Vasil v Boland

[2022] NSWSC 1534

Supreme Court

New South Wales

Medium Neutral Citation:

Vasil v Boland [2022] NSWSC 1534

Hearing dates:

4 November 2022

Decision date:

10 November 2022

Jurisdiction:

Equity - Applications List

Before:

Meek J

Decision:

Dismiss application for summary dismissal. Amended statement of claim stuck out. Leave granted to plaintiff to file a further amended statement of claim by 24 November 2022.

Catchwords:

CIVIL PROCEDURE — Proceedings brought by two plaintiffs being adult siblings claiming representations made encouraging investment into a company and alleged consequential loss — Claim by first named plaintiff earlier summarily dismissed on the basis that the property subject of the claim vested in his trustee in bankruptcy — Second plaintiff earlier permitted leave to replead — minimal changes to pleaded case Second application for summary dismissal — Summary dismissal refused — Alternative application for strike out of amended statement of claim pleadings — Amended statement of claim struck out — leave given to further amend claim

SUMMARY DISMISSAL — Caution in deciding limitation questions in interlocutory proceedings particularly in cases of alleged economic loss

TRUSTS — Indicia of beneficial interests — Requirements of declaration of trust regarding shares — Appropriate party to bring proceedings for loss suffered by a trust

LEGAL PROFESSION — Barristers — entitlement to appear on direct access brief

PRACTICE — Appearance — Procedure — Representation of company by director — Whether representation by entitlement or Court’s indulgence — Uniform Civil Procedure Rules 2005 (NSW) rr 7.1(2)(a), 7.2(1)(a)

PRACTICE AND PROCEDURE — Abuse of process –– second application made for summary dismissal and strike out — Whether such application an abuse of process — No abuse of process

COSTS — Self-represented litigants –– Ordinarily cannot recover costs because costs are awarded as a partial indemnity for professional legal costs actually incurred in the conduct of litigation

Legislation Cited:

Australian Consumer Law

Australian Securities and Investments Commission Act2001 (Cth)

Civil Procedure Act 2005 (NSW)

Corporations Act2001 (Cth)

Evidence Act1995 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41

Alexander v Perpetual Trustees WA Ltd (2004) 216 CLR 109; [2004] HCA 7

Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256; [2006] HCA 27

Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29

Brimaud v Honeysett Instant Print Pty Ltd (1998) 217 ALR 44

Doe on the demise of Bennett v Hale and Davis (1850) 117 ER 423

Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87; [1983] HCA 25

General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69

In the matter of Elegance Swan (in liquidation) (controllers appointed) [2022] NSWSC 1451

Keesing v Adams [2010] NSWSC 336

Kirby v Sanderson Motors Pty Ltd [2002] NSWCA 44

Liu v The Age Company Ltd (2016) 92 NSWLR 679; [2016] NSWCA 115

May v Christodoulou (2011) 80 NSWLR 462; [2011] NSWCA 75

Mendonca v Matthews Folbigg Pty Ltd [2022] NSWSC 764

Nominal Defendant v Manning [2000] NSWCA 80

Perera v Genworth Financial Mortgage Insurance Pty Ltd (2017) 94 NSWLR 83; [2017] NSWCA 19

Ramage v Waclaw (1998) 12 NSWLR 84

Reid v Commonwealth Bank of Australia [2022] NSWCA 134

Spencer v Commonwealth (2010) 241 CLR 118; [2010] HCA 28

Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; [1992] HCA 55

Webster v Lampard (1993) 177 CLR 598; [1993] HCA 57

Wickstead v Browne (1992) 30 NSWLR 1

Texts Cited:

JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis)

Solicitors Manual (NSW) (LexisNexis)

Category:

Procedural rulings

Parties:

Susan Vasil (Plaintiff / Respondent to motion)
Brian Timothy Boland (First Defendant / Applicant on motion)
Helen Jane Boland (Second Defendant / Applicant on motion)
Murray Charles Reid (Third Defendant / Respondent to motion)
Avid Business Pty Ltd (Fourth Defendant / Applicant on motion)

Representation:

Counsel:
J A Loxton (Plaintiff)
In person (First and Second Defendants)
R A Clayton (solicitor) (Third Defendant)
No appearance (Fourth Defendant)
Solicitors:
A R Yates & Co (Third Defendant)

File Number(s):

2021/168665

Judgment

1. HIS HONOUR: On 4 November 2022, I heard a notice of motion filed on 12 July 2022 by the first, second and fourth defendants (applicants) for orders in respect of an amended statement of claim filed on 10 December 2021 (amended claim) being specifically orders for:

1. summary dismissal pursuant to r 13.4 Uniform Civil Procedure Rules 2005 (NSW) (UCPR); and

2. to alternatively strike out, in whole or part the amended claim pursuant to r 14.28 UCPR.

2. For the reasons which follow I decline to dismiss the proceedings. However, I determine to strike out the amended claim and give leave to the second plaintiff (Ms Vasil) to file a further amended claim on or before 24 November 2022 having regard to the matters raised in these reasons for judgment.

