Andy Vuong Duc Pham v Enterprise ICT Pty Ltd

There are three motions before the Court.

By further amended notice of motion filed 14 May 2019, the plaintiffs seek a series of lump sum costs orders against Mr Sebie and ENA Development Pty Ltd (ENA) (‘the plaintiffs’ costs application’) for costs incurred in proceeding 2015/325044 (‘the 2015 proceeding’) from 29 January 2018 until the conclusion of the proceeding. On 27 February 2020, after part-hearing the plaintiff’s application, I made orders noting that this was an appropriate case for the making of lump sum costs orders.

By further amended notice of motion filed 6 March 2020, ENA seeks a lump sum costs order against the plaintiffs arising from Young AJA’s decision on 12 June 2015 in Pham v Sebie [2015] NSWSC 745 at [6] in which his Honour struck ENA out of the proceedings effectively on the basis that they should not have been joined (‘ENA’s costs application’).

Finally, by further amended notice of motion dated 26 June 2019, ENA seeks an order that the Court lifts the stay made by Slattery J (in [2018] NSWSC 1063) on its cross claim dated 1 July 2018 (‘ENA’s stay application’). The substance of the relief sought in that cross claim is payment to ENA of net proceeds of sale of a property in Chiswick (held in Court). Those proceeds are the security it claims for repayment of two advances of loans it made to Mr Sebie. The advances it says were $1.37 million in 2005 and $504,000 in 2015. On 13 July 2018, Slattery J ordered that ENA pay $100,000 of security for the costs of the plaintiffs in the proceedings by 27 July 2018. If that security was not paid on time, ENA’s cross claim was to be stayed. The security was not paid on time and the stay on ENA’s cross claim has been in place since 27 July 2018. On 29 March 2019, ENA paid the security for costs into Court.

On 30 January 2018, Slattery J made a lump sum cost order in respect of the plaintiff’s costs incurred in the 2015 proceeding up to 26 January 2018.

With respect to costs incurred from 27 January 2018 onwards, the plaintiffs seek lump sum costs orders against ENA in relation to the following items for which existing interlocutory costs orders have been made. The below tables are taken from a summary table provided by Mr Zipser on 25 June 2020. Some details have been excluded. The references to past judgments and orders have been added, having been found in Mr Zipser’s written submissions.

The plaintiffs submit that they ought to receive 100 per cent of these costs on the basis that the work was principally barrister’s work in attending to core legal matters. Alternatively, they submit that if I am inclined to give a discount, taking into account that the calculation is to be on the ordinary or party/party basis, it should only be for 15 per cent (relying in particular upon Hancock v Rinehart (Lump sum costs) [2015] NSWSC 1640 at [57]). They further submit in relation to Item 2 that ENA’s conduct in attempting to delay and frustrate Slattery J’s attempts to deal with their application in a timely way (see the comments made by his Honour in Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 3) [2018] NSWSC 381 at [8]-[40]) is a relevant factor in determining whether they ought to recover all or most of their costs.

Belatedly on the morning of the hearing ENA’s director, Mr Ronald Jemmott, provided some short written submissions to the Court in relation to the plaintiff’s costs application. Mr Jemmott stated that he has not been provided with any invoices and the plaintiffs have never asked for their bills to be paid. He then disputed numerous charges for a variety of reasons, for example, on the basis that in his opinion certain charges were repeated or too high for the work said to have been completed. His assertions were not supported by evidence.

At the hearing, Mr Stapleton, who appeared for ENA, accepted that Items 2, 9 and 17 are the subject of historical costs orders against ENA and that a lump sum costs order is appropriate. He submits that the normal approach to party/party lump sum costs orders, being a discount of approximately 40 per cent, should be applied, noting that Slattery J ordered costs against ENA on a party/party basis (not an indemnity basis) despite the comments his Honour made in the judgment.

