Bruce Maples v Siteberg

Judgment 1HIS HONOUR: The first defendant (Siteberg) moves for an order that the proceedings be stayed until the plaintiff (Mr Maples) pays costs that have been ordered to be paid by him, and have been assessed, in other proceedings.

The factual background 2The parties agreed that the relevant factual background could be found in a decision given by Ball J on 26 November 2010: Siteberg v Maples [2010] NSWSC 1344. It is convenient, accordingly, to set out, to the extent relevant as findings of fact in these reasons, what his Honour said at [3] to [21] of these reasons: 3Siteberg is a non-residential building maintenance and renovations company. Its directors and shareholders are Mr Tenish and his wife. Since 2008 Mr Maples, either in his own capacity or on behalf of a company known as Atco Building Structures Pty Ltd, has commenced a number of legal proceedings against Siteberg, following the breakdown of a business relationship between Mr Maples and Mr Tenish. Mr Maples has been a director of Atco since 13 November 2009 and was a director before 19 January 2007. He was Atco's general manager between 19 January 2007 and 13 November 2009 and, in that capacity, was responsible for its day-to-day activities. 4 Mr Tenish began working with Mr Maples in September 2006. At that time, Atco was performing a number of contracts for what was then known as the Department of Commerce and Mr Tenish was providing services to Atco in connection with those contracts. It appears that the Department was dissatisfied with the services provided by Atco and, on 15 March 2007, Mr Tenish, on behalf of Atco, signed two contractor performance reports prepared by the Department in which he acknowledged that Atco's performance on the relevant projects was unsatisfactory. Subsequently, the Department removed Atco as an authorised contractor. Mr Maples blames Mr Tenish for that happening. 5 Despite those events, Mr Tenish and Mr Maples remained at that time on quite good terms. Mr Tenish proposed that, in the future, he and Mr Maples tender for Department contracts through Siteberg. Mr Maples suggested that what they should do was establish a trust through which they could carry on that business. Mr Tenish says that, at the time, he did not understand what a trust was, but that he accepted Mr Maples' suggestion. As a consequence, they established a unit trust known as the Southern Highlands Trust, with Siteberg as the trustee and Mr Maples as the settlor. A trust deed was executed on 2 November 2007 between Siteberg and Mr Maples. Siteberg and Mr Maples each held 50 per cent of the units in the trust. Siteberg, as trustee, engaged Mr Maples as an executive project manager for which he was paid an hourly rate together with other expenses. Siteberg was successful in winning a number of tenders from the Department of Commerce. 6 The relationship between Siteberg and Mr Maples, however, soon ran into further difficulties. In April 2008, the Department of Commerce informed Mr Tenish that it would not process any future tenders from Siteberg if Mr Maples continued to be involved with the projects. 7 Following the Department's decision, Mr Tenish decided to terminate his relationship with Mr Maples. He appears to have done that simply by causing Siteberg to tender for future projects in its own capacity rather than as trustee of the Southern Highlands Trust. There is a dispute about whether Mr Maples was ever told of that decision. Mr Tenish gave evidence that he informed Mr Maples of his decision by telephone in April. I accept that evidence. It strikes me as inherently probable that Mr Tenish would have said something to Mr Maples after the Department had informed him of its position. Given that Mr Maples had been working as a project manager for Siteberg, it would be very odd if that work had simply ceased without either party saying anything. Moreover, for reasons which will become apparent, I do not regard Mr Maples as a reliable witness and where there is a dispute between his evidence and that given by Mr Tenish, I prefer the evidence given by Mr Tenish. 8 In either June or July 2008, Mr Tenish closed the trust's bank account and transferred the remaining funds (amounting to approximately $13,000) to Siteberg's account. Mr Maples claims to be entitled to half that amount. There is also a dispute about whether Siteberg received amounts totalling $150,000 in respect of projects engaged in by Siteberg as trustee of the Southern Highlands Trust for which Siteberg has not accounted to Mr Maples. 9 Mr Tenish proposed to Mr Maples that they meet with Siteberg's accountant to finalise any financial adjustment between them. That proposal was not acceptable to Mr Maples. Instead, he took a number of extraordinary steps designed to protect his interests. On 4 June 2008, he wrote to the Department as a director of Siteberg asking the Department to change the bank account for Siteberg to which it would make payments to the one nominated in the letter. On 5 June 2008, without Siteberg's or Mr Tenish's knowledge, he lodged a form with ASIC giving notice that he had been appointed a director of Siteberg. He caused false accounts of Siteberg to be prepared which he provided to Kingsway Financial Assessments Pty Ltd, which was conducting a routine review of Siteberg's affairs and operations on behalf of the Department of Commerce. He purchased goods from a number of suppliers and charged the costs of doing so to Siteberg's accounts with those suppliers without Siteberg's consent. He also appears to have prepared an alternative trust deed to which he attached the signature page of the original trust deed. On or about 12 August 2008, he sent a copy of that trust deed to the Department of Commerce together with an undated letter of demand requiring the Department to pay certain moneys to the bank account nominated in the trust deed - which was the bank account previously used by the trust. On 22 September 2008, Mr Maples lodged a notification of details of a charge with ASIC. The liability said to be secured by the charge was described as "Assetts [sic] over company and TRUST" and the amount said to be secured was $300,000. 