Background

3. The proceedings were commenced by statement of claim filed on 4 June 2021 (original claim).

4. The then first plaintiff (Mr Dimitrovski) and Ms Vasil are adult siblings. Ms Vasil claims Mr Dimitrovski holds shares on trust for her in a company Life Order Products Pty Ltd (company) established it is said by the first defendant (Mr Boland).

5. It appears that Mr Dimitrovski was made bankrupt on 9 December 2013 and was discharged by operation of law from the bankruptcy on 21 December 2016.

6. The second defendant is the wife of Mr Boland.

7. The third defendant (Mr Reid) is said to be the company's accountant and personal accountant of Mr Boland.

8. The fourth defendant (Avid Business) is another company incorporated in 1998.

9. The company was deregistered on 10 July 2016.

Appearances

10. On hearing of the application Ms Vasil was represented by Mr Loxton of counsel. Mr Boland appeared on his own behalf but by audio visual link. With Mr Boland were his wife, Mrs Boland and his son Timothy.

11. Mr Reid did not seek to join in the application for summary dismissal and strikeout of the amended claim.

12. Nonetheless Mr Clayton, solicitor for Mr Reid, observed the proceedings via AVL but played no active part.

13. Timothy indicated that he was a director of Avid Business and sought to speak on its behalf.

Representation on behalf of a company by a director

14. There are particular provisions which address who on behalf of a company may commence and carry-on proceedings in a court.

15. The provisions of rr 7.1 and 7.2 UCPR address how a company within the meaning of the Corporations Act 2001 (Cth) may "commence" and "carry on" proceedings in the Supreme Court.

16. The concept of a company "carrying on" proceedings appears to cover a circumstance in which the company is named as a defendant in the proceedings.

17. That appears evident from the provisions of r 7.2(1) UCPR in that the expressions "commences" or "carries on" are connected to a requirement that a director or authorised officer must file an authority to act with "the originating process, notice of appearance or defence, as the case may be".

18. A director or authorised officer who files a notice of appearance or defence is not commencing proceedings. The provisions only make sense if such a director or authorised officer who files a notice of appearance or defence is carrying on proceedings.

19. Clearly that is how the provisions have been construed: see for example May v Christodoulou (2011) 80 NSWLR 462; [2011] NSWCA 75 at [6], a case in which a director of a defendant company, though not having strictly complied with r 7.2(1) UCPR, represented it in District Court proceedings involving a building dispute.

20. The proper construction of the provisions of r 7.1(2)(a) UCPR is that a director is entitled to conduct or defend proceedings on behalf of the company as of right, subject only to compliance with the procedural requirements in the rules: May v Christodoulou at [6], [95].

21. The procedural requirements as noted above require that in the case of a director of a defendant company that there be an affidavit as to his or her authority to act in that capacity together with a copy of the instrument evidencing that authority: r 7.2(1).

22. The content of the affidavit in the case of a director of a company within the meaning of the Corporations Act is set out in r 7.2(2) UCPR.

23. As I understood the position none of the applicants had addressed their mind to the issue.

24. Whilst I had no particular reason to doubt the assertion of Timothy that he is a director of Avid Business, there was no up-to-date search in relation to the company nor provision of any material that would satisfy the requirements of r 7.2(1)(a) and (2) UCPR.

25. Ultimately both Timothy and Mr Boland who in substance was the spokesperson for the applicants accepted that prima facie position.

26. I asked Mr Loxton if there was any objection to Timothy representing the company.

27. Mr Loxton indicated that it was probably a good idea if Avid Business was represented by a solicitor. Mr Loxton for his part did not seriously oppose Mr Boland speaking in the interests of himself, his wife and Avid Business as the applicants. However, Mr Loxton noted that if the matter progressed (after the hearing of the application) he reserved the right to object on a later occasion and any formalities ought to be complied with: T3–4.

28. As the applicants were all effectively in the same interests for the purposes of the application, it is conceivable that had leave to dispense with the requirement being sought, I might have given it. Ultimately, it was not necessary to make that determination because the matter proceeded by Mr Boland, as I have noted, effectively being spokesman for all the applicants.

Right of appearance of counsel on direct access brief

29. Mr Boland queried who Mr Loxton had been appointed by and asked whether there was an authority furnished to the Court to establish that he had been appointed for Ms Vasil: T4–5. It was made clear that Mr Loxton is of counsel and he had informed me that he was instructed directly by Ms Vasil. I noted that he had a right of appearance before the Court: T5.

30. Historically, there is no rule of law (as distinct from a rule of practice) preventing a litigant instructing counsel directly (direct access). Nor is counsel precluded from appearing on the direct instructions of a litigant: e.g. Solicitors Manual (NSW) (LexisNexis) at [28,055.1]; Doe on the demise of Bennett v Hale and Davis (1850) 117 ER 423 at 428–49. Historically, the professional relationship between counsel and a client was not contractual: Solicitors Manual (NSW) at [28,055.5]; Keesing v Adams [2010] NSWSC 336 at [13]–[20].

