Yammine v Liemant

Federal Court of Australia|2022-12-09|Before: Rares J, Stewart J

The proceeding be permanently stayed.
The applicants pay the respondents' costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 The respondents apply for a permanent stay of the proceeding against them. They do so on the basis that the proceeding is an abuse of process. 2 Although the identities of the parties are slightly different, a matter to which I will return, parties of the same interests in the present proceeding previously brought a proceeding in this Court against parties of the same interests as the respondents in the present proceeding. The claims asserted in both proceedings arise out of the same commercial relationship between the two sets of commercial interests over a period of about two years between late 2016 and late 2018. The first proceeding asserts claims against the respondents with respect to the termination and unwinding of that relationship, whereas the present proceeding asserts claims against the respondents concerning the formation of the relationship and its conduct. 3 The first proceeding proceeded to trial before Rares J, with judgment being reserved on 1 June 2022 after a five day hearing. A number of witnesses gave evidence. The key witnesses in that proceeding are likely to be the key witnesses in the present proceeding. They were cross-examined at length in the first proceeding, and it is likely that the outcome of the first proceeding will turn on findings of credit in relation to them. 4 In those circumstances, the respondents submit that the claims that are asserted in the present proceeding should have been brought, if at all, in the first proceeding and that to allow the current proceeding to continue would amount to an abuse of process. 5 For the reasons that follow, I have concluded that the proceeding is an abuse of process and must be permanently stayed.

The Yammine parties 6 The first applicant in both proceedings is Norman Yammine. 7 The second applicant in both proceedings is NJA Pty Ltd as trustee for the NJA Family Trust. Mr Yammine is the sole director of NJA. The beneficiaries of the family trust include Mr Yammine's immediate family. 8 The third applicant in the present proceeding, which is not a party to the first proceeding, is Recycling & Transport Solutions Pty Ltd (RTS). RTS is a company owned and controlled by Mr Yammine. There is a period of time in which Mr Yammine says that he was removed as sole director, secretary and shareholder of that company without authority, although he did not know it at the time, and that he was later restored to those positions. I will return to that issue.

The Liemant parties 9 The first respondent in the present proceeding is Mark Liemant. He is not a party to the first proceeding. 10 The second respondent in the present proceeding is Gary Liemant, Mark Liemant's brother. Gary Liemant is also the second respondent in the first proceeding. 11 The third respondent in the present proceeding is Lantrak NSW Pty Ltd, a wholly-owned subsidiary of Lantrak Holdings Pty Ltd. Lantrak NSW is not a party to the first proceeding. 12 Lantrak Holdings is the first respondent in the first proceeding. It is the holding company of a group of companies known as the Lantrak Group of which Gary and Mark Liemant are the ultimate controlling interests.

The present proceeding 13 The present proceeding was commenced by the filing of an originating application and concise statement on 28 June 2022. That was 27 days after judgment was reserved in the first proceeding. 14 In their amended concise statement in the present proceeding, the applicants allege the following. 15 Before late 2016, Mr Yammine, through RTS, operated an earthmoving and landfill business in NSW. At that time, Gary and Mark Liemant through the Lantrak Group were engaged in an earthmoving and landfill business in Victoria and Queensland, but not in NSW. 16 In November or December 2016, Mr Yammine and RTS, on the one part, and Gary and Mark Liemant, on the other, concluded an agreement. In terms of the agreement, Gary and Mark Liemant agreed to purchase 50% of the RTS business for $5 million. A new company, referred to as NewCo, would be incorporated as a special purpose vehicle to take transfer of the RTS business. The RTS business would be transferred from RTS to NewCo for the effective expansion of the Lantrak business into NSW. Mr Yammine or his nominee, on the one part, and Gary and Mark Liemant or their nominee, on the other, would conduct the business as a 50:50 joint venture through NewCo. 17 It is said that it was part of the agreement that Mr Yammine would manage the day-to-day business of NewCo, including being responsible for the business operations, winning work and overseeing the completion of that work. Gary and Mark Liemant, through companies in the Lantrak Group, would be responsible for all head office functions including invoicing and accounting and financial matters. 