The plaintiffs also seek $9,580 for work done in relation their application for security for costs against ENA in respect of its cross-claim which they say are costs in the cause of ENA’s cross claim (see [2018] NSWSC 1063 at [102]) (Item 7). However, the plaintiffs concede they are not yet entitled to recover that money (T.14).

Against Mr Sebie, the plaintiffs seek lump sum costs orders in relation to the following Items for which costs orders have been made:

Again, the plaintiffs submit that they should receive either all or 85 per cent of these costs on the basis that the costs relate to core legal work and taking into account Mr Sebie’s conduct over the course of the proceeding.

Mr Sebie also provided written submissions late on the day of the hearing. They were in “draft mode” and alleged fraud against Mr Pham and Mr Zipser. Mr Sebie asserted Mr Zipser had overcharged. He disputed that Items 1, 8, 10 and 11 are subject to existing cost orders of this Court and submitted that the costs in Items 6, 8 and 13 were ordered against multiple defendants and should therefore be shared. With respect to Item 12, he said there was second order made on the same day with no order as to costs. He also disputed Item 16, stating there was an order “but only part costs”.

In response, the plaintiffs submit that when a costs order is made by a judge against two or more parties each party is jointly and severally liable in respect of those costs. They say Mr Sebie did not ask the Court to apportion the costs when the relevant orders were made though it was open to him to do so. They further submit that the principles of equity would permit Mr Sebie to apply for a contribution from the other parties liable to pay costs.

In relation to other costs incurred by the plaintiffs since 27 January 2018, the plaintiffs seek the following costs against Mr Sebie:

In relation to Item 3, the plaintiffs say that, while the existing costs order is against Ramzy Sebie and Maizen Zraika, Mr Sebie caused the caveats to be lodged over the Chiswick property (see findings of Slattery J in Pham v Enterprise ICT Pty Ltd (No 9) [2018] NSWSC 1657) at [18]-[23]).

The plaintiffs submit that Item 4 relates to work necessary to prevent Mr Sebie continuing to cause caveats to be lodged over the property, although they did not at the time ask for a costs order against Mr Sebie (T.39).

In relation to Item 15, reserved costs, the plaintiffs rely on UCPR r 42.7(1) which states that “unless the court orders otherwise, the costs of any application or other step in any proceedings, including (a) costs that are reserved… are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.” The plaintiffs submit that for each of the principle contests between the plaintiffs and Robert Sebie in the 2015 proceedings, the Court has ordered that Robert Sebie pay the plaintiffs’ costs. They also submit that they succeeded on their claim for quantification of interest and costs should follow the event.

Finally, to the extent they are successful, the plaintiffs seek their costs of the present applications (these were Items 18, 19 and 20 in Mr Zipser’s table). They would seek the costs of defending ENA’s costs and stay applications against ENA. However, if I was to decide they were entitled to costs against Mr Sebie and ENA in relation to their costs application, they would ask for those costs to be added to the lump sum costs order against Mr Sebie (T.42).

The plaintiffs seek interest on costs pursuant to s 101 of the Civil Procedure Act 2005 (NSW).

ENA submits that Young AJA struck ENA out of the plaintiffs’ proceeding on the basis that the suit was one for specific performance but ENA was not a party to the relevant contract (citing Tasker v Small (1837) 3 Mylne and Craig Reports 63; 40 ER 848). Its costs were reserved (see [8] of Young AJA’s judgment). It also submits that while there is only one invoice in the evidence totalling $8,496.22 (Ex.RJ2 p 11), I should infer, from a $7,000 debit from ENA’s bank account in favour of “LAC Lawyers Legal” (Ex.RJ2 p 15), the absence of any disbursement for counsel on the invoice that is in evidence, and Young J’s observation that ENA was represented by counsel (see [6] of his Honour’s judgment), that there was a further invoice of a barrister who appeared in the proceedings which brings the total amount of ENA’s claimed legal costs to $15,496.22.

