Velissaris v Fitzgerald
[2014] VSCA 139
•27 June 2014
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2014 0033
| GEORGE VELISSARIS | Applicant |
| v | |
| LAURENCE A FITZGERALD and BDO KENDALS (VIC & NSW) PTY LTD | First Respondent |
| Second Respondent |
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| JUDGES | ASHLEY and MANDIE JJA |
| WHERE HELD | MELBOURNE |
| DATE OF HEARING | 20 June 2014 |
| DATE OF JUDGMENT | 27 June 2014 |
| MEDIUM NEUTRAL CITATION | [2014] VSCA 139 |
| JUDGMENT APPEALED FROM | Velissaris v Fitzgerald and Anor (Unreported, County Court of Victoria, Judge Macnamara, 17 March 2014) |
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COURTS – Practice and procedure – Leave to appeal – Appeal – Proceeding in County Court by alleged beneficial owners against liquidator of now deregistered company for sales of land and plant and equipment at alleged undervalue – Previous proceedings in Federal Court of Australia and Supreme Court referable to sales of this property at undervalue – Bringing of further proceedings in those courts restrained except by leave of court – County Court proceeding forever stayed and order restraining further proceedings in that court except by leave – Reliance by judge upon issue estoppels – Whether previous proceedings gave rise to issue estoppels or res judicata – No issue estoppels or res judicata – Proceeding in County Court relating to sale of land an attempt to avoid restraints imposed by superior courts – Abuse of process for claim to be brought in County Court – Anshun estoppel available to liquidator, and assured of success, in relation to claim for sale of plant and equipment at undervalue – Claim summarily dismissed under Civil Procedure Act 2010 (Vic) s 63 – Appeal allowed so as to vary orders made in County Court – Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 applied.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr P Zappia with Mr T Clarke | Victorian Bar Court of Appeal Duty Barrister Scheme |
| No appearance for the First Respondent |
ASHLEY JA:
The impugned orders
George Velissaris (‘the appellant’) seeks leave to appeal from orders made by a judge in the County Court on 17 March 2014. The orders were as follows:
1. This proceeding be forever stayed.
2.The plaintiff is restrained from taking any further step in this proceeding or filing any further proceeding in this Court against the first defendant regarding or in any way relating to:
a. the property known as 333-335 Sydney Road Brunswick;
b.the business formerly carried on at that address by the deregistered company Maryvell Investments Pty Ltd ACN 0808 327 073 or by the plaintiff;
c.the ownership of the plant and equipment once used or located at 333-335 Sydney Road Brunswick; or
d.the affairs of the deregistered company Maryvell Investments Pty Ltd ACN 080 327 073;
without first obtaining the leave of a judge of this Court.
3.The plaintiff pay the first defendants’ costs of the proceeding to date including the costs of his summons filed 20 February 2014.
Leave to appeal
There is a question whether leave to appeal is necessary. It was said by this Court in Kermani v Westpac Banking Corporation,[1] in accordance with what had been said by Gibbs J[2] in Port of Melbourne Authority v Anshun Pty Ltd (No 1) (‘Anshun (No 1)’),[3] that an order forever staying a proceeding on the grounds of
abuse of process is a final — not an interlocutory — order.[4]
[1][2012] VSCA 42 [59]-[90], (Robson AJA, with whom Neave and Harper JJA agreed).
[2]With whom Mason and Murphy JJ agreed.
[3](1980) 147 CLR 35, 38.
[4]In Anshun (No 1), Gibbs J referred to a possible distinction between ‘a case which is frivolous or vexatious in the ordinary sense, or in which the proceedings disclose no reasonable cause of action, and a case in which the abuse of process lies in an attempt to litigate a cause of action which is res judicata’ (at 38). The latter was the situation in Anshun (No 1); and it is the situation in the present case. About that kind of case, his Honour said, English authority that an order forever staying an action as frivolous, vexatious and an abuse of process is an interlocutory order had nothing to say. But in the end, as I understand it, his Honour simply focused upon the reality of the order in concluding that it should be regarded as a final order.
There is also an issue whether a restraining order such as the judge below made is, within s 17A(4)(b)(ii) of the Supreme Court Act 1986, an injunction.
But whether or not leave is required need not be resolved. The Court as presently constituted has been authorised to hear and determine the substance of the foreshadowed appeal; and in my opinion that is what it should do, granting leave so far as that might be necessary.
The proceeding
The proceeding was commenced by writ filed by the appellant, who was then unrepresented, on 2 December 2013. A statement of claim was filed on about 28 January 2014. The defendants named by the writ are Laurence Fitzgerald and BDO Kendalls (Vic & NSW) Pty Ltd. In reality, the proceeding is pursued only against the first defendant (the present respondent). The second defendant is a company in liquidation, and it is uncontroversial that the appellant has not obtained leave to proceed against that company.
It is convenient to set out the statement of claim in full. Thus:
1.The Plaintiff is and was at all material times since 5th June, 2005 the trustee of the Maryvell Family Trust (‘the Trust’) and brings this proceeding on his own behalf and on behalf of the beneficiaries of the Trust.
2.At all material times, the Trust was the beneficial owner of the property situate and known as 333-335 Sydney Road, Brunswick (‘the real estate’).
3.At all material times, the Plaintiff was the owner of the business known as the ‘Greek Bar Tavern The Kalamata’ (‘the business’) and was also the beneficial owner of the plant and equipment which formed part of the business.
4.The first Defendant was at all material times the liquidator of the previous trustee of the Trust known as Maryvell Investments Pty Ltd (‘the company’) and was a director of the second named Defendant.
5.At all material times, the Defendants owed a statutory, common law and equitable duty to exercise reasonable care in discharging all functions as the liquidator of the company (‘the duty of care’).
PARTICULARS
The duties are express pursuant to sections 180 to 184 and section 420A of the Corporations Act 2001 (Cth) and are also implied as an ordinary incident of the duties and functions as a liquidator of the company.
6.In breach of the duty of care alleged in paragraph 5 hereof, the Defendants sold the real estate and the plant and equipment for less than their fair market value.
PARTICULARS
The Defendants entered into a Contract of Sale dated 26th March, 2008 for a figure of $1.6M which was grossly below the fair market value of $6M. The Defendants failed to take all reasonable and proper steps to market and sell the real estate and the plant and equipment for the best possible price. The plant and equipment was purportedly sold for $1.00.
7.Further, and in the alternative, the Defendants wrongfully converted the Plant and equipment by purporting to sell it when such Plant and Equipment beneficially belonged to the Plaintiff in his own personal capacity, rather than to the company.
8.By reason of the matters alleged in paragraphs 1 to 6 hereof, the Trust has suffered loss and damage.
PARTICULARS
The real estate was sold for $1.6M which was well below its true market value of $6M thereby giving rise to a loss of $4.4M together with an additional loss of $1M for lost goodwill attached to the business plus a loss of $600,000 being the true market value of the plant and equipment being a grant total loss and damage of $6M.
9.Further, by reason of the Defendants’ wrongful conversion of the Plant and Equipment, the Plaintiff has suffered loss and damage in his own personal capacity as the beneficial owner of the Plant and Equipment.
PARTICULARS
The Plaintiff claims direct loss and damage constituted by the difference between the sale price of $1.00 and the fair market value of the Plant and Equipment which was valued at approximately $600,000. Further, the Plaintiff claims substantial consequential damages arising out of the destruction of the business caused by the wrongful sale of the plant and equipment of not less than $1M.