18 It is said that the agreement for the payment of the consideration for the purchase of the business was that Gary and Mark Liemant would pay, or would procure a company in the Lantrak Group to pay, Mr Yammine or his nominee or RTS $2 million. Following the transfer of the business, Gary and Mark Liemant would pay Mr Yammine or his nominee shareholder, within a reasonable time, $6 million in franked dividends out of the first $6 million of NewCo's after-tax profits before any company profits were distributed to the Liemants as 50% shareholders. 19 In the alternative to that agreement with regard to payment of the purchase price, it is pleaded that Gary and Mark Liemant would pay, or would procure a company in the Lantrak Group to pay, Mr Yammine or his nominee or RTS $2 million upon the transfer of the RTS business to NewCo, plus $1.5 million within 12 months and $1.5 million within 24 months, or alternatively $5 million within a reasonable time. 20 It is alleged that pursuant to the agreement, Lantrak NSW was incorporated and in about January 2017 the RTS business was transferred to Lantrak NSW. Fifty percent of the issued shares in Lantrak NSW were issued to Lantrak Holdings as the nominee of the Liemants and 50% were issued to NJA as Mr Yammine's nominee. Until about 1 November 2018 when the joint venture came to an end, Mr Yammine managed and operated the Lantrak NSW business from day-to-day, and the Liemants, through companies in the Lantrak Group, conducted the head office functions. 21 It is alleged that in breach of the agreement, the Liemants did not satisfy their liability to Mr Yammine or RTS of $5 million for the effective acquisition of 50% of the RTS business. 22 The first claim that is asserted is thus for payment of $5 million being the agreed purchase consideration. 23 The second claim that is asserted is one of breach of fiduciary duty arising out of the conduct of the business. It is said that the Liemants owed fiduciary duties to Mr Yammine, NJA and RTS, including duties of cooperation and keeping Mr Yammine and NJA informed of Lantrak NSW's financial performance, the profits earned and how the profits were treated. It is said that the Liemants were obliged not to put themselves in a position of conflict between their own interests and those of Mr Yammine in the joint venture, not to make any secret profits from Lantrak NSW, not to use their position as directors of Lantrak NSW to receive preferential treatment, and so on. 24 It is said that in breach of their fiduciary duties, between January 2017 and November 2018 the Liemants did not cooperate with Mr Yammine and NJA and did not keep them informed of Lantrak NSW's financial performance. The Liemants used their position as directors of Lantrak NSW to cause Lantrak NSW to understate its true net profits so as to remove or inhibit the ability of Lantrak NSW to pay Mr Yammine or NJA, within a reasonable time, $6 million in franked dividends out of the first $6 million of Lantrak NSW's profits after-tax before any company profits were distributed to the Liemants. It is pleaded that the Liemants put themselves in a position of conflict between their own interests and those of Mr Yammine in the joint venture and that they made secret profits from Lantrak NSW. 25 The applicants claim loss and damage, an account from the Liemants and payment of unauthorised profit made by them. 26 The third claim asserted against the Liemants is for misleading and deceptive conduct under s 18 of the Australian Consumer Law. It is pleaded that in late 2016 the Liemants represented to Mr Yammine and RTS that they would pay or procure a company in the Lantrak Group to pay Mr Yammine or his nominee $5 million against transfer of the RTS business. It is said that by their failure to pay that amount, or to procure its payment, the Liemants engaged in misleading and deceptive conduct in trade or commerce with regard to a future matter. 27 The fourth claim asserted against the Liemants is in unjust enrichment. As an alternative to the other claims, it is said that if the agreement for the purchase and transfer of the RTS business was not binding or enforceable, then Lantrak NSW was unjustly enriched at the expense of RTS by acquiring the RTS business for no consideration. It is pleaded that RTS is "entitled, as if upon quantum valebat or otherwise, to restitutionary damages" from Lantrak NSW in respect of the full value of the RTS business as at the date of the transfer of the business. 28 Analysis of those causes of action reveals that the necessary evidence and factual findings for their determination will cover the formation of the commercial relationship between the Yammine and Liemant commercial interests, the terms of that relationship, how those terms were put to effect, and the conduct of the relationship through 2017 and 2018 to its termination including the financial position of Lantrak NSW during the course of the relationship, its profits and how they were dealt with.