10 On 3 October 2008, Siteberg commenced proceedings in this court seeking various orders including an order that the trust deed provided to the Department of Commerce was not properly executed and orders restraining Mr Maples from holding himself out as a director or as representing Siteberg. Siteberg also sought a declaration that the trust came to an end on or about 31 May 2008 and a declaration that all contracts entered into by Siteberg since that date have been entered into for its own benefit. Mr Maples did not appear on the return date of the summons. When cross-examined in these proceedings, Mr Maples gave a series of evasive answers about whether he was served with the proceedings commenced in October 2008 by Siteberg. The upshot of his evidence was that he could not recall whether or not he was served with the proceedings. Clearly, however, he was. 11 Rein J made orders substantially in the form sought by Siteberg in the absence of Mr Maples. However, his Honour was not prepared to make orders to the effect that the trust came to an end on 31 May 2008 and that Siteberg since then has entered into contracts on its own account. ASIC was not prepared to remove the charge lodged by Mr Maples without an order pursuant to s 274 or s 1322(4) of the Corporations Act 2001. Consequently, Siteberg filed an amended summons and, on 17 November 2008, Austin J made an order under s 1322(4)(b) directing that the register kept by ASIC be rectified by removing all particulars recorded by ASIC in respect of the details of charge lodged by Mr Maples. Again, the orders were made in the absence of Mr Maples. The proceedings were stood over to the Registrar's List. However, nothing further has happened in them. 12 In the meantime, on 20 July 2009, Mr Maples caused Atco to commence proceedings against Siteberg at Camden Local Court. Atco's claim was expressed to be for: "The loss of money due to lack of supervision and loss of contracts for the Department of Commerce". Mr Maples says that he served the proceedings by express post. However, Mrs Tenish, who works with her husband and collects the mail for Siteberg, said in an affidavit she filed in the Local Court proceedings that she never received it and Mr Maples' counsel who ultimately appeared in the Local Court proceedings accepted that the proceedings had not been properly served. I do not accept Mr Maples evidence that he posted the summons to Siteberg. In the normal course of events, had he posted it, it would have been received. He engaged in a pattern of behaviour in which he took it upon himself to do things which affected Siteberg without ever giving it notice of what he had done or proposed to do. Moreover, as I will explain shortly, this is not the only occasion on which Mr Maples claims to have posted documents to Siteberg that it never received. 13 Despite the fact that Mr Maples did not notify Siteberg of the proceedings and before, on any view, the time had expired for Siteberg to file a defence, Mr Maples, on 17 August 2009, caused Atco to obtain default judgment against Siteberg. Mr Maples then caused Atco to obtain a garnishee order on the basis of its default judgment. That order was served on Siteberg's bank but not on Siteberg. The bank paid Atco an amount totalling approximately $59,000 in accordance with the garnishee order. Mr Maples says in an affidavit he filed in the Local Court that he did not appreciate that it was necessary to serve the garnishee order on Siteberg. 14 When Siteberg found out what Mr Maples had done, it made an application on 20 August 2009 to set aside the default judgment and garnishee order. At the same time, it commenced proceedings in this court claiming an injunction restraining Mr Maples and Atco from dealing with the money that had been paid pursuant to the garnishee order. 15 Siteberg's application to set aside the default judgment and garnishee orders in the Local Court was heard on 15 September 2009. Mr Maples was represented at that hearing. His counsel conceded that Mr Maples did not have authority to commence the proceedings on behalf of Atco (and, as I have said, that the proceedings had not been properly served). The default judgment and garnishee orders were set aside and Mr Maples was ordered to pay Siteberg's costs on an indemnity basis. Mr Maples now says that his counsel had no instructions to make the concession that he did not have authority to commence the proceedings in Atco's name, although he accepts that he is bound by the concession made on his behalf. 16 In this court, Rein J granted freezing orders against Mr Maples and Siteberg on 20 August 2009. Those orders were extended following an interlocutory hearing on 26 August 2009. After some delay, and a number of interlocutory hearings and mentions at which Mr Maples was represented, the amount that was paid pursuant to the garnishee order was repaid to Siteberg. On 13 November 2009, Rein J ordered that Mr Maples pay Siteberg's costs on an indemnity basis and, on 28 April 2010, I ordered that Mr Maples pay a gross sum of $70,000 in respect of those costs. 