Mantovani v Vanta Pty Ltd
[2020] VSC 736
•6 November 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2019 00733
IN THE MATTER of an application by GIOVANNI ALFREDO MANTOVANI pursuant to Rule 54.02 of the Supreme Court (General Civil Procedure) Rules 2015
BETWEEN:
| GIOVANNI ALFREDO MANTOVANI | Plaintiff |
| and | |
| VANTA PTY LTD (ACN 005 190 965) (as trustee of the Mantovani Family Trust) and OTHERS (according to the schedule) | Defendants |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 February 2020 |
DATE OF JUDGMENT: | 6 November 2020 |
CASE MAY BE CITED AS: | Mantovani v Vanta Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2020] VSC 736 |
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PRACTICE AND PROCEDURE – Appeal from Judicial Registrar – Appeal de novo – Where defendants seek order the proceeding continue as if commenced by writ – Where defendants allege family trust reconstituted and dispute plaintiff is beneficiary – Where plaintiff seeks order to amend originating motion – Where plaintiff is seeking trust documents – Supreme Court (General Civil Procedure) Rules 2015 (Vic) rr 4.06, 36.01, 54.02, 54.05, 84.05 – Bendigo and Adelaide Bank Limited v Grahame [2020] VSC 86.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Barrett | Cornwalls |
| For the First Defendant, Second Defendant and Third Defendant (in his personal capacity) | Mr PG Cawthorn QC and Mr H Kirimov | SMR Legal Pty Ltd |
| For the Third and Fourth Defendants (in their capacity as executors of the will of Teresa Mantovani) | Cassidys Morrison & Teare |
SCHEDULE OF PARTIES
| BETWEEN: | |
| GIOVANNI ALFREDO MANTOVANI | Plaintiff |
| and | |
| VANTA PTY LTD (ACN 005 190 965) (as trustee of the Mantovani Family Trust) | First Defendant |
| and | |
| NICOLA MANTOVANI | Second Defendant |
| and | |
| SALVATORE ROCCO MANTOVANI (personally and as executor of the will of Teresa Mantovani) | Third Defendant |
| and | |
| CARMINE VINCENZO MANTOVANI (personally and as executor of the will of Teresa Mantovani) | Fourth Defendant |
HER HONOUR:
Introduction
Giovanni Mantovani (‘the plaintiff’), Nicola Mantovani (‘Nicola’), Salvatore Mantovani (‘Salvatore’) and Carmine Mantovani (‘Carmine’) are the adult children of Vincenzo Mantovani (‘Vincenzo’) and Teresa Mantovani (‘Teresa’). Vincenzo died on 20 July 1974. Teresa died on 14 October 2015.
Probate of Teresa’s will and estate was granted to Salvatore and Carmine on 25 June 2018. The inventory of assets filed with the application for the grant of probate lists a property at 20 Broadway Street, Cobram, in the State of Victoria, as an asset of Teresa’s estate. Under Teresa’s will, this property was devised to the plaintiff. The property has not been distributed to the plaintiff as the executors consider they may need to sell it to meet the liabilities of Teresa’s estate.
Over the years many properties owned by Teresa and Vincenzo were transferred to the Mantovani Family Trust (the ‘Family Trust’). Vanta Pty Ltd (‘Vanta’) was appointed trustee of the Family Trust, having been incorporated on 19 May 1976. The current directors and shareholders of Vanta are Nicola and Salvatore. Carmine is a former director of Vanta. There is disagreement between the plaintiff and Vanta, Nicola and Salvatore (collectively ‘the defendants’) about the distribution of Teresa’s estate and whether the plaintiff is in fact a beneficiary of the Family Trust.
Since April 2017, the plaintiff has sought details of the Family Trust and access to trust documents and accounts. To date, the defendants have not produced any such documents.
Plaintiff’s proceeding
By originating motion filed 21 February 2019, the plaintiff seeks orders and declarations pursuant to r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’) against Vanta as the trustee of the Family Trust, and Nicola, Salvatore and Carmine. Salvatore and Carmine are sued both personally and as executors of Teresa’s estate.
The plaintiff seeks that Vanta produce certain documents concerning the Family Trust from 2008 to the present, including the trust deed of the Family Trust, and for the documents to be provided electronically. In the event that the trust deed cannot be located, the plaintiff seeks a declaration that all assets held by Vanta are held subject to a resulting trust in favour of Teresa’s estate, and an order for the taking of accounts and payment by the defendants of any amounts found to be due to Teresa’s estate.
Plaintiff’s application to amend
By summons filed 14 November 2019, the plaintiff seeks leave, pursuant to r 36.01 of the Rules, to file and serve an amended originating motion seeking: (a) to expand the period of time for which documents are sought to those dating back to 27 July 1976; and (b) to expand the range of documents to be produced by adding the word ‘all’ before each category of documents. In addition, by oral application during the appeal hearing, the plaintiff seeks to add the words ‘and any reconstituting deed’ after the words ‘a copy of the Mantovani Family Trust’ in paragraph 1(a) of the originating motion.[1]
[1] The final version of the amended originating motion is annexed to these reasons.
