Cappelleri v Cappelleri
[2024] VSCA 173
•7 August 2024
| SUPREME COURT OF VICTORIA COURT OF APPEAL |
| S EAPCI 2023 0100 |
| DOMENICO CAPPELLERI | First Applicant |
| and | |
| MARIO CAPPELLERI | Second Applicant |
| v | |
| LEONIE CAPPELLERI (BY HER LITIGATION GUARDIAN VINCENZO NICOLA CAPPELLERI) & ORS (ACCORDING TO THE ATTACHED SCHEDULE) | Respondents |
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| JUDGES: | EMERTON P, McLEISH and MACAULAY JJA |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 23 April 2024 |
| DATE OF JUDGMENT: | 7 August 2024 |
| MEDIUM NEUTRAL CITATION: | [2024] VSCA 173 |
| JUDGMENT APPEALED FROM: | [2023] VSC 485 (Moore J) |
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LIMITATION OF ACTIONS – Declaratory relief – Whether claims for pure declaratory relief barred under Limitation of Actions Act 1958 – Whether claims barred under s 5(1)(a) – Whether claims ‘founded on tort’ – Whether facts alleged comprise tort of injurious falsehood – Elements of injurious falsehood not alleged – Whether facts alleged comprise cause of action based on generalised wrongful conduct – Whether cause of action based on generalised wrongful conduct ‘founded on tort’ – No claim ‘founded on tort’ – Claims not barred under s 5(1) – Claims not otherwise barred under ss 5(8) or 21 – No error – Leave to appeal granted – Appeal dismissed – Limitations of Actions Act 1958, ss 5(1)(a), (2), (8), 21; Supreme Court Act 1986, s 36; Supreme Court (General Civil Procedure) Rules 2015, r 23.05; Harris v Gas & Fuel Corporation of Victoria [1975] VR 619; Judamia v State of Western Australia (Supreme Court of Western Australia Full Court, Malcolm CJ, Rowland and Franklyn JJ, 1 March 1996); Waddington v State of Victoria [2018] VSC 746; Woodeson v Credit Suisse (UK) Limited [2018] EWCA Civ 1103; P & O Nedlloyd BV v Arab Metals Co [2005] 1 WLR 3733, considered.
EQUITY – Enforceability of gift – Whether transfer of shares for no consideration valid in equity – Whether donor completed all actions required to effect transfer – Evidence of required actions deficient or non-existent – No error – Leave to appeal refused – Corin v Patton (1990) 169 CLR 540, applied.
ESTOPPEL – Estoppel by acquiescence or inaction – Whether respondents estopped from challenging validity of share transfer – Whether acquiescence to transfer by failure to object to actions taken by company adverse to interests as shareholders – Alleged estoppel unsupported by facts – Whether promissory estoppel by inaction – No relevant relationship between parties to engage principles of promissory estoppel – No evidence of relevant knowledge, inducement or reliance – No error – Leave to appeal refused – Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, applied.
CIVIL PROCEDURE – New issue raised on appeal – Withdrawal of concession on appeal – Whether leave to appeal against order made by consent following trial judgment – Not in interests of justice to re-open issue – Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598; Lafranchi v Transport Accident Commission (2006) 14 VR 359, considered.
CORPORATIONS – Rectification of ASIC register – Whether judge erred in ordering ASIC to rectify register under s 1322(4)(b) of Corporations Act 2001 (Cth) – Whether power under s 1322(4)(b) exercisable to correct procedural irregularities only, not errors resulting from intentional misconduct – Power under s 1322(4)(b) not so confined – No error – Leave to appeal refused – Corporations Act 2001 (Cth), s 1322(4)(b) – Weinstock v Beck (2013) 251 CLR 396; Miltonbrook Pty Ltd v Westbury Holdings Kiama Pty Ltd (2008) 71 NSWLR 262; Onefone Australia v One Tel Ltd (2010) 80 ACSR 11; Re Murray River Organics Ltd (2019) 138 ACSR 365; Tayeh v The Commonwealth [2020] FCA 1323, considered.
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| Counsel | |||
| Applicants: | Mr G Nash KC with Mr J Levine | ||
| Respondents: | Mr J O’Bryan | ||
Solicitors | |||
| Applicants: | Access Law | ||
| Respondents: | Madgwicks | ||
TABLE OF CONTENTS
Introduction and summary
Background
Disputes over shareholding and directorship of F&L
Reasons of the trial judge
Were Leonie and Vincenzo’s claims statute-barred?
Was there a transfer, effective in law or equity, of shares in F&L from Frank to Domenico?
Is Leonie estopped from contesting the transfer of shares in F&L to Domenico?
Relief
Ground 1: are the respondents’ claims statute-barred?
Applicants’ submissions
(a) Arguments relied upon at trial
(b) Arguments in the application for leave to appeal
Respondents’ submissions
Applicable Principles
(a) Declaratory relief
(b) Limitation of actions
(c) Limitation period applicable to declaratory relief
Consideration
(a) First alleged basis
(b) Second alleged basis
(c) Third alleged basis
Conclusion
Ground 2: was there a transfer, effective in equity, of any shares in F&L from Frank to Domenico?
Submissions
Consideration
Ground 3: was Leonie estopped from contesting the transfer of shares in F&L to Domenico?
Submissions
Consideration
Ground 4: did the judge err in ordering ASIC to rectify its register?
Submissions
Applicable principles
Consideration
Conclusion
SCHEDULE OF PARTIES
EMERTON P
MCLEISH JA
MACAULAY JA:
Introduction and summary
Mother and son are pitted against the two brothers of the mother’s deceased husband, the father of the son. The contest is about the shareholding in a company with valuable property holdings. The deceased husband appeared to operate the company loosely as his own personal business despite other family members, from time to time, being appointed as a director of, or holding one or both of the two issued shares in, the company.
The deceased husband was Frank Cappelleri. His two brothers are Domenico and Mario. Frank’s wife is Leonie, and their son is Vincenzo. Vincenzo is Leonie’s litigation guardian in this proceeding. The company is F & L Pty Ltd (‘F&L’). At trial, the dispute related to directorships and shareholding. Now, on this application for leave to appeal, the issue is confined to shareholding.
To the extent they are relevant, Leonie and Vincenzo (in his own right, and as administrator of the estate of Frank Cappelleri) obtained orders by which the trial judge:
(a)declared Leonie the beneficial owner of one share in F&L;
(b)declared Leonie’s and Vincenzo’s claims not to be barred by operation of the Limitation of Actions Act 1958 (the ‘LAA’);
(c)declared that Frank had not transferred either share in F&L to Domenico;
(d)declared that Leonie was not estopped from asserting there had been no such transfer; and
(e)required the Australian Securities and Investments Commission (‘ASIC’) to rectify its register to show that Leonie and Vincenzo (in his capacity as administrator of the estate of Frank Cappelleri) each held one of the two ordinary shares issued by F&L.
Domenico and Mario, the applicants, have applied for leave to appeal against four of the above orders. Proposed grounds 1, 2 and 3 challenge the declarations described in paragraphs (b), (c) and (d) above, and proposed ground 4 challenges the order described in paragraph (e).[1] Leonie and Vincenzo (in both his capacities) are respondents to the application. Broadly, the applicants contend that the respondents are precluded by statutory limitation periods, and are estopped, from disputing that Domenico now holds the two shares in F&L, and that in any event, the judge lacked power to order ASIC to amend its register.
[1][1] The full terms of each proposed ground of appeal are set out in the discussion below at [40], [125], [135] and [152].
For the reasons that follow, we would grant leave to appeal on proposed ground 1, but dismiss the appeal, and refuse leave to appeal on the remaining proposed grounds.
Background
Agostino and Anna Cappelleri migrated to Australia in the early 1950s. They had three sons: Frank, Domenico (also known as ‘Michael’, ‘Mike’ or ‘Mick’) and Mario. Frank married Leonie Cappelleri in 1979. They had one child, Vincenzo (also called ‘Vince’) Cappelleri, who was born in 1984.[2]
[2]In the interests of clarity and without intending any disrespect to any of the parties, these reasons will refer to them by their first names.
After Frank and Leonie married, Frank began purchasing properties in the western suburbs of Melbourne, which he would renovate and rent out. Frank acquired six properties in this way over a period of about 27 years.
Some of Frank’s property development interests were pursued through a company, Ninety-Sixth Goblin Pty Ltd, which was registered on 11 August 1983. The company later changed its name to F & L Pty Ltd in April 1987. Over the years, F&L acquired several properties, including:
(a)in October 1984, a property at 97 Ballarat Road, Maidstone;
(b)in December 1989, a property at 75 Ballarat Road, Maidstone; and
(c)in June 1996, a property at 15 Saltau Street, Keilor East.
Frank and Leonie resided at the property at 15 Saltau Street until 2005, when Leonie left the premises. That year, Frank and Leonie separated, and a proceeding in the Family Court of Australia was commenced soon after. The proceeding was highly acrimonious, but Frank and Leonie did not divorce.
Frank died on 18 October 2014. He left a will dated 19 May 2003 in which he appointed Leonie as his executrix and left his entire estate to her. Leonie was granted probate of the will on 18 December 2014. After Frank’s death, Leonie and Vincenzo moved back into the property at 15 Saltau Street.
Disputes over shareholding and directorship of F&L
At all times, F&L has had a share capital of two ordinary shares. In broad terms, the apparent changes in directorships and shareholding in F&L to November 2014 may be summarised as follows:
(a)Leonie was first appointed as a director of F&L in 1983 and remained a director until June 2005; Frank, his mother Anna, Vincenzo, Mario and Domenico were added and removed as directors periodically between 1989 and 2014; and
(b)Frank and Leonie each held one of the two ordinary shares up to 2001 when Frank transferred his share to Vincenzo to hold on trust for Frank; in 2005 Leonie ceased to be a shareholder and her share became Anna’s share, and then Vincenzo’s share (so that he held both shares); and in 2010 Vincenzo’s two shares became Domenico’s shares.
More particularly, in early 2005, Frank and Leonie were each recorded on the ASIC register as holding one of the shares in F&L, and both were registered as directors of the company. From June 2005 onward, several notifications were made to ASIC regarding the ownership of shares in and directorship of F&L:
(a)In June 2005, Frank removed Leonie as a director of F&L — without her consent or knowledge — and notified ASIC of this change.
(b)In August 2005, Frank notified ASIC that Anna Cappelleri’s shareholding in F&L had decreased from one share to no shares, and that Vincenzo held two shares in F&L (the ‘2005 notification’). ASIC amended its register accordingly.
(c)In July 2010, Frank notified ASIC that Vincenzo’s shareholding in F&L had decreased from two shares to no shares, and that Domenico held two shares in the company (the ‘2010 notification’). ASIC amended its register accordingly.
(d)In November 2013, Frank notified ASIC that Domenico had been appointed as a director of F&L.
(e)In November 2014 — following Frank’s death — Domenico notified ASIC that Mario had been appointed as a director of F&L.
The current and historical extract produced by ASIC for F&L records that:
(a)Domenico was the registered holder of the two shares in F&L from July 2010 until October 2020.
(b)Domenico and Mario were the directors of F&L from October 2014 — following Frank’s death — until October 2018.
Although company documents and the ASIC register record that Leonie, at certain points in time, beneficially owned one of the two issued shares in F&L, there is no document that records or explains how she became divested of that share. Whether she was ever so divested was an issue in the case. In 2001, the annual return of the company recorded Leonie as holding one share and Vincenzo as holding the other. Since Frank had previously owned one share, it is evident that Frank’s share had passed to Vincenzo. Although Vincenzo was always recorded as owning his shares in the company beneficially, Leonie explained that Frank had transferred his share to Vincenzo to be held on trust for Frank.