31. Legislation now permits a barrister to contract with a client and subject to legislation, the Barrister's Rules and any conditions on the relevant practising certificate, barristers may act directly for clients: Solicitors Manual (NSW) at [28,065.10] Keesing v Adams [21]–[32].

Earlier summary dismissal and strikeout application

32. On 30 July 2021, the current applicants applied for summary dismissal and strikeout orders in relation to the original claim. That application was heard by Lindsay J on 22 October 2021.

33. During that hearing Mr Reid as third defendant sought leave to move the Court for similar orders. That leave was given.

34. The basis of the application then was essentially three grounds:

1. First, that Mr Dimitrovski was made bankrupt on 9 December 2013 and his claim had vested in his trustee in bankruptcy.

2. Secondly, that the proceedings were commenced years after the events complained of and were said to be defeated by a limitation period of six years.

3. Thirdly, the pleading was said to be bad as to form.

35. Justice Lindsay made orders dismissing the proceedings by Mr Dimitrovski and striking out the claim by Ms Vasil but permitting her leave to replead any claim.

36. Justice Lindsay gave some brief reasons for the orders that he made.

37. In relation to Mr Dimitrovski’s claim his Honour noted that he was made bankrupt after the dates on which the various causes of actions accrued and thus the property in those actions vested in his trustee in bankruptcy. Insofar as Mr Dimitrovski had made a claim of alleged personal injury, his Honour determined that the claim was and is inextricably interwoven with the financial matters and that that claim also vested in his trustee in bankruptcy.

38. On the basis that it was clear in relation to Mr Dimitrovski's claim that such vesting had occurred, the proceedings were summarily dismissed.

39. In relation to the limitation period defences his Honour indicated that the position was not so clear.

40. His Honour considered that at least in relation to Ms Vasil it was premature to form a view as to whether the foreshadowed limitation defences would inevitably succeed and at least for that reason declined to grant summary dismissal in relation to Ms Vasil's claims.

41. His Honour recorded that counsel for the plaintiffs had conceded the need to review the claims made by Ms Vasil. However in any event his Honour observed by way of example that paragraph 7 of the original claim no clarity had then been given as to what claims for damages were made as between the two plaintiffs.

42. Paragraph 7 of the original claim alleged "[b]y the conduct of the 1^st Defendant the Plaintiffs have suffered loss and damage" and then particulars of the alleged loss were given.

43. His Honour noted that it was not necessary to dwell too much on the example given of inadequate pleading by paragraph 7 because if Ms Vasil sought to proceed it would be necessary for her to recast the statement of claim generally: T 32.

44. The particulars given in paragraph 7 included loss of investment, loss of a hotel business and other properties, loss of a real estate business, loss of earnings, personal injury caused by distress, personal shock and trauma allegedly arising from events comprising the cause of action, disappointment and distress in breach of a so-called agreement dated 4 August 2004 to pay Mr Dimitrovski a salary.

The amended claim

45. On 10 December 2021 Ms Vasil filed an amended statement of claim.

46. Since filing of the amended claim there have been a number of directions listings.

47. The amended claim is similar to the original claim with the amendments being fairly minimal. Essentially the references to Mr Dimitrovski have been deleted or modified and reference to Ms Vasil inserted in their stead.

48. The amended claim (as per the original claim) asserts that between 2004 and 2009 there was an investment in the company by Ms Vasil in the form of shares by the payment of $500,000 to the company at the request of Mr Dimitrovski in reliance upon a representation made by Mr Boland orally to Mr Dimitrovski "for [Ms Vasil]".

49. In substance it is claimed that by the conduct of Mr Boland the investment was lost and there was other loss.

50. Part of the alleged reason the investment was made is that it was said that Mr Boland was an existing investor in the company.

51. The claims for relief that been made are pursuant to various statutory provisions under the Australian Consumer Law, the Corporations Act2001 (Cth), the Australian Securities and Investments Commission Act2001 (Cth) asserting misleading and deceptive or unconscionable conduct.

52. The transcript of the earlier summary judgment application makes reference to general law claims relating to damage arising from a tortious conspiracy. It is not clearly evident from the amended claim whether such claims are persisted with by Ms Vasil.

53. There is other ancillary relief sought including orders for reinstatement of the registration of the company pursuant to s 601AH(2) Corporations Act, claims for an account and equitable compensation.

54. One of the earlier references in paragraph 7 of the original claim dealing with loss and damage reserved a right to add further particulars. That reference was deleted and in its stead in the amended claim a particular included being "injury to reputation, loss of earning capacity and loss of enjoyment of life".

55. It does not appear that any of the defendants have filed defences to the amended claim. However that is not fatal to a claim for summary dismissal.

The application

56. On the application Mr Boland read his affidavit sworn 12 July 2022 without objection.

57. Mr Loxton read the affidavit of Ms Vasil sworn 17 August 2022 and the affidavit of Mr Dimitrovski also sworn 17 August 2022.

58. The process of establishing from Mr Boland his objections to the evidence of the affidavits of Ms Vasil and Mr Dimitrovski was somewhat vexed. Mr Boland did not distinguish between admissibility of the evidence on the one hand and comment or submission on the effect of the evidence on the other hand.