Pursuant to r 84.04 of the Rules, the plaintiff’s summons was referred to Judicial Registrar Caporale for hearing and determination. At the hearing on 11 December 2019, the defendants opposed the plaintiff’s application for leave to amend and sought orders that the proceeding continue as if commenced by writ and that pleadings be filed and served.
On 17 December 2019, leave was granted to the plaintiff to file and serve an amended originating motion in the form annexed to his summons filed 14 November 2019.
Defendant’s appeal
By notice of appeal filed 8 January 2020, but which the defendants failed to serve on the plaintiff, the defendants appealed the decision and sought orders that the proceeding continue as if commenced by writ and that the plaintiff be required to file a statement of claim.
Pursuant to r 84.05(4) of the Rules, an appeal from a determination made by a Judicial Registrar proceeds as a hearing de novo. A hearing de novo involves the Court rehearing an application from the beginning, unconstrained by the former decision under appeal.[2] It requires the Court to reconsider the evidence before the decision-maker at first instance, as well as any new evidence upon which the parties may rely.[3]
[2]Bendigo and Adelaide Bank Limited v Grahame [2020] VSC 86, [18] (Sloss J), citing Southern Motors Pty Ltd v Australian Guarantee Corporation Ltd [1980] VR 187, 190 (Starke, Murphy and Brooking JJ).
[3]Ibid [15]–[18] (Sloss J). See especially [16], citing Butterworths Australian Legal Dictionary, (1997), ‘de novo’.
The plaintiff relied on his affidavits sworn 19 February 2019 and 19 July 2019 and the affidavits by his solicitor sworn 22 March 2019 and 9 August 2019.
The defendants relied on an affidavit by Salvatore sworn 26 June 2019 on behalf of Vanta, Nicola and Salvatore. Carmine filed an affidavit sworn 6 June 2019 as to the assets and liabilities of Teresa’s estate. For the purposes of the appeal, the defendants also relied on an affidavit by their solicitor, Alexander Joel Sheed-Finck, sworn 26 February 2010.
Background
Salvatore deposed that Vanta is the trustee of the Family Trust. Vanta has two issued ordinary shares and is controlled by members of the Mantovani family. From 1976 until 2010, Teresa and Nicola were the directors of Vanta. In 2010 and 2011, various changes were made to Vanta in respect of the directors, secretary and shareholders. On 29 August 2010, Teresa resigned as a director of Vanta and Salvatore was appointed a director. On 19 August 2011, Teresa’s one share was transferred to Nicola, and Carmine transferred his one share to Salvatore and resigned as secretary and director. On the same date, Salvatore was appointed secretary. The current directors of Vanta are Nicola and Salvatore. Salvatore is the current secretary.
The properties transferred to Vanta are located in Cobram. One parcel of land was transferred to Vanta on 1 July 1976. On 4 April 1977, this parcel of land was subdivided into four residential units. On 31 December 1980, Teresa transferred two parcels of land to Vanta. On 19 December 1989, these two parcels of land were subdivided into six shop front properties on William Street, Cobram.
The plaintiff deposed that, over an unspecified range of years, Teresa and Carmine would distribute money from the Family Trust to Teresa’s grandchildren, being the children of Salvatore, Carmine and Nicola. The plaintiff recalled this amount was around $600 each year and was distributed at tax time. The plaintiff does not have children.
The plaintiff deposed that, in about 1981, Teresa handed him a copy of a document titled ‘Schedule’, which was dated 27 July 1976. The Schedule referred to the ‘Mantovani Family Trust’ and contained the words ‘The date of making this deed: 27th July 1976’. It also named Vanta as trustee of the Family Trust and named certain family members as beneficiaries. The plaintiff says the Schedule named him as a beneficiary. When Teresa handed the Schedule to the plaintiff, Teresa did not explain much about it to the plaintiff but told him to keep it in a safe place. The plaintiff has never seen the trust deed for the Family Trust, but for the past three years he has been seeking to get a copy of it from his brothers.
Efforts to locate documents of and relating to the Family Trust
The plaintiff’s solicitor, Craig Healy, deposed to correspondence passing between himself and the solicitors for the defendants, SMR Legal Pty Ltd (‘SMR Legal’), and the solicitors for Carmine over several years, regarding the content of and access to the trust deed of the Family Trust and related relevant documents.
Carmine’s solicitors noted on 25 May 2017 that the issues surrounding Vanta and the Family Trust were ‘yet to be significantly progressed’ and that their understanding of the circumstances was that Vanta, ‘at least initially and most likely still does’, hold the properties in its capacity as trustee of the Family Trust and that no formal documents recording the vesting of the Family Trust have been located.
