Zabusky & Ors v Virgtel Limited - [2021] QSC 17

SUPREME COURT OF QUEENSLAND

CITATION:

Zabusky & Ors v Virgtel Limited [2021] QSC 17

PARTIES:

HARVEY ZABUSKY

(first plaintiff/first respondent)
EREZ ZABUSKY
(second plaintiff/second respondent)
D.A. WERBER LIMITED (RC: 26128)

(third plaintiff/third respondent)

v

VIRGTEL LIMITED (IBC NO 311178)

(defendant/applicant)

FILE NO/S:

BS No 8849 of 2020

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:
Supreme Court at Brisbane

DELIVERED ON:

12 February 2021

DELIVERED AT:

Rockhampton

HEARING DATE:

10 December 2020

JUDGE:

Crow J

ORDER:

1.   The proceedings, BS No 8849 of 2020, be permanently stayed.

2.   If the parties cannot agree as to the appropriate costs order, then they are to file and serve submissions as follows:

a.   The respondents within seven days of the delivery of these reasons; and

b.   The applicant within 14 days of the delivery of these reasons.

CATCHWORDS:

COURTS AND JUDGES – COURTS – JURISDICTION AND POWERS – GENERAL PRINCIPLES – where the respondents commenced proceedings in Queensland to enforce an order of the Federal High Court of Nigeria against the applicant company – where the applicant company seeks to have the proceedings permanently stayed on the basis there is insufficient, or no jurisdictional nexus at all with Queensland – where the applicant contends that Queensland is clearly the inappropriate forum – where the applicant has no real assets or chattels in Queensland or Australia – where the respondent contends that monies, totalling over $1 million, contained in two trust accounts pursuant to orders of the Supreme Court of Queensland are assets of the applicant – whether the trust monies are assets of the applicant – whether there is sufficient jurisdictional nexus to Queensland – whether Queensland is the appropriate forum

Harmer v Commissioner of Taxation (1991) 173 CLR 264; [1991] HCA 51, followed
Voth v Milandra Flour Mills Pty Ltd (1990) 171 CLR 538; [1990] FCA 55, followed
White v Verkouille (1990) 2 Qd R 191; [1989] QSC 421, cited
Zabusky & Anor v Van Leeuwen & Anor [2011] QSC 270, cited

COUNSEL:
S S Monks for the applicant

C Wilson for the respondents

SOLICITORS:
James Conomos Lawyers for the applicant

Hayes & Co Lawyers for the respondents

The current application of the defendant for a permanent stay of proceedings is the most recent instalment of a decades-long, multi-jurisdictional litigation between the first plaintiff, Mr Harvey Zabusky (and interests associated with him) and, now that both Mr Hendrik van Leeuwen and Mrs Maria van Hal have passed away, Mr Paul Simonet (and interests associated with him).
The history of the first several years of litigation between 2005 and 2011 is described by Daubney J in Zabusky & Anor v Van Leeuwen & Anor [2011] QSC 270. Since then there have been several judgments by this court and the Court of Appeal, a final judgment of the Federal High Court of Nigeria on 28 November 2019 (“Nigerian judgment”) and judgments of Bannister J in the British Virgin Islands. For completeness’ sake, there were also proceedings instituted in…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] QSC 17
Decision Date: 12 February 2021

CaseChat Overview and Summary

In the case of Zabusky & Ors v Virgtel Limited, the applicants sought to enforce a judgment from the Federal High Court of Nigeria against Virgtel, a company incorporated in the British Virgin Islands, in the Supreme Court of Queensland. The applicants filed an originating application in the Brisbane Supreme Court to enforce the Nigerian judgment. Virgtel contested the jurisdiction of the Queensland court and applied for the proceedings to be permanently stayed on the basis of insufficient jurisdictional nexus or forum non conveniens.

The primary legal issue was whether there was a sufficient jurisdictional nexus between the claim and the Supreme Court of Queensland. The court had to determine if the trust funds held by solicitors pursuant to two specific court orders were assets of Virgtel in Queensland. The applicants argued that the trust funds were Queensland assets of Virgtel, whereas Virgtel contended that it had no assets in Queensland and that the court was an inappropriate forum.

The court found that the trust funds were not assets of Virgtel, as none of the money held in trust was contributed by Virgtel. The court relied on the High Court's decision in Harmer v Commissioner of Taxation (1991) 173 CLR 264, which held that until the resolution of competing claims in inter-pleader proceedings, none of the claimants were presently entitled to an interest in the amount deposited within the meaning of s 97(1) of the Income Tax Assessment Act 1936 (Cth). The court concluded that the trust funds held by solicitors were held in trust for statutory purposes and not as assets of Virgtel.

