In the matter of Sunnyside Accountants

These reasons concern whether the Court should adopt the report of a referee in whole or in part and what order should then be made concerning the outstanding claim for relief in the proceedings that was the subject matter of the reference.

The first plaintiff (Sunnyside Accountants Pty Limited, or SAPL) is in the business of providing accounting, tax and ancillary services.

As at September 2019, the first defendant (Mr Mar) was the sole director of SAPL. The shares in SAPL were owned by Mr Mar and the second defendant (Ms Lam).

Mr Mar, Ms Lam and the second plaintiff (Mr Wasala) entered into a Heads of Agreement setting out “Agreed Terms” for the sale of SAPL to Mr Wasala. It was common ground between the parties that the Heads of Agreement was entered into in late October 2019 and continued to regulate the parties’ rights and obligations alongside the Share Sale Agreement that they entered into a short time later, as referred to below.

The “Agreed Terms” set out in the Heads of Agreement included that all of the ordinary shares in SAPL would be transferred to Mr Wasala (referred to as the “purchaser”) and that the purchaser would pay a “consultant fee” to Mr Mar and Ms Lam (referred to as the “original owners”) for three years thereafter. The “consultant fee” was calculated as a percentage of SAPL’s monthly turnover, subject to the fee being a minimum annual monetary amount. Those provisions were also included in the Share Sale Agreement referred to below.

The “Agreed Terms” in the Heads of Agreement also included the following:

The Share Sale Agreement between Mr Mar and Ms Lam (as the “Sellers”) and Mr Wasala (as the “Buyer”) is dated October 2019 and provides for the sale of all of the issued shares in SAPL to Mr Wasala in consideration for $1.00 on the completion date of 1 November 2019.

Clause 5.5 of the Share Sale Agreement set out certain obligations of Mr Wasala as the Buyer, including:

There are two clauses in the Share Sale Agreement numbered 7.3. Pursuant to the first clause 7.3, the Sellers were entitled to terminate the agreement by notice in writing to the Buyer if the Buyer and SAPL failed to pay the Sellers’ Monthly Consulting Fees under clause 5.5B and that default persisted for more than seven days. The second clause 7.3 set out the consequences of termination, which included that the Buyer covenanted to transfer all of his shares in SAPL back to the Sellers for $1.00 and was obliged to do all things necessary to cause the resignation of the Buyer as a director of SAPL and the appointment of the Sellers as directors of SAPL.

Ms Lam transferred all of the shares in SAPL to Mr Wasala’s nominee, Wasala Family Pty Limited (WFPL) and Mr Wasala was appointed as a director of SAPL on 1 November 2019.

Thereafter, a dispute arose between the parties. These proceedings were commenced on 4 March 2021, shortly after Mr Mar and Ms Lam had written to Mr Wasala alleging that Mr Wasala had defaulted in the performance of his obligations under clause 5.5B of the Share Sale Agreement since June 2020 and stating that they terminated the Share Sale Agreement pursuant to clause 7.3, with the consequence that all of the shares in SAPL held by WFPL were transferred back to Ms Lam. The letter demanded that Mr Wasala resign as a director of SAPL and facilitate the appointment of Mr Mar and Ms Lam as directors of SAPL.

The originating process filed by SAPL and Mr Wasala (as first and second plaintiffs) on 4 March 2021 sought declarations to the effect that Mr Wasala was and remained the sole director and WFPL and was and remained the sole shareholder of SAPL. The plaintiffs also sought an order under s 1322(4)(b) of the Corporations Act 2001 (Cth) that the Australian Securities and Investments Commission (ASIC) withdraw from its registers the Form 484 documents lodged by Mr Mar recording a transfer of the shares in SAPL back to Ms Lam, the appointment of Mr Mar as a director of SAPL and the cessation of Mr Wasala’s office as a director of WAPL.

By interlocutory process filed on 5 March 2021, Mr Mar and Ms Lam sought an order to the effect that those forms lodged with ASIC were not invalid, declarations that they had validly terminated the Share Sale Agreement and were entitled to have the shares in SAPL transferred to them in accordance with clause 7.3 of the Share Sale Agreement and an order for specific performance of clause 7.3 of the Share Sale Agreement.

