Pistorino (by her litigation guardian, Timothy Charles Finemore) v Connell (No 3)
[2014] VSC 551
•6 November 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
S CI 2009 05816
and
S CI 2008 10160
S CI 2009 8347
S CI 2010 4180
S CI 2010 2370
S CI 2011 786
IN THE MATTER of the Will and Estate of AGOSTINO PISTORINO
| AURELIA PISTORINO (BY HER LITIGATION GUARDIAN, TIMOTHY CHARLES FINEMORE) | Plaintiff |
| and | |
| GIOVANNA GRACE CONNELL & ORS (AND OTHER PROCEEDINGS IN ACCORDANCE WITH THE ATTACHED SCHEDULE) | Defendants |
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JUDGE: | SIFRIS J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 24 October 2014 |
DATE OF JUDGMENT: | 6 November 2014 |
CASE MAY BE CITED AS: | Pistorino (by her litigation guardian, Timothy Charles Finemore) v Connell & Ors (No 3) |
MEDIUM NEUTRAL CITATION: | [2014] VSC 551 |
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PRACTICE AND PROCEDURE ‑ Leave to discontinue proceeding and related proceedings on terms ‑ Leave granted.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff in S CI 2011 786, the Fifth Defendant in S CI 5816 and S CI 2009 8347 and the First Defendant in S CI 2010 2370 | Dr K P Hanscombe QC with Mr A P Dickenson and Mr M Flynn | Aitken Partners |
| For the Plaintiff in S CI 2009 5816, S CI 2009 8347 and S CI 2010 2370 and the First Defendant in S CI 2010 4180 | Mr J Delany QC with Ms H A Tiplady | Dominic Esposito Solicitors |
| For First Defendant in S CI 2009 5816, Third Defendant in S CI 2009 8347, First Plaintiff in S CI 2008 10160, Second Defendant in S CI 2010 4180 | Mrs G G Connell, in person | |
| For the Third Defendant in S CI 2009 5816 and Second Defendant in S CI 2010 2370, Fourth Defendant in S CI 2010 4180, First Defendant in S CI 2008 10160 and S CI 2011 786 | Mr A P Young | Piper Alderman |
| For the Third Defendant in S CI 2009 5816, Second Plaintiff in S CI 2008 10160, Plaintiff in S CI 2010 4180 | Ms S Phillips (solicitor) | Brian Ward & Partners |
| For the Fifth Defendant in S CI 2009 5816, the First and Second Defendants in S CI 2009 8347, the Third, Fifth and Seventh to Fifteenth Defendants in S CI 2010 4180 | Mr J Tsalanidis | Thomson Geer |
HIS HONOUR:
Introduction
The parties to this proceeding (and other related proceedings) no longer wish to have the matters and various claims decided by the Court. In this case (and others as referred to below) leave is sought by the Plaintiff to discontinue each proceeding on certain terms.
The various proceedings arise out of the substantial disagreement between the wife and children of the late Agostino Pistorino (’the deceased’), who died on 5 January 1999.
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 (’Mrs Pistorino’) was to receive the income of the Estate.
•On the death of Mrs Pistorino 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 were at the time of the death of the deceased.
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.
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’).
In about April 2009 Mrs Pistorino commenced this proceeding seeking the removal of Baker and Joanne as executors of the Will and trustees of the Estate (’the Estate Proceeding’).
On 13 August 2009 Mrs Pistorino 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.
On about 20 May 2010 Mrs Pistorino commenced proceedings in this Court (No 2370 of 2010) against Joanne and David Ian Gibbs (’Gibbs’) (who had been appointed executor of the Estate) under Part IV of the Administration and Probate Act 1958 (Vic) seeking in the alternative to the Estate Proceeding, 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 no 4180 of 2010 was commenced by Gibbs seeking indemnification (’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’).
It is necessary to briefly state some further background matters.
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.
Baker was removed as executor on 7 October 2009 and was replaced by 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.
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, Robson J made orders directing the payment of monies to Mrs Pistorino 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 Mrs Pistorino pursuant to the court orders.
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 (‘the Trustees’) in lieu of Joanne and Gibbs, pursuant to the orders made on 27 August 2010 in the Estate Proceeding and the Gibbs Proceeding.
The Removal Proceeding, the Corporations Proceeding, the Estate Proceeding, the Part IV Proceeding, the Caveat Proceeding and the Gibbs Proceeding 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, Mrs Pistorino 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.
By order of this Court made 25 September 2012 Timothy Charles Finemore was appointed litigation guardian for Mrs Pistorino in respect of all proceedings to which she is a party and provision was made for the payment of his costs.
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.
3Determining 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).
On 1 February 2013 I heard argument on the matters referred to in the memorandum. I granted a stay in each matter until further order. No further order has been made. I also, subject to some exceptions, granted a stay in relation to the various costs orders permitting the parties to have their costs paid out of the Estate. The effect was that going forward, each party would be liable for their own costs and expenses. I published my reasons on 6 February 2013.[1] I will assume familiarity with this Judgment.