AND THE PLAINTIFF CLAIMS:-
A.$6,000,000.00 in compensatory Damages plus $1,000,000.00 in exemplary damages being a total of $7,000,000.00
B. Interest pursuant to statute.
C. Costs.
The liquidator’s application
The first defendant (‘the respondent’ or ‘the liquidator’) made application by summons dated 20 February 2014 for orders that –
1.The proceeding be dismissed, alternatively stayed, pursuant to Rule 23.01 of the County Court Civil Procedure Rules 2008 on the grounds that the proceeding is scandalous, frivolous, vexatious and an abuse of process of the Court.
2.Alternatively that there be summary judgment for the first defendant pursuant to s 63 of the Civil Procedure Act 2010.
3.The plaintiff be restrained from filing any further proceeding against the first defendant in any Court or Tribunal in the State of Victoria whatsoever regarding or in any way relating to:
a. the property known as 333-335 Sydney Road Brunswick;
b.the business formerly carried on at that address by the deregistered company Maryvell Investments Pty Ltd ACN 0808 327 073 or by the plaintiff;
c.the affairs of the deregistered company Maryvell Investments Pty Ltd ACN 080 327 073.
The application was heard on 17 March. The appellant appeared unrepresented, and the respondent appeared by counsel. The judge made orders and gave reasons that same day.
In his reasons, the judge summarised some of the circumstances underlying the proceeding. I will refer to those and other circumstances later in these reasons. His Honour then noted decisions in some of the large number of earlier proceedings which the appellant has brought against the respondent and others arising out of those circumstances. Thus:
9.The gravamen of [the respondent’s] case was that the propositions which are essential to the case mounted for the $6 million which is now before me have been the subject of binding determinations by the Supreme Court of Victoria and the Federal Court of Australia, at least one of which has been the subject of appellate review by the Court of Appeal of Victoria and, in those circumstances, it constitutes an abuse of process to seek to re-litigate those matters. To assess what might be said for this view, it is necessary to say something about a number of other proceedings which have been taken and which bear upon this question. First, there was a determination made by a master of the Supreme Court and then made by Dodds-Streeton J in the matter of Tolhurst Druce and Emmerson v Maryvell Investments Pty Ltd [2007] VSC 271 to the effect that any lease which Mr Velissaris claimed over the Sydney Road property was void by reason of the operation of the Corporations Law as an uncommercial transaction. A master of the court found this to be the case and Dodds-Streeton J upheld that determination.
10.Then Bongiorno J ordered the removal of caveats by Mr Velissaris upon the basis that Mr Velissaris did not, on the material before Bongiorno J, have an interest in the land sufficient to maintain those caveats. His Honour went further and restrained the lodgement of further caveats to similar effect. His Honour’s judgment is to be found at [2008] VSC 19.
11.Then the action switched to the Federal Court of Australia when the matter came on before Gordon J. Mr Velissaris says that he brought this proceeding with a view to blocking the sale of the Sydney Road property. He contended that the two sale arrangements which I described earlier were wrongful, void and invalid as a result of the misconduct of the liquidator. An earlier application for an injunction to restrain settlement of the first contract was dismissed by Gray J, Velissaris v Maryvell Investments Pty Ltd (in liquidation) [2007] FCA 2095.
12.Again, Her Honour Gordon J found at paragraph 13:
‘During the hearing, Mr Velissaris submitted to the court that the substance of his complaint about the conduct of the liquidator arose out of the manner in which he conducted the sale process of the property in respect of both the first and second Contracts of sale. There were two complaints; the property was sold for less than its market value and, secondly, that the term of each contract of sale should have not been 30 days but some longer period.’
13.Mr Velissaris referred and relied on, according to that paragraph of Her Honour’s judgment, s 420A of the Corporations Act and, according to paragraph 14, s 180 to 184 of the Corporations Act. He had submitted to Her Honour that Mr Fitzgerald, as liquidator was a controller and subject to the duties imposed by ss 180 to 184. Her Honour dismissed this proceeding rejecting the contentions made by Mr Velissaris.
14.The next court proceeding came before Robson J. He published a judgment in the matter Velissaris v Maryvell Investments and Fitzgerald at [2009] VSC 61. Mr Velissaris said he brought this application seeking to have the winding up stayed and also, according to the catchwords at the head of His Honour’s judgment as an application for damages. Once again His Honour dismissed the claim. He found that the allegations were baselessly made and he ordered that the Prothonotary not accept any further process from Mr Velissaris to similar effect. Gordon J had made a like order directed to the Federal Court Registrar.
15.Next there was a proceeding heard by Sifris J. Mr Velissaris sued Dynami Pty Ltd, which it will be recalled was the purchaser under the second sale and Ms Zervas. The contention there was that insofar as Dynami Pty Ltd had purported to purchase plant and equipment that plant and equipment was owned by Mr Velissaris. Sifris J dismissed this claim and His Honour’s judgment is to be found at [2010] VSC 587. At paragraph 49 he said:
‘What then is the evidence of ownership of the plant and equipment? It is most confusing and unsatisfactory and I must find that the plaintiff has failed to establish ownership. The critical matter is the plaintiff’s own evidence as referred to in paragraph 24 above.’
16.At paragraph 24 he referred to an affidavit sworn by Mr Velissaris in the proceeding where Tolhurst Druce and Emmerson sought a winding-up order and to which I made reference earlier in which he swore that the plant and equipment belonged to the company and not to him. Mr Velissaris said that that affidavit was hastily prepared and he was rushed into swearing it and that it should not be regarded as a correct account of the true situation. Be that as it may, His Honour accepted it and therefore found that the plant and equipment did not belong to Mr Velissaris but rather belonged to Maryvell Investments Pty Ltd.
17.His Honour made an order that:
‘No further proceeding or process of any kind in the trial division, including this proceeding, concerning Dynami Pty Ltd, Zervas, Theodore Zervas or Stonnington Online Conveyancing’ -
et cetera et cetera –
‘shall be accepted for filing by the Prothonotary.’
18.An appeal was taken to the Court of Appeal in Victoria, Velissaris v Dynami and Zervas [2010] VSCA 587. The Court of Appeal dismissed the appeal generally but varied the order to which I last made reference stating that in the circumstances it was inappropriate to direct an order to the Prothonotary, rather the proper course, in the circumstances, was to order Mr Velissaris to refrain from filing process in the court. Sifris J’s determination was otherwise upheld.
Counsel for the respondent submitted below that it was an abuse of process for the appellant to seek to litigate matters the subject of issue estoppels binding between the parties. His Honour said this:
20.The determinations which I have recited already, first, reject the allegations of misconduct in the sale and, secondly, find that the plant and equipment for which $600,000 by way of damages are sought were the property of the company in liquidation are not the property of Mr Velissaris. The proceeding which he brings now fundamentally challenges both those findings and, in my view, it is for that reason an abuse of process. It should be stayed.
21.The only complicating matter is that the last proceeding, that is the one before Sifris J, is one in which Mr Fitzgerald, the present applicant under the summons, was not a party. How, it may be asked, can Mr Fitzgerald seek the benefit of an issue estoppel in that determination where he was not a party to the proceeding? This cannot be a case of issue estoppel in the strict sense of the word. However, the New South Wales Court of Appeal in Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198 held that it is an abuse process (sic) for a person to seek to re-agitate issues which have been determined in a previous court proceeding, even if the parties are not identical. Here there has been an attempt to re-litigate the issues which are to be found determined by Sifris J and, indeed, made the subject of appellate review by the state’s Court of Appeal.
22.It goes without saying that it would be problematic in the extreme to have a situation where this court were to make an inconsistent finding with the findings made by the Supreme Court and confirmed by the Court of Appeal and I am fortified in that view by the thought that this was not a situation where there is an attempt to saddle Mr Velissaris with the consequences of a loss in court perhaps created by the incompetence of another litigant. Rather, the matter before Sifris J in the Court of Appeal was his own matter which he himself prosecuted. [This case is different from Solak v Registrar of Titles [2011] VSCA 279 where the Court of Appeal left open the application of Anshun estoppel where the parties to the two proceedings are different. There the complaint was that a matter raised in the second proceeding should have been raised in the first. Here, the self-same issues arising in this proceeding have been determined in an earlier one.] In those circumstances I propose making an order that this proceeding be forever stayed.
