Labriola v Kuntyj - [2021] WASC 375

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
CITATION:   LABRIOLA -v- KUNTYJ & ANOR [2021] WASC 375
CORAM:   MASTER SANDERSON
HEARD:   20 OCTOBER 2021
DELIVERED          :   28 OCTOBER 2021
FILE NO/S:   CIV 1188 of 2021
BETWEEN:   JENNIFER KRYSTINA LABRIOLA
Plaintiff

AND

LYNDA DEANNE KUNTYJ
First Defendant

LYNDA DEANNE KUNTYJ as executrix of the estate of THE LATE BOHDAN KUNTYJ
Second Defendant

Catchwords:

Practice & procedure - Defendants' application for summary judgment - Turns on own facts

Legislation:

Family Provision Act 1972 (WA)
Rules of the Supreme Court 1971 (WA)
Superannuation Industry (Supervision) Act 1993 (Cth)

Result:

Application dismissed

Representation:

Counsel:

Plaintiff	:	F A Robertson
First Defendant	:	L A Tsaknis
Second Defendant	:	L A Tsaknis

Solicitors:

Plaintiff	:	Armstrong Legal
First Defendant	:	Dwyer Durack
Second Defendant	:	Dwyer Durack

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

MASTER SANDERSON:

This is the defendants' application for summary judgment. It is brought under O 16 of the Rules of the Supreme Court 1971 (WA). There are two significant differences between O 14 and O 16. In an application under O 16, a plaintiff is confined to the causes of action pleaded in a statement of claim. Thus, if material facts which could have been pleaded are not pleaded and the statement of claim does not disclose a cause of action, then judgment will be entered for the defendant. Under O 14, a defendant is free to raise any defence to the plaintiff's claim that might be available. Generally speaking, no defence will have been filed when an O 14 application is made, and there is no prospect of confining a defendant to what is pleaded.
The second important difference is that a plaintiff who is unsuccessful on an O 14 application has no right of appeal. On the other hand, a defendant who applies under O 16 and is unsuccessful can appeal. The Court of Appeal has expressed the view this difference is an anomaly and indicated appeals dismissing an O 16 application have limited chances of success. Nonetheless, the reasons for dismissing an O 16 application have to be sufficiently detailed to expose the reasoning behind the order dismissing the application. At the same time, it is inappropriate to make any finding of fact or draw any conclusions of law which might be seen to determine any aspect of the plaintiff's case. It requires sailing a fine line.
The amended statement of claim in this case presents a very straightforward case. Bohdan Kuntyj (the deceased) died on 28 August 2018. He left a will dated 2 July 2018. The plaintiff is a child of the deceased, and it is pleaded, a person entitled to apply for provision from the deceased's estate within the meaning of s 7 of the Family Provision Act 1972 (WA). The second defendant was appointed executor and trustee under the terms of the will, and probate of the will has been granted to her.
At the date of death of the deceased, there was in existence the Bohdan Superannuation Fund (the Fund). The Fund was a self‑managed superannuation fund within the meaning of s 17A of the Superannuation Industry (Supervision) Act 1993 (Cth). Bohdan Holdings Pty Ltd (Bohdan Holdings) was the trustee of the Fund. The Fund held assets totalling approximately $2,300,000. Bohdan Holdings was incorporated on or about 1 August 2003. At all material times, it acted as trustee of the Fund. It had one issued share, which was owned legally and beneficially by the deceased as at the date of his death. Up until the date of his death, the deceased was the sole director of Bohdan Holdings. As at 13 September 2018, the first and/or second defendant became the sole shareholder and director of Bohdan Holdings. (Paragraphs 6(c)(ii) and 6(e) are inconsistent as to the date upon which the first and/or second defendant became a shareholder of Bohdan Holdings. Nothing turns on this discrepancy.)
The defendants accept all of these facts as pleaded. Of course, on an application for summary judgment, a defendant must accept the facts as pleaded for the purposes of the application. But in this case, the defendants actually accept without argument, the pleaded facts are correct.
