The Statement of Claim in these proceedings was filed on 25 October 2016. The case concerns two properties in which the plaintiff claims he has or has had an interest. The first property is a property at Holsworthy. The plaintiff, Mr Charan, was the owner of that property as a joint tenant with his wife, Mrs Charan. The second property is a property at Casula. That property was owned by Mrs Charan and one of her sons, Prashant Charan, as tenants in common. The plaintiff asserts that he beneficially owned the entirety of both of those properties pursuant to resulting trusts. The properties were subject to a mortgage to the Commonwealth Bank of Australia ("the Bank"), which is the first defendant.
Both Prashant Charan and Mrs Charan became bankrupt. The former became bankrupt on 16 November 2006 and the latter on 6 June 2012.
The third defendant, Mr Gleeson, became trustee in bankruptcy of the estate of Prashant Charan. The fourth defendants, Messrs Pascoe and Scott, became trustees in bankruptcy of the estate of Mrs Charan. Those trustees in bankruptcy subsequently became registered as proprietors pursuant to s 90 of the Real Property Act 1900 (NSW). That occurred on 15 November 2012.
The other defendant in the proceedings is the Registrar-General, which has been named as the second defendant. It appears that the Registrar-General has been joined in relation to its conduct concerning registration of the bankruptcy trustees as proprietors.
The Bank obtained orders for possession of the properties after the institution of proceedings. The order for possession was made on 14 February 2013. The Bank subsequently sold both of the properties by way of exercise of its power of sale. The Holsworthy property was sold on 26 October 2013 for $526,000 and the Casula property was sold on 8 July 2013 for $545,000. The sales apparently resulted in a surplus of approximately $175,000. I note that the current registered proprietors of the properties are not parties to the proceedings.
The plaintiff seeks relief to the effect that the properties be "reconveyed" to him or, alternatively, that he receive compensation for loss allegedly suffered as a result of various wrongs perpetrated by the respective defendants.
Each defendant has filed a Notice of Motion seeking the striking out of the Statement of Claim pursuant to Uniform Civil Procedure Rules r 14.28 or the dismissal of the proceedings pursuant to Uniform Civil Procedure Rules r 13.4.
Directions were made for the service of written submissions. Each party has provided submissions accordingly. The motions were listed in the Real Property List on 7 April 2017. On that occasion the plaintiff, who had recently retained a solicitor to act for him in the proceedings, was represented by counsel (Mr Mack). Mr Mack informed the Court that the plaintiff did not seek to support his present Statement of Claim. An adjournment was sought to enable an Amended Statement of Claim to be filed and served. An adjournment was granted on that basis. The motions were adjourned to the Real Property List today.
The plaintiff was directed to file and serve any Amended Statement of Claim by 21 April 2017. That did not occur. Further, on 1 May 2017 the plaintiff's solicitor filed a Notice of Intention to Cease to Act, and on 9 May 2017 he filed a Notice of Ceasing to Act.
As mentioned, the motions were adjourned to the Real Property List today. Mr Lewin appeared for the Bank, Mr Booth appeared for the Registrar-General, and Ms Fazio appeared for the trustees in bankruptcy. The plaintiff himself was not present in Court. He was, however, represented by his wife, Mrs Charan. It appears that Mr Charan provided authority to his wife to appear for him today.
These are not the first proceedings the plaintiff has brought against the Bank and the bankruptcy trustees in this Court.
On 3 July 2014 the plaintiff commenced proceedings against those parties in the Equity Division. Applications to strike out the Statement of Claim and for summary dismissal were heard by White J (as his Honour then was) on 8 October 2014 (see Charan v Commonwealth Bank of Australia [2014] NSWSC 1473). His Honour considered various claims made by the plaintiff and concluded that, with one exception, none of the causes of action pleaded or sought to be raised were arguable (see at [48]). At [49] his Honour said:
In my view the proceedings should be summarily dismissed. But the dismissal of the proceedings will be without prejudice to the plaintiff's right, if any, to an account or to equitable damages against the Bank in respect of its conduct as mortgagee in possession of the subject properties, or in respect of the exercise of its power of sale in respect of those properties, or in respect of a determination of the amount of the net proceeds of sale held on trust by it for the mortgagors (including the plaintiff) or their trustees in bankruptcy.
The plaintiff did not pursue an account or equitable damages claim against the Bank of the type referred to by his Honour. Rather, on 9 December 2014 the plaintiff commenced another proceeding against the Bank and the bankruptcy trustees which raised many claims, including a number which had been considered by White J and found to be unarguable. Again, motions for summary dismissal and striking out of the Statement of Claim were filed by the defendants. They were heard and determined by McDougall J on 27 March 2015 (see Charan v Commonwealth Bank of Australia [2015] NSWSC 411). McDougall J concluded at [53]:
It follows, in my view, that each and every one of the claims pleaded is utterly unsustainable. That applies also to the claims for 'reversion' of the Holsworthy and Casula land, which I have not expressly dealt with. No facts are pleaded that could show fraud, let alone fraud in which the purchasers from the Bank conceivably might have been involved.