23.I was asked to go further and to grant an order in personam restraining Mr Velissaris from filing process against Mr Fitzgerald as to these matters in any other court or tribunal in the state of Victoria. It was contended, as I understood it, that since this would be an order addressed to Mr Velissaris himself it would not entail the presumption of me, as a judge of the County Court, attempting to order officers, say, of the Federal Court of Australia or the Prothonotary of the Supreme Court of Victoria what to do or not to do. In this respect it might be thought to be similar to an anti-suit injunction.
24.I was not referred to any authority relative to this other than the Court of Appeal’s decision on appeal from the decision of Sifris J. In my view, despite the analogy with the anti-suit injunction for this court, which is not a superior court of record, to make orders of the wide-ranging effect that I have been asked to make here would be inappropriate. I do, however, for the same reasons that have led the judges in the other proceedings to do so feel it appropriate to grant orders which are restricted in their operation to this court alone.
Application for leave to appeal/appeal: the appellant’s written submissions
The appellant filed a document headed ‘Appellant’s Outline of Argument’ in the Court of Appeal Registry on 24 April this year. It contains an admixture of grounds and argument. The former were stated as follows:
1.The learned judge erred in law by permanently staying the appellant’s claims on the basis of an erroneous enunciation and application of the principle of issue estoppel in the circumstances of this case.
2.The learned judge should have held that the principle of issue estoppel had no application in circumstances where there had never been a final determination on the merits of the matters raised in the appellant’s statement of claim as against the respondent.
3.The learned judge erred in law characterizing the appellant’s proceeding as an abuse or process.
The submissions advanced in support of those grounds were as follows:
4.The learned judge erroneously enunciated the principle of issue estoppel at paragraph 19 of the judgment as follows:-
‘It is trite law that where a particular issue is determined by a court of competent jurisdiction subject only to appeal that mater is finally determined between them and it is not competent for either party to seek to re-litigate that issue in subsequent proceedings in that court or any other.’
5.The correct principles of issue estoppel were enunciated by Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ in Kuligowski v Metrobus [2004] HCA 34, 220 CLR 363 at 369 where their Honours set forth as follows what they regarded as ‘uncontroversial matters’:
‘[21] In his speech in Carl Zeiss Stiftung v Rayner & Keeler Ltd [No 2], Lord Guest, after noting that the doctrine of issue estoppel had been accepted by Australian courts for a number of years, indicated that, for the doctrine to apply in the second set of proceedings, the requirements were:
“(1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and, (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.”’
6.These principles were recently applied by the Full Court of the Federal Court of Australia in Dale v State of Western Australia [2011] FCAFC 46 and should also be applied by this Court.
7.The decision of Justice Gordon in the Federal Court related to an attempt to restrain the sale of the subject property. The proceeding before Judge Macnamara raised different questions focusing on issues of professional negligence which were never the subject of any final determination by Justice Gordon. Indeed, there was never any trial on the merits of any claim in the Federal Court. Accordingly, the principle of issue estoppel did not apply and the appellant’s claim for damages should have been allowed to proceed to trial in the usual course.
8.Likewise, the (sic) Justice Robson in the Supreme Court proceeding at [2009] VSC 61, did not consider the same questions raised in the proceeding below and nor did His Honour finally determine any such matters concerning the respondent’s professional negligence. There was no trial of any sort conducted; nor were there any pleadings served as occurred before Macnamara J.
9.Further, the decision of Justice Sifris in the Supreme Court at [2010] VSC 587 did not involve the respondent as a party and hence, the principle of issue estoppel does not apply. The third element of issue estoppel cited in Kuligowski was not made out. The decision of the New South Wales Court of Appeal in Rippon is inconsistent with the principles enunciated in Kuligowski and ought not to be followed. Accordingly, whether the appellant is able to make out a claim against the respondent for conversion should have been allowed to proceed to trial.
10.By reason of the foregoing matters, it was not open to find that the appellant’s claims below amounted to an abuse of process. Accordingly, the claims ought to have been allowed to go to trial in the ordinary course for a judicial determination on their merits. It is significant to note that the pleading filed by the appellant below had never been filed before and had not been the subject of any final determination on the merits in any previous judgment.
11.There has been a substantial miscarriage of justice by reason of the errors of law identified in the proposed Notice of Appeal. Accordingly, leave to appeal ought to be granted and the matter heard instantly and the appeal be allowed.[5]
[5]The emphases are in the original, likewise with the grounds of appeal.
Conclusions summarised
In my opinion, for the reasons which follow, the order that the proceeding should be permanently stayed as an abuse of process was correct so far as it related to the claim for sale of the land at an undervalue, though not entirely for the reasons stated by the judge. Insofar as the appellant raised claims respecting the sale of the plant, I would allow the appeal so as to give summary judgment for the respondent in lieu of ordering a stay. I further consider that the judge was correct to make a restraining order. I would, however, vary the terms of that order.
Circumstances and litigation
Maryvell Investments Pty Ltd (Maryvell) was placed into liquidation on 19 June 2006. The respondent was appointed liquidator. He performed his duties until presenting final accounts in 2010. Those accounts showed that the company had indebtedness which it could not meet of a little over $4 million. The company was then deregistered.
Focusing only upon litigation instigated since Maryvell was put into liquidation, there have been no less than 22 decisions of superior courts (and in one instance of the Victorian Civil and Administrative Tribunal) relating to — (1) the affairs of Maryvell generally; (2) the asserted right of the appellant to continue in occupation of the Sydney Road land (‘the land’); (3) the ownership of plant and equipment (‘the plant’) in premises situate on the land; (4) the alleged misconduct of the liquidator; (5) the alleged responsibility of the purchaser of the land arising out of the purchase of the plant by another entity; (6) reinstatement of Maryvell. Certain themes have been repetitively agitated, or sought to be agitated, in this litigation, which has been conducted in the Trial Division, this Court, the Federal Court of Australia, the Full Court of the Federal Court of Australia, the High Court, and —most recently, in the present proceeding — in the County Court. The appellant has been the moving party or the defendant in every instance.
Two major trials have been held in the Trial Division — the first before Dodds-Streeton J (as her Honour then was) in 2007, and the second before Sifris J in 2010. The appellant unsuccessfully appealed to this Court against the decisions in those matters. He unsuccessfully sought leave to appeal to the High Court, and stay of execution, from the judgment of this Court in the first of those matters.
The various decisions show that the appellant has adopted a breathtakingly inconsistent range of positions from one proceeding to another; and, indeed, within the one proceeding. He has been the subject of seriously adverse findings, with respect to his truthfulness, on a number of occasions.
He has not been deterred by any of this. Speaking generally, when avenues for complaint in one court appear to have closed, he has commenced litigation in another court.
Avenues have closed because:[6] (1) of judgment at trial and on appeal; or (2), proceedings have been held to be an abuse of process; or (3), courts have made restraining orders so as to prevent the commencement of new litigation, except by leave, in that court.
[6]These circumstances are interrelated.
As I earlier noted, a repeated theme of the appellant’s complaints has been that the liquidator sold the land at an undervalue. Another theme has been that the liquidator sold the plant at an undervalue, by selling it to a party which became the tenant of the land for $1. The appellant has made increasingly florid allegations respecting the liquidator’s behaviour in those connections.
