Medall Pty Ltd as trustee for the Elpa Family Trust v Sciano
[2018] WASC 294
•20 SEPTEMBER 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: MEDALL PTY LTD AS TRUSTEE FOR THE ELPA FAMILY TRUST -v- SCIANO [2018] WASC 294
CORAM: MASTER SANDERSON
HEARD: 28 AUGUST 2018
DELIVERED : 20 SEPTEMBER 2018
FILE NO/S: CIV 3152 of 2017
BETWEEN: MEDALL PTY LTD AS TRUSTEE FOR THE ELPA FAMILY TRUST
First Plaintiff
CORRADINO ELPITELLI AS TRUSTEE FOR THE LAND BANK PROPERTY TRUST
Second Plaintiff
AND
RICHARD SALVATORE SCIANO
First Defendant
SILVER KNIGHT HOLDINGS PTY LTD AS TRUSTEE FOR THE GANDOSSI FAMILY TRUST
Second Defendant
JOHN EDWARD GANDOSSI AS TRUSTEE FOR THE LAND BANK PROPERTY TRUST
Third Defendant
AUCTOR GROUP PTY LTD
Fourth Defendant
Catchwords:
Practice and procedure - Application for further and better discovery - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Application for discovery dismissed
Category: B
Representation:
Counsel:
| First Plaintiff | : | Mr M Curwood |
| Second Plaintiff | : | Mr M Curwood |
| First Defendant | : | Mr C Silver |
| Second Defendant | : | Mr M Handcock |
| Third Defendant | : | Mr M Handcock |
| Fourth Defendant | : | Mr T Retallack |
Solicitors:
| First Plaintiff | : | Frichot & Frichot |
| Second Plaintiff | : | Frichot & Frichot |
| First Defendant | : | Chad Silver & Associates |
| Second Defendant | : | Effective Legal |
| Third Defendant | : | Effective Legal |
| Fourth Defendant | : | Culshaw Miller Lawyers |
Case(s) referred to in decision(s):
Nil
MASTER SANDERSON:
This was the fourth defendant's application by letter dated 6 July 2018 for further discovery from the plaintiffs. In the alternative, the fourth defendant sought preliminary discovery pursuant to O 26A r 4(1)(b) and O 26 r (7) of the Rules of the Supreme Court 1971 (WA) (the Rules). Although he was not directly affected by the application, the first defendant supported the fourth defendant's application. The second and third defendants were represented by counsel but did not make any submissions one way or the other.
The claim made by the plaintiffs is relatively straightforward. What follows is taken from an amended statement of claim filed 16 February 2018. By par 3 of the amended statement of claim, the plaintiffs say the first plaintiff and the second defendant are holders of all the issued units in a unit trust called Land Bank Property Trust (the Trust). That claim is denied by the fourth defendant. By par 4 the plaintiffs allege the Trust was established by a deed dated 3 December 2003. That is admitted by the fourth defendant. The fourth defendant also admits the plaintiffs' pleas as to the identity of the original trustees of the Trust and the original unitholders of the Trust. However, it disputes the plaintiffs' plea that the trust deed was varied by a deed of variation dated 1 January 2005.
By par 6 of the amended statement of claim the plaintiffs alleged the fourth defendant became the trustee of one of the unitholders and was issued 666,667 units in the Trust. The fourth defendant admits that plea. However, it denies the plaintiffs' plea of a change of trustee of one of the other unitholders and the issue of the same number of units to the first plaintiff. Paragraph 7 pleads that in December 2003 the trustees of the Trust, they being the first defendant, the second plaintiff and the third defendant purchased a certain property in Hope Valley. The fourth defendant admits that plea.
By par 8 the plaintiffs plead that in June 2013, the issued units in the Trust held by the fourth defendant as trustee were required by the first plaintiff, pursuant to an agreement between the first plaintiff and the fourth defendant. By par 8A, the plaintiffs plead it was a material term of the agreement that the fourth defendant would transfer to the first plaintiff all of its units in the Trust for nil consideration, providing that the first plaintiff indemnified the fourth defendant and the first defendant, with respect to all their liability to St George Bank with respect to loans made by St George Bank to the trustees of the Trust. Paragraph 8B of the amended statement of claim pleads that the agreement was 'performed' and lists certain matters. Presumably this is a plea of part performance of the agreement pleaded in par 8. By par 9 it is pleaded that after the first plaintiff acquired the issued units from the fourth defendant, the first plaintiff and the second defendant agreed to issue further units in the Trust. By par 10 it is said the first plaintiff and the second defendant then signed the resolution to remove the first defendant as trustee of the Trust. The plaintiffs say the first defendant has refused to execute a transfer in registrable form of the legal title to the Hope Valley properties consequent upon his removal as trustee.