Salvatore deposed that he had searched his papers and Teresa’s papers and had asked his accountants to do likewise. He deposed that despite these searches it has not been possible to locate the trust deed or a copy of it. Salvatore also deposed that he had been to Shepparton’s Centrelink office to ask whether there was a copy of the trust deed on file but a member of staff told him there was no copy on their file.
On 28 March 2018, Raymond Warren, accountant at M+S Group Accountants Pty Ltd (‘M+S Group Accountants’), confirmed that the firm is the accountant for the Family Trust and that it had completed extensive searches for the trust deed on numerous occasions, and set out the specific actions taken in an attempt to locate it.
On 2 February 2018, SMR Legal informed the plaintiff’s solicitors that ‘after long and meticulous searches there had been no success in locating the trust deed’. On 17 April 2018, SMR Legal informed the plaintiff’s solicitors that the trust deed could not be located and attached the letter from M+S Group Accountants. On the same date, the plaintiff’s solicitors requested detailed copies of trust accounts for the Family Trust.
By email dated 3 June 2018, SMR Legal refused to provide copies of the trust accounts as the trust deed could not be located. They appeared to state that, because the trust deed could not be located, the plaintiff was not entitled to any documents.
For the purposes of the appeal, the defendants’ solicitor, Mr Sheed-Finck, deposed that he was ‘instructed and hold[s] the belief, by reason of the matters already deposed to at paragraphs 16 and 17 of the affidavit of Mr Healy sworn 22 March 2019 that Salvatore Rocco Mantovani as director of the first defendant has made reasonable enquiries to seek a trust deed, which have not been successful’. The reference to paragraphs 16 and 17 of the affidavit of Mr Healy is a reference to the email dated 17 April 2018 from SMR Legal to the plaintiff’s solicitors and the letter dated 28 March 2018 from M+S Group Accountants.
Possible reconstitution of the Family Trust
Up until June 2018, there was no dispute that the Family Trust existed or that the plaintiff was a beneficiary of the Family Trust. Following the email dated 3 June 2018, Salvatore filed his affidavit sworn 26 June 2019, deposing to a series of events that took place in August 2010 whereby: the Family Trust ‘was to be brought to an end and re-started’; the Family Trust was ‘reconstituted’; and the plaintiff was not a beneficiary of the reconstituted trust.
In September 2018, the plaintiff’s solicitors made further requests for access to trust account documents, which were not provided to the plaintiff. In October 2018, following further correspondence from the plaintiff’s solicitors, SMR Legal informed the plaintiff’s solicitors that they had instructions to accept service.
Salvatore’s version of events
Salvatore deposed that, in or around the winter of 2010, Teresa tore up some pieces of paper in front of him, which she said constituted the trust deed of the Family Trust. He recalls that she complained about the length of time that the trust was said to exist and the ’99-years’ in the deed. Salvatore deposed that he did not understand what provoked Teresa to tear up the pieces of paper.
Salvatore said that, in about August 2010, Teresa said she wanted to apply for an old age pension and that steps were taken by her accountants to formalise what he understood to be the end of the Family Trust as it was then constituted. Salvatore understood that the advice from the accountants was that Centrelink would not allow Teresa to receive a pension while being a discretionary beneficiary of the Family Trust and that it was for this reason that the Family Trust ‘was to be brought to an end and re-started’.
Salvatore deposed that he understood that the Family Trust as it was then constituted would be brought to an end and those ‘of us’ who wanted to manage the trust property and perhaps one day benefit from it would ‘sign in’ as beneficiaries. He says that he remembers signing a piece of paper given ‘to us’ by Teresa’s accountants for that purpose. He recalls that Nicola signed the piece of paper but Carmine did not, as Carmine wanted nothing to do with the management of the assets of the Family Trust.
Salvatore deposed that he asked the plaintiff to ‘sign in’ but the plaintiff said he did not want to do so. Salvatore asked the plaintiff on three occasions, with each occasion being about two weeks apart. Each time he asked the plaintiff, Salvatore said the plaintiff was angry. On the first occasion, he said the plaintiff did not want to sign it because he had a tax problem. On another occasion, the plaintiff said he wanted nothing to do with the Family Trust assets because of white ants. On the final occasion, the plaintiff used some offensive language and told Salvatore to go away and not raise it again. The plaintiff did not therefore ‘sign in’.
Salvatore deposed that he and Nicola, as the two individuals who had signed in, had responsibility for managing the assets of the Family Trust. He also deposed that it was they who would perhaps benefit from that management. Salvatore deposed that, since the end of 2011, he and Nicola had put considerable effort into managing the assets of the Family Trust, including securing good long-term tenants for the shop properties.
For the purposes of the appeal, Mr Sheed-Finck deposed that he believes that Salvatore ‘believes because of the explanation set out in [Salvatore’s] affidavit, that the plaintiff is not a beneficiary of the trust or any trust at all and has no right to trust documents and no interest in any property in issue’.