That said, the appellant’s litigious past is relevant only insofar as earlier decisions may demonstrate that the proceeding which the appellant now seeks to pursue constitutes, for one reason or another, an abuse of process; or that all or some of the claims raised in the proceeding have no real prospects of success.
The respondent was represented below, but did not appear and was not represented before us. His solicitors wrote to the Registry asserting, in substance, that he had been hounded for years by the appellant; and that he would, in effect, abide the Court’s decision. There may be substance to the respondent’s complaint, but his not being represented has not simplified the Court’s task.
The statement of claim; and previous decisions
By paragraph one of the statement of claim, the appellant asserts that he has been trustee of the Maryvell Family Trust (‘the Trust’) since 5 June 2005, and that he brings the proceeding on his own behalf and on behalf of the beneficiaries of the Trust.
The reference to 2005 is obviously wrong. The appellant has previously asserted in litigation, and has produced documentation of a certain kind to show, that he appointed himself trustee of the Trust on 5 June 2006 — that is, a fortnight before the winding up order was made.
The appellant pleads that he brings this proceeding on his own behalf and on behalf of the beneficiaries of the Trust.
So far as this plea could be relevant, analysis of the statement of claim — see later in these reasons — appears to show that it could be relevant only to the alleged sale of the land at an undervalue.
On any view, Maryvell had legal title to the land from 1998 up until the time that the respondent sold it in early 2008. Dodds-Streeton J held, in the proceedings between the appellant and the respondent mentioned at [16] above, that Maryvell either held both legal title and beneficial interest in the land; or else, if it had originally held title as trustee of a trust, and had been validly removed by what the appellant did in early June 2006, that it had, in addition to its registered title, a right to possession pursuant to a lien securing its indemnity for liabilities incurred in the execution of the trust property.[7]
[7]See [2007] VSC 271 [218].
The effect of the judgment of Dodds-Streeton J is that the liquidator was authorised to sell the land, whether or not it was subject to a trust in favour of the Trust. He was obliged, so far as he could, to have Maryvell discharge its liabilities incurred in the execution of the trust property. The land was the principal asset. Sell the land the respondent did. The proceeds of sale, I add, proved to be only sufficient to pay out a mortgagee, to meet the petitioning creditor’s costs, and to partly meet the liquidator’s own costs and expenses.
The fact that the liquidator was entitled to sell the land might not, however, preclude a proceeding by beneficiaries against the liquidator alleging sale at an undervalue. This assumes, of course, that at time of sale the land was held on a particular trust; a matter which Dodds-Streeton J extensively discussed, but did not need to decide. Relevantly to the present proceeding, her Honour also discussed — but did not finally decide — whether in 2006 the appellant was the trustee of what I have called the Trust. That was a matter about which the appellant had given different accounts.[8]
[8]Ibid [61], [95].
The proceeding which culminated in the judgment of Gordon J in the Federal Court must then be considered.[9]
[9]Velissaris v Maryvell Investments Pty Ltd (in liquidation) and Fitzgerald (No 2) [2008] FCA 511.
The appellant, in a proceeding brought against the respondent,[10] specifically sought to allege sale of the land at an undervalue. That is a matter addressed by paragraphs 4, 5 and 6 of the statement of claim in the present proceeding, although something must later be said about the references to plant therein.
[10]It was commenced a few months after Dodds-Streeton J had delivered her judgment.
The appellant focused upon sale of the land by auction on 14 November 2007, at a sale price of $1.6 million. In respect of that sale, the appellant alleged that the respondent had breached ss 51A and 52 of the Trade Practices Act 1974 (Cth). He claimed damages under that Act, the Corporations Act2001 (Cth), and at common law. He sought, but was unsuccessful in obtaining, an injunction to prevent settlement.[11]
[11]The injunction application was heard and determined by Gray J.
The appellant was thereafter directed to file a statement of claim. But he did not do so, despite being given extensions of time. Eventually, before Gordon J, the respondent moved for dismissal of the proceeding under rules of court.
As Gordon J noted, the November contract did not proceed to settlement. Settlement was delayed for several reasons; one of them was the lodging of a caveat by the appellant. Illustrating the appellant’s flexibility when it comes to asserting standing, it is notable that he alleged that his caveatable interest was an equitable interest in fee simple pursuant to a resulting or constructive trust.
Bongiorno J (as his Honour then was) ordered that the caveat be removed. He concluded that the asserted interest was inconsistent with the determination of Dodds-Streeton J in the earlier proceeding, and there was no serious issue for trial.
Regardless whether the lodging of the caveat was of decisive importance, the fact is, as Gordon J noted, that the purchaser defaulted.
Her Honour next noted that there had been a later sale of the land by tender, the deadline date being 19 March 2008. She noted that the appellant proposed to amend his statement of claim to allege that the completed sale was at an undervalue. She said this:
13.During the hearing, Mr Velissaris submitted to the Court that the substance of his complaint about the conduct of the liquidator arose out of the manner in which he conducted the sale process of the property in respect of both the First and Second Contracts of Sale. There were two complaints; the property was sold for less than its market value and, secondly, that the term of each contract of sale should have not been 30 days but some longer period. In support of his contention, Mr Velissaris referred to s 420A of the Corporations Act. That section provides:
‘In exercising a power of sale in respect of property of a corporation, a controller must take all reasonable care to sell the property for, (a), if, when it is sold, it has a market value — not less than that market value or, (b), otherwise — the best price that is reasonably obtainable, having regard to the circumstances existing when the property is sold.’
14.As the express words of the section make clear, it imposes a statutory duty on a ‘controller’ in relation to the property of a corporation. A ‘controller’ is defined in s 9 of the Corporations Act. The definition does not include a liquidator. However, that is not necessarily fatal to Mr Velissaris’ claim because, as counsel for the Defendants properly accepted, a liquidator, as an officer of the company within the meaning of s 9 of the Corporations Act, must exercise his powers and discharge his duties subject to the statutory duties imposed on him by ss 180 to 184 of the Corporations Act.
15.As I have noted, Mr Velissaris’ complaints are that the property was sold for less than its market value and, secondly, that the term of the sale contract should not have been 30 days. In my view, these contentions are not shown to have any reasonable prospects of success. There have been two separate sales of the property by the liquidator. On each occasion, a licensed real estate agent was engaged by the liquidator to sell the property. The procedures adopted were transparent. The price obtained on each sale was $1.6 million. There is no suggestion that those sales were not at arm’s length. 30 days is an acceptable settlement period for sale of the property.
16.Accordingly, Mr Velissaris’ reference to what he described as comparable sales higher than $1.6 million, are not to the point. Both the fact of those arm’s length sales of the property and the circumstances in which they were effected provide sufficient independent evidence of the market value of the property. …
It is next necessary to set out the following passage in her Honour’s reasons, upon which counsel for the appellant, before us, particularly relied:
17.In such circumstances, the current proceeding and any proceeding amended in the manner proposed by Mr Velissaris to include a claim in relation to the Second Contract of Sale has not been shown to have any reasonable prospects of success under s 31A(2) of the Federal Court Act. Moreover, having regard to the number and history of proceedings filed by Mr Velissaris in this court, the High Court and the Supreme Court of Victoria, Mr Velissaris’ conduct in these proceedings and, so far as the proceeding is currently framed, the fact that the First Contract of Sale did not settle, the existing proceeding is frivolous, vexatious and an abuse of process of the court.
It was in those circumstances that the judge ordered that the proceeding be dismissed, as having no reasonable prospects of success under s 31A(2) of the Federal Court of Australia Act1976 (Cth); and because the proceeding was frivolous, vexatious and an abuse of process of the Court.
The judge further directed that no further proceeding concerning Maryvell or the land be accepted from the appellant except with the leave of the court, observing that:
Such a direction does not preclude a litigant from pursuing a properly formulated claim if one should be presented to the court.