59. Nonetheless, after raising a number of objections to both affidavits and my dealing with those objections including in relation to some of the paragraphs admitting the material, but with a limitation pursuant to s 136 Evidence Act1995 (NSW) that it be treated effectively as a submission or statement of the deponent’s belief, the hearing progressed.

Applicants’ submissions

60. On the hearing of the application before me Mr Boland put forward three main arguments for the relief sought.

61. First, he asserted that the amended claim is essentially the same as the original claim with "edits" as I have described above and as such is an abuse of process.

62. Secondly, Mr Boland submits that Ms Vasil's claims to be a shareholder of the company "by way of a declaration of trust in her favour by the 1^st Plaintiff" does not plead or indicate how the alleged trust arises. Mr Boland asserts that Ms Vasil was never a member or officer of the company and has no standing to bring the proceedings.

63. Thirdly, Mr Boland states that if the shares were held on a "constructive trust" Ms Vasil could only bring an action in the company's name with leave pursuant to ss 236(2), 237 Corporations Act. However he says that Ms Vasil has not obtained any such leave and accordingly has no standing to bring her action.

Respondent’s submissions

64. Mr Loxton submitted that the test for assessing whether a claim should be summarily dismissed is whether the claim discloses a case which the Court is satisfied cannot succeed citing General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128–129; [1964] HCA 69; Reid v Commonwealth Bank of Australia [2022] NSWCA 134 at [2], [131].

65. In particular Mr Loxton advanced three matters as to why the relief sought by the applicants should not be granted.

66. First, Mr Loxton says there has been no relevant change in circumstances since the hearing before Lindsay J citing Brimaud v Honeysett Instant Print Pty Ltd (1998) 217 ALR 44 per McClelland J (as his Honour then was).

67. Secondly, Mr Loxton submitted the Court should not entertain a motion for summary judgment because any evidentiary deficiencies in Ms Vasil's case may be overcome on the hearing citing Wickstead v Browne (1992) 30 NSWLR 1 at 11G–12C per Handley and Cripps JJA.

68. Their Honours stated at 12A-C

“The court will not entertain a motion for judgment by some only of the defendants because any gaps in the plaintiff's case against those defendants may be filled when the other defendants go into evidence. In particular one or more of the defendants going into evidence may seek to exculpate themselves by inculpating defendants against whom the plaintiff had no admissible evidence at the close of his case. If the respondent would not be entitled to succeed on a no evidence point at the trial until all the evidence has been called, including that from other defendants, it is clear that there can be no such entitlement on an application by one of several defendants for summary dismissal.”

69. Thirdly, Mr Loxton says that Mr Dimitrovski has apparently appealed to the Full Court of the Federal Court against the decision of Lindsay J (referred to above) ordering summary dismissal of the claim against him, which appeal is apparently outstanding. Mr Loxton states that it is premature to summarily dismiss the amended claim of Ms Vasil before the Full Court considers or more particularly determines whether there is an overlap of issues between both claims.

69. Mr Loxton provided a list of what he said whether triable issues in the proceedings as follows:

1. were representations made by the defendants in connection with investment into the company?

2. did "the plaintiffs" invest in the company?

3. did "the plaintiffs" rely on those representations in their decision to invest in the company?

4. whether representation is false and/or deceptive and/or misleading?

5. did the representations cause loss, injury or damage suffered by "the plaintiffs"?

6. what is the quantum of loss, injury or damage suffered by "the plaintiffs"?

71. I have used the expression "the plaintiffs" above in the list because that is how Mr Loxton presented the schedule of issues.

72. I pause to observe that the schedule highlights at least one of the matters that the applicants complain of namely that there is no distinction that has been properly made between the position of Mr Dimitrovski and that of Ms Vasil.

73. In relation to the strike out application Mr Loxton submitted that the amended claim satisfies the requirement of pleading material facts in a sufficient way such that the defendant can understand the materiality of the facts in a sense of how they relate to a cause of action citing the decision of Hodgson JA in Kirby v Sanderson Motors Pty Ltd [2002] NSWCA 44 at [20]–[21].

Legal principles

Summary dismissal principles

74. A court whose jurisdiction is regularly invoked should not decide the issues raised in such proceedings in a summary way except in the clearest of cases. Thus generally speaking a party is not to be denied the opportunity to place his or her case before the court in the ordinary way including after taking advantage of any usual interlocutory processes: Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 (Agar v Hyde) per Gaudron, McHugh, Gummow and Hayne JJ at [57].

75. The test to be applied regarding summary dismissal applications has been expressed in caselaw in various ways. However all of the expressions used are essentially intended to describe a high degree of certainty about the ultimate outcome of the proceedings if they are allowed to go to trial and in the ordinary way: Agar v Hyde at [57].