Plaintiff ’s version of events
The plaintiff’s affidavit sworn 19 July 2019 responds to Salvatore’s affidavit. The plaintiff deposed that Teresa’s important documents were kept at the Cobram branch of the ANZ Bank and that it was unlikely that her important documents were torn up, as stated by Salvatore. After Teresa’s death, the plaintiff had a conversation with the manager of the Cobram branch of the ANZ Bank who told him that two male family members had removed all documents from Teresa’s safe and also closed her account with the bank.
The plaintiff deposed that, in the winter of 2010, Salvatore requested that he sign a document ‘for the trust’. At the time, the plaintiff was in an orchard. He was unable to read the document presented to him as he did not have his glasses with him and did not sign it. Salvatore did not give any explanation as to the reason for signing the document. The plaintiff understood he was already a beneficiary of the Family Trust and therefore did not think he needed to sign another document.
Plaintiff’s submissions
In his submissions, the plaintiff indicated his agreement with the following:
(a) Vanta is trustee of the Family Trust, as deposed by Salvatore in his affidavit sworn 26 June 2019;
(b) ‘Vanta … initially and most likely still does, hold the properties in its capacity as Trustee of the Mantovani Family Trust’, as stated by the lawyers for Carmine, a former director of the trust, in a letter dated 23 May 2017;
(c) Vanta’s accountants are M+S Group Accountants, as stated by M+S Group Accountants in a letter dated 28 March 2018; and
(d) Vanta’s solicitors have undertaken detailed searches for the trust deed, as deposed by Mr Healy in his affidavit sworn 22 March 2019.
The plaintiff also noted that ten properties were transferred to Vanta as trustee of the Family Trust, and that these properties have been rented and have generated significant income over the years. The plaintiff submitted that he did not have knowledge of how these properties had been dealt with, as opposed to his three siblings, all of whom had been involved in the management of the Family Trust.
The plaintiff noted that, in Teresa’s will dated 8 April 1992, she had attempted to devise the ten properties in Vanta’s name, as well as a residence at 20 Broadway Street, Cobram, to her sons. As Teresa was not the owner of the ten properties, she could not devise them under her will. In the application for a grant of probate of Teresa’s will made on 25 June 2018, Carmine deposed as to an inventory of assets in Teresa’s estate. The only property listed in the inventory was 20 Broadway Street, Cobram, which was devised to the plaintiff and has been his family home since 1982. The executors of Teresa’s estate are proposing to sell this property to meet the liabilities of Teresa’s estate.
The plaintiff submitted that he has been seeking documents from the trust for several years, however, the defendants have ‘dodged and stonewalled’ these efforts. He submitted that, despite many requests, the trust deed had not been located, and that once it was clear in June 2018 that the trust deed was lost, the defendants began to suggest the trust had been reconstituted. The plaintiff noted that no documentary evidence has been produced to support this assertion. He submitted that the idea that the trust had been reconstituted is inconsistent with evidence of searches being conducted for one trust deed alone, and letters from accountants of the Family Trust who stated they were not in possession of ‘the trust deed.’ The plaintiff further noted that, prior to June 2018, there appeared to be no dispute between the parties as to the existence of the Family Trust or that the plaintiff was a beneficiary of it.
The plaintiff noted that, in circumstances where not even the trustee of the alleged reconstituted trust is known, the lack of documentary evidence should be regarded with suspicion. This is particularly the case given that the trust is alleged to have been reconstituted in 2010 and it would be expected that documentary evidence of the reconstituted trust, such as tax records, could be discovered.
As the defendants alleged a reconstituted trust, the plaintiff also seeks that his originating motion be further amended to include the words ‘and any other reconstituted deed’ after the words ‘A copy of the Mantovani Family Trust deed’ in paragraph 1(a) of the schedule marked ‘A’ and annexed to his summons.
The plaintiff submitted that the best available evidence of the trust deed was the Schedule that the plaintiff had retained, which is dated 27 July 1976 and lists the plaintiff as a beneficiary of the Family Trust. He submitted that this gives him the right to request and inspect documents relating to the trust. He also submitted that this means he has standing to bring a proceeding concerning the administration of the Family Trust.
The plaintiff submitted that the central questions in the proceeding relate to how the Family Trust is being administered, in circumstances where there was no trust deed. He submitted that without knowledge of the trust deed, the trust property and Teresa’s estate cannot be administered. If there is no trust deed, he submitted that the properties transferred to Vanta should be held on resulting trust for Teresa’s estate. This is the reason that he has brought the proceeding and, on this basis, he seeks the relevant amendments to the originating motion.
Commencing the proceeding by writ
In response to the defendant’s submission that the proceeding continue as if commenced by writ, the plaintiff disputed that there was a significant factual controversy about whether he was a beneficiary of the Family Trust. He cited the Schedule as evidence of this.