The plaintiffs submit they should not be ordered to pay ENA’s costs of its appearance before Young AJA. They say Young AJA declined to make such an order despite ENA’s express request. They also submit that Young AJA did not suggest that they, instead of Mr Sebie, might be responsible for ENA’s costs. Their application was for specific performance of a contract of sale of the Chiswick property from Mr Sebie to the plaintiffs and an order under s 74MA of the Real Property Act 1900 (NSW) to remove a caveat lodged in the name of ENA over the Chiswick Property. They say that ENA “accepted an invitation from Young AJA to be let out of the proceeding” and “thereby gave away an opportunity to persuade the Court that it had an equitable interest in the Chiswick property”. Following a trial before Pembroke J in April 2017, his Honour ordered the caveat be removed. Yet in 2018, ENA told Slattery J that it wanted to file a cross claim against the plaintiffs to assert, the plaintiffs say, “the claim which it elected in June 2015 not to assert”. The plaintiffs also dispute Young AJA’s reliance on the rule in Tasker v Small and point to ENA’s delay in bringing its costs application which they say has caused deficiencies in the evidence.

However, the plaintiffs have indicated that if I am of the view that it is appropriate they pay ENA’s costs, they do not oppose the making of a lump sum costs order. They say that ENA would only be entitled to costs on a party/party basis but submit that there are significant gaps in ENA’s evidence as to the work done by its lawyers and the costs it has actually paid.

ENA submits that its payment of the security on 29 March 2019 would in and of itself be sufficient to move the Court to lift the stay. It further submits that the delay did not cause prejudice to the plaintiffs; they are still working out the extent of their interest claim arising from their successful costs order and payment out order. It also says that there is a justiciable controversy as to who is entitled to the balance of the funds that would be left alive if it were unable to prosecute its cross claim and the money would continue to sit in Court. Mr Sebie supported ENA’s case.

The plaintiffs submit that the issues ENA seeks to litigate through its cross claim were already determined by Pembroke J in Pham v Enterprise ICT Pty Ltd and Others [2017] NSWSC 446. They say that a central issue in those proceedings was whether there was a secured loan agreement between ENA and Robert Sebie in September 2005 such as to give ENA an equitable interest in the Chiswick Property which might prevent completion of the sale of the Property to the plaintiffs. They submit it would be an abuse of process for ENA to re-litigate them and, on the basis that ENA was a privy of Robert Sebie (who was a party to the proceedings), a res judicata prevents it from doing so. Here, the plaintiffs rely on a 2019 judgment of Berman J in the Family Court in which his Honour stated “ENA is the alter-ego of the husband” (that judgment was anonymised on publication and therefore I do not cite it here).

The plaintiffs also submit that ENA’s election to “be let out” of the proceedings before Young AJA gives rise to an Anshun estoppel as the plaintiffs were in those proceedings seeking an order that ENA’s caveat be removed (see above). ENA could have filed a cross claim. They submit there is a risk of inconsistent judgments on the question of whether ENA has an equitable interest in the Chiswick Property arising from a secured loan agreement between it and Robert Sebie.

The plaintiffs submit that ENA’s conduct in relation to the consolidated proceedings ultimately determined by Pembroke J in 2017 also gives rise to an Anshun estoppel. They say ENA was aware of the claims in those proceedings. Finally, they submit that Berman J heard and determined the plaintiffs’ defences of Anshun estoppel and abuse of process in 2019 (see AP-3 pp 313-327) and those findings are binding on ENA and the plaintiffs.

Ms Musabwasoni also submits that ENA is barred by a res judicata or Anshun estoppel. With respect to the privy issue, she submits that the interests of ENA and Mr Sebie are the same in that each seeks to undo the sale of the property to the plaintiffs. She said the identification between ENA and Mr Sebie arises in Mr Sebie’s constant interventions on behalf of ENA during Court proceedings (as demonstrated by Berman J’s decision); the Family Court’s finding that ENA is the alter ego of Mr Sebie; Pembroke J’s finding that Mr Sebie was a director of ENA for four years and at the time of the “fictitious unsecured loan agreement”; and the many references to ENA in judgments of this Court.

