Rozenblit v Vainer

[2019] VSC 316

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2013 06645

BORIS ROZENBLIT

Plaintiff

v  

MICHAEL VAINER

ALEXANDER VAINER

First Defendant

Second Defendant

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JUDGE:	Sifris J
WHERE HELD:	Melbourne
DATE OF HEARING:	4-7, 12-14, 18-19 and 25 March 2019
DATE OF JUDGMENT:	20 May 2019
CASE MAY BE CITED AS:	Rozenblit v Vainer & Anor
MEDIUM NEUTRAL CITATION:	[2019] VSC 316

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TRADE PRACTICES – Misleading or deceptive conduct – Plaintiff transferred shares as consideration for second defendant providing security for a loan – First defendant proposed and arranged the share transfer – First defendant failed to disclose that second defendant was entitled to retain the shares if he did not provide security – First defendant engaged in misleading or deceptive conduct – Second defendant was not involved in first defendant’s contravention – Australian Consumer Law s 18.

TRADE PRACTICES – Unconscionable conduct – Plaintiff was not under a special disadvantage or disability – First and second defendants did not engage in unconscionable conduct within the meaning of the unwritten law – First and second defendants engaged in unconscionable conduct by expropriating or retaining the plaintiff’s shares for no consideration – Australian Consumer Law ss 20 and 21 – Commercial Bank of Australia v Amadio (1983) 46 ALR 402; Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2000) 169 ALR 324.

RESTITUTION – Transfer of property – Plaintiff transferred shares under a mistake of fact – Total failure of consideration – Retention of shares by second defendant unjust in all of the circumstances.

REMEDIES – Damages - Shares retained by second defendant worthless – Company wound up – Nominal damages awarded.

EQUITY – Breach of fiduciary duty – Plaintiff and first defendant were shareholders and directors in a company – First defendant wound up that company and incorporated a new company – Plaintiff alleged that he had been improperly excluded from new company – Whether first defendant owed fiduciary obligations to plaintiff – Where parties alleged to be in ‘quasi-partnership’ – First defendant did not assume responsibility for interests of plaintiff – Contractual arrangements and company and trust structures inconsistent with fiduciary obligations – Plaintiff was not vulnerable to and did not rely on first defendant  – First defendant did not owe fiduciary obligations to plaintiff – Ebrahimi v Westbourne Galleries Ltd [1973] AC 360; Brunninghausen v Glavanics (1999) 32 ACSR 294.

CONTRACT – Breach of contract – Parties entered into a series of agreements to govern the operation, management and structure of a company’s business – Breach of the terms of an earlier agreement alleged – Subsequent agreement superseded the earlier agreements – No breach of contract – Hillam v Iacullo [2015] NSWCA 196.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	J Korman	P Henenberg Lawyers
For the Defendant	R Moore	Aptum Legal

TABLE OF CONTENTS

A.. Introduction................................................................................................................................... 2

B.. Relevant background.................................................................................................................. 3

B1 – The agreements........................................................................................................... 3

B2 – Corporate structure................................................................................................... 12

B3…