IIB Global NV v Scott Darren Pascoe (No 4)

[2011] NSWSC 1413

Supreme Court

New South Wales

Medium Neutral Citation:	IIB Global NV & Anor v Scott Darren Pascoe & Ors (No 4) [2011] NSWSC 1413
Hearing dates:	3 November 2011
Decision date:	22 November 2011
Jurisdiction:	Equity Division
Before:	Black J
Decision:	Opportunity given for further submissions prior to making order that paragraphs 2-6 of the Summons be stuck out
Catchwords:	PRACTICE AND PROCEDURE - Whether reasonably arguable case is established for relief sought in Summons - Whether person associated with foreign company has standing to seek declaratory relief in respect of the company's rights
Legislation Cited:	- Civil Procedure Act 2005 (NSW) s56 - Real Property Act 1900 (NSW) s138 - Uniform Civil Procedure Rules 2005 (NSW) r 13.4(1)(b)
Cases Cited:	- Anderson v Midland Railway Co [1902] 1 Ch 369 - Australian Agricultural Co v Oatmont Pty Ltd (1992) 8 ACSR 255 - Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937 - Burton v Shire of Bairnsdale (1908) 7 CLR 76 - Cox v Journeaux (No 2) (1935) 52 CLR 713 - Shalhoub Holdings Pty Ltd v Commonwealth Bank of Australia [2006] NSWSC 607
Category:	Interlocutory applications
Parties:	Linden Prescott Dyason (Plaintiff) Scott Darren Pascoe, Elizabeth Ann Occleshaw and Lindsey Jane Dyason (First Defendant) Scott Darren Pascoe (Second Defendant)
Representation:	Counsel: The Second Plaintiff appeared in person B.J. Skinner (S.D. Pascoe & E.A. Occleshaw) Solicitors: The Second Plaintiff appeared in person Goldrick Farrell Mullan (S.D. Pascoe & E.A. Occleshaw)
File Number(s):	11/294682

Judgment

1. By Notice of Motion filed on 5 October 2011, Mr Pascoe (as trustee of the bankrupt estate of Mr Arthur Dyason) seeks orders that paragraphs 2-6 of the relief sought in the Summons and the associated pleadings and particulars be struck out or dismissed. Mr Pascoe also seeks orders that the Registrar General register certain unregistered dealings and be ordered to reject and cancel two other dealings under s 138 of the Real Property Act 1900 (NSW). The Registrar General has filed a submitting appearance except in respect of costs in the proceedings.

1. The application made by Mr Pascoe gives rise to some complexities and any order striking out the proceedings may, for reasons I indicate below, give rise to practical difficulties. I have therefore determined that the preferable course is to indicate the conclusions which I have reached as to the matters which were argued before me but allow the parties an opportunity to make further written submissions, within 14 days, as to the further orders or directions which should be made in the proceedings consequential upon this judgment.

The relevant principles

1. The Court's power to dismiss a Summons generally or claims made in it arises under rule 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) which relevantly provides that:

If in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings:

...

(b) no reasonable cause of action is disclosed ...

the court may order that the proceedings be dismissed generally or in relation to that claim.

The Court's power to dismiss proceedings under this rule is exercised with caution but may be exercised where a plaintiff's case is so weak that it would be futile to permit the proceedings to go to trial: see Ritchie's Uniform Civil Procedure NSW at [13.4.15].

1. The relevant principles have been identified in the case law. In Burton v The President of the Shire of Bairnsdale (1908) 7 CLR 76 at 98-100, Higgins J observed that the power to strike out a claim:

... has been held not to apply except in plain or obvious cases; and if there is a point of law that requires any serious discussion, it should be set down for argument: Hubbuck v Wilkinson . The pleading must be "obviously frivolous or vexatious, or obviously unsustainable," if it is to be struck out (per Lindley LJ in Attorney General of the Duchy of Lancaster v London and North Western Railway Co ). The pleading must be "so clearly frivolous that to put it forward would be an abuse of the process of the Court": Young v Holloway .

