Trani v Trani
[2019] VSC 2
•17 January 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S ECI 2018 01356
| MARCO TRANI & ANOR (according to the attached schedule) | Plaintiff |
| v | |
| PATRIZI TRANI & ORS (according to the attached schedule) | Defendant |
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JUDGE: | Daly AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 20 December 2018 |
DATE OF JUDGMENT: | 17 January 2019 |
CASE MAY BE CITED AS: | Trani & Anor v Trani & Ors |
MEDIUM NEUTRAL CITATION: | [2019] VSC 2 |
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PRACTICE AND PROCEDURE – Application to set aside judgment obtained in default of defence – Whether judgment entered regularly – Whether proceeding an application in respect of co-owned property under Part IV of the Property Law Act 1958 (Vic) (‘partition proceeding’) – Proceeding not a partition proceeding – No defence on the merits advanced –Application dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Panna QC | Robert James Lawyers |
| For the First and Second Defendant | Mr J Levine | The Law Professionals |
| For the Third Defendant | No appearance |
HER HONOUR:
The plaintiffs in this proceeding, Marco and Luciano Trani, are brothers. The first defendant, Patrizia Trani, is their estranged sister. The second defendant, Ascended Mastery Pty Ltd, is a company controlled by Patrizia. The third defendant, Michelle Farfoud, is a conveyancer who was engaged by Patrizia to sell the family beach house at 331 Dromana Parade, Safety Beach (“Safety Beach property”). Until July 2018, Marco, Luciano and Patrizia owned the Safety Beach property as tenants in common in equal shares.
On 17 September 2018, Marco and Luciano issued this proceeding, alleging that, in summary, Patrizia had sold the Safety Beach property to a third party, without their knowledge or consent, and had forged their signatures on the transfer of land documents lodged with the Registrar of Titles. Marco and Luciano alleged that the second defendant was liable as a knowing recipient of the proceeds of sale of the Safety Beach property, and the third defendant was liable for misrepresentations said to have been made by her to the Registrar of Titles that she was authorised to execute the transfer of land documents on behalf of Marco and Luciano.
This is not the first proceeding involving Marco, Luciano, and Patrizia. In 2013, Latina Investments Pty Ltd (“Latina”), as the trustee of the Trani Family Trust, which was controlled by Marco and Luciano at the time, brought proceedings in this Court seeking the withdrawal of caveats lodged by Patrizia over a number of properties owned by Latina. In 2015, Patrizia brought a proceeding in this Court alleging that, among other things, that Marco and Luciano had acted in breach of trust by winding up the Trani family trust in June 2014 and distributing the assets of the trust to themselves to the exclusion of Patrizia (“trust proceeding”). Patrizia was substantially successful in the trust proceeding, with final orders being made in her favour in October 2018.
Returning to the current proceeding, on 17 September 2018, McDonald J made freezing orders over the assets of Patrizia and the second defendant following an ex parte application made by Marco and Luciano. The freezing orders were extended by John Dixon J on 24 September 2018.
By the operation of the rules of Court, Patrizia and the second defendant were required to file and serve their defences by 21 October 2018. No defences were filed, and on 1 November 2018, Marco and Luciano obtained judgment in default as defence against Patrizia and the second defendant. The third defendant has filed a defence, alleging, among other things, that Patrizia and the second defendant are concurrent wrongdoers for the purposes of Section 24AH(1) of the Wrongs Act 1958 (Vic) and s 87CB(3) of the Competition and Consumer Act 2010 (Cth).
At the hearing of an application in the trust proceeding on 21 November 2018 that enforcement of my orders in the trust proceeding be stayed pending the hearing and determination of this proceeding, counsel for Patrizia foreshadowed that Patrizia would make an application to set aside the judgment in default of defence. This application was served on or about 3 December 2018, seeking orders that:
The judgment in default of Appearance entered on 1 November 2018 against the First and Second defendant be set aside on the grounds that the First Defendant has a good defence to the claim.[1]
[1]The judge was actually obtained in default of defence, but nothing turns upon this error.
The application was supported by an affidavit sworn by Patrizia on 15 December 2018[2]. Patrizia deposed, in summary, as follows:
[2]An earlier version of this affidavit was served some weeks earlier, but not filed.
(a) while she retained Lennon Lawyers to appear before John Dixon J on 24 September 2018 to request a relaxation of the freezing orders, she was unable to retain them beyond that date as she could not afford their fees;
(b) she had not received any papers regarding the proceeding; and
(c) she deposed (excluding references to exhibits) as follows:
I deny the claim of fraud made by the applicants.
On 1 December 2016, I requested, by handwritten note to Marco Trani, that my family may use the Beach house for Christmas with my family and friends.
On 22 December 2016, Adam Duque Lawyers sent a letter on behalf of their clients Marco Trani and Gino Trani refusing me access and use of the beach house for Christmas 2016 and threatening to force a sale of the beach house.
