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Shimshon v MLC Nominees Pty Ltd

Shimshon v MLC Nominees Pty Ltd

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Case Copied 18 December 2020 66 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

GROUP PROCEEDINGS LIST

S ECI 2020 00306

DAVID SHIMSHON	Plaintiff
-and-
MLC NOMINEES PTY LIMITED (ACN 002 814 959)	First Defendant
NULIS NOMINEES (AUSTRALIA) LIMITED (ACN 008 515 633)	Second Defendant

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JUDGE:	John Dixon J
WHERE HELD:	Melbourne
DATE OF HEARING:	24 August, 29 October 2020 (Further submissions received on 20 October, 13 November and 27 November 2020)
DATE OF JUDGMENT:	18 December 2020
CASE MAY BE CITED AS:	Shimshon v MLC Nominees Pty Ltd
MEDIUM NEUTRAL CITATION:	[2020] VSC 640

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PRACTICE AND PROCEDURE – Group proceedings – Determination of preliminary question – Whether proceeding concerns property subject to a trust – Whether proceeding excluded from application of Part 4A – Supreme Court Act 1986 (Vic) Part 4A, s 33B(2)(b)(ii).

SUPERANNUATION – General principles – Breaches of general law duties and statutory covenants alleged against trustee – Plaintiff’s interest in superannuation fund as a fund member not vested – Expectation of lessened member’s account balance due to trustee’s alleged breaches – Whether loss and damage suffered – Superannuation Industry (Supervision) Act 1993 (Cth) ss 52, 55.

TRUSTS AND TRUSTEES – Superannuation trust – Alleged breach of general law duties and statutory covenants by trustee – Whether actionable by individual fund member with expectant or contingent interest – Nature of available remedy considered.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N Owens SC with Ms M Szydzik and Dr S Chordia	Maurice Blackburn Pty Limited
For the Defendants	Mr M J Darke SC with Ms K E Foley	Allens

TABLE OF CONTENTS

The issues............................................................................................................................................ 1

The pleading....................................................................................................................................... 2

Submissions........................................................................................................................................ 5

Plaintiff........................................................................................................................................... 5
Defendants..................................................................................................................................... 8
Plaintiff’s reply............................................................................................................................ 11

Construction of the provision........................................................................................................ 14

Application of the provision.......................................................................................................... 24

The pleaded case......................................................................................................................... 24
Plaintiff’s characterisation of loss and damage...................................................................... 29

Principles........................................................................................................................................... 32

Analysis of claim.............................................................................................................................. 37

Entitlements of members of superannuation funds.............................................................. 38
Standing........................................................................................................................................ 41
SIS Act........................................................................................................................................... 41

Conclusion......................................................................................................................................... 46

HIS HONOUR:

The issues

The parties submitted the following question for preliminary determination, pursuant to r 47.04 of the Supreme Court (General Civil Procedure) Rules2015 (Vic) (‘Rules’).

Were the proceedings validly commenced as a group proceeding under Part 4A of the Supreme Court Act1986 (Vic), having regard to s 33B(2)(b)(ii)?

The question addresses the issue of whether the proceeding is, or can be, a group proceeding; that is, can the plaintiff’s claim be properly commenced on behalf of group members.

Part 4A of the Supreme Court Act1986 (Vic) (‘Act’) sets out the statutory provisions that regulate group proceedings in this court. The question turns on the proper construction of s 33B of the Act—specifically, s 33B(2)(b)(ii) (‘provision’)—that governs the application of Part 4A by specifying proceedings to which the Part does not apply. Section 33B states:

33B Application
(1)This Part applies to a cause of action whether arising before or on or after 1 January 2000.

(2) This Part does not apply to—
(a) a proceeding under sections…

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.

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Details

Case: [2020] VSC 640
Decision Date: 18 December 2020

CaseChat Overview and Summary

In Shimshon v MLC Nominees Pty Ltd, the plaintiff, Shimshon, brought a claim against the defendant, MLC Nominees Pty Ltd, seeking damages and an account of profits arising from alleged breaches of general law duties and statutory covenants by the trustee of a superannuation fund. The dispute centred on the plaintiff's interest in the fund as a member, and whether he had suffered loss and damage due to the alleged breaches. The case was heard in the Supreme Court of Victoria.

The primary legal issues before the court were whether the proceeding concerned property subject to a trust and, if so, whether it was excluded from the application of Part 4A of the Supreme Court Act 1986 (Vic) by virtue of section 33B(2)(b)(ii). The court also needed to determine if the plaintiff's claim was actionable as an individual fund member with an expectant or contingent interest in the fund, and if so, what remedy might be available.

The court held that the proceeding did concern property subject to a trust, namely the superannuation fund. However, it was not excluded from the application of Part 4A, as the plaintiff's claim was not based on his interest as a beneficiary of the trust but rather as a fund member. The court further found that the plaintiff's interest in the fund was not vested, but rather expectant or contingent, and therefore, his claim was not precluded by the general law. Nevertheless, the plaintiff had not suffered any loss or damage due to the alleged breaches of duty and covenant by the trustee.

The court dismissed the plaintiff's claim, and no orders were made in his favour. The court held that the plaintiff's expectation of a lessened member's account balance due to the alleged breaches did not constitute a loss or damage for which he could claim damages or an account of profits.

Orders