceedings. He has confirmed that that undertaking would be continued and honoured if the Court determined that that undertaking should come into effect. However he argues that the undertaking should not apply (submissions 21 May, 2010).

23 The substantive proceedings District Court were commenced by a statement of claim filed on 3 December 2009 (proceedings no. 5358 of 2009). That matter raised arguments about the implication of terms in an agreement in December 2002 and whether there has been a breach of those terms.

24 The defence, filed 19 February 2010, pleads (at paras [30] ff) that the claims made are so closely related to the matters of fact determined in the Supreme Court equity proceedings (see below) that they could and should have been raised by Mr Smith in those proceedings.

25 Mr and Mrs Wikramanayake submit that the proceedings between the parties were resolved in earlier Supreme Court proceedings between effectively the same parties such that the principles in Anshun apply.

26 Mr Sirtes SC submits on behalf of Mr Smith that the District Court proceedings instituted are what were contemplated when the adjournment application was refused. He submits that these proceedings require a determination of whether there was an agreement for a profit share on the sale of the property, that this was precisely the (different) action contemplated at the time the adjournment application was made. It was and is '…a large separate commercial claim…' as described by Mr and Mrs. Wikramanayakes' then counsel.

27 Even if that is not correct and the Anshun doctrine operates, Mr Sirtes SC submits that, in any event, Mr and Mrs. Wikramanayake are bound by the terms of the undertaking given by their counsel not to take any Anshun point when such proceedings were commenced. He argues that these are those proceedings. Mr Sirtes SC submits that the adjournment was refused because of the proffered undertaking which, in the circumstances, should be enforced.

28 The parties agreed that I should read the statement of claim filed 3 December 2009, the defence filed 19 February 2010 and an affidavit of the Defendants' solicitor, Robert Tassell sworn 11 March 2010. Mr. Tassell is, and has been, the solicitor for Mr Smith since 2005 in relation to his dealings with Mr and Mrs Wikramanayake and third parties in connection with the overall development.

29 A folder of material is annexed to that affidavit. I have been directed to the reasons for the decision of Justice Hammerschlag and the orders made together with the transcript of those proceedings - pp. 190-229.

30 The relevant principle in Anshun was referred to by Allsop P in Champerslife Pty Ltd v Manojlovski & Anor [2010] NSWCA 33 who approved the statement of Somervell LJ in Greenhalgh v Mallard [1947] 2 All ER 255 to the following effect: "1. … res judicata for this purpose is not confined to the issues which the court is actually asked to decide, but ... it covers issues or facts which are so clearly part of the subject-matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them." 2. ...the relevant test is: '…there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it.' 3. …Unreasonableness is derived significantly from the …relevance to the subject matter of the first proceeding. There are at least two related assessments that have to be made: was the matter so relevant that it can be said to have been unreasonable not to rely upon it in the first proceeding … the character of the assessments was referred to in the following way: "It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case , focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before." (emphasis added) "… the assessment is not to be made mechanistically, but rather there is a value judgment to be made referable to the proper conduct of modern litigation."

31 There has been a further reference to those principles in Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231 per McColl JA, especially at [78]-[100]. Adopting respectfully the analysis of her Honour of the categories of use of the Anshun principles and the strict inquiry necessary as to whether there is the requisite identity between the two sets of proceedings - at [84] - it is clear that what is involved is a serious step requiring 'a scrupulous examination of all the circumstances' or the 'exceptional or extreme circumstances which would justify shutting out the appellant's claims in the District Court proceedings' - [205]. That includes an analysis of the issues in and what was determined by the Supreme Court proceedings preceding the District Court proceedings - [162].

32 The issue is whether each of the other claims (subject to the claim for a one-third share of any profit) made by the Mr Smith are so closely related to the matters of fact that were determined in the Supreme Court Equity proceedings that they could, and should, reasonably have been raised by the Plaintiff in those proceedings.

