Rozenblit v Vainer (No 2) - [2015] VSC 234

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

S CI 2013 6645

BORIS ROZENBLIT	Plaintiff
v
MICHAEL VAINER AND ALEXANDER VAINER	Defendant

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JUDGE:	LANSDOWNE AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	17 February 2015
DATE OF JUDGMENT:	28 May 2015
CASE MAY BE CITED AS:	Rozenblit v Vainer and anor (No 2)
MEDIUM NEUTRAL CITATION:	[2015] VSC 234

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PRACTICE AND PROCEDURE – application to amend statement of claim – whether a company can be directly liable for a wrongful share transfer – claims arising from a liquidation based on alleged breach of trust by the holding company of a shareholder – insufficient and inconsistent pleading in multiple respects - leave to amend refused.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J. Korman	Lloyds & Barclay Lawyers (t/a Abrahams Meese Lawyers)
For the Defendant	Mr M. McNamara	CIE Legal

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Facts and the plaintiff’s claims......................................................................................................... 1

Claim arising from the allocation of shares in VRT Global.................................................... 4
Claims arising from the transfer of the plaintiff’s shares in VRT Global............................. 5
Claims arising from the liquidation of VRT Global................................................................ 7
Re-pleading of loss....................................................................................................................... 9
Operation of a business by the first defendant subsequent to the liquidation................... 9

Claims against the company arising from the share transfer..................................................... 9

The defendants’ objections........................................................................................................ 10
The change is unnecessary............................................................................................... 10
The company is not liable for the transfer of its own shares...................................... 12
Inconsistent pleading........................................................................................................ 13
Amendments do not arise from the earlier reasons..................................................... 14

Claimed breach of fiduciary duty by the first defendant arising from the share transfer. 14

New claim of knowing receipt against the second defendant................................................. 17

New claim for loss............................................................................................................................ 17

Claims arising from the liquidation of VRT Global................................................................. 19

No or insufficient pleading of a cause of action........................................................... 21
Objections of form............................................................................................................. 24
Matters of proof................................................................................................................. 25
Summary............................................................................................................................. 26

New claims arising from the operation of Polymeric Powders Pty Ltd................................. 26

Summary of conclusions on the objections................................................................................ 30

Discretion........................................................................................................................................... 32

Orders................................................................................................................................................. 32

HER HONOUR:

Introduction

The application before me is made by the plaintiff on summons filed 10 November 2014. The plaintiff seeks leave to file and serve an amended statement of claim. The summons was supported by an affidavit exhibiting the then proposed amended statement of claim. Further changes were made to the proposed amended statement of claim closer to the hearing date and a consolidated proposed amended statement of claim was received by the Court on 9 February 2015. That is the document that formed the subject of the hearing.

The application is opposed, with some limited exceptions. The defendants say large portions of the proposed amendments are flawed in law or do not disclose a cause of action. They also oppose the application on discretionary grounds, which they say should tend against the grant of leave. These discretionary factors include the period of time since the proceeding commenced, the number of attempts by the plaintiff to formulate his statement of claim, the absence of, in the defendants’…

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 (No 2)

Details

AGLC: Rozenblit v Vainer (No 2) [2015] VSC 234
Case: [2015] VSC 234
Decision Date: 28 May 2015

CaseChat Overview and Summary

Rozenblit v Vainer (No 2) involved a dispute between Rozenblit and Vainer, concerning an application to amend a statement of claim. The case before the court was whether a company could be directly liable for a wrongful share transfer, as well as claims arising from a liquidation based on an alleged breach of trust by the holding company of a shareholder. The court was required to determine the sufficiency and consistency of the pleadings in multiple respects, and ultimately decide whether leave to amend should be granted.

The primary legal issue before the court was whether the plaintiff's statement of claim contained sufficient and consistent pleadings to support the claims against the defendants. The court examined whether the plaintiff had established a proper case for direct liability against the company for a wrongful share transfer, as well as whether the claims arising from the liquidation were adequately supported by the pleadings. Additionally, the court assessed whether the allegations of breach of trust by the holding company were sufficiently pleaded.

In reaching its decision, the court found that the plaintiff's statement of claim was insufficient and inconsistent in several respects. The court held that the plaintiff had not adequately pleaded a case for direct liability against the company for a wrongful share transfer, as the necessary legal basis for such a claim was not established. Furthermore, the court found that the claims arising from the liquidation were not properly supported by the pleadings, as they lacked sufficient detail and specificity. The court also determined that the allegations of breach of trust by the holding company were insufficiently pleaded, as they did not provide a clear and concise statement of the alleged breaches. As a result, the court refused the application to amend the statement of claim.

In summary, the court found that the plaintiff's statement of claim was insufficient and inconsistent in multiple respects, and therefore refused the application to amend. The court's decision highlights the importance of ensuring that pleadings are both sufficient and consistent in order to properly support the claims being made in a legal proceeding.

Orders