Further, the plaintiff submitted that, owing to the trust deed being unavailable, it is not possible to plead out all of the terms of the trust deed. The plaintiff submitted that the defendant’s proposal that the plaintiff plead to the contents of the trust, the identity of the beneficiaries, and the manner of its reconstitution had ‘an air of unreality’. He further submitted that pleadings would not clarify the present factual difficulties in the case, as significant and relevant documents have not been discovered, including the trust deed.
The plaintiff acknowledged that the terms of his amended originating motion are broad and submitted that this was a consequence of the defendants failing to produce relevant documentation that may have narrowed the issues in the proceeding.
Account of profits
The plaintiff submitted that, if there is no trust deed, an account must be made of any profits that Salvatore, Nicola and Carmine may have derived over the years in dealing with the properties held by Vanta. If the trustee refuses to acknowledge the existence of the trust, as the plaintiff submitted is the case, then it is appropriate to also seek documents from those that have dealt with the trust assets.
The plaintiff submitted that, in an attempt to avoid bringing multiple proceedings, he seeks an order that Salvatore, Carmine and Nicola all account for profits they may or may not have received from the trust.
Obligations under Civil Procedure Act 2010
The plaintiff submitted that the defendants’ conduct, both in a general sense and in pursuing the present appeal, has not been consistent with their obligations under the Civil Procedure Act 2010 (‘CPA’). The plaintiff submitted that, if there is no trust deed, the trustee should have made an application to the Court to determine how the Family Trust should have been administered. He further submitted that the executors of Teresa’s estate also should have made the application. Given the lack of action by the trustee and the executors of Teresa’s estate, the plaintiff submitted that it was appropriate for him to bring this proceeding, including by way of originating motion, to ensure that the issues are resolved as soon as possible.
Defendants’ submissions
The proceeding should proceed by writ
In oral submissions, the defendants conceded that their ‘whole case’ that the proceeding continue as if commenced by writ was that there were substantial factual disputes between the parties.
As such, the defendants submitted that the proceeding should proceed by writ, as it does not fall within the exception in r 4.06 of the Rules. Specifically, the defendants submitted that the issue of whether the plaintiff is a beneficiary of the trust is the main issue in dispute between the parties. They submitted this is of substantial importance given the plaintiff’s case proceeds on the basis that he is a beneficiary of the trust. The defendants noted that if the plaintiff is not a beneficiary, he is not entitled to trust documents.
In support of the submission that the proceeding should proceed by pleadings, the defendants cited the decision in Re Sir Lindsay Parkinson & Co Ltd Settlement Trusts for the proposition that ‘proceedings by beneficiaries against trustees of a contentious nature … ought normally to be commenced by writ’.[4] In addition, the defendants submitted that there is a factual controversy over the extent to which the defendants have maintained the trust property.
[4][1965] 1 WLR 372, 374 (Buckley J) (‘Re Sir Lindsay Parkinson’).
The defendants submitted that there should not be any difficulty in the plaintiff pleading his case, as the terms of the pleadings were outlined by the plaintiff’s counsel during this appeal. Allowing the matter to proceed by originating motion would require bifurcation of proceedings in relation to different matters. This would mean subsequent proceedings would need to be brought once documents were produced and any accounting completed. The defendant cited the Court of Appeal’s decision in Hoh v Ying MuiPty Ltd[5] to highlight the ‘undesirability of sequential trial orders’.
Subsidiary submissions
[5][2019] VSCA 203, [398]–[402] (Beach, Hargrave JJA and Sifris AJA).
The defendants made a number of subsidiary submissions regarding the plaintiff’s amendments sought to each particular paragraph of the originating motion.
The defendants submitted that the proceeding as formulated in the originating motion in paragraph 1 is controversial in that it assumes the present trust has existed from 1976, which conflicts with Salvatore’s evidence that the trust was reconstituted in 2010. It also requires determination of whether the plaintiff is a beneficiary of the trust. They submitted that any conclusion whereby the Court might find that the plaintiff is a beneficiary entitled to trust documents could create a res judicata or issue estoppel situation. The defendants submitted that the amendment sought to paragraph 1A, being that the defendants produce documents ‘since July 1976’, likewise presumes the existence of a trust from that point in time.
The defendants submitted with respect to paragraph 1A that the plaintiff does not have jurisdiction to seek final orders that the second to fourth defendants produce trust documents, as they are not trustees of the alleged trust. The defendants also submitted that it is oppressive to seek documents over a period of 43 years.
The defendants submitted that paragraph 2 suffers from the same issues as paragraphs 1 and 1A.
The defendants made submissions with respect to paragraphs 3(a) and (b) which are not relevant to this application.
