Shtrambrandt v Semenova

[2011] VCC 328

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST

GENERAL DIVISION

Case No. CI-10-05841

ARKADY SHTRAMBRANDT	Plaintiff
v
ELENA SEMENOVA	First Defendant
and
ANNA MAY	Second Defendant
and
ANDREW MAY	Third Defendant

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JUDGE:	HIS HONOUR JUDGE GINNANE
WHERE HELD:	Melbourne
DATE OF HEARING:	21 March 2011
DATE OF JUDGMENT:	24 March 2011; Revised 31 March 2011
CASE MAY BE CITED AS:	Shtrambrandt v Semenova & Ors
MEDIUM NEUTRAL CITATION:	[2011] VCC 328

REASONS FOR JUDGMENT

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Catchwords: TORT – conspiracy – failure to pay bill leading to litigation against plaintiff – intention to defraud creditors – whether plaintiff a creditor – Property Law Act 1958 (Vic)

Practice – defendants’ application for summary judgement – no real prospects of success –

Civil Procedure Act 2010 (Vic) s 63.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	In person
For the Second and Third	J. D.S. Barber	De Wet Partnership
Defendants  HIS HONOUR:

1          The second and third defendants seek summary judgment; or alternatively, the striking out of the Statement of Claim.

2 They rely either on s.63 of the Civil Procedure Act 2010 which speaks of striking out the proceeding if it has no real prospect of success; or alternatively, the more traditional test contained in the General Steel Industries Inc v Commissioner for Railways (NSW)[1] of a claim that is untenable. It is only in a clear case that the Court will summarily dismiss a proceeding.

[1] (1964) 112 CLR 125

3          The plaintiff’s claim proceeds from the basis of his former marriage to the first defendant. His case is that the defendants engaged in conduct to defeat the interests of creditors. This was said to be carried out by the entry into a contract for the sale of a unit by the second and third defendants to the first defendant, and the resale of it to the second and third defendants. The amount of $350,000 that was paid to the first defendant, Ms Semenova, was immediately transferred into an overseas account by the third defendant.

4          It is pleaded that the conduct involved, both in the payment of that money back to the first defendant, Ms Semenova, and its transfer by the third defendant, to an overseas account, was conduct “intended to defeat the interests of creditors” and that the contracts of sale of the unit were not bona fide or genuine. It is alleged that the defendants conspired to conceal the first defendant’s funds from creditors and third parties.

5          It is then pleaded that Ms Semenova swore an affidavit claiming that the third defendant had misappropriated her money and admitted that she had disposed of that money on the advice of the second defendant in order to defeat the interests of the creditors. The plaintiff claims damages.

6          The plaintiff swore an affidavit of 14 February 2011 containing statements about the settlement of Family Court proceedings between him and the first defendant.

7          However the basis of his case is that in 2005, proceedings were commenced against him and against Ms Semenova and others by the solicitor who had acted for them, Mr Brott. Those Supreme Court proceedings were decided on 19 October 2009: Brott v Shtrambrandt.[2] The outcome was that Mr Brott could not succeed against Mr Shtrambrandt or his son, but judgment was given against the first defendant, Ms Semenova, who apparently did not resist the entry of judgment against her.

[2] [2009] VSC 46

8          Although Mr Shtrambrandt successfully defended the Supreme Court proceedings, he was left with a legal bill of $460,000. His case is that he would not have been sued, and had to pay that sum to defend the proceedings, if Ms Semenova had paid the legal bill due to Mr Brott. Ultimately she did not dispute the proceeding.

9          In essence the plaintiff says that his former wife has diverted money overseas by a conspiracy involving the second and third defendants, causing him loss. If that money had been available, Mr Brott would have been paid his legal fees and there would never have been any case brought against him and there would have been no occasion for him to spend money to defend the proceedings.

10        Mr Shtrambrandt’s affidavit, refers to a Family Court affidavit in which Ms Semenova appears to agree that she invested $350,000 offshore on the advice of Mr May. There was objection taken to the use of that affidavit. It may be that it is for the Family Court to give leave for such an affidavit to be used in other proceedings[3], but I am prepared to consider the argument based on that evidence for the purposes of my ruling.

