Visy Board Pty Ltd v D'Souza & Ors (No 2)

[2008] VSC 502

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No.  4537 of 2006

VISY BOARD PTY LIMITED (ACN 005 787 913)	Plaintiff
v
STEPHEN D’SOUZA AND OTHERS	Defendants

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JUDGE:	BYRNE J
WHERE HELD:	Melbourne
DATE OF HEARING:	5, 6 November 2008
DATE OF JUDGMENT:	21 November 2008
CASE MAY BE CITED AS:	Visy Board v D’Souza (No. 2)
MEDIUM NEUTRAL CITATION:	[2008] VSC 502

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PRACTICE and PROCEDURE – appeal from Master – plaintiff’s application for summary judgment – whether fiduciary duties owed – question should be decided against factual background – issues as to fact – summary judgment refused

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J Delany SC and Mr C Archibald	Herbert Geer
For the First Defendant	Mr A Panna SC	Alfred P Mayuka
For the Second Defendant	Mr G Moffatt	Middletons
For the Third to Sixth Defendants	Mr JM Selimi	Starnet Legal

HIS HONOUR:

1. I reserved my decision in this appeal from the Master because I thought a careful examination of the voluminous material filed in support of the plaintiff’s summary judgment application might show that the application was well-founded.  Having done so, I am satisfied that it is not.

1. I have summarised the claims of the plaintiffs, Visy Board Pty Ltd and others (‘Visy Board’), in my judgment dealing with the preliminary objection of the defendants to this application.[1]  I will not repeat this.

   [1][2008] VSC 476.

1. The summons which initiated this application was filed as long ago as 19 October 2006.  It seeks declaratory orders that the firstnamed defendant, Stephen D’Souza, and the secondnamed defendant, Mario Murzello, breached fiduciary duties owed to the plaintiffs;  that each of the thirdnamed defendant, Aero Marine Logistics Pty Ltd (AML);  the fourthnamed defendant, Narendra Kapur;  the fifthnamed defendant, Pattathil Govinda; and the sixthnamed defendant, Valerie Faith Maria D’Souza, has knowingly assisted in or participated in these breaches of fiduciary duty and, further, that Mrs D’Souza had been knowingly involved in the receipt of certain property obtained from Visy Board in breach of these fiduciary duties.  Consequential orders including tracing orders were sought.

1. Although the summons was returnable in the Practice Court, it was heard by a Master, and on 17 December 2007 the application was dismissed and leave was given to the defendants to defend.  The Visy Board notice of appeal was filed on 31 January 2008, within the extended time for appeal.  On 22 February 2008 the Master ordered that Visy Board pay the defendants’ costs of the summary judgment application. By notice of appeal filed on 29 February 2008, Visy Board appeals this order too.

1. The principles which I must apply upon such an application are well-established.  Summary judgment will be given only where there is demonstrated no conflict of evidence or uncertainty in the formulation or application of legal principle which warrants a trial.  It is not for the court on such an application to give judgment only because it is of opinion that the plaintiff is likely to succeed at trial.  A defendant is not to be denied a trial except in a clear case;  especially where, as here, the allegations are serious allegations of dishonesty. 

1. The claim of Visy Board is that Mr D’Souza from October 2003 to 8 February 2006 and Mr Murzello from September 2004 to 8 February 2006 did dishonestly interpose AML into shipping contracts which they entered into on behalf of Visy Board as shipper and caused AML to charge Visy Board for services which it did not in fact perform.  They thereby earned for themselves or for other defendants, secret profits in breach of their fiduciary duties as employees. 

1. The first point taken on behalf of Mr D’Souza and Mr Murzello was that they were in fact employed by the secondnamed plaintiff, Visy Industries Holdings Pty Ltd.  This is the holding company within the Visy Board group which in fact engaged in shipping of goods through a number of subsidiaries.  There are in total nine plaintiffs, including Visy Industries, all members of the Visy Board group.  The claimed losses, totalling a little over $2 million, are alleged to have been suffered by one or other of seven of these subsidiaries, not by Visy Industries.  This, it was said, raises an issue whether Mr D’Souza and Mr Murzello owned fiduciary duties to any of the plaintiffs other than their employer.  I was referred to no direct authority on this point.  It was said that this is a legal question which ought to be decided against a background of decided facts, particularly as the contention of the plaintiffs was that these fiduciary duties to the plaintiffs arose “by reason of their respective contracts of employment and/or by reason of their employment and/or by reason of the provision in the course of their employment of services by them to each of the plaintiffs”.[2]

   [2]Amended statement of claim, para 15.

1. I agree that the existence and nature of the suggested fiduciary duties should be determined after the trial of the factual basis upon which they depend.

1. Each of the non-corporate defendants has sworn an affidavit[3] in opposition to the application.  Mr D’Souza and Mr Murzello depose that the interposition of AML as a forwarding agent to organise the shipping documents and to take steps necessary to effect the shipments was required or permitted by their superiors at Visy Board and that these superiors were aware of and approved the retainer of such an agent and the payments which were made to the agent. 

   [3]Mr D’Souza has in fact sworn two affidavits.

1. On behalf of Visy Board a powerful argument was directed against this evidence.  It was denied by the Visy Board managers;  it was inconsistent with the shipping documents;  it was inconsistent with the way that dealings with AML were conducted;  it was inconsistent with the admissions made by these two men when interviewed in the course of the Visy Board investigation into the AML matter.  It was put, too, that Mr D’Souza’s assertions on oath that he had no interest in AML should be rejected. 

1. As I have mentioned at the outset, my function is not to decide the case; it is to decide whether there is a case.  These evidentiary conflicts are for trial.

1. Other factual issues include whether AML ever provided any services for Visy Board and the question of the losses of the plaintiff companies. 

1. It is clear from my examination of the material that these are issues to be tried between Visy Board and Mr D’Souza and Mr Murzello.  Since the claims against the other defendants depend upon findings against those two men, these claims, too, must go to trial.  I mention in passing that, even if adverse findings of fact and law were made against those two, other issues are for resolution in the claims against the other defendants.

1. I conclude, therefore, that the summary judgment application must fail.  The Master was right. This appeal will be dismissed. 

1. The order of the Master as to costs included an order that the plaintiffs pay the costs of Mr D’Souza of the summary judgment on an indemnity basis.  This was because the application against him was said to be doomed to fail and he invited them to withdraw.   No submission was presented as to this matter. In the ordinary case an appeal against a costs order is difficult to maintain.[4]   If the parties wish to present argument, I will hear them.

   [4]See, for example,  Rule 77.05(1)

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