In addition, Mr Mar and Ms Lam sought the following relief in prayers 8, 9 and 10 of the interlocutory process:

On 11 March 2021, orders were made by consent dismissing the originating process and all claims for relief in the interlocutory process, with the exception of prayers 8-10 above, with no order as to costs. At the same time, the Court noted the terms of an agreement entered into on that date by Mr Mar (referred to by his first name “Keith”), Ms Lam (referred to by her first name “Nancy”), Mr Wasala (referred to by his name “Charitha”), SAPL (referred to as “Sunnyside”) and WFPL (referred to as “WF”) (the Settlement Agreement).

The Settlement Agreement relevantly provided:

Consistently with the parties’ agreement that the Share Sale Agreement had been validly terminated, the effect of the orders made on 11 March 2021 dismissing the proceedings but for prayers 8-10 of the interlocutory process was that Mr Wasala’s removal and Mr Mar’s appointment as sole director of SAPL and the registration of the transfer of all the shares in SAPL to Ms Lam in early March 2021 were undisturbed.

The matter was stood over to allow the parties time to identify an appropriate referee and formulate the terms of the referral.

On 13 April 2021, the Court made an order by consent1 referring the following matter to Mr David Watt for enquiry and report pursuant to Uniform Civil Procedure Rules 2005 (NSW), r 20.14:

The referee has produced a report dated 23 August 2021.

The referee determined that:

The parties do not take issue with these aspects of the referee’s report, save as recorded at [73] below. The parties’ dispute about which parts of the report should be adopted relates principally to the alternative ways in which the referee addressed Mr Wasala’s offsetting claims.

Mr Wasala presented offsetting claims totalling $1,077,477 and submitted to the referee that Mr Mar and Ms Lam were therefore indebted to him in the net amount of $270,706.

Mr Mar and Ms Lam submitted to the referee that Mr Wasala’s offsetting claims were misconceived because they conflated the rights of SAPL with the rights of Mr Wasala, and also conflated the rights and obligations of Mr Mar and Ms Lam with the rights and obligations of SAPL. Mr Mar and Ms Lam submitted that the amount owing by Mr Mar and/or Ms Lam to Mr Wasala under relevant offsetting claims was negative $93,303 with the result that the amount owed to them by Mr Wasala was increased from $806,771 to $900,074.

The question whether Mr Wasala’s offsetting claims conflated his rights with the rights of SAPL and conflated the rights and obligations of Mr Mar and Ms Lam with the rights and obligations of SAPL became known as the conflation issue.

The referee dealt with the conflation issue in the following manner:

However, the referee continued:

The referee concluded that the amount of the debt due by Mr Wasala to Mr Mar and Ms Lam after taking into account debts that Mr Wasala was entitled to raise by way of set-off was:

The difference of $75,683.12 between the referee’s determinations of the debt due by Mr Wasala under Approach 1 and Approach 2 is attributable to:

The referee continued:

The referee rejected the submission made by Mr Mar and Ms Lam that the debtors were assets of SAPL and not Mr Wasala and could therefore not be set off against amounts owing by Mr Wasala to Mr Mar and Ms Lam as described in the terms of the referral.

The referee stated:

It is convenient to refer to the issue identified by the referee as summarised at [29]-[32] above as the accounts receivable offset claim. As will be apparent from the referee’s report extracted above, the referee did not determine any amount in favour of Mr Wasala in respect of SAPL’s November 2019 to February 2021 accounts receivable to which the referee found that Mr Wasala had “an absolute right”. That is to say, the referee’s Approach 1 and Approach 2 calculations did not incorporate any amount in respect of the accounts receivable offset claim. The referee instead proposed that Mr Mar and Ms Lam give the undertakings referred to in the report above.

Both Mr Wasala on the one hand and Mr Mar and Ms Lam on the other hand seek orders under UCPR r 20.24(1) that the referee’s report be adopted in part.

Mr Wasala’s contentions are set out in a notice of motion filed on 18 October 2021, points of claim filed on 8 November 2021 and written submissions dated 16 March 2022 as supplemented by oral submissions at the hearing on 24 March 2022.

Mr Mar and Ms Lam’s contentions are set out in an interlocutory process filed on 18 October 2021, points of claim filed on 5 November 2021 and written submissions dated 7 March 2022 as supplemented by oral submissions at the hearing on 24 March 2022.

I have considered all of the parties’ submissions, irrespective of whether they are expressly referred to in these reasons.