33 Further, whether proceeding with a hearing on those matters - with the exception of the claim for the failure arising to pay an agreed share of the surplus proceeds - would constitute an abuse of process such that the proceedings should be subject to the application of the doctrine of issue estoppel as propounded in Anshun and the Plaintiff estopped from proceeding with the claim.

34 Mr and Mrs. Wikramanayake submit that the separate question to be determined under the Uniform Civil Procedure Rules at 28 is as follows: "The Court orders, nunc pro tunc, that the question of whether: (1) Mr Smith's claims herein or any part of them represent an abuse of process or are the subject of an issue of estoppel of the kind recognised by the High Court of Australia in Anshun; and

(2) to the extent they do, the nature and extent of the orders that should follow from such a finding, are questions to be heard and determined as questions separate from all other issues in the proceedings."

35 Mr Sirtes SC submits that the proper consideration of the issues would follow the following approach: 1. Does the Anshun test apply; 2. If not, the Motion fails; 3. If so, the Court would consider whether Mr and Mrs. Wikramanayake are bound by the undertaking given by their counsel in the course of the Supreme Court proceedings; 4. If the undertaking applies, then the Motion must fail.

36 Clearly, the Supreme Court Equity proceedings (affidavit Mr Tassell exhibit RT1 - tab 33) and those in the District Court are essentially between the same parties: Mr Smith and Mr and Mrs Wikramanayake and their company, WRP. The dispute arose out of the same development and what is asserted to have been the same agreement based on the same conversations between essentially the same parties.

37 Against that background, Mr Bolster submits that the pleadings are, in most fundamental respects, a re-pleading of, or that they mirror, the same pleadings in the earlier proceedings. Further, he submits that the agreements pleaded and the breach of duties alleged are essentially the same as are the losses arising. He argues that the matters to be considered arise out of the same set of facts; the agreement sought to be enforced in the District Court proceedings was expressly pleaded and averted to in the Supreme Court proceedings. A separate agreement to share profits on the ultimate sale of the facility was referred to by Justice Hammerschlag in the course of his judgment.

38 Mr Sirtes SC categorizes the proceedings as being differently brought, the one being in contract and the other as an aspect of a property dispute. Mr Smith's case is that when the agreement was completed, each of the parties would have a one-third beneficial interest in the total undertaking, not a profit share arrangement. Mr Sirtes SC asserts that the 2002 agreement contemplated that Mr and Mrs Wikramanayake would be the financiers for the arrangement whereas under the 2004 agreement they would become developers. He submits further that the judgment of Justice Hammerschlag clearly contemplates the change of the parties' position. Mr Sirtes SC submits that the issue was canvassed in the proceedings - see tab 400 at para. 30.

39 Mr and Mrs Wikramanayake submit that the issue of the nature of the agreement was clearly contemplated in the earlier Supreme Court proceedings and, particularly, that the 2004 agreement was a matter in issue - see tab 410, reference to the 2004 oral agreement. They assert that the 2002 agreement was breached in 2004.

40 Mr Bolster submits that the undertaking was limited to any litigation arising out of the claims envisaged by any proposed amendment - not something which was already in the contemplation of the parties in the earlier proceedings: for example, any sale of the property which gives rise to a profit. He therefore argues that the undertaking does not apply to these proceedings.

41 The parties have referred to the transcript of the Supreme Court proceedings - pp. 121 ff; p.142 [line 40-55] - concerning the cross-examination of Mr. Smith. Mr. Bolster urges the finding that there was an express acceptance by Mr Smith that there was a second arrangement in 2004; accordingly, that arrangement was clearly contemplated as well as being the subject of argument and submissions in the Supreme Court proceedings.

