Moondancer Holdings Pty Ltd v Navarac Pty Ltd

[2011] WASC 250

MOONDANCER HOLDINGS PTY LTD -v- NAVARAC PTY LTD [2011] WASC 250

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2011] WASC 250
Case No:	CIV:1061/2008	Heard:	29 JUNE 2011
Coram:	ALLANSON J	Delivered:	20/09/11
No of pages:	20	Judgment Part:	1 of 1
Result:	Application dismissed
Category:	B
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Parties:	MOONDANCER HOLDINGS PTY LTD TOSMAN PTY LTD atf THE ABC CHILD TRUST ALLEN BRUCE CARATTI NAVARAC PTY LTD VENETIAN NOMINEES PTY LTD AARON GRANT CARATTI MADDELIENE CARATTI
Catchwords:	Practice and procedure Case management Order for actions to be heard together Turns on own facts
Legislation:	Nil
Case References:	Bellview Investments Pty Ltd v Dean Investments Pty Ltd (Unreported, NTSC, 18 December 1997) Cameron v McBain [1948] VLR 245 Donnellan v The Public Trustee [2007] WASC 213 Espanol Holdings Pty Ltd v Banning [2000] WASC 192 Hunter v Chief Constable of the West Midlands Police [1981] UKHL 13; [1982] AC 529 Norilya Minerals Pty Ltd v Easterday [2009] WASC 191 Reichel v Magrath (1889) 14 App Cas 665 Saker v Creative Land Management Pty Ltd [2000] WASC 44 Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : MOONDANCER HOLDINGS PTY LTD -v- NAVARAC PTY LTD [2011] WASC 250 CORAM : ALLANSON J HEARD : 29 JUNE 2011 DELIVERED : 20 SEPTEMBER 2011 FILE NO/S : CIV 1061 of 2008 BETWEEN : MOONDANCER HOLDINGS PTY LTD

First Plaintiff

TOSMAN PTY LTD atf THE ABC CHILD TRUST
Second Plaintiff

ALLEN BRUCE CARATTI
Third Plaintiff

AND

NAVARAC PTY LTD
First Defendant

VENETIAN NOMINEES PTY LTD
Second Defendant

AARON GRANT CARATTI
Third Defendant

MADDELIENE CARATTI
Fourth Defendant

(Page 2)

Catchwords:

Practice and procedure - Case management - Order for actions to be heard together - Turns on own facts

Legislation:

Nil

Result:

Application dismissed

Category: B

Representation:

Counsel:

First Plaintiff : Mr A Metaxas
Second Plaintiff : Mr A Metaxas
Third Plaintiff : Mr A Metaxas
First Defendant : Mr G R Donaldson SC
Second Defendant : Mr G R Donaldson SC
Third Defendant : Mr G R Donaldson SC
Fourth Defendant : Mr G R Donaldson SC

Interested Party : Mr G D Cobby

Solicitors:

First Plaintiff : Metaxas & Hager
Second Plaintiff : Metaxas & Hager
Third Plaintiff : Metaxas & Hager
First Defendant : Lemonis/Tantiprasut Lawyers
Second Defendant : Lemonis/Tantiprasut Lawyers
Third Defendant : Lemonis/Tantiprasut Lawyers
Fourth Defendant : Lemonis/Tantiprasut Lawyers

Interested Party : Gadens Lawyers

(Page 3)

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

Bellview Investments Pty Ltd v Dean Investments Pty Ltd (Unreported, NTSC, 18 December 1997)
Cameron v McBain [1948] VLR 245
Donnellan v The Public Trustee [2007] WASC 213
Espanol Holdings Pty Ltd v Banning [2000] WASC 192
Hunter v Chief Constable of the West Midlands Police [1981] UKHL 13; [1982] AC 529
Norilya Minerals Pty Ltd v Easterday [2009] WASC 191
Reichel v Magrath (1889) 14 App Cas 665
Saker v Creative Land Management Pty Ltd [2000] WASC 44
Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378


(Page 4)

1 ALLANSON J: On 17 September 2009, the defendants in action CIV 1061 of 2008 brought a chamber summons seeking orders that:

1. The trials of the following proceedings be heard together:

a. CIV 1061 of 2008;

b. CIV 2006 of 2008;

c. COR 71 of 2008;

d. CIV 1546 of 2004; and

e. CIV 1348 of 2004.