Ms Musabwasoni further submits that if ENA is now allowed to run its case it will create oppression on her in circumstances where ENA is committing an abuse of process (UBS AG v Tyne (2018) 265 CLR 77). She says that ENA is Mr Sebie and Mr Sebie’s “fraudulent” case to try and assert the secured loan agreement as having priority failed before Pembroke J who described the purported loan document to be a “fiction”. She submits that there are other proceedings on foot in the Family Court, and the money in Court forms the basis of the property pool in that Court for distribution pending hearing. The present case has been far from just, quick and cheap; Ms Musabwasoni’s life has been on hold, her finances have suffered and a ten-year case in the Family Court is yet to be decided.

In response, Mr Stapleton for ENA submits that no estoppel or res judicata arises with respect to the proceedings before Young AJA and Pembroke J on the basis that ENA was not a proper party to those proceedings. He said ENA “didn't have an obligation at any other time until the money was in the bank to actually assert its interest in this money” (TT.53-54).

Mr Jemmott provided some additional submissions and materials to my chambers by email on 1 July 2020. Mr Jemmott was it seems attempting to assist the Court by answering questions I raised during the hearing. However, I did not invite the provision of further material and therefore have not taken it into account.

I have set out the relevant principles concerning lump sum or gross sum cost orders in several past decisions (see, e.g., Edward Ted Lakis and Anor v Michael Victor Lardis and Anor (No 3) [2018] NSWSC 1296 at [52]-[58]; Lawcover Insurance Pty Ltd v Muriniti and Newell [2018] NSWSC 558 at [6]-[10]; and most recently Wong v Van Vlymen [2020] NSWSC 841 at [106]-[112]).

In summary, section 98(4)(c) of the Civil Procedure Act 2005 (NSW) permits the Court to order payment of costs in a specified lump sum instead of assessed costs. The discretion is wide and the order may be made whenever the circumstances warrant it (Harrison v Schipp (2002) 54 NSWLR 738 at [21] (‘Harrison’); Hamod v The State of New South Wales [2011] NSWCA 375 at [813] (‘Hamod’)). With respect to determining the lump sum, the Court is to take a broad-brush approach (Harrison at [22], [33]).

In Hamod, Beazley JA (as her Honour then was) pointed out that the costs ordered should be based on an informed assessment of the actual costs having regard to the information before the Court. The approach to be taken in arriving at the estimate must be logical, fair and reasonable. However, the exercise will necessarily be impressionistic and may involve a “discount of the costs actually incurred or estimated, in order to take into account the contingencies that would be relevant in any formal costs assessment” (at [820]).

Experience, I think, has shown that a discount of 10-30% is typically appropriate (see Ross v Padget [2016] NSWSC 1851 at [16] and [21]; Fisher-Pollard by her tutor Fisher-Pollard v Fisher-Pollard [2018] NSWSC 807). Stevenson J adopted this approach in Berry Rural Co Operative Society Ltd v Sepak Industries Pty Ltd (No 4) [2018] NSWSC 1902 (at [6]).

However, as Mr Zipser pointed out, Brereton J in Hancock v Rhinehart (Lump sum costs) [2015] NSWSC 1640 stated (at [57]):

Ultimately, within the broad brush approach, and absent any expert evidence, I must have regard to the particular evidence in the case and my own experience.

With respect to the existing costs orders that were made against ENA and Mr Sebie, the position is that when a costs order is made against two or more parties, each party is jointly and severally liable in respect of those costs. This was explained by McLelland CJ in Eq in Barclays Australia (Finance) v Mike Gaffikin Marine (1996) 21 ACSR 235 at 238:

The Court has a discretion whether or not to lift the stay. In general, a stay may be lifted where proper grounds can be shown or where it is just and proper to do so (see Hutchinson v Nominal Defendant (1972) 1 NSWLR 443). In that case, Isaacs J said (at 447-448):