1. In Cox v Journeaux (No 2) (1935) 52 CLR 713, the High Court exercised the power to summarily dispose of proceedings. However, the exceptional character of the jurisdiction to do so was emphasised by Sir Owen Dixon who observed that:

It is only when to permit it to proceed would amount to an abuse of jurisdiction, or would clearly inflict unnecessary injustice upon the opposite party that a suit should be stopped. But the Court is not concluded by the manner in which the litigant formulates his case in his pleadings. It may consider the undisputed facts. Further, it is not limited to cases where there is no dispute of fact.

1. Similarly, in Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937 at 944, Cross J observed that "the fundamental principle is that prima facie a plaintiff is entitled to have his case come to trial; and applications to deprive him of that right will succeed only in the clearest of cases" and that "fatal defects in the plaintiff's case must be very clear before the court will intervene in this fashion". In Shalhoub Holdings Pty Ltd v Commonwealth Bank of Australia [2006] NSWSC 607, after undertaking a comprehensive review of the case law, Rothman J observed that the Court has an inherent jurisdiction, described in the rule, to strike out a plaintiffs' case because it is so weak and/or because it depends upon facts, which, on the plaintiffs' case, cannot be proven, but observed that the Court would take that course "only in exceptional circumstances and only where it came to the view that to proceed further would be futile."

The relevant pleadings

1. By way of background, I should note that, on 21 September 2011, I delivered an earlier judgment in these proceedings by which I ordered that the Summons be dismissed in respect of the First Plaintiff ("IIB Global"), that IIB Global be dismissed from the proceedings and that paragraph 1 of the Summons be dismissed in respect of the Second Plaintiff, Mr Linden Dyason ("Mr Dyason"). The result of those orders was that Mr Dyason, in his personal capacity, remained as Plaintiff in the proceedings in respect of the orders sought in paragraphs 2-6 of the Summons.

1. Paragraph 2 of the Summons seeks an order that the application be adjourned until the "applicant" obtains permission to represent Ms Lindsey Jane Dyason as one of the registered proprietors. Ms Lindsey Dyason is the third named Second Defendant in the proceedings and is one of the registered proprietors of the property in issue in the proceedings. The Summons uses the term "applicant" to refer to Mr Pascoe (who is one of the third named First Defendants and also the Second Defendant) or possibly to Mr Pascoe and Ms Occleshaw (who are the third named First Defendants).

1. I do not consider that there is any reasonable prospect that the Court would make the order sought in paragraph 2 of the Summons. Mr Pascoe and Ms Occleshaw have been joined by the Plaintiffs as Defendants in the proceedings and are entitled to defend the proceedings. Ms Lindsey Dyason has also been joined as a Defendant in the proceedings although she has not taken any active part in them. I can see no basis on which Mr Pascoe's and Ms Occleshaw's ability to defend the proceedings against them should be made conditional on their obtaining permission to represent another defendant in the proceedings. There is also no evidence before the Court that Ms Lindsey Dyason has consented or would consent to being represented in that manner and such an order would require an adjournment for an indefinite period if Ms Lindsey Dyason delays in consenting to that arrangement or does not consent to that arrangement. I consider that paragraph 2 of the Summons should be dismissed.

1. Paragraph 3 of the Summons seeks a declaration that the handwritten words "including transfer of the mortgage" in Schedule 2, clause 1 of a caveat lodged by Mr Pascoe over the relevant property are of no force and effect. Mr Dyason has not put submissions to support this relief and I am aware of no principle which prevents a handwritten amendment being made to a caveat before it is lodged. I have granted orders extending the operation of that caveat, on an interlocutory basis, in my judgment delivered on 14 October 2011 in these proceedings. I can see no basis on which the Plaintiffs could succeed in obtaining the relief sought under this paragraph. I consider that paragraph 3 of the Summons should be dismissed.