2. The evidence given in any one of the above proceedings be treated as evidence in the other proceedings.

2 The summons was only heard on 29 June 2011. The parties had, in the meantime, attempted unsuccessfully to resolve their disputes by mediation. At the hearing, all parties in all of the actions were represented except the fourth and twelfth defendants (of sixty defendants) in CIV 2006 of 2008.

The basis for making an order

3 Order 83 of the Rules of the Supreme Court 1971 (WA) provides for consolidation of actions but does not expressly provide, as an alternative to consolidation, for an order that the actions be heard together. But it is not in contest that the court has the power to make such an order as part of its power to regulate its own procedures: see, for example, Norilya Minerals Pty Ltd v Easterday [2009] WASC 191 [65]; but see Cameron v McBain [1948] VLR 245, 248.

4 Further, the court is now expressly given power under O 4A r 2 to make any procedural direction that in its opinion it is just to make in a case to facilitate the attainment of the objectives of case management set out in O 1 r 4B. The order sought is within that power.

5 What principles should guide the exercise of the court's discretion? Generally, the court must adopt a pragmatic approach. Everything depends upon the facts of the particular case. But as the order sought is one relating to case management, the court must have regard to O 1 r 4A and r 4B, and follow the course that best ensures the attainment of the objects set out in those rules.

(Page 5)

6 The types of factors to be taken into account on an application for a consolidation order were set out by Master Sanderson in Saker v Creative Land Management Pty Ltd [2000] WASC 44 [2], referring to Bellview Investments Pty Ltd v Dean Investments Pty Ltd (Unreported, NTSC, 18 December 1997) (Thomas J):

1. are there common questions of law or fact, or a common transaction or series of transactions, of sufficient importance which render it desirable that the whole of the matters should be disposed of at the same time;

2. is it convenient that the actions be consolidated in order to avoid a multiplicity of actions and ensure savings of time and costs;

3. is the court satisfied that the consolidation is unlikely to result in unfairness to any party, or to prejudice a party's ability to conduct their case;

4. will the consolidation be conducive to a just resolution of the issues between the parties;

5. the court should have regard to any relevant practical matters which may make it inexpedient to consolidate the proceedings.

7 In Espanol Holdings Pty Ltd v Banning [2000] WASC 192 [4], Master Sanderson accepted the same principles are a useful guide in an application for an order that actions be heard together. I agree.

Background

8 John Caratti and Allen Caratti are brothers. They are the children of Maddeleine and the late Sergio Caratti.

9 John Caratti and Allen Caratti signed an agreement (undated but apparently prepared in 1989) in which they recorded their intention to carry on business in partnership (the partnership agreement). The Partnership Agreement is not a complete agreement. It does not state the nature of the business to be conducted, and many of the other items in the schedule to the agreement (including specification of premises, partnership name, capital contributions, bank and operation of bank accounts) are 'as agreed by the partners from time to time'. The document is prepared as a deed and is signed, but not witnessed. The Partnership Agreement has been pleaded as relevant in CIV 1061 of 2008 and CIV 2006 of 2008.

(Page 6)

10 In 1995, the Carchild Unit Trust was established by deed, with Navarac Pty Ltd as trustee. There were two unit holders: Venetian Nominees Pty Ltd (Venetian Nominees) and Tosman Pty Ltd (Tosman). Each unit holder held its unit as trustee of a 'child trust' - Venetian Nominees as trustee of the JMC Child Trust (whose primary beneficiaries are the children of John Caratti); Tosman as trustee of the ABC Child Trust (whose primary beneficiaries are the children of Allen Caratti). The 'child trusts' are discretionary trusts, and were also created by deed in 1995.