A number of points must be made. First, the judge was apparently prepared to assume that, on some basis or another, the appellant had standing to bring a proceeding against the respondent arising out of the sale of land. She did so knowing of the judgment of Dodds-Streeton J. It seems likely that she assumed standing on the basis of the appellant’s contention, doubted but not decided by Dodds-Streeton J, that he had become trustee of the Trust in June 2006.
Second, Gordon J dismissed the proceeding. She contrasted, in the passage cited at [38], ‘the current proceeding’ and ‘any other proceeding amended in the manner proposed to include a claim in relation to the Second Contract’. She referred to the way in which ‘the proceeding is currently framed’, in the context of the first contract not having proceeded to completion; and referred also to ‘the existing proceeding’.
The judge expressed the conclusion that a claim founded upon the second contract would have no reasonable prospects of success. The conclusion was based, it seems, upon circumstances some of which the appellant has later sought to put in issue. But be that as may, I consider that appellant’s counsel was correct when he submitted that her Honour’s judgment did not finally determine that his client had no arguable claim for sale at an undervalue based upon the second contract. The appellant had foreshadowed such a claim, but it was not pleaded. In a sense that is not surprising, because her Honour dealt with the matter only a few weeks after sale was effected by acceptance of tender, and before the sale was completed. Her Honour’s reasons show that the second sale was not the subject-matter of the proceeding which she dismissed. Her reservation of leave, and reference to ‘a properly formulated claim’ emphasise that point.
In the event, it appears to me that her Honour summarily, but finally, determined, in a proceeding between the appellant and the respondent, that the first contract for sale at $1.6 million was not a sale at an undervalue.[12] That was an issue joined and determined, regardless that the appellant must have failed to secure any relief because the sale had not proceeded to completion. However, whilst it might logically follow that the appellant could not establish that the completed sale at the same price was a sale at an undervalue, that question was not finally determined.
[12]As having no reasonable prospect of success.
Third, the way was left open by her Honour’s orders for the appellant to return to the court — that is, if he could present a properly formulated claim founded on the second contract. In that event, by leave, the claim might be pursued. The requirement for leave was, in my opinion, entirely appropriate, a filter apt to prevent the court’s time and resources being wasted.
Fourth, in later proceedings the appellant has sought to allege that the successful sale was not at arm’s length; but that it was procured by shady or unlawful dealings between the respondent and the purchaser. Counsel for the appellant stated that his client’s instructions were that this change of position was attributable to the appellant coming into possession of documentation passing between the purchaser and the respondent. It is beyond the scope of these reasons to pass upon the veracity of that explanation.
The appellant, since the proceeding determined by Gordon J, has repeatedly attempted to litigate the question whether the completed sale was at an undervalue. He did so in Re Maryvell Investments Pty Ltd (in liquidation),[13] a proceeding heard by Robson J in the trial division.
[13][2009] VSC 61.
There, the appellant’s attempt was by way of an application for orders, inter alia, that the liquidation of Maryvell be stayed, an inquiry be held into the conduct of the liquidator, and damages for breach of provisions of the Corporations Act2001. But what was specifically before Robson J was an application by the respondent and Maryvell to summarily dismiss or otherwise stay that proceeding as being scandalous, vexatious and an abuse of process under r 23.01 of the Rules.
Robson J accepted that the appellant had standing — as a creditor or contributory — to make the application to terminate the liquidation. Then he turned to ‘the merits’ of the application that the liquidation be terminated. He said this:
60.Mr Velissaris’ claim that the liquidation be terminated is founded on the allegation that the liquidator did not properly sell the Sydney Road property; that the liquidator refused to sell the property to him; that the liquidator bribed a valuer to under value the property to justify selling it below its true value; and, the liquidator received a bribe from the ultimate purchaser to sell to it for less that its true value.
61.Apart from insults and unfounded assertions, Mr Velissaris puts forward no evidence to establish any of these claims. At its highest, he produces an unverified valuation prepared for a finance company by Mr Les Cooper. The valuation is not properly proved. More importantly, even if it was proved, there is still no evidence to suggest that Mr Fitzgerald acted improperly in obtaining the advice of an independent valuer and retaining agents to sell the property as he did. The price that the liquidator achieved was consistent with the valuation of Fitzroys, the independent valuer and the auction in 2007.
…
63.There is no evidence to suggest that the liquidator paid the independent valuer Sutherland Farrelly Pty Ltd or received any payment or inducement from the ultimate purchaser to sell it for less than its true value. In fact the allegations were merely based on a belief without basis.
65.The Federal Court has already dealt with the allegations that the Sydney Road property was not properly sold by Mr Fitzgerald. To seek to make them again in this Court is an abuse of process.
66.In my view, the claim to terminate the liquidation on these grounds is hopeless and bound to fail. It should be stayed.
I pause for a moment to make two points. First, the facts found by his Honour — regardless of the earlier decision of Gordon J — fully justified a stay of the appellant’s claim to terminate the liquidation. For reasons indicated, I consider that what his Honour said at [65] in his reasons was not correct so far as it implied that Gordon J had dealt conclusively with a claim founded on the second contract. But it matters not.
Second, his Honour stayed the particular claim (as he did the other claims raised by the appellant). He did not dismiss it. No issue estoppel or res judicata was thereby established.
His Honour next considered and rejected the appellant’s claim for an inquiry into the liquidation.[14]
[14]Ibid [69].
His Honour then addressed the order sought by the appellant that the respondent pay to him, and the other beneficiaries of the Trust, compensation for loss and damage suffered by them in consequence of what was said to be the respondent’s breach of statutory obligations under ss 180 and 181 of the Corporations Act2001, and his duties at common law and in equity. It was contended by the liquidator that the appellant had no standing to make that application. The judge agreed, saying that the duties owed by the liquidator under the particular sections of the Corporations Act, at common law and in equity, were owed to the company. He added that, whilst a liquidator might be personally liable to the trustee or the beneficiaries in the event of improper dealing with trust assets, any such claim would founder. There was no evidence to support such claim, and it should be stayed.
Thus, Robson J stayed each claim raised by the appellant. He did not dismiss it. Accordingly, he made no final determination. But he made an important further order:
(2)That no further proceeding or process of any kind in the trial division of the Supreme Court of Victoria, including in this proceeding, concerning Maryvell Investments Pty Ltd (In liquidation), the conduct of the liquidation, the liquidator or the property at 333 Sydney Road, Brunswick be accepted for filing by the Prothonotary from George Velissaris except with the prior leave of the Court.
This was, I consider, an appropriate order to protect the Court, by a filtering mechanism, against the pursuit of the existing proceeding, or the initiation of a new proceeding, founded upon nothing more, in substance, than what the appellant had previously advanced with respect to the sale of the land.
I refer next to Re Velissaris.[15] That was an application, made by the appellant in his asserted capacity as trustee of the Trust, for leave to apply to the Court for an order to terminate the liquidation. The application was founded on two particular grounds, of which the first is of present relevance. It concerned the liquidator’s action in disposing of the company’s real property at an undervalue. Davies J in the Trial Division observed that –
The court on a number of previous occasions has ruled that Mr Velissaris failed to disclose a cause of action with respect to that allegation and has refused to grant Mr Velissaris leave to make application to terminate the liquidation on that basis. There is no warrant for the court on this further occasion taking any different view …[16]
[15]Unreported, Supreme Court of Victoria, Davies J, 8 July 2011.
[16]Ibid [2].
I think that her Honour was saying no more than that the state of the material advanced by the appellant in support of this aspect of his application was no better than it had been in the past. So understood, her decision was unremarkable. His application does, however, underline the appellant’s persistence, and emphasises the wisdom of the leave filter imposed by Robson J.
