Pistorino (by her litigation guardian, Timothy Charles Finemore) v Connell
[2013] VSC 21
•6 February 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
SCI 2009 05816
IN THE MATTER of the Will and Estate of AGOSTINO PISTORINO
BETWEEN
| AURELIA PISTORINO (BY HER LITIGATION GUARDIAN, TIMOTHY CHARLES FINEMORE) | Plaintiff |
| and | |
| GIOVANNA GRACE CONNELL & ORS | Defendants |
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JUDGE: | SIFRIS J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 1 February 2013 | |
DATE OF JUDGMENT: | 6 February 2013 | |
CASE MAY BE CITED AS: | Pistorino (by her litigation guardian, Timothy Charles Finemore) v Connell & Ors | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 21 | |
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PRACTICE AND PROCEDURE – Limited utility of proceedings – High cost of proceedings – Abuse of process – Stay of proceedings pending further order – Supreme Court Act 1986 (Vic), s 30 – Civil Procedure Act 2010 (Vic), s 47(1)
PRACTICE AND PROCEDURE – Case management – Stay of costs orders permitting the costs of all parties to be paid out of estate
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff (by her litigation guardian) | Mr J Delany SC with Ms H Tiplady | Dominic Esposito Solicitors |
| For the First Defendant | Mr T North SC with Mr J O’Bryan | O'Donnell Salzano Lawyers |
| For the Third Defendant | Mr L Glick SC with Ms S Bailey | Piper Alderman |
| For the Fifth Defendant | Mr J Tsalanidis | Thomson Lawyers |
| For the Sixth Defendant | Dr K Hanscombe SC with Mr A Dickenson | Aitken Partners |
HIS HONOUR:
Background
Agostino Pistorino (“the deceased”) died on 5 January 1999. At the date of his death the deceased had net assets in excess of $20 million.
By the deceased’s last Will dated 28 December 1994 Giovanna Grace Connell (“Joanne”), Bradford John Baker (“Baker”) and Antonio Pistorino (“Antonio”) were appointed executors.
Probate of the Will was granted to Joanne, Baker and Antonio on 15 January 2001.
The relevant provisions of the Will are as follows:
•The estate was devised to the trustees with power of conversion.
•The deceased’s wife, Aurelia Pistorino (“Aurelia”) was to receive the income of the Estate.
•On the death of Aurelia the Estate would be divided equally between the deceased’s children Joanne and Antonio.
•The trustees had the authority to postpone the realisation of the whole or part of the Estate and to retain the assets in the same state in which they where at the time of the death of the deceased.
Antonio was removed as executor on 18 December 2008. Baker was removed as executor on 7 October 2009 and was replaced by David Ian Gibbs (“Gibbs”). On 6 September 2010 both Joanne and Gibbs were removed as executors. Equity Trustees Pty Ltd (“Equity Trustees”) became sole executor of the Estate.
The assets of the Estate comprise shares and units in various companies and trusts and loans to family corporations and family members. The Estate has interests in Pistorino Investments Pty Ltd (“PIPL”) and Piston Holdings Pty Ltd (“Piston Holdings”). Both companies have substantial retained earnings. PIPL holds interests in numerous property owning companies.
There are numerous proceedings relating to the Estate. A brief summary is set out hereunder.
The proceedings
On 8 December 2008 Joanne and Baker commenced proceedings in this Court (No 10160 of 2008) seeking that Antonio be removed as executor and trustee of the Estate (“the Removal Proceeding”).
On 11 December 2008 Antonio retired as a director of PIPL and Piston Holdings. Orders were made by consent on 18 December 2008 that Antonio be discharged as an executor and trustee of the Estate.
On 13 August 2009 Aurelia commenced proceedings in this Court (No 8347 of 2009) against Joanne, Agaupi Investments Pty Ltd (“Agaupi”) and Baker alleging oppression in the management and control of the affairs of Agaupi and PIPL (“the Corporations Proceeding”). Agaupi and PIPL are both companies related to the Estate.
In about April 2009 Aurelia commenced this proceeding seeking the removal of Baker and Joanne as executors of the Will and trustees of the Estate (“the Estate Proceeding”).
On 7 October 2009 Gibbs was appointed as an independent trustee of the Estate and a director of each of the corporations comprising the relevant group of companies (“the Group”) in lieu of Baker, who was removed from the aforesaid positions on an interim basis pending the hearing and determination of the Estate Proceeding. Further, on 7 October 2009, Justice Robson made orders directing the payment of monies to Aurelia in relation to her income entitlement. Those orders were subsequently varied by me on 15 December 2011 and 13 February 2012. Monies have been paid to Aurelia pursuant to the court orders.