76. The power to order summary judgment or dismissal should only be exercised with great care and should not be exercised unless it is clear that there is no real question to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99; [1983] HCA 25. See also Webster v Lampard (1993) 177 CLR 598 at 602–603; [1993] HCA 57 per Mason CJ, Deane and Dawson JJ; Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256; [2006] HCA 27 at [46]; Spencer v Commonwealth (2010) 241 CLR 118; [2010] HCA 28 per French CJ and Gummow J at [24].

77. In Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533; [1992] HCA 55 Mason CJ and Dawson, Gaudron and McHugh JJ in respect of limitation issues regarding claims for economic loss stated as follows:

“We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question.”

Abuse of process regarding interlocutory applications

78. The reference by Mr Loxton to the decision in Brimaud raises the question as to whether it is an abuse of process to bring further interlocutory applications concerning the same or substantially the same issue that has previously been determined.

79. The decision in Brimaud has been affected both by statutory provisions and Court of Appeal authority.

80. In Nominal Defendant v Manning [2000] NSWCA 80 the Court of Appeal rejected the proposition that an unsuccessful applicant for interlocutory orders is precluded from making a similar application simply because the applicant seeks to rely on additional relevant factors albeit that they did not amount to fresh evidence. In this respect Heydon JA (as his Honour then was) and Foster AJA differed from Mason P who dissented.

81. In Liu v The Age Company Ltd (2016) 92 NSWLR 679; [2016] NSWCA 115 the Court of Appeal apart from considering caselaw on the issue of repeated interlocutory applications also considered the effect of the statutory provisions brought about by the reforms under the Civil Procedure Act 2005 (NSW) (CPA) including s 56.

82. In Liu McColl JA after reviewing the authorities noted in summary that the overriding principle governing the approach of the Court to interlocutory applications is that the Court should do whatever the interests of justice require in the particular circumstances of the case: at [199].

83. Determining what the interest of justice require in the context of a second (or subsequent) interlocutory application regarding what is alleged to be the same issue, the interests of justice require the Court to have regard amongst other matters, to the nature of the first interlocutory application, the nature of the change in position and whether any matter relied upon to change the basis on which the challenged earlier order was made, was open to be advanced at the earlier hearing: McColl JA at [199]; see Ward JA (as her Honour then was) at [292] agreeing and Beazley JA at [13].

84. The position regarding repeated interlocutory applications was also recently dressed by Cavanagh J in Mendonca v Matthews Folbigg Pty Ltd [2022] NSWSC 764 at [37], [48]. There his Honour referred to the decision in Liu and considered that the approach taken by McColl JA (as I have noted above) is in light of the provisions of the CPA the proper approach to repeated interlocutory applications: Cavanagh J at [47]–[48].

85. Courts historically have had power to permit amendment. Consequent upon the civil procedure reforms in 2005 power of the Supreme Court to order that the document in the proceedings be amended or leave be granted to a party to amend any such document is exercised by reference to an identification of the real issues in the proceedings: s 64(2) CPA.

86. Specifically, subject to the dictates of justice (s 58) all necessary amendments are to be made for the purpose of determining the real issues raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings: s 64(2).

87. For the purposes of determining what the dictates of justice are in a particular case, the Court must have regard to the provisions in ss 56 and 57 CPA and may have regard to the matters set out in s 58(2)(b) CPA to the extent to which the Court considers them relevant.

88. The provisions of s 58(2)(b) CPA are as follows:

“For the purpose of determining what are the dictates of justice in a particular case, the court—

…

(b)    may have regard to the following matters to the extent to which it considers them relevant—

(i)    the degree of difficulty or complexity to which the issues in the proceedings give rise,

(ii)    the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,

(iii)    the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,

(iv)    the degree to which the respective parties have fulfilled their duties under section 56 (3),

(v)    the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings,

(vi)    the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,

(vii)    such other matters as the court considers relevant in the circumstances of the case.”

Declarations of trust regarding shares

89. I addressed questions regarding declarations of trust in In the matter of Elegance Swan (in liquidation) (controllers appointed) [2022] NSWSC 1451. At [119]–[132] I stated as follows:

“119.   Precise definition of a “trust” has been said to be elusive if not impossible: J D Heydon and M J Leeming, Jacobs’ Law of Trusts (8th ed, 2016, LexisNexis) (Jacobs’) at [1-01] page 1.

120.   Basically, a “trust” may be described as a relation between trustee and beneficiary in respect of certain property. Specifically, a trust exists when the owner of a legal or equitable interest in property is bound by an obligation, recognised by and enforced in equity, to hold that interest for the benefit of others, or for some object or purpose permitted by law: Jacobs’ page 1.

121.   Statutory provisions may create trusts and deem certain relationships to be trust relationships.

122.   Generally speaking, leaving aside charitable trusts, in assessing whether the trust exists one ordinarily looks to see if there is a “trustee”, “trust property”, a “beneficiary” and “a personal obligation annexed to the property”: Jacobs’ at [1-04]-[1-10] pages 3-5.

123.   The requirements for a declaration of trust are that the declarer declares itself in a final and binding way to be a trustee of a property for another. No consideration is required. No formal or technical words are required, any act of expression of clear intention to create a trust will do: Jacobs’ [5-02], [6-22] page 75; Hyhonie Holdings Pty Ltd v Leroy [2004] NSWCA 72 (Hyhonie Holdings)per Hodgson JA at [42]-[44].