Battle was renewed in the Federal Court. On 2 March 2011, Middleton J heard the appellant’s application for an order terminating the winding up of Maryvell. The respondent, who had by now finalised the liquidation, was the first respondent. The Australian Securities and Investments Commission was the second respondent. The appellant argued that Maryvell had a number of causes of action which it wished to pursue — against, inter alia, the respondent.
In the course of his reasons, his Honour said this:
6.… However, it is apparent in relation to some or all of the claims, putting aside the claim against Sigma, that the courts have already considered in one way or another the allegations that have been made before this Court against those entities. I say ‘in one way or another’ because some of the points raised by Mr Velissaris may not have been directly decided by those courts. It is apparent, however, that the issues that are now raised by Mr Velissaris could well have been raised in that litigation and should have been raised.
7.Mr Velissaris, mindful of this criticism, said that he was either badly advised at the time of the earlier litigation, or he himself was unable to present the case in a way which could bring all the issues before the court. Whether or not this is true is not a matter that I can put too much weight upon, where various courts have already made determinations after hearing argument before them.[17]
[17]Velissaris v Fitzgerald [2011] FCA 197, [6]-[7] (Middleton J). (Emphasis added).
His Honour was not at all satisfied that Maryvell could either fund the foreshadowed litigation, or meet the costs burden of security for costs orders or of ultimate failure. He dismissed the application.
The appellant appealed. His appeal was dismissed by a Full Court of the Federal Court on 9 September 2011.
On appeal, the Full Court noted that the appellant had brought the proceeding before Gordon J to which I have earlier referred, and that it had been concluded that it had no reasonable prospects of success. The Court also referred to the judgment of Robson J in this Court, and to further attempts to agitate the same subject matter which were rejected by Vickery J,[18] Davies J,[19] and Davies J again.[20]
[18][2009] VSC 448.
[19][2010] VSC 278.
[20][2010] VSC 401.
The Court concluded that the appellant had failed to demonstrate any appealable error in the exercise of the discretion by the judge at first instance.
Then the appellant’s pursuit of the respondent and others shifted back to the Trial Division. Before Ferguson J, in Re Velissaris,[21] the appellant sought leave to file an application to reinstate Maryvell, which by this time had been deregistered. He sought reinstatement so as to prosecute claims which, he told the judge, ought be pursued for the benefit of his family. Among the assertions which he made were that the liquidator had sold the land at an undervalue; and that he had wrongly sold, for $1, the plant which, according to the appellant, he owned. In an affidavit supporting his application, he said that he was contemplating litigation against the liquidator in relation to the sale of the property and the plant and equipment.
[21][2012] VSC 293. It was commenced a few months after Dodds-Streeton J had delivered her judgment.
Ferguson J concluded that it would not be just to reinstate the registration of Maryvell in circumstances where — (1) multiple unsuccessful applications to terminate the winding up had been made prior to its deregistration; (2) the grounds relied upon in those applications were substantially the same as were relied upon in this proceeding; (3) the proposed claims that the appellant would have the company pursue in relation to the conduct of the respondent and the sale of the property had already been considered in this Court and the Federal Court, and had been characterised as having no reasonable prospects of success, being hopeless or doomed to fail; and (4) Maryvell had been wound up on grounds of insolvency, yet there was no evidence as to its financial position should its registration be reinstated.
Her Honour’s reasons suggest a misunderstanding as to the breadth of the issues determined by Gordon J.[22] But her accurate recitation of findings made by Robson J, upon the material before his Honour, amply justified conclusion (3) noted in the preceding paragraph.
[22]Ibid [10].
Viewed overall, it is evident that in proceedings between the same parties, and in satellite litigation, the applicant, in a variety of ways, has sought to agitate the proposition that the land was sold at an undervalue. His claim against the liquidator with respect to the first, abortive, sale, was dismissed in the Federal Court on the footing that it was not arguable and was an abuse of process. Before Robson J, the appellant attempted to support his case that the second sale was at an undervalue, and that attempt was a complete failure. It appears that he has not produced, in other applications to judges in the Trial Division, any more cogent evidence than he proffered before Robson J.
It is true that the allegation that the land was sold at an undervalue has never been ventilated at trial. But that is because nothing produced by the appellant at the outset, or thereafter, has suggested that there to be any merit to it. Further, the appellant’s assertion that the second sale was not at arm’s length has consisted only, as Robson J described it, of ‘insults and unfounded assertions’, unsupported by any evidence.[23]
[23]Re Maryvell Investments Pty Ltd (In liquidation) [2009] VSC 61 [60] and [61].
The judge below evidently concluded that there had been final determinations of both the appellant’s claim that the land had been sold at an undervalue, and the appellant’s assertion, with respect to the plant, that he was its owner. His Honour appears to have concluded that there were issue estoppels in each instance.
Focusing upon the sale of land, for reasons indicated there has been no final determination of the appellant’s sale at an undervalue claim.[24] At least the second requirement for issue estoppel affirmed by the High Court in Kuligowski v Metrobus[25] has not been satisfied. Neither, I add, have the requirements for res judicata been satisfied.
[24]Assuming, for the purpose of argument, that he has standing to pursue such a claim.
[25](2004) 220 CLR 363, 373 [21].
But the appeal is against the orders made below, not the judge’s reasons. In my opinion, for a reason which the Court put to counsel, it was an abuse of process for the appellant to bring the proceeding in the County Court (restricting my conclusion for the moment to the claim respecting the sale of land). That is so for two reasons.
Abuse of process is a concept insusceptible of formulation comprising closed categories.[26] It extends to describe proceedings which are ‘seriously and unfairly burdensome, prejudicial or damaging’ or ‘productive of serious and unjustified trouble and harassment’. Again, in the criminal case of Rogers v The Queen,[27] McHugh J said this:[28]
Inherent in every court of justice is the power to prevent its procedures being abused.[29] Although the categories of abuse of procedure remain open, abuses of procedure usually fall into one of three categories: (1) the court’s procedures are invoked for an illegitimate purpose; (2) the use of the court’s procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court’s procedures would bring the administration of justice into disrepute. Many, perhaps the majority of, cases of abuse of procedure arise from the institution of proceedings. But any procedural step in the course of proceedings that have been properly instituted is capable of being an abuse of the court’s process.[30]
[26]Michael Wilson & Partners Ltd v Nicolls (2011) 244 CLR 427, 452 [89]; Batistatos v Roads & Traffic Authority (NSW) (2006) 226 CLR 256, 265 [9] (Gleeson CJ, Hayne and Crennan JJ).
[27](1994) 181 CLR 251, 286.
[28]The passage was approved and adopted in Wilson, Batistatos, and PNJ v The Queen (2009) 252 ALR 612, 613 (French CJ, Gummow, Hayne, Crennan and Kiefel JJ).
[29]Hunter v Chief Constable of the West Midlands Police (1982) AC 529, 536.
[30](1994) 181 CLR 251, 286.
Courts constantly remind themselves that to stay a proceeding as an abuse of process is a grave step, one which is to be taken only with very considerable caution. But if the circumstances plainly demand it, there is no occasion to refrain from so ordering.
In many instances, a conclusion that a particular proceeding constitutes an abuse of process will mean that the claimant is precluded altogether from bringing another proceeding which raises the same claim. But in a rare case, having regard to the considerations mentioned at [72] above, I see no reason why a proceeding might not be stayed so as to preclude a party from bringing a particular proceeding in a particular court (rather than in another court) when to permit that course would both work oppression and injustice upon the opposing party, and would bring the administration of justice into disrepute.
In the present case, the unfairness to the respondent of the appellant being able to bring his sale of land at an undervalue claim in the County Court, thereby avoiding the filter of leave, is very evident.