The pleaded claims 29 The further amended statement of claim in the first proceeding pleads the following case. 30 It is pleaded that by non-binding heads of agreement dated 27 September 2018, NJA and Mr Yammine (ie, the Yammine interests) agreed to sell, and Lantrak Holdings, Earthtrak Pty Ltd (a Liemant company) and Gary and Mark Liemant agreed to buy, the Yammine interests' shares, and other Yammine-owned assets used, in the Lantrak NSW business for $47.5 million, of which $35 million was attributable to the Yammine interests' shares. 31 It is pleaded that in order to accommodate Lantrak Holdings' financial circumstances at the time, the Yammine interests, Lantrak Holdings and Gary Liemant entered into two contracts. The one is that Lantrak Holdings agreed in writing on 12 November 2018 to purchase the Yammine interests' shares for $13 million rather than $35 million (the November 2018 agreement). The other is that Lantrak Holdings and Gary Liemant agreed orally that in consideration of the Yammine interests entering into the November 2018 agreement, Lantrak Holdings and Gary Liemant would honour the heads of agreement and would subsequently pay the Yammine interests the balance of the original purchase price of $35 million, being $22 million (the collateral contract). 32 It is pleaded that the November 2018 agreement was performed by Lantrak Holdings and the Yammine interests. However, it is said that Lantrak Holdings and Gary Liemant breached the collateral contract by failing to pay the Yammine interests the sum of $22 million. 33 In the alternative, it is pleaded that in consideration of the Yammine interests executing the November 2018 agreement, Lantrak Holdings and Gary Liemant promised and agreed to pay the Yammine interests the sum of $22 million. An estoppel claim is then pleaded on the basis that the Yammine interests reasonably relied on that promise in entering into the November 2018 agreement. 34 A further claim for misleading and deceptive conduct is pleaded. It is said that prior to the November 2018 agreement being concluded, Lantrak Holdings and Gary Liemant made representations to the Yammine interests that they would honour the September 2018 heads of agreement and would pay the balance of the original price of $35 million attributable to the Yammine interests' shares, namely $22 million. It is said that those representations were false because Lantrak Holdings and Gary Liemant had no intention of paying $22 million or any other sum to the Yammine interests. 35 Those claims all canvass the dissolution of the commercial relationship between the Yammine and Liemant interests that found expression in the business of Lantrak NSW. However, as will be seen, the alleged terms of the dissolution are based at least in part on the commercial success of the business with the result that the conduct of the relationship, the financial position of the business and the profits earned were necessarily significant in the trial of the claims. 36 There is a further alternative claim in respect of a non-compete agreement said to have been concluded on 11 October 2019. It is pleaded that under that agreement Lantrak Holdings and Gary Liemant agreed to pay Mr Yammine $10 million for him and his entities not to compete with the business of Lantrak NSW for a period of 10 years. It is claimed that they failed to pay. The non-compete agreement claim does not appear to overlap in time or evidence with the other claims or the claims in the present proceeding.

The course of the proceeding 37 The statement of claim in the first proceeding was filed and served in June 2020. Prior to the respondents being required to file a defence, in order to meet the respondents' request for further particulars the applicants were directed to serve outlines of evidence. Thereafter, an amended statement of claim was filed and outlines of evidence of 11 witnesses were served. 38 The applicants' outlines of evidence included an outline of the evidence to be given by Mr Yammine. The outline commenced with events in 2015 with the founding of the RTS business. In some detail, it dealt with discussions between Mr Yammine and Gary and Mark Liemant for the sale of a 50% interest in the business by Mr Yammine to the Liemants and the formation of Lantrak NSW. It also dealt with the profits of the Lantrak NSW business during the period that the business was conducted. 39 The applicants also served an outline of the evidence to be given by Errol Pinto, an advisor or assistant to Mr Yammine on financial and strategic matters. Mr Pinto's outline included details concerning the sale of the RTS business to the Liemants and what was said to be the application by Mr Yammine of the money that was to be paid to him back into the business in order to grow it. 40 In February 2021, the respondents filed and served a defence to the amended statement of claim and served the outlines of evidence of four witnesses. 41 The respondents' outlines of evidence included outlines of the evidence to be given by Gary and Mark Liemant. Those outlines in effect responded to the applicants' outlines by covering the purchase of the RTS business and its transfer to Lantrak NSW and the conduct of the business under Mr Yammine's management. There was also an outline of the evidence of Simon Peeke, a financial consultant to the Lantrak Group, that covered, amongst other matters, the financial performance of Lantrak NSW. 42 In March 2021, the matter was listed for final hearing in March 2022 on a seven day estimate. 43 In April 2021, the parties were directed to make standard discovery. The respondents made very substantial discovery in May 2021, whereas the applicants made very limited discovery in July 2021. The respondents' discovery included substantial documentation with regard to the financial position of Lantrak NSW throughout the period of its operation. That documentation included balance sheets, profit and loss statements, group financial reports, debtors and cash flow reports, cash flow forecasts, debtors and creditors ledgers and asset registers from time to time. 44 Notwithstanding the respondents having made discovery in May 2021, it was not until November 2021 that the applicants' then solicitors downloaded the discovered documents. 