[1]Pistorino (by her litigation guardian, Timothy Charles Finemore) v Connell & Ors [2013] VSC 21.
Critical to the ability to resolve the various proceedings in whole or in part was the tax position of Mrs Pistorino (and others). The Proceedings were adjourned from time to time, tax advice and rulings were obtained and various other orders were made by the court from time to time.
It has taken longer than originally contemplated but has led to the current application.
The Estate Proceeding – 05816 of 2009
By summons filed 19 September 2014 the Plaintiff (Mrs Pistorino) seeks the following orders ‑
1.The plaintiff have leave to discontinue the proceeding on the following terms:
(a)The income entitlement of the plaintiff, pursuant to paragraph 1 of the Order of Justice Sifris made 15 December 2011 and paragraph 1 of the Order of Justice Sifris made 13 February 2012, shall continue until Mrs Pistorino’s death;
(b)Paragraph 3(c) of the Order of Justice Robson made 7 October 2009, paragraphs 2 and 3 of the Order of Justice Croft made 18 December 2009, paragraphs 3 and 7 of the Order of Justice Croft made 27 August 2010, paragraphs 1, 2, 3, 5, 6, 7 and 8 of the Order of Justice Croft made 17 June 2011 and paragraphs 1, 2, 3, 4, 5 and 6 of the Order of Justice Croft made 27 June 2011, as stayed pursuant to paragraph 2 of the Order of Justice Sifris made 6 February 2013 (the Costs Orders), stand as the final costs orders in the proceedings;
(c)Any tax liability of the plaintiff arising as a consequence of the Costs Orders be paid out of the corpus of the Estate; and
(d) There be no further order as to costs.
Paragraph 1(a) (’Income Entitlement’) was opposed by Mrs Connell and Equity Trustees. I do not propose to make the order or more precisely include the Income Entitlement (or any other fixed entitlement) as a condition of the leave to discontinue. It is neither necessary nor desirable.
The gravamen of the Plaintiff’s argument was to the effect that Mrs Pistorino requires ongoing financial support and should not be left to the uncertain decision of the directors of the various companies to declare and pay dividends to the Estate. Alternatively, it was suggested that a fixed sum be paid. Further, it was submitted that the Court has the power to make the order, or impose the term – which was the holding position of the parties without any determination of the merits – in a summary way because this was, amongst other things, efficient and cost effective and entirely consistent with the provisions of the Civil Procedure Act 2010 (Vic) (‘the Act’). It was preserving the position – which but for the summons would have continued – and was ‘cutting to the chase’.
The main thrust of the argument in opposition was to the effect that there was no power and no need and that the operation of the companies including the declaration of dividends should be dealt with on the basis of the Corporations Act 2001 (Cth) and the general law. A consequence of discontinuance was, it was submitted, that the holding orders would be discharged.
I will not grant the Plaintiff leave to discontinue on the basis of the Income Entitlement term substantially for the reasons advanced by Mrs Connell and Equity Trustees.
First, I am not satisfied that there is any need. Mrs Pistorino has not insubstantial assets including cash on hand. She is 86 years old and on the evidence is more than able to support herself. She is a one half owner of the shares in PIPL and has over the past several years received substantial amounts in advance of and without any consideration as to her legal entitlement thereto.
Secondly, and not unrelated to the first point, it would deliver a substantial victory to Mrs Pistorino in circumstances where she is discontinuing the Proceeding. It would have the effect, in part, of converting a holding position into a positive result in the case. This is neither fair nor desirable and is not made so by the invitation of invocation of the Act to the effect that I should simply determine the complicated substantive matter underpinning the Income Entitlement in an arbitrary and summary way. The Act is very important and far reaching but it does not permit or require the Court to sit under a palm tree.
I propose to accede to paragraph 1(b). It is desirable.
Mrs Connell originally opposed the term and in written submissions contended that all of the costs orders were made only as holding positions and that the orders and liability for costs and costs generally was able to be revisited and if necessary and appropriate substantial costs could be recovered. To her great credit she resiled from this position.
Equity Trustees could not consent to the order because it involves the giving up of a right to potentially recover substantial funds in relation to costs that should not have been incurred or paid and this would, it was submitted, be to the detriment of present and future beneficiaries.
Although there is some substance in the position taken by Equity Trustees, I propose to allow the term. The existing primary beneficiaries (the children Joanne and Antonio) agree and a review of the various costs orders and the like would be an extremely costly and substantial undertaking. This is, to say the least, most undesirable. It would also necessarily require some consideration of the merits, which in the context of this family saga is most undesirable.
I will accede to paragraph 1(c) with the agreed cap of $322,714 and also to paragraph 1(d).