Further, commencement of the proceeding in the County Court was a patent attempt by the appellant to avoid having to confront the filtering mechanism established by orders made in the Trial Division and in the Federal Court which required that leave of the court be obtained before any proceeding of a particular kind (as described in the orders) be accepted for filing. The idea that the appellant should be permitted to circumvent orders made, for the soundest of reasons, by superior courts is obnoxious. Appellant’s counsel, understandably, could advance no justification for the course taken other than to contend that the appellant could choose where to prosecute his claim. That sound general proposition says nothing when the circumstances of the appellant’s past litigation are taken into account. Commencement of the County Court proceeding should be regarded as a quite distinct challenge to the authority of the Supreme Court and the Federal Court.
It follows, in my opinion, that the County Court would have lent itself to a proceeding which was oppressive and unfair to the respondent, and which attempted to circumvent orders of the superior court of this State, and of another superior court, had it not stayed the proceeding[31] as an abuse of process.
[31]For the moment, so far as it related to the sale of land claim.
In the event, confining myself for the moment to the claim that the land was sold at an undervalue, if the appellant is to bring any proceeding, the consequence of the orders which I would propose is it must be by leave of one of the two superior courts. Whether the appellant would be able to adduce material justifying a grant of leave is another question.
I turn to the claim relating to the sale of plant. By paragraph [3] of the statement of claim the appellant alleges that he was the owner of the business conducted at the Sydney Road premises, and was ‘also the beneficial owner of the plant and equipment which formed part of the business’.
I have no doubt that the reference to beneficial ownership was intended to draw a distinction between legal and beneficial ownership, and thereby to attempt to avoid the consequences of Velissaris v Dynami Pty Ltd (‘Dynami’),[32] a decision of Sifris J which was upheld in this Court. At least since 2007 — as is disclosed by the reasons of Dodds-Streeton J — the appellant has shown an awareness of the difference between legal and beneficial ownership. That awareness is reflected in paragraphs [2] and [3] of the present statement of claim.
[32][2013] VSC 299.
In Dynami, the appellant sued the purchaser of the land, contending that he, the appellant, owned the plant, that the respondent had not been entitled to sell it, and that he should recover its value and consequential loss from that defendant. It is not clear from the reasons of Sifris J what cause of action the appellant pursued. In argument in this Court, counsel for the appellant submitted that there was some indication that the appellant relied upon detinue, but he accepted that the claim may have been laid in conversion.
Counsel was correct in submitting that it was not critical to a claim in conversion that the appellant be the owner of the plant.[33] What was required was that the appellant had possession or an immediate right to possession — in this case, it must have been the latter. But the judge had to address the claim that was advanced. The appellant asserted ownership, which will often coincide with possession, or at least right to immediate possession.
[33]The same would apply had the appellant sued in detinue.
The appellant’s plea that he was the owner of the plant was rejected by Sifris J at first instance. This Court upheld his Honour’s conclusion. Observations seriously critical of the appellant’s lack of truthfulness were made by the trial judge and by Osborn JA.
A number of observations must be made about Dynami. First, as I have already said, ownership was relied upon to found the claim. The debate was as to who owned the plant when it was sold. The proceeding was evidently conducted on the footing that ownership and right to possession were to be treated as co-existent.
Second, the appellant gave evidence that he was the owner of the plant. But in 2006, he had deposed to the contrary in resisting the making of a winding up order. He had sworn that Maryvell owned the plant. At trial before Sifris J, he attempted to explain the contradiction, but his attempt did him more harm than good.
Third, one way in which the appellant explained to Sifris J how he came to be the owner of the plant was that he had been given it by his daughter in 2003.[34] She had acquired it in 1997 when purchasing the land, premises and contents at a mortgagee sale (which took place after the appellant, as mortgagor, had defaulted). The way that the appellant put his case — supported to an extent by his daughter’s evidence — left no apparent room for a case founded upon a split between legal and beneficial ownership of the plant. For present purposes, it is not to the point that the judge, for understandable reasons, rejected their evidence of the asserted gift.
[34]Velissaris v Dynami [2010] VSC 587 [23].
Fourth, the appellant also gave evidence at trial of two other ways in which he had become the owner of the plant. Osborn JA described them as ‘substantially inconsistent’ when giving reasons in the appellant’s unsuccessful appeal from the decision of Sifris J.[35] Neither of them left apparent room for a case founded on there having been a split between legal and beneficial ownership.
[35]Velissaris v Dynami [2013] VSCA 299 [30].
Fifth, acceptance of the appellant’s case must have meant that the respondent had wrongfully converted the plant. But, as Sifris J observed, no such claim had been hitherto made by the appellant — although, I interpolate, he had not been shy of suing the respondent, nor was such a claim now made.
Sixth, notwithstanding what I have thus far said, there is a suggestion in the reasons of Osborn JA that in some way the appellant was contending that there was a split between legal and beneficial ownership. His Honour said this:
48.… the evidence as a whole including the Statement of Affairs to which I have referred supports the conclusion that Maryvell was intended in 1998 to, and did in fact, take over the business and the assets utilised in it were divested from the appellant personally. Mrs Patroungas gave evidence that the purpose of transferring the property utilised in the restaurant business to the trust was first to protect that property if her father went bankrupt and secondly to allow income to be distributed to the trust beneficiaries for taxation purposes.[36] Both these purposes render it likely that not only the freehold land but also ownership of the business and of the plant and equipment were transferred to Maryvell. The appellant’s understanding of the nature of beneficial ownership resulting from the trust arrangement and his subjective belief that the business ‘always was and remained my business’ do not alter this fundamental probability. Further, no contemporaneous records as to the trust arrangements were produced by the appellant to the Court at trial.
49.Secondly, the nature of the transaction pursuant to which the appellant’s daughter is said to have nominated Maryvell as purchaser of the restaurant in 2003, makes it inherently likely that plant and equipment which included substantial fixtures (in particular air conditioning works) were purchased pursuant to the nomination.[37]
[36]The appellant’s affidavit of 3 March 2010 is to substantially the same effect.
[37]Ibid [48]-[49] (emphasis added).
Seventh, Sifris J dealt with the question of damages, as against the prospect that his decision upon liability was overturned. He held, strictly obiter dictum, that the appellant had failed to prove any loss or damage.
Eighth, subject to the matter mentioned at [89], the present proceeding appears to be yet another occasion upon which, a court having rejected a claim put by the appellant in a certain way — dependent largely upon his evidence which has been disbelieved — he has sought to mount a case formulated in a different way so as to avoid the consequences of adverse findings.
In my opinion, Anshun estoppel is of central importance when considering the claim for sale of the plant at an undervalue. If the respondent could successfully call that estoppel in aid, it would be relevant to alleged abuse of process, and to the question whether, rather than grant of a stay, the claim should be dismissed under s 63 of the Civil Procedure Act2010 (Vic). It is convenient to begin with abuse of process.
Abuse of process may be established in the absence of either issue estoppel or an available plea of res judicata. Anshun estoppel[38] may be called in aid by a party applying for a dismissal or stay of proceeding on the ground of abuse of process. In Solak v Registrar of Titles,[39] this Court gave some consideration to the question whether special principles apply where a claim of Anshun estoppel is made by a party who was not a party to earlier litigation. It appears to have been assumed that such a claim could be made. Warren CJ ultimately did not decide the ‘special principles’ question. But her Honour said this:
[38]Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.
[39](2011) 33 VR 40.