42 Mr. Bolster has referred to subsequent proceedings concerning the parties in the Federal Magistrate's Court - Smith v Wikramanayake & Anor [2008] FMCA 1425. Those proceedings were taken by the Official Receiver and that Court was concerned with an application to set aside a Bankruptcy Notice based on the judgment for costs in the Supreme Court proceedings. Mr. Bolster submits that the fact of those proceedings, and the outcome, are relevant to any residual issues relating to the exercise of my discretion. I have already indicated the limited relevance of the fact of those proceedings as distinct from the matters canvassed within them.

43 Mr Sirtes SC submits that the two agreements contemplated different matters. The 2002 agreement was one relating to the share of proceeds where the claim had not yet crystallised because the property had not been sold. The property still has not been sold. Accordingly he submits that the course of action cannot be the subject of the Anshun principle. What the original agreement was concerned with was rights which had accrued, not something that might accrue.

44 In the alternative, Mr Sirtes SC submits that what is involved is an application for the summary dismissal of the matter. Accordingly, it should be considered in accordance with the principles outlined in General Steel (General Steel Industries Inc. v C'mr for Railways (NSW) (1964) 112 CLR 125) and that, in all the circumstances, it would be unfair if there was a summary dismissal of the matter at this stage. As a final alternative, Mr Sirtes SC urges that the issue be left to whichever trial judge hears the District Court proceedings.

45 Mr Sirtes SC also refers to the submissions made by Dr Bell SC, in the Supreme Court proceedings, that the 2004 agreement effectively involved a large, separate commercial claim. He submits that that was inherent in the application for the adjournment, the undertakings given and the judgment of Justice Hammerschlag. He further submits that a court should not simply say that, even if the matter could have been raised, it should have been and is therefore the subject of the Anshun doctrine.

46 The next issue to be considered was whether it was unreasonable to rely on the doctrine in all the circumstances. He submits that the proper characterisation of the claim is that the 2002 agreement involved a claim for property rights in a lodge whereas the 2004 agreement involved the right to receive a profit share. He submits that the Plaintiff is entitled as a matter of logic to say that he gave up the profit share arrangement (in the 2002 agreement) to gain equity in the lodge (the 2004 agreement). He would have only been entitled to gain equity in the agreement once it was determined as it was that he no longer had an entitlement to claim the property share.

47 In those circumstances, Mr Sirtes SC submits that the crucial issue in the case is: was there an agreement to give Mr Smith an equity - not a profit - share. He argues that the cross-examination on that point makes it clear (tab 180) that that construction was canvassed.

48 Effectively the amendment application became an adjournment application. The basis for the adjournment application is set out at tab 199-201. He submits that Mr. and Mrs. Wikramanayake were aware of that (see tab 195).

49 Mr Sirtes SC in his submissions of 3 June 2010 argues that Mr Smith should have his day in court and that the undertaking given should be enforced to enable that to occur. While there was no precision in the nature of the claim proposed by Mr Smith nor any precision in the undertaking volunteered on behalf of Mr and Mrs Wikramanayake, he submits that should not operate to bar Mr Smith's claim; further, that the undertaking should be considered in the light of the circumstances of the hearing when it was given and given an inclusive interpretation.

50 Mr Sirtes SC also submits that the fact that the alternative claim could have been pleaded and argued does not answer the Anshun principle of whether it should have been - he submits that it was a contradictory claim and that Mr Smith should not have had to make such a claim as part of those proceedings.

51 I have considered the evidence, the oral and written submissions made, the pleadings and the judgment in the Supreme Court as well as the pleadings in the District Court and the submissions made as well as the relevant legal principles as I have outlined them.

52 This dispute arises between parties who are, and were, all commercially astute, familiar with an extensive range of financing and related corporate arrangements as well as being experienced within both the industry and enterprise the subject of their arrangements. The oral agreement asserted, and the change of status of the parties, must be viewed against that background, the long series of meetings between the parties which occurred and the commercial realities of what was occurring between them.