11 The last of the background documents is an agreement (the 2002 Deed), executed as a deed on 26 September 2002, between John Caratti, Allen Caratti and their mother. The 2002 Deed recites that the parties jointly or severally control 13 companies:

1. Caratti Holdings Pty Ltd;

2. Harvard Nominees Pty Ltd;

3. Jamesway Nominees Pty Ltd;

4. Mammoth Investments Pty Ltd;

5. Navarac Pty Ltd;

6. Robinswood Pty Ltd;

7. Tercon Holdings Pty Ltd;

8. Tosman Pty Ltd;

9. Venetian Nominees Pty Ltd;

10. Lakeview Rise Pty Ltd;

11. Citizone Holdings Pty Ltd;

12. Jade Assets Pty Ltd;

13. Torradup Nominees Pty Ltd.

12 The 2002 Deed further recites that Allen Caratti owned a 50% beneficial interest in shares in another four companies:

14. Boban Pty Ltd;

(Page 7)

15. Hocking Land Development Pty Ltd;

16. Rubynet Pty Ltd;

17. Doncaster Pty Ltd.

13 The circumstances of the making of the 2002 Deed were not put before the court in this application. It provides that a Supreme Court action, CIV 2188 of 2002, would be discontinued with no order as to costs. But there is no evidence about the subject matter of that action or how the 2002 Deed might relate to its resolution. None of the parties refers to the settlement as relevant to the issues I am to consider.

14 Among arrangements made under the deed, were:

Clause 4

The shareholding in all corporations 1 - 13 above will be adjusted so that Allen Caratti and John Caratti will hold equal beneficial interests.

Clause 5

Allen Caratti will be entitled to nominate a person to act as a director of each of:

5.1 Caratti Holdings

5.2 Jamesway

5.3 Navarac

5.4 Mammoth

5.5 Harvard

5.6 Venetian

Clause 6

In corporations 14 - 17 above, John Caratti will have a beneficial interest equal to that of Allen Caratti. Allen Caratti will act as trustee of that beneficial interest and as the director representing the interests of Allen Caratti and John Caratti.

Clause 9

There will be no further share allotments or transfers of shares other than as contemplated by this agreement without unanimous approval of parties.

Clause 10

(Page 8)

On John Caratti attaining the age of 60 years all beneficial interests of John Caratti and Allen Caratti will be divided equally between them in specie with cash adjustment as necessary.

Clause 12

All powers of corporations named above and parties as trustees or appointors of any trusts will be used so that beneficial entitlements are equalised between Allen Caratti and John Caratti or the children of Allen Caratti and the children of John Caratti as the case may be.

Clause 13

All powers to act as trustees or appointors will if exercisable by Allen Caratti or John Caratti alone be amended so as to be exercisable by them or their nominees jointly.

Clause 14

No new entities shall be incorporated by the parties without them incorporating equality of beneficial interests.

15 The 2002 Deed also provides a mechanism to resolve any disputes about the distribution of assets upon John Caratti attaining the age of 60 years. He turned 60 in January 2010.

16 The 2002 Deed is relevant to all of the actions that are the subject of this application.

The five actions

CIV 1348 of 2004

17 In March 2004, Allen Caratti brought an action against Bruce McKenzie, John Caratti, and a group of nine companies named as the third defendant. The nine companies are the first nine named in the 2002 Deed. The writ and the statement of claim sought an injunction restraining Mr McKenzie (an accountant) from acting for the other defendants, as well as damages. The action against Mr McKenzie was dismissed by consent in January 2005. In March 2005 the other defendants applied to strike out the statement of claim against them. That application was dismissed on 20 May 2005.

18 In CIV 1348 of 2004, Allen Caratti pleads and relies on the terms of the 2002 deed. He claims that it was a deed of settlement by which the proceedings CIV 2188 of 2002 were compromised. Those proceedings

(Page 9)

were an action by Allen Caratti against Aaron Caratti, Maddeleine Caratti and the same group of nine companies.

19 The most recent document on the court file in CIV 1348 of 2004 is a letter of 13 October 2005, when the solicitors for Allen Caratti wrote to a registrar of the court in relation to this action and CIV 1546 of 2004 as follows:

Both actions seem to have been dormant for some time. I can only infer that all parties are content with that situation. There seems no basis on which anyone should interfere with the present state of affairs.

