Martyniuk v King
[1999] VSC 443
•1 November 1999
SUPREME COURT OF VICTORIA
PRACTICE COURT Do not Send for Reporting Not Restricted
No. 7115 of 1999
| VLADYMIR MARTYNIUK | Plaintiff |
| v. | |
| CECIL KING AND OTHERS | Defendants |
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JUDGE: | BEACH, J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 1 NOVEMBER 1999 | |
DATE OF JUDGMENT: | 1 NOVEMBER 1999 | |
CASE MAY BE CITED AS: | MARTYNIUK v. KING & ORS. | |
MEDIA NEUTRAL CITATION: | [1999] VSC 443 | |
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CATCHWORDS: Practice and Procedure – Interlocutory injunction – Serious issue to be tried – Balance of convenience such as to require preservation of status quo.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr. J. Peters | Corrs Chambers Westgarth |
| For the First Defendant | Mr. J. Waller | Mahonys |
| For the Second Defendant | Mr. P. Bornstein | Efron & Associates |
| For the Third Defendant | Mr. P. Cawthorn | Efron & Associates |
HIS HONOUR:
This is the return of a summons filed in the court by the plaintiff, Vladymir Martyniuk, whereby the plaintiff seeks an interlocutory injunction restraining the defendants from selling or transferring and/or completing any sale and/or registration of any sale or transfer of the first-named defendant, Cecil King's, ten C class units in the Watts-Castle Crown Unit Trust.
In December 1997 the plaintiff was the holder of ten A class units in the trust. The first-named defendant, Cecil King, was the holder of ten C class units in the trust. The second named defendant, Illawong Retirement Living Pty Ltd, was the holder of ten B class units in the trust.
Prior to 18 June 1998 the trustee of the trust was Illawong Retirement Group Pty Ltd (IRG).
By an agreement made on or about 15 December 1997, the defendant, King, agreed to sell, and the plaintiff agreed to purchase, the ten C class units in the trust owned by King for the sum of $525,000. There were terms of the agreement that -
1.the defendant, King, would transfer the ten C class units (the said units) to the plaintiff, and
2.that King would resign as a director of the Illawong Retirement Group and as a director of associated companies and that the purchase price was payable by a deposit of $5250 upon the making of the agreement, $294,750 by 2 February 1998, and the balance of $225,000 on 30 June 1998.
It is the case for the plaintiff that it was either an express or implied term of the agreement that payment of the purchase price was conditional upon registration of the transfer of the units by the trustee of the trust.
The agreement was evidenced by a document signed by the plaintiff and the defendant, King, dated 15 December 1997, which is exhibit MART4 to the plaintiff's affidavit sworn 8 October 1999.
Pursuant to the agreement, the plaintiffs paid to the defendant, King, the sum of $5250 on 15 December 1997 and the sum of $294,750 on 2 February 1998. It is the case for the plaintiff that on 2 February 1999 the agreement was varied, or alternatively a further agreement was entered into, between the defendant, King, and the plaintiff to the effect that -
1.the defendant, King, would appoint the plaintiff as King's proxy in respect of any unit holders' meeting of the trust;
2.King would enable the plaintiff to vote as the defendant, King's, proxy at any such unit holders' meeting, and
3.that the defendant, King, would not revoke such proxy or alternatively would not exercise any power to vote as the holder of the 10 C class units without the plaintiff's consent.
On that same day the defendant, King, gave the plaintiff the appropriate authority to act as his proxy to vote in respect of the ten C class units.
The ten B class units in the trust were at the time the plaintiff entered into his agreement with the defendant, King, were held by Illawong Retirement Living and were owned as to 50 per cent by one Glen Walker; as to 25 per cent by one Salo Howard Rabinowitz, and as to 25 per cent by other individuals and companies.
In mid-February 1998, Mr Rabinowitz personally and/or through corporate entities acquired a controlling interest in IRL.
On 15 June 1998 the defendant, King's, solicitors wrote to the plaintiff noting that the balance of purchase money of $225,000 was due on 30 June and requesting that he forward the share transfer form and transfer form for the units to them in anticipation of the settlement. The letter notes their instructions that in his capacity as secretary of the company (I.R.G.) which was then the trustee of the trust, that the plaintiff had both the share certificates and the units certificate under his control.