In its prayer for relief, the plaintiffs claim against the first defendant a declaration that he is no longer a trustee of the Trust. As against the fourth defendant, the first plaintiff seek a declaration that on 15 June 2013 the first defendant 'transferred to the first plaintiff its 666,667 units in the Trust'.
For its part, the fourth defendant denies pars 8, 8A, 8B and 9 of the amended statement of claim. Without going into details, the fourth defendant alleges no final transfer agreement was concluded. Paragraph 9 of the defence of the fourth defendant addresses the claim of part performance and denies that there was such part performance or that the alleged contract was enforceable.
By par 12 of the defence, the fourth defendant says if there was a concluded agreement it was not binding on the fourth defendant because it was concluded in breach of fiduciary duties owed by the second plaintiff and the first defendant to the fourth defendant. I will not detail the alleged breaches of trust as pleaded in par 15 of the fourth defendant's defence. Suffice it to say that the fourth defendant alleges breaches of fiduciary duty which, if established, would presumably result in no order being made against the fourth defendant. It is arguable that the matters pleaded in pars 12 ‑ 17 of the fourth defendant's defence should form a counterclaim so as to justify the court making a declaration if the fourth defendant's defence is made out. This was not a point taken by counsel for the plaintiffs but it is a relevant consideration in determining this application.
The documents sought by the fourth defendant were set out in an email from the fourth defendant's solicitors to the plaintiffs' solicitors dated 25 June 2018. That email appears as attachment 'JS17' to an affidavit of Joan Sciano sworn 6 July 2018. Five categories of documents are sought. First, the banking records of the Trust. Second, the minutes of meetings and resolutions of the trustees. Third, instructions given to and advice received from any accountants in relation to the preparation of financial statements and lodgement of tax returns for the Trust. Fourth, communications between the trustees relating to a range of matters in particular arrangements with respect to the St George loan. Fifth, any other documents held by the trustees or 'related corporate entities' which relate to matters described in the fourth category.
This case is relatively straightforward. The plaintiffs' plea is that there was a sale and purchase of units - albeit the purchase price of the units was zero. The fourth defendant alleges there was no such agreement. If the fourth defendant succeeds on that issue that is the end of the matter - the plaintiffs' claim must be dismissed. The further plea from the fourth defendant is as to a breach of trust. As to that, counsel for the plaintiffs in his written submissions put the position as follows (par 11):
To the extent that the fourth defendant alleges one or more of the trustees (or one or more of the unitholders) has some liability to account to the fourth defendant for some previous transactions, Mr Sciano as a director of the fourth defendant (and the person who represented the fourth defendant in its dealings with the unit trust) could properly identify in a pleading the scope of transactions for which an account or damages or some other relief is sought. The application does not set out a basis why the ordinary principles of discovery (namely discovery after pleadings) should not apply.
During the course of his submissions, counsel for the fourth defendant indicated that further discovery was required or preliminary discovery was required to allow the fourth defendant to form a view as to whether a counterclaim should be initiated. This action commenced in December 2017. The amended writ of summons was filed 16 February 2018 and the defence of the fourth defendant was filed 23 March 2018. Discovery has been given by the plaintiffs and discovery was completed by 13 April 2018. It is not clear why the fourth defendant did not raise the issue of further discovery until 6 July 2018. It appears to have been in a position to plead to the statement of claim and to raise the relevant issues some months prior to the request for further discovery.
In the circumstances, I accept the plaintiffs' argument that the fourth defendant was on a fishing expedition. I am not satisfied as the pleadings stand at present that the discovery of the plaintiffs is manifestly deficient. In fact, that was not really the way in which counsel for the fourth defendant argued the application. Counsel placed more emphasis on the need to obtain documents to flesh out any prospective counterclaim. In my view, those documents are not needed. If the matter got to trial and the plaintiffs were able to establish the pleaded agreement then the fourth defendant could raise the allegations of breach of trust. Any failure on the part of the plaintiffs to produce the documents now sought would surely do nothing more than strengthen the fourth defendant's position. To now require the plaintiffs to produce a raft of documents against the possibility of a counterclaim being formulated is, in my view, unnecessary.
Accordingly, the application of the fourth defendant will be dismissed. The fourth defendant should pay the plaintiffs' costs of the application.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
ASSOCIATE TO MASTER SANDERSON19 SEPTEMBER 2018
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