The defendants submitted that the plaintiff has approached this proceeding with ‘a high degree of suspicion, which is unfounded’. The defendants reject the plaintiff’s submission that they have been concealing documents, instead noting that they consider there is evidence that the plaintiff is not a beneficiary of the trust, which means trust documents cannot be provided to him.
The defendants submitted that they had not been evasive and silent in the face of the plaintiff’s requests. Rather, the defendants highlighted correspondence between the parties about the content of the originating motion to show that they had engaged with the plaintiff’s requests. Further, the defendants seek that the proceeding continue as if by writ because they are uncertain as to the plaintiff’s claims. The defendants characterise their ‘course’ as one that would avoid bifurcating proceedings, as noted above. They submitted that they seek to have the proceeding proceed in an appropriate fashion, but by the plaintiff persisting in bringing his claims by originating motion, the ‘fault lies’ with the plaintiff.
Consideration
The plaintiff’s proceeding is brought pursuant r 54.02 of the Rules. Certain propositions concerning r 54.02 were set out by Derham AsJ in Re The Macedonian Orthodox Church Community ‘Saint Dimitrij Solunski’ Springvale Inc, that are relevant for this appeal, as follows:
(b) the procedure is a summary procedure, intended to enable questions arising in the administration of an estate or a trust to be resolved cheaply and simply and operate as an exception to the court’s ordinary function of deciding disputes between competing litigants;
…
(d)the purpose of the procedure is to enable a trustee or executor to obtain the direction or opinion of the Court on a matter of administration or management, or as to the construction of the will or trust instrument, without the need to commence an administration suit with all its attendant delay and cost;
…
(f) there is but one jurisdictional bar to relief: the applicant must point to the existence of a question respecting the management or administration of the trust property or a question respecting the interpretation of the trust instrument.[6]
[6][2020] VSC 274, [33] (Derham AsJ), citing Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand & Anor (2008) 237 CLR 66, 90-1 [61]–[63] (Gummow ACJ, Kirby, Hayne and Heydon JJ).
Rule 54.02 provides that relief may be granted in an administration proceeding, without the need for a claim to be made for the administration or execution of the relevant estate or trust.[7] The types of proceeding that may be brought pursuant to r 54.02 include those where orders are sought directing trustees and executors to furnish and verify accounts,[8] or that an act be done in the administration of an estate or execution of a trust that would be within the powers of the Court to order if the estate or trust were being administered by the Court.[9]
[7]Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 54.02(1).
[8]Ibid r 54.02(2)(b)(i).
[9]Ibid r 54.02(2)(c)(ii).
The defendants concede that Vanta is the trustee of the Family Trust and that the trust commenced on 27 July 1976. Subsequent to the creation of the Family Trust, Vanta became registered on the titles of a number of properties in Cobram, retained accountants, made trust distributions to beneficiaries and presumably filed tax returns and other financial documentation for each financial year since 1976.
The plaintiff has sought details of the Family Trust for almost three years. The searches conducted by the defendants were for the purpose of finding the trust deed for the Family Trust. The searches conducted by Vanta’s lawyers and accountants were also for the trust deed. It was not until June 2018 that the defendants informed the plaintiff that the trust deed had been lost. Up until that date, there was no dispute that the Family Trust existed and that the plaintiff was a beneficiary.
After the plaintiff was informed that the trust deed was lost, the defendants suggested that the Family Trust had been brought to an end and ‘reconstituted’ and alleged that the reconstituted deed did not include the plaintiff as a beneficiary. The alleged ‘reconstituting’ document has not been produced by the defendants despite it being said that it came into existence around 2010 or 2011, nor have the defendants produced any other documents that might give some substance to their recent assertion of a reconstituted trust. The suggestion that the trust was reconstituted is irreconcilable with the earlier searches for the trust deed, as well as with the accountant’s letter stating in 2018 that they do not have the trust deed.
The best evidence of the Family Trust is the information contained in the Schedule dated 27 July 1976. There is no dispute as to the authenticity of the Schedule to the Family Trust dated 27 July 1976 or its contents. The defendants have not suggested that the Schedule was inaccurate and they have not disputed that it was attached to the trust deed. The Schedule provides the name and date at which the Family Trust was created and identifies the trustee, the settled sum, the appointor and the members of the Mantovani family who are the beneficiaries of the Family Trust, including the plaintiff.[10]
[10]Cf the evidence in South Melbourne Continental Pty Ltd [2018] VSC 398, [41]–[42] (McMillan J).