CIV 1546 of 2004

20 In April 2004, Allen Caratti brought an action against John Caratti, Maddeleine Caratti, Aaron Caratti, the same group of nine companies, and a further company Zel Nominees Pty Ltd. The claim seeks a variety of relief, including orders implementing some of the provisions of the 2002 Deed. In particular, the statement of claim seeks orders, based on the 2002 Deed, that:

(a) shareholding in the corporate defendants be equalised between Allen and John Caratti;

(b) Allen Caratti's nominee be appointed as a director of each of those companies.

21 In their defence, the defendants plead that, on its proper construction, the deed does not require the defendants to make the share transfers claimed by the plaintiff; alternatively, that it does not require those transfers to be made until the 60th birthday of John Caratti.

22 The defendants allege a further oral agreement made shortly after and varying the terms of the 2002 Deed to the effect that:

(a) Maddeleine Caratti would be Allen Caratti's nominee and Aaron Caratti would be John Caratti's nominee as director of each company;

(b) instead of an adjustment of shareholding, the parties would share equally in the in specie distribution of the assets of those companies within 60 days of John Caratti's 60th birthday.

23 The defendants also counterclaim. They allege, among other things, that Allen Caratti breached the 2002 Deed by incorporating new entities through which he established or operated businesses.

(Page 10)

24 Events have now overtaken some of the relief sought in CIV 1546 of 2004. For example, the plaintiff sought an injunction to restrain John Caratti from acting in the management of the fourth defendant companies until October 2005.

25 Since the letter of 13 October 2005 referred to in [19] above, the defendants have changed solicitors, and the plaintiff has given notice of intention to proceed, but no substantive steps have been taken towards trial. The matter is not ready to proceed to trial.

COR 71 of 2008

26 In June 2008, Allen Caratti sought relief by originating process under s 290 of the Corporations Act 2001 (Cth) against Maddeleine Caratti, Aaron Caratti and seven companies. The corporate defendants are seven of the nine companies which are defendants in the two actions begun in 2004. The plaintiff seeks injunctions requiring each company to produce its financial statements for the 2006/2007 financial year for inspection and copying by the plaintiff.

27 The entitlement to relief depends, at least in part, on whether Allen Caratti is a director of the seven companies. That is also in issue in the other actions.

28 Apart from changes of solicitor, no steps have been taken since July 2008.

CIV 1061 of 2008

29 This is an action by Allen Caratti and two companies, Moondancer Holdings Pty Ltd (Moondancer) and Tosman (as trustees of the ABC Child Trust), against Navarac (as trustee of the Carchild Unit Trust), Venetian Nominees (trustee of the JMC Child Trust), Aaron Caratti and Maddeleine Caratti. It is necessary to identify the issues in this action in greater detail. The parties agree that this and CIV 2006 of 2008 are the principal actions. They are conveniently referred to as the Trustee Action and the Partnership Action.

30 The plaintiffs' current pleadings are a further amended statement of claim filed 26 March 2010 and a re-amended reply filed 16 September 2009. Both of those documents precede significant amendments to the defence, filed 5 August 2010.

31 The plaintiffs' claim is based on the establishment of the Carchild Unit Trust and the two discretionary trusts for the children of Allen

(Page 11)

Caratti and John Caratti. The plaintiffs claim that (as shown in the accounts of Navarac's trustee of the Carchild Unit Trust):

1. as at 30 June 2006, Navarac as trustee had made loans described as 'related party loans' to John Caratti and four companies associated with the Caratti family;

2. as at 30 June 2007, the loan to John Caratti had been repaid but each of the other loans had increased; and

3. as at 30 June 2008, the related party loans had been repaid and a loan of approximately $39 million had been made to Mammoth Investments.

32 The plaintiffs plead Navarac was in breach of the terms of the unit trust deed and its duties as trustee in making those loans.

33 The plaintiffs further plead that in about January 2006 Navarac granted a charge to the National Australia Bank to secure an advance to Navarac to purchase a racing car for the exclusive use of Aaron Caratti, and that the grant of security and the purchase of that car were:

1. in breach of the terms of the trust deed; and

2. a distribution to Aaron Caratti, who was not a unit holder of the unit trust.