On about 20 May 2010 Aurelia commenced proceedings in this Court (No 2370 of 2010) against Joanne and Gibbs under Part IV of the Administration and Probate Act 1958 (Vic) seeking in the alternative to the Estate proceedings, further maintenance and provision from the Estate (“the Part IV Proceedings”).
On about 3 September 2010 Joanne and Gibbs retired as directors of each of the corporations comprising the Group and as executors and trustees of the Estate pursuant to Orders made on 27 August 2010 in the Estate Proceeding and proceeding 4180 of 2010 commenced by Gibbs (“the Gibbs proceeding”).
On about 3 September 2010 Petr Vrsecky (“Vrsecky”) and James Downey (“Downey”) were each appointed as directors, and in the case of Vrsecky secretary as well, of each of the corporations in the Group pursuant to the orders made on 27 August 2010 in the Estate proceeding and the Gibbs proceeding.
On about 6 September 2010 Equity Trustees were appointed independent trustees of the Estate in lieu of Joanne and Gibbs, pursuant to the Orders made on 27 August 2010 in the Estate Proceeding and the Gibbs proceeding.
On 22 February 2011 the Trustees commenced proceedings in this Court (No 786 of 2011) against Antonio, Rocco Lomoro and the Registrar of Titles seeking, amongst other matters, a declaration that the property situated at 7 Tucker Place, North Fitzroy is held on trust for the Estate and an order that the title to the property be amended to reflect the same (“the Caveat proceeding”).
The Trustees, as a consequence of the Estate Proceeding, have or may have claims against some or all of the corporations or trusts in the Group (“the Potential Group Proceedings”).
The Removal proceeding, the Corporations proceeding, the Estate proceeding, the Part IV proceeding, the Caveat proceeding and the Potential Group Proceedings are hereafter collectively referred to as the Proceedings (“the Proceedings”).
Mediations of the Proceedings were conducted by Mr George Beaumont QC and attended by Joanne, Antonio, Aurelia and the Trustees on 26 November 2010, 30 November 2010 and 2, 3, December 2010. A further mediation attended by all the parties was conducted by Efthim AsJ on 14 February 2011 and another mediation by Mr Beaumont QC on 29 August 2012 and 1 September 2012 (“the mediation”).
By order of this Court made 25 September 2012 Timothy Charles Finemore was appointed litigation guardian for Aurelia in respect of all Proceedings to which she is a party and provision was made for the payment of his costs.
Future conduct of the Proceedings
Two particular features of the litigation led the Court to take a more active role in the management of the Proceedings. First, various orders of the Court permit all parties to fund their legal costs and expenses in the first instance from the Estate, subject to minimal conditions. The costs incurred to date are unjustifiably very high indeed. Not much has been achieved and the costs run into millions of dollars thereby eroding the value of the Estate. This must stop. Secondly, the litigation is in many ways onerous, burdensome, abusive and self-defeating. The evidence of the litigation guardian is that Aurelia does not wish to continue with the litigation. She is over 80 and wishes all the matters to be resolved. The Court has been copied in on settlement proposals and it is apparent that all parties are constructively working towards resolving all matters.[1] I do not propose to comment on settlement matters or the nature and basis of any tax advice or ruling. It is obvious that the matter must be resolved by agreement of the parties.
[1]Ordinarily it is both undesirable and inappropriate that the contents of any settlement discussions be referred to the Court. However in the peculiar circumstances of this case, the proposed orders that I indicated would be seriously considered, the nature of the proceedings and the supervisory jurisdiction of the Court, the information was useful and informative.
Matters came to a head towards the end of last year. Aurelia made application to amend her Statement of Claim in the Estate Proceeding. Joanne opposed the amendment and sought to strike out the Estate Proceeding. Limited argument took place and I declined to determine the issue instead raising with the parties other matters associated with the utility of the various proceedings and the high costs thereof. Application was made by Antonio and Aurelia for further funding from the Estate in order to enable tax advice and rulings to be obtained, a necessary factual matter for obvious reasons including settlement discussions. I refused Antonio’s application but allowed Aurelia to provide further information prior to deciding to what extent the Estate should provide such funding to her.
On 14 December 2012 I adjourned all matters to 1 February 2013 and indicated that I would circulate a memorandum in relation to the various matters that would be considered and if necessary and convenient dealt with on that day. It is convenient to set out the memorandum in full.
In view of the limited utility of the various proceedings, the high cost of the litigation, and the age and condition of Mrs Pistorino, his Honour is giving serious consideration to progressing the proceedings in the following way:
1.Order a stay of all proceedings until further order.
2.Discharging the various costs orders with prospective effect. Costs going forward will be subject to a different regime or no regime at all.
3.Determining the tax liability of Mrs Pistorino. Funds will be made available for this purpose in accordance with the memorandum filed on 11 January 2013.
4.Requiring Mrs Pistorino to attend court for the purpose of giving limited evidence.
