Batistatos v RTA of NSW [2020] NSWSC 1747 | Case summary

Batistatos v RTA of NSW [2020] NSWSC 1747 | Case summary | Zoe

[2]

The nature of the proceedings and this application

By Originating Process filed on 6 July 2020, the Plaintiff, Ms Maria Saravinovska (to whom I will refer, without any disrespect, as "Maria") seeks orders, under ss 175, 233, 247A, 461, 1322 and 1324 of the Corporations Act 2001 (Cth) or alternatively in the Court's equitable jurisdiction, rectifying the register of members of the First Defendant, K R & Sons Pty Ltd ("Company"), and information recorded by the Australian Securities and Investments Commission ("ASIC") in respect of the Company, to record her as the owner of 100 shares held by the late George Saravinovski (to whom I will refer, without disrespect, as "George"). She also seeks an order for access to documents under s 247A of the Corporations Act, which it appears she would have standing to pursue as George's executrix, and an order under s 233 of the Act that the Second Defendant, Louie Saravinovski (to whom I will refer, without disrespect, as "Louie") purchase her shares in the Company, on a specified basis and, in the alternative, an order under s 233 or s 461(1)(k) of the Act that the Company be wound up on the just and equitable ground.
In accordance with an order that I made on 23 November 2020, Maria provided a Statement of Facts, Issues and Contentions (which I marked MFI 1) which identified the matters on which she relied for the relief sought. She also there identified some historical facts, including the incorporation of the Company, the manner in which its shares were held, the fact that it has owned real property at Rockdale since November 1995 and that, from 6 November 2002 until his death on 8 January 2016, George held 100 of the 1,000 shares in the Company and was a director of the Company and, until February 2017, those shares were recorded in ASIC's records as fully paid. Maria also pleads that she has been the executrix of George's estate since his death on 8 January 2016 and that she obtained a grant of probate in respect of that estate on 13 May 2016 and that she has been entitled, from 8 January 2016 or alternatively 13 May 2016, to be recorded in the Company's register of members as the holder of 100 shares held in George's name.
Maria then identifies conduct of Louie or the Company, under Louie's control, which is said to found the various claims, namely the Company's claim in February 2016 that George's estate owed a debt to the Company in respect of alleged unpaid share value for the 100 shares held in George's name and the lodgement of successive forms with ASIC in October 2016 and February 2017 to "correct" ASIC's records to record that George's shares were not beneficially held and subsequently that they were not paid. Maria also relies on a failure, from 14 June 2017, of the Company or Louie to record her as the registered owner of the shares in the Company previously held by George and a failure to cause that matter to be recorded in ASIC's records since 2016. Third, Maria relies on a failure to provide her with Company books and records, in her capacity as the executrix of George's estate, since 2016, and also after later requests were made for access to specified documents. Maria also relies on Louie's alleged failure to call or hold annual general meetings of the Company since 2016, despite her requests as executrix of George's estate that annual general meetings be held, and Maria not being aware of any dividends to shareholders in the Company since 2016 as constituting oppression. She also contends that Louie's operation of the Company since 25 January 2016, or alternatively 23 May 2017, amounts to oppressive conduct. She seeks winding up on the just and equitable ground, by reference to hostility between her and Louie since prior to 2016.
By Interlocutory Process filed on 14 August 2020, the Company, presumably acting under Louie's control, and Louie applied for the proceedings to be dismissed under r 13.4 or r 14.28 of the Uniform Civil Procedure Rules as an abuse of process, or an order that the proceedings be permanently stayed, or that Maria "be estopped from pursuing or advancing these proceedings by operation of an estoppel in pais, including but not lim[it]ed to, an issue estoppel and or Anshun estoppel", and for costs.
Following a hearing in the Corporations Motions List on 23 November 2020, I ordered that the Interlocutory Process be dismissed with costs, and made further directions as to the conduct of the proceedings. These are my reasons for making that order.

