De Varda v Scott in his capacity as the trustee of the bankrupt estate of de Varda

The deed 21 On or about 9 July 2015, Mr de Varda, on legal advice, entered into a deed of settlement and release with Mr Scott, Mr de Varda's former wife, Philippa, and Mr Cliffe. 22 The recitals to the deed recounted that: the Federal Circuit Court had declared each of Mr de Varda and Mr Cliffe bankrupt on 20 December 2013 and the official trustee was appointed as trustee of each of their bankrupt estates. on 7 April 2014, Mr Scott was appointed trustee of each of their bankrupt estates in place of the official trustee. on 28 April 2015, Mr Cliffe executed an authority directing the trustee to utilise all surplus funds available, following the (proposed) annulment of his bankrupt estate, for payment of creditor claims, costs and expenses in Mr de Varda's estate. on 5 June 2015, the trustee had commenced proceedings in this Court (that were docketed to Gleeson J) seeking orders for the realisation of funds held by Westpac in the joint account of Mr and Mrs de Varda (the 2015 proceeding). the parties agreed to settle the 2015 proceeding and to provide for certain steps to be taken in the administration of Mr de Varda's bankrupt estate on the terms of the deed. 23 In the operative provisions of the deed: Mr and Mrs de Varda acknowledged and agreed that an amount of not less than $400,000 of the funds held in their joint account was property of Mr de Varda's bankrupt estate and had vested in the trustee under s 58 of the Bankruptcy Act (cl 2). The parties agreed that, on the exchange of the deed, Mr and Mrs de Varda would provide the trustee with consent orders in the form of schedule 2 to the deed that their solicitor, David Cohen, would sign on their behalf (cl 3.1). Mr Cliffe authorised and directed Mr Scott to utilise and apply any surplus remaining in his estate, after payment of all Mr Cliffe's own debts in his bankrupt estate, to the payment of Mr de Varda's debts in his estate (cl 3.3). Mr Scott, as trustee, agreed that within seven days of the entry of the consent orders to terminate the 2015 proceedings, he would issue notices pursuant to s 145(3) of the Bankruptcy Act to persons who, to his knowledge, were or claimed to be creditors in the bankrupt estate of Mr de Varda but who had not proved their debts, giving them 21 days to do so following which Mr Scott would deal with the monies in his hands at that time (cl 4). Mr Scott agreed, subject to an exception that is not now relevant, to refrain from seeking to realise any property from Mr de Varda's bankrupt estate while he dealt with the proofs of debt and the funds that Mr Cliffe's estate had made available. In the event that Mr Scott came to provide a certificate of annulment to the official receiver, pursuant to s 153A of the Act and cl 4.1(d) of the deed, the parties agreed that, within seven days, they would seek the entry of the consent orders that, first, directed Westpac to pay the remaining funds in the joint account to Mr and Mrs de Varda or in accordance with any written direction that they gave and, secondly, otherwise dismissed the 2015 proceeding with no order as to costs, to the intent that any costs incurred by the trustee would form part of the charges and expenses of the administration of the bankrupt estate of Mr de Varda. Each of the parties to the 2015 proceeding agreed to bear his or her or its own costs (cl 5). 24 Importantly, the deed provided in cll 6.1 and 6.3 (in the deed, Mr de Varda was referred to as "Joseph", Mrs de Varda as "Philippa" and Mr Cliffe as "David"): 6.1 Warranties as to creditor claims (a) The trustee warrants that, as at the date of this deed he is not aware of any claims by creditors which are provable debts in Joseph's bankrupt estate, other than the claims set out in Schedule 1. (b) Joseph warrants that, as at the date of this deed, he is not aware of any claims by creditors which are provable debts in Joseph's bankrupt estate, other than the claims set out in Schedule 1. … 6.3 Warranty as to withdrawal of complaints Joseph warrants that: (a) he has withdrawn any complaint or notification made or lodged by him or on his behalf to any regulator, ombudsman, statutory body, politician or official concerning the Trustee or the administration of his bankrupt estate (Complaint); and (b) he shall refrain from making any new or additional complaint. (emphasis added) 25 In cl 7.1, Mr de Varda released any claims and withdrew any current complaints and, in cl 8.1, each of Mr and Mrs de Varda and Mr Cliffe warranted to Mr Scott that they had received independent legal advice from Mr Cohen regarding the deed. Relevantly, cll 7.1 and 8.1 provided: 7.1 Release by Joseph and withdrawal of any current complaints (a) Subject to clause 5(b)(ii), upon execution of this deed Joseph unconditionally and irrevocably releases the Trustee from any Claim Joseph has, may have, could or might at any future time have or have had, against the Trustee in respect of any matter arising directly or indirectly out of or in connection with the following: (i) this deed; (ii) the Proceedings; and (iii) any act or default made by the Trustee in the