45 In late 2021 and early 2022, there was correspondence between the parties' solicitors about the claims that later became the subject of the present proceeding. I will deal with this correspondence separately in the next section of these reasons. 46 In February 2022, approximately a month before the trial, there was an interlocutory hearing in which the applicants applied to rely on the report of a financial expert on the question of the profitability of the Lantrak NSW business. The respondents had also retained an expert to deal with that issue in the event that the applicants' expert's report was admitted. In the result, the report was not admitted because of its lateness and the consequences that that would likely have on the trial, but the fact of the applicants having such a report is relevant to the question of when the present proceeding could or should have been brought. See Yammine v Lantrak Holdings Pty Ltd [2022] FCA 179. 47 The trial of the first proceeding took place between 8 and 14 March 2022 and was reconvened on 1 June 2022 for closing submissions. In the intervening period, the parties filed and served written closing submissions. As mentioned, judgment was reserved on 1 June 2022. 48 The evidence in chief at the trial was adduced orally. Mr Yammine gave evidence, including evidence in some detail with regard to the formation of the commercial relationship with the Liemants and the transfer of the RTS business to Lantrak NSW. His evidence in chief also dealt in some detail with the conduct of the business after its transfer to Lantrak NSW, including with regard to the profits earned. Mr Yammine was cross-examined at length. The cross-examination covered the sale of the RTS business to Lantrak NSW, the shareholding arrangement, the conduct of the business and the profits earned and payment of the purchase consideration. Mr Yammine was also re-examined on the profits of the business. 49 Mr Pinto gave evidence, including on the sale of the RTS business to Lantrak NSW. He was cross-examined at length, including on the sale and profitability of the business and the profits earned. He was also re-examined on the profits of the business. 50 Gary Liemant gave evidence. He was cross-examined at some length, including on the transfer of the RTS business to Lantrak NSW. The cross-examination covered the purchase price and other features of what was agreed, payment of the purchase price and the profits that were earned. Mr Peeke also gave evidence on, and was cross-examined on, the profitability and financial position of Lantrak NSW. 51 In closing submissions, written and oral, the parties canvassed at some length the profits that were earned by the business because that was relevant to the dissolution issues and in particular the inherent probability, or otherwise, that Gary Liemant made the promises alleged against him and the basis on which the price for the shares had been arrived at.

The inter-solicitor correspondence in late 2021 and early 2022 52 On 22 December 2021, the applicants' then solicitor, Mr Zouky OAM, wrote to the respondents' solicitors. Mr Zouky's letter stated that he had been instructed by Mr Yammine to institute a further proceeding against Gary and Mark Liemant in relation to the transfer of the RTS business from RTS to Lantrak NSW in early 2017. The letter then set out details of the claim "in the amount of approximately $5,000,000.00". The letter stated that the proceeding would be commenced shortly and that it was "likely that the above proceeding will need to be managed together with the existing proceeding". 53 On 23 December 2021, Mr Zouky sent a further letter to the respondents' solicitors. The letter stated that the "two proceedings will involve common witnesses and may involve overlapping issues of fact and law, such that it would be most efficient for them to be heard and determined together". Mr Zouky also proposed the terms of an email to be sent to the docket judge's associate which included informing the judge of the imminent new proceeding, that the proceedings should be managed together and that an adjournment of the first proceeding may be necessary. 54 On 24 December 2021, the respondents' solicitor, Mr Milner, replied. In relation to the proposed new proceeding, he stated that he was not in a position to express any concluded view as he had not yet been served with any proposed pleadings. Mr Milner stated that the proper course for the applicants to take was to serve the proposed pleading as soon as possible. Mr Milner did not consent to the docket judge being notified in the manner that had been proposed by Mr Zouky. 55 On 31 December 2021, Mr Zouky wrote a further letter to Mr Milner saying that he would arrange for the statement of claim in respect of the foreshadowed proceeding to be served as soon as possible. Notwithstanding that, no statement of claim was served, and at a case management hearing early in the new year no mention was made of the proposed new proceeding or claims. 56 No further mention of the proposed proceeding appears to have been made between the parties until the final day of the trial, 1 June 2022. In the respondents' written closing submissions it was said that Mr Yammine had confirmed in evidence that he had no complaint and brought no claim in respect of the first transaction which resulted in the Yammine parties and the Lantrak parties each holding a 50% interest in the Lantrak NSW business. In response to that, the then senior counsel for the applicants in oral closing drew attention to a portion of the cross-examination of Mr Yammine on the first day of the trial in which it had been put to him that he did not complain about any part of the initial purchase price of $5 million "in these proceedings". It was said by the applicants' senior counsel that there had been correspondence about a threatened proceeding in respect of the sale and "at least on our instructions, that matter is certainly not resolved".