34 The plaintiffs plead further that Navarac made interest free loans to Venetian Nominees in breach of the trust deed.

35 The plaintiffs plead, in particular, that Navarac breached the trust deed by making a distribution to a child of John Caratti without a commensurate distribution to the trustee of the ABC child trust; and by making a distribution to Venetian Nominees without making a commensurate distribution to Tosman (as trustee of the ABC child trust).

36 The plaintiffs plead that Navarac's breaches of trust were committed 'in personal, conscious, fraudulent bad faith'. They claim:

1. an enquiry and account as to the loss suffered by the Carchild Unit Trust;

2. that Navarac, Aaron Caratti and Maddeleine Caratti pay the amount of the loss;

(Page 12)

3. that the trust vest;

4. that a receiver be appointed to get in the assets of the trust and distribute them in equal proportions to Moondancer and Venetian Nominees.

37 The plaintiffs plead that by deed in July 2007, Allen Caratti exercised his power as appointor of the ABC Child Trust to appoint Moondancer as trustee of that trust, and Tosman retired as trustee. The standing of Moondancer to seek relief is in issue between the parties.

38 In the amended defence and counterclaim, the defendants plead the Partnership Agreement, which they say was entered into on or about 1 June 1989, between Allen Caratti and John Caratti. The defendants plead that the business of the partnership was 'property acquisition, property development and sale of developed property', and that, during the term of the partnership, Allen Caratti was to give the whole of his time and attention to the business of the partnership and not engage in any other business.

39 The defendants also plead the 2002 Deed. They describe the first 13 companies specified in that deed as the '2002 Partnership Companies' and entities through which the partnership carried on its business. They assert that it was acknowledged for the purposes of the 2002 Deed, and was the fact, that the whole of the shareholding, assets, and business of the 2002 partnership companies were assets of the partnership.

40 The defendants also claim that the shares held by Moondancer in the four companies numbered 14 to 17 in the 2002 Deed, (described as the 'Allen Caratti Interest Companies') were assets of the partnership.

41 The defendants further plead that the 2002 Deed varied the Partnership Agreement and the partnership. In particular, they plead that Allen Caratti and John Caratti each had an equal beneficial interest 'in respect of the shareholding, assets and business in and of each of the 2002 Partnership Companies'. Those companies include the trustees of each of the Carchild Unit Trust (Navarac) and the two child trusts (Venetian Nominees and Tosman).

42 Further, the defendants plead (Amended Defence and Counterclaim, par 3J):

The 2002 Deed varied the Partnership Deed and the Partnership or alternatively the 2002 Deed and the Partnership Deed were subject to an implied term … that:

(Page 13)

(a) if after the date of the 2002 Deed [Navarac] held any shares or held any interest in shares in any corporation other than the 2002 Partnership Companies and the Allen Caratti Interest Companies that engaged in the Business of the Partnership without the shareholding of any such corporation being equal as between [Allen Caratti] and John Caratti, such shares or any interest in shares held by [Allen Caratti] were the property of and an asset of the Partnership;

(b) if after the date of the 2002 Deed [Allen Caratti] was involved in the management of or held any interest in property or assets of any legal entity other than the 2002 Partnership Companies and the Allen Caratti Interest Companies that engaged in the Business of the Partnership the property and assets of such entity were the property of and an asset of the Partnership; and

(c) if after the date of the 2002 Deed any corporation that engaged in the Business of the Partnership (other than the 2002 Partnership Companies and the Allen Caratti Interest Companies) in which [Allen Caratti]:


(i) held shares or was beneficially entitled to any shares in such corporation; and/or

(ii) was involved in the management of or held any interest in property or assets of such corporation,

and such corporation carried out such business by means of a trust or held any asset by way of trust the property and assets of any such trust are the property and were assets of the Partnership.

43 On the defendants' case, the effect of the 2002 Deed was to vary the partnership deed so that upon John Caratti attaining the age of 60, the partnership would be dissolved and all assets applied in the manner set out in the 2002 deed.