As I have outlined, the plaintiffs and second defendant base their opposition to the lifting of the stay on the doctrines of res judicata, Anshun estoppel and abuse of process. Despite their common underlying basis, there are technical legal distinctions between these doctrines (see discussion in my previous judgment Telesto Investments Limited v UBS AG [2013] NSWSC 503 at [172]-[259] (‘Telesto’)). In Jackson v Goldsmith (1950) 81 CLR 446 (at 466 and 467) Fullagar J said in relation to res judicata:

In Blair v Curran (1939) 62 CLR 464, Dixon J said (at 532):

In Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, Gibbs CJ, Mason and Aickin JJ cited both Jackson v Goldsmith and Blair v Curran and said (at 597):

This statement was subsequently approved by Deane, Toohey and Gaudron JJ in Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 507. Somewhat more recently, in Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245 Handley AJA said (at [106]) that the test for res judicata is whether the cause of action in the later proceedings is in substance the same as that litigated to judgment in the former.

In Macquarie Bank Ltd v National Mutual Life Association of Australasia Ltd (1996) 40 NSWLR 543, the Court of Appeal considered the proper approach to be taken to identify the relevant cause of action for the purpose of the doctrine of res judicata. Clarke JA (with whom Priestley JA agreed) reviewed the relevant authorities (at 558-559) and concluded:

The plaintiffs and Ms Musabwasoni assert that ENA’s cross claim is barred by res judicata on the basis that ENA was a privy of Mr Sebie. In Carl-Zeiss (No 2) [1967] 1 AC 853, Lord Reid said (at 910):

The plaintiffs’ submission must be based on privity of interest. They cited the decision in Effem Foods Pty Ltd v Trawlindustries (1993) 43 FCR 510. Ms Musabwasoni’s submission was put on that basis. She referred to Osborne v Smith (1960) 105 CLR 153. More recently, in Tomlinson v Ramsey Food Processing (2015) 256 CLR 507 (‘Tomlinson’) the High Court re-affirmed the principle governing privity of interest stated and applied by Barwick CJ in Ramsay v Pigram (1968) 118 CLR 271. French CJ, Bell, Gageler and Keane JJ said (at 515-523):

Turning to Anshun estoppel, the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 598 referred with approval to the principle expressed Sir James Wigram V.C. in Henderson v Henderson (1843) 3 Hare at 115:

Their Honours then stated at 602-604:

As I noted in Telesto, a question of Anshun estoppel may also arise where a matter is not brought as a cross-claim, or where a matter is not brought as a claim in earlier proceedings but is later raised as a cause of action (Boles v Esanda Finance Corporation Ltd (1989) 18 NSWLR 666 at 673; Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245 at [41], citing Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287 and Zavodnyik v Alex Constructions Pty Ltd (2005) 67 NSWLR 457). Although, the matter must have been so relevant in the first proceedings that it was unreasonable not to raise it or rely on it (Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245 at [3]-[4] per Allsop P and at [52] per Giles JA; see also Tomlinson at 518 [22]). And as McColl JA (with whom other members of the Court of Appeal agreed) stated in Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231 at [83], “an Anshun estoppel will apply even though the parties to the second proceeding are not the same as the first”.

Finally, the Court has the power to stay proceedings for an abuse of process so as to safeguard the administration of justice, to protect the integrity of the court’s process or to prevent serious and unjustified prejudice or harassment (Rogers v The Queen (1994) 181 CLR 251 at 286 per McHugh J; Ridgeway v The Queen (1995) 184 CLR 19 at 74-75 per Gaudron J; Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at [9]-[16] per Gleeson CJ, Gummow, Hayne and Crennan JJ).