In summary, Mr Wasala contends that the Court should adopt the referee’s report insofar as the report:

Mr Mar and Ms Lam contend that the Court should:

There was no dispute about the applicable principles, which were summarised by reference to authority by McDougall J in Chocolate Factory Apartments v Westpoint Finance [2005] NSWSC 784 at [7]:

The referee’s Approach 1 of treating SAPL differently according to the identity of the shareholders of SAPL at different times (“SA Version 1”, “SA Version 2” and “SA Version 3”), and thereby conflating SAPL with its shareholder(s) at any particular time rather than treating SAPL as a separate legal entity, involves an error of law. The referee properly identified that it was a matter for the Court to determine whether this Approach 1 or the alternative Approach 2 was correct. The Court will reject those parts of the referee’s report that have quantified or determined offsetting claims made by Mr Wasala in accordance with the erroneous Approach 1.

The terms of the reference required the referee to determine the amount (if any) of the debt due by Mr Wasala to Mr Mar and/or Ms Lam pursuant to the Share Sale Agreement, the Heads of Agreement or otherwise relating to the business of SAPL, taking into account any debt that Mr Wasala is entitled to raise by way of set-off, being a liquidated amount owing by Mr Mar and/or Ms Lam to Mr Wasala. Approach 1 strays beyond the referee’s jurisdiction to the extent that the referee purported to determine that Mr Mar and/or Ms Lam owed liquidated amounts to SAPL and treated those amounts as owing to Mr Wasala.

The referee recorded that Mr Wasala claimed as an offset an amount in respect of “additional rent paid by [SAPL] in respect of the period from 1 May 2020 to 2 March 2021” for the lease of SAPL’s business premises at 45 Chandos Street, St Leonards. The referee recorded that the premises were owned by Mr Mar and Ms Lam until about May 2020, when they were sold to a new owner which then became SAPL’s landlord under the lease.

The referee summarised Mr Wasala’s submissions about the rent offset in the following terms:

The referee then noted that the submissions made by Mr Mar and Ms Lam had initially offset the sum of $4,000 per month as a “Credit Adjustment for Monthly Rent” against Mr Wasala’s liability to Mr Mar and Ms Lam for Monthly Consulting Fees for the period from November 2019 to February 2021. The referee noted that those submissions appeared to be consistent with contemporaneous correspondence between the parties during the period from May to December 2020 and stated:

The referee stated that Mr Mar and Ms Lam had subsequently altered their position, submitting that the issue of rent was a matter relating to SAPL’s rights and obligations and was not related to the question referred to the referee.

The referee determined that “a credit adjustment for monthly rent in the amount of $32,275.42 plus GST should be allowed for as an offset against the total of the Monthly Consulting Fees and collections from debtors as at 31 October 2019.”

The referee’s reasons for that determination were expressed as follows:

On one reading of paragraph 146 and paragraph 149(b) of the referee’s report extracted above, the report suggests that Mr Mar and Ms Lam had in fact made adjustments as between themselves and SAPL and/or Mr Wasala for monthly rent in excess of $5,500 plus GST during the period from May 2020 to January 2021. It was common ground between the parties that no such adjustments were made, as is apparent from the referee’s calculation of the amount that he allowed for the rent offset claim referred to immediately below. As I understand paragraphs 146 and 149(b) read in the context of the report as a whole, the referee was referring to contemporaneous correspondence between the parties which referred to adjustments in respect of rent during that period albeit that the adjustments were not in fact made.

The amount of $39,573 is calculated as the difference between $6,050 (being the rent of $5,500 plus GST referred to in the 19 September 2019 email) and the rent actually paid by SAPL by the new landlord for the months of May 2020 to January 2021. The referee excluded the month of February 2021 because there was no evidence that SAPL had in fact paid rent in that month.

It was submitted on behalf of Mr Wasala that the referee’s allowance of his offsetting claim for the rent adjustment did not involve the referee conflating SAPL and Mr Wasala. It was submitted that the referee found that there was an agreement between Mr Mar and Mr Wasala personally “under which Mr Mar promised to reimburse (or provide a ‘credit’ to) Mr Wasala (or Sunnyside for the rent payable each month under the Lease such that Mr Wasala (or Sunnyside) would only be obligated to pay $6,050 (including GST) each month for the remained of the term of the Lease, for as long as Mr Wasala remained the sole shareholder of Sunnyside.” It was submitted that this finding by the referee was a finding of fact and that there is no basis for the Court to reconsider or alter the finding. It was further submitted that Mr Mar’s email of 19 September 2019 was sent to Mr Wasala before he became a director or shareholder in SAPL. Accordingly, it was submitted, Mr Mar’s 19 September 2019 email was a promise made by him to Mr Wasala personally to either pay Mr Wasala directly the amount equal to any rent in excess of $6,050 per month or to ensure that, during Mr Wasala’s period of ownership of SAPL, SAPL was not required to pay monthly rent in excess of $6,050.