44 John Caratti turned 60 in 2010.

45 The defendants counterclaim for income or capital received from certain farming properties, which they say Allen Caratti received to the exclusion of Navarac (as trustee of the Carchild Unit Trust).

CIV 2006 of 2008

46 John Carrati began the Partnership Action by writ in August 2008 against twelve defendants, including Allen Caratti, five other individual defendants and six companies. In August 2009, the plaintiff applied to join another four individuals as defendants, and the writ was amended to

(Page 14)

join those four in April 2010. The writ was further amended in 2010 to join the companies which are now defendants 17 to 60. The plaintiff also seeks orders in relation to any interest Allen Caratti may have in the property of other companies which are not parties to the action.

47 The individual defendants include Allen Caratti's de facto spouse, and her sister and mother; two of his daughters; and his former wife. The sixteenth defendant is said to be his close friend. The fourteenth defendant (and Allen Caratti's de facto spouse) are said to be employed by the twentieth defendant.

48 Maddeleine Caratti is the twelfth defendant.

49 The statement of claim pleads the same allegations in relation to the Partnership Agreement and the 2002 Deed that are pleaded in the defence and counterclaim in the Trustee Action. It then pleads, in relation to each of the defendant companies, that Allen Caratti, directly or indirectly, owns its shares and is involved in its management; that its shares are assets of the partnership; that its assets are assets of the partnership; and that any property or assets it holds in trust are property and assets of the partnership.

50 There are many companies, not parties, in relation to which the statement of claim pleads that Allen Caratti owns (directly or indirectly) some but not all of their shares. The plaintiff claims, in effect, that Allen Caratti's interest in the shares or property of those companies are assets of the partnership.

51 The defendants to the Partnership Action have not yet pleaded to the claim.

Submissions of the applicants

52 The applicants are the defendants in the Trustee Action, that is Navarac, Venetian Nominees, Aaron Caratti and Maddeleine Caratti, but not John Caratti. Their primary submission is shortly stated: the various proceedings centre around the control of entities associated with the Caratti family, how their assets should be dealt with, and the beneficial entitlement of parties to the assets. The two principal actions (the Trustee Action and the Partnership Action) concern the arrangements made by the 1989 Partnership Agreement and the 2002 Deed, and the 'central issue' in all of the proceedings is 'the nature of the commercial arrangements between John and Allen Caratti'. The Partnership Action is said to involve a wider range of parties, but is centrally about the legal

(Page 15)

relationship between John and Allen Caratti, and whether the other defendants hold assets which are part of that arrangement or relationship.

53 The resolution of the applicants' contention that Allen Caratti has structured his business affairs to limit the extent to which he must account for his assets on the determination of the partnership, and the assessment of the extent of those assets, affect all of the actions.

54 The applicants accept that assessing the extent of Allen Caratti's assets which need to be brought into account in the partnership is 'factually complex' and that Partnership Action will be 'by far the most extensive of all the actions'.

Submissions on behalf of the respondents

55 The same lawyers represent all but seven of the defendants in the Partnership Action (including Allen Caratti), and the plaintiffs in each of the other actions. They oppose the matters being heard together, although in oral submissions they agreed that all but the Trustee Action could be heard together.

56 The respondents have not yet pleaded to the Amended Defence in the Trustee Action, or to the claim in the Partnership Action. Counsel told me, however, that they disputed the claim that there was a partnership. Their position is that the Partnership Agreement was signed, but nothing further came of it.

57 The respondents further pointed to the difficulty of the defendants in the Trustee Action pleading the partnership as a defence in that action when John Caratti is not a party to it. They say that the substance of the Trustee Action is the allegation that Navarac misused approximately $30 million of trust funds, and the pleas regarding the Partnership Agreement and the 2002 Deed do not go to that question.

58 In the course of submissions, counsel for these respondents (and counsel for the other defendants in the Partnership Action) suggested that there may be alternative way in which to manage the trials, and that some issues might be separately determined. The respondents did not, however, identify what issues might be separated for prior determination. The only application before me is that for a joint hearing.