The High Court recently considered the doctrine of abuse of process in UBS AG v Tyne (2018) 265 CLR 77. Kiefel CJ, Bell and Keane JJ said (at 95-96):

The plaintiffs also referred to Clearly v Jeans (2006) 65 NSWLR 355 (‘Jeans’), in which Bryson JA (at [45]) quoted from the judgment of Morritt V.C. in Secretary of State for Trade and Industry v Bairstow [2004] Ch 1 (‘Bairstow’):

As the plaintiffs point out, the propositions in Bairstow were considered and applied in Five D Pty Ltd v Impact Building Pty Ltd [2007] NSWSC 993, where Harrison AsJ noted (at [26]) that “in Jeans the NSW Court of Appeal adopted the reasoning in Baistow in finding that abuse of process can apply where parties to later civil proceedings were not parties to the earlier proceeding”. In that case, the plaintiff in the second action was a director of the defendant in the first action.

Many of the amounts claimed against ENA and Mr Sebie are subject of existing costs orders of this Court. During argument, Mr Zipser referred to the various Items in his table (modified above) which were cross-referenced to his written submissions and evidence. For each Item where there is an existing costs order, Mr Zipser referred me to the past relevant order as well as invoices married up to the particular order. Notably, the plaintiffs were required to pay $250 per hour immediately but the higher rate of $500 per hour if they obtained a costs order in their favour and there are funds or a source available for the costs order to be paid. Those contingencies appear to have been satisfied by the various existing costs orders and the Sebie Supreme Court fund.

Neither ENA nor Mr Sebie put on evidence in opposition to the plaintiffs’ lump sum costs application. They made in my view no plausible criticism of the charges made by Mr Zipser or their extent. At the hearing, Mr Sebie sought additional time to put on evidence to challenge the actual quantum of costs. He said he wanted to go through notes he had accumulated for each court appearance, the time each took and the evidence that was provided (T.32). This was refused. Mr Sebie had the plaintiffs’ materials for several months prior to the hearing before me on 26 June 2020, and the evidence he proposed to put on was unfortunately not relevant to my assessment of the reasonableness of Mr Zipser’s fees.

I am of the view that it is appropriate to make lump sum costs orders against ENA and Mr Sebie in relation to each amount for which there is an existing costs order. That is, I would make lump sum costs orders in relation to Items 2, 9 and 17 against ENA, and in relation to Items 1, 6, 8, 10, 11, 12, 13 and 16 against Mr Sebie. I would also make a lump sum costs order against Mr Sebie in relation to Item 15. Costs were reserved, however, the plaintiffs ultimately succeeded on their claim for quantification of interest. During argument, Mr Sebie submitted that some of the costs in Items 6, 8 and 13 were ordered against multiple defendants. However, it is open to the plaintiffs to seek these costs from Mr Sebie, and Mr Sebie may later seek a share of those costs from the other defendants (see Barclays Australia (Finance) v Mike Gaffikin Marine (1996) 21 ACSR 235, 238 and the cases cited there).

However, I am not prepared to make the orders sought by the plaintiffs with respect to those Items for which there is no existing costs order. The plaintiffs should have sought orders for those costs from the judges that heard the relevant applications at the time. Every decision on costs involves a significant amount of discretion on the part of the trial judge. I am not prepared to delve into past judgments and second guess what those judges have said. Similarly, with respect to Item 3, I am not prepared to disturb existing orders of the Court. The approach to be taken in relation to lump sum applications has to be broad brush and pragmatic.

Turning to quantum, I agree with Mr Stapleton’s suggestion that recoverability of 100 or 85 per cent would be too generous for costs payable on the party/party basis. However, I note that most of the costs are barristers’ fees and other disbursements. In my assessment, having regard to the evidence that has been provided, I should apply a discount of 20% to the costs claimed by the plaintiffs against ENA and Mr Sebie which I have allowed.

Therefore, in summary, I would make lump sum costs orders against ENA in relation to Items 2, 9 and 17, and against Mr Sebie in relation to Items 1, 6, 8, 10, 11, 12, 13, 15 and 16, applying a 20 per cent to each amount. However, I would refuse to make lump sum costs orders in relation to Items 3, 4, 5 and 14. I note during argument the plaintiffs agreed they were not yet entitled to recover the costs in Item 7 which relate to work done in respect of ENA’s cross claim. Items 18, 19, 20 relate to the present applications and I would hear the parties further in relation to those costs.