The Bank and the bankruptcy trustees in the present proceedings complain that these proceedings are a further attempt by the plaintiff to advance claims that have been held to be unarguable or unsustainable and should be dismissed accordingly.
Something should be said about what was decided in the earlier proceedings. In relation to the proceedings determined by White J, the following should be noted:
1. at [24] his Honour noted that any claims to a beneficial interest in the property of the bankrupts that is now vested in the trustees would be within the exclusive jurisdiction of bankruptcy in the Federal Court or the Federal Circuit Court;
2. at [26] his Honour noted that the claim for "reversion" of the Holsworthy Land was not pressed;
3. at [30]-[35] his Honour dealt with a claim which was based upon the lodging of caveats by the bankruptcy trustees, which caveats subsequently lapsed, and the trustees then becoming registered proprietors of interests in the properties. In the course of dealing with that claim, his Honour said at [35]:
…There was nothing to prevent the trustees in bankruptcy becoming registered. The interests of the bankrupts in the lands vested in their trustees in bankruptcy in equity by virtue of the sequestration orders. The Bank at all times had a registered mortgage. The Bank as mortgagee of Real Property Act land was not the legal owner of the land, but held a statutory charge. The interests of the bankrupts and the trustees in bankruptcy remained subject to that charge.
1. at [36]-[42] his Honour dealt with a claim that the trustees should have applied rental income towards payment of the mortgage. His Honour held that such a claim was not arguable and, in any event, fell within the exclusive jurisdiction of the Federal Court or the Federal Circuit Court;
2. at [43]-[47] his Honour dealt with a claim that the Bank should have sold the properties to the plaintiff's sons pursuant to a proposal which had been advanced. His Honour considered that there was no arguable cause of action in respect of those matters; and
3. at [48] and [49] his Honour concluded that, apart from the one matter earlier referred to, none of the causes of action sought to be advanced raised any arguable cause of action.
In relation to the second proceedings, heard by McDougall J, the following should be noted:
1. at [27]-[35] his Honour dealt with a claim against the third defendant, Mr Gleeson, in respect of a caveat he lodged over the Casula property;
2. at [36]-[37] his Honour dealt with a claim against the fourth defendants, Messrs Pascoe and Scott, in respect of caveats they lodged over both the Casula and Holsworthy properties;
3. at [38] and [39] his Honour dealt with a claim against the trustees in bankruptcy in respect of "rental seizure" and breach of certain duties imposed as trustees by the Bankruptcy Act 1966 (Cth);
4. at [41] his Honour dealt with the question whether the trustees were entitled to become registered proprietors of interests in the properties;
5. at [42] his Honour noted that the pleading included scandalous, irrelevant and unfounded allegations against the Registrar-General and people employed in the Registrar-General's office;
6. at [44]-[48] his Honour dealt with claims under the Corporations Act 2001 (Cth), including s 420A of that Act, against the Bank;
7. at [49]-[52] his Honour dealt with a conspiracy case that was advanced against the Bank; and
8. at [53]-[55] his Honour concluded, in effect, that each and every one of the claims pleaded was utterly unsustainable.
Some evidence was adduced at the hearing of the motions. Mrs Charan for the plaintiff read the affidavit of the plaintiff sworn 8 February 2017. The Bank read the affidavit of Richard Lewin sworn 9 December 2016. The Registrar-General read the affidavit of Anthony Booth sworn 8 December 2016. The bankruptcy trustees read the affidavit of Daniela Fazio sworn 8 December 2016.
In addition to the affidavit material, I have considered the written submissions provided by each party (including the plaintiff's submissions in reply and the further submissions handed up today by Mrs Charan) and I have heard further submissions in Court today.
As I have mentioned, on the last occasion counsel for the plaintiff indicated that the Statement of Claim was not to be supported. I have read and considered the Statement of Claim. It is clearly a deficient document. In my view, counsel for the plaintiff was well justified in informing the Court that the pleading was not sought to be supported. It is prolix, it is confusing, and it is obviously a document that has a tendency to cause prejudice, embarrassment, and delay. It fails to properly disclose any identifiable causes of action. Insofar as it contains conclusions which are apparently intended as descriptions of causes of action, the relevant material facts are not adequately identified. I have no hesitation in striking out the Statement of Claim in these circumstances.
The plaintiff did not seek an adjournment of the Notices of Motion today. Nevertheless, I have considered whether it would be appropriate to give the plaintiff another opportunity to provide a pleading that is in a satisfactory form. However, in the absence of legal representation it is unlikely that the provision of such an opportunity would yield anything other than another deficient pleading which seeks to raise claims of the type currently sought to be advanced. That is to say, the rendering a further opportunity is very likely to be a futile exercise.
I consider that the most appropriate course, having regard to the overriding purpose in s 56 of the Civil Procedure Act 2005 (NSW), is for the Court to proceed to consider, based on the material before the Court, whether the Court should not only strike out the Statement of Claim, but should summarily dismiss the proceedings.