53 The basis for these proceedings is an assertion that Mr and Mrs Wikramanayake have breached what is said to be an agreement to account for a one-third share of the profits or to sell the property and pay Mr Smith a share of the proceeds. Pleaded in the alternative is a joint venture to develop the facility and a reliance on what was said to be the agreement to found a fiduciary duty on the part of Mr and Mrs Wikramanayake, the breach of which gave rise to loss and damage. Both these matters rely on the existence of the agreement and its terms which were the subject of the earlier proceedings where evidence was given and cross-examination conducted. Whatever breach there was could have, and, in my view, should have, been raised in the earlier proceedings.

54 In the Supreme Court proceedings, His Honour also canvassed the division of the profits on the sale of the facility. It is not as though there is a subsisting agreement arising in the context of the acquisition of the property by WRG in 2004. Mr Smith seeks to enforce the 2002 agreement and the implication of an agreed term that he would be paid a profit share on the sale of the property within a reasonable time after sale after July 2004. Again, all those matters could have been canvassed in the alternative before Justice Hammerschlag. Even if it was a 'contradictory' rather than an alternative claim as asserted by Mr Sirtes SC (submissions 3 June, 2010 p. 10) that would have not prevented the argument being advanced depending on the view taken of, and findings made on, the relevant evidence. I do not accept the submission that in this case Mr Smith has a separate and independent cause of action. Certainly a plaintiff with cumulative remedies is not required to choose between them and may have both - Tang Man Sit v Capacious Investments Ltd [1996] AC 514; Baxter v Obacelo Pty Ltd [2001] HCA 66; (2001) 205 CLR 635. But the Anshun principles, relevantly in this case, were designed to prevent vexation by separate suits where a cause of action and any matters necessarily established as its legal foundation or as the justification for its conclusion or were legally indispensable to the conclusion merge in the judgment. Those matters cannot be re-litigated in subsequent proceedings between the parties. That is the apposite principle in this case.

55 The pleadings closely follow and, in some cases, mirror, the pleadings in the Supreme Court proceedings - see table of pleadings submissions 14 May 2010, paragraph 7. Counsel's addresses and the evidence canvassed in the judgment makes it clear that the agreement as to the one-third profit share was the subject of those proceedings.

56 In my view, the matters raised in the District Court proceedings are sufficiently closely related to the Supreme Court proceedings that, if they were not raised in them at least inferentially, then they could, and should, have been raised in them. The Plaintiff and his advisors made that election to conduct the case on that basis at that time and then apparently wished to change it on the basis of evidence given in cross-examination. What are asserted to be the differences between the Supreme Court and the current District Court proceedings do not, in my view, warrant other than the application of the Anshun principles as explained in Habib v Radio 2UE Sydney Pty Ltd.

57 To the extent that I need to consider the reasonableness of the failure to raise the matter in the earlier proceedings, in my view it was unreasonable not to raise in those proceedings the variation now contended for, in particular, the splitting of profits on the future sale of the property. This does not involve a '…summarily dismissal of the proceedings on an analysis of the merits' as is submitted by Mr Sirtes SC. It does not involve a canvassing of any new, proposed or possible evidence.

58 Mr Smith could only be successful in the District Court proceedings if he was to obtain an essentially different outcome based on the same conversations and meetings between the same parties and what is asserted to be a different or additional agreement from that found to exist in the Supreme Court proceedings. In that event there is the risk of competing or conflicting judgments in the District Court compared to the Supreme Court - Bryant v Commonwealth Bank of Australia (1995) 130 ALR 129.

59 To the extent relevant to the exercise of my discretion, I also note that the Supreme Court judgment was handed down in February, 2007 and the consequential Bankruptcy Notice served in April 2008. Mr Smith sought then to set that Notice aside in the Federal Magistrates Court proceedings conducted in September, 2008. The District Court proceedings were commenced by him in December, 2009. On the obverse side, Mr and Mrs Wikramanayake have had these issues constantly ventilated whenever they have sought to have the matter determined, or, in the case of their costs application, their entitlements enforced. There have clearly already been substantial costs incurred in the totality of the proceedings involving, for these purposes, the same parties with the same conversations and dealings and involving the same facility.