17 On 10 February 2010, Mr Maples made another attempt to recover money that he thought was owing to him. This time, he lodged an adjudication application under the Building and Construction Industry Security of Payment Act 1999. In that application, he claimed an amount of $159,776.02. The amount claimed by Mr Maples was said to relate to project management services he supplied to Siteberg in respect of a number of projects on which Siteberg worked for the Department of Commerce during 2008. The application was supported by 41 tax invoices and 14 notices that Mr Maples says were sent to Siteberg and the Department of Commerce. Mr Tenish gave evidence, which I accept, that none of those documents was received by Siteberg, although Mr Maples says that he arranged for the application to be posted to it. In support of that assertion, he provided a statutory declaration to the adjudicator from a Mr Jason Strong who said that he: "... did witness the document titled "Payment Claim under the Building and Construction Industry Security of Payment Act 1999 NSW Section 13" to be hand delivered by myself to a mail box for the purpose of sending said document to the party known as "Siteberg PTY LTD." However, Mr Strong was not called to give evidence in the hearing before me. Again, I do not accept Mr Maples' evidence on this point. As I have said, the likelihood is that if the documents had been posted, they would have been received by Siteberg. I accept that they were not. It is, of course, possible for things to get lost in the post and the mere fact that a document was not received on one occasion does not mean that it was not sent. However, the likelihood that that would have happened to both sets of proceedings filed by Mr Maples and the various invoices he claims to have sent Siteberg is remote. Moreover, as I have said, Mr Maples has demonstrated a pattern of behaviour in which he has taken action against or affecting Siteberg without giving any notice to Siteberg of what he was doing. Examples include his dealings with ASIC and the Department of Commerce. They also include Mr Maples' application to obtain default judgment and to serve a garnishee order on Siteberg's bank. In my opinion, the likelihood is that he continued that behaviour in relation to the adjudication application. 18 Siteberg's solicitors wrote to the adjudicator on a number of occasions stating that Siteberg was never served with the claim, that it had no business relationship with Mr Maples and that he was not entitled to any part of the amount claimed. Ultimately, the adjudicator rejected those submissions and made a determination in Mr Maples' favour. The adjudicator's precise reasons for doing so are not important. It is, however, significant to note that, throughout this time, Mr Maples maintained his position that the documents had been served on Siteberg and that he was entitled to the amount that he claimed. 19 Following the determination of the adjudicator, Mr Maples commenced proceedings in the Campbelltown District Court in order to register the adjudicator's certificate as a judgment of that court. In response, Siteberg commenced these proceedings. It originally sought an interlocutory injunction restraining Mr Maples from taking any steps to enforce the adjudication determination. An interlocutory injunction, which was opposed by Mr Maples, was granted by Ward J on 18 May 2010. Ultimately, as I have said, Mr Maples, who has been represented throughout the proceedings, consented to the determination being set aside. He does not concede that the application was not served. However, he says that, in circumstances where Siteberg did not receive it, it was appropriate to consent to the orders it sought. In my opinion, that explanation is not plausible. Mr Maples had known for some time that Siteberg asserted that it never received the adjudication application. Nevertheless, he persisted with the application and resisted the interlocutory injunction sought by Siteberg. A more likely explanation of Mr Maples' conduct is that he knew that the application had not been served and that Siteberg was bound to succeed in having the determination of the adjudicator set aside and that, in those circumstances, there was no point in persisting with it. 20 There is one other matter that I should mention which is relevant to the current application. During the course of the hearing, Mr Maples made an application to file a cross-summons seeking orders that the proceedings be referred to an Associate Judge to enquire and certify the assets and liabilities of the Southern Highlands Trust. I dismissed that application on the basis that the application was made very late and that the relief sought was more appropriately sought in separate proceedings. I return to the significance of this matter below. 21 Mr Maples sought to give an explanation of at least some of his conduct in an affidavit filed in these proceedings. He points out, correctly, that the Southern Highlands Trust has not been wound up and that it at least appears that the trust received substantial sums of money in respect of projects performed by it for which it has not accounted to him. He justifies his actions in causing himself to be registered as a director of Siteberg on the basis that he had acted as a de facto director for some time. In support of that assertion, he annexed applications for commercial credit and guarantee forms signed by both him and Mr Tenish, one or more of which were sent under cover of a letter apparently signed by Mr Tenish. Ultimately, however, he was forced to concede in cross-examination that the covering letter had in fact been written and signed by him using Mr Tenish's name. In addition, Mr Tenish gave evidence, which I accept, that Mr Maples had signed the relevant forms without his knowledge or consent. Mr Maples says that he registered the notice of charge to record formally that Siteberg held property on trust. As