I would also order that ENA and Mr Sebie should pay interests on costs pursuant to the s 101(4) of the Civil Procedure Act at the prescribed rate. This is the ordinary position against which no submissions have been made and reflects the compensatory purpose of s 101 (see Ritchie's Uniform Civil Procedure NSW [s 101.10]; Doppstadt Australia Pty Ltd v Lovick and Son Developments Pty ltd (No 2) [2014] NSWCA 158 at [403]; see also McKeith v Royal Bank of Scotland Group PLC [2016] NSWCA 260 at [52]–[60] where the previous s 101(4)-(5) is discussed). The plaintiffs seek interest on costs from the date on which the costs were paid. That is the default position under the previous s 101(5) which applies to proceedings commenced prior to 25 November 2015. Under the current s 101(5), the default position is that interest is payable “from the date the order was made or any other date that the court orders”. The parties did not address me on the question of which version of the provision is applicable and I would hear them further as to the date from which interest should run.

Young AJA struck ENA out of the plaintiffs’ proceedings on 12 June 2015 because, on the authorities, and on the circumstances before his Honour, ENA was not a proper party. The plaintiffs did not appeal this decision, and at the time, costs were reserved. In my view, it is entirely appropriate that the plaintiffs be ordered to pay ENA’s costs thrown away as a result of being improperly joined.

Mr Stapleton invited me to infer that the total costs incurred by ENA in relation to these proceedings were $15,496.22 rather than $8496.22, there being $7000 in counsel’s fees for which there is no invoice. Whilst it may be accepted from the bar table and some comments made by Young AJA in his Honour’s judgment that counsel was retained, I am not satisfied that ENA has discharged its onus in relation to what counsel’s fees were and how much it actually paid. There was for example no contemporaneous support or affidavit by counsel concerning the time spent or work done. I would I think be left to speculate as to precisely what work was done. Proper records should be kept and there was no excuse proffered as to why they were not.

With respect to the $8496.22 amount, for which there is an invoice, I am satisfied this is an appropriate case for a lump sum costs order. However, I would also apply a 20 per cent discount to this amount. I am also of the view that the plaintiffs should pay interest on these costs at the prescribed rate.

ENA wants to assert that it advanced loans to Mr Sebie to purchase the Chiswick Property which were secured by charges over the Chiswick Property, and therefore that it has an equitable interest in the funds held in Court. In the 2017 proceedings, Pembroke J was required to determine whether the plaintiffs’ interest in the Chiswick Property was defeated by a transfer of that property to Enterprise ICT, and if not, whether the plaintiffs were entitled to the order for specific performance sought against Mr Sebie, in addition to other relief (see Pham v Enterprise ICT Pty Ltd and Others [2017] NSWSC 446 at [56], [58]).

The transfer to Enterprise ICT came about following proceedings commenced by ENA against Mr Sebie in which ENA sought possession of the Chiswick Property on the basis of Mr Sebie’s default under the alleged loan agreement (see [29]). Those proceedings were concluded one month later by consent orders, including apparently an order that ENA Development have possession of the Chiswick land (see [33]). Pembroke J then recorded (at [34]) that:

Pembroke J held that the transfer to Enterprise ICT was fraudulent within the meaning of ss 42 and 43 of the Real Property Act, the designed object being to “cheat the plaintiffs of their existing rights”, and therefore the plaintiffs’ right under the 2014 contract for sale was not defeated (see [56]). In the course of his Honour’s reasoning, Pembroke J made several findings against Mr Sebie and ENA. See for example:

While this material is clearly prejudicial to ENA’s position, I do not think that it is enough to give rise to a res judicata. Pembroke J determined that the particular loan agreement relied on by Mr Sebie was falsified, however, his Honour did not it seems to me finally determine the question as to whether ENA advanced loans to Mr Sebie and therefore has an equitable interest in the funds held in Court. The loan document was produced by Mr Sebie on 11 February 2015 in response to a request from the plaintiffs’ solicitors for confirmation of the loan between Mr Sebie and ENA. Pembroke J was not considering the same cause of action as that asserted by ENA in its cross claim. As his Honour stated (at [52]):