[3]             Cf County Court Civil Procedure Rules 2008 O.43. 09

11        The plaintiff’s affidavit then alleges that Mr May has acknowledged that he has access to some of Ms Semenova’s funds, but has refused to pay them to the plaintiff because he does not have a power of attorney from Ms Semenova.

12        There is also reference to a loan agreement entered into between Mr Shtrambrandt and Mr May. That loan agreement led to separate Supreme Court proceedings issued in 2008, that Mr May says were ultimately settled for a nominal sum.

13        Mr and Mrs May have sworn separate affidavits substantially disputing the claims that the plaintiff makes. In determining this application, it is not appropriate that the Court decides disputed questions of facts based on affidavits. However, it is appropriate that the Court consider whether the plaintiff’s case, has no real prospects of success.

14 As I have stated, the plaintiff’s claim is largely one in conspiracy. He alleges that there have been steps taken to defeat creditors. He does not allege that he is a creditor. He does not allege that he can rely on s.172 of the Property Law Act 1958, which deals with alienation of property with intent to defraud creditors. His case is that his former wife should have provided funds to pay Mr Brott his fees and that as a result of that failure, he has had to incur substantial legal costs in defending, ultimately successfully, the claim brought by Mr Brott.

15        To succeed in a claim of conspiracy, a party can proceed down one of two paths. They can either allege that there was a conspiracy, being a combination of deliberately, or wilfully, doing an act causing damage to them in their trade or other interests. Alternatively, they can rely on a conspiracy by unlawful act or unlawful means. Again, there must be an intent to injure a particular person and damage suffered. I refer to the authorities of Lonhro Ltd and Shell Petroleum Co Ltd (No 2)[4] and Little v Law Institute of Victoria

(No 3)[5].

[4] [1982] AC 173

[5] [1990] VR 257 at 271

16        In this case, I am not persuaded, and it is not pleaded, that the transfer of money overseas was an illegal act. Transferring money overseas in itself is not an unlawful act, nor am I persuaded that any of the evidence before me provides even an arguable basis that the purpose of sending the money overseas was to cause harm to the plaintiff. It may well have had a number of purposes ranging from investment, to perhaps putting monies out of the reach of the creditor, being Mr Brott. Obviously, I make no finding to that effect, not least because Ms Semenova was not represented at the hearing of this application.

17        The case is not pleaded in a way that alleges the matters necessary to make out a conspiracy.

18        Nevertheless, I have looked carefully at the affidavits to see if there is material that might provide a basis for a pleading that Ms Semenova and Mr and Mrs May deliberately acted with the purpose of causing harm to the plaintiff. I see no such evidence in the affidavits or the pleadings.

19 I have also considered whether this is a case that under s.64 of the Civil Procedure Act, should be allowed to go to trial, for the reason advanced by Mr Shtrambrandt that he cannot obtain an affidavit from Ms Semenova and that it would only be at a trial where she was subpoenaed, that he might be able to obtain some evidence to support his case. But, when one looks steadily at his case, it is apparent that it depends on him establishing that the defendants acted together to put funds out of his reach, not out of Mr Brott’s reach. To make a case the plaintiff would also have to establish that he was a creditor of at least one of Ms Semenova and Mr and Mrs May. I do not see any basis in the affidavits on which that proposition can be established. I also do not see any foundation for the argument that Ms Semenova and Mr and Mrs May acted to do harm to the plaintiff, in the manner he alleges.

20 This is a case where the Court can conclude that the claim has no real prospects of success within the terms of s.63 of the Civil Procedure Act; or alternatively, is untenable in the traditional principles discussed in cases such as General Steel Industries Inc v Commissioner for Railways (NSW).

21        I therefore dismiss the proceedings against the second and third defendants.

22        Although, it is unnecessary to decide the pleading ground contained in the summons, the consequence of my conclusion is that the statement of claim does not validly plead a cause of action.

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