Toumazou v Grenadier Towers Pty Ltd & Ors
[2007] VSC 53
•2 March 2007
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 9592 of 2006
| KYRIACOS TOUMAZOU | Plaintiff |
| v | |
| GRENADIER TOWERS PTY LTD & ORS | Defendants |
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JUDGE: | Hansen J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 2 March 2007 | |
DATE OF JUDGMENT: | 2 March 2007 | |
CASE MAY BE CITED AS: | Toumazou v Grenadier Towers Pty Ltd & Ors | |
MEDIUM NEUTRAL CITATION: | [2007] VSC 53 | |
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Practice and Procedure – Application to summarily dismiss proceeding – Plaintiff bankrupt – Issues alleged in statement of claim previously litigated and determined adversely to the plaintiff – Proceeding dismissed as untenable – Supreme Court (General Civil Procedure) Rules 2005, r 23.01.
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APPEARANCES: | Counsel | Solicitors |
| The Plaintiff appeared in person | ||
| For the First to Fourth Defendants | Mr G Lucas | Andrew T Fraser & Associates |
| No appearance for the Fifth Defendant |
HIS HONOUR:
This is an application by the first to fourth defendants to a proceeding for an order that the proceeding, commenced by writ filed on 6 November 2006 be dismissed. The application was made under Rule 23.01 of the rules on the basis that the claim is untenable.
It is necessary to say something about the claim and then to say something of the background of the matter. The statement of claim endorsed on the writ commences with an allegation that the plaintiff, Mr Toumazou, was the holder of six ordinary shares in the first defendant, Grenadier Towers Pty Ltd and a director of that company until 12 April 1996.
It is alleged that Grenadier, which I will refer to in that way, is and was the registered proprietor of land at 14 Ossett Street, Sorrento. It is further alleged that the second defendant, Michael Georgiou, purported to act as a director of Grenadier from 12 April 1996 holding the plaintiff's shares which are alleged in the statement of claim to have been wrongly procured from him. It is also alleged that the plaintiff ceased to be a director of Grenadier in circumstances that constituted wrongful acting by Georgiou, the third defendant Mr Pandeli who was Grenadier’s accountant and the fourth defendant Mr Fraser who acted as its solicitor.
In this context the plaintiff challenges the validity of a meeting convened on or about 12 April 1996 for the purpose of bringing about a transfer of his shares to Georgiou and the efficacy of his resignation as a director of Grenadier.
It is alleged in paragraph 10 that it would be unconscionable for Grenadier and Georgiou not to recognise the plaintiff's interest in the shares and the land and in paragraph 11 that as a result of the defendants’ breaches of duties, the shares in Grenadier and the land are held on trust for the plaintiff. It is alleged in paragraph 12 that by reason of those matters, the plaintiff has a beneficial interest or estate in equity in the land and that Grenadier holds its legal interest in the land upon trust for the plaintiff pursuant to an implied or constructive trust.
On 13 September 2006 the statement of claim proceeds to say, the plaintiff lodged a caveat on title claiming such an interest. It is evident from the remaining paragraphs of the statement of claim that the immediate purpose of the proceeding being commenced when it was was to uphold the caveat pending determination of the case.
In these premises, the relief claimed is (a) a declaration that the plaintiff has a beneficial interest, estate or equity in the land, (b) an order directing the registrar of titles to maintain the caveat over the title to the land, (c) a declaration that the plaintiff has a beneficial estate or equity in the shares and that the second defendant, Georgiou, transfer the shares to the plaintiff, (d) that the plaintiff be reinstated as director of Grenadier Towers Pty Ltd, and (e) damages.
This proceeding first came before me in the Practice Court on 5 February last when, after hearing counsel for the first to fourth defendants and Mr Toumazou in person, I ordered that the first to fourth defendants file and serve a defence to the statement of claim.
I made other orders but I mention only this particular order concerning the filing of a defence. It now transpires that a defence had been filed on 5 December 2006. That document was not on file when I made my orders but it is now. Sensibly the first to fourth defendants complied with my order by filing an amended defence.