I reject Mr Wasala’s submissions for the following reasons.

The referee did not find that Mr Mar and Mr Wasala entered into an agreement in relation to adjustments to the rent payable by SAPL. The referee’s reasons for his determination in relation to the rent offset claim set out in paragraph 149 of his report simply summarised the terms of the email, stated (contrary to the terms of the email) that the parties did not contemplate a change in ownership of the leased property (the email expressly referred to the lease being “for the purpose of sale of property”), and expressed an opinion about an assumption that Mr Wasala was entitled to make on the basis of the email. The referee also referred to “the actions of the Defendants in providing credit adjustments to SA between May 2020 and January 2021” which, as I have noted above, must be understood as a reference to correspondence indicating that adjustments would be made in favour of SAPL rather than adjustments actually made. The referee’s report is silent about the basis on which he treated adjustments to be made in favour of SAPL as a liquidated amount owing by Mr Mar and/or Ms Lam to Mr Wasala. However, it is plain that, in doing so, the referee erroneously conflated SAPL and Mr Wasala in treating Mr Mar’s statement that he would “take care of the difference in rent”, which related to a liability of SAPL, as giving rise to a debt owing by Mr Mar and/or Ms Lam to Mr Wasala. That is put beyond doubt by the fact that the referee has included the rent offset claim amount in his Approach 1 calculations but excluded them from his Approach 2 calculations. For those reasons, I accept the submissions made by senior counsel for Mr Mar and Ms Lam that the referee’s determination of the rent offset claim is infected by his error of law in relation to the conflation issue.

Counsel for Mr Wasala invited the Court to interpret the referee’s report as containing a finding that there was an agreement between Mr Mar and Mr Wasala to the effect referred to at [51] above on the basis of counsel’s interpretation of the email and because, it was submitted, the referee was an accountant and not a lawyer and therefore could not be expected to use the term “agreement” when he found that an agreement existed. In my opinion, no such reading of the referee’s report is available. Accountants are familiar with the concept of an agreement and it is to be expected that the referee would have used that word (or an equivalent word, such as contract) if he had found that the 19 September 2019 email was an agreement between Mr Mar and Mr Wasala. If the referee had found that such an agreement was made between Mr Mar and Mr Wasala, the rent offset claim amount determined by the referee would have been included in his Approach 1 and Approach 2 calculations. As noted above, it was included in the Approach 1 calculations only, being the calculations in which the referee erroneously conflated SAPL and Mr Wasala during the period that SAPL was under Mr Wasala’s ownership and control.

Neither the referee’s report nor Mr Wasala’s submissions before this Court identified any submission made by Mr Wasala to the referee to the effect that the 19 September 2019 email constituted or evidenced an agreement between Mr Mar and Mr Wasala giving rise to an amount owing by Mr Mar to Mr Wasala personally. That is a contention that Mr Wasala seeks to introduce for the first time in the context of his application for the partial adoption by the Court of the referee’s report. The hearing of the parties’ applications under UCPR r 20.24(1) is not a hearing de novo. It is not an occasion for the parties to have a second go, putting forward entirely new contentions for the first time in relation to the matters that were the subject of the reference and asking the Court to adopt erroneous elements of the referee’s report to the extent that the Court’s determination of those new contentions happens to be consistent with the referee’s determination made on other grounds. In my opinion, it would frustrate the purpose of UCPR Pt 20 Div 3 if the Court were to entertain such an exercise and I decline to do so in this case.

The referee determined under Approach 1 that Mr Wasala was entitled to offset the sum of $19,521.10 against the amounts he owes to Mr Mar and Ms Lam. The sum of $19,521.10 represents leave entitlements accrued as at 1 November 2019 by SAPL employees based in Taiwan and the Philippines. The basis of the referee’s determination was that the Heads of Agreement and Share Sale Agreement make it clear that Mr Mar and Ms Lam were liable for leave entitlements accrued by SAPL employees up to 1 November 2019.

In their submissions to the referee, Mr Mar and Ms Lam contended that leave entitlements accrued by SAPL employees as at 1 November 2019 and paid to them while SAPL was under Mr Wasala’s ownership were a liability of SAPL and not something for which Mr Mar and Ms Lam were personally liable to reimburse Mr Wasala.