During the next 2 months, there were numerous conversations in relation to the beach house including:
(a) Threats by Marco’s solicitor to force sell the beach house
(b)To seek valuations/appraisals for the beach house sale price
(c)I offered to buy the beach house
d)Discussions of the relationship between Marco, Luciano and myself being irreparable
On 16 August 2017, my solicitor’s De Marco Lawyers, sent a letter to Adam Duque Lawyers advising that I would be agreeable to a sale of the beach house at a fixed price if Marco Trani wished to force a sale, and enclosing a kerbside valuation of the Beach house.
On 18 August 2017, Adam Duque Lawyers sent a letter advising that they no longer held instructions on behalf of Gino Trani and that all correspondence should be addressed to the registered proprietors.
In or about July 2017 appraisals were gained stating that the beach house proposed sale values could range from $1.1 Million dollars to 1.3 Million dollars.
On or about February 2018 my Husband Abe contacted a man named Ayla HAN (“Mr HAN”) whom he knew was looking for a property on the peninsula. Abe asked Ayla if he was interested to look at our beach house.
Mr HAN looked at our beach house on or about early March 2018.
Shortly after Mr HAN inspecting our beach house, an agreement was struck for $1,350,000.00.
Mr HAN introduced us to his conveyancer Ms Michelle FARFOUD of Meadow Heights Conveyancing.
Over a period of time between May and June 2018 Mr HAN paid a cash deposit of $270,000 to Abe.
From the cash deposit Abe recovered $289,000.00 for his capitol (sic) improvement and renovation works on the beach house from which the parties have benefited from and which included two bedrooms and a verandah.
There may be a need for an accounting of the monies paid in respect of the sale of the Beach house, which should be heard and determined in VCAT.
Patricia exhibited the following documents to her affidavit:
(a) an email from Lennon Lawyers to the solicitors for Marco and Luciano on 4 October 2018, confirming that they no longer acted for Patrizia; and
(b) copies of appraisals of the Safety Beach property carried out in July 2017.
At the hearing of the application, counsel for Patrizia submitted that, in effect, the default judgment was irregular, in that the proper forum for this proceeding is the Victorian Civil and Administrative Tribunal (“VCAT”), as Marco and Luciano are seeking an order that Patrizia and the second defendant account for their alleged receipt of more than their just and proportionate share of co-owned property pursuant to s 28A of the Property Law Act 1958 (Vic) (“Act”). Part IV of the Act concerns co-owned property, which includes the Safety Beach property. Section 234(1) of the Act provides that a co-owner of land may apply to VCAT for an accounting in accordance with s 28A of the Act.
Section 234C(1) of the Act provides that, subject to certain exceptions, this Court does not have jurisdiction to hear applications under Part IV of the Act. One exception is contained in s 234C(4) of the Act, which provides that this Court has jurisdiction to hear an application where the issue of co-ownership arises in the course of an existing proceeding, or, if in the opinion of this Court, special circumstances exist, such as if the subject matter of the proceeding is complex. Counsel for Patrizia submitted that as Marco and Luciano have not brought any application in this Court for a declaration that the subject matter of this proceeding is complex (which in any event it is not), this proceeding was commenced without jurisdiction, and as such, the default judgment was irregularly obtained. Counsel for Patrizia submitted that the default judgment ought to be set aside, and this proceeding should be stayed to enable Marco and Luciano to bring a proceeding at VCAT, during the course of which Patrizia would be able to bring her claim for compensation for funds her husband has spent on the improvements to the Safety Beach property pursuant to s 233 of the Act.
The application to set aside the default judgment was opposed by Marco and Luciano, on the basis that this proceeding is a proceeding alleging fraud, not a proceeding seeking relief under Part IV of the Act. Senior counsel for Marco and Luciano submitted that Marco, Luciano and Patrizia are no longer co-owners of the Safety Beach property, as the Safety Beach property is now owned by a third party. There is nothing in Patrizia’s affidavit (or in her earlier affidavit sworn in response to the original freezing order) which engages at all with the allegations made in the proceeding so as to suggest that Patrizia has a good defence on the merits.
Senior counsel for Marco and Luciano submitted that, in any event, even if this proceeding could be characterised as a proceeding under Part IV of the Act, the matter is of sufficient complexity to justify being heard in this Court. This proceeding also includes a claim for breach of duty by the conveyancer, against which the conveyancer has defended the matter on the basis that, among other things, Patrizia and the second defendant are concurrent wrongdoers under Part IVAA of the Wrongs Act 1958 (Vic) and Part VI(A) of the Competition and Consumer Act 2010 (Cth). Finally, given the evidence of the freezing orders, and Patrizia’s own evidence that she has no money, this Court could not be satisfied that Patrizia and the second defendant could meet an order for costs, and for security to compensate Marco and Luciano for the prejudice caused to them by the setting aside of the default judgment.