The plaintiff, in both the written submissions and in the submissions made on his behalf to the Court today, seeks to raise a plethora of matters and does so in a somewhat confusing and difficult to understand manner. Nonetheless, the plaintiff's submissions which were filed on 8 February, is an extensive document which does represent an attempt to set out in a reasonably logical fashion the nature of the claims sought to be advanced. Those submissions identify three main issues. The second of the issues is said to lie at the heart of the case.
Issue one is described as "Non-divisible properties, resulting trust, and wrongful caveats". The argument seems to be that because the plaintiff held an interest in the properties under resulting trusts, he held the entire beneficial ownership of the properties. Hence, it was said that the property held by the two bankrupts, being their interests in the two properties, did not constitute property which was divisible amongst their creditors. However, as White J stated at [24] of his judgment, any claims by the plaintiff to a beneficial interest in either of the properties would be a matter that would fall within the exclusive jurisdiction of the Federal Court or the Federal Circuit Court. In relation to the suggestion of "wrongful caveats", that issue seems to me to have been already dealt with adversely to the plaintiff by White J at [30]-[35] of his judgment, and by McDougall J at [27]-[37] of his judgment. I can see no reason to take a different view. Insofar as loss is said to have been sustained by the plaintiff, I note that at [34] of his judgment McDougall J stated that Mr Charan had demonstrated no basis for showing that any damage was suffered by reason of the asserted wrongful maintenance of the caveats. That seems to me to be the case here.
The next matter raised under issue one concerns rent seizure and breach of Bankruptcy Act duties. This is a matter that was dealt with by McDougall J at [38] and [39] of his judgment. I cannot discern any arguable claim in this regard.
Issue two, which as I have noted is described as lying at the heart of the case, concerns s 90 of the Real Property Act and the transfer of land titles. This complaint was dealt with by White J at [30]-[35] of his judgment and by McDougall J at [41] of his judgment. There does not seem to me to be any basis to the claim that the obtaining of the status of registered proprietors by the bankruptcy trustees involved any wrongful conduct on their part, the part of the Bank, or on the part of the Registrar-General or officers of the Registrar-General.
Issue three refers to the Bank's allegedly improper and wrongful exercise of the power of sale. I have already referred to what White J said about that at [49] of his judgment. That is, the dismissal of the proceedings which his Honour ordered was expressly stated to be without prejudice to the plaintiff's right to bring an action against the Bank for improper or wrongful exercise of the power of sale. As noted by McDougall J at [19] of his judgment, it might have been thought that the plaintiff would take that course following the orders made by White J, but that was not to be. There are some allegations concerning the exercise of the power of sale contained in the Statement of Claim in these proceedings. However, the pleading is inadequate in that regard. It fails to plead with sufficient clarity the material facts relied upon to support the conclusion (contained in paragraph 120) that the Bank wilfully and recklessly sacrificed the plaintiff's interests in the properties.
I note that the further submissions handed up today by Mrs Charan also deal with the non-divisible property claim, the transfer of legal titles claim, and the improper exercise of the power of sale claim. I have read those submissions and I do not think that there is anything additional in them which suggests that there may be some other claim of that type which has not already been dealt with in the earlier proceedings.
There is no doubt about the principles to be applied when summary dismissal is sought. The power is to be exercised sparingly and only in clear cases where no tenable claim exists. For summary dismissal to be appropriate, the plaintiff's claim must, in effect, be manifestly groundless.
As McDougall J did when he considered the matter before him, I have endeavoured to identify the nature of the various claims sought to be advanced by the plaintiff and consider those claims on their merits. I have not been able to identify any arguable causes of action. I have come to the conclusion that, considered on their merits, the plaintiff's claims, including those against the Registrar-General, are manifestly groundless. Moreover, having regard to the strong likelihood that most if not all of the claims raised (other than the claim in respect of the exercise of the power of sale) have been decided adversely to the plaintiff in earlier proceedings, the claims appear unsustainable for that reason also.
Indeed, whilst I am prepared to accept that the plaintiff may genuinely hold grievances against the defendants in respect of what has happened in relation to the two properties, I think that the plaintiff's conduct in bringing these proceedings, which is, in effect, the third time these claims have been advanced in this Court, amounts to an abuse of process.
I do not intend by these reasons to suggest that the claim which White J referred to at [49] of his judgment is itself a claim that could be described as manifestly groundless or bound to fail. That particular claim, which has been alluded to in the Statement of Claim but not adequately pleaded, has not been the subject of any previous determination. Any dismissal of these proceedings is not intended to diminish the right which White J referred to at [49] of his judgment. Mr Lewin, in the course of his submissions, seemed to accept that that should be the case.
For the above reasons, I consider that the Court should not only strike out the Statement of Claim but should also dismiss the proceedings pursuant to Uniform Civil Procedure Rules r 13.4. The Court will so order.
The Court will further order that the plaintiff pay the defendants' costs of the Notices of Motion. I consider that the circumstances of the bringing of this case, which amount in my view to an abuse of process, warrant the making of a costs order on an indemnity basis. The order of the Court will be that the plaintiff pay the defendants' costs of the Notices of Motion and the proceedings on an indemnity basis.
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Decision last updated: 18 May 2017