The Part IV Proceedings – 2370 of 2010
The Corporations Proceeding – 8347 of 2009
In each of these proceedings in which Mrs Pistorino is plaintiff there must, for the reasons given, be orders in the same terms as the Estate Proceeding.
The Removal Proceeding ‑ 10160 of 2008
The Caveat Proceeding ‑ 786 of 2011
I propose to make orders in accordance with the submission made on behalf of Mr Pistorino, in both of these proceedings. It follows that I do not consider, for the reasons given, that the costs orders should be revisited as submitted by Equity Trustees. Further, given the nature of the Removal Proceeding (10160 of 2008) and questions associated with who is the proper plaintiff, it is in the circumstances most undesirable to require any further affidavits to be filed.
The Gibbs Proceeding – 4180 of 2010
Gibbs, one of the former trustees appointed by the Court, seeks payment of legal costs incurred by him post his removal as trustee by order of the Court made 27 August 2010. Gibbs has foreshadowed legal action to recover these costs, but has agreed to an order that his claim for costs be subject to the assessment procedure established by the orders of Croft J made 17 June 2011. Equity Trustees seeks orders to this effect.
I propose to dismiss this proceeding and make orders as submitted by Equity Trustees.
SCHEDULE OF PARTIES
Proceeding S CI 2009 5816
AURELIA PISTORINO
First Plaintiff
and
GIOVANNA GRACE CONNELL (who is sued as executor of the will and trustee of the estate of AGOSTINO PISTORINO, Deceased)
First Defendant
BRADFORD JOHN BAKER (who is sued as executor of the will and trustee of the estate of AGOSTINO PISTORINO, Deceased)
Second Defendant
ANTONIO PISTORINO
Third Defendant
DAVID IAN GIBBS (who is sued as executor of the will and trustee of the estate of AGOSTINO PISTORINO, Deceased)
Fourth Defendant
PISTORINO INVESTMENTS PTY LIMITED (ACN 007 217 807)
Fifth Defendant
EQUITY TRUSTEES LIMITED (ACN 004 031 298)
Sixth Defendant
Proceeding S CI 2009 8347
AURELIA PISTORINO
Plaintiff
and
AGAUPI INVESTMENTS PTY LTD (ACN 004 827 865)
First Defendant
PISTORINO INVESTMENTS PTY LTD (ACN 007 217 807)
Second Defendant
GIOVANNA GRACE CONNELL (also known as Joanne Connell)
Third Defendant
Proceeding S CI 2010 2370
AURELIA PISTORINO (by her litigation guardian, Timothy Charles Finemore)
Plaintiff
and
EQUITY TRUSTEES LIMITED (ACN 004 031 298)
First Defendant
ANTONIO PISTORINO
Second Defendant
Proceeding S CI 2008 10160
GIOVANNA GRACE CONNELL
First Plaintiff
JOHN BRADFORD BAKER
Second Plaintiff
DAVID IAN GIBBS
Third Plaintiff
and
ANTONIO FRANK PISTORINO
Defendant
Proceeding S CI 2010 4180
DAVID IAN GIBBS
Plaintiff
and
AURELIA PISTORINO
First Defendant
GIOVANNA GRACE CONNELL (who is sued as executor of the will and trustee of the estate of AGOSTINO PISTORINO, Deceased)
Second Defendant
AGAUPI INVESTMENTS PTY LTD (ACN 004 827 865)
Third Defendant
ANTONIO PISTORINO
Fourth Defendant
PISTORINO INVESTMENTS PTY LIMITED (ACN 007 217 807)
Fifth Defendant
EQUITY TRUSTEES LIMITED (ACN 004 031 298)
Sixth Defendant
PISTON HOLDINGS PTY LTD (ACN 078 072 670)
Seventh Defendant
PISTORINO NOMINEES PTY LTD (ACN 007 217 807)
Eighth Defendant
DALWOOD MEADOWS PTY LTD (ACN 058 457 935)
Ninth Defendant
BURTON ARCH PTY LTD (ACN 006 816 691)
Tenth Defendant
ADMIRAL COVE PTY LTD (ACN 006 462 568)
Eleventh Defendant
REYNOLD TOWNS PTY LTD (ACN 005 936 452)
Twelfth Defendant
BELRIDGE COURT PTY LTD (ACN 072 359 936)
Thirteenth Defendant
DELRICH RIDGE PTY LTD (ACN 072 359 936)
Fourteenth Defendant
541 KING STREET NOMINEES PTY LTD (ACN 006 036 086)
Fifteenth Defendant
Proceeding S CI 2011 786
EQUITY TRUSTEES LIMITED (ACN 004 031 298)
Plaintiff
and
ANTONIO FRANK PISTORINO
First Defendant
ROCCO LOMORO
Second Defendant
REGISTRAR OF TITLES
Third Defendant
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