Applicable principles 57 The leading case on the principles applicable to a claim of abuse of process such as the present is UBS AG v Tyne [2018] HCA 45; 265 CLR 77. There are detailed discussions of the relevant principles in the judgment of the plurality, Kiefel CJ and Bell and Keane JJ, and in the concurring judgment of Gageler J which also adopted (at [61]) the reasons of the plurality. Relevant to the present case, the following may be identified. 58 First, either of two conditions enlivens the power of the court to permanently stay proceedings as an abuse of process of the court. The one is where the use of the court's procedures occasions unjustifiable oppression of a party, and the other is where the use serves to bring the administration of justice into disrepute. (At [1].) The issue in that case, as with the present, is whether one or both of those conditions is met. 59 Secondly, whether or not particular conduct rises to the level of an abuse of process is a determination that requires consideration of all the circumstances. In that regard, the determination is "a broad, merits-based judgment which 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". (At [7] quoting Lord Bingham of Cornhill in Johnson v Gore Wood & Co [2002] 2 AC 1 at 31.) 60 Thirdly, the determination of whether the bringing or continuance of a proceeding is an abuse of the process of the court must take into account the procedural law administered by the court whose processes are engaged. Relevantly, that is s 37M of the Federal Court of Australia Act 1976 (Cth) (FCA Act) which provides that the overarching purpose of the civil practice and procedure provisions of the court is to facilitate the just resolution of disputes according to law "as quickly, inexpensively and efficiently as possible". That overarching purpose has various objectives including "the efficient use of the judicial and administrative resources available for the purposes of the Court", "the efficient disposal of the Court's overall caseload" and "the disposal of all proceedings in a timely manner". (At [34].) 61 Fourthly, which arises out of the third point, the timely, cost-effective and efficient conduct of modern civil litigation takes into account wider public interests than those of the parties to the dispute. (At [38] citing, amongst other authorities, Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 at [95].) 62 Fifthly, in a further development of the same point with reference to Aon, although a party has a "right" to bring proceedings, in doing so choices are made respecting what claims are made and how they are framed. The just resolution of a dispute involves parties having a sufficient "opportunity" to identify the issues that they seek to agitate. Abuse of process principles may be invoked to prevent attempts to litigate a claim that should have been litigated in earlier proceedings. (At [38]-[39], citing Aon at [33], [98] and [112].) 63 Sixthly, in some circumstances the bringing of a claim which should have been litigated in an earlier proceeding will be an abuse, and that may be so notwithstanding that the later proceeding is not precluded by an estoppel. That can be so even where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to the earlier proceeding, nor the privy of such a party. (At [43] and [62]-[63], citing Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; 256 CLR 507 at [26].) 64 Seventhly, the courts must be astute to protect litigants and the system of justice itself against abuse of process. It is to hark back to the time before the High Court's decisions in Aon and Tomlinson and the enactment of s 37M of the FCA Act to expect that the courts will indulge parties who engage in tactical manoeuvring that impedes the "just, quick and efficient" resolution of litigation. (At [45].) 65 In UBS, there was first a proceeding in the Supreme Court of NSW by Mr Tyne, the trustee of a family trust and a company associated with Mr Tyne. During the course of the proceeding, Mr Tyne and the trustee discontinued the proceeding which continued in the name of the company. Mr Tyne thereafter succeeded the trustee as trustee of the trust and, in his capacity as trustee, brought a proceeding in the Federal Court asserting essentially the same causes of action that had been discontinued in the Supreme Court proceeding. The respondent, UBS, sought the permanent stay of the proceeding. 66 In the circumstances of UBS, oppression was found not only in the significant delay in the resolution of the dispute and the inevitability of increased costs to UBS, but at its core was the vexation of being required to deal again with claims that should have been resolved in the Supreme Court proceeding. It was held that for the Federal Court to lend its procedures to the staged conduct of what is factually the one dispute prosecuted by related parties under common control with the attendant duplication of court resources, delay, expense and vexation, was likely to give rise to the perception that the administration of justice is inefficient, careless of costs and profligate in its application of public moneys. (At [59].) 67 Justice Gageler held (at [75]) that it was not necessary for the effect of the Federal Court proceeding on UBS to rise to the level connoted by language such as "unfairness" or "oppression". Rather, UBS's private interest was sufficiently engaged by UBS being compelled by the coercive authority of the Federal Court to respond to a process designed to vindicate a claim which should have been brought in the Supreme Court proceeding, which UBS had already gone to the time and expense of bringing to completion. That private interest was to be weighed with the public interest in the timely and efficient resolution of claims.