59 Counsel further submitted that the application to hear the matters together ought to be on notice to the beneficiaries of the discretionary trusts which hold units in the Carchild Unit Trust. The claim being made

(Page 16)

by the applicants and by John Carrati is, in effect, that the assets of those discretionary trusts are assets of the partnership between John and Allen Caratti and are to be distributed in accordance with the Partnership Agreement and the 2002 Deed.

60 I have not referred to the written submissions filed by the respondents, as they were prepared before the amended defence in the Trustee Action, and have been largely overtaken by events

The Gadens defendants

61 The other defendants in the Partnership Action, except the fourth and twelfth defendants, are all represented by the firm of Gadens Lawyers, and it is convenient to refer to them as the Gadens defendants.

62 The second defendant is Allen Caratti's de facto wife. The statement of claim in the Partnership Action pleads that she is also an employee of the twentieth defendant, Mammoth Nominees. It pleads that she is an officer in several of the other defendants, that she owns shares in some of them, and is also the registered proprietor of a large amount of real property (par 248). The plaintiff alleges that Allen Caratti controls and directs all of her actions and activities in relation to the companies and in relation to the properties. The plaintiff claims that Allen Caratti directs and controls the acts and activities of the companies through the second defendant, so that he is involved in the management of those companies. The plaintiff claims that both the properties held by those companies, and the properties held by the second defendant, are assets of the partnership.

63 The second defendant is the sole director and shareholder of the seventh and eighth defendants. John Caratti alleges that, through her, Allen Caratti is involved in the management of those companies.

64 The ninth defendant is Allen Caratti's former wife (they were divorced in about 1992). She is the director of the tenth defendant. John Caratti alleges that Allen Caratti controls and directs her activities by reason of her having been his wife, and is thereby involved in the management of the tenth defendant.

65 The Gadens defendants have not yet pleaded in the action, but counsel informed me that they will deny the allegation that they are Allen Caratti's alter ego.

66 These defendants have no involvement in any of the other actions. They are not parties to the Partnership Agreement or the 2002 Deed. If

(Page 17)

John Caratti is successful in relation to the construction of those agreements, it will be necessary to determine the nature and extent of Allen Caratti's involvement with the Gadens defendants, and whether they hold or control property of the partnership.

67 The Gadens defendants point to the obvious inconvenience and cost of participating in actions in which they have no interest. They are, however, already parties to the action which is anticipated to be the longest and most complex.

Consideration of relevant factors

Common parties

68 Allen Caratti is plaintiff in four actions and defendant in one; Maddeleine Caratti is a defendant in four actions; John Caratti and Aaron Caratti are parties in three of them. John Caratti is not a party to the Trustee Action, but, if the amended defence and counterclaim is maintained, he should be.

69 Some of the corporate parties, in particular Navarac and Tosman, are involved in multiple actions.

70 The same lawyers appear for Allen Caratti, the other plaintiffs in actions in which he is a plaintiff, and 19 of the other defendants in the Partnership Action. John Caratti and the defendants in the actions other than the Partnership Action have the same lawyers.

71 The applicants accept that the additional parties in the Partnership Action would not actively participate in the other four actions. But they submit that (apart from Maddeleine Caratti) the other defendants in it are 'part of the Allen Caratti family parties'. This characterisation, which really begs the question, is not particularly helpful. While it is true that many of them are represented by the solicitors acting for Allen Caratti, they are not all so represented.

Common questions of fact and law

72 The existence of common questions of fact and law, and the prospect of inconsistent findings being made in separate actions, are important factors. There is no doubt there are common questions of fact and law.

73 The defence pleaded in the Trustee Action repeats a substantial part of the plea in the Partnership Action, and puts in issue in all of the contentions regarding the arrangements between John and Allen Caratti

(Page 18)

which form the basis of the Partnership Action. There is now a substantial overlap between the two principal actions. I also accept that how the court resolves the issues regarding the operation and proper construction of the 2002 Deed and the Partnership Agreement will affect the other actions. The effect of the 2002 Deed is centrally relevant the actions commenced in 2004 .

74 The additional and factually complex issues regarding the extent of Allen Caratti's assets, and his relationship to the many companies named as defendants in that action, arise primarily in the Partnership Action, and then only if the court finds that there was a partnership. If, for example, the Trustee Action is determined first, the remaining issues for the Partnership Action will be limited or, depending on the earlier finding, may fall away.