[3]

Affidavit evidence

The Company and Louie led voluminous evidence, which I can address briefly since it seems to me that it was not capable of supporting the relief sought. By an affidavit dated 14 August 2020, Louie identified the several parties to the proceedings and exhibited a voluminous bundle of documents relating to earlier proceedings between the parties, including proceedings ("2014-2015 Proceedings") brought by Maria and then by George against Krste ("Chris") Saravinovski, which were heard before Kunc J over several weeks between 10 September 2014 and 5 June 2015, in which his Honour delivered judgment on 12 July 2016 ([2016] NSWSC 964) and the unsuccessful appeal brought by Chris (by his tutor Louie) from that judgment ([2017] NSWCA 85). Louie there referred to several matters in issue in the 2014-2015 Proceedings, including that George personally did not pay for his 10% interest in the Company (although it appears that Chris did so), to the Company's assets, and to costs claimed in a bill of costs in respect of the 2014-2015 Proceedings. Louie also referred to the physical effort, legal resources and emotional effect of the 2014-2015 Proceedings, which I do not under-estimate, and contended that the order sought in these proceedings that Louie purchase the 100 shares in the Company for their "true value" is an order that George or Maria could have sought in the 2014-2015 Proceedings.
Mr Carter, who appeared for Louie in this application, also drew attention to several documents contained in the exhibit to Louie's affidavit which included a Cross-Claim filed by George in the 2014-2015 Proceedings which sought an order that money due and damages claimed by him be charged against the shares in the Company and pleaded the Company's purchase of the property presently owned by it; Chris' Defence to that Cross-Claim which admitted the purchase of that property; the issue of a subpoena in the earlier proceedings for documents relating to the affairs of the Company; cross-examination in the 2014-2015 Proceedings as to whether rent in respect of the Company's premises was paid to the Company and as to George's shareholding in the Company; and other references to the Company in the transcript of the 2014-2015 Proceedings.
Mr Carter also referred to proceedings ("2017 Proceedings") which were subsequently brought before Ward J, in which Maria obtained orders to restrain dealings with Chris' assets in potential breach of several undertakings given to the Court, which were ultimately dismissed by consent after the costs orders made in the 2014-2015 Proceedings were paid ([2020] NSWSC 1232). The Company and Louie also relied on an affidavit dated 8 October 2020 of Mr Gordon Bryant, the solicitor acting for Chris and Louie in the 2017 Proceedings, which annexed pleadings in those proceedings and confirmed that Maria took no steps during those proceedings to pursue a claim in respect of the shareholding in the Company. The Company and Louie also relied on an affidavit dated 29 October 2020 of their solicitor in these proceedings, Mr Vaikom Rajeev, which also referred to aspects of the 2014-2015 Proceedings.
The Company and Louie tendered an affidavit dated 26 June 2020 of Maria filed in these proceedings, which refers to the affairs of the Company since 1995. Plainly, that affidavit was capable of supporting claims that are broader than those which Maria now brings, but that does not expand those claims beyond those now identified in her Statement of Facts, Issues and Contentions (MFI 1). The Company and Louie also tendered an affidavit dated 8 July 2020 of Maria's solicitor, Mr Coffey, and the exhibit to that affidavit which referred to the history of the proceedings; matters which emerged from an ASIC historical search for the Company dated 10 October 2013 and correspondence during 2013 as to the value of the land held by the Company; and further steps which took place in the 2014-2015 Proceedings and the 2017 Proceedings.
Maria in turn read Mr Coffey's affidavit dated 21 September 2020 which also referred to aspects of the 2014-2015 Proceedings; to the basis of Maria's claim to the shares in the Company, and to her having obtained a grant of probate of George's estate on 13 May 2016, after the 2014-2015 Proceedings had concluded before Kunc J and his Honour's judgment was reserved; and to correspondence between the parties' legal representatives in early 2016 onwards. Mr Coffey there contended that Maria's entitlement to be registered as the shareholder of 100 shares in the Company did not arise until after George's death on 8 January 2016, by the time the hearing in the 2014-2015 Proceedings had concluded and judgment was reserved; Louie had subsequently failed to record Maria as the holder of the shares held by George; Louie had subsequently failed or refused to provide Maria with books and records of the Company or to hold an annual general meeting, since Mr Coffey's request by letter dated 14 June 2017, and Maria had no cause of action in respect of those matters at the time of commencement or hearing of the 2014-2015 Proceedings; and the disputed forms were also lodged with ASIC concerning George's shareholding after the 2014-2015 Proceedings. Maria also relied on a further affidavit dated 19 October 2020 of Mr Coffey, which referred to aspects of the conduct of the 2017 Proceedings.