Observations with regard to the two proceedings 68 There are a number of pertinent observations with regard to the two proceedings that are presently under consideration. 69 First, although the causes of action in the present proceeding and in the first proceeding do not arise from precisely the same facts, and they are in a sense separated in time, the causes of action have significant interrelationship. That interrelationship is apparent from the observations that follow. 70 Secondly, there is significant overlap in the material facts between the breach of fiduciary duty and unjust enrichment claims in the present proceeding and the claims in the first proceeding (other than the non-compete claim). That overlap arises particularly from the fact that it is the applicants' case in the first proceeding that the agreement with regard to the purchase price for the shares in Lantrak NSW was arrived at with reference to the profitability of that business. In closing submissions, it was said on behalf of the applicants that the figure of $35 million was set by reference to five times the business's earnings before interest and tax, and reference was made to Mr Yammine and Mr Pinto's oral evidence in support of that. Indeed, it was very much part of the first proceeding that the very substantial purchase price for the shares and assets was justified on the basis of the success of the business, which in turn required detailed consideration of the accounting in the business and the profits of the business. These matters are necessarily material to the breach of fiduciary duty and unjust enrichment cases in the present proceeding. 71 Thirdly, there is significant overlap in the evidence in the two proceedings. As mentioned, the evidence in the first proceeding covered in considerable detail factual questions as to the formation of the commercial relationship including the transfer of the RTS business to Lantrak NSW and the agreements in that regard, and the conduct and profitability of the business. That evidence appears to have been regarded as relevant not only by way of context, but also significantly with regard to the witnesses' credit and Mr Yammine's stated usual or common manner of doing business on a handshake and not requiring formal documentation. As mentioned, the question of profitability of the business also goes to the terms of the agreement with regard to the dissolution of the relationship. 72 Fourthly, the two principal witnesses in both proceedings are likely to be the same, namely Mr Yammine and Gary Liemant. Both those witnesses were cross-examined at length in the first proceeding, and the credit of both of them was impugned. The judgment in the first proceeding is likely to have to make findings with regard to their credit. That will likely be based on evidence on matters that will have to be covered again by them in the present proceeding. 73 Fifthly, not only is the duplication between the two proceedings, particularly as identified in the second and third observations above, likely to lead to a risk of conflicting findings, but the respondents are vexed on the same issues twice. In that regard, the respondents have given extensive discovery on those issues, they have had to consider detailed outlines of evidence by the applicants that cover those issues, they have prepared detailed outlines of evidence in response, and they have prepared for and dealt with those issues at trial. There is no doubt that it would have been considerably less burdensome on the respondents to have had to deal with all the claims in one proceeding, and that it would be substantially wasteful to them to have to deal with them separately. 74 Sixthly, although the parties in the two proceedings are not exactly the same, the commercial interests on either side of the two proceedings are identical. To the extent that there is not an identity of parties, such parties are certainly the privies of Mr Yammine and the Liemants, respectively. 75 Seventhly, there does not appear to be any credible reason why the claims that are the subject of the present proceeding were not brought in the first proceeding. That necessitates consideration of Mr Yammine's explanation for not bringing the claims that are the subject of the present proceeding in the first proceeding.

Mr Yammine's explanation for bringing the proceeding late 76 Mr Yammine deposed an affidavit in the present proceeding in which he explains why the claims that he asserts in the proceeding were brought only when they were and why they were not brought in the first proceeding. 77 Mr Yammine says that in about March 2020, Gary Liemant first said to him that the Liemant interests would not pay Mr Yammine and NJA the outstanding $22 million for the Lantrak NSW shares that are the subject of the collateral contract. He says that given that recent conversation with Gary Liemant, he was at that time "focused on the terms upon which the Liemant interests agreed to purchase NJA's shares in Lantrak NSW and the circumstances surrounding that agreement". He says that he was "focused on the terms of [his] exit from Lantrak NSW". 78 Mr Yammine says that he considered the claim in the first proceeding, and the circumstances that gave rise to it, to be separated, both in time and substance, from the agreement and circumstances under which the Liemant interests purchased a 50% interest in the business of RTS in late 2015 or early 2016, or the circumstances in which he entered into the Lantrak NSW business with the Liemant interests. He says that at the time of commencing the first proceeding, he was not focused on those different claims and the circumstances that surrounded them. 79 Mr Yammine also says that at the time of commencing the first proceeding, the claims that are the subject of the present proceeding, including those related to the joint operation of the Lantrak NSW business during 2017 and most of 2018, required further consideration and consultation with his lawyers. He says that when he commenced the first proceeding, he wanted to seek and obtain relief from the court promptly in respect of his claims in that proceeding and that he did not want the bringing of the other claims to delay the resolution of those claims. 