The court decided that there was no sufficient jurisdictional nexus to Queensland, and Queensland was an inappropriate forum. Consequently, the court permanently stayed the proceedings.

The final orders were that the proceedings be permanently stayed and if the parties could not agree on the appropriate costs order, they were to file and serve submissions within specified timeframes.

Orders

Orders of the court

1. The proceedings, BS No 8849 of 2020, be permanently stayed.

2. If the parties cannot agree as to the appropriate costs order, then they are to file and serve submissions as follows:

a. The respondents within seven days of the delivery of these reasons; and

b. The applicant within 14 days of the delivery of these reasons.

Background

Background to the litigation

Therefore, to enforce the judgment in Queensland, the plaintiffs must rely upon the common law rules permitting enforcement of foreign money judgments.[5] [5]White v Verkouille (1990) 2 Qd R 191 at 194 per McPherson J.Background On 5 August 2020 the plaintiffs, as applicants, filed an originating application in the Brisbane Supreme Court (BS No 8466 of 2020) seeking, inter alia, substituted service upon the defendant, Virgtel, a company incorporated in the British Virgin Islands. On 7 August 2020, Boddice J made orders for substituted service upon the respondent requiring service of the Claim and Statement of Claim to be effected upon the respondent by way of: (a)courier service to the registered office of defendant in the British Virgin Islands; (b)attachment to an email sent by the plaintiff’s solicitor to the email address of the Registered Agent of defendant in the British Virgin Islands; and(c)email attaching the Claim and Statement of Claim sent by the plaintiff’s solicitors to Mr Paul Simonet, a director of the defendant, Virgtel. On the 17 August 2020, the plaintiffs then filed a Claim and Statement of Claim, to bring a claim at common law for the enforcement of the Nigerian Judgment, initiating the proceeding presently being dealt with (BS No 8849 of 2020). A conditional notice of intention to defend was filed on 15 October 2020, in which the defendant disputed the jurisdiction of the Supreme Court of Queensland. On 29 October 2020, the defendant filed an application seeking:[6] [6]Defendant’s application filed 29 October 2020. 1. A declaration pursuant to rule 16(b) of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) that the originating process has not been properly served upon the defendant. 2. In the alternative to paragraph 1, an order pursuant to rule 16(f) of the UCPR, rule 127 of the UCPR, or the inherent jurisdiction of the court, that the service of originating process be set aside because of the plaintiff’s non-compliance with: a. rule 128 UCPR; and b. paragraph 2 of the orders dated 7 August 2020 made by Boddice J in proceeding BS No 8466 of 2020. 3. Further or alternatively to paragraphs 1 and 2, an order pursuant to rule 16(g) UCPR, rule 127 UCPR, or the inherent jurisdiction of the court, that the proceeding be stayed because: a. the originating process had not been properly served; or b. there was and is no jurisdictional nexus, or no sufficient jurisdictional is insufficient jurisdictional nexus, between the claim and the Supreme Court of Queensland; or c. the Supreme Court of Queensland is a clearly inappropriate forum. Issues pertaining to service were later cured and as such the defendant does not pursue the orders sought in paragraph 1, 2 and 3(a) of their application. Virgtel submits that as they have no assets in Queensland and will never have any assets in Queensland, therefore the proceeding has no utility. This renders Queensland an inappropriate forum within the meaning of r 127(2)(b) of the UCPR and as such the court should stay the proceeding permanently on the basis of forum non conveniens.Forum non conveniens