124. If the trust property is land or any interest in land the declaration must be manifested in writing signed by the person making the declaration: s 23C(1)(b) Conveyancing Act; Jacobs’ [6-23] page 75.

125.   Particular issues arise where the trust is created by deed, including whether, even if the deed has been executed, it has in addition been delivered: Hyhonie Holdings at [40]-[41].

126.   A person’s intention, at a particular time may be proved by admissions, direct statements, words and acts and statements accompanying acts or omissions: Halsbury’s Laws of Australia, 195 – Evidence (online) (Halsbury’s) at [195-845].

127.   Remoteness of the statements regarding intention, whether before or after the relevant time, goes to the weight rather than the admissibility of the evidence: Halsbury’s at [195-845] citing Nash v Commissioner for Railways (1963) 63 SR (NSW) 357 at 360 (Full Court); Herald and Weekly Times Ltd v McGregor (1928) 41 CLR 254 at 265; [1928] HCA 36 per Isaacs J.

128.   However, the statement of a witness of his or her intention is scrutinised carefully by the Court (e.g. Cox v Smail [1912] VLR 274 at 283 per Cussen J) and such statements may be insufficient to rebut an contrary inference drawn from that person’s acts and conduct: Halsbury’s at [195-845] citing Forster v Forster [1907] VLR 159 at 170 per Hood J.

129.   Where there is a written declaration of trust in unambiguous words the creation of the trust may be rebutted by evidence of contrary intention, but the onus is on the party seeking to disprove the trust to show a contrary intention and strong evidence is required for this purpose: Strang v Strang [2009] NSWSC 760 per Nicholas J at [67] citing Re Lamshed [1970] SASR 224 at 239 per Bray CJ.

130.   The relevant question is whether there was the requisite intention at the time that the declaration was made: Strang at [68].

131.   The signing of a declaration and having it witnessed is some evidence of the required intention: HyhonieHoldings at [45] per Hodgson JA.

132.   For a party to challenge the declaration of trust to establish the declarer’s intention was otherwise it is necessary to demonstrate (which for example could be done by reference to subsequent conduct) that it was not the declarer’s real intention at the time to create the trust: Strang at [81].”

90. In order to create a trust over shares however no writing is necessary: Hyhonie at [42].

Determination of summary dismissal application

Minimal amendments

91. As to Mr Boland's first point that the amended claim is in substance no different from the original claim, it does not seem to me, subject to matters that I will refer to below regarding strike out application, that the amendments made to the original claim constitute an abuse of process.

92. It does seem to me (as I will note below) that further thought needs to be given to the pleading of the claim by Ms Vasil on how it is said that she claims to have suffered damage and in what capacity.

93. Nonetheless the amendments made as reflected in the amended claim to the particulars of paragraph 7 at least purportedly have been done to allege that the damage and loss said to be suffered particularised is said to be referable to Ms Vasil.

94. The fact that little amendments have been made to other parts of the claim other than paragraph 7 does not per se entitle the applicants to summary dismissal.

Standing and the declaration of trust

95. As to Mr Boland second point that the claim does not plead and the evidence indicate how the alleged trust arises, that is not entirely correct.

96. Mr Boland asserts that there has been variability in the materials placed before the Court in the proceedings thus far regarding the interests of Mr Dimitrovski and Ms Vasil in particular in relation to the assertion that the relevant shares were held in trust for her.

97. The submission is understandable as there did appear to be some degree of conflicting approach that was initially taken by Mr Dimitrovski and Ms Vasil to the proceedings in this respect. The original claim and submissions before Lindsay J regarding the character of the trust and the notion of a joint holding had an elusive quality.

98. However, since the earlier summary dismissal application, Ms Vasil has served evidence which was relied upon in this application as noted above.

99. The evidence includes an ASIC search in relation to the company such search reflecting the position as at 12 March 2021.

100. The search describes matters in relation to the company as qualified by the description "former". This includes former organisation details, organisation addresses, registered offices, principal place of business, officer details and shareholders. That description appears to reflect the fact that the company has been deregistered.

101. Noting that qualification, the search discloses that Mr Dimitrovski held 500,000 ordinary shares. The shares were not fully paid but significantly they were not beneficially held: page 3 search.

102. The fact that the shares are said to be held by Mr Dimitrovski non-beneficially at least is consistent with the notion that he holds the shares on trust for Ms Vasil.

103. Further, in her affidavit, Ms Vasil addressed the question of creation of the alleged trust and standing.

104. The relevant evidence in her affidavit is as follows:

“Legal standing

68.    When George met with Nada and I at our home on 19 October 2019, he also showed us a copy of my father's Will that my father had prepared around the time we invested in the company in 2004. I otherwise didn't know the full details about his Will and I asked George, "Why haven't you shown us this before"?