I will refuse the application on the basis that I am not persuaded that this court lacks jurisdiction to hear this proceeding, and as such, it would be necessary for Patrizia and the second defendant to establish that they had arguable defences on the merits in order to justify setting aside an otherwise regular judgment.[3] They have not done so. While in her affidavit in support of the application Patrizia denies that she has committed fraud, her affidavit fails to address the primary factual allegations made by Marco and Luciano in this proceeding, being that Patrizia arranged for the sale and transfer of the Safety Beach property without their knowledge and consent, and kept the proceeds of sale for herself.
[3]Evans v Bartlam [1937] AC 437; Kostakanellis v Allen [1974] VR 596
Turning to the jurisdictional issues raised by counsel for Patrizia and the second defendant first, I am not convinced that Part IV of the Act is available only to current co-owners of a property as submitted on behalf of Marco and Luciano. While it is not necessary for present purposes to determine this issue, I note that s 234 of the Act provides that a co-owner of land or goods may apply to VCAT under Division 3 of Part IV of the Act for orders for an accounting under s 28A of the Act. Section 28A(1) of the Act provides that
A co-owner is liable, in respect of the receipt by him or her of more than his or her just or proportionate share according to his or her interest in the property, to account to any other co-owner of the property.
One would expect that a co-owners “just or proportionate share” to refer to the proceeds of sale of the relevant property, which, would ordinarily only be received upon the transfer of the property away from the co-owners. It is difficult to reconcile this provision with the definition of “co-owner” under s 222 of the Act, which appears to be limited to parties who are co-owners at the time of the making of any application under Part IV of the Act. However, as noted above, it is not necessary for me to attempt to reconcile these provisions on this occasion. First, I agree that this proceeding is not an application under Part IV of the Act. Part IV of the Act confers broad and flexible powers upon VCAT to make orders with respect to the sale and/or division of co-owned property, but those powers may only be exercised in relation to an application made by a co-owner under s 225 of the Act, which provides that a co-owner of land or goods may apply for:
(a) the sale of the land or goods and the division of the proceeds among the co-owners; or
(b) the physical division of the land or goods among the co-owners; or
(c) a combination of the matters specified in paragraphs (a) and (b).
Essentially, Part IV of the Act concerns what are commonly known as “partition” proceedings. This proceeding is not a partition proceeding. It is a proceeding seeking damages for alleged fraud. No relief in the nature of the sale or division of the Safety Beach property is sought by Marco and Luciano in this proceeding. As a creature of statute, VCAT can only hear and determine matters where jurisdiction is conferred upon it by legislation such as the Act.
In any event, even if this proceeding was a proceeding to which Part IV of the Act applies, I agree that this is a proceeding of sufficient complexity to justify remaining in this Court (although I also accept it would be suitable for determination in the County Court). While the factual matters alleged in the Statement of Claim are not particularly complex, this proceeding also makes claims against the conveyancer, the third defendant. VCAT probably does have jurisdiction to hear the claims made against the conveyancer, given that they are made under the Australian Consumer Law and Fair Trading Act 2012 (Vic). However, the nature of the claims brought against the conveyancer, the potential quantum of Marco’s and Luciano’s claims, and the nature of the defences relied upon by the third defendant (which are largely referrable to the alleged fraudulent conduct of Patrizia and the second defendant) means that it would be preferable for those claims to be brought in a court which has unlimited jurisdiction, and is bound by the laws of evidence.
Finally, for completeness, even if there were any doubts as to whether this Court has jurisdiction to deal with this matter, I disagree that in order to bring this proceeding and enter default judgment, it would have been necessary for Marco and Luciano to bring an application to this Court for a declaration that this Court has jurisdiction to hear this proceeding. No such procedure is mandated by s 234C of the Act: the reference to “application” in s 234C of the Act necessarily refers to an application under s 225 and/or s 234 of the Act, not an application seeking a determination as to which is the proper forum to bring a proceeding. Rather, where an issue of jurisdiction arises, the proper course is for the party challenging the jurisdiction of this Court to bring an application for a stay under Order 23 of the Rules. Were such an application to be an application to be successful, the validity or regularity of any steps already taken in that proceeding could be the subject of further argument.
Accordingly, the default judgment is regular. There is nothing in the evidence before me to indicate that Patrizia or the second defendant have any arguable defences to the claims brought by Marco and Luciano. If Patrizia’s husband has a claim with respect to his expenditure on improvements to the Safety Beach property, that is a matter for him to pursue. Any such claim would not justify setting aside the default judgment obtained against Patrizia and the second defendant.
I shall hear further from the parties regarding the form of orders to give effect to these reasons, and the questions of costs.
SCHEDULE OF PARTIES
S ECI 2018 01356
BETWEEN
MARCO TRANI First Plaintiff LUCIANO TRANI Second Plaintiff - and - PATRIZI TRANI First Defendant ASCENDED MASTERY PTY LTD (ACN 163 217 936) Second Defendant MICHELLE FARFOUD Third Defendant
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