However, during the course of the hearing before me, senior counsel for Mr Mar and Ms Lam referred to the term of the Heads of Agreement that provides: “Original owners has liability for event(s) happened prior to 1st November 2019”. Senior counsel conceded that it was arguable that employee leave entitlements accrued prior to 1 November 2019 are “events” that happened prior to that date for which Mr Mar and Ms Lam (the “original owners”) are personally liable to make an adjustment in favour of Mr Wasala pursuant to that clause of the Heads of Agreement. If that argument were upheld, then Mr Wasala would be entitled to have the referee’s report adopted insofar as it allowed his offsetting claim of $19,521.10 in respect of overseas employee leave entitlements, notwithstanding the referee’s error in relation to the conflation issue. Senior counsel did not formally concede the point but informed the Court that he did not make any submission against that argument.

It is common ground between the parties that the Heads of Agreement continued to apply alongside the Share Sale Agreement after the parties executed the Share Sale Agreement.

The argument identified by senior counsel for Mr Mar and Ms Lam is, with respect, correct.

The referee erred in conflating SAPL with Mr Wasala during the period from 1 November 2019 to 28 February 2021 when Mr Wasala (or his nominee, WFPL) was the shareholder of SAPL. That error infected the referee’s determination of Mr Wasala’s rent offset claim and the Court will not adopt the report to the extent that it concerns that determination.

Notwithstanding the referee’s error in relation to the conflation issue, the referee’s report should be adopted by the Court insofar as it allowed Mr Wasala’s offsetting claim of $19,521.10 in relation to overseas employee leave entitlements. That aspect of the referee’s determination is consistent with the terms of the Heads of Agreement, without conflating Mr Wasala and SAPL.

As I have noted at [29] above, the remaining offsetting claims affected by the conflation issue (being the miscellaneous claims totalling $16,588.67) were not pressed by Mr Wasala at the hearing concerning the adoption of the referee’s report and the report will therefore not be adopted insofar as the referee allowed those claims.

Subject to the accounts receivable offset claim addressed below the Court will adopt the referee’s report to the extent that it applies Approach 2 (rejecting Approach 1 and thereby excluding the referee’s determination of the rent offset claim and the miscellaneous offsetting claims) and to the extent that it finds that Mr Mar and Ms Lam owe the sum of $19,521.10 to Mr Wasala in respect of the overseas leave entitlements claim.

The sole basis of the referee’s determination that Mr Wasala had “an absolute right” to SAPL’s accounts receivable for SAPL’s tax and accounting services invoiced to clients during the November 2019 to February 2021 period is identified in paragraph 160 of the referee’s report extracted at [32] above. That sole basis is that, notwithstanding that the parties made no provision in the Share Sale Agreement in respect of SAPL’s accounts receivable as at the date on which Mr Mar and Ms Lam exercised their rights under clause 7.3 to terminate that agreement for non-payment of the Monthly Consulting Fees, the referee was of the opinion that it was “reasonable to assume” that Mr Wasala, as “the exiting shareholder” “would be entitled and would have expected to have an absolute right to collect any accounts receivable outstanding to SA as at the date of exit”.

As senior counsel for Mr Mar and Ms Lam submitted, that opinion erroneously conflates Mr Wasala with SAPL during the November 2019 to February 2021 period and thereby strays beyond the scope of the reference. The referee’s recommendations or proposals concerning undertakings is also outside the scope of the reference.

I reject the submissions made by counsel for Mr Wasala to the effect that this part of the referee’s report should be read as a finding by the referee that the Share Sale Agreement was subject to an implied term to the effect that, if Mr Mar and Ms Lam exercised their rights of termination under clause 7.3, Mr Wasala had the right to collect any accounts receivable owing to SAPL as at the date of termination in respect of tax and accounting services provided by SAPL during the period from November 2019 to the date of termination. In my opinion, that suggested reading of the report finds no support in the language that the referee used to express his opinions and is untenable. As senior counsel for Mr Mar and Ms Lam submitted, the referee makes no findings about rights or terms, implied or otherwise. The referee simply makes an observation about what, in his opinion, might reasonably have been assumed by Mr Wasala. That is not the legal test for the implication of a term. Contrary to the submissions made by counsel for Mr Wasala, the implied term that he contended the referee found does not satisfy the five requirements of that legal test: Codelfa Construction Pty Ltd v State Rail Authority (1982) 149 CLR 337 at 346-347 (Mason J, as his Honour then was). In particular, far from being necessary to give business efficacy to the Share Sale Agreement, the suggested implied term would have an effect that seems to me to undermine the efficacy of the agreement. The suggested implied term would apply in circumstances where, having received the shares in SAPL for $1.00, Mr Wasala had failed to pay (or cause SAPL to pay) the Monthly Consulting Fees to Mr Mar and Ms Lam (being the critical component of the consideration for their transfer of the shares to him). The effect of the suggested implied term would be to permit Mr Wasala to strip SAPL of all revenue that it generated under his ownership, returning to Mr Mar and Ms Lam the shares in a company that had therefore effectively operated at a loss during the period in which Mr Wasala had owned the shares without paying for them (or without paying for them in full). For the same reasons, the suggested implied term is not so obvious that it goes without saying.