[4]

The parties' submissions and determination

The Company and Louie relied on detailed written and further oral submissions made by Mr Carter. Maria relied on somewhat briefer written submissions made by Ms Avery-Williams and I did not call upon her for oral submissions.
Mr Carter outlined, at some length, the relationship between the parties and the background to the several disputes. He referred to well-established principles as to the Court's powers under s 56-58 of the Civil Procedure Act 2005 (NSW) and to the Court's power to give directions under s 61 of the Civil Procedure Act and to stay proceedings before it under s 67 of the Civil Procedure Act. Mr Carter also referred to the Court's power to dismiss proceedings which are an abuse of the Court's process under UCPR r 13.4 or to strike out pleadings which are an abuse of process under UCPR r 14.28. Mr Carter also referred to well-known authorities concerning the Court's case management powers including the observations of the Court of Appeal in Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230, a decision which has been cited on many occasions.
Mr Carter also made careful submissions as to the scope of Anshun estoppel, by reference to the decision in Henderson v Henderson (1843) 3 Hare 100; (1843) 67 ER 313; the High Court's decision in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45; and the subsequent review of the relevant principles by the Court of Appeal in Ekes v Commonwealth Bank of Australia [2014] NSWCA 336 and Conference and Exhibition Organisers Pty Ltd v Johnson [2016] NSWCA 118. That principle was summarised by Sir James Wigram VC in Henderson v Henderson above at 319, quoted by Gibbs CJ, Mason and Aickin JJ in Anshun v Port of Melbourne Authority above at 598 as follows: "where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case." Whether an Anshun estoppel is established depends on whether it was unreasonable for a party not to raise a matter in earlier proceedings and that must be determined in all the circumstances, and in the context of expectations as to the manner in which litigation should be conducted.
Mr Carter also summarised the case law as to issue estoppel, including Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231, and also referred to principles of abuse of process, including the decisions of the High Court in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129 and Batistatos v RTA of NSW (2006) CLR 256; HCA 27; [2006]; the House of Lord's decision in Johnson v Gore Wood & Co [2000] UKHL 65; (2000) 1 All ER 481 and the application of those authorities by Barrett J in ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue (2003) 59 NSWLR 196; [2003] NSWSC 697.
These principles are summarised in Ritchie's Uniform Civil Procedure NSW at [14.28.17] as follows: "Proceedings will also be regarded as an abuse of process to the extent that they involve an attempt to relitigate particular issues that were determined, either explicitly or necessarily, in earlier judicial proceedings (including proceedings determined by consent). Such a determination gives rise to issue estoppel: Blair & Perpetual Trustee Co Ltd v Curran (Adam's will) (1939) 62 CLR 464; Noall v Middleton [1961] VR 285; Commissioner for Railways v Bielewicz [1963] NSWR 482 at 486; [1963] SR (NSW) 466 at 468; Carl Ziess Stiftung v Rayner (No 3) [1970] Ch 506; [1969] 3 WLR 991 … The scope of the estoppel is confined to those issues that were directly involved in the actual decision made in the previous proceeding (and does not include every finding that was made): Murphy v Abi-Saab(1995) 37 NSWLR 280; BC 9505070. Where the basis for issue estoppel has been made out, the court retains an overriding discretion to permit the proceedings to continue, although this discretion is likely to be exercised only in exceptional circumstances: Arnold v National Westminster Bank plc [1991] 2 AC 93; [1991] 3 All ER 41; Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1 at 30; [2001] 1 All ER 481 at 498 per Bingham LJ."