5.Requiring the parties to state their position on costs and the continuation of the existing regime of distributions to Mrs Pistorino (these are two of the three matters raised by the Mr Delany S.C., the third and main concern was the tax liability of Mrs Pistorino).
Stay of proceedings
None of the parties opposed a stay as such and it was not my intention to consider a permanent stay. The only question therefore is the duration of the stay.
The alternatives are a stay until further order or until the end of April 2013. In the first case application would need to be made by any party on proper material for a lifting of the stay. In the alternative case it was submitted that a stay was appropriate until such time as Aurelia had received a tax ruling, the expected date being some time in April 2013. The tax ruling is undoubtedly critical to any settlement.
The power to order a stay is not in dispute. The stay is not based on actual and perceived difficulties associated with the causes of action in the Estate Proceeding, a matter that I have deliberately refrained from ruling on, and in respect of which I have some concerns. Rather, the stay is based on the view I have come to that to further litigate any of the matters at the very least until a tax ruling is obtained by Aurelia constitutes an abuse of process in the particular circumstances and the absurdly high costs involved. The critical issue that underpins the entire dispute is the tax liability of Aurelia and her ability to discharge such liability. Until these matters are known there is little point in proceeding further. I did not understand any party to suggest otherwise.
Section 30 of the Supreme Court Act 1986 (Vic) recognises the court’s inherent power to grant a stay:
Nothing in this Act affects the power of the Court to stay a proceeding in the Court, either of its own motion or on the application of any person, whether or not a party.
In relation to the definition of ‘abuse of process’, in Michael Wilson & Partners Ltd v Nicholls the High Court found that:
As the majority pointed out in Batistatos v Roads and Traffic Authority (NSW), "[w]hat amounts to abuse of court process is insusceptible of a formulation comprising closed categories". In Ridgeway v The Queen, Gaudron J noted that the concept extended to proceedings "instituted for an improper purpose", and to proceedings that are "seriously and unfairly burdensome, prejudicial or damaging" or "productive of serious and unjustified trouble and harassment". In Rogers v The Queen, McHugh J concluded that, although the categories of abuse of process are not closed, many cases of abuse can be identified as falling into one of three categories: "(1) the court's procedures are invoked for an illegitimate purpose; (2) the use of the court's procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court's procedures would bring the administration of justice into disrepute.[2]
[2](2011) 244 CLR 427; see also Williams’ Civil Procedure Vic, [I 23.01.47] citing Rogers v R (1994) 181 CLR 251 at 286; 123 ALR 417; 68 ALJR 688; referred to in Motiv v R (2011) 283 ALR 393; 86 ALJR 117; [2011] HCA 50; at [10], and Courtenay Investments Ltd v D PP (Cth) [2012] WASCA 121 at [95].
In New South Wales, Giles CJ has described the jurisdiction to stay proceedings for abuse of process as follows:
[It] extends to all those categories of cases in which the processes of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness (Walton v Gardiner (1993) 177 CLR 378 at 395; 112 ALR 289 per Mason CJ, Deane and Dawson JJ). It is important that freedom of access to the Courts should be preserved, and that defendants should not be encouraged to seek a stay on flimsy grounds for tactical reasons (Williams v Spautz (1992) 174 CLR 509 at 519; 107 ALR 635 per Mason CJ, Dawson, Toohey and McHugh JJ), but the fundamental policy considerations informing the jurisdiction are that the Court must ensure that its processes are used fairly as between the parties to the litigation and that the Court must avoid the erosion of public confidence through concern that its processes may lend themselves to oppression and injustice. So there have been identified as aspects of abuse of process first, oppression and unfairness to the other party to the litigation and, secondly, that the matter complained of will bring the administration of justice into disrepute (Rogers v R (1994) 181 CLR 251 at 256; 123 ALR 417 per Mason CJ; at 286 per McHugh J; see also Hunter v Chief Constable of West Midlands Police [1982] AC 529 at 536; [1981] 3 All ER 727 per Lord Diplock and Walton v Gardiner at 393).[3]
[3] State Bank of New South Wales Ltd v Stenhouse Ltd (1997) Aust Torts Reports 81-423 at 64,086, affirmed in Aed Oil Ltd v Puffin FPSO Ltd (No 4) [2010] VSC 65.
In Victoria, Robson J set out the relevant principles in the case of Re AWB Limited No 10. In that case the focus was on duplicate proceedings and the relevant principles enunciated included:
(1)The court possesses an inherent jurisdiction to stay its proceedings as an abuse of process if the proceedings are unjustifiably oppressive and vexatious or manifestly unfair or otherwise bring the administration of justice into disrepute among right-thinking people: Walton v Gardiner; Rogers v R; and PNJ v R; Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd.