In addition to the amended defence, there is a further affidavit sworn by the plaintiff and an affidavit sworn by the fourth defendant who is acting as the solicitor for the first to fourth defendants. I have read the file again, including the recently filed documents and I have regard to all that is contained in them.
A further fact to mention is that there was an earlier proceeding, number 5907 of 1998, in which Mr Toumazou was the first plaintiff against a series of defendants, one of which was Grenadier and another of whom was Mr Georgiou, which Osborn J heard and decided in 2002.
A copy of his Honour's reasons for judgment is Exhibit 4 to an affidavit sworn by Mr Fraser on 5 December 2006. It is apparent from those reasons that the efficacy of the transfer of the plaintiff's six shares in Grenadier and of that which constituted his resignation as a director, both of which he challenged, were issues which Mr Toumazou agitated before, and were determined by his Honour. He determined those issues adversely to the claims of Mr Toumazou, who now makes the same claims in the present proceeding.
It is evident from the statement of claim in the present proceeding and perusal of his Honour's reasons that the claims are the same. Furthermore, I have been informed this morning by Mr Toumazou that no appeal was taken from that decision, or to be more precise, from those parts of the reasons for judgment.
The next matter to mention is that I am satisfied on the evidence that the plaintiff is a bankrupt, and has been since 31 January 2006. An appeal from the sequestration order which was made on the petition of the Housing Guarantee Fund, was heard by a judge in the Federal Court and dismissed. The effect of bankruptcy, and in particular of the vesting provision in s.58 of the Bankruptcy Act, is that property of the bankrupt, which includes a right to sue, has vested in the official trustee in bankruptcy.
The official trustee has confirmed the fact of bankruptcy in a letter which is in evidence, and that there being no funds in the bankrupt estate, the trustee does not intend to continue the action. The effect of the vesting of the bankrupt's property in the trustee is that it is the trustee and not the bankrupt who has the right of action. There is not a coterminous right, it is not a shared right, it is a single right which is vested in the official trustee and in consequence the bankrupt has no right to bring the proceeding. That is enough in itself to identify that the claims in the present proceeding that the plaintiff has a beneficial interest in the land and the shares must fail.
The third aspect of the claim is the application for an order that the plaintiff be reinstated as a director of Grenadier. There are two reasons why this claim is untenable. In the first instance, as a matter of law by reason of the plaintiff being bankrupt, he is precluded from acting as an officer which includes a director of a company. The relief sought is therefore not open and the application for it is futile and must fail in the circumstances of bankruptcy but there is a second reason why that claim faces difficulty and it is the fact that for it to succeed it must confront the findings made by Osborn J in the earlier case. The claim for relief to be reinstated as a director must be founded upon establishing the pleas in the statement of claim as to wrongful conduct producing his resignation as a director which claims were rejected by Osborn J in his decision.
The other aspect of relief is the order directing the registrar of titles to maintain the caveat over the title to the land. That is concerned basically with the question whether the plaintiff has a caveatable interest in the land being an interest of the kind described in the statement of claim. I have seen the caveat and the interest claimed in the caveat accords with the claim in the statement of claim.
Any such interest that the plaintiff has is an interest in property which has vested in the official trustee on the commencement of bankruptcy. Again it is a matter therefore that vests in the trustee and it is for him to bring the proceeding but furthermore, the claim itself turns on a successful holding of the fundamental complaints concerning the loss of the shares and the directorship, which matters have been dealt with adversely to the plaintiff by Osborn J.
The claim for damages falls to be considered in the same way, that is to say it is a chose in action, to give it its proper description, that has vested in the official trustee.
For these reasons it is inescapable in my view that this claim would fail if it was permitted to proceed to trial. The claim is not arguable. It is untenable. There is, therefore, no reason not to make the order which the first to fourth defendants seek. It would be an unnecessary vexation to permit the proceeding to go forward to a trial and I will, in those circumstances, and having listened to all that Mr Toumazou has said today and in the Practice Court on 5 February, order that the proceeding be dismissed.
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