In Ekes v Commonwealth Bank of Australia above, Bathurst CJ observed (at [112]) that "An issue estoppel will only arise in respect of those matters which a primary decree, order or judgment necessarily established as the legal foundation for the decision and nothing but that which is legally indispensable to the conclusion is thus finally closed or precluded … In the case of a judgment by consent this may be productive of some difficulty … a court will examine all evidence that is available and admissible and with the aid of such material ascertain any and what adjudication of matters in dispute was expressly or necessarily involved in the actual decision assented to." I have here drawn on my summary of the applicable principles in Saba v Plumb [2017] NSWSC 622 at [117]ff. It is not necessary to address these principles in any greater detail, since it seems to me that the factual basis for the application of these principles is not established here.
Mr Carter submits that the evidence discloses that the value of the Company's shares was considered by both parties during the 2014-2015 Proceedings; that George was receiving legal advice as to the position in respect of the Company in 2014; and that the value of the Company's shares was raised in the 2017 Proceedings. Mr Carter acknowledges that the Company was not a party to the 2014-2015 Proceedings, but I accept that is not determinative where George or Maria could have sought to join it as a party to those proceedings. Mr Carter submits that the family members expended extraordinary time, effort and cost in the 2014-2015 and 2017 Proceedings and I accept that proposition given the length of the 2014-2015 Proceedings. Mr Carter also submits that Maria acted "unreasonably" by holding back pursuing the issues in the 2014-2015 Proceedings, or alternatively in the 2017 Proceedings. That proposition is not established as a matter of fact, for the reasons noted below. Mr Carter also points to the fact that Chris is now too old to give evidence in the proceedings, but it seems to me that is of little significance where his conduct is not in issue in them.
Mr Carter also submits that Louie would suffer prejudice where a contested hearing would not be heard until 2021, some 10 years after Maria and George commenced their respective claims. That complaint would have greater force if the present proceedings did not relate to more recent steps that Louie had taken, potentially inconsistent with Maria's rights as executor of George's estate, after judgment was reserved in the 2014-2015 Proceedings. That proposition also reflects a wider aspect of Mr Carter's submissions, that a claim for the Company's shares could have been pursued in the 2014-2015 Proceedings.
Ms Avery-Williams also refers, in her written submissions, to the relationship between the parties and the history of the earlier proceedings. Ms Avery-Williams submits that Anshun estoppel operates to prevent the assertion of a claim, or raising of an issue of fact or law, if the claim or issue was so connected with the subject matter of the first proceeding to have made it unreasonable for it not to have been made or raised in that earlier proceeding. Again, it seems to me that that is not established here, in respect of the 2014-2015 Proceedings, where the issues that are raised in these proceedings largely occurred after judgment was reserved. It is also not established in respect of the 2017 Proceedings, because of the narrow scope of those proceedings. Ms Avery-Williams submits that, for an issue estoppel to arise, the Defendants would need to establish that the same question arises in these proceedings as has already been resolved in earlier proceedings between the same parties in a final judicial decision. It seems to me that that there is limited scope for issue estoppel here, where the issues raised by Maria in these proceedings substantially relate to Louie's conduct after the death of George, which occurred after judgment was reserved in the 2014-2015 Proceedings.
Ms Avery-Williams submits, and I accept, that the concept of abuse of process would here overlap with the issues that arise in respect of Anshun estoppel: UBS AG v Tyne (2018) 360 ALR 184; [2018] HCA 45 at [68]. There would here, in my view, be no abuse of process in pursuing issues which Maria was free to pursue, where there was no Anshun estoppel or issue estoppel arising from the 2014-2015 Proceedings or the 2017 Proceedings, and where she sought relief in respect of seriously arguable claims that arose from matters that had arisen after judgment was reserved in the 2014-2015 Proceedings and were reasonably not raised in the 2017 Proceedings.