The next event of significance for present purposes was a meeting of unit holders of the trust on 18 June 1998 attended by the defendant, King; his solicitor, Peter Riches; a former auditor of the trust named Collins; Rabinowitz, representing the Illawong Retirement Living interest in the trust, and the Illawong Retirement Living's solicitor, Graham Efron. The minutes note that the defendant, King's, wife was also present at the meeting by invitation.
At that meeting the agreement between the plaintiff and the defendant, King, was tabled together with a copy of the proxy that the defendant, King, had given to the plaintiff. However, at the same time the defendant, King, tabled a revocation and cancellation of the proxy he had given in favour of the plaintiff. It was then unanimously resolved by those unit holders present at the meeting that the then trustee of the trust, Illawong Retirement Group Pty Ltd, be removed and that Retirement Equity Pty Ltd be appointed as trustee in its stead. It is my understanding from the material before me that Rabinowitz has a significant interest in Retirement Equity Pty Ltd.
Later during the course of the meeting the defendant, King, undertook not to proceed to conclude the sale of his ten C class units in the trust without giving two clear business days' notice of his intention to do so to Illawong Retirement Living.
Later again, the defendant, King, authorized the new trustee, Retirement Equity Pty Ltd, to redeem his units in the trust. Later that month a director of Retirement Equity Pty Ltd informed the plaintiff's solicitors that the trustee would not register the transfer of the units from the defendant, King, to the plaintiff on the basis that the procedure set out in the trust deed in relation to the transfer of units had not been followed.
On 30 June 1998 the plaintiff's solicitors wrote to the defendant, King's, solicitors a letter which contains the following paragraphs:
"Mr Martyniuk intends to complete the transfer of the units today in accordance with the agreement. However, the conduct of your client set out above will prevent him from having a transfer of the units registered without obtaining appropriate court orders. Clearly it was a term of the agreement that the transfer of the units would be registered by the trustee. We are instructed to request that your client join with Vlad Martyniuk in calling a meeting of the trust or alternatively reinstate his proxy to Vlad Martyniuk. At the meeting Retirement Equity would be retired as trustees and IRG reinstated as trustee. Given the notice requirements, we ask that your client consent to vary the agreement to allow settlement to take place on 3 July 1998."
There was then further correspondence between the parties in relation to the matter. I do not think any useful purpose will be served in setting it out in my reasons for judgment.
The dispute between the parties was not resolved and on 12 August 1999 the defendant, King, gave to the plaintiff a notice of recision of the 15 December 1997 agreement.
On 16 October 1998 the defendant, King, gave to the other unit holders and the trustee notice of a meeting of the unit holders in the trust. The purpose of the meeting was to discuss and, if thought fit, pass resolutions in relation to the following matters:
1.the refusal and failure of the trustee to respond to requests for information as to the administration of the trust, and in particular its failure to respond to requests for details of expenditure of moneys on recent litigation and how much such litigation and foreshadowed future litigation was in the interest of the trust as a whole;
2.the foreshadowed refusal of the trustee to register the transfer of units from the defendant, King, to the plaintiff, and to provide specific reasons there therefore;
3.the failure of the trustee to seek independent legal advice in relation to its trust affairs, and
4.to consider whether the trustees' actions over recent months had been such as to justify its removal as trustee of the trust and whether or not a new trustee representing all the interests of the unit holders should be appointed.
In the affidavit of 26 October 1999 sworn by Rabinowitz appears the following paragraph:
"31.On or about 16 October 1998 Graham Efron's solicitor advised me that he had received notice of a meeting of unit holders scheduled for 20 October 1998 to consider and, if thought fit, to revise the issue of the proposed transfer of the King units to Mr Martyniuk. Now produced and show to me marked HR12 is a copy of that notice of meeting. I instructed Graham Efron to issue proceedings immediately seeking to restrain Mr King and Mr Martyniuk from completing the contract. Proceedings were returnable on 22 October 1998."
