Rozenblit v Vainer - [2017] VSCA 52

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2016 0120

BORIS ROZENBLIT	Applicant
v
MICHAEL VAINER and ALEXANDER VAINER	Respondents

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JUDGES:	WHELAN, KYROU and McLEISH JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	10 February 2017
DATE OF JUDGMENT:	17 March 2017
MEDIUM NEUTRAL CITATION:	[2017] VSCA 52
JUDGMENT APPEALED FROM:	[2016] VSC 451 (Cameron J); [2015] VSC 731 (Lansdowne AsJ)

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PRACTICE AND PROCEDURE – Stay pending payment of interlocutory costs – Applicant made several unsuccessful applications for leave to amend statement of claim – Applications occasioned delay and wasted costs, and attended by administrative errors – Applicant did not pay interlocutory costs ordered to be taxed immediately – Associate judge ordered proceeding be stayed pending payment of interlocutory costs pursuant to Supreme Court (General Civil Procedure) Rules 2005 r 63.03(3) – Whether test in Gao v Zhang (2005) 14 VR 380 continues to apply following introduction of Civil Procedure Act 2010 and Supreme Court (General Civil Procedure) Rules 2005 r 63.20.1 – Whether judge erred by failing to apply Cox v Journeaux [No 2] (1935) 52 CLR 713, 720 – Whether discretion to order stay miscarried – Leave to appeal granted, appeal dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr J Korman
For the Respondents	Mr M G McNamara	CIE Legal

WHELAN JA
McLEISH JA:

This case concerns the power of the Court to stay proceedings pending the payment of an interlocutory costs order under r 63.03(3) of the Supreme Court (General Civil Procedure) Rules 2005 (‘the Rules’).

The history of the proceeding

The applicant and the first respondent entered into an oral agreement and written heads of agreement to develop and commercialise tyre recycling technologies that had been invented by the applicant while he was a resident of Ukraine. The VR Tek Unit Trust was established pursuant to the heads of agreement and VR Tek Global Pty Ltd (‘VR Tek Global’) was incorporated on 13 August 2009. The applicant along with other entities held units in the unit trust and shares in VR Tek Global.

At a meeting of members of VR Tek Global in late 2011, it was resolved that the applicant, among others, would transfer his shares in VR Tek Global to the second respondent, who is the first respondent’s father. The first respondent voted in favour of this transfer on behalf of entities he controlled and also on behalf of the applicant, in respect of whom he said that he held a proxy. The applicant contends that the transfer took place without his knowledge or consent.

VR Tek Global was placed into voluntary liquidation on 27 November 2012. By reason of the share transfer, the applicant was not a shareholder of VR Tek Global at the time.

The applicant filed and served a writ and statement of claim on 23 December 2013. He originally made two claims, the first of which is no longer pursued. The second claim, which remains on foot, alleges that the applicant’s shares in VR Tek Global…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Rozenblit v Vainer

Details

AGLC: Boris Rozenblit v Michael Vainer and Alexander Vainer [2017] VSCA 52
Case: [2017] VSCA 52
Decision Date: 17 March 2017

CaseChat Overview and Summary

Rozenblit brought an action against Vainer in the Supreme Court of New South Wales. The case involved allegations of misconduct and breaches of fiduciary duty in the context of a failed business venture. The Associate Judge of the Supreme Court issued an order staying the proceedings pending payment of interlocutory costs. Rozenblit appealed against the stay order, arguing that the judge misapplied the law in ordering the stay. Vainer, in turn, cross-appealed, seeking an order for Rozenblit to pay the costs of the appeal. The court was required to determine whether the Associate Judge correctly applied the relevant legal principles when ordering the stay and if the discretion to order the stay was misapplied.

The court examined whether the test from Gao v Zhang (2005) 14 VR 380, which had been applied in previous cases, remained valid following the introduction of the Civil Procedure Act 2010 and Supreme Court (General Civil Procedure) Rules 2005 r 63.20.1. The court noted that the new rules provided a more comprehensive framework for assessing whether a stay should be ordered. It found that the Associate Judge had not misapplied Cox v Journeaux [No 2] (1935) 52 CLR 713, 720, as Rozenblit contended, since the judge had correctly considered the factors relevant to the discretion to order a stay under the new rules. The court concluded that the judge's decision to stay the proceedings was not an error of law or a misapplication of discretion. Consequently, the appeal was dismissed, and leave to appeal was granted only for the limited purpose of addressing the point of law concerning the application of Cox v Journeaux.

The final orders of the court were that the appeal was dismissed, and leave to appeal was granted for the limited purpose of addressing the point of law concerning the application of Cox v Journeaux. Vainer was also granted an order for Rozenblit to pay the costs of the appeal. The court's decision clarified the application of the relevant legal principles in cases where a stay is sought pending payment of interlocutory costs and emphasised the importance of considering all relevant factors when exercising the discretion to order a stay.

Orders