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The source of those funds is set out the reasons of Daubney J in Zabusky & Anor v Van Leeuwin & Anor [2011] QSC 270 at [27]. As found by Daubney J, Virgtel had been entirely bereft of cash since 2001 and accordingly, money was provided personally by Mr Van Leeuwin, Mr Van Leeuwin’s late wife, Ms Van Hal, and companies controlled by Mr Van Leeuwin, namely Viscaya and Amadora SA.Conclusion The plaintiffs find themselves in the difficult position of asserting that trust funds held by solicitors pursuant to two specific court orders are Queensland assets of Virgtel in circumstances where none of the money held in trust was contributed by Virgtel. In Harmer v Commissioner of Taxation (1991) 173 CLR 264 (“Harmer”), Mr Harmer, a solicitor (and two other solicitors), received a sum of money that had been paid into court by a company in inter-pleader proceedings. The money was then placed into an interest-bearing account pending the determination of the proceedings. The High Court determined that until the resolution of the competing claims in the inter-pleader proceedings, none of the claimants were presently entitled to an interest in the amount deposited within the meaning of s 97(1) of the Income Tax Assessment Act 1936 (Cth) since the money was not subject to an existing trust at the time it was deposited into the account.[15] Accordingly, the solicitors were required to pay tax upon the interest derived from the interest bearing accounts. [15]Harmer v Commissioner of Taxation (1991) 173 CLR 264. In Harmer the High Court said:[16]“There are many circumstances in which trust money can be paid into court by a trustee either pursuant to an order made on the application of a beneficiary or pursuant to an application made by the trustee himself or herself…In such a case, the funds paid into court remain subject to any pre-existing trust notwithstanding the payment in. If some person or persons were presently entitled to the corpus or income before payment in, the fact of payment in to await the orders of the court will not, of itself, displace that present entitlement. If entitlement is disputed, the function of the court will be to identify existing interests in the money paid into court rather than to create new ones.”(Footnotes omitted.) [16]Harmer v Commissioner of Taxation (1991) 173 CLR 264 at 272. The High Court went on to say:[17] “As the orders actually made demonstrate, the function of the court in the present case was to determine the conflicting claims and counterclaims of the claimants as against Riverhall as a debtor. The moneys paid into court were not themselves the subject matter of dispute but were held to satisfy any order, including any order for costs, made by the court consequent upon its determination of those conflicting claims and counterclaims. Once the moneys were deposited with the Building Society in the names of the appellants holding as trustees, the moneys were held by them in that capacity to be dealt with in accordance with the order of the court and not otherwise. It is unnecessary to consider whether the contingent interests of the claimants in the moneys paid into court could be aggregated into a totality of beneficial ownership or whether the powers of the Supreme Court to make orders affecting the moneys, including orders as to costs, meant that one of the elements of an ordinary non-purpose trust was lacking. It suffices to say that the trust upon which the moneys were held was a trust for statutory purposes…and that the legislative provisions, including Rules of Court, applicable to govern the payment of the moneys into court and their subsequent application effectively overrode any need of that element.”(Footnotes omitted.) [17]Harmer v Commissioner of Taxation (1991) 173 CLR 264 at 274.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Zabusky & Ors v Virgtel Limited [2021] QSC 17
PARTIES:	HARVEY ZABUSKY (first plaintiff/first respondent) EREZ ZABUSKY (second plaintiff/second respondent) D.A. WERBER LIMITED (RC: 26128) (third plaintiff/third respondent) v VIRGTEL LIMITED (IBC NO 311178) (defendant/applicant)
FILE NO/S:	BS No 8849 of 2020
DIVISION:	Trial Division
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	12 February 2021
DELIVERED AT:	Rockhampton
HEARING DATE:	10 December 2020
JUDGE:	Crow J
ORDER:	1. The proceedings, BS No 8849 of 2020, be permanently stayed. 2. If the parties cannot agree as to the appropriate costs order, then they are to file and serve submissions as follows: a. The respondents within seven days of the delivery of these reasons; and b. The applicant within 14 days of the delivery of these reasons.
CATCHWORDS:	COURTS AND JUDGES – COURTS – JURISDICTION AND POWERS – GENERAL PRINCIPLES – where the respondents commenced proceedings in Queensland to enforce an order of the Federal High Court of Nigeria against the applicant company – where the applicant company seeks to have the proceedings permanently stayed on the basis there is insufficient, or no jurisdictional nexus at all with Queensland – where the applicant contends that Queensland is clearly the inappropriate forum – where the applicant has no real assets or chattels in Queensland or Australia – where the respondent contends that monies, totalling over $1 million, contained in two trust accounts pursuant to orders of the Supreme Court of Queensland are assets of the applicant – whether the trust monies are assets of the applicant – whether there is sufficient jurisdictional nexus to Queensland – whether Queensland is the appropriate forum Harmer v Commissioner of Taxation (1991) 173 CLR 264; [1991] HCA 51, followed Voth v Milandra Flour Mills Pty Ltd (1990) 171 CLR 538; [1990] FCA 55, followed White v Verkouille (1990) 2 Qd R 191; [1989] QSC 421, cited Zabusky & Anor v Van Leeuwen & Anor [2011] QSC 270, cited
COUNSEL:	S S Monks for the applicant C Wilson for the respondents
SOLICITORS:	James Conomos Lawyers for the applicant Hayes & Co Lawyers for the respondents