What transpired on 22 October 1998, however, was that the proceeding in question was adjourned sine die by consent of all the parties, and that is the present situation. It is worthy of note that the proceeding was issued by Illawong Retirement Living Pty Ltd against the defendant, King, and the plaintiff. Thereafter there was a lot of toing and froing by the parties with a view to resolving the impasse that they had arrived at in relation to the transfer of the defendant, King's, ten C class units in the trust, but despite their best efforts in that regard, the parties were unable to resolve the matter.
On 7 September 1999, Illawong Retirement Equity Pty Ltd, the trustee of the trust, as agent for the defendant, King, made a written offer to the plaintiff in respect of five of King's C class units in the trust. The offer was that the plaintiff, who, of course, had already paid in excess of $300,000 in respect of the defendant, King's 10 C class units in the trust, was offered five of them for a total price of $250,000.
On 6 October last the plaintiff filed its writ in this proceeding in the court. His application presently before me is in respect of the injunction to which I referred at the outset. The plaintiff also seeks a speedy trial of the proceeding.
In my opinion, it is clear on any view of the matter that there is a serious issue to be tried in the proceeding. However, it is said on behalf of all defendants that by his delay in the matter, the plaintiff has disentitled himself to injunctive relief of the type he now seeks.
In the circumstances of this case, I do not consider that that is so. In my view, and without wishing to predetermine the matter, it is strongly arguable that all the plaintiff's problems to date, or at least a large proportion of them, have been caused by the actions of the defendant, King, and in particular I refer to what he did at the unit holders' meeting on 18 June 1998 and then the actions of the Rabinowitz interests, which, of course, includes the second named defendant, since Rabinowitz took control of the second-named defendant in his endeavours to take control of the trust.
While, generally speaking, a delay of the magnitude which has occurred in this case would disentitle a party to equitable relief, I think that if one has regard to the whole of the circumstances in this case it would cause significant injustice to the plaintiff to do so, and, as I said a moment ago, I think the delay is such, when one has regard to the reasons for it, as not to disentitle him to the relief he now seeks.
As to the balance of convenience, it is said again on behalf of all defendants that in the final analysis, if the plaintiff is successful in his proceeding, he would be adequately compensated by an appropriate award of damages.
I am not satisfied that that is the case. If a sale of the units or a redemption of them takes place, the plaintiff will be locked into the trust structure as a one-third unit holder. He will lose his controlling interest and the ability to oversee his investment in the trust. It may well be that damages could not adequately compensate him for his loss in that regard. I consider that this is a classic case where the status quo should be preserved until the trial of the proceeding.
Upon the plaintiff having given the usual undertaking as to damages and, more importantly, an undertaking that within 14 days of this day he will pay into an interest bearing bank account in the joint names of his solicitors and the defendant, King's, solicitors, the sum of $225,000, such sum to be held in such bank account pending the further order of the court or the agreement of the plaintiff and the defendant, King, I order that -
1.The defendants be restrained until the hearing and determination of the proceeding or further order, whether by themselves, their servants or agents and/or howsoever otherwise from selling on or transferring and/or completing any sale and registration of any sale or transfer of the defendant, King's, ten C class units in the Watts-Castle Crown Unit Trust.
In my opinion, it is appropriate that this proceeding be given a speedy trial, and I propose to make the following further interlocutory orders in the matter.
2.The plaintiff file and serve a statement of claim on or before 4.00 p.m. On Wednesday 3 November 1999;
3.The defendants file and serve their defences and any counterclaims on or before 10 November 1999;
4.The plaintiff file and serve any reply and defence to counterclaim on or before 17 November 1999;
5.The parties exchange lists of discoverable documents on or before 24 November 1999;
6.The plaintiff's summons filed 6 October 1999 be hereafter treated as a summons for directions and be adjourned to the Listing Master to a date on be fixed by the Associate to the Listing Master in December 1999;
7.The proceeding be fixed for trial with such priority as the Listing Master is able to give it;
8. That the costs of this application be reserved;
9. That there be liberty to apply;
10.That this order be prepared by the solicitors for the plaintiffs within 72 hours and brought to me for authentication;
11.That within seven days of its authentication, a copy of the order be served upon the Associate to the Listing Master.
I do not think it is appropriate in the circumstances that the exhibits remain on the court file. I shall have my Associate return them to the parties.
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