80 Mr Yammine also says that "in any event", at the time of commencing the first proceeding he did not have effective control of RTS so it would not have been possible for him at that time to bring a claim on its behalf. He says that unknown to him at the time, in February 2018 he was removed as the sole director and secretary of RTS and the shares in the company were transferred to someone else. He says that that was all done by his accountants without his authority. On 1 November 2021, RTS was deregistered due to a failure by his accountants to pay the necessary fees to ASIC. 81 Mr Yammine says that he discovered the irregularities in the stewardship and composition of RTS in November 2021 after it had become deregistered. He then promptly took steps to have the company reinstated and to have his shares in RTS restored. The company was reinstated on 3 February 2022, and his shares were restored on 15 February 2022. On 25 July 2022, as the sole shareholder in RTS he passed a resolution removing the sole director and secretary of RTS who had wrongly been recorded as replacing him, and restored himself to those positions. 82 Mr Yammine says that for those reasons it was not until "early to mid-2022" that his lawyers could commence the present proceeding on his behalf, including on behalf of RTS. 83 Senior counsel for the respondents applied to cross-examine Mr Yammine on the matters canvassed in his affidavit in the stay application. I refused such leave, essentially on the basis that the discretion to grant such leave is sparingly exercised in an interlocutory matter, there was a risk that what was to be canvassed in cross-examination would overlap with evidence in any final hearing of the proceeding, and I did not perceive that the cross-examination would be of assistance. See Selvaratnam v St George - A Division of Westpac Banking Corporation (No 2) [2021] FCA 486 at [43] and the cases cited there. 84 Even without cross-examination, there are a number of evident problems with Mr Yammine's explanation for not having brought the present claims in the first proceeding. 85 First, even accepting that Mr Yammine was "focused" on the claim for the $22 million, there is no explanation why he should have been so focused. It is clear that on his version he was at that time in substantial dispute with the Liemant interests about the whole of their commercial relationship. It was his and his lawyers' responsibility to bring forward all related claims in an efficient and cost-effective manner. His and Mr Pinto's outlines of evidence and evidence in chief covered the formation and the conduct of the relationship, so at least to that extent there was a focus by Mr Yammine on those issues from very early in the course of the first proceeding. 86 Secondly, although Mr Yammine may have considered that the claim for the $22 million was separated "both in time and substance" from the claims asserted in the present proceeding, he is clearly mistaken in that regard. As explained above, the claims have significant factual overlap and all arise from the same commercial relationship which lasted a relatively short period of time. 87 Thirdly, even if it is correct that at the time that the first proceeding was commenced Mr Yammine did not have the necessary financial information about the conduct of the Lantrak NSW business available to him to bring the present proceeding, he could have sought that information before bringing the proceeding. If he had not obtained it prior, he could have obtained it early in the proceeding, which is indeed what occurred when discovery was given. As mentioned, substantial financial discovery was given by the respondents in May 2021. Shortly thereafter, if not before, the claims that are the subject of the present proceeding could readily have been included in the first proceeding. As mentioned, that discovery was not accessed by the applicants until November 2021, and shortly thereafter Mr Zouky first asserted the present claims. I infer that the applicants' delay in asserting the claims was caused at least in part by their very late consideration of the discovered documents. 88 Fourthly, given the size and complexity of the claims brought in the first proceeding, Mr Yammine (or anyone who may have advised him) could not reasonably have thought that that proceeding would be brought to resolution so quickly as to justify not bringing the claims that are the subject of the present proceeding at the same time. Also, in Mr Zouky's correspondence in December 2021 it was suggested that the trial in the first proceeding could be adjourned in order to accommodate the new proceeding, which shows that at least at that stage Mr Yammine was not so concerned to ensure the quick resolution of the first proceeding. In any event, it is doubtful that such a consideration is relevant given the substantial overlapping factual underpinnings to the prospective claims and their interrelatedness. 89 Fifthly, Mr Yammine's explanation with regard to being unable to bring a claim on behalf of RTS is unconvincing for a number of reasons, even putting to one side that the obvious explanation for the changes in the internal arrangements in RTS in early 2017 and its subsequent deregistration are most likely explicable with reference to the fact that in early 2017 the whole of its business was transferred to Lantrak NSW. Mr Yammine's ability, through his accountants, to restore the proper internal arrangement in RTS after he learnt of the unauthorised changes shows that he never really lost control of RTS; there was a problem of form, not of substance. 90 Also, since Mr Yammine did not know that he was not the sole shareholder, director and secretary of RTS at the time that the first proceeding was commenced, and thereafter, the formal internal position with regard to RTS offers no explanation for why Mr Yammine did not bring the present claims at that time. Had he sought to bring them back in early 2020, he may have discovered the problems in RTS at a much earlier time which would still have enabled those claims to be brought in the first proceeding. 91 Further, when the present proceeding was brought, RTS was in any event not named as an applicant. It was added as the third applicant only in the amended originating application and amended concise statement on 16 August 2022. Thus, RTS was not regarded as a necessary applicant to the claims that are the subject of the present proceeding at the time that it was brought with the result that any difficulties with regard to the internal arrangements in RTS offer no explanation for why those claims were not brought at a much earlier time. 92 Finally, Mr Yammine was reinstated as sole shareholder of RTS on 3 February 2022, whereafter he could at any time have reappointed himself sole director. It is therefore not the case that his reappointment as sole director in only July 2022 had any bearing on the proceeding only being brought when it was.