1. Paragraph 4 of the Summons seeks:

"A Declaration that there is no legal impediment to the Registrar of Lands and Property Management Authority ("LPMA") giving effect to the registration of the Transfer of Mortgage AC [omitted] from The Trust Company to IIB Global NV, the First Plaintiff (presently pending with LPMA)."

1. There appears to be no contest before me as to several relevant facts, which I summarised in my earlier judgment delivered in these proceedings on 21 September 2011. By letter dated 28 April 2008, solicitors acting for (inter alia) Mr Arthur Dyason advised solicitors for The Trust Company (PTAL) Limited ("PTAL") that an amount had been transferred to PTAL in payment of the amounts due under the mortgage and requested those solicitors to forward the certificate of title and a discharge of the mortgage. PTAL executed a discharge of the mortgage on 9 May 2008 that was lodged, together with the certificate of title, with the Land Titles Office by IIB Global's solicitors by letter dated 17 August 2009. By letter dated 28 March 2011, solicitors for PTAL advised that the relevant mortgage had been transferred to IIB Global. An undated transfer of mortgage was signed on behalf of PTAL.

1. It appears that PTAL received the relevant payment on the basis of its agreement that it would discharge the mortgage once that payment was received. If that is the factual position, then it is difficult to see any basis on which PTAL could have enforced its mortgage against Mr Arthur Dyason (or Mr Pascoe as his trustee in bankruptcy) after it had agreed to discharge it, had received payment of the amount due on that basis and a discharge of mortgage had been executed and lodged for registration. However, the fact that a claim may be unlikely to succeed at a final hearing will not generally be sufficient to warrant an order that it be struck out having regard to the principles set out above.

1. There is, in my view, a second difficulty with the declaration presently sought by Mr Dyason in paragraph 4 of the Summons, as to which I sought and received additional submissions from the parties. The relief sought in that paragraph seeks to establish, in effect, that IIB Global is entitled to registration of a transfer of a mortgage to it. IIB Global is not now party to the proceedings and Mr Dyason is also not, for the reasons I set out in my judgment dated 21 September 2001, an officer of IIB Global. The evidence which I reviewed in that judgment indicates that:

• Mr Dyason is founder and principal of the Institute for Independent Business, a not for profit company registered in the United Kingdom.
• IIB Global was incorporated in the Netherland Antilles on 13 December 2004 and Citco Curacao, a global consultancy company, and Mr Liu were appointed as its Managing Directors.
• The Institute for Independent Business Private Foundation holds 6000 shares of the stock of IIB Global and may have transferred the "Founder's authorities" for the Institute for Independent Business Private Foundation to Mr Dyason; however, there is no evidence as to the content of the "Founder's authorities" under the law of the Netherlands Antilles.
• Mr Dyason exercises a degree of practical control or influence over the affairs of IIB Global.

1. The declaration sought in paragraph 4 of the Summons seeks to vindicate rights of IIB Global and, in the ordinary course, IIB Global would have standing to seek that declaration and would be the proper party to seek such a declaration. By contrast, a shareholder does not generally have standing to seek declaratory relief in respect of rights as between a company and a third party: Anderson v Midland Railway Co [1902] 1 Ch 369; Australian Agricultural Co v Oatmont Pty Ltd (1992) 8 ACSR 255 at 268. There are good practical reasons for that position since, otherwise, proceedings could be brought by a shareholder to seek to assert a company's rights against its wishes; there would be a risk of multiplicity of proceedings, if a company and individual shareholders brought separate proceedings to assert the company's rights, possibly formulated in different ways; and there would be a real risk of inconsistent results, if the Courts reached different conclusions in separate proceedings brought by a company and individual shareholders as to the content and effect of the same rights.