69.    George said, "I didn't think that there was any point because we lost it all anyway".

70.    I knew that from our conversations at home that when we invested in the company, Life Order Products Pty Ltd, George promised my father that the shares that we held in the company were held by George for our family and because my father was a 50% owner of the real estate business that we sold to invest in Life Order Products, my father wanted me to have his 50% shareholding in the company.

71.    My father said words to the effect, "Susie should have ownership in the company, and I want her to have my half of the shares and I want her to work in the business".

72.    I then recall my father saying, "Susie, you will be the owner of my shares and they will be held in George's name in trust for you".

73.    About a year later, the sale of the real estate business had problems regarding a fraud by the property manager and the purchaser of the business renegotiated the sale price with George and my father, and they agreed to accept a reduction in price.

74.    At this time, I recall in our kitchen at home, George said to me and my father words to the effect, "You can be the owner of my 50% shareholding in Life Order Products, because I take responsibility for accepting the sales price, and I will make up for it when we are making profits from selling Life Order products".

75.    I then recall my father saying to me, "Susie, you will own George's shares in Life Order Products, but they will also be held in trust for you by George". That means all the shares that we paid for in the company are held by you".

76.    Back then, I was going through some intermittent personal issues, and I knew that it upset my father and everyone else in my family. My father wanted me to take an interest in something that would make me get out of bed in the morning and he encouraged George to include me in the company. My father appointed George as Executor and Trustee in his Will and a Protective Trust was created that saw George responsible for my business affairs. I understand why this was done and my family only wanted the best for me.

77.    The shares that I own in the company are recorded in the ASIC document annexed to my affidavit and it shows the Shareholder Details of George Dimitrovski as being nonbeneficially held.

78.    I have legal standing in the matter because our paid shares in the company were non- beneficially held by George and the shares were held on my behalf. I knew little about business structures, and this arrangement was initially organized by my father and George in 2004 because my father agreed to sell Bevans Real Estate Thirroul, our principal family business, to invest in the company, and in 2005, George and my father extended their undertaking and agreed that I would own the total 25% shareholding in the company because the purchaser of Bevans Thirroul defaulted on the sale of the business and did not settle on the agreed amount, and because of this, George volunteered to give over his half shareholding in the company to my father and in accordance with point 19.9 of my father's Will regarding General Power to Hold on Separate Trust; George and my father made an agreement by express word that the total shareholding in Life Order Products would be held for me in trust.

Annexed and marked 'E' is a copy of the last Will of Kosta Dimitrovski dated 15 December 2004, and; Annexed and marked 'F' is a copy of ASIC Company Historical Extract for Life Order Products Pty Ltd dated 12 March 2021.”

105. Mr Loxton referred to paragraph 72 of Ms Vasil's affidavit regarding the standing issue.

106. That is a paragraph as noted above which suggests that Ms Vasil's father Kosta Dimitrovski stated to Ms Vasil that she would be the owner of his shares and "they will be held in George's name in trust for you".

107. The company search records that Mr Dimitrovski held the shares. It seems from the evidence above that part of the assertion of Ms Vasil is that Mr Dimitrovski promised the shares will be held for the family by family discussions with their father Kosta it was declared that any ownership in the shares would be held by George in trust for Ms Vasil.

108. Mr Dimitrovski’s affidavit on the other hand does not expressly deal with how it is that he holds the shares as trustee for Ms Vasil.

109. The affidavit (lengthy as it is), only addresses the issue of investment briefly in the following terms at [65]:

“After we considered all of Mr Boland’s representations, we decided to make the investment in the company, and I said, “Brian, we will do it and we will invest in your company” and on for August 2004, we shook hands on it.”

110. That evidence leaves unstated which persons constituted “we” in considering the alleged representations and in particular leaves in a vague and elusive state which persons constituted “we” for the purpose of “deciding “to make the investment in the company”.

110. Mr Dimitrovski’s affidavit annexes a Heads of Agreement document dated 4 August 2004 “for Equity Share” in the company. That document does not refer to Ms Vasil and states in part “Dimitrovski will acquire 25% of Life Order shares for AuS$500,00”.

111. Despite the lack of clarity arising from those issues, nonetheless, the above evidence of Ms Vasil provides some basis for an ultimate argument regarding standing. In those circumstances, I am not convinced that Ms Vasil’s claim to standing is so hopeless that the claim should be summarily dismissed.

Proper parties

113. However the claim that Mr Dimitrovski held that shares on trust for Ms Vasil begs the question of proper parties to the proceedings.

114. I asked Mr Loxton whether there was a part of Ms Vasil's claim that did not depend in a sense on her shareholding. He initially indicated that all her claims did depend upon her shareholding noting that she was the beneficiary of the trust and the trust had lost money: T 19, 23.

115. That indication highlighted the necessity to consider who has standing to address loss to a trust. There are legal principles as to who as between a trustee and beneficiary may bring proceedings for loss suffered by a trust: see JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis) at 560–561; Alexander v Perpetual Trustees WA Ltd (2004) 216 CLR 109; [2004] HCA 7 at [55] approving Ramage v Waclaw (1998) 12 NSWLR 84 at 91–93 per Powell J.