This case is one of the relatively few cases where the party asserting Anshun estoppel in the second proceeding was not a party to the first proceeding. The High Court is yet to consider the principles applicable in this situation. However, in Redowood Pty Ltd v Link Market Services Pty Ltd Hodgson JA of the NSW Court of Appeal (with whom Mason P and Bryson AJA agreed) suggested that a stricter test should be applied:
‘In cases where the earlier proceedings and the later proceedings are between the same parties, as in Anshun itself, a finding of unreasonableness in not raising a matter in the earlier proceedings would almost inevitably mean that the later proceedings were oppressive and an abuse of process. Where the parties are different, the test of unreasonableness is still relevant; but in my opinion it must either be considered not conclusive, or else must be understood as involving unreasonableness of such a nature that the later proceedings against different parties are an abuse of process.’
The Court cautioned against applying Anshun estoppel too readily where the party asserting the estoppel was not a party to the first proceeding:
‘… [W]here a plaintiff may have alternative remedies against different parties, to suggest that a plaintiff should generally sue all of them, barring exceptional circumstances, would be to encourage complex and lengthy litigation, and promote the incurring of costs where there is no certainty that a Bullock or Sanderson order would be obtained. ... [P]laintiffs should be permitted reasonable latitude in deciding whether to sue just one defendant, or to join a number of defendants in alternative claims.’
The English Court of Appeal has expressed a similar sentiment. In Aldi Stores Ltd v WSP Group Plc Thomas LJ stated:
‘[T]here is a real public interest in allowing parties a measure of freedom to chose whom they sue in a complex commercial matter and not to give encouragement to bringing a single set of proceedings against a wide range of defendants or to complicate proceedings by cross-claims against parties to the proceedings. That freedom can and should be restricted by appropriate case management.’
All of the Australian cases to which the Court was referred where a defendant who was not a party to the first proceeding was able to successfully rely on Anshun estoppel in the second proceeding involved the estopped plaintiff attempting to assert in the second proceeding some proposition inconsistent with the judgment in the first proceeding. Even if such a collateral attack by the plaintiff is not a necessary precondition for Anshun estoppel, its absence is a significant factor militating against a finding that Anshun estoppel has arisen.[40]
[40]Ibid 54-55 [67]-[70] (citations omitted).
Respecting the appellant’s claim that the plant was sold at an undervalue, his counsel submitted that Dynami created no issue estoppel as would prevent the appellant litigating a claim based upon a plea that there was different legal and beneficial ownership in the plant. For that reason, the judge below was wrong to stay the claim as an abuse of process in reliance upon issue estoppel.
In my view, that submission was correct. The issue in the two trials would not be identical.
Counsel further submitted that the judge had not relied upon Anshun estoppel, and that if that form of estoppel had been raised in argument below his client may have had some answer to it. I accept the first part of that submission; but not the second. As distinct from counsel’s assertion, no material in admissible form was sought to be adduced upon the question.
In my opinion, even if the appellant did not contend, in the Dynami trial, that the legal and beneficial ownership of the plant was different, there was absolutely no justification for him not joining the respondent as defendant to a claim in conversion. It was unreasonable for him not to do so; the unreasonableness being ‘of such a nature that [the County Court proceeding was] an abuse of process’. A claim against the respondent and against the purchaser of the plant — not the purchaser of the land – should have been raised and determined in the one proceeding.[41] The sale was not in doubt. Evidence of the sale by a person having no right to sell, as the case was conducted, would have made out a claim in conversion against both seller and buyer, as counsel for the appellant specifically conceded. It would be an abuse of process to permit the appellant now to pursue a claim in conversion against the respondent. That is so despite the fact that the appellant, in the present proceeding, would not be seeking to mount a collateral attack upon the judgment in Dynami.[42] There is a point at which the conception of freedom to choose who to sue, and when, loses validity. That point, in my opinion, was long past by the time that the appellant initiated and prosecuted Dynami. In my opinion, the fact that the appellant was unrepresented in that proceeding does not excuse his failure to bring in the respondent as a defendant. His long history of litigation arising out of the liquidation should not be ignored.
[41]Likewise if a claim in detinue was to be raised.
[42]That is, accepting that the ownership case mounted in Dynami and the plea in the present proceeding that there was a split in legal and beneficial ownership are not inconsistent.
Does this conclusion, framed in the context of consideration of paragraph 3 of the statement of claim, flow through to the matters pleaded by paragraphs [5], [6], [7], [8] and [9]?
Paragraph [7] pleads conversion. Paragraph [9] pleads loss attributable thereto. The appellant’s attempt to litigate those matters in the County Court proceeding was an abuse of process.
What, then of paragraphs [5], [6] and [8]? Read together with paragraphs [2] and [3], they plead, in substance, that the Trust as beneficial owner of the land, but not of the plant, suffered loss and damage by reason of the respondent, who had legal title to the plant, selling the plant at an undervalue. Such a claim could not be maintained in the face of the plea by paragraphs [2] and [3]. Counsel for the appellant made no submission in support of it.
In Dynami, this Court made the following order:
The appellant, George Velissaris, is restrained from making any further application or taking any step, including the filing or issuing of any new proceeding, in this Court concerning or relating to the ownership of the plant and equipment once used or located at the property known as 333-335 Sydney Road Brunswick sold by the liquidator of Maryvell Investments Pty Ltd ACN 080 327 073 (‘Maryvell’) to Stonnington Online Conveyancing Pty Ltd (‘the tenant’), pursuant to clause 22.7 of the lease dated 20 March 2007 between Maryvell and the tenant, without first obtaining the leave of a judge or associate judge of this Court.
The Court did not have occasion to consider whether, if a claim was raised against the liquidator respecting the sale of the plant, Anshun estoppel could successfully be called in aid by the respondent on an application to stay or dismiss (part of) a proceeding. I have concluded that the respondent was entitled to successfully rely upon such an estoppel.
That takes me to the question of appropriate relief. I consider it necessary to finally dispose of this aspect of the proceeding. The respondent’s summons on which the judge below made his orders sought, in the alternative to relief under r 23.01 of the County Court Civil Procedure Rules2008, that the respondent have summary judgment under s 63(1) of the Civil Procedure Act2010 (Vic). Judgment under that sub-section may be given on a claim or part of a claim if it has ‘no real prospect of success’.
The claim respecting the plant had no chance of success because, if the matter was to proceed, I have concluded that reliance upon an Anshun estoppel would certainly succeed. I would therefore give summary judgment on the claim against the respondent in conversion, and because the statement of claim reveals it to be hopeless I would also dismiss the claim for loss by the Trust arising out of the sale of the plant. Otherwise, for reasons explained, I would stay the proceeding so as to preclude the plaintiff ever again bringing a proceeding against the respondent in the County Court relating in any way to the sale of the land. [43]
[43]If I had not concluded that the sale of equipment claims should be summarily dismissed, then by reason of the order noted at [101] I would have proposed that they be stayed as in the case of the sale of land claim.
Orders
I propose that the following orders be made:
1. Grant leave to appeal, so far as that may be necessary.
2.Allow the appeal. Set aside the orders made below, and in lieu thereof order:
(1)The claims made by the plaintiff by paragraphs [5], [6], [7], [8] and [9] of the statement of claim in the proceeding, so far as they relate to plant and equipment, are dismissed.
(2) The proceeding is otherwise forever stayed.
(3)The plaintiff is restrained from taking any further step in the proceeding, or filing any further proceeding in the County Court against the first defendant regarding or in any way relating to;
(a) the property known as 333-335 Sydney Road, Brunswick:
(b)the business formerly carried on at that address by the deregistered company Maryvell Investments Pty Ltd ACN 080 327 073, or by the plaintiff;
(c)the affairs of the deregistered company Maryvell Investments Pty Ltd ACN 080 327 073.
MANDIE JA:
I agree in the reasons of Ashley JA and with the orders proposed by his Honour.
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