administration of Joseph's bankrupt estate. (b) Clause 7.1(a) may be raised or pleaded as a complete defence to the continuance or commencement of any proceedings or claim or complaint, which have been or may be brought at any time by Joseph against the trustee. (c) Joseph must on exchange of this deed provide to the Trustee evidence satisfactory to the Trustee in the Trustee's absolute discretion that Joseph has withdrawn any Complaint. … 8. Legal Advice warranty 8.1 Each of Joseph, Philippa and David warrants to the Trustee that: (a) they have received independent legal advice from David H Cohen, Solicitor regarding this deed and in particular in relation to: (i) their obligations and rights under this deed; (ii) their alternatives to entering this deed; (b) after receiving that advice they have freely and voluntarily entered into the Deed. (emphasis added) 26 The deed contained other provisions that are not presently relevant. In schedule 1, the deed set out the creditor claims in Mr Cliffe's and Mr de Varda's estates known by Mr Scott at the date of the deed and the amount that he proposed to pay respectively from Mr Cliffe's and Mr de Varda's estates in respect of those claims. 27 On 19 August 2015, Gleeson J made the consent orders that: declared that an amount of not less than $400,000 of the funds held by Westpac in the joint account was property of the bankrupt estate vested in Mr Scott under s 58 of the Bankruptcy Act. directed Westpac to pay $20,000 to each of Mr and Mrs de Varda and retain the balance pending receipt of a joint authority from Mr Scott and Mr and Mrs de Varda or further order of the Court. 28 On 8 September 2015, Mr Scott certified to the official receiver that Mr de Varda's bankruptcy had been annulled on that date. 29 On 9 September 2015, her Honour made further orders by consent, in fulfilment of the terms of the deed, that the 2015 proceeding be otherwise dismissed with no order as to costs.

Mr de Varda's further opportunity to remedy the defects in his case 30 At the hearing on 18 February 2022, Mr de Varda argued that the release that he gave in cl 7.1 of the deed somehow could be ignored or ought be set aside by the Court. His solicitor, Mr Chang, who drafted the statement of claim, also made submissions alleging a number of broad, sweeping allegations of fraud and serious misconduct against Mr Scott. The statement of claim is one of the worst and most inadequately pleaded set of allegations that I have encountered. 31 Mr Chang did not articulate any oral argument or written submission that had regard to the ordinary requirement that fraud be alleged or pleaded specifically and with particularity. Nor did the statement of claim plead any of those allegations with regard to the requirements of rr 16.42 or 16.43. The reason why fraud must be alleged with particularity is, as Mason CJ and Gaudron J said in Banque Commerciale SA, En Liquidation v Akhil Holdings Limited (1990) 169 CLR 279 at 285, that it has long been recognised that fraud may take a variety of forms and is incapable of precise definition. Accordingly, a party is entitled to be informed by a proper pleading as to precisely what must be negatived by way of defence to the charge. 32 As a result of the lack of coherence in the statement of claim and what Mr Chang was seeking to assert in argument, at the conclusion of the first day of the hearing of Mr Scott's application on 18 February 2022, I ordered: 4. The applicant file and serve on or before 10 March 2022: a. Points of claim that comply with the Federal Court Rules 2011 and, in particular, if relevant, rules 16.02, 16.03, 16.04, 16.42 and 16.43 identifying the basis on which he contends that he has a reasonable prospect of successfully contending at a trial that the deed of settlement and release he entered into on 9 July 2015 is not enforceable together with any evidence in support and written submissions limited to five pages.; and b. A readable or revised version of the schedule to the amended statement of claim 33 Neither Mr Chang nor Mr De Varda subsequently complied with order 4 in any respect. 34 At 11.51 am today, Mr Chang sent to my associate a bundle of material that I infer included a letter to the solicitor for Mr Scott dated 17 March 2021 comprising seven pages with many attachments (the 17 March 2022 letter). At 12.09 pm today, Mr Chang emailed my associate asserting that Mr De Varda sought a stay and would rely on principles in two cases, copies of which he attached: Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685 and Wichmann v Dormway Pty Ltd [2019] 3 Qd R 323. 35 At 12.46 pm, Mr Chang followed up with a further email to my associate, saying: In my submission, this case is a prime example of why we need reform in the area of recusal applications. 36 Mr Chang also included in these emails an interlocutory application, dated today, seeking a stay of this proceeding for a period of two months to enable Mr De Varda to obtain alternate legal representation and pending the determination of Mr De Varda's application, filed on 9 March 2022, in a new proceeding (NSD164 of 2022), that seeks an extension of time to obtain leave to appeal from my refusal to recuse myself in De Varda v Scott in his capacity as the trustee of the bankrupt estate of de Varda (Recusal Application) [2022] FCA 170. 