75 John Caratti is not a party to the Trustee Action, but should be. Even if he remains a non-party, the risk of inconsistent findings is reduced by the principle that an issue should not be re-litigated where it would be manifestly unfair or constitute an abuse of process to do so. That principle is of wider application than the principles of res judicata, or issue estoppel. It can extend to proceedings between parties who are different from the parties to the proceedings in which the issue was previously determined - see Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378, 392 - 393; Hunter v Chief Constable of the West Midlands Police [1981] UKHL 13; [1982] AC 529; Reichel v Magrath (1889) 14 App Cas 665; Donnellan v The Public Trustee [2007] WASC 213 [27] - [42].

76 The risk of inconsistent findings is not, in these circumstances, determinative.

77 Finally, in the Trustee Action the court must try additional issues relating to the conduct of Navarac which is alleged to be in breach of the Carchild Unit Trust deed. And, in the counterclaim, it must consider whether Allen Caratti is liable to account for receiving income or capital due to the Carchild Unit Trust. The parties in the Partnership Action (in particular, the Gadens defendants) are not involved in those issues.

Other issues

78 The applicants raise the need for consistent findings as to credit, where there are witnesses who will be giving evidence across several actions. I agree that it is a relevant factor, but not decisive.

(Page 19)

79 There is nothing before me to suggest that any party will suffer any procedural prejudice whether the actions are tried together or separately. Pleadings will still be needed in each matter. Evidence issues may be complex if orders are made for the use of the evidence in all actions. But I have not been referred to anything that demonstrates those difficulties are insurmountable.

80 The Gadens defendants will suffer the prejudice of involvement in a long trial, much of which will not concern them. They are already parties to the Partnership Action, which is likely to be the longer and more factually complicated matter. But the Trustee Action raises discrete issues which are likely to occupy several days of sitting time, and in which they are not concerned.

81 The plaintiffs in the Trustee Action (respondents to this application) submit that joining the matters will delay the hearing of that action. It is difficult to assess the extent of any delay. None of the defendants have pleaded in the Partnership Action. But the plaintiffs have not yet pleaded to the Amended Defence in the Trustee Action. It is not ready to proceed to trial.

82 I do not, however, discount the potential for delay in the Partnership Action. Arguments over interlocutory procedures, such as discovery, are not beyond imagining when there are sixty defendants, and the identification of their assets and property will be in issue.

83 Allen Caratti has not attempted to get the three other actions which he commenced to a hearing. I am not certain that he intends them to proceed to trial. I have no regard to the risk for further delay in those matters by linking them to the other actions.

Conclusion

84 I am not satisfied at this stage that trying all matters together is necessarily the most efficient way of disposing of these cases or would otherwise best ensure the attainment of the objects of case management. Counsel for John Caratti disclaimed any support for separate resolution of issues. Counsel for the other parties expressed support for that course, but without any firm proposal or identification of what issues may be appropriate for separate determination. In my view, it needs to be carefully considered.

85 Whether there was a partnership between John Caratti and Allen Caratii between 1987 and 2002; the effect of the 2002 Deed; the

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continuation of any partnership after 2002 - these are potentially discrete issues. They may be decided before the court considers whether the companies named as defendants in the Partnership Action are assets of a partnership between John Caratti and Allen Caratti, or hold assets to which John Caratti has a claim because of that partnership. How the court resolves them will affect the way in which both actions proceed, and may affect whether the second aspect of the Partnership Action proceeds at all.

86 The application for the five actions to be tried together should be dismissed. It is difficult to make a proper assessment of the best way to proceed until the respondents have pleaded. Accordingly, there should be orders for further pleading in the Trustee Action, and pleading in the Partnership Action. The parties will be required to then attend a strategic conference to consider the most appropriate approach to be taken to the remaining interlocutory stages, including the best way to try the issues common to the actions. An order at this stage for the whole of the actions to be tried together would, in my judgment, close the door when other options must be examined.

87 I will hear the parties as the terms of the directions that need to be made as a result of this decision.