I am also not satisfied on the material before me that ENA is properly conceived as a privy of Robert Sebie with respect to the 2017 proceedings. Mr Sebie’s interest was in defeating the transfer of the property to the plaintiffs; ENA’s interest is in establishing an equitable interest in the property and seemingly the proceeds of its sale. That interest it seems was not fully represented and determined, neither was it necessary to be determined, at the trial before Pembroke J. As the plurality emphasised in Tomlinson (at [38]), it is a principle at the core of our legal system that a party claiming the existence of a right should have an opportunity to present evidence and arguments on which the claim is founded.

In my view, the claim of Anshun estoppel and abuse of process must also fail. ENA was effectively struck out of the 2015 proceedings by Young AJA. Those proceedings were “consolidated” with the plaintiffs’ proceedings against Enterprise ICT and ultimately determined by Pembroke J in 2017. Although it is likely ENA remained aware of what was going on in those proceedings, I am not convinced that the cross claim was “so relevant” to the 2017 proceedings that it was “unreasonable” not to pursue it then, given what I have said about the issues that were before Pembroke J and the initial striking out of ENA. As to the question of abuse of process, there are now significant funds sitting in Court and the Court will have to determine who is entitled to what portion. While these proceedings have had ongoing and significant impact on the lives of those involved, justice requires the matter to be determined at an appropriate stage if it is sought to do so.

Further, I am not convinced that the plaintiffs’ and Ms Musabwasoni’s reliance on Berman J’s judgment in the Family Court assists their cause. The issue before his Honour was whether ENA’s cross claim (which was in similar terms as that before this Court) should be struck out on the basis of abuse of process, issue estoppel or Anshun estoppel. Berman J found that ENA was at all material times aware of the issues being ventilated in the Supreme Court and had the opportunity to participate when the interests of ENA may have been adversely affected. His Honour said that it must be an abuse of process for ENA to seek relief in respect of matters that have been heard and determined simply on the basis that they were not a party. However, it seems his Honour’s decision to strike ENA’s cross claim out of the Family Court for abuse of process was predicated to some extent on the basis that the cross claim was already before the Supreme Court. His Honour noted that the Supreme Court is properly seized of the dispute, and that the resolution of the cross claim will determine all outstanding matters as to the Chiswick Property.

In early 2018 Slattery J permitted ENA to file its cross claim on the condition that the plaintiffs could promptly apply for an order that ENA provide security in respect of the plaintiffs’ costs, which the Court granted and ordered the proceedings be stayed in the meantime. The stay was contingent upon the payment of security for costs. As far as I am aware there is no argument that the cross claim is unarguable. The security has now been paid, albeit late, and I think it reasonable that the stay is lifted accordingly. Although, I would hear the parties further as to what conditions if any should apply to the lifting of the stay.

I would make lump sum costs orders in favour of the plaintiffs against ENA in relation to Items 2, 9, 17 and against Mr Sebie in relation to Items 1, 6, 8, 10, 11, 12, 13, 15 and 16 in Mr Zipser’s table. However, I would discount each amount claimed by 20 per cent. ENA and Mr Sebie should pay interest on costs pursuant to s 101(4) of the Civil Procedure Act, but the dates from which interest should run are yet to be determined. I would also make a lump sum costs order in favour of ENA against the plaintiffs with respect to the amount of $8496.22. I would also discount the total amount claimed by ENA by 20 per cent and order interest on those costs. Finally, I am of the view that in principle the stay on ENA’s cross claim should be lifted.

I would hear the parties further as to the precise orders to be made, including the conditions if any that should apply to the lifting of the stay, the date from which interest on the various amounts should run, the cost consequences of the present applications and next steps.