37 Mr Chang and Mr de Varda put no further evidence before me today other than by the tender of the 17 March 2022 letter. That letter does not address why Mr De Varda did not comply with order 4 that I made on 18 February 2022, or why he needed two more months to comply with it, particularly having regard to the volume of material attached to and the seven pages of argumentative material in, the 17 March 2022 letter. 38 Ordinarily, when a party asks the Court to make an order to deal with the consequences of his, her or its delay, or seeks the exercise of a discretion to enable the party to comply with requirements for the orderly conduct of a proceeding, the party must give an explanation. As Gilmour, Perram and Beach JJ made clear in Tamaya Resources Ltd (in Liq) v Deloitte Touche Tohmatsu (a firm) (2016) 332 ALR 199 at 226 [155]: the explanation required is that of the moving party, not merely their solicitor or counsel. The client may very well know of matters relevant to the explanation for delay which are not known by the lawyers. 39 Here, Mr Chang's attempt to explain from the bar table why order 4 made on 18 February 2022 had not been complied with by his client (or him), eschewed giving any coherent information. This was particularly evident in the circumstances where Mr Chang asserted that after 10 March 2022, which was after expiry of the time for compliance, unspecified "problems" had developed that supposedly inhibited him or Mr de Varda from complying with that order. However, whatever those problems were, they nonetheless do not seem to have prevented Mr Chang either appearing today or writing the extensive argument in the 17 March 2017 letter, and collecting the attachments to it. Nor did Mr Chang send this material to the Court with any attempt at timeousness after he wrote it.

Consideration 40 The Court can give judgment pursuant to s 31A(2) of the Federal Court of Australia Act for one party against another in relation to the whole or any part of a proceeding if the first party is defending the proceeding and the Court is satisfied the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. It is not necessary that the proceeding be hopeless or bound to fail for it to have no reasonable prospect of success (s 31A(3)): see Spencer v The Commonwealth (2010) 241 CLR 118 at 141 [58]-[60] per Hayne, Crennan, Kiefel and Bell JJ. 41 Here the terms of the deed are clear. The deed recited that Mr de Varda and Mr Cliffe had raised complaints about the way in which Mr Scott had administered their estates, including their complaints to the Authority. Like the Authority, I also do not perceive, at the moment, that there was any substance to those complaints. However, prior to entering into the deed and procuring the annulment of his bankruptcy, each of Mr de Varda and Mr Cliffe had ventilated those complaints and knew that, in entering into the deed, he would have to release Mr Scott from any claim, including one based on any of their previously made complaints, as a precondition of achieving the annulment of their bankruptcies. 42 The reason I made order 4 on 18 February 2022 was that the statement of claim is so incoherent, it is impossible to understand precisely what are the material facts constituting the alleged fraud and Mr Scott's knowledge or state of mind amounting to fraud on his part: cf: Spencer 241 CLR at 131 [23] per French CJ and Gummow J, 141 [58]-[60] per Hayne, Crennan, Kiefel and Bell JJ. That is because Mr Chang completely disregarded the requirements of rr 16.42 and 16.43 in drafting it. 43 Mr Chang asserted in his submissions that Mr Scott made a variety of misrepresentations prior to the entry into the deed that were, allegedly, fraudulent. One example, on which he relied on a number of occasions on 18 February 2022 and repeated today, was his interpretation of a statement of account of the bankrupt estate of Mr Cliffe issued apparently by a stockbroker, CMC Markets. Mr Cliffe had annexed an extract of the statement to an affidavit he made on 28 October 2020 in a proceeding he had brought against Mr de Varda in the Supreme Court of New South Wales that has since been transferred to this Court. The statement records that following the hearing before Judge Driver on 11 December 2013, the balance of Mr Cliffe's account with the stockbroker was reduced to zero. On 20 December 2013, Judge Driver delivered his reasons and ordered that Mr de Varda, Mr Cliffe and Rabbi Tov-Lev be made bankrupt. 44 Thereafter, moneys seem to have come in and out of the stockbroker's account due to trading apparently by Mr Cliffe that occurred because his Honour had stayed all proceedings under the sequestration order for 21 days. Subsequently, on 5 February 2014, a judge of this Court ordered a further stay pending determination of the appeal that I heard and dismissed on 11 March 2014. 