The issue of whether the plaintiff is a beneficiary of the Family Trust is not a substantial dispute of fact. Accordingly, the proceeding may be commenced by originating motion in accordance with r 4.06 of the Rules. Further, r 54.05 of the Rules contemplates that where a plaintiff brings a proceeding within r 54.02, a court may make any order and grant any relief to which a plaintiff is entitled by reason of any breach of trust, wilful default or other misconduct of a defendant, notwithstanding that the proceeding was commenced by originating motion. The defendants’ reference to the comments of Buckley J in Re Sir Lindsay Parkinson & Co Ltd Settlement Trusts,[11] to the effect that contentious proceedings against trustees should usually be commenced by writ, are not applicable to this proceeding. Buckley J was dealing with a contentious proceeding where the beneficiaries of a trust were attempting to remove the trustees and appoint another in their place.[12] In this proceeding no such allegations are made against the trustee. In substance, the proceeding is straightforward in that the plaintiff seeks trust documents in respect of the Family Trust where the Schedule includes him as a beneficiary, and other orders to ensure the due administration of the Family Trust.
[11]Re Sir Lindsay Parkinson (n 4).
[12]Ibid 373–4 (Buckley J).
There is also no substantial factual dispute over how the defendants have maintained the trust property, as submitted by the defendants. At this stage of the proceeding, there is no information as to how the Family Trust has been administered as the defendants have not produced the relevant documentation concerning the Family Trust.
Amendments
Pursuant to r 36.01 of the Rules, the plaintiff seeks to amend the originating motion to clarify what he now seeks and to resolve the outstanding issues as expediently as possible.
The Court’s power to amend is discretionary and whether it should be exercised in an individual case is determined on the facts.[13] Factors that should be considered in the exercise of the Court’s discretion include the reasons for the amendments at the point in question in the proceeding,[14] whether any costs are wasted,[15] whether there will be irreparable prejudice to the other parties if the amendment is allowed,[16] and whether case management considerations weigh against the amendments.[17] Amendments that are futile in law or have no real prospects of success at trial will not be allowed.[18]
Plaintiff’s amendments to paragraph 1
[13]KSG Investments Pty Ltd v Openmarkets Online Trading Pty Ltd [2020] VSC 186, [25] (Nichols J).
[14]Thomas v Powercor Australia Limited (No 3) [2011] VSC 391, [12] (Forrest J) (‘Thomas’).
[15]Aon Risk Services Australia v Australian National University (2009) 239 CLR 175, 217 [111] (Gummow, Hayne, Crennan, Kiefel and Bell JJ) (‘Aon Risk Services’).
[16]Thomas (n 14).
[17]Aon Risk Services (n 15).
[18]Commonwealth v Verwayen (1990) 170 CLR 394, 456 (Dawson J) (‘Verwayen’).
The plaintiff seeks to amend paragraph 1 of the originating motion by changing the period of time for which the documents are sought from 2008 to the present to 27 July 1976 to the present. Prior to June 2018 there was no dispute that the Family Trust existed and the plaintiff was a beneficiary. After that date the plaintiff was informed that the trust deed had been lost and the defendants suggested that the Family Trust ended and was reconstituted. The proposed amendment arises as a result of the defendants’ evidence. If the trust deed cannot be located, the central question is how the trust assets have been administered by Vanta since 1976 and pursuant to what trust deed.
The proceeding is at an early stage, so there will not be irreparable prejudice to the defendants in allowing the amendment.[19] Further, the amendment does not disclose a case that is wrong at law or futile, nor a case that does not have a real prospect of success.[20]
[19]Cf Aon Risk Services (n 15).
[20]Verwayen (n 18).
The plaintiff’s second amendment to paragraph 1 seeks to expand the documents to be produced by Vanta by adding the word ‘all’ before each category of documents that concern the real properties in the name of Vanta. By oral application, the plaintiff also sought to add the words ‘and any reconstituting deed’ after the words ‘a copy of the Mantovani Family Trust’ to paragraph 1(a) of the originating motion. As with the first amendment, these further amendments arise as a result of the defendants’ evidence and concerns about the administration of the Family Trust since 1976 to the present and in particular in the apparent absence of the trust deed. The amendments are relevant to the proceeding as it now stands by reason of the defendants’ evidence.
Plaintiff’s amendments to paragraph 1A
Vanta is the registered proprietor of the properties referred to in paragraph 1A. The defendants do not dispute that the relevant properties are held on trust by Vanta for the Family Trust. This amendment also arises from the defendants’ evidence, and also concerns the central issue in the proceeding, namely, the administration of the Family Trust from 1976 onwards and pursuant to what trust deed. The plaintiff has no knowledge or information as to how the trust assets have been administered over that period of time.
The amendments will narrow the issues in dispute and avoid the need to bring a further proceeding to determine how the trust has been administered. The amendments to paragraph 1A will not cause irreparable prejudice to the parties and are not futile at law.
Nicola, Salvatore and Carmine would have dealt with properties over the specified time period as at particular points in time each of them was a director of Vanta. Nicola and Salvatore continue in this office today. They would have all dealt with trust assets and should have to account for those dealings.
The defendants’ submission that seeking records of the trust over the time period of 43 years is oppressive is rejected. Trustees are under a duty to keep proper accounts.[21] This is a duty that is not diminished because a trust extends over a considerable period of time. As Vanta has been the trustee for the duration of the Family Trust, it should have these documents in its possession and be able to readily provide them.