The next step concerns the 2005 notification. By that document — a notification to ASIC signed by Frank — it was said that Anna’s shareholding in the company was reduced from one to none, and Vincenzo was then the owner of the two shares. The unexplained premise is that, somehow, Leonie’s share had been transferred to Anna, and then further transferred to Vincenzo. Other than the 2005 notification, no document records any such transfers. Further, the ASIC register does not record Anna as ever having owned a share in the company.
Next, as stated, the 2010 notification recorded that the two shares apparently held by Vincenzo were transferred to Domenico. Prior to Domenico being recorded in the ASIC register as the owner of the two shares, the only previously recorded shareholders were: Vincenzo (as to one share, and then later both shares), Leonie (as to one share) and Frank (as to one share).
The circumstances set out above at [12(a)–(e)] gave rise to disputes over the shareholding and control of F&L, and the ownership of its assets, between Leonie and Vincenzo, on the one hand, and Domenico and Mario on the other. In broad terms, Leonie and Vincenzo contended that:
(a)Both the 2005 notification and 2010 notification were false and of no effect in transferring shares in F&L, with the result that Frank and Leonie each continued to hold one of the two issued shares in the company.
(b)The appointments of Domenico and Mario as directors of F&L were made without Leonie’s consent or knowledge and were invalid, and Leonie remained the proper director of the company.
On 31 January 2017, Leonie commenced a proceeding in the Trial Division of this Court against the applicants, F&L and the Registrar of Titles. Leonie brought the proceeding in her personal capacity and in her capacity as the executor of Frank’s estate. In July 2021, Leonie was found to lack mental capacity to represent herself in legal proceedings and, as a result, Vincenzo was appointed as her litigation guardian in August 2021. In December 2021, the Court also ordered that Leonie be discharged as executor of Frank’s estate, with Vincenzo appointed in her place as administrator.
At trial, Vincenzo — in his personal capacity, as the administrator of Frank’s estate and as Leonie’s litigation guardian — sought declarations and orders that, among others, relevantly included:
(a)declarations that the appointments of Domenico and Mario as directors of F&L were null and void and invalid;
(b)a declaration that Leonie is the proper director and secretary of F&L;
(c)an order that ASIC rectify its register to show Leonie as the sole director and secretary of F&L;
(d)a declaration that the shares in F&L are owned by Leonie in her personal capacity as to one share, and Leonie in her capacity as executrix of Frank’s estate as to one share; and
(e)an order that ASIC rectify its register to show that the shares in F&L are owned by Leonie in accordance with the above sub-paragraph.
Relevantly to this application for leave to appeal, the judge made the declarations and order set out at [3] above.
By way of counterclaim, the applicants sought an order that Vincenzo, Leonie and ASIC take all necessary steps to correct ASIC records to show Domenico as holding both shares in F&L. However, the applicants abandoned their counterclaim on the first day of the trial.
Reasons of the trial judge
Regarding the directorship of F&L, the trial judge found — following certain concessions by the applicants — that Leonie had never been validly removed as a director of the company, and Domenico had not been validly appointed.[3] The applicants do not now seek to disturb these findings, which means that the application for leave to appeal is confined to issues concerning the shareholding in F&L.
[3]Reasons, [80]–[86].
It is helpful to set out the trial judge’s summation of the issues in relation to the shareholding of F&L, and his findings in respect of those issues, in greater detail. Relevantly, the trial proceeded by reference to the following questions:
(a)Was Leonie ever the beneficial owner of one of two shares in F&L, or did she hold her share on trust for Frank?
(b)Are [Leonie’s and Vincenzo’s] claims in relation to the rectification of the register in relation to the transfer of shares in F&L in 2005 and 2010 barred by virtue of ss 5(1)(a) and/or 21 of the LAA?
(c)Was there at any time a transfer, effective in law or equity, of:
(i)one share; or
(ii)two shares
in F&L from Frank to Domenico?
(d)Is Leonie estopped from asserting that the transfer of shares in F&L to Domenico is not valid and effective?
Regarding the first of these issues, the judge concluded that, when Leonie was the owner of one of the two shares in F&L, she was the beneficial owner of that share (contrary to the applicants’ contention that Leonie merely held her share on trust for Frank).[4] The applicants do not now challenge this finding.
Were Leonie and Vincenzo’s claims statute-barred?
[4]Ibid [31]–[37].
The 2005 notification and the 2010 notification were both effected more than six years before the commencement of the proceeding. As a result, the applicants argued that the respondents’ claims were barred by operation of the LAA. Specifically, the applicants submitted that:
(a)the challenges to the validity of the purported share transfers the subject of the 2005 and 2010 notifications are based on the proposition that Frank’s conduct in causing those transfers was tortious or amounted to breach of statutory duty, and are therefore barred by s 5(1)(a) of the LAA; and
(b)a declaration that Leonie owns shares in F&L, despite their fraudulent transfer, would amount to a claim of constructive trust, which would be precluded by ss 5(2) or 21 of the LAA.
The trial judge rejected these submissions. First, the judge set out the ‘correct analysis’ to be applied in determining whether claims for declaratory relief are statute-barred,[5] as stated by McDonald J in Waddington v State of Victoria:[6]
The primary question is whether the plaintiff’s claim for declaratory relief is an action ‘founded on tort’. If this question is answered in the affirmative, the claim for declaratory relief is statute-barred. A declaration may be sought alone and need not be consequential relief for tortious conduct. The Supreme Court Act 1986 (Vic) s 36 provides, ‘[a] proceeding is not open to objection on the ground that a merely declaratory judgment is sought, and the Court may make binding declarations of right without granting consequential relief.’ Therefore, on one view, the claim for declaratory relief is not founded on tort but on statute. However, an action is comprised of the facts giving rise to a right to sue. Whether the plaintiff’s claim for declaratory relief is founded on tort is a factual question.
[5]Ibid [42].
[6][2018] VSC 746, [21] (McDonald J) (‘Waddington’).
The judge noted that the respondents did not advance any causes of action, and that the relief sought was a declaration as to the shareholding in F&L and an accompanying order that ASIC rectify its register to reflect that shareholding. Distinguishing the circumstances of Waddington — in which claims for declaratory relief were explicitly advanced on the basis that the relevant underpinning conduct constituted several torts — the judge found that the respondents were seeking ‘what may be regarded as “pure” declarations as to rights, with consequential relief based upon the exercise of a statutory right under s 1322(4)(b) of the Corporations Act [2001 (Cth)]’.[7] The judge determined that such claims did not engage the provisions of the LAA.
[7]Reasons, [44].
In supplementary submissions, the applicants had asserted that the respondents’ claim is properly characterised as one for relief in respect of the tort of injurious falsehood, engaging the time limitation in s 5(1)(a) of the LAA. The judge rejected this argument, noting that the respondents had not pleaded such a case, sought relief on that basis, or claimed damages (being the gist of the action in injurious falsehood).[8]
[8]Ibid [45]–[49].
Having reached these conclusions, the judge noted that the exercise of the Court’s broad jurisdiction to make declaratory orders is not dependent upon a pleaded cause of action. After setting out the statutory sources of the Court’s inherent power to grant such relief,[9] the judge concluded — with reference to relevant factors as articulated in Director of Consumer Affairs Victoria v Mecon Insurance Pty Ltd[10] — that the declarations sought by the respondents in respect of the shareholding in F&L were appropriate in the circumstances, and were not statute-barred.[11]
Was there a transfer, effective in law or equity, of shares in F&L from Frank to Domenico?
[9]Supreme Court Act 1986, s 36; Supreme Court (General Civil Procedure) Rules 2015, r 23.05.
[10][2016] VSC 42, [22] (Elliott J).
[11]Reasons, [50]–[54].
In closing submissions below, the applicants conceded that they could not establish that the shares in F&L said to be held by Domenico were validly transferred to him at law.[12] The judge thus considered whether the shares had been validly transferred in equity. As there was no suggestion that Domenico provided any consideration in return for the shares,[13] in the judge’s analysis, this question turned on whether there had been an effective gift of the shares from Frank (who held the equitable interest and was, for reasons not explained by the applicants, treated as also holding the legal interest) to Domenico. The judge set out the principles relating to the enforceability of a gift, as summarised by Mason CJ and McHugh J in Corin v Patton:[14]
[I]f an intending donor of property has done everything which it is necessary for him to have done to effect a transfer of legal title, then equity will recognize the gift. So long as the donee has been equipped to achieve the transfer of legal ownership, the gift is complete in equity. ‘Necessary’ used in this sense means necessary to effect a transfer. From the viewpoint of the intending donor, the question is whether what he has done is sufficient to enable the legal transfer to be effected without further action on his part.
[12]Ibid [57].
[13]Ibid.
[14](1990) 169 CLR 540, 559 (Mason CJ and McHugh J); [1990] HCA 12.
The judge noted that the applicants’ submission that the shares were validly assigned to Domenico in equity ‘proceeded from the unexplained premise that, if the transfer of shares from [Vincenzo] to Domenico in 2010 was not effective in law, the shares remained with the donor, being Frank’.[15] The basis of that claim was unclear. Nevertheless, assuming the accuracy of that ‘unsubstantiated foundation’,[16] the judge considered whether the applicants had proven a gift of shares in F&L to Domenico — that is, applying the principles set out in Corin v Patton, whether they had established ‘that Frank did everything he needed to do, according to the nature of the property, to pass property in the shares to Domenico’.[17]
[15]Reasons, [62].
[16]Ibid [63].
[17]Ibid [69].
The judge concluded that this question must be answered in the negative. First, having set out the provisions of F&L’s Articles of Association concerning share transfers,[18] the judge stated that in accordance with these provisions, the applicants needed to establish that Frank and Domenico executed an instrument of transfer, which was then left at F&L’s registered office. The judge found that there ‘is no evidence that Frank ever executed an instrument of transfer in relation to the shares’, and held that certain share certificates relied upon by the applicants — which were signed by Frank and certified that Domenico held two shares in F&L — did not record such a transfer.[19]
[18]Ibid [55].
[19]Ibid [69].
Secondly, the judge considered that F&L’s Articles of Association appeared to contemplate that a share transfer may alternatively ‘be effected with the approval of the board of directors of the company’. The judge concluded that there was no documentary evidence, such as minutes of meetings, that F&L’s board of directors resolved to approve a share transfer from Frank to Domenico. In doing so, the judge did not accept evidence advanced by Domenico that he could recall having a meeting of the board of directors with Frank at which they approved Domenico as a shareholder — evidence that the judge rejected as ‘vague, contradictory and lacking in the specificity one would expect in relation to such an important matter’.[20]
[20]Ibid [70].
Having found that the applicants failed to establish an enforceable gift, the judge thus rejected that there was a transfer of shares in F&L from Frank to Domenico, effective in either equity or in law.[21]
Is Leonie estopped from contesting the transfer of shares in F&L to Domenico?
[21]Ibid [71].
The applicants contended that Leonie was estopped from asserting that the transfer of two shares to Domenico in 2010 was not valid and effective, on the basis that:
(a)in July 2010, Leonie complained to Frank that Vincenzo’s shareholding in F&L was causing Vincenzo problems with Centrelink, following which Frank indicated to Leonie that he would transfer the shares out of Vincenzo’s name; and
(b)later that month, Frank lodged the 2010 notification with ASIC.
The applicants claimed that Leonie was thus estopped from contesting the purported share transfer because she ‘knew of and acquiesced to the transfer of the two shares from Vince to Domenico’, and Domenico had ‘acted as a director of F&L since 2013 and taken responsibility for the affairs of the company in the belief that his appointment as a director was valid and that the transfers of shares to him were valid and effective’.[22]
[22]Ibid [75].
After setting out relevant principles as summarised by Brennan J in Waltons Stores (Interstate) Ltd v Maher,[23] the judge reasoned as follows:
[T]he fundamental difficulty for the defendants in establishing the existence of a promissory estoppel is that there was no relevant relationship between Domenico and Leonie. It is essential that the person sought to be estopped must have contributed, in some active way, towards the creation or continuance of the mistaken basis upon which the parties have conducted their dealings, therefore making it unconscionable to allow the party to resile from the position. There must in substance be some active contribution by the party sought to be estopped which makes it unjust to permit them to deny the truth of a belief or assumption which that party has induced.
Domenico and Leonie had nothing to do with each other in relation to the purported transfer of shares to Domenico. As such, Leonie cannot be said to have induced Domenico to adopt any assumption about his ownership of the shares and she cannot be said to have acquiesced in any assumption made by Domenico. Leonie [was] not aware that Domenico purported to be the owner of the shares until after Frank’s death. Likewise, it cannot be said that Leonie knew or intended that Domenico should be the owner of the shares.[24]
[23](1988) 164 CLR 387, 428–9 (Brennan J); [1988] HCA 7 (‘Waltons Stores’).
[24]Ibid [77]–[78].
Accordingly, the judge rejected the applicants’ estoppel argument.[25]
Relief
[25]Ibid [79].
Following the delivery of reasons and submissions from the parties, the judge made orders and declarations including, relevantly, those set out at [3] above.
Ground 1: are the respondents’ claims statute-barred?
The first proposed ground of appeal is that:
The learned judge erred in holding that ‘the respondents’ claims in relation to the rectification of the register in relation to the transfer of shares in F&L in 2005 and 2010 [were not] barred by virtue of ss 5(1)(a) and/or 21 of the Limitation of Actions Act’.
Applicants’ submissions
Because the applicants’ argument on this issue has evolved and shifted over the course of the proceeding, it becomes necessary to briefly survey those arguments so as to tie down precisely what remains of them. This is necessary, first, to confine the legal principles that must be set out and, secondly, to identify the questions that need to be addressed on this application.
(a)Arguments relied upon at trial
In their pleaded defence to the respondents’ claims, the applicants pleaded — baldly and without specific explanation — that ss 5(1)(a) and/or 21 of the LAA constituted a bar to the claims. Section 5(1)(a) concerns, relevantly, actions ‘founded on tort including actions for damages for breach of statutory duty’, while s 21 concerns, among other things, actions in respect of fraud or fraudulent breach of trust and actions by a beneficiary to recover trust property or in respect of any breach of trust.
At trial, the applicants put forward arguments in their first written submission, in oral argument and in a second written submission filed (with leave) following oral argument. In their first written submission, the applicants submitted that the respondents’ claim relied on conduct by Frank that was ‘wrongful’, so that their claim was ‘founded on tort or breach of statutory duty’. Additionally, they argued that the claim was one for a ‘constructive trust’ arising from the alleged fraudulent transfer of shares, to which a six‑year limitation period would apply by analogy to a claim for account (s 5(2) of the LAA) or the ‘tort of fraud’ (s 5(1)(a)). Section 21 of the LAA was said, expressly, not to apply.
In oral argument at trial, the applicants made numerous submissions about the nature of the respondents’ claim, namely that it alleged or relied upon:
(a)a breach of directors’ duties in contravention of ss 180–182 of the Corporations Act 2001 (Cth), being a breach of statutory duty (to which s 5(1)(a) of the LAA would apply);
(b)the equitable liability to account for breach of trust, analogous to the legal action for account (to which s 5(2) of the LAA would apply);
(c)the economic tort of ‘slander of title’; and
(d)a ‘combination of facts giving rise to the right to sue’.
Leave was given to the applicants to explain their ‘economic tort’ argument by a further written submission. In their second written submission, the applicants argued that the factual allegations made in the respondents’ claim for relief comprised each of the elements of the tort of injurious falsehood — namely, a false statement, published to a third party, with malice, causing the plaintiff damage. Further, they submitted, this tort formed the ‘basis’ of the respondents’ claim.
(b)Arguments in the application for leave to appeal
As revealed by the terms of proposed ground 1, the applicants appear to rely upon ss 5(1)(a) and 21 of the LAA consistently with their pleaded defence. As will appear, in written and oral submissions put to this Court, no reliance — or at least, no express reliance — was placed upon s 21 of the LAA as the reason why the respondents’ claims may be barred by a limitation period.
In their written case, the applicants argued that:
(a)the claims for declaratory relief were ‘based on Frank’s and Domenico’s wrongful conduct’ and the orders sought were aimed at ‘negating the effect’ of their wrongful actions, so that the claims were ‘founded on tort’;
(b)the applicants’ resistance to the respondents’ allegations that the 2005 and 2010 notifications were ‘false and ineffective’ gave rise to a ‘justiciable controversy’, and those allegations were premised on ‘wrongful’ acts;
(c)to determine whether an action is founded on tort, it is necessary to have regard to the facts on which the action is based;
(d)applying that test, and because the actions were based on alleged ‘wrongful conduct’, the judge erred in rejecting the applicants’ argument that the claims were ‘founded on tort’ and caught by s 5(1)(a) of the LAA.
Finally, in oral submissions to this Court, the applicants submitted, first, that a claim for declaratory relief cannot evade the operation of a statutory limitation period if the legal or equitable right to be declared depends for its existence upon the proof of facts that would constitute a cause of action, such as an action for tort.
Secondly, they submitted that the respondents’ claim for declaratory relief relied upon proof of facts that would make out the tort of injurious falsehood, reprising the argument set out in their second written submission at trial. The facts said to correspond with the elements of the tort were that Frank published false statements to ASIC concerning Leonie’s shareholding in F&L, with an intention to injure her, causing her to no longer be shown as a shareholder on the ASIC register and to be held out of the benefits of being a shareholder, such as the receipt of dividends.
Thirdly, the applicants submitted that a cause of action is based on the facts alleged. The cause of action is therefore not a reference to the categorisation of the case as, for example, ‘an action for defamation or an action for assault’. This means, they submitted, the answer to the question whether the respondents claim is ‘founded on tort’ depends on the facts alleged, not how it is ‘framed’. Here, the claim is based on a ‘wrongful act’ and the relief sought is to reverse the situation the wrongful act brought about. This, the applicants seemed to argue, was sufficient to make the action one that is ‘founded on tort’.
In these ways, the applicants contended that the respondents’ case was founded on tort and, thus, must be subject to the limitation period applicable to an action for tort — namely, s 5(1)(a) of the LAA. They argued that the judge was wrong to find otherwise.
Finally, the applicants made brief mention — without elaboration — of a possible analysis that the facts alleged would constitute ‘equitable fraud’, citing a decision of this Court in Mapa Pearls Pty Ltd v Haliotis Fisheries Pty Ltd.[26] They acknowledged that their reference in oral submissions to this possible analysis was the first occasion on which it had been put. Except insofar as it might have been implied by the fleeting reference to Mapa Pearls, the applicants pressed no argument in either written or oral submissions that the respondents’ claim was barred by s 21 of the LAA.
Respondents’ submissions
[26](2023) 71 VR 581; [2023] VSCA 108, [61]–[62] (Kyrou, McLeish and Niall JJA) (‘Mapa Pearls’).
The respondents submitted that the judge made no error.[27]
[27]Initially, the respondents addressed the applicants’ reliance on generalised ‘wrongful acts’ as being the foundation of the alleged tort, but took this no further when the applicants did not press that argument in oral submissions.
As they had submitted at trial, the respondents submitted that the factual foundation for their case for declaratory relief was that:
(a)at all relevant times, Frank and Leonie were the beneficial owners of the two issued shares in F&L, and nothing had occurred to alter that position;
(b)insofar as there were purported transfers of shares, some recorded in the ASIC register, they did nothing to affect the true beneficial ownership of the shares;
(c)in particular, the purported transfer of Leonie’s share in 2005, and the purported transfer of shares to Domenico in 2010, were unauthorised and invalid, and therefore ineffective to alter the beneficial ownership in the shares; and
(d)on that basis, the respondents were entitled to declarations as to the true beneficial ownership of the shares.
The respondents argued that nothing in their claim required proof of any particular motive or impure intention on Frank’s part in making the relevant notifications to ASIC; still less did it require alleging or proving any loss on Leonie’s or Vincenzo’s part resulting from the incorrect recording of shareholdings in the ASIC register.
Further, the respondents submitted that the relevant applicable legal principles are as follows:
(a)first, a proceeding is not objectionable merely because only declaratory relief is sought;
(b)secondly, the jurisdiction to order declaratory relief is not dependent upon the plaintiff pleading or identifying a cause of action;
(c)thirdly, the jurisdiction to order declaratory relief is discretionary and not fettered, however, ordinarily the jurisdiction will not be exercised unless it is directed to determining a legal controversy; and
(d)fourthly, the correct analysis is that, if the right that is sought to be declared is dependent on the proof of a combination of facts that would found an action that is subject to a statutory limitation period, and the time had expired for suing on that action, the court would need to decide if it should exercise its discretion to grant the declaratory relief in those circumstances.
Applicable Principles
(a)Declaratory relief
Much has been written about the power to give declaratory relief. It has been said that the ‘power of the court to give declaratory judgments is among the most important of all curial remedies’.[28] Although born in the Court of Chancery, as a result of legislative reforms and reforms to the rules of court introduced in England in 1850, 1852 and 1858, the remedy came to be sourced in statutory power and, to resolve a limitation applied in Chancery, was expressly made available whether or not any consequential relief was or could be claimed.[29]
[28]JD Heydon, MJ Leeming and PG Turner, Meagher Gummow & Lehane’s Equity: Doctrine & Remedies (LexisNexis, 5th ed, 2015) [19-005] (‘Equity: Doctrine & Remedies’).
[29]Ibid [19-010]–[19-025].
Those statutory reforms found their way into legislation and court rules in a number of Australian states, including Victoria. The Supreme Court Act 1986 provides, in s 36:
36 Declaratory judgments
A proceeding is not open to objection on the ground that a merely declaratory judgment is sought, and the Court may make binding declarations of right without granting consequential relief.
Rule 23.05 of the Supreme Court (General Civil Procedure) Rules 2015 (the ‘Rules’) provides:
No proceeding shall be open to objection on the ground that a merely declaratory judgment or order is sought thereby, and the Court may make binding declarations of right whether or not any consequential relief is or could be claimed.
The additional words ‘or could be’ appearing in the rule are important. They emphasise — as they were intended to emphasise — that the power to grant declaratory relief is available not merely where consequential relief is not claimed in fact, but also where consequential relief could not be claimed.[30]
[30]Ibid [19-025].
A number of propositions flow from this history and these developments.
First, the power to grant declaratory relief is no longer exclusively equitable. When exercised by a court of law, it is a statutory power.[31]
[31]Chapman v Michaelson [1909] 1 Ch 238, 242 (Cozens-Hardy MR, Fletcher Moulton LJ agreeing at 242, Farwell LJ agreeing at 242–3).
Secondly, the party applying for declaratory relief need not have a subsisting cause of action or a right to some other relief.[32]
[32]Guaranty Trust Co of New York v Hannay & Co [1915] 2 KB 536, 572 (Bankes LJ); Patton v Attorney‑General for the State of Victoria [1947] VLR 257, 272 (Herring CJ); Gouriet v Union of Post Office Workers [1978] AC 435, 501 (Lord Diplock) (‘Gouriet’).
Thirdly, the power to grant declaratory relief is discretionary. While it is not possible or desirable to fetter the manner of its exercise by the application of rules, the power is nonetheless ‘confined by the considerations which mark out the boundaries of judicial power’.[33] Accordingly, and relevantly to the present case, the relief must be directed to the determination of a legal controversy, the person seeking it must have a real interest in the relief, and the relief may be refused if it will not produce any foreseeable consequence for the parties.[34]
[33]Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 581–2 (Mason CJ, Dawson, Toohey and Gaudron JJ); [1992] HCA 10 (‘Ainsworth’). See also Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421, 437–8 (Gibbs J); [1972] HCA 61.
[34]Ainsworth (1992) 175 CLR 564, 582 (Mason CJ, Dawson, Toohey and Gaudron JJ). See also Director of Consumer Affairs Victoria v Mecon Insurance Pty Ltd [2016] VSC 42, [22] (Elliott J) and the cases there cited.
The concept of a ‘legal controversy’ might best be understood by considering what is not a legal controversy. Sometimes, the requirement is expressed as a ‘justiciable controversy’ which is, perhaps, a shorthand way of stating the proposition that the exercise of the power marks out the boundaries of judicial power. For example, in Mutasa v Attorney-General,[35] a judge refused to declare that the Crown had failed to protect the plaintiff, a British subject, when, upon the colony of Southern Rhodesia declaring its independence, the plaintiff was arrested. The judge found that the Crown’s duty to protect its citizens was ‘political’ — in effect a moral one — and not a legal duty that could be enforced in a court of law.[36]
[35][1980] QB 114.
[36]Ibid 120, 123 (Boreham J).
In Gouriet v Union of Post Office Workers, emphasising the courts’ concern only with ‘legal rights’, Lord Diplock explained that the power to grant declaratory relief is confined to declaring contested legal rights — subsisting or future — of the parties to the litigation.[37]
[37][1978] AC 435, 501 (Lord Diplock).
An understanding of the potential scope of what is meant by a ‘legal controversy’ — a controversy about legal rights — is assisted by considering the meaning of ‘declarations of right’, the phrase appearing in both s 36 of the Supreme Court Act 1986 and r 23.05 of the Rules. In Sankey v Whitlam, Gibbs ACJ said that the word ‘right’ in that phrase ‘is used in a sense that is wide and loose’.[38] It extends, for example, to the power to declare that a plaintiff is under no liability or duty to the defendant.[39] In Walker v Corporate Affairs Commission, Young J said that the word ‘right’, as used in the phrase, is ‘a very wide word and covers all justiciable legal relationships whether or not there exists a right in the sense of something which could be vindicated by pursuing a cause of action at common law’.[40] It certainly extends to the power to declare whether a person has title to real or personal property if that issue is contested.[41]
(b)Limitation of actions
[38](1978) 142 CLR 1, 23 (Gibbs ACJ); [1978] HCA 43.
[39]Ibid.
[40](1988) 13 NSWLR 550, 556 (Young J).
[41]Heydon, Leeming and Turner, Equity: Doctrine & Remedies [19-090].
The question arising under proposed ground 1 is whether, and if so how, the power to grant declaratory relief is constrained by a period of time within which the action in which the relief is sought must be brought. At law, such time limits are provided in the LAA. The scheme of the LAA is to fix particular periods of limitation according to the nature of the action. Depending on the nature of the action, different events are used as the commencement date for the relevant time period.
Part I of the LAA concerns the periods of limitation. Section 5 appears in pt I div 2, which is headed ‘Actions of contract, tort etc’. Other divisions concern, for instance, ‘actions to recover land and rent’ (div 3), and ‘actions in respect of trust property or the personal estate of deceased persons’ (div 6, in which s 21 appears).
Section 5(1)(a) provides as follows:
5 Contracts and torts
(1)The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued—
(a)Subject to subsections (1AAA), (1AA) and (1A), actions founded on simple contract (including contract implied in law) or actions founded on tort including actions for damages for breach of a statutory duty;
…
An ‘action’ is defined in the LAA to include ‘any proceeding in a court of law’,[42] and, undoubtably, would embrace an action by which a party seeks a declaratory judgment.
[42]LAA, s 3(1).
The commencement date of the six-year period within which any action covered by s 5(1) is to be brought is the date on which ‘the cause of action accrued’. That is not the starting point for all actions within s 5; for example, the time period for actions for an account (s 5(2)) commences when the ‘matter … arose’.
Paragraph (a) of sub-s 5(1) describes some of the ‘actions’ to which the six-year time limitation applies, namely ‘actions founded on simple contract’ and ‘actions founded on tort’. The latter is said to include actions for damages for breach of statutory duty. The combination of the opening words in sub-s 5(1) and the content of para (a) requires, relevantly, that an action ‘founded on tort’ must be brought within six years of the accrual of the cause of action in respect of that action. These words suggest that a ‘cause of action’ is something different from an ‘action’ — which includes any proceeding in a court of law — and is also something that has a knowable date of accrual for the purpose of determining the date on which the time period begins running.
Unlike the word ‘action’, ‘cause of action’ is not defined in the LAA. For its meaning, we must go to the general law. It is well established that a cause of action means ‘every fact which is material to be proved to entitle the plaintiff to succeed — every fact which the defendant would have a right to traverse’.[43] A succinct expression of this understanding of a cause of action is, as stated by Wilson J in Do Carmo v Ford Excavations Pty Ltd,[44] ‘simply the fact or combination of facts which gives rise to a right to sue’.[45]
[43]Cooke v Gill (1873) LR 8 CP 107, 116 (Brett J). See also Read v Brown (1888) 22 QBD 128, 131 (Lord Esher MR).
[44](1984) 154 CLR 234; [1984] HCA 17.
[45]Ibid 245 (Wilson J).
This conception has been held to apply in the context of limitation of actions in Victoria.[46] In Harris v Gas & Fuel Corporation of Victoria, after citing Lord Guest in Central Electricity Generating Board v Halifax Corporation,[47] the Full Court said, in the context of considering the LAA:
The phrase ‘cause of action’ (which is constantly referred to in s 23A) has been discussed in many authorities and his Lordship’s statement is in accord with the various views expressed in the authorities. These authorities are appropriately and accurately summarised in Jowitt’s Dictionary of English Law in the definition of ‘Cause of action’ in this way, viz: ‘The fact or combination of facts which give rise to a right to sue. Thus in the case of some torts (eg trespass) the cause of action is the wrongful act; in the case of other torts (eg negligence) the cause of action consists of two things, the wrongful act and the consequent damage. The phrase is of importance chiefly with reference to the Limitation Act 1939 … Thus, time begins to run when the cause of action arises … It is thus necessary to determine the date upon which the cause of action arises.’ Whatever might be the meaning of the phrase in some contexts … the definition set out above is generally accepted as the test in relation to barring actions by effluxion of time.[48]
[46]Harris v Gas & Fuel Corporation of Victoria [1975] VR 619, 623 (Gillard, Menhennit and Norris JJ) (‘Harris v Gas & Fuel’).
[47][1963] AC 785.
[48]Harris v Gas & Fuel [1975] VR 619, 623 (citations omitted).
Understanding that a cause of action comprises the facts, or combination of facts, necessary to give rise to a right to sue does not mean, however, that the combination of facts necessary to give rise to that right is set at large. In other words, such an understanding does not mean that the established formulations of the elements necessary to make out a right to sue in tort, for example, are set aside. So much is clear from the Full Court’s explanation in Harris v Gas & Fuel. Rather, the emphasis on the facts making up a cause of action — at least in the limitation context — assists in the search for the date on which the particular cause of action accrues. It accrues on the occurrence of the last fact necessary to complete the set of facts required by law to establish an entitlement to relief under the rubric of a settled category of claim (often also labelled a ‘cause of action’). The ‘combination’ of them must, however, conform to a recognised set of elements. Otherwise the cause of action, in the case of s 5(1)(a), will not be ‘founded on’ contract or tort.
These are not mere abstract observations. They are significant in the context of some of the applicants’ arguments in this case. We will return to their significance in due course.
(c)Limitation period applicable to declaratory relief
Having stated some principles in relation to declaratory judgments and the LAA, the next issue to consider is whether the LAA sets a limitation period for an action for purely declaratory relief.
First, there is no provision that expressly stipulates a limitation period for an action for declaratory relief.
Secondly, as stated, at least where the remedy is sought in a court exercising its jurisdiction at law, as opposed to its equitable jurisdiction, declaratory relief is a statutory remedy. Except where the LAA expressly provides otherwise — such as in pt I div 6 concerning certain actions for breach of trust — claims made in the equitable jurisdiction of the court are not governed by limitation statutes. The Victorian scheme preserves the original English approach whereby equity provides its own means of dealing with the effluxion of time through the equitable defences of laches and acquiescence.[49]
[49]LAA, s 31; GE Dal Pont, Law of Limitation (LexisNexis, 2nd ed, 2021) 3.30.
Historically, however, courts of equity also applied limitation periods at law, by analogy, where the remedy sought in equity corresponded to a remedy at law.[50] The LAA incorporates the doctrine of analogy in s 5(8) by providing that the section does not apply to any ‘claim for specific performance of a contract or for an injunction or for other equitable relief’, except to the extent that ‘any provision thereof may be applied by the Court by analogy’. The reference to ‘other equitable relief’ will not pick up a claim for declaratory relief which, as we have explained, is sourced in statute.
[50]Knox v Gye (1872) LR 5 HL 656, 674–5 (Lord Westbury); R v McNeil (1922) 31 CLR 76, 100 (Isaacs J); [1922] HCA 33; Dal Pont, Law of Limitation 13.32.
Rival arguments concerning if and how a limitation statute constrains the bringing of a claim for declaratory relief are neatly represented in the judgment of Longmore LJ in Woodeson v Credit Suisse (UK) Limited.[51] The relevant question, in substance, was whether a claimant could evade the time limit set by statute in respect of a debt claim by seeking declarations that they were entitled in equity to set off certain claims against the creditor.
[51][2018] EWCA Civ 1103 (‘Woodeson’).
Lord Justice Longmore approved the principle articulated by Colman J in P & O Nedlloyd BV v Arab Metals Co,[52] that a court should not entertain a claim for a declaration that a defendant owes a debt or is liable for damages in tort or contract if such a claim is made once the debt or damages claim is statute-barred.[53] A seemingly different position had been reached by Webster J in National Bank of Commerce v National Westminster Bank,[54] where the judge made obiter remarks to the effect that no period of time provided by the limitation statute applies to a claim brought simply for a declaration because a declaration itself is not a cause of action.
[52][2005] 1 WLR 3733 (‘Nedlloyd’).
[53]Woodeson [2018] EWCA Civ 1103, [21].
[54][1990] 2 Lloyds Rep 514.
Lord Justice Longmore agreed with academic criticism of Webster J’s view, a criticism reiterated by Colman J in Nedlloyd. The academic’s view was that a claim for a declaration could be or become time-barred if ‘the basis of the action’ was itself time-barred. Colman J put it slightly differently. He noted that the periods of limitation varied in the statute according to the ‘nature of the grounds for relief’. Those grounds comprise the factual foundation and the assertion of a legal or equitable right consequential upon those grounds. Thus, a claim for a declaration that a contractual right had accrued or a breach of contract had occurred was an ‘action … founded on grounds an essential part of which is a simple contract’.[55]
[55]Woodeson [2018] EWCA Civ 1103, [24] (Longmore LJ), citing Nedlloyd [2005] 1 WLR 3733, [20] (Colman J).
This brings us to the case relied upon by the judge in the present case, namely the decision of McDonald J in Waddington.[56] The facts are important. Waddington had accumulated hundreds of infringement warrants served on him because of driving offences. As a result, his car was seized (later alleged to be trespass to goods) and he was arrested on two occasions and ultimately imprisoned (later alleged to involve false imprisonment and battery). He argued that the statutory regime under which the infringement warrants were issued, and everything that proceeded from them, was invalid (later alleged to support a claim for breach of statutory duty). Most of the relevant events occurred outside the six-year period preceding the commencement of his proceeding, but some (the second arrest and his imprisonment) occurred inside the period.
[56][2018] VSC 746.
Waddington commenced a proceeding pleading claims for trespass to goods, false imprisonment, battery and breach of statutory duty. He claimed damages. He also sought declarations that the seizure of his vehicle, arrests and imprisonment were unlawful and invalid. The defendant pleaded that each claim was statute-barred. Among other things, the question whether the claims for declaratory relief were so barred came before McDonald J as a preliminary question. The judge decided that the claims for declarations concerning each event occurring outside of the six-year period were statute-barred because they were claims founded on tort.
Importantly, the reason they were said to be ‘founded on tort’ was two-fold: first, the claims that the seizure of the vehicle and Waddington’s arrest were unlawful and invalid were ‘based, at least in part, upon [Waddington’s] contention that the conduct constituted the torts of trespass to goods, false imprisonment and battery’. Secondly, the claims for declarations were brought alongside claims for damages for those torts.[57] In so holding, McDonald J adopted the view that an action is comprised of facts giving rise to a right to sue and that the question whether the claim for declaratory relief before him was founded on tort was a factual question.[58]
[57]Ibid [26] (McDonald J).
[58]Ibid [21] (McDonald J). The relevant passage from the judgment is extracted above at [26].
Two further questions arise from the discussion so far:
(a)First, if a claim for declaratory relief is to be subject to a statutory limitation period when the facts on which it is based would give rise to an entitlement to relief in an action on a simple contract or in tort, does the limitation period apply because the declaratory claim is an action founded on tort, or for some other reason?
(b)Secondly, if a claim for declaratory relief is not based on facts that would establish a claim in contract or tort, or any other action covered by the LAA, is it free of any limitation period?
Both of these issues were addressed by the Hon Eric Heenan, writing extra‑curially, when he said:
[I]n an action in which a declaration was sought as ancillary to some other form of relief, any limitation period constituting a defence to the principal relief could be expected, again subject to qualifications, to constitute a basis for discretionary refusal of the declaratory relief.
This principle, whether direct or by analogy, can be readily enough applied where a declaration is sought in aid of, or in substitution for, the vindication of the legal, or equitable, or statutory right. This is because such a right, if it exists, must be regarded as having accrued at some particular point and, from that time, any delay can be reckoned in a manner which would allow the direct or analogous limitation period to be applied. However, this is not the case when a declaration is being sought in vindication of some interest which is neither legal, equitable nor statutory ... or, even more, to challenge some legislative or administrative act of some public body or authority. In these latter cases, if the decision or conduct or legislation is ultra vires or void, there does not seem to be any reason why its validity should improve merely because of the passage of time.[59]
[59]Justice EM Heenan, ‘History of Declaratory Relief: A Distinct Remedy Beyond Equitable Affiliations’ in Kanaga Dharmananda and Anthony Papamatheos (eds), Perspectives on Declaratory Relief (Federation Press, 2009) 51, 80–1.
In respect of the first question, the Hon Eric Heenan appeared to consider that the defence would operate at the level of discretion; that is, if the limitation would apply to the underlying legal or equitable claim, it would provide a basis for discretionary refusal of the declaration. In respect of the second question, he allowed for the possibility that no limitation would apply.
Judamia v The State of Western Australia[60] was a case concerning a claim for declaratory relief, where the grounds for relief did not conform to any established cause of action, nor entitle the plaintiffs to any relief in consequence of proving such a claim. It is necessary to mention this case, not least because the applicants in the current application placed some reliance upon it.
[60](Supreme Court of Western Australia Full Court, Malcolm CJ, Rowland and Franklyn JJ, 1 March 1996) (‘Judamia’).
Five Aboriginal plaintiffs claimed that the repeal of s 70 of the Constitution Act1889 (WA) had not been validly effected by Acts passed in 1897 and 1905 and, so, the provision remained in force. That section required an amount of money to be paid annually from consolidated revenue in Western Australia to a fund for the welfare of Aboriginal persons. The invalidity of the repeal was said to stem from the failure of legislatures both in Western Australia and in England to follow the legal requirements for passing legislation, in this case the Bills to repeal the section, or because it was made in breach of a fiduciary obligation. The consequence of the section remaining in force was, potentially, that a vast sum of money had been withheld from Aboriginal people in Western Australia. The relief sought was that the Court declare that the two repealing Acts were invalid and of no effect, or that they were made in breach of a fiduciary obligation owed by the Crown to Aboriginal inhabitants of Western Australia.
The primary judge struck out the claim because it could not be maintained in the face of s 6 of the Crown Suits Act1947 (WA), which provided that ‘no right of action’ lay against the Crown unless notice was given to the Crown Solicitor three months ‘after the cause of action accrues’. A discretion existed for the Attorney General to extend the period of limitation to six years. On appeal, the appellants argued that the Crown Suits Act 1947 had no application because the proceeding for declaratory relief did not involve a ‘cause of action’.
Chief Justice Malcolm held that although there did not need to be a ‘cause of action’ in the traditional sense which identifies one of the historic ‘forms of action’, there must, nonetheless, be a ‘controversy of a justiciable nature’.[61] In that regard, he applied the understanding of a ‘cause of action’ being the fact or combination of facts which gives rise to the right to sue.[62] It followed, he said, that in proceedings for a declaration under the Crown Suits Act 1947, it is ‘the occurrence of the last fact or circumstance which gives rise to the right to sue for the declaration which should be taken as the date on which the cause of action accrued’.[63] It is evident that, even though the combination of facts may not have conformed to the elements of an established category of claim, Malcolm CJ viewed them as comprising a ‘cause of action’ within the statute. Because the last of those facts was the last failure to follow legal procedures for the passage of legislation, occurring in England in 1906, the act giving rise to the supposed invalidity, and the act constituting the alleged breach of fiduciary duty, must have occurred in excess of 80 years before the action was commenced. He concluded that the appellants’ argument must fail.[64]
[61]Ibid 33 (Malcolm CJ).
[62]Ibid 35 (Malcolm CJ).
[63]Ibid.
[64]Rowland J delivered a separate judgment coming to the same conclusion but adopting a somewhat different analysis. Franklyn J substantially agreed with both Malcolm CJ and Rowland J.
We will discuss what might be taken from this decision in the course of our consideration of the parties’ submissions. The Chief Justice’s analysis might conflict in some respects with the observations we have made at [76] above that the combination of facts must conform to a recognised set of elements for tort. The oft-repeated statement that an action for declaratory relief alone does not require there to be a cause of action implies that the foundation for the action need not, itself, comprise a cause of action in the usual sense. It is important to note, however, that the purpose, scope, structure and language of the Crown Suits Act 1947 is substantially different from the LAA.
Consideration
According to the various arguments that the applicants are to be taken as having made on this application, the respondents’ action may be subject to a time limitation prescribed by the LAA on one of a number of bases:
(a)first, the action is captured under s 5(1)(a) because the facts alleged comprise the tort of injurious falsehood (‘first alleged basis’);
(b)secondly, it is captured under s 5(1)(a) because the facts alleged comprise a cause of action based on wrongful conduct, which means the action is founded on tort (‘second alleged basis’); and
(c)thirdly, because the facts alleged comprise an equitable action for breach of trust or equitable fraud or for a constructive trust, it is either captured by s 5(8) (by analogy) or s 21 (directly) (‘third alleged basis’).[65]
[65]The applicants did not specifically mention s 5(8), but if the LAA is to apply to an equitable claim it must do so either directly, under div 6 of Pt I, or by analogy under s 5(8).
A number of arguments previously raised were not pressed in either written or oral submissions before this Court and may be considered to have been abandoned. Those include the arguments that the action is founded on a breach of statutory duty consisting of breaches of statutory directors’ duties, and that the action is one for account or analogous to such an action. We will say nothing further about them.
It is fitting to start with a consideration of the nature of the rights which the respondents sought to have declared. Relevantly, the dispute raised by the 2005 and 2010 notifications concerned the beneficial ownership of Leonie’s share (no longer contested) and the efficacy of the purported transfer of shares to Domenico (resulting in him being shown as owner of both shares). In substance, the legal right that was the subject of the claimed declaratory relief was the ownership of the shares. The specific legal controversy was whether it was Leonie (in her own right) and Vincenzo (as administrator of Frank’s estate) who owned the shares, or Domenico. The applicants correctly identified this as being the relevant legal controversy.[66] The applicants did not dispute that such a controversy could be the proper foundation for an action for declaratory relief.
(a)First alleged basis
[66]See the argument summarised above, [47(b)].
The assumed premise of the applicants’ first argument was an acceptance that, in order to invoke the application of a statutory period of limitation, they were required to show that the ‘basis’ of the claim for declaratory relief was a combination of facts which would correspond to the elements of a recognised legal or equitable claim.[67] In this case, they sought to show that the factual basis of the claim made out the tort of injurious falsehood. Proof of such facts, they must necessarily contend, would have entitled the respondents to consequential relief for that particular tort (ie generally, damages).
[67]This is the premise for the application of the statutory limitation period adopted in Nedlloyd, Woodeson and Waddington.
An important corollary of the circumstance that the underlying facts comprise an established category of claim (ie cause of action) is that it enables an event to be identified as the accrual date for that particular category of claim. For example, in the case of injurious falsehood or negligence, it is the occurrence of loss caused by the relevant wrongful conduct. Given that s 5(1) fixes the date on which the ‘cause of action’ accrues as the starting point for the six-year limitation period, identifying the relevant cause of action and its date of accrual in the particular circumstances of the case is fundamental.
The problem that the applicants face is that the respondents’ case for the existence of the ‘right’ which they sought to have declared does not depend upon the proof of several of the elements necessary to comprise the tort of injurious falsehood. Specifically, the respondents’ case does not allege, or even implicitly require to be proven, that Frank acted with malice or any particular intention when he notified ASIC in 2005 and 2010 about the purported change in shareholdings in F&L. True, the respondents alleged that the notifications were ‘false’, but that allegation merely establishes the first and second elements of the tort. Falsity may mean no more than that the content of the notifications was wrong or incorrect.
There was no suggestion in the facts alleged that the notifications were made with any intention to injure Leonie or Vincenzo, or any intention at all; merely that the notifications were ineffective to achieve any change in the actual ownership of the shares. The respondents’ case would stand if Frank’s notifications were simply misguided, yet the product of an honest belief as to the correctness of what he purported to carry out.
Equally, there was no allegation, nor was it implicitly required to be proven, that Leonie or Vincenzo suffered any loss or damage by reason of the incorrect notifications. Counsel for the applicants attempted to construct a loss said to be implicit in the respondents’ action, namely the loss of enjoyment of the benefits of being a shareholder such as a loss of dividends, or not being shown as a shareholder on the ASIC register. There was no evidence of any loss of dividends in the relevant period. Such a fact was certainly not pleaded or relied upon in evidence. Even if there had been evidence of dividends not being paid, the deprivation of dividends was not a fact among the combination of facts required to be proven to establish the right that the respondents sought, namely title to the shares.
As for the loss comprising not being recorded as shareholder on the ASIC register, the incorrect information on the register merely stood as a false representation to the world with no loss consequence. Had it, for instance, allowed the applicants to dispose of the shares to a third party for valuable consideration without notice of the true beneficial ownership, the incorrect register might have caused some loss. But no such step was alleged.
In short, the respondents’ allegations concerned only the conduct of causing a false record of shareholding without any allegation of a consequential effect on legal or equitable interests in the shares, much less any actual loss or damage flowing from that false record. It follows that the facts alleged as the basis for the respondents’ action for the declaration of right did not comprise the tort of injurious falsehood. For these reasons, the applicants’ first argument must fail.
(b)Second alleged basis
The applicants’ second argument is that the respondents’ action was founded on tort because the combination of facts alleged to give rise to the entitlement to sue — that is, for declaratory relief — included Frank’s ‘wrongful act’ of giving the false ASIC notifications and, possibly, Domenico’s wrongful acts to the extent he was involved. Unlike the first argument, the second argument does not assume that the applicants must show that the underlying facts would comprise a ‘cause of action’ in the sense of a traditional category of claim.
Instead, the applicants’ second argument proceeds from a looser conception of a cause of action. On this looser conception, a cause of action is any combination of facts that would give rise to an entitlement to relief in a court, whether or not those facts would make out a claim recognised in law or equity as entitling the plaintiff to some form of consequential relief.[68] On this second argument, the combination of facts entitling a plaintiff to ‘pure’ declaratory relief is itself the cause of action. The date on which that cause of action accrues is the occurrence of the last of the events necessary to establish the entitlement to the declaration of right. In this case, the applicants argue, the cause of action accrued, at the latest, when Frank lodged the 2010 notification.
[68]This looser conception is best illustrated by the judgment of Malcolm CJ in Judamia as summarised in [94] above.
Further, for this argument, the requirement in s 5(1)(a) that the action be ‘founded on tort’ does not require proof of the elements of a recognised tort but merely the proof of some wrongdoing.
By this series of steps, it seems, the applicants contend that when Frank’s ‘wrongful acts’ occurred, time commenced for Leonie or Vincenzo to bring a ‘cause of action’ for a declaration of right in respect of the ownership of the shares. Since the action was filed more than six years after 2005 or 2010, the action is barred by s 5(1)(a).
The argument has a number of flaws.
First, while the phrase ‘cause of action’ in s 5(1) means the facts or combination of facts giving rise to the right to sue, that is not enough for the purposes of s 5(1)(a). Under that provision, it is necessary to go further and show that the action is ‘founded on’ contract or tort.
The point is properly made that a cause of action is comprised of the facts or combination of facts which give rise to the right to sue — not simply the way it is framed or labelled. Even so, the cases do not support the proposition that the facts may be de-coupled from the legal or equitable framework that leads to the result that proof of those facts entitles the claimant to particular consequential relief. In Nedlloyd, Colman J referred to the grounds for declaratory relief as comprising both the facts and the asserted legal or equitable right in consequence of those facts. In Woodeson, Longmore LJ’s observations were focused on the situation where the factual basis for the declaratory relief would entitle the claimant to recovery of a debt or to damages for tort or breach of contract. In Harris v Gas & Fuel, the Full Court clearly understood the meaning of a ‘cause of action’, in the limitation context, as relating to traditional categories of claim (such as the tort of negligence), even accepting that it comprises the facts which entitle the claimant to sue. In Waddington, McDonald J found that the plaintiff’s claim for declaratory relief was time-barred because the facts on which the claim was based made out tortious causes of action that were time-barred.
Insofar as this conclusion differs from that reached by Malcolm CJ in Judamia, we consider that our difference is amply explained by the very different statutory provisions being construed.
Actions for declaratory relief are not contemplated at all in the LAA. The division in which s 5(1) appears concerns ‘[a]ctions of contract, tort etc’. Section 5(1)(a) refers to actions ‘founded on’ contract and tort. Contextually, the reference to ‘cause of action’ in s 5(1) is to be construed as the entitlement to sue in contract, tort or the other particular species of action addressed in the sub-section,[69] according to established principles applicable to such actions. It does not embrace an action for declaratory relief that is not so founded.
[69]They are actions to enforce a recognizance, actions to enforce an award and actions to recover a sum recoverable by virtue of an enactment.
Furthermore, we do not accept that the phrase ‘founded on tort’ merely means an action founded on any ‘wrongful’ act. In the context we have already described, tort has a particular legal meaning and is not simply the equivalent of the French word for ‘wrong’. It is a legal wrong as defined in the common law or, as s 5(1)(a) explicitly provides, constituted by a breach of statutory duty permitting recovery of damages.
It follows that, without the facts establishing a recognised cause of action in tort, there is no date of accrual of a cause of action and there is no action ‘founded on tort’. Section 5(1)(a) simply does not apply. The applicant’s second argument must fail.
(c)Third alleged basis
Finally, we consider the applicants’ third argument. Little time need be spent on this basis for contending that the respondents’ claims attracted a period of limitation under the LAA, specifically ss 5(8) or 21. The reason for this is that the applicants did not explain how the claims for equitable fraud, or for a constructive trust, were established on the facts relied upon by the respondents. As explained above, in oral submissions the applicants merely mentioned Mapa Pearls but, apart from citing several paragraph numbers,[70] did not elaborate the basis of its application to the facts of this case. It is not for the Court to imagine what the argument might be.
[70]The paragraphs cited referred to various legal and equitable causes of action which may give rise to an in personam claim against a registered proprietor of land, including equitable fraud. In relation to equitable fraud, the Court referred to conduct that may fall short of deceit but would be regarded by equity as unconscientious: Mapa Pearls (2023) 71 VR 581; [2023] VSCA 108, [61] (Kyrou, McLeish and Niall JJA).
The applicants did not specifically seek to invoke s 21 of the LAA, which speaks of ‘fraud or fraudulent breach of trust’ and a beneficiary’s action ‘to recover trust property or in respect of any breach of trust’. If s 21 was not to be invoked, equitable claims may only be subject to a time limit by analogy pursuant to s 5(8). At least one problem for the applicants in this regard is that the respondents’ claim was for a declaration of right — a statutory claim — and thus no analogy would be called for.
For these reasons the applicants’ third argument must fail.
Conclusion
None of the applicants’ arguments that the judge was wrong to find that the LAA did not bar the respondents’ action for declaratory relief succeed. It is not a surprising or remarkable result that no limitation period applies in this case, as the applicants implied by their statement, put rhetorically, that if the provisions of the LAA did not apply then the respondents would never have any time constraint on when they could apply for relief.
One answer to this statement may be that there is no natural time limit on the correction of a public register. A second answer, however, is that because declaratory relief is discretionary, a court may refuse to make a declaration because the passage of time has operated in such a fashion as to render the making of the declaration unjust or inappropriate.[71] This was the mechanism suggested by the respondents as summarised in [56(d)] above. We agree.
[71]These two answers reflect the views expressed by The Hon Eric Heenan extracted above at [89].
We would grant leave to the applicants to appeal on ground 1 but dismiss the appeal.
Ground 2: was there a transfer, effective in equity, of any shares in F&L from Frank to Domenico?
The second proposed ground of appeal is that:
The learned judge erred in holding that ‘there [was not] at any time a transfer, effective in equity, of: (a) one share; or (b) two shares, in F&L from Frank to Domenico’.[72]
Submissions
[72]Emphasis in original.
In their written case, the applicants submitted that the judge failed to adequately explain why he did not accept Domenico’s evidence that he and Frank had agreed at a board meeting of F&L to resolve to approve the transfer of shares from Frank to Domenico. Secondly, the applicants submitted that the judge was wrong to hold there was no evidence that Frank had ever executed an instrument of transfer in relation to the shares. They argued that the judge should have applied the principle in Jones v Dunkel[73] to more readily find against the respondents, in circumstances where they had possession or control of the premises where the company records were kept, and that the company share register recorded Domenico as the holder of the two shares in the company. On this basis, the applicants argue, the judge was wrong not to conclude that there had been an effective transfer in equity of the two shares, or alternatively one of the shares, from Frank to Domenico.
[73](1959) 101 CLR 298; [1959] HCA 8.
The respondents submitted that the judge was correct to hold that there was no transfer, effective in equity, of shares in F&L from Frank to Domenico. First, the judge rightly did not accept Domenico’s evidence because, as the judge explained, Domenico’s evidence was ‘vague, contradictory and lacking in the specificity one would expect in relation to such an important matter’.[74]
[74]Reasons, [70].
Secondly, as for the contention that the judge ought to have applied the principle in Jones v Dunkel to infer that the share register would not have assisted them, the respondents submitted that, here, the applicants are confusing the transfer document from Frank to Domenico, on the one hand, and the share register, on the other hand. Article 33 of the Articles of Association of F&L required that an instrument of transfer be in writing and be executed by or on behalf of both the transferor and transferee. Further, the Articles provided that the transferor shall remain the holder of the shares until the transfer is registered and the name of the transferee is entered into the register of members in respect of the shares so transferred. The applicants’ argument that the judge should more readily have found that Frank and Domenico had executed a transfer of shares because of the unavailability of the share register, said to be in the possession of the respondents, was illogical. The share register itself would not prove the existence of the required, signed transfer of shares.
Consideration
As stated above, the applicants conceded before the judge that they could not establish that the shares held by Vincenzo had been validly transferred at law by Frank to Domenico and, therefore, had only pressed an argument that the shares had been transferred in equity.[75] Furthermore, because there was no suggestion Domenico had provided any consideration for the shares, the applicants put their argument on the principles summarised in Corin v Patton concerning the enforceability of a gift.
[75]See above, [30].
As the judge recognised, there is some incongruity in the applicant’s position. The principles in Corin v Patton address the effect in equity of an unsuccessful attempt by the owner of property to transfer legal title. It seems to be accepted, however, that it was Vincenzo who held the legal title, on trust for Frank. In that respect, an inquiry into the requirements for a legal transfer under the Articles of Association, and in particular as to the existence of a share transfer signed by Frank is at least anomalous. However, like the judge, we will proceed on the basis that, by some means unexplained, Frank held the legal title as well.
The relevant principles from Corin v Patton are set out above.[76] Applying those principles, the judge was required to ascertain all of the steps that Frank, as donor, must have completed in order to establish that the gift was enforceable in equity. Among those requirements was one that Frank, as transferor, and Domenico, as transferee, were each required to sign a transfer of shares. Another was that the transfer had to be recorded in the company share register.
[76]See above, [30].
Consistently with the incongruity we have discussed, the judge noted the first hurdle which the applicants faced: namely, to explain why, if the purported transfer of shares from Vincenzo to Domenico was not effected in law, the shares remained with the donor, being Frank (rather than Vincenzo). However, the judge was prepared to look past that ‘unexplained premise’ and examine the evidence as to the existence of any signed document by which Frank transferred either of the two shares to Domenico, or of the recording of such a transfer in the company share register.
No such transfer was produced in evidence. That is hardly surprising when it was assumed at the time that Vincenzo owned the two shares and thus any signed transfer was likely to have been from Vincenzo to Domenico, rather than from Frank to Domenico. In any event, there was no evidence at all of any such document of transfer. We agree with the respondents’ submission that the Jones v Dunkel principle could not aid the applicants in this regard because the share register, if it was produced, could not prove the existence of a document of transfer.
As for the alternative basis for proving a transfer in equity — that is, by proving the resolution of the board to effect transfer of a share or shares from Frank to Domenico — the applicants’ submissions on this point are completely lacking in merit. The judge saw and heard Domenico give his evidence and was perfectly placed to make a finding on the credibility of his claim that such a resolution had been made ‘over the coffee table’. We see no reason to doubt the judge’s conclusion, much less find it glaringly improbable.[77] Once again, such a resolution would be improbable for the same reason that a signed transfer between Frank and Domenico would be improbable. Frank and Domenico assumed Vincenzo was the holder of the two shares. A board resolution approving a transfer of shares between Vincenzo and Domenico would not amount to an approval of a transfer between Frank and Domenico.
[77]Fox v Percy (2003) 214 CLR 118; [2003] HCA 22.
In our view, this proposed ground lacks any prospect of success and, accordingly, we would refuse leave to appeal on it.
Ground 3: was Leonie estopped from contesting the transfer of shares in F&L to Domenico?
The third proposed ground of appeal is that:
The learned judge erred in holding that ‘Leonie [was not] estopped from asserting that the transfer of shares in F&L to Domenico is not valid and effective as alleged in paragraph 66C of the amended defence’
In their defence to the respondents’ claim, the applicants pleaded that:
(a)on or about 7 July 2010, Leonie complained to Frank that Vincenzo had problems at Centrelink because he held two shares in F&L;
(b)Frank told Leonie that he would transfer the two shares out of Vincenzo’s name and, on 23 July 2010, lodged the 2010 notification showing that Domenico held the two shares;
(c)Leonie knew of and acquiesced in the transfer of the two shares to Domenico;
(d)Domenico has, since 2013, acted as a director of F&L in the belief that he had been appointed as director and that two shares had been validly and effectively transferred to him; and
(e)therefore, Leonie is estopped from asserting that the transfer of the two shares to Domenico was not valid.
The judge accepted that the evidence given in the trial was ‘broadly consistent’ with the pleaded allegations. He did not, however, make a finding consistent with sub‑para (c) above. Rather, he found, as Leonie stated in an affidavit, that Frank had told her he was waiting for some papers from ASIC and would ‘remove Vincent as a director’. The judge interpolated that the reference to removing him as a director, in context, was meant to convey that Frank told her he would remove Vincenzo as a shareholder, rather than as a director.[78] Beyond that, the judge merely recorded that the applicants alleged that Leonie knew of and acquiesced in the transfer of the two shares from Vincenzo to Domenico.[79] The judge does not appear to have made a specific finding on that fact.
[78]Reasons, [74].
[79]Ibid [75].
As explained earlier,[80] the judge rejected the applicants’ estoppel plea based on the reasoning advanced in the pleading. He did so because there was no relevant relationship between Leonie and Domenico, and thus no relevant contribution made on Leonie’s part to induce Domenico to hold any mistaken belief or assumption in order to engage the principles of promissory estoppel. The judge relied upon and applied the principles in Waltons Stores (Interstate) Ltd v Maher.[81]
Submissions
[80]See above, [37].
[81](1988) 164 CLR 387, 428 (Brennan J). See Reasons, [76].
In their written submissions to this Court, the applicants appealed to a principle described in Spencer Bower and Turner’s The Law Relating to Estoppel by Representation (our emphasis added):
[I]f a party, having a right to assert his status as a shareholder in a company, or his right to a share to any business or concern, is mute and passive while proceedings are being taken by the company, or other persons interested in the business or concern, to forfeit his share or deal with the property as if he had no part or lot therein, and makes no protest or complaint, and takes no step to prevent or defeat such proceedings, this passivity on his part operates either as a representation that he has finally abandoned any claim to such status, right, or interest which he may ever possessed, or else as an acknowledgement that he never had any such claim at all: and in either case, he is precluded from asserting it on any subsequent occasion as against the parties to whose adverse proceedings he raised no objection at the time.[82]
[82]George Spencer Bower, ‘Chapter III: How a Representation May Be Made’ in Sir Alexander Kingcome Turner (ed), The Law Relating to Estoppel by Representation (Butterworths, 3rd ed, 1977) 51 [57].
Applying that principle, the applicants submitted that Leonie knew of the transfer of shares to Domenico and stood by for several years thereafter without challenging it. This passivity — or acquiescence — is said to constitute an estoppel preventing Leonie from now challenging Domenico’s shareholding ‘or his status as a director of F&L’.
Apart from that basis for arguing that Leonie was estopped from disputing Domenico’s ownership of the shares, the applicants also placed reliance on the principles of promissory estoppel as stated in Waltons Stores (the same principles on which the judge had rejected their estoppel claim below). In particular, the applicants focused on a sentence taken from the judgment of Mason CJ and Wilson JJ, which was that:
[I]naction, in all the circumstances, constituted clear encouragement or inducement to the respondents to continue to act on the basis of the assumption which they had made.[83]
[83]Waltons Stores (1988) 164 CLR 387, 407 (Mason CJ and Wilson JJ).
Leonie’s ‘silence and failure to act’ were said to have constituted such ‘inaction’.
The respondents submitted that the judge was right to hold that Leonie was not estopped from asserting that the transfer of shares to Domenico was not valid. The respondents submitted that the proposition — stated in sub-para (c) at [135] above — that Leonie knew about the transfer of shares to Domenico in 2010, was contrary to the evidence. The respondents pointed to Leonie’s statement that, in 2008, she understood that Frank was going to restore the shares to reflect her ownership of half of the assets in F&L. It was not until after Frank died that she learned that Frank had not restored her share and that Domenico claimed that he owned a share.
Furthermore, the respondents submitted that, as the judge found, there was no evidence to show that Leonie, by her conduct, induced Domenico to hold any particular assumption or belief about the transfer of shares, at the very least because they had no relevant relationship to one another. Insofar as the applicants may rely upon Leonie’s conduct in inducing Frank to assume or believe anything about the transfer of shares to Domenico, the respondents submit that the applicants are not in a position to say anything about Frank’s belief.
Consideration
The first of the applicants’ arguments, relying upon the principle in Spencer Bower and Turner, appears to be new in this litigation. In our view, it has no merit.
The facts that would need to be established to engage the principle described in Spencer Bower and Turner are different to those relied upon in the applicants’ pleaded defence and as argued before the judge. In the cases referred to in Spencer Bower and Turner as authority for the principle stated therein — including Rule v Jewell[84] and Prendergast v Turton[85] — there were ongoing significant mercantile activities of the company while the shareholders remained silent in the face of the alleged forfeiture of their shareholdings. Those mercantile activities had particular relevance to the shareholders’ interests. In each case, there was a clear expectation that the shareholders should assert their interests consistent with their intention to maintain them, in the absence of which they were to be taken to have abandoned their shares.
[84][1881] 18 ChD 660.
[85][1841] 1 Y&C Ch 98.
For the principle to be engaged in the present circumstances, the applicants would need to have shown that there were some ‘proceedings taken by the company’ (F&L) adverse to Leonie’s (and Vincenzo’s) shareholder interest such that, by standing by while those proceedings occurred, Leonie and Vincenzo represented, in effect, that they had abandoned their shares.
Even if this new formulation of the estoppel claim is entertained, it is difficult to see how Domenico’s control of the company as director over the years after 2014 (when Frank died) amounts to a ‘proceeding by the company’ adverse to Leonie’s interests such that her failure to challenge his shareholding gives rise to an estoppel against her now challenging that shareholding. There was no reliance upon, or evidence of, any particular operations or proceedings of F&L occurring over those years which were said to be adverse to Leonie’s interests as a shareholder. Therefore, the premise for the alleged estoppel on the principle described in Spencer Bower and Turner simply does not exist in this case. The first argument must be rejected.
The applicants’ second argument drew from the principles in Waltons Stores. The proposition in the sentence that the applicants relied upon, extracted above at [140], is explained by what Mason and Wilson JJ went on to say:
It was unconscionable for it, knowing that the respondents were exposing themselves to detriment by acting on the basis of a false assumption, to adopt a course of inaction which encouraged them in the course they had adopted. To express the point in the language of promissory estoppel the appellant is estopped in all the circumstances from retreating from its implied promise to complete the contract.[86]
[86]Waltons Stores (1988) 164 CLR 387, 407–8 (Mason CJ and Wilson JJ) (emphasis added).
We accept the respondents’ contention that the evidence did not support a finding that Leonie knew, in 2010, that Frank intended to, or did in fact, transfer two shares to Domenico. The judge made no such finding. It could not be inferred from the other facts pleaded by the applicants that Leonie knew any more than that Frank had taken the shares out of Vincenzo’s name. Of the six matters that Brennan J in Waltons Stores said a plaintiff must prove to establish an equitable estoppel,[87] it was not established that Leonie had induced Domenico to adopt any assumption or expectation about the transfer of shares; that Domenico acted, or abstained from acting, in reliance upon such an assumption; or that Leonie knew or intended him to do so. Hence, the second argument must also be rejected.
[87]Ibid 428–9 (Brennan J).
For these reasons, we agree with the respondents that the judge was right to hold that Leonie was not estopped from asserting that the transfer of shares in F&L to Domenico was not valid. The applicants’ arguments are without merit. We refuse leave to appeal on this ground.
Ground 4: did the judge err in ordering ASIC to rectify its register?
The fourth proposed ground of appeal is that:
The learned judge erred in ordering ASIC to ‘rectify its register to show that Leonie Cappelleri holds one share in F&L Pty Ltd beneficially and that Vincenzo Cappelleri, in his capacity as the administrator of the estate of Frank Cappelleri (deceased), holds one share in F&L Pty Ltd beneficially’.
The judge did not give any reasons for making the order that ASIC rectify the register to show that Leonie and Vincenzo each held one of the two ordinary shares issued by F&L. There is a reason for that. The judge made findings in respect of the substantive issues which he identified as requiring determination. He did not proceed to state the orders he would make, saying that he would invite the parties to submit proposed orders to give effect to his reasons for judgment.[88]
[88]Reasons, [104].
In their amended statement of claim, the respondents had explicitly sought an order that ASIC rectify its register in terms in which the judge ultimately ordered. Other than pleading the operation of the LAA, the applicants had not directed any specific argument against the Court ordering that ASIC rectify its register. On the day the judge delivered reasons for judgment in respect of the substantive issues he directed that the parties file any minute of consent orders which they proposed the court should make or, in the absence of consent, each file and serve a minute of the orders that they respectively proposed the court should make.
The applicants and respondents adopted the first course. They jointly proposed that the Court order, amongst other things, that ASIC rectify its register to show that Leonie Cappelleri holds one share in F&L beneficially and that Vincenzo Cappelleri in his capacity as the administrator of the estate of Frank Cappelleri (deceased) holds one share in F&L beneficially. That is what the judge ordered. It is that order that the applicants now say was made in error.
Submissions
It was common ground that the power by which the Court purported to make the rectification order was that contained in s 1322(4)(b) of the Corporations Act 2001 (Cth).
Under this proposed ground, the applicants submitted that the judge was wrong to order that ASIC rectify its register because the power in s 1322(4)(b) was not exercisable in the circumstances existing in this case. They submitted that s 1322(4) is directed only to the rectification of ‘procedural irregularities or omissions’, whereby the persons concerned with or party to the irregularity had otherwise acted honestly and, only then, if the court could cure its effects without prejudice to third parties. In other words, the power was only available to cure accidental slips, not intentional or ‘mischievous’ conduct that would contravene another provision of the Corporations Act.
Here, however, the applicants submitted that the order that ASIC rectify its register proceeded from the judges’ declarations as to the ownership of shares. Those declarations were made upon findings that Frank’s notification of the share transfers to ASIC was false and that the appointments of Dominico and Mario as directors of the company were made without Leonie’s consent. Such findings, the applicants argued, were clearly findings of intentional misconduct amounting to contraventions of the Corporations Act. This factual context, the applicants contended, precluded the making of an order under s 1322(4)(b).
Finally, the applicants also argued that the order that ASIC rectify its register was time-barred under the LAA for much the same reasons that they had contended that the declaratory relief sought by the respondents was also time-barred.
Unsurprisingly, the respondents submitted that this is a new point that was not raised at trial and, indeed, that the very order which the applicants now challenge as being made without power was one which they themselves consented to. Proposing that the judge make the order for the rectification of the ASIC register constituted a concession by the applicants that the order is within power. That concession, the respondents submitted, cannot be withdrawn without the leave of this Court.
Further, the respondents argued that the order the applicants now wish to appeal from is discretionary in nature, and the applicants would thus need to show an error in the exercise of that discretion on the principles in House v King.[89] The respondents submitted that no such error has been shown.
[89](1936) 55 CLR 499; [1936] HCA 40.
In any event, the respondents submitted, the proposed ground is hopeless because the power in s 1322(4)(b) of the Corporations Act is not confined in the way asserted. In particular, they submitted, the power to order rectification under s 1322(4)(b) extends to correcting incorrect information that has been included in a notification required to be given to ASIC, citing, among other cases, Re Centura Global Holdings Pty Ltd.[90]
[90](2016) 111 ACSR 185, 204 [57] (Black J); [2016] NSWSC 62. The respondents also cited Re Botanical Water Holdings Pty Ltd [2013] VSC 96.
Finally, the respondents submitted that the applicants’ argument that the claim for relief under s 1322(4)(b) is statute-barred amounts to the same argument as that advanced in ground 1 and should fail for the same reason.
Applicable principles
Section 1322 of the Corporations Act, headed ‘Irregularities’, appears in pt 9.5 of the Act, headed ‘Powers of Courts’. Sub-sections 1322(1)–(3B) concern the meaning of various terms used within the section and specify specific powers for a court to declare certain ‘proceedings’ or meetings held by a corporation to be declared invalid or void.
Sub-sections 1322(4)–(6) are in the following terms:
(4)Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:
(a)an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;
(b)an order directing the rectification of any register kept by ASIC under this Act;
(c)an order relieving a person in whole or in part from any civil liability in respect of a contravention or failure of a kind referred to in paragraph (a);
(d)an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;
and may make such consequential or ancillary orders as the Court thinks fit.
(5)An order may be made under paragraph (4)(a) or (c) notwithstanding that the contravention or failure referred to in the paragraph concerned resulted in the commission of an offence.
(6)The Court must not make an order under this section unless it is satisfied:
(a)in the case of an order referred to in paragraph (4)(a):
(i)that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature;
(ii)that the person or persons concerned in or party to the contravention or failure acted honestly; or
(iii)that it is just and equitable that the order be made; and
(b)in the case of an order referred to in paragraph (4)(c)--that the person subject to the civil liability concerned acted honestly; and
(c)in every case--that no substantial injustice has been or is likely to be caused to any person.
With respect to the raising of new issues on an appeal, the High Court stated in Whisprun Pty Ltd v Dixon[91] that it would be inimical to the due administration of justice if, on appeal, a party could raise a point that was not taken at the trial unless that point could not possibly have been met by further evidence at the trial. Even so, when no question of further evidence is admissible, it may not be in the interests of justice to allow a new point to be raised on appeal, particularly if it will require a further trial of the action.[92]
[91](2003) 77 ALJR 1598; [2003] HCA 48 (‘Whisprun’).
[92]Ibid 1608 [51] (Gleeson CJ, McHugh and Gummow JJ).
In Lafranchi v Transport Accident Commission,[93] two members of this Court expanded upon those two propositions from Whisprun. In respect of the second proposition — that in every case the question is whether it is or is not in the interests of justice to allow a new point to be raised on appeal — Maxwell P and Neave JA referred to cases in which a party sought the permission of the court to withdraw a concession made at trial in respect of a contentious issue. The judges held that the question of whether a concession made below should be permitted to be withdrawn on appeal should be approached by reference to the two propositions in Whisprun.[94]
Consideration
[93](2006) 14 VR 359; [2006] VSCA 81 (‘Lafranchi’).
[94]Ibid [26] (Maxwell P and Neave JA).
The first point to be addressed is whether this Court should entertain the applicant’s proposed ground 4 in circumstances where they had, in substance, conceded before the judge that there was both power to make the rectification order and that it was appropriate in the exercise of the judge’s discretion to do so.[95] In oral submissions, the applicants accepted that, having made the concession that has been identified, they were bound to obtain the Court’s leave to withdraw that concession in order to propound ground 4. They submitted, however, that the issue raised by the proposed ground is a pure question of law and there could be no possible prejudice to the respondents by the Court permitting the concession to be withdrawn and the ground argued.
[95]Another question may be whether the parties, by agreement, could confer on the court a power to make an order that it otherwise lacked the power to make. That begs the question sought to be raised on appeal. Whether or not the conditions existed for the exercise of the power under s 1322(4)(b) might be a question (1) going to jurisdiction, in which case it was a matter for the judge to decide (Citta Hobart Pty Ltd v Cawthorn (2022) 276 CLR 216, 230 [23] (Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ), 242–3 [62] (Edelman J); [2022] HCA 16); or (2) involving a proposition of law, in which case the judge may (but was not bound to) proceed on the basis adopted by the parties (Pantorno v The Queen (1989) 166 CLR 466, 473 (Mason CJ and Brennan J); [1989] HCA 18; Mangoola Coal Operations Pty Ltd v Muswellbrook Shire Council [2023] NSWCA 275, [6] (Leeming JA); or (3) turning on the facts to be applied, in which case the judge was entitled to proceed on the basis that the parties agreed to the necessary facts. The present case falls into the third category. As the argument unfolded, it seems that the question turned on the factual character of Frank’s conduct in sending the ASIC notifications — that is, whether they were merely mistaken or involved some form of culpability. As discussed earlier, it was not necessary for the judge to decide anything more than that the notifications were incorrect and lacked a valid legal basis. Since there was no finding beyond the notifications being incorrect, the parties’ consent to the judge making the rectification order should, for these purposes, be construed as carrying an implied agreement that the notifications were made mistakenly but honestly.
Here, there is no specific claim by the respondents that, had the argument been raised at trial, the respondents’ case would have been run differently by the calling of further evidence or by particular cross-examination of the applicants. Although it may be a little difficult to see how the respondents may have run their case differently had the applicants opposed the rectification order on the basis of lack of power or for discretionary reasons, nonetheless we consider that it is possible that the respondents may have done so. First, if the question of power turns on the precise character of the conduct constituted by Frank’s ASIC notifications, the respondents may have sought to adduce further evidence, or to re-frame their arguments, to seek to give that conduct the requisite characterisation. Secondly, the respondents may have adduced further evidence in an endeavour to persuade the judge to exercise his discretion in favour of making the rectification order, in the face of actual opposition, in the factual circumstances which existed.
Having regard to these possibilities, and the respondents’ opposition to this Court permitting the applicants to withdraw their concession at trial, we are not persuaded that it would be in the interests of justice to ‘re-open’ the point about the Court’s power to make the order. This conclusion provides a sufficient basis to refuse leave for the applicants to appeal on proposed ground 4. Nevertheless, even if we had permitted the concession to be withdrawn, we also think that there are no merits to the proposed ground. We will briefly explain why.
The cases on which the applicants relied to contend that s 1322(4)(b) did not authorise the Court to make the rectification order in the present circumstances do not directly concern that provision, but concern other paragraphs of s 1322(4). The applicants referred to Weinstock v Beck,[96] Re Murray River Organics Ltd,[97] Onefone Australia v One Tel Ltd,[98] and Tayeh v The Commonwealth.[99] Other cases that directly concern s 1322(4)(b), however, support the proposition that the power it authorises extends to enabling a court to correct incorrect information that has been included in a notification required to be given to ASIC. We will come to those in a moment.
[96](2013) 251 CLR 396; [2013] HCA 14 (‘Weinstock’).
[97](2019) 138 ACSR 365; [2019] FCA 931 (‘Murray River Organics’).
[98](2010) 80 ACSR 11; [2010] NSWSC 1120 (‘Onefone’).
[99][2020] FCA 1323 (‘Tayeh’).
Weinstock concerned the construction of s 1322(4)(a). Specifically, the question was whether that provision should be limited to empowering a court to declare that an act was invalid only in circumstances where a person with power to commit an act did not properly exercise that power. The Court held that the provision should be read broadly and liberally, and that it also applied where the person had no power to commit the act at all. The case was not concerned with the power in s 1322(4)(b) to direct the rectification of a register kept by ASIC. None of the statements made in the case expressly dealt with the width of that power.
Tayeh is also a case concerned with s 1322(4)(a) and the particular constraints on the power contained therein by reason of sub-s (6). Sub-section (6) conditions the powers granted in sub-ss (4)(a) and (c), but not (4)(b). In the passage relied on by the applicants from Murray River Organics — a case concerned with the power granted in sub-s (4)(c) — the judge drew upon statements made in Weinstock about the liberal construction to be given to s 1322(4) generally.[100] The passage that the applicants cited from Onefone concerns the meaning of the phrase ‘procedural irregularity’, the meaning of which is affected by s 1322(1).[101] The phrase is used in several sub-sections of s 1322, but not in sub-s (4). The observations are of doubtful assistance to the construction of sub-s (4) and, specifically, to sub-s (4)(b).
[100]Murray River Organics (2019) 138 ACSR 365, 370 [26] (Anderson J).
[101]Onefone (2010) 80 ACSR 11, 14 [8] (Barrett J).
Cases that explicitly focus on the power granted in sub-s (4)(b) support the view that the power enables the court to direct that a register be rectified to correct incorrect information notified to ASIC.[102]
[102]See, for example, Re MIG Property Services Pty Ltd (No 2) (2012) 92 ACSR 234; [2012] VSC 606; Re Botanical Water Holdings Pty Ltd [2013] VSC 96; Re DJG Equities Pty Ltd (2014) 32 ACLC 14-008; [2014] NSWSC 194; and ReCentura Global Holdings Pty Ltd (2016) 111 ACSR 185; [2016] NSWSC 62.
In Miltonbrook Pty Ltd v Westbury Holdings Kiama Pty Ltd,[103] Spigelman CJ (Tobias and Campbell JJA agreeing), discussed at length the construction of s 1322(4)(b). The Chief Justice noted that the power is not, in terms, confined to an omission or misstatement.[104] He contrasted the provision with similar provisions in predecessor legislation and cautioned against reference to case law based on such provisions. The Chief Justice noted that the provisions of s 1322 generally, and all the provisions of sub‑ss (4) in particular, are of contextual relevance to construing the limits of the power in sub-s (4)(b). However, he, took the view that the rectification power is not to be seen as consequential upon an order under sub-s (4)(a) nor, it would seem, any of the other powers in s 1322. In broad terms, the judge preferred a broader rather than narrower construction of the word ‘rectify’ (or, to be precise, the word rectification) as it appears in sub‑s (4)(b).[105]
[103](2008) 71 NSWLR 262; [2008] NSWCA 38.
[104]Ibid 270 [34] (Spigelman CJ).
[105]Ibid 272 [47], 273 [54] (Spigelman CJ).
In our view, none of the cases relied upon by the applicants compel a view of s 1332(4)(b) that would deny its use to correct incorrect information recorded on a register kept by ASIC, regardless of whether that information was supplied accidentally or intentionally. There is a body of case law to the contrary. We are not persuaded that the judge lacked the power to make the rectification order upon the factual findings that he made. In any event, even if the power is unavailable to correct errors that proceed from some contravention of the Corporations Act, as the applicants argued, the judge made no finding of any such contravention, nor was it necessary for him to do so to make the order he made.
Other than for the alleged lack of power, the applicants did not argue that the judge’s discretion miscarried. There is no need to address any arguments under House v The King.
Finally, as for the applicants’ argument that the claim for an order that ASIC rectify its register is time-barred, we agree with the respondents’ submission that such an argument must fail for the same reasons given in respect of ground 1. In particular, where there is no risk of an injustice to a third party by doing so, there should not be any natural time limit on the correction of a public register.[106] Because of the declarations of right made by the judge, which we have upheld, the applicants cannot claim to suffer any injustice by the judge ordering that ASIC rectify its register to reflect his findings.
[106]See [121] above.
Conclusion
For the reasons we have stated, we will grant the applicants leave to appeal on ground 1, but dismiss the appeal, and otherwise refuse leave to appeal on proposed grounds 2, 3 and 4.
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SCHEDULE OF PARTIES
DOMENICO CAPPELLERI First Applicant MARIO CAPPELLERI Second Applicant and LEONIE CAPPELLERI (by her Litigation Guardian VINCENZO NICOLA CAPPELLERI) First Respondent VINCENZO NICOLA CAPPELLERI (as the Administrator of the Estate of FRANK CAPPELLERI, deceased) Second Respondent VINCENZO NICOLA CAPPELLERI Third Respondent
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