Ms Avery-Williams in turn submits that the causes of action and factual substratum of the present proceedings are different from the 2014-2015 Proceedings and the 2017 Proceedings, primarily because Maria did not have the interest which she now claims in the shares of the Company as executor of George's estate until George's death, which did not occur until after judgment in the 2014-2015 Proceedings was reserved, and the other issues to which I have referred above also did not occur until after that time. It does not seem to me that that matter is displaced by the fact that there were references, in other contexts, to the value of the shares in the Company in the 2014-2015 Proceedings. Ms Avery-Williams also points out that some of the conduct on which Maria relies, including amendments to records maintained by ASIC, occurred after judgment in the 2014-2015 Proceedings, including the purported correction to ASIC's records to record George's shares as initially "not beneficially held" and then as "not paid". Ms Avery-Williams rightly observes those matters could not have been raised in the 2014-2015 Proceedings because they had not occurred until after the delivery of the judgment of Kunc J.
Ms Avery-Williams also points to the scope of the 2017 Proceedings; the position taken by the solicitor for Chris and Louie in those proceedings that they would oppose any amendment by Maria to include claims against the Company or seeking to have such claims dealt with or heard together with those proceedings; and submits, in any event, that no issue estoppel or Anshun estoppel can arise in relation to the proceedings so far as they were dismissed by consent, by reason of s 91 of the Civil Procedure Act.
I recognise that, had Louie transferred George's shares to Maria on his death, and not subsequently taken steps to seek to alter ASIC's records from treating the shares as fully paid to treating them as not beneficially owned or not paid, then it might well not have been open to Maria to raise claims relating to those shares in these proceedings, by reason of an Anshun estoppel or principles of abuse of process. It seems to me that that proposition has little force where, after judgment in the 2014-2015 Proceedings had been reserved, Louie took further steps which potentially deprived Maria of her rights as executor of George's estate. Those matters could not reasonably have been agitated in the 2014-2015 Proceedings, where they occurred after judgment was reserved them. It does not seem to me to that Maria could be said to have acted unreasonably, by not seeking to re-open proceedings to introduce new events in a later time period, after a hearing of very complex proceedings over many days, further delaying a judgment in them. Indeed, that approach would have had the perverse result (in the unlikely event that the Court had acceded to it) that a final resolution of the proceedings would be continuously deferred to add and resolve new issues, for so long as Louie took new steps that potentially infringed George's or her rights. It also seems to me that Maria also could not reasonably have been expected to raise these matters in the 2017 Proceedings, which were primarily directed to a narrow issue, whether Chris should be permitted to dispose of his assets to Louie in possible breach of earlier undertakings given by the Court.
It seems to me that, as I noted in submissions, Mr Carter's contentions ultimately reduced to the proposition that, once George and Maria had not sought to require Louie to acquire their shares in the Company in the 2014-2015 Proceedings or the 2017 Proceedings, then they were debarred from seeking to protect their rights in respect of those shares against new acts of potential oppression by Louie by subsequent proceedings. Mr Carter fairly accepted that that proposition had little attraction as a general rule, but supported it in the context of substantial proceedings between family members. It seems to me that that proposition is also unsustainable in that context.
For all these reasons, I was satisfied that the matters raised in these proceedings were not the subject of an issue estoppel (at least of any scope that would prevent the continuance of the proceedings) or an Anshun estoppel, and did not amount to an abuse of process, and that they were properly pursued in these separate proceedings so far as they raise issues of oppression and corporate governance. For these reasons, I made orders dismissing the Interlocutory Process with costs.

Batistatos v RTA of NSW

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Cases Cited (19)