I reject the submission made on behalf of Mr Wasala that the suggested implied term was “conceptually identical” to Mr Mar and Ms Lam’s entitlement under the Heads of Agreement to SAPL’s accounts receivable as at 31 October 2019. The submission is plainly wrong because Mr Mar and Ms Lam had an express right under the Heads of Agreement and because that express right did not have the “conceptually identical” effect of the suggested implied term described above. The submission is irrelevant in any event because the implication of terms is not an exercise in judicially rewriting contracts so as to redistribute the balance of parties’ rights and obligations in a manner that the Court considers “reasonable” or “conceptually identical”.

If, contrary to my opinion stated above, the referee did find that the Share Sale Agreement included an implied to term to the effect for which Mr Wasala contends, that finding was wrong as a matter of law for the reasons explained at [67] above.

For all of the reasons at [65]-[69] above, the Court will not adopt those parts of the referee’s report that contain his opinion or determination that Mr Wasala had a right to collect SAPL’s accounts receivable as at 1 March 2021 for tax and accounting services invoiced by SAPL to clients during the period from November 2019 to February 2021. Nor will the Court adopt the referee’s recommendations or proposals concerning undertakings to be given by Mr Mar and Ms Lam or commercial settlement between the parties referred to at paragraphs 156 to 162 of the report.

I note that, as senior counsel for Mr Mar and Ms Lam submitted, the Share Sale Agreement (without the suggested implied term) does not leave Mr Wasala with nothing in respect of the period during which SAPL carried on business under his ownership and control. Only 35 per cent of SAPL’s monthly turnover was required to be paid to Mr Mar and Ms Lam as the Monthly Consulting Fee. Clause 7.3 of the Share Sale Agreement does not require Mr Wasala to repay to SAPL or to Mr Mar and Ms Lam any distributions or other payments made by SAPL to Mr Wasala from the remaining 65 per cent of its monthly turnover during the period of his ownership of SAPL.

For completeness, I also note that, as senior counsel for Mr Mar and Ms Lam acknowledged, the rejection of the referee’s opinion in relation to Mr Wasala’s accounts receivable offset claim does not affect Mr Wasala’s right to enforce clause 8 of the Settlement Agreement extracted at [16] above.

In the alternative to the submissions that I have rejected at [65]-[69] above, counsel for Mr Wasala submitted that, if the Court does not adopt those parts of the referee’s report referred to at [70] above, then the Court should “exercise its discretion also to exclude the cash collected from the November 2019 Accounts Receivable of $141,118 (and therefore reject that part of the Referee’s Report as well)”. That submission is wholly inconsistent with Mr Wasala’s submissions made to the referee. The referee recorded that Mr Wasala agreed with Mr Mar and Ms Lam that SAPL had received the sum of $141,118 from clients in respect of accounts receivable as at 1 November 2019 and that all parties had submitted that the amount of $141,118 should be included in favour of Mr Mar and Ms Lam in the referee’s determination of the net amount payable by Mr Wasala to Mr Mar and Ms Lam. [1] I repeat my observations at [55] above.

Neither party submitted that they would wish to be heard separately in relation to costs and I am not aware of any reason why costs should not follow the event. Given that the Court will make orders substantially in the terms sought in the interlocutory process filed by Mr Mar and Ms Lam on 18 October 2021, save for the overseas leave entitlements finding in respect of which senior counsel for Mr Mar and Ms Lam drew the Court’s attention to the argument in favour of Mr Wasala that the Court has accepted, the appropriate costs order is that Mr Wasala is to pay the costs of Mr Mar and Ms Lam of and incidental to prayers 8-10 of the interlocutory process filed on 5 March 2021, the reference and the parties’ competing applications for the partial adoption of the referee’s report, on the ordinary basis as agreed or assessed.

For the foregoing reasons, the orders of the Court are as follows: