Caratti v Caratti [No 2]

[2014] WASC 65

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   CARATTI -v- CARATTI [No 2] [2014] WASC 65

CORAM:   ALLANSON J

HEARD:   6 FEBRUARY 2014

DELIVERED          :   7 MARCH 2014

FILE NO/S:   CIV 2006 of 2008

BETWEEN:   JOHN MICHAEL CARATTI

Plaintiff

AND

ALLEN BRUCE CARATTI
First Defendant

TINA MICHELLE BAZZO
Second Defendant

KARENE MARIE THOMSON
Fourth Defendant

LYONS ROAD LAND COMPANY PTY LTD
Fifth Defendant

ANKETELL LAND COMPANY PTY LTD
Sixth Defendant

GUCCE HOLDINGS PTY LTD
Seventh Defendant

GUCCE DEVELOPMENTS PTY LTD
Eighth Defendant

MARCIA NATALIE SPARGO
Ninth Defendant

DAWNLINK PTY LTD
Tenth Defendant

NICOLE MADLEINE CARATTI
Eleventh Defendant

MADDELEINE CARATTI
Twelfth Defendant

ALISHA BETH CARATTI
Thirteenth Defendant

JOSEPHINE LYNETTE BAZZO
Fifteenth Defendant

PAUL JOHN MANSUTTI
Sixteenth Defendant

ANKETELL LAND HOLDINGS COMPANY PTY LTD
Seventeenth Defendant

BERNGUARD DEVELOPMENTS PTY LTD
Eighteenth Defendant

DONCASTER ASSET PTY LTD
Nineteenth Defendant

MAMMOTH NOMINEES PTY LTD
Twentieth Defendant

MORTIMER LAND COMPANY PTY LTD
Twenty-first Defendant

NEWHOME NOMINEES PTY LTD
Twenty-second Defendant

OAKFORD LAND COMPANY PTY LTD
Twenty-third Defendant

STARBRAKE HOLDINGS PTY LTD
Twenty-fourth Defendant

STARBRAKE PTY LTD
Twenty-fifth Defendant

SUNLAND ASSET PTY LTD
Twenty-sixth Defendant

TREVALLEY INVESTMENTS PTY LTD
Twenty-seventh Defendant

TURNBERRY NOMINEES PTY LTD
Twenty-eighth Defendant

WEDGEPOINT PTY LTD
Twenty-ninth Defendant

WESTSWAN LAND COMPANY PTY LTD
Thirtieth Defendant

CAMDALE NOMINEES PTY LTD
Thirty-first defendant

MOONDANCER HOLDINGS PTY LTD
Thirty-second Defendant

ODD BALLS (WA) PTY LTD
Thirty-third defendant

MAMMOTH FINANCE PTY LTD
Thirty-fourth Defendant

WESTRALIA PROPERTY HOLDINGS PTY LTD
Thirty-fifth Defendant

109 ST GEORGES TERRACE PTY LTD
Thirty-sixth Defendant

1110 HAY PTY LTD
Thirty-seventh Defendant

GEORGE 218 PTY LTD
Thirty-eighth Defendant

GOLDTUNE INVESTMENTS PTY LTD
Thirty-ninth Defendant

MONTVISTA PTY LTD
Fortieth Defendant

GREAT NORTHERN LAND COMPANY PTY LTD
Forty-first Defendant

BELLAGE PTY LTD
Forty-second Defendant

BLUEBEACH HOLDINGS PTY LTD
Forty-third Defendant

ANKETELL FARMS PTY LTD
Forty-fourth Defendant

WESTEND ASSET PTY LTD
Forty-fifth Defendant

MOSHEE PTY LTD
Forty-sixth Defendant

GUCCE RANFORD ROAD PTY LTD
Forty-seventh Defendant

GUNAROO INVESTMENTS PTY LTD
Forty-eighth Defendant

PARKDALE ASSET PTY LTD
Forty-ninth Defendant

STARSKY PTY LTD
Fiftieth Defendant

89 BURSWOOD ROAD PTY LTD
Fifty-first Defendant

NICHE GROUP (WA) PTY LTD
Fifty-second Defendant

OCEAN KEYS (WA) PTY LTD
Fifty-third Defendant

PARLIAMENT PLACE PTY LTD
Fifty-fourth Defendant

PRADA PTY LTD
Fifth-fifth Defendant

HERDSMAN TECHNOLOGY LIMITED
Fifty-sixth Defendant

WHITBY LAND COMPANY PTY LTD
Fifty-seventh Defendant

HUSKER HOLDINGS PTY LTD
Fifty-eighth Defendant

DELTA ACE PTY LTD
Fifty-ninth Defendant

SUCCESS ASSET PTY LTD
Sixtieth Defendant

CHRISTINA MARCIA CARATTI
Sixty-first Defendant

NATALIE ROCHELLE CARATTI
Sixty-second Defendant

BENJAMIN MICK CARATTI
Sixty-third Defendant

OPAL NIGHT PTY LTD
Sixty-fourth Defendant

RICH NIGHT PTY LTD
Sixty-fifth Defendant

130 FAUNTLEROY AVENUE (WA) PTY LTD
Sixty-sixth Defendant

YANCHEP INVESTMENTS PTY LTD
Sixty-seventh Defendant

TAAC PTY LTD
Sixty-eighth Defendant

TIMEDRIFT (WA) PTY LTD
Sixty-ninth Defendant

MICHAEL NEAL CARATTI
Seventieth Defendant

AARON GRANT CARATTI
Seventy-first Defendant

REBECCA ANNE CARATTI
Seventy-second Defendant

NATHAN JOHN CARATTI
Seventy-third Defendant

Catchwords:

Interlocutory injunction application - Party seeking to invoke dispute resolution procedure contained in deed - Protection of court process - Turns on own facts

Legislation:

Commercial Arbitration Act 2012 (WA), s 8(1), s 8(2)
Rules of the Supreme Court 1971 (WA), O 52
Supreme Court Act 1935 (WA), s 25(9)

Result:

Application granted
Injunction issued
No order for security for costs

Category:    B

Representation:

Counsel:

Plaintiff:     Mr D Ryan SC

First Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Second Defendant     :     No appearance

Fourth Defendant     :     No appearance

Fifth Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Sixth Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Seventh Defendant     :     No appearance

Eighth Defendant     :     No appearance

Ninth Defendant     :     No appearance

Tenth Defendant     :     No appearance

Eleventh Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Twelfth Defendant     :     No appearance

Thirteenth Defendant     :     No appearance

Fifteenth Defendant     :     No appearance

Sixteenth Defendant     :     No appearance

Seventeenth Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Eighteenth Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Nineteenth Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Twentieth Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Twenty-first Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Twenty-second Defendant   :     Mr J W K Burnside QC & Mr A Metaxas

Twenty-third Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Twenty-fourth Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Twenty-fifth Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Twenty-sixth Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Twenty-seventh Defendant  :     Mr J W K Burnside QC & Mr A Metaxas

Twenty-eighth Defendant    :     Mr J W K Burnside QC & Mr A Metaxas

Twenty-ninth Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Thirtieth Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Thirty-first defendant     :     No appearance

Thirty-second Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Thirty-third defendant     :     No appearance

Thirty-fourth Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Thirty-fifth Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Thirty-sixth Defendant     :     No appearance

Thirty-seventh Defendant    :     No appearance

Thirty-eighth Defendant     :     No appearance

Thirty-ninth Defendant     :     No appearance

Fortieth Defendant     :     No appearance

Forty-first Defendant     :     No appearance

Forty-second Defendant     :     No appearance

Forty-third Defendant     :     No appearance

Forty-fourth Defendant     :     No appearance

Forty-fifth Defendant     :     No appearance

Forty-sixth Defendant     :     No appearance

Forty-seventh Defendant     :     No appearance

Forty-eighth Defendant     :     No appearance

Forty-ninth Defendant     :     No appearance

Fiftieth Defendant     :     No appearance

Fifty-first Defendant     :     No appearance

Fifty-second Defendant     :     No appearance

Fifty-third Defendant     :     No appearance

Fifty-fourth Defendant     :     No appearance

Fifth-fifth Defendant     :     No appearance

Fifty-sixth Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Fifty-seventh Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Fifty-eighth Defendant     :     No appearance

Fifty-ninth Defendant     :     No appearance

Sixtieth Defendant     :     No appearance

Sixty-first Defendant     :     No appearance

Sixty-second Defendant     :     No appearance

Sixty-third Defendant     :     No appearance

Sixty-fourth Defendant     :     No appearance

Sixty-fifth Defendant     :     No appearance

Sixty-sixth Defendant     :     No appearance

Sixty-seventh Defendant     :     No appearance

Sixty-eighth Defendant     :     Mr J W K Burnside QC & Mr A Metaxas

Sixty-ninth Defendant     :     No appearance

Seventieth Defendant     :     No appearance

Seventy-first Defendant     :     No appearance

Seventy-second Defendant   :     No appearance

Seventy-third Defendant     :     No appearance

Solicitors:

Plaintiff:     Lemonis/Tantiprasut Lawyers

First Defendant     :     Metaxas & Hager

Second Defendant     :     No appearance

Fourth Defendant     :     No appearance

Fifth Defendant     :     Metaxas & Hager

Sixth Defendant     :     Metaxas & Hager

Seventh Defendant     :     No appearance

Eighth Defendant     :     No appearance

Ninth Defendant     :     No appearance

Tenth Defendant     :     No appearance

Eleventh Defendant     :     Metaxas & Hager

Twelfth Defendant     :     No appearance

Thirteenth Defendant     :     No appearance

Fifteenth Defendant     :     No appearance

Sixteenth Defendant     :     No appearance

Seventeenth Defendant     :     Metaxas & Hager

Eighteenth Defendant     :     Metaxas & Hager

Nineteenth Defendant     :     Metaxas & Hager

Twentieth Defendant     :     Metaxas & Hager

Twenty-first Defendant     :     Metaxas & Hager

Twenty-second Defendant   :     Metaxas & Hager

Twenty-third Defendant     :     Metaxas & Hager

Twenty-fourth Defendant     :     Metaxas & Hager

Twenty-fifth Defendant     :     Metaxas & Hager

Twenty-sixth Defendant     :     Metaxas & Hager

Twenty-seventh Defendant  :     Metaxas & Hager

Twenty-eighth Defendant    :     Metaxas & Hager

Twenty-ninth Defendant     :     Metaxas & Hager

Thirtieth Defendant     :     Metaxas & Hager

Thirty-first defendant     :     No appearance

Thirty-second Defendant     :     Metaxas & Hager

Thirty-third defendant     :     No appearance

Thirty-fourth Defendant     :     Metaxas & Hager

Thirty-fifth Defendant     :     Metaxas & Hager

Thirty-sixth Defendant     :     No appearance

Thirty-seventh Defendant    :     No appearance

Thirty-eighth Defendant     :     No appearance

Thirty-ninth Defendant     :     No appearance

Fortieth Defendant     :     No appearance

Forty-first Defendant     :     No appearance

Forty-second Defendant     :     No appearance

Forty-third Defendant     :     No appearance

Forty-fourth Defendant     :     No appearance

Forty-fifth Defendant     :     No appearance

Forty-sixth Defendant     :     No appearance

Forty-seventh Defendant     :     No appearance

Forty-eighth Defendant     :     No appearance

Forty-ninth Defendant     :     No appearance

Fiftieth Defendant     :     No appearance

Fifty-first Defendant     :     No appearance

Fifty-second Defendant     :     No appearance

Fifty-third Defendant     :     No appearance

Fifty-fourth Defendant     :     No appearance

Fifth-fifth Defendant     :     No appearance

Fifty-sixth Defendant     :     Metaxas & Hager

Fifty-seventh Defendant     :     Metaxas & Hager

Fifty-eighth Defendant     :     No appearance

Fifty-ninth Defendant     :     No appearance

Sixtieth Defendant     :     No appearance

Sixty-first Defendant     :     No appearance

Sixty-second Defendant     :     No appearance

Sixty-third Defendant     :     No appearance

Sixty-fourth Defendant     :     No appearance

Sixty-fifth Defendant     :     No appearance

Sixty-sixth Defendant     :     No appearance

Sixty-seventh Defendant     :     No appearance

Sixty-eighth Defendant     :     Metaxas & Hager

Sixty-ninth Defendant     :     No appearance

Seventieth Defendant     :     No appearance

Seventy-first Defendant     :     No appearance

Seventy-second Defendant   :     No appearance

Seventy-third Defendant     :     No appearance

Case(s) referred to in judgment(s):

CSR Ltd v Cigna Insurance Australia Ltd [1997] HCA 33; (1997) 189 CLR 345

1. ALLANSON J:  John Caratti has brought an action against his brother Allen Caratti and 72 other defendants.  At the heart of the action is John's claim that Allen is bound by a deed executed in 2002 under which 'all beneficial interests' of the two brothers are to be distributed equally between them on John reaching the age of 60.  The deed also provides a means for resolving disputes by the decision of an independent barrister. 

2. John turned 60 in January 2010.  In November 2013, Allen attempted to invoke the mechanism for resolution of disputes by a barrister.  The parties agree that a barrister acting under the deed could not resolve all matters that are in issue in the action.  John asks the court to restrain Allen from invoking the procedure under the deed; Allen argues that the dispute resolution procedure should be permitted to resolve those matters that it can.

3. In these reasons I have adopted shorthand terms used in the pleadings (for example, the 2002 Companies, the Allen Caratti Interest Parties), as well as the practice of referring to groups of defendants by the firm of solicitors representing them.  I refer to members of the Caratti family by their first name.  The defendants also include two members of the Bazzo family ‑ Tina Bazzo and Josephine Bazzo, and I will use those names.  This practice is for the purpose of clarity and I intend no disrespect.

The terms of the deed

1. On 26 September 2002, John and Allen and their mother, Maddeleine, executed a deed settling disputes between them (the 2002 Deed).  As background, the parties recited that they jointly or severally controlled 13 named companies (the 2002 Companies), and that Allen owned a 50% beneficial interest in shares in another four companies (the Allen Caratti Interest Companies):

2. The 2002 Deed records that the parties agreed:

   1.The shareholding in the 2002 Companies would be adjusted so that John and Allen held equal beneficial interests:  cl 4.

   2.Allen would be entitled to nominate a director of each of six of those companies:  cl 5.

   3.In the Allen Caratti Interest Companies, John was to have a beneficial interest equal to Allen, with Allen to be trustee of that interest, and the director representing the interests of John and Allen:  cl 6.

   4.Clause 8 made further provision regarding directorships.

   5.There were to be no share allotments or transfer of shares other than as contemplated by the agreement without unanimous approval of the parties:  cl 9.

   6.No new entities were to be incorporated by the parties 'without them incorporating equality of beneficial interests':  cl 14.

   7.On John attaining the age of 60 years, 'all beneficial interests of John Caratti and Allen Caratti will be divided equally between them in specie with cash adjustment as necessary':  cl 10. 

   8.Clause 11 states:

   In the event of Allen Caratti and John Caratti not agreeing on the distribution of assets as required by clause 10 above within 60 days then any unresolved issues shall be resolved by an independent barrister to be appointed by the President for the time being of the Law Society of WA.  That person shall be appointed within 7 days a request by either John Caratti or Allen Caratti.  The person so appointed shall

   11.1act at the joint cost of Allen Caratti and John Caratti;

   11.2decide all issues within 60 days of his appointment;

   The decision of the person so appointed shall be final and binding on Allen Caratti and John Caratti.

The events leading to this application

1. John turned 60 on 21 January 2010.  On 20 January 2010 Allen's solicitors wrote to John, referring to the terms of the 2002 Deed, and requesting 'an account of your relevant beneficial interests' and inviting a proposal for distribution of the parties' interests.

2. On 2 February 2010, solicitors for John responded suggesting a 'structured mediation'.  The parties participated in a private mediation but could not resolve their disputes.  From 2011, they have been actively litigating both this action and a related action between Moondancer Holdings Pty Ltd and others (as plaintiffs), and Navarac Pty Ltd and others (as defendants): CIV 1061 of 2008.  John and Allen are parties to that action. 

3. The pleadings are now complete.   

4. By letter dated 20 November 2013, the solicitor for Allen requested the President of the Law Society to appoint an independent barrister to resolve matters in accordance with cl 10 and 11 of the 2002 Deed.  The letter stated:

   In 2002 my client and his brother John Caratti were in dispute concerning their respective rights to various family assets including their respective rights to take part in the management of various family companies.  Allen Caratti and John Caratti settled that litigation by entering into a deed.

5. The letter set out cl 10 and 11 of the 2002 Deed and requested the appointment of an independent barrister 'to undertake the division of beneficial interests as contemplated by the deed'.  The President has not, to date, appointed a barrister. 

6. On 29 November 2013, John brought this application by chamber summons for an injunction restraining Allen by requiring him to withdraw the request, and restraining him from making any further request or otherwise invoking the procedure under cl 11 of the 2002 Deed.

7. If cl 11 of the 2002 Deed is an arbitration agreement, Allen has submitted his first statement on the substance of the dispute. The court is not required to refer the parties to arbitration under s 8(1) of the Commercial Arbitration Act 2012 (WA). Section 8(2) of that Act permits arbitral proceedings to be commenced or continued, and an award made, while the issue is pending before the court. John submits that provision is permissive only, and subject to the power of the court to restrain them. In my opinion, the submission is correct and the court may restrain parallel arbitral proceedings where that course is necessary to protect its own proceedings or processes or, more generally, where the administration of justice so demands.

The basis of jurisdiction

1. John relies on s 25(9) of the Supreme Court Act 1935 (WA) and O 52 r 1 and 2 of the Rules of the Supreme Court 1971 (WA), alternatively the inherent jurisdiction of the court. The court has jurisdiction to determine the disputes between Allen and John which are the subject of the action. Where the court is exercising jurisdiction, it has an inherent or implied power to prevent its processes being abused and 'to protect the integrity of those processes once set in motion': CSR Ltd v Cigna Insurance Australia Ltd [1997] HCA 33; (1997) 189 CLR 345, 391 ‑ 392. That power is the foundation for anti-suit injunctions, and, in my opinion, enables the court to grant an injunction of the kind now sought. The power is not restricted to closed categories, but is to be exercised when the administration of justice so demands or when necessary for the protection of the court's proceedings or processes.

2. Allen does not dispute that the court has jurisdiction to grant an injunction in the terms sought. 

The action

1. These proceedings are one of five actions between the brothers and their associated persons and entities, although only this action and CIV 1061 of 2008 have been progressing. 

2. In early 2012, John filed a substituted statement of claim.  It is long and detailed, and extensive particulars have been given.  Summarising a claim that requires 704 paragraphs and over 300 pages of particulars for its full statement may seem brave or pointless, but the essence of the claim bears on the question I must now decide.

The plaintiff's case

1. John pleads the following case.

2. From in or about 1950 to 1978, Sergio and Maddeleine Caratti (John and Allen's parents) carried on a family business under a partnership known as S&M Caratti.  John and Allen worked in the family business.  Prior to 1978, the family business was operated through a number of entities.  During 1977 to 1980, it was restructured:  new corporations and separate trusts were created, assets were transferred between entities, and further assets were acquired in the names of various persons.

3. In or about 1978 or 1979, John and Allen entered into an oral partnership agreement (the Partnership) and agreed that the assets and interests they held would be treated as assets of the Partnership.  The Partnership would dissolve upon John reaching the age of 65 years, and the assets and interests of the partners would be accounted for so as to result in equal entitlement for John and his children, and for Allen and his children.  John and Allen agreed that assets or interests that they acquired in the future would be accounted for on the dissolution of the Partnership on the same basis.  Sergio and Maddeleine agreed with John and Allen that the assets which had been accumulated by the family business would be distributed in accordance with this agreement.

4. On or about 1 June 1989, John and Allen entered into a written agreement entitled 'Deed of Partnership', which was intended to put into writing the substance of what had been earlier agreed.  The business of the Partnership was property acquisition, property development and sale of developed property, property rental, earth moving and farming.  John and Allen carried on the business of the Partnership through the various entities in their control at the time, and through new entities incorporated by them on the express basis of the Partnership. 

1. In making the 2002 Deed, John and Allen intended that it would identify the entities which, at that time, held assets of and formed part of the Partnership.  

2. The 2002 Deed varied the Partnership Deed and the Partnership.  Alternatively, it confirmed for the purpose of the Partnership Deed and the Partnership that the relationship between the parties was subject to its terms.  

3. John pleads that the 2002 Deed varied the Partnership Deed to include certain terms; alternatively those terms were implied to give it business efficacy.  These terms are particularly significant for the case he makes, as they include terms to the effect: 

   (a)At the time of the 2002 Deed, the 2002 Companies and the Allen Caratti Interest Companies were the only entities in which the business of the Partnership was carried on, and by which John and Allen held any interest in any business.

   (b)Allen's beneficial interest in any corporation or legal entity that existed at the time of the 2002 Deed, and though which he carried on the business of the Partnership or any business, would be an asset of the Partnership.

   (c)John and Allen would not circumvent the terms of the 2002 Deed by causing or allowing third parties in their control to establish new entities to carry on business, or to acquire assets or businesses, except on behalf of John and Allen.

   (d)If Allen held any shares, or held any interest in shares, in any corporation that engaged in the business of the Partnership or any business without the shareholding of any such corporation being equal between John and Allen, the shares or the interest in shares were the property of and an asset of the Partnership.

   (f)If Allen held any interest in property or assets of any legal entity that engaged in the business of the Partnership or any business, the property and assets of such entity were the property of and an asset of the Partnership.

   (g)If Allen held shares or was beneficially entitled to shares, or held any interest in property or assets of any corporation that carried on business by means of a trust, or held any asset by way of trust, the property and assets of the trust were assets of the Partnership.

4. The 2002 Deed also varied the date on which the Partnership would dissolve, and John and Allen agreed that it would dissolve upon John attaining the age of 60 years on 21 January 2010.  Upon dissolution, the property and assets of the Partnership would be applied under the terms of the 2002 Deed.

5. John pleads an alternative case, based on the 2002 Deed.  If no Partnership existed between them, John and Allen agreed they would carry on business together according to the terms of the 2002 Deed (the 2002 Arrangement), including terms implied into that arrangement.  The implied terms are extensive.  Any interests held by Allen in property or assets of any legal entity that engaged in the business of the 2002 Arrangement were subject to its terms.  To the extent that any business of the 2002 Arrangement was to be conducted by means of any trust, or any asset was to be held by any trust created by John or Allen, they would ensure that the beneficial interest in any such trust was equal.  The assets and beneficial interests in the business of the 2002 Arrangement would be divided and adjusted under the 2002 Deed on John reaching the age of 60.

6. John pleads that, by reason of the nature of the 2002 Arrangement and the obligations it imposed, Allen owed him fiduciary duties.

7. The effect of these pleas can be illustrated by three examples: the sixth defendant, Anketell Land Company Pty Ltd, a company in which Allen holds shares; the seventh defendant, Gucce Holdings Pty Ltd, a company in which all shares are held by Tina Bazzo; and land of which Tina Bazzo is the registered owner. 

Anketell Land Company Pty Ltd

1. Anketell Land Company has carried on the business of property acquisition, property development and sale of developed property, property rental, earthmoving and farming.  It was incorporated by Allen in 2004, after the 2002 Deed.  Allen holds beneficially two of the four ordinary shares in the company.  John pleads that the company has acquired assets by using assets of the Partnership or, if no Partnership existed, the assets of entities subject to the 2002 Arrangement. 

2. John claims that Allen's shares in Anketell Land Company, his interest in Anketell Land Company, and any beneficial interest Allen has in the assets or property of Anketell Land Company, including any property or asset held on trust, are assets of the Partnership or are held subject to the terms of the 2002 Deed.  Alternatively, he claims that Allen breached the terms of the Partnership Deed, or breached his fiduciary duties, or breached the implied terms of the 2002 Deed.  John claims relief through constructive trust, account for benefits, and damages or equitable compensation.

3. John pleads another alternative case: that Allen's conduct constituted a fraudulent and dishonest design on his part to establish and acquire, or to take part in the management of, new business interests, in breach of fiduciary duties owed under the Partnership, or the 2002 Arrangement.  He alleges that Anketell Land Company assisted Allen in various ways with actual knowledge of that fraudulent or dishonest design.  John seeks relief by way of constructive trust or equitable compensation.

4. Finally, John pleads the further alternative that Allen is estopped from denying that his interest in Anketell Land Company, any trust of which it is trustee, and its assets and property, are assets of the Partnership or subject to the 2002 Deed.      

Gucce Holdings Pty Ltd

1. Gucce Holdings was incorporated in January 2002.  Allen was a director until February 2002.  Tina Bazzo has been a director from 17 January 2002, and owns the 2 issued shares.  Gucce Holdings is not named in the 2002 Deed.

2. John claims that:

   1.Allen controls and directs all actions and activities of Gucce Holdings, and of Tina Bazzo in respect of Gucce Holdings, and is thereby involved in its management.

   2. Gucce Holdings has carried on the business of property acquisition, property development and sale of developed property, property rental, earthmoving and farming. 

   3.Gucce Holdings has acquired assets by funds and security being provided by Allen and the twentieth defendant, Mammoth Nominees Pty Ltd (Allen is the sole director and shareholder of Mammoth Nominees). 

   4.Allen has used the assets of the Partnership or the 2002 Arrangement, or his interest in them, to provide security for Gucce Holdings' financial obligations; to pay expenses and liabilities on behalf of Gucce Holdings; and to pay expenses and liabilities of entities in which Gucce Holdings is a shareholder. 

3. As a consequence, John claims that he is beneficially entitled to the shares in Gucce Holdings or has an interest in its assets, either as assets of the Partnership or as assets subject to the 2002 Arrangement.

4. John also claims relief against the property of Gucce Holdings, and against Tina Bazzo and Gucce Holdings, on the basis that Allen's conduct constituted a fraudulent and dishonest design to establish and acquire, or to take part in the management of, new business interests in breach of his fiduciary duties - either under the Partnership, or under the 2002 Arrangement - and Tina Bazzo had actual knowledge of Allen's fraudulent and dishonest design. 

5. John pleads two further alternative cases regarding Gucce Holdings.  First, the 2002 Deed ought to be rectified to include Gucce Holdings as one of the 2002 Companies.  Upon rectification, the Gucce Holdings shares and its assets and property are assets of the Partnership, alternatively are held 50% for John's benefit under the 2002 Arrangement.  Second, Allen is estopped from denying that his interest in Gucce Holdings, and any trust of which it is trustee and its assets and property, are assets of the Partnership or subject to the 2002 Deed.

Land registered to Tina Bazzo

1. Tina Bazzo is the registered owner of real property, listed in the statement of claim.  John claims that:

   1.Allen controls and directs all of Tina's actions and activities in respect of the properties;

   2.Tina acquired the properties with the assistance of entities of the Partnership, or entities subject to the 2002 Deed, providing her with funds, making payments on her behalf, or providing her with security;

   3.Allen has transferred property to Tina in his capacity as the director of another entity.

2. John claims that Allen is the beneficial owner of the properties and they are assets of the Partnership, or subject to the 2002 Arrangement.

3. Alternatively, he alleges that Allen breached the terms of the Partnership Deed, or his fiduciary duties.  As a consequence, the land is held on constructive trust for the Partnership; alternatively, Allen is liable to account to the Partnership for benefits obtained, or is liable to pay damages or equitable compensation.

4. John pleads another alternative:  Allen has breached the implied terms of the 2002 Deed, or his fiduciary duties arising out of that deed.  As a consequence, 50% of the land is held on constructive trust for John, alternatively Allen is liable to account for benefits, or to pay damages or equitable compensation.

5. In relation to the land, John pleads that Allen's conduct constituted a fraudulent and dishonest design in breach of his fiduciary duties and that Tina assisted him in acquiring assets in her name, with knowledge of that design.

Relief

1. John claims that an account should now be taken of the Partnership, and the partnership assets should be allocated so that the net value of the assets and interests held by John and his children, and Allen and his children, would be equal.  Alternatively, if the Partnership has come to an end by Allen's repudiation of it, an account of the Partnership should be taken and partnership assets allocated on the same basis of equality between the two brothers and their children.  Alternatively, if no Partnership existed, there should be an account taken of the 2002 Arrangement and equal allocation of the assets.    

2. John further claims that the net value of any assets that do not form part of the Partnership or the 2002 Arrangement, because they were acquired in breach of fiduciary duties, should be taken into account.

The defendants' cases

1. There are 73 defendants.  Those that have been active in the proceedings can be considered as two groups:  the Metaxas defendants (twenty four defendants, including Allen) and the Roe defendants (thirty seven defendants, including Tina Bazzo).   

The Metaxas defendants

1. It is not necessary, for present purposes, to go into the detail of the factual dispute between the parties.  The following aspects of the defence of the Metaxas defendants are immediately relevant.  First, they deny John and Allen formed a partnership by oral agreement in about 1978 or 1979.  Second, they admit that Allen signed the Deed of Partnership in 1989, but deny that there was a partnership.

2. The Metaxas defendants also plead that, in June 1999, John was convicted of conspiring to defraud the Commonwealth and imprisoned.  By reason of that conviction, John was prohibited by law from managing a corporation for a period of five years from the date of his release from prison.  Any partnership between John and Allen was dissolved by operation of law at the date of John's conviction.

3. Alternatively, the Metaxas defendants say that John has failed to perform his obligations to Allen in respect of the alleged partnership, and any partnership was abandoned.  They rely on a range of matters, including the conduct that is the subject of the action CIV 1061 of 2008.

4. The Metaxas defendants admit the terms of the 2002 Deed, but deny that it had the effect that John attributes to it.  In particular, they deny that it was a variation of the Partnership, or a confirmation of the partnership agreement.  The Metaxas defendants deny that the terms pleaded by John can be implied.  They deny that Allen owed John fiduciary duties.  Alternatively, they say that if fiduciary duties were owed, they were reciprocal.

5. The Metaxas defendants admit that the beneficial interests of John and Allen would be divided between them under the 2002 Deed.  They say that the assets to be divided were the beneficial interests of John and Allen in the 2002 Companies, the Allen Caratti Interest Companies and any new entities incorporated by them after the 2002 Deed was executed.  On that basis, they admit that Allen holds his beneficial interest in the shares of several companies on trust for himself and John equally, pursuant to the terms of the 2002 Deed.  The admission is limited to the shares.  It includes the shares in Anketell Land Company. 

6. The Metaxas defendants deny that Allen had any involvement in the management of Gucce Holdings, or has controlled it or the conduct of its business.  They deny that, on its proper construction, the 2002 Deed applied to Gucce Holdings, or to any beneficial interests Allen holds in Gucce Holdings or its shares.  They deny the claims for rectification and estoppel.

7. The Metaxas defendants plead that the 2002 Deed, on its proper construction, did not include other companies which were incorporated before its execution and not named in it. 

8. In relation to some companies (including many of the Roe defendants) the Metaxas defendants plead that Allen has no beneficial interest in their property or assets.

9. The Metaxas defendants plead that Allen has no interest in the real property registered in Tina Bazzo's name, and that he has never had an interest in those properties.

The Roe defendants 

1. The Roe defendants also deny that John and Allen were in partnership.  They admit the deed of partnership was signed, but say the common intention of John and Allen was not to carry on business in partnership, but to enable John to deal with assets of the family business, so as to confer interests on Allen and his children, without being exposed to more than nominal duty or tax on the transfer of any interest in the assets.

2. Alternatively, the Roe defendants say that if the deed of partnership was executed with the intention of carrying on business in partnership, John and Allen abandoned any partnership between them before May 1992 (when Sergio Caratti died).  They say that neither party complied with the express terms of the deed requiring the payment of a premium; no accounts or other financial statements were ever prepared in respect of the partnership; no taxation returns were ever prepared in respect of the partnership; and John and Allen never shared the profits or losses of the partnership.  

3. The Roe defendants also plead that any partnership between John and Allen was dissolved by operation of law on John's conviction and imprisonment for fraud.  Alternatively, they say John has refused to perform his obligations to Allen in respect of the alleged partnership since in or about May 2002, and has abandoned the alleged partnership.  It is unnecessary to detail the allegations of the conduct relied on, except to note that they include refusal to allow Allen to participate in the management of the business of the alleged partnership, or to allow Allen access to its books. 

4. The Roe defendants plead that the 2002 Deed was made in order to settle proceedings (CIV 2188 of 2002) that Allen had instituted against Maddeleine, John’s son Aaron, and nine companies.  In those proceedings, Allen sought declarations to the effect that he and Maddeleine were the only directors of nine companies, and that Aaron had never been a director of them.  They plead that if the 2002 Deed identified entities that formed part of a partnership between John and Allen, John was prohibited by law from carrying on business as a partner in that partnership and the 2002 Deed is void, alternatively it is unenforceable.

5. Further, they say that John and Maddeleine have refused to perform their obligations to Allen in respect of the 2002 Deed since in or about May 2004, have denied any obligation to perform the 2002 Deed, and have abandoned the 2002 Deed.   

6. The Roe defendants plead that Allen has never had any involvement in the management of Gucce Holdings, and that Tina Bazzo has controlled the company and the conduct of its business since its incorporation.  They deny that Allen has, or has ever had, any interest in the shares or assets of Gucce Holdings.  They plead similarly, in relation to other companies in the Roe defendants group, that Allen has no interest in their shares or property.

7. The defendants deny John's claims that the properties owned by Tina Bazzo are assets of the Partnership, or assets of the 2002 Arrangement.  They say that Allen has no interest in the land and has never had any interest in it.

The cl 11 procedure

1. There are, in my opinion, abundant reasons why the reference to a barrister should be restrained. 

2. First, it is clear, and Allen does not contend otherwise, that the procedure under cl 11 of the 2002 Deed cannot resolve all issues between the parties.  Some of the problems are fundamental.  In particular, there are 72 defendants that are not parties to the 2002 Deed, and that would not be parties to any 'proceedings' before the chosen barrister, and would not be bound by his or her findings.  

3. Second, Allen has acknowledged that the arbitration can lead to a partial resolution only.  In correspondence between the solicitors, Allen's representative has put forward the notion that there are 'agreed assets', which can be distributed, and 'disputed assets' which will require decision of the court.  He has, however, neither identified what assets are agreed, nor identified a process by which they can be determined.  Even where there is a level of agreement (such as for those companies where the Metaxas defendants admit that Allen holds shares on trust for himself and John equally) there remains a real dispute about whether equality of shareholding is sufficient to achieve the required equality of beneficial interests.

4. Third, the questions to be determined, both factual and legal, are of some complexity.  Even at a threshold stage, the question of what is meant by the 'beneficial interests' of John and Allen requires resolution.  I note, for example, that while cl 10 uses the term beneficial interests, it refers to division 'in specie', and cl 11 contemplates a 'distribution of assets'.

5. Fourth, again as a threshold issue, John contends that cl 10 and 11 contemplate one reference in which the barrister will resolve all unresolved issues and by which all beneficial interests will be divided equally.  This construction is consistent with the provision in cl 10 for a cash adjustment when that is necessary to achieve equality.  It is at least arguable that cl 10 is not consistent with a partial distribution of agreed assets only, to be revisited following the determination of what other assets are subject to the 2002 Deed.  Counsel for John submitted, correctly in my opinion, that a piecemeal division could have tax consequences, and could result in the need for later adjustments and distributions, perhaps after property has changed in value or is no longer available.

6. The barrister would thus be required to determine the proper construction of the 2002 Deed as it affects the scope of his or her reference.  There is an obvious opportunity for conflicting decision between the barrister and court on both threshold issues. 

7. Fifth, even among the 2002 Companies, there are entities which act as trustees.  It is not readily apparent how the appointed barrister, in proceedings between the two brothers, can effect an equal division of beneficial interests in property held by a trust. 

8. Sixth, one of the principal disputes in the proceedings is whether the 2002 Deed confirms or varies an existing partnership, or is itself an 'arrangement'.  This dispute is not only between John and Allen, but includes the Roe defendants.  The Roe defendants have brought an application - yet to be heard - for the preliminary and separate determination of questions regarding the existence of the alleged partnership.  The determination of whether the relationship was a partnership affects a range of issues, including the existence and nature of any fiduciary duties owed by each party, and the relief claimed.  Again there is a risk of inconsistent decisions.

1. Seventh, John claims relief by way of the rectification of the 2002 Deed.  Most significantly, he has pleaded rectification to include Gucce Holdings in the 2002 Companies.  Because of the manner in which Gucce Holdings holds property, that claim affects many parties, including Gucce Holdings and Tina Bazzo, who are not parties to the cl 11 process. 

2. For these reasons, in my opinion it is appropriate to restrain the pursuit of the cl 11 procedure in order to protect the integrity of the court processes in a matter in which its jurisdiction has already been engaged, and which has been proceeding now for more than five years.  I am particularly concerned about the scope for inconsistent decisions regarding the interpretation of the 2002 Deed, the existence of the Partnership, the nature of the arrangement under the 2002 Deed if there was no partnership, and the entities which are subject to the arrangements in the Deed.  

3. I also have regard to the tight schedule - I am tempted to say ridiculously tight in the context of a dispute this large and complex ‑ in which the barrister would be required to complete the task.  John asserts that all of the issues relating to the existence of the Partnership or the 2002 Arrangement must be determined.  I doubt it could be done in 60 days.  The resources the parties would be required to expend, and duplicate, are strong reason not to attempt it.

4. Counsel for John argued that the court should restrain the proposed reference on the alternative bases that Allen has, by his conduct:

   1.waived his right to invoke the cl 11 process while these proceedings are on foot;

   2.created an equitable estoppel by which his right to invoke cl 11 is suspended; and

   3.elected not to pursue the cl 11 procedure.

5. It is not necessary to determine these further grounds.

The undertaking

1. John has given an undertaking in the usual form.  Allen requests that John be required to give security for the undertaking.  There are two reasons why that application should be refused.  First, there is no apparent basis on which Allen would suffer loss by the determination of all issues by the court rather than by a barrister.  Second, if loss may be suffered as a result of the making of the injunction, Allen's submission does not sit well with the general thrust of his case that he and John are equally entitled to millions of dollars in assets.

2. I will not make an order for security.