I have said, he does not accept that his counsel was correct to concede that he did not have authority to commence proceedings in the Local Court on behalf of Atco. He accepts, however, that the pleadings in that claim were defective because they did not properly plead a cause of action but he says that he did not have legal representation at the time he prepared them. Even accepting all these matters, it does not explain why Mr Maples sought to obtain summary judgment without serving the proceedings on Siteberg. In addition, a number of matters are left unexplained - such as the trust deed and accounts that he fabricated or caused to be fabricated and his purchase of goods on Siteberg's credit - and, as I have said, other explanations he gave are implausible - such as his claim that he sent Siteberg by post the various invoices on which he relied in the adjudication application and the application itself. 3The parties agreed that (with a minor exception to which I shall turn to in a moment) I could accept as factually correct, not only the basic or preliminary facts found by his Honour, but also his Honour's characterisation of some of those facts. 4The exception to which I referred is this. At [16], Ball J referred to freezing orders that had been granted against Mr Maples and "Siteberg". It was common ground that the reference to Siteberg was incorrect and that the Court should read this as a reference either to Atco or as to Berrima District Credit Union, a financial institution where Atco had an account. 5It is convenient also to set out certain further paragraphs of the reasons given by Ball J, because they contained statements that the parties relied on, one way or another, in this application. Accordingly, I set out [30], [33] and [36]: 30On the other hand, I do not accept that Mr Maples' application to file a cross-summons was vexatious. In my opinion, it is appropriate that the trust be wound up and it is quite possible that Mr Maples is owed money by the trust. Mr Benson, who appeared for Siteberg, submitted that it would now be vexatious for Mr Maples to bring a claim seeking to wind up the trust and an account. In his submission, that claim should have been brought as a cross-claim in the proceedings originally commenced by Siteberg and Mr Maples is estopped from pursuing it now. I do not accept that submission. The question whether the trust should be wound up and whether it owes any money to Mr Maples was not resolved by the hearing before Rein J. Indeed, his Honour specifically refused to make orders that would resolve those issues. In those circumstances, I do not see how it could be said that his Honour's judgment resolved those issues or gave rise to some from of Anshun estoppel: see Port of Melbourne Authority v Anshun Pty Ltd (No 1) (1980) 147 CLR 35. All that has happened is that the issue has been left unresolved by proceedings which themselves have not been finally resolved. ... 33 In this case, Mr Maples pursued one claim himself and caused Atco to pursue another claim against Siteberg. The first claim related to work Mr Maples says he did for Siteberg (as trustee of the Southern Highlands Trust). The second claim appears to have related to damages Atco is said to have suffered as a consequence of the certificates signed by Mr Tenish. Although Mr Maples took a number of other steps which each fall within the definition of "proceedings" each of those steps was a step taken either to enforce judgments he had obtained in respect of the two claims or to defend those judgments. None of the steps Mr Maples took could be described as attempts to re-litigate matters that had been decided against him. Nor could the claims be described as completely fanciful. They arose from a commercial relationship between him and Siteberg where there was at least some basis for a claim. ... 36In my opinion, on the material I have seen, Mr Maples may have an arguable case that Siteberg has failed to account to him for amounts received by it as trustee of the Southern Highlands Trust before Siteberg ceased in April 2008 to conduct business as trustee of that trust. Siteberg says that little weight should be placed on this consideration because of Mr Maples' conduct to date. In particular, it relies on the fact that Mr Maples has delayed bringing such a claim, that he has sought to justify a claim in respect of the trust by reference to a forged trust deed, that his conduct has already cost Siteberg approximately $200,000 in legal fees and that he has paid none of the costs orders made in Siteberg's favour to date. As a result, it might be argued that Mr Maples could not recover more than he now owes Siteberg in costs. Even accepting all those matters, I would be reluctant to make an order under s 8 of the Vexatious Proceedings Act at this stage even if I were satisfied that Mr Maples has frequently instituted or conducted vexatious proceedings. There is no evidence that Mr Maples is threatening to bring other vexatious proceedings. For the reasons I have given, I do not think that he could be prevented from bringing the proceedings he indicated in his affidavit that he wished to bring. Again, however, that is not to say that the position would not change if Mr Maples instituted or maintained further vexatious proceedings. 6Finally, by way of commentary or explanation of what Ball J said, I note that the reference to an inquiry into the transactions of the Southern Highlands Trust (see [20], [30] and [36]) refers to an arguable case that Siteberg may be liable to account to Mr Maples. In the view of Ball J, any such action for account should be one commenced in separate proceedings. In substance, I think, that is precisely what Mr Maples seeks in these proceedings.