[21]Brynes v Kendle (2011) 243 CLR 253, [42]–[43] (Gummow and Hayne JJ).
Given these conclusions, the defendants’ submission that the plaintiff’s proposed amendments could create a res judicata or issue estoppel on contentious issues is rejected. On the evidence, it is not contentious that the plaintiff is a beneficiary of the Family Trust.
Accordingly, the plaintiff’s application to amend the originating motion will be allowed.
Submissions regarding the CPA
The parties addressed certain aspects of each other’s conduct in the dispute concerning the plaintiff’s amendments, including the ways in which the respective conduct bears on the application.
Pursuant to ss 7 and 8 of the CPA, the Court is required to give effect to the overarching purpose of the CPA and the rules of court ‘to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute’. The plaintiff has been successful in his application for amendment and, in bringing the application, has not breached any of his obligations under the CPA.
The defendants on the other hand have protracted the dispute. They failed to produce relevant documents that should be in their possession or in the possession of their accountants, lawyers, or financial advisers. Their conduct was problematic in suggesting only after a lengthy period of time that the Family Trust has been reconstituted, yet provided no documents to support the suggestion. In addition, the affidavit of Mr Sheed-Finck deposing to his belief by reason of Salvatore’s beliefs and instructions adds nothing to the determination of the issues. It is premature at this stage of the proceeding to make a determination on this aspect, save that the defendants’ conduct has been problematic and may become an issue in the future.
Orders
The Court orders that:
(a) The defendants’ appeal be dismissed.
(b) Leave be granted to the plaintiff to file and serve an amended originating motion substantially in the form annexed and marked ‘A’ to his summons filed 14 November 2019 and as further amended by oral application at the hearing of the appeal.
(c) On or before 20 November 2020, the parties forward proposed minutes for further directions in the proceeding.
(d) In the event the parties are unable to agree on the costs of the appeal and the reserved costs before Judicial Registrar Caporale, short written submissions be filed and the costs will be determined on the papers.
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Amended annexure to plaintiff’s summons to amend
1. An order that the first defendant produce for inspection by the plaintiff the
following documents of the Mantovani Family Trust and of the first
defendant
for the years 2008from 27 July 1976 to the present:(a) A copy of the Mantovani Family Trust deed and any reconstituting deed;
(b) All asset registers;
(c) All Ledgers and journals;
(d) All Profit and Loss Statements and Balance Sheets;
(e) All Tax Returns;
(f) All Bank Statements;
(g) Any documents recording income and/or capital distributions;
(h) All Leases and licences of any properties owned by the first defendant.
1A. An order that the defendants produce for inspection by the plaintiff, in relation to the following properties and titles:
(a) Certificate of title Volume 2141 Folio 064;
(b) Certificate of title Volume 2734 Folio 632;
(c) Certificate of title Volume 8623 Folio 323;
(d) Certificate of title Volume 8634 Folio 885;
(e) Unit 1, 5 William Street, Cobram (C/T Volume 9200 Folio 993);
(f) Unit 2, 5 William Street, Cobram (C/T Volume 9200 Folio 994);
(g) Unit 3, 5 William Street, Cobram (C/T Volume 9200 Folio 995);
(h) Unit 4, 5 William Street, Cobram (C/T Volume 9200 Folio 996);(i) 20 William Street, Cobram (C/T Volume 9922 Folio 662);
(j) 22 William Street, Cobram (C/T Volume 9922 Folio 663);(k) 24 William Street, Cobram (C/T Volume 9922 Folio 664);
(l) 26 William Street, Cobram (C/T Volume 9922 Folio 665);
(m) 28 William Street, Cobram (C/T Volume 9922 Folio 666);
(n) 30 William Street, Cobram (C/T Volume 9922 Folio 667);
the following documents:
(i) All leases and licences over any of the abovementioned properties
since 27 July 1976;
(ii) All records of any security over any of the abovementioned
properties including any mortgages;
(iii) All documents recording income derived from the abovementioned
properties since 27 July 1976;
(iv) All documents recording expenditure in relation to the
abovementioned properties since 27 July 1976.
` 2. An order that the first defendants provide to the plaintiff (care of its lawyers
Cornwalls) electronic copies of the documents referred to in paragraph 1 and
1A where those documents are stored in electronic form.
3. In the event that the Mantovani Family Trust Deed cannot be located:
(a) A declaration that all assets held by the first defendant are held subject to a resulting trust in favour of the estate of Teresa Mantovani;
(b) An order for the taking of accounts and the payment by the defendants of such amounts found to be due to the estate of Teresa Mantovani.
4. An order that the second and third named defendants personally pay the
plaintiff’s costs of this proceeding on an indemnity basis.
5. Such further or other order as the Court considers necessary or appropriate.
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