Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Smith v Wikramanayake & Ors [2011] NSWCA 269
• Hearing dates: 31 August 2011
• Decision date: 31 August 2011
• Before: Allsop P, Meagher JA, Handley AJA

Decision

(1) Summons for leave to appeal dismissed.

(2) Applicant to pay the respondents' costs of the proceedings in this Court.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: RES JUDICATA - Anshun estoppel - later proceedings arising out of same matrix of fact - leave to amend refused in earlier proceedings on defendants' undertaking - later proceedings not within undertaking - stay property granted
• Category: Principal judgment
• Parties: Applicant: David Smith; 1st Respondent: Margaret Anne Wikramanayake; 2nd Respondent: Prenitha Srimath Wikramanayake; 3rd Respondent: Wagga Road Properties Pty Limited
• Representation: Counsel: Application: GA Sirtes SC/Ms JK Petruolo; 1st & 2nd Respondents: P Bolster; Solicitors: Applicant: Macpherson & Kelley; 1st & 2nd Respondents: Verekers
• File Number(s): 2010/244039

Decision under appeal

• Date of Decision: 2011-08-31 00:00:00
• Before: BJ Knox SC DCJ
• File Number(s): 2009/338384

Judgment

1 ALLSOP P : I will ask Handley AJA to give the judgment of the Court.

2 HANDLEY AJA : This is an application for leave to appeal from a judgment of Knox SC DCJ of 25 June 2010, who stayed proceedings in the action "until such time as the facility is sold and the mortgage finance repaid." The facility is an aged care facility at Warren Street, Lamington near Albury, and the mortgage is that granted by the proprietor, Wagga Road Properties Pty Limited, to Mr and Mrs Wikramanayake. The order for a stay was interlocutory and the applicant requires leave to appeal pursuant to s 127(2)(a) of the District Court Act.

3 The proceedings in the District Court followed earlier proceedings in the Equity Division between, with one exception, the same parties. The earlier proceedings were heard by Hammerschlag J over four days in February 2007 and were dismissed following a reserved judgment on 28 February that year. The plaintiff's further amended statement of claim in the Equity Division claimed declaratory and other relief in respect of claims by the present applicant and a Mr John James to beneficial interests in the facility. The claims were based on an oral agreement allegedly made on or about 5 February 2004 as the culmination of discussions between the parties since 2002.

4 At the start of the last day of the trial, counsel then appearing for the plaintiffs applied for leave to further amend the statement of claim to rely on a profit sharing agreement dependent on a future sale of the property. Mr Wikramanayake had admitted the existence of such an agreement during his cross-examination the previous day and that morning. The proposed amendment sought a declaration of that entitlement without any claim for consequential relief. The plaintiffs had as yet no cause of action under the profit sharing agreement because the property had not been sold.

5 The further amended statement of claim already relied on that profit sharing agreement as part of the matrix, but alleged that it had been superseded by the oral agreement sued on. The application for leave to amend was opposed by senior counsel for the defendants who relied, inter alia, on Mr Wikramanayake's statement in the witness box that the plaintiffs had repudiated that profit sharing agreement and were no longer entitled to enforce it. During the discussion that followed counsel for the plaintiffs sought an adjournment to formulate the proposed amendment with care.

6 The trial Judge articulated the nature of the right that would be asserted if leave to amend was granted more than once over pp 225-229 of the transcript of 9 February 2007. On p 225 line 51, the Judge said "You're seeking declaratory relief and in the event that it was sold you'd be entitled to a one-third share of the profits." At p 226, the Judge said, "Why should I grant the amendment do you say, having regard to the detriment which Mr Bell asserts. If and when this is ever sold, you can come to court and claim your entitlement then?" He again referred to future proceedings in the event of a sale later on that page. At p 227, he said that the result in the current proceedings would not estop the plaintiffs enforcing the oral profit sharing agreement sought to be relied upon.

7 At p 229, Dr Bell SC who appeared for the defendants said:

"There is no prejudice to Mr Weaver (counsel for the plaintiffs) if you decline the amendment because it is open to him in future proceedings if and when what is currently a hypothetical situation, there being no sale imminent and certainly no profits imminent if it comes to pass that subsequent proceedings are commenced."

8 The Judge refused the adjournment and said he would give his reasons later. He described the proposed amendment (T 229) as involving:

"an amendment to the prayers for relief to seek a declaration as to the existence of an agreement to the effect that on sale of the facility which is the subject of these proceedings, each of the plaintiffs would be entitled to one-third share in the profit,"

The action continued and judgment was delivered, as I have said, on 28 February that year. The plaintiffs' claim to beneficial interests in the facility was dismissed and the defendants recovered judgment on their cross-claim.

9 The Judge's reasons for refusing the plaintiff's application for an adjournment record the terms of the undertaking given by Dr Bell on behalf of the defendants as follows:

"10. Also, Mr Bell gave an undertaking on behalf of the defendants that in the event that these proceedings were determined on the present issues and thereafter the plaintiffs wish to prosecute a claim as envisaged in the proposed amendment, no Anshun or issue estoppel or analogous point would be taken."

10 On 3 December 2009, the applicant commenced proceedings in the District Court against the same defendants. The statement of claim pleaded an oral profit-on-sale sharing agreement made in or about December 2002 and a relevant sale in July 2004. In the alternative the applicant alleged breach of implied terms, repudiation of the agreement by the defendants and its acceptance by the plaintiff. There was also an alternative claim for breach of fiduciary duty arising out of a joint venture agreement said to have been made in or about December 2002. The applicant sought damages or an account of profits. The causes of action did not depend on a sale of the facility after February 2007.

11 These claims had not been foreshadowed in the plaintiff's application for leave to amend in the Equity proceedings. Unless they are covered by the defendants' undertaking of 9 February 2007, fairly construed in the light of the surrounding circumstances, they were barred by an Anshun estoppel.

12 The Equity proceedings involved an examination of informal dealings between the parties between 2002 and 2005 and the relevant matrix of fact. The contract sued upon in those proceedings was oral and there was very little in the way of documentary evidence. Any claim based on a different oral contract made during that period giving rise to different relief was so intimately bound up with the claims as pleaded that it could and should have been included in the earlier proceedings.

13 The claims in the District Court were therefore barred by an Anshun estoppel. They are not covered by the defendants' undertaking which was limited to a claim to a share of the profits on a sale of the facility after February 2007. The primary Judge was therefore substantially correct for the reasons he gave.

14 The order made by the judge assumed that the stay of proceedings could be lifted if the facility was later sold, but this was not appropriate because the causes of action were not covered by the undertaking. The order was however correct in substance.

15 The Court has been informed that the facility has since been sold but, the respondents assert, at a loss.

16 The order of the Court therefore is summons for leave to appeal dismissed. The applicant to pay the respondents' costs of the proceedings in this Court.

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Decision last updated: 06 September 2011