Conclusion 93 Taking the above matters into account, in my view the claims that are the subject of the present proceeding should have been brought in the first proceeding, or at least early enough to have enabled them to be heard simultaneously with the first proceeding. It is apparent from Mr Zouky's correspondence in December 2021 that that was the applicants' intention at that time, and that that was because the two proceedings would "involve common witnesses and may involve overlapping issues of fact and law such that it would be most efficient for them to be heard and determined together". That is exactly the position that pertained then, and it pertains now. The applicants had the opportunity to bring the claims then - actually, long before then - and they should have done so. 94 I infer that the applicants chose not to bring the present proceeding at the time of or shortly after Mr Zouky's correspondence so as not to imperil the trial dates of the first proceeding. That is a forensic decision that they made and that they must live with. It is not necessarily a decision taken so as to give the applicants a forensic advantage by bringing the present proceeding separately and later. It is more likely a decision taken in order to avoid the consequences to the first proceeding arising from asserting the claims in the present proceeding so late, but that lateness is something for which the applicants are responsible. 95 I accept that, unlike in UBS, there is no evidence in the present case that there was "tactical manoeuvring" by the applicants in not bringing the present claims much earlier, if that phrase is taken to have a pejorative connotation. There was nevertheless a decision taken not to bring the claims earlier. It is not necessary to a finding of abuse of process that there be "tactical manoeuvring" in a pejorative sense. 96 Not only will the respondents be vexed by having to deal with the present proceeding separately from the first proceeding, but public resources committed to the administration of justice will be wasted by the two proceedings being heard separately. Already, a judge of the Court has heard the one proceeding and is reserved on it. Given the significant issues of credit at stake, it would be inadvisable for the same judge to hear and determine the second proceeding. That further contributes to duplication and waste. As mentioned, there is also the risk of conflicting findings on credit and material facts. 97 There is no sense in which the applicants' bringing of the claims in the present proceeding in a separate proceeding and too late for the two proceedings to be heard together is consistent with the overarching objectives of the Court's practice and procedure provisions as expressed in s 37M of the FCA Act, and as required of the applicants by s 37N(1). To allow the present proceeding to continue would not constitute the efficient use of the judicial and administrative resources of the Court, it would detract from the efficient disposal of the Court's overall caseload and it would not contribute to the disposal of proceedings in a timely manner. 98 I do not accept, as submitted on behalf of the applicants, that there is any relevance for present purposes to the observation, with reference to CBRE (V) Pty Ltd v Trilogy Funds Management Ltd [2021] NSWCA 316; 107 NSWLR 202 at [18], that if following Mr Zouky's correspondence in December 2021 the respondents were concerned as to the potentiality of the applicants bringing the new claims against them in a separate proceeding they could have themselves brought a cross-claim in the first proceeding seeking a negative declaration. I do not consider that there was any obligation on the respondents to take such a course, particularly considering that they did not know necessary details of the foreshadowed claims, Mr Zouky had said that he would be serving pleadings imminently and to seek such a negative declaration at that stage might itself have imperilled the trial dates. There is no reason why that should have been at the respondents' risk. It is one thing to observe that a negative declaration can be sought, but it is quite another to conclude that a party is under some form of obligation to do so. 99 I therefore consider that both the alternative conditions for the enlivening of the power to permanently stay proceedings identified in UBS at [1] are established in this case. For the present proceeding to continue would occasion unjustifiable oppression of the respondents, and it would serve to bring the administration of justice into disrepute. The stay is justified on either basis, and it is compelled by both together.

Disposition 100 In the circumstances, the proceeding should be permanently stayed and the applicants should pay the respondents' costs of the proceeding. I certify that the preceding one hundred (100) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (13 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (6)

Cited By (1)