Antoun v Russo

Supreme Court of NSW|2018-10-31|Before: Adamson J

Solicitors: Hanna Legal (First, Second and Third Defendants) Henry William Lawyers (Fourth Defendant) File Number(s): 2018/218281

Introduction

By statement of claim filed on 16 July 2018, Nemer Antoun (the plaintiff) commenced proceedings against Angelo Russo (the first defendant), Wentworth Williams & Associates Pty Ltd (the second defendant), Filomina Kyriacou (the third defendant) and St George Illawarra Leagues Football Club (the fourth defendant).
The first, second and third defendants (the first applicants) filed a notice of motion on 10 October 2018 for an order dismissing the proceeding pursuant to Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 13.4; or, in the alternative, an order that the statement of claim and proposed amended statement of claim be struck out. The fourth defendant (the second applicant) filed a notice of motion seeking similar relief on 19 October 2018.

Analysis of the pleadings

Mr Dean, who appeared on behalf of the first applicants, contended that both the statement of claim and the amended statement of claim were bad in form and lacking in substance. He submitted that because there was no cause of action disclosed as a matter of substance it would be futile to grant leave to the plaintiff to amend the pleading and that the proceedings ought be dismissed. Mr Wirth, who appeared on behalf of the second applicant, adopted Mr Dean's submissions and made further submissions.
In substance, the plaintiff makes the following three complaints against the defendants in the pleadings. I use the term "complaint" because the plaintiff had chosen to adopt the language of defamation proceedings where reference is commonly made to "the matter complained of". The term, "the matter complained of" is not apposite in the present case, which contains no action for defamation.

The first complaint

The plaintiff alleged that on 11 July 2012 Mr Russo, an accountant, fraudulently signed a document which was submitted to the Australian Securities and Investment Commission (ASIC) which had the effect of transferring a share owned by The Transformer Group Pty Ltd (Transformer) in Global Human Resources Group Pty Ltd (Global) to GHR No. 3 Pty Ltd (GHR No. 3). The second defendant is the accountancy firm in which Mr Russo worked and the third defendant is the principal of that firm.
The plaintiff alleged that he was the sole director of Transformer in July 2012 and did not authorise the transfer of its share in Global to GHR No. 3.
ASIC company searches record that: 1. The plaintiff was the sole director of Transformer from 25 February 2008 until 28 June 2013; 2. Transformer had a single share; 3. The plaintiff acquired Transformer's single share on 27 February 2008 and transferred it on 30 April 2014; 4. Transformer owned one of the two shares in Global; 5. Transformer's share in Global was transferred to GHR No. 3 in July 2012.
Mr Dean submitted that, even if the plaintiff's allegation were true and expressed in terms which were sufficient to overcome any formal defect in pleading, the plaintiff would not have a cause of action. He relied on the principle of "reflective loss" and referred to VPlus Holdings Pty Ltd v Bank of Western Australia Ltd [2012] NSWSC 1327; (2012) 91 ACSR 545 in which Stevenson J dismissed claims brought by shareholders in respect of loss suffered by a company in which they held shares. His Honour said: "[28] The relevant principle is that a shareholder of a company cannot recover damages merely because the company has suffered damage, and cannot recover damages that are merely a reflection of a loss suffered by the company. A shareholder may only recover damages for loss suffered personally that is separate and distinct from the loss of the company: Chen v Karandonis [2002] NSWCA 412 at [34]-[53] (per Beazley JA, with whom Heydon and Hodgson JJA agreed) and Ballard v Multiplex [2008] NSWSC 1019 ; (2008) 68 ACSR 208; per McDougall J at [32]-[41]. . . . [34] The policy underlying the reflective loss rule (see [29] above) is as applicable in a liquidation as in the case of a solvent company. In a liquidation, a claim brought by a shareholder for a loss which in substance is the same as the company has suffered, will equally expose the company to double recovery, or allow the claimant shareholder to recover, to the exclusion or reduction of a claim brought by the liquidator in the interests of creditors or contributories as a whole."
The plaintiff did not address this submission in his response but merely asserted that he came to the court "for justice".
I accept Mr Dean's submission that the first complaint does not disclose any reasonable cause of action on the part of the plaintiff against the first applicants by reason of the principle of reflective loss. If anyone has a right to sue for the alleged wrong done by the first applicants in relation to the transfer of Transformer's shares in Global, it is Transformer and not its shareholders. The interests of justice do not favour the maintenance of proceedings which are hopeless because they are misconceived as a matter of law. Accordingly, this part of the proceedings ought be dismissed.

The second and third complaints

The second complaint made by the plaintiff in the pleading is that the second and third defendants sent text messages to the plaintiff which contained messages of abuse and asked him, in direct terms, to go away.
In order to appreciate the context in which the text messages were sent, it is necessary to provide some background to the allegations. I was informed that the plaintiff's brother was murdered but that the alleged perpetrators have not yet been tried. It appears that the plaintiff wishes to avenge his brother's death. The plaintiff alleges that there is some connection between the first applicants and those responsible for his brother's murder. The only allegation made against the second applicant is that it received sponsorship monies from the second defendant. This matter is disputed by the second applicant on the basis that it is another rugby league entity which receives sponsorship from the second defendant.
The third complaint made by the plaintiff in the pleading is that he was forced by third parties to sign a letter on 13 July 2017 in which he apologised to each of the defendants and in which he retracted the serious allegations he had made against them. He did not suggest that any of the defendants were responsible for the duress applied to him but he intimated that he believed that the first applicants were associated with those who were responsible for imposing the duress.
I understood from the plaintiff's submissions on this aspect of the pleading that he has been demonstrating in the street by wearing a sandwich board on which appear statements which criticised the defendants (I understood this to be the subject of separate defamation proceedings brought by the first and second defendants against the plaintiff in this Court). He has been making statements concerning the first applicants for what he alleges to be their association with persons who may have been involved in his brother's murder and against the fourth defendant because it is said to receive sponsorship from the second defendant. The plaintiff submitted that he felt that he had been "denied a voice" and that this was why he was bringing the second and third complaints to this Court.
This Court is not a forum for disgruntled individuals without causes of action. The jurisdiction of this Court includes a jurisdiction to decide whether maintainable causes of action have been established and, if so, to grant remedies accordingly. The applicants have persuaded me that the plaintiff has no maintainable cause of action against any of them on the basis of any allegations in the statement of claim or the amended statement of claim. There is thus no utility in granting leave to the plaintiff to replead the amended statement of claim in better form, or in directing the Registrar to refer the plaintiff to the Pro Bono Panel for the provision of pro bono legal assistance. Having regard to the analysis of the pleadings set out above, I do not consider that there are any formal amendments that can be made which would produce a pleading which would disclose any reasonable cause of action. In these circumstances, I propose to dismiss the proceedings against all defendants pursuant to UCPR, r 13.4(1)(b): namely, that no reasonable cause of action is disclosed.

Costs

The first and second applicants sought costs of the notices of motion on the basis of the general rule that costs follow the event: UCPR, r 42.1. The plaintiff opposed an order for costs on the grounds of impecuniosity. Impecuniosity does not constitute a reason why a costs order ought not be made although it might affect the preparedness of the successful party, or parties, to enforce it. I see no reason to depart from the general rule.

Orders

For the reasons given above, I make the following orders: 1. Dismiss the proceedings pursuant to Uniform Civil Procedure Rules 2005 (NSW), r 13.4(1)(b). 2. Order the plaintiff to pay the defendants' costs of the proceedings, including the notice of motion filed by the first, second and third defendants on 10 October 2018 and by the fourth defendant on 19 October 2018.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 November 2018

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