(2)The jurisdiction should only be exercised in exceptional cases or sparingly with the utmost caution: Jago v District Court (NSW).
(3)The jurisdiction to stay for abuse of process is not limited to cases where the proceedings have been brought for an improper purpose or where there is no possibility of the court affording the affected party a fair hearing: Walton v Gardiner; Rogers v R.
(4)The circumstances in which abuse of process may arise are extremely varied and the courts have refrained from limiting the circumstances to fixed categories: Hunter v Chief Constable of the West Midlands Police; Rogers v R; Batistatos v Roads and Traffic Authority (NSW).
(5)In considering whether to grant a stay as an abuse of process, the court should undertake a weighing process involving a subjective balancing of a variety factors and considerations: Walton v Gardiner.[4]
[4]Re AWB Limited No 10 [2009] VSC 566 at [264].
Section 47(1) of the Civil Procedure Act2010 (Vic) also broadly empowers the court to make orders ‘in the interest of the administration of justice; or in the public interest’:
(1)Without limiting any other power of a court, for the purposes of ensuring that a civil proceeding is managed and conducted in accordance with the overarching purpose, the court may give any direction or make any order it considers appropriate, including any directions given or orders made-
(a)in the interests of the administration of justice; or
(b)in the public interest.
In all of the circumstances I propose to grant a stay in each matter until further order and propose to revisit the matter generally at the end of April 2013.
Costs orders
There is no basis on which the present costs regime should continue. The orders were appropriate at the time. They are no longer appropriate. The original costs order was made over three years ago (and has continued with some inclusions, exclusions and conditions) and to say that the matters have progressed at a snails pace is to engage in exaggeration. Without attributing blame, the incurring of millions of dollars of costs is unjustified in the context of a family dispute with confined issues. Further it has not been demonstrated that the parties are without means. In fact the contrary appears to be the position. With effect from the date of the proposed order, and subject to the matters referred to below, there will be a stay of the costs orders and each party will be liable for its own costs and expenses henceforth.
The costs orders will continue to apply in relation to the costs expenses and remuneration of Equity Trustees, Downey and Vrsecky. As all proceedings are effectively on hold, the costs and expenses and remuneration referred to does not relate to the actual conduct of the litigation but to other matters that these parties are required to deal with, including fundraising referred to in paragraph 40 hereof. Save as aforesaid, the costs of all other parties shall not, with effect from the date of the proposed order, be paid by the Estate. The order will not affect costs incurred to the date of the order. The order will not preclude any party from making application on proper material (and with full disclosure) for payment of any costs and expenses out of the Estate and will not preclude any party from challenging any costs incurred or paid to any party in the manner identified in the costs orders.
I note that the parties, with respect properly, did not seriously contest the need to revise the costs orders. So far as the application by Aurelia and Antonio for funding in order to obtain tax rulings is concerned I am reluctant to permit further funding from the Estate particularly in light of the fact that the Estate is seriously short of funds and has outstanding accounts payable of well over $1 million. However notwithstanding such reluctance, I will allow funding for such purposes in respect of Aurelia. Based on the memorandum dated 11 January 2013 provided by Mr Murphy SC and Ms Lee and the costs estimates provided by Timothy Bow of Lawler Draper Dillon, I am prepared in view of the importance of such tax ruling to authorise an amount of $40,000 from the Estate towards such costs. Any costs in excess of $40,000 will have to be borne by Aurelia.
I reject Antonio’s revived application for such funding. His position self-evidently differs to that of Aurelia.
So far as the litigation guardian is concerned, I do not propose to make any further order or ‘carve out’. Aurelia is bound by the general stay in paragraph 1 of the proposed orders and the stay in relation to costs in paragraph 2. It follows that Aurelia is not entitled to payment of costs from the Estate. I do not propose to disturb the order of Dixon J made on 25 September 2012.
General matters
I remain concerned about the continuing need for the litigation guardian. However, at this stage, given the intended tax ruling and reasonably advanced settlement discussions, I do not propose to take the matter any further. The matter and the retention of Vrsecky and Downey as directors of the Group companies will be revisited in April 2013. I note however that there is little discord between the litigation guardian and Aurelia so far as the desire to resolve the matter is concerned.
The final matter relates to funding. Further funds are required by Equity Trustees to make payment of outstanding costs incurred and billed but not paid (about $1.3 million) and costs incurred but not yet billed (in excess of $1.2 million) and other associated costs, disbursements and agreed commission. This is a matter of some concern. To address the matter orders were made for Burton Arch Pty Ltd, a property owning company, to raise funds for such purpose. However, there are difficulties with implementing the orders and the parties have been unable to agree on a suitable basis for raising funds. I do not propose to make any further orders at this stage. However, as the matter is sufficiently urgent, I propose to deal with funding issues on 8 March 2013.
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