116. I asked for assistance of Mr Loxton on this issue. However Mr Loxton was not then, or even following the short adjournment, able to further assist me on the matter.

117. Beyond noting the general principle which I have above, I say nothing further about this matter.

Distinguishing between damage to the company and alleged personal damage to Ms Vasil

118. As to Mr Boland's third point, it is true that if there was damage said to be suffered by the company and if the gist of the application was an application to recover loss on the part of the company, then that would be a claim that would require leave.

119. However one of the opaque aspects of the claim is the lack of clarity as to whether Ms Vasil has suffered loss as a beneficiary of a trust or in a personal capacity.

120. I noted in the course of submissions that the Court needed to understand in a sense more clearly the distinction between claims brought by Ms Vasil as being the beneficiary of a trust and claims which were brought which appear to be assertions of personal injury including distress, shock and trauma: T 23.

121. Mr Loxton as I understood him then accepted that there were such separate claims "free of any trust" and that Ms Vasil was "perhaps" bringing the claim both as a beneficiary of the trust and in her own right.

No abuse of process

122. As to Mr Loxton’s first point, in this particular case the application has not be made by the applicants in order to repair a deficiency arising from any act on their part in the first application: see Liu at [293]. Rather it has arisen consequent upon Ms Vasil filing an amended claim consequent upon the orders of Lindsay J.

123. Evidence has been brought forward by Ms Vasil. At least regarding the alleged trust that is evidence that is said by the applicants to be particularly within Ms Vasil’s knowledge. Her disclosure of her evidence regarding the trust is evidence that was not available to be considered by the applicants previously.

124. I do not consider that the application is an abuse of process.

Other matters

125. As to Mr Loxton’s second point I am mindful of the observations made by Handley and Cripps JJA in Wickstead v Browne above.

126. There is no need for me to decide the second point in light of my findings regarding standing and other issues I have mentioned above.

127. However, it is not entirely clear to me that evidentiary deficiencies in Ms Vasil's case would likely be able to be cured by the defendants going into evidence.

128. This is a case in which the applicants say that evidence regarding the trust is entirely within Ms Vasil’s camp. They as defendants have no insight into the internal workings of how it is said that within the Dimitrovski family the trust was created other than the affidavit materials filed on this application.

129. As to Mr Loxton’s third point it is not necessary for me to determine it.

130. Lastly, I note that novel claims for economic loss were considered by the Court of Appeal in Perera v Genworth Financial Mortgage Insurance Pty Ltd (2017) 94 NSWLR 83; [2017] NSWCA 19. Whether the claims of Ms Vasil to have suffered economic loss in a context in which seemingly the representations were not made to her will remain to be seen.

131. Whilst I have serious doubts as to whether Ms Vasil's claims for damages are brought within time, that issue has not been raised on this hearing. In any event even if it had been raised, I consider for the reasons given by Lindsay J that it is not appropriate to summarily dismiss the damages claims particularly having regard to the observations of the High Court in Wardley Australia at 533 supra.

No summary dismissal

132. Because of the views I take regarding Mr Boland submissions, despite the delay in Ms Vasil bringing the claim forward and despite having some doubts as to the ultimate efficacy of her claims (about which I make no finding), I am not persuaded that summary dismissal should be ordered.

Determination of strike out application

133. The question in relation to striking out the pleading falls into a different category.

134. It is far from clear to me why only limited "edits" have been made to the pleading on the part of Ms Vasil in circumstances where it seemed relatively clear that Lindsay J had been told that a claim would be recast.

135. The claim has not effectively been recast. The earlier doubt as to precisely how the trust is said to have arisen has in a sense been addressed by Ms Vasil in her affidavit. In that respect she has “nailed her colours to a mast”.

136. Nonetheless, there may still be a question regarding who the appropriate person is to bring any claim for loss to the trust.

137. More particularly, there should be clarification regarding what parts of the loss that Ms Vasil claims are said to be referable to her position as beneficiary of a trust on the one hand and on the other hand loss that is said to be suffered by her personally.

138. Mr Loxton appeared to accept as much: T 23–24.

139. I am satisfied that the dictates of justice favour an opportunity being given to Ms Vasil to further amend the pleading. Any such amendment or reformulation of the pleading should distinguish clearly between the claims brought by Ms Vasil in her own right and those brought allegedly as beneficiary of the trust. In relation claims brought as beneficiary of the trust Ms Vasil should address who as between the trustee and herself as beneficiary are actually authorised to bring such claims within the locus standi principles.

Costs

140. Neither party made any specific application for costs.

141. Both sides have had success and failure. I propose to make no order as to costs.

142. In any event, self-represented litigants ordinarily cannot recover costs because costs are awarded as a partial indemnity for professional legal costs actually incurred in the conduct of litigation: Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29.

Conclusion

143. The orders of the Court are:

1. Dismiss the application for summary judgment.

2. Order that the amended statement of claim be struck out.

3. Grant leave to Ms Vasil to file a further amended claim on or before 24 November 2022.

4. Order that there be no order as to costs.

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Decision last updated: 10 November 2022