1. In the present circumstances, Mr Dyason's position is more remote than that of a shareholder in IIB Global, since it appears that Independent Business Private Foundation and not Mr Dyason personally is the shareholder in IIB Global. In my view, it would be futile to permit the claim for the declaration sought in paragraph 4 of the Summons to go to trial, since Mr Dyason does not have seek standing to seek it. I do not regard this as a mere "technical" deficiency, where Mr Dyason's seeking the relief in his personal capacity would result in the claim for that relief being determined in proceedings in which IIB Global has never been represented by a person with authority to act for it and is now no longer party and would deprive Mr Pascoe of the opportunity to obtain security for costs which would or may have been available to him if IIB Global had pursued the proceedings in its own right. Subject to the matter noted in paragraph 22 below, I consider that paragraph 4 of the Summons should also be dismissed under UCPR r 13.4(1)(b).

1. Paragraph 5 of the Summons seeks an order that "the Applicant return the Certificate of Title for the relevant property to IIB Global as mortgagee". It appears the reference to "the Applicant" here is also to Mr Pascoe and Ms Occleshaw notwithstanding they are Defendants in the proceedings. The only basis on which such an order could be sought would be IIB Global's claim as mortgagee, arising from registration of the assignment of the mortgage taken by PTAL to IIB Global. Since I have concluded that Mr Dyason does not have standing to pursue that claim to a final hearing, and subject to the matter noted in paragraph 22 below, it would also be appropriate to dismiss this paragraph of the Summons.

1. Paragraph 6 of the Summons seeks an order for costs which would be consequential on the result of a final hearing. Subject to the opportunity for further submissions to which I refer below, I consider that paragraph 2 would be dismissed consequential on any dismissal of paragraphs 2-5 of the Summons.

Other orders sought by Mr Pascoe

1. Mr Pascoe also seeks orders that:

• The Registrar General register unregistered dealing AG274266, which is an application of record writ lodged by a third party;
• The Registrar General be ordered to reject two specified dealings relating to a change of name and the transfer of the mortgage from PTAL to IIB Global pursuant to section 138 of the Real Property Act ; and
• The Registrar General register the discharge of mortgage lodged by PTAL pursuant to section 138 of the Real Property Act .

1. Section 138 of the Real Property Act allows the Court, in proceedings for the recovery of an interest in land or proceedings in which the Court makes a determination as to an interest in land, to make specified ancillary orders. I will assume, without deciding, that the prerequisites to the exercise of the power under s 138 of the Real Property Act may be satisfied in the present case.

1. However, I do not consider that I could presently make the orders sought, since Mr Pascoe's entitlement to such orders would depend upon a finding, on a final basis, adverse to IIB Global that the assignment of the mortgage from PTAL to IIB Global was ineffective. Although I have made observations as to that question in my interlocutory judgment dated 21 September 2011 and would, subject to the further submissions referred to below, dismiss the balance of the relief sought by Mr Dyason in the Summons for the reasons noted above, this does not amount to a final determination adverse to IIB Global which would support relief in the terms sought by Mr Pascoe. Neither IIB Global not appearing in the proceedings by a person properly authorised to represent it nor Mr Dyason's lack of standing to pursue relief in respect of IIG Global's claims establish that Mr Pascoe is entitled, on a final basis, to the relief which he claims against IIB Global.

Further submissions

1. In my view, there is a real risk that the order which could now be made, dismissing the balance of the Summons without resolving the matters noted in paragraph 19 above, will not resolve the substantive matters in dispute between the parties. Such a resolution might better be achieved by, for example, directions as to the filing of any cross-claim seeking orders of the kind referred to in paragraph 19 above, the joinder of any additional parties to the proceedings which are necessary parties to such a cross-claim and the filing of any further evidence, and listing the proceedings for a final hearing at the earliest possible date.

1. I consider the preferable course is therefore to allow the parties a further 14 days to make submissions as to the directions or orders that may be made consequential on my judgment. I reserve the question of costs of the motion pending those further submissions and the orders that are then made.

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Decision last updated: 29 November 2011