At this point, it is appropriate to look a little more carefully at the terms of the Fund. In opposition to the application, Ms Kuntyj filed an affidavit sworn 31 August 2021. Appearing as attachment LDK10 to that affidavit is a copy of the Bohdan Superannuation Fund original trust deed dated 13 August 2003. The document identifies Bohdan Holdings as the trustee of the Fund, and Bohdan Kuntyj as the 'Member'. On 19 November 2008, what is described as the 'Bohdan Superannuation Fund Deed of Amendment' (Deed of Amendment) was executed. During the course of his submissions, counsel for the defendants correctly pointed out that although this latter document is said to be a deed of amendment, in reality it replaces the original deed. So, it is to the Deed of Amendment one must look to ascertain the terms of the Fund.
It was common ground between the parties that upon the death of the deceased, the first defendant (in her capacity as executor of the estate of the deceased) became entitled to appoint a director to Bohdan Holdings. She appointed herself, and she was entitled to take that step. She was then both the executor of the deceased's estate and the sole director of Bohdan Holdings, which was still trustee of the Fund. Clause 12.6 of the deed of variation deals with 'Death Benefits'. Relevantly for present purposes, cl 12.6.2 reads as follows:
A Death Benefit to which this Rule applies must, subject to the remaining provisions of this Rule 12.6, be paid in proportions decided by the Trustee to one. or more of the following:
(a) one or more of the Member 's Dependants; and
(b)the Member's Legal Personal Representative.
The Trustee must consider any Death Benefit Nomination made in accordance with Rule 12 .6.4, but unless Rule 12.6.5 applies may not treat the Death Benefit Nomination as binding.
It is worth noting that the reference in cl 12.6.2(a) is to 'Member's Dependents'. That phrase is not defined in cl 1. However, as counsel for the defendants conceded, the phrase is likely interchangeable with the defined term 'Dependent'.
It is clear then that under the terms of the deed of variation, the second defendant, having been duly appointed as the sole director of Bohdan Holdings by the first defendant, was entitled to make payment from the Fund to herself. The plaintiff does not argue otherwise. The plaintiff says that the first defendant, in the exercise of her fiduciary duty, was obliged to make payment from the Fund to the estate of the deceased. That alleged duty is pleaded in this way:
9.As Executor of the Will and estate of the Second Deceased, she owed the estate:
a. duty to identify, secure and collect assets of the estate;
b. a duty not to use knowledge or opportunity arising out of her appointment as executor to advance her personal interests; and
c.a duty not to pursue a personal benefit in circumstances where there is a real or significant possibility of a conflict between her fiduciary duty and personal interest;
It is important to note that this case is not pleaded on the basis that the first defendant had a duty to the plaintiff in the plaintiff's capacity as a beneficiary of the estate. The plea is that the fiduciary duty was owed by the executor to the estate, and that duty was breached when the first defendant caused Bohdan Holdings to make payment to her, rather than to the estate.
The first defendant, for her part, puts the position this way. As executor of the estate, she was entitled to appoint whomsoever she chose to the position of director of Bohdan Holdings. She decided to appoint herself. She was quite entitled to do so. However, once she appointed herself, she acted as a director of Bohdan Holdings - she was not acting in her capacity as executor of the deceased's estate. That being so, she owed no fiduciary duty to the estate in the exercise of her powers as a director of Bohdan Holdings.
Having rehearsed the arguments made by the parties, it is clear this case is not clear-cut. Summary judgment will only be granted in the clearest of cases. I accept that it is difficult to see any further facts emerging which could alter the arguments advanced by the parties. However, applying the test for summary judgment, I am not satisfied this case is so clear that the plaintiff's claim is bound to fail. Accordingly, the summary judgment application will be dismissed.
In keeping with usual practice, the costs of the application for summary judgment, including reserved costs, will be costs in the cause.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MM
Court Officer
28 OCTOBER 2021