60 In terms of my residuary and overriding discretion left after the matters set out above, I consider that the continuation of these proceedings would constitute an abuse of process in all the circumstances.

61 Dr Bell SC, acting on behalf of Mr and Mrs Wikramanayake in the Supreme Court proceedings clearly contemplated at the time of that interchange with His Honour that there would be separate and different proceedings and that, if instituted, they would be the subjects of the undertaking not to take the Anshun point. That undertaking could only come into effect if there were proceedings following the sale of the property. In that event, there would still have to have been an assertion of an agreement for the one-third share ownership given the new ownership structure. That difference of ownership does not seem to raise reasons warranting a different consideration of the matters, which were, or could have been, raised in the earlier proceedings and, in my view, should have been.

62 Against the background of the matters I have considered, I reiterate that these are proceedings between parties who were accountants involved in a commercial development and financial arrangement. They appear to have conducted their affairs apparently without recourse to solicitors and without any effective documentation. There has been substantial litigation where - using the words of Mr Sirtes SC - the parties have already had their day in court. The credibility of the parties has already been assessed and findings of fact made by a superior court judge. There are also the Federal Magistrates proceedings between essentially the same parties involving the costs consequences following the Supreme Court proceedings.

63 In my view, the Anshun principles applies to these proceedings.

64 I then turn to consider whether the undertaking should apply.

65 Mr Bolster submits that the undertaking relates to any claim arising out of the sale of the property and facility which gave rise to a profit. The waiver implicit in the undertaking did not extend to an acceptance that there was a new agreement in 2004. In any event, a claim based on such an agreement is open and was the subject of the concession referred to in the submissions in the Supreme Court proceedings as well as the judgment of Justice Hammerschlag on the application to amend. That has been reiterated in the submissions made on behalf of Mr and Mrs Wikramanayake in these proceedings - submissions 14 May 2010 at [30]. In my view, the limited undertaking given - and accepting that neither the proposed amendment nor the undertaking volunteered were both given in the context of the late stage of the Supreme Court hearing - does not apply to the District Court proceedings: it did not extend to an undertaking now contended for by Mr Sirtes SC on behalf of Mr Smith. On my reading of the transcript and the judgment, I do not accept that 'The aim of Justice Hammerschlag was to carve out rights in relation to the 2002 agreement so that those rights were not lost' - submissions of Mr Sirtes SC 3 June 2010.

66 Even if I am wrong on that, the new proceedings would effectively involve the same parties with essentially the same issues of credibility on substantially the same facts - although a different result would be contended for. As I understand the position, there is no additional or other material or evidence which would, or could, be the basis for any additional argument or interpretation of the evidence in existence at the time of the Supreme Court proceedings. What was referred to as the earlier agreement to split the profits on sale being in existence and accepted by the parties may be a different issue once the facility is sold.

67 Accordingly I make orders in terms of the Notice of Motion that the proceedings be stayed until such time as the facility is sold and the mortgage finance repaid.

68 At the conclusion of the oral submissions, I asked the parties what orders for costs they would respectively seek depending on the outcome of the Notice. It was agreed that, if the Applicants were successful on the Notice of Motion, they should receive their costs. In the event that the Respondent was successful, the proper costs order should be costs in the cause. Mr Sirtes, SC subsequently qualified that concession by asking me to consider whether costs should be the Respondent's costs in the cause.

69 In all the circumstances, the proper costs order should be that the Plaintiff pay the Defendants' costs.

The statement of claim is stayed until such time as the facility known as 'Lavender Lodge' at 286 Warren Street, Lavington in Wagga is sold.

The Respondent is to pay the Applicants' costs of the Motion on the usual basis.

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.

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