45 The statement appears to indicate that, as at 12 March 2014, the stockbroker dealt with some money replacing two stopped cheques that resulted in debit entries on the statement amounting to $180,000. Mr Chang repeatedly asserted that, first, the $180,000 had gone missing on 12 March 2014 when the account was reduced to a nil balance and, secondly, Mr Scott had not accounted for the $180,000, and had made fraudulent representations to Mr de Varda by, as far as I can understand, not informing Mr Cliffe or him about what happened to that sum. Of course, those submissions ignored the fact that Mr Scott was not appointed as the trustee of either Mr de Varda or Mr Cliffe until 7 April 2014. 46 As at 4 April 2014, the statement showed that there were zero funds in credit but on 9 April 2014 it records a sale of 1000 ANZ Banking Group Ltd shares that realised about $33,743.00. 47 At the foot of the statement (which appears to have been a longer document of which only the last 3 pages are in evidence), there appear totals of transactions conducted historically on the account suggesting that Mr Cliffe had engaged in about $32 million worth of trades. From this premise, Mr Chang asserted that, somehow, Mr Scott must have been involved in, or at least had detailed knowledge of, all of those trades. However, the only transaction recorded in the statement that took place during Mr Scott's administration was the sale of the ANZ shares. 48 During the course of argument, the following exchanges occurred between Mr Chang and myself when I sought to understand what he was putting: HIS HONOUR: Well, but what is the ultimate representation you say was made at the time of entry into the deed? That - they all deal with different times and different statements about what the liabilities were that changed. MR CHANG: Yes. Sir, I will summarise it for you, your Honour. There were numerous letters sent by the respondent over time prior to the date of the deed of settlement where he was saying there was X dollars available in Cliffe's estate when there was, in fact, more, and there - well, there ought to have been more. And where he was saying that there were ..... X dollars in - in liabilities. For example, by letter of 19 March [2015], he says that the unsecured liabilities were $350,786 - that's the representation that you're after. We say that figure was exaggerated. And that's your misrepresentation. That's just one example of many matters which induced the applicant and Mr Cliffe to believe that they had to pay more than they ought to have done and enter into the deed of settlement. It's just one of many misrepresentations that are pleaded in the amended statement of claim, but I've just picked a few for you here. HIS HONOUR: Well, the deed as at 9 July is the critical thing, and you said, in paragraph 18, the maximum liability in their estates was stated to be $197,000, so - anyway, I don't understand. This is just not a pleading. It's not even a - a coherent identification of what it is - - - MR CHANG: There's evidence, your Honour - - - HIS HONOUR: At the time your client entered into the deed was the misrepresentation. MR CHANG: Evidence before you - and the - the discrepancies in the CMC Markets account alone should be enough. You've got evidence in front of you which clearly shows a need for an accounting inquiry, and you're just ignoring it. … HIS HONOUR: Mr Chang, are you making a serious submission to me that something happened between 9 April 2014 when this account tells me that there is $33,743.80 in credit and the bottom of this account, which tells me that on 3 July 2014, there was $38,254 in credit that involved Mr Scott taking out $32 million or $100,000 or $5000? MR CHANG: What I'm saying to you, your Honour, and what I think is quite clear, is that this is an extract of Cliffe's CMC Markets account, and at the bottom, there are totals of $32 million in debits and credits, that's what I'm saying, that's what the documentary evidence says. … MR CHANG: First of all, that's mentioned in my letter [of 17 March 2022]. I've really tried to dumb everything down in this letter, which you say you've read. The second page of the account, 12 March 2014, can you see a debit of $80,000 and a debit of $100,000 there? There's two cheques; 30646 and 30647. HIS HONOUR: Yes. So, yes. And - - - MR CHANG: Two cheques, 30646 and 30647, two cheques for $180,000. My client doesn't know where that has gone to. … HIS HONOUR: Well, Mr Scott wasn't appointed until April [2014]. MR CHANG: As I've said to you, PPB Advisory [Mr Scott's firm] knew what was happening with this $180,000. That $180,000 has not been accounted for in Cliffe's estate, which means that his estate has that amount less than it ought to have, which means that there's that amount less to discharge Mr De Varda's debts as Cliffe promised. It's not difficult. It's not rocket science, your Honour. HIS HONOUR: All right. Well, yes, well, and what's the misrepresentation you say that introduced entry into the deed; where is it? MR CHANG: Well, nearly all of the correspondence that the respondent sent over the course of the relevant period, as I've defined that in the amended statement of claim, every single letter up to the deed, and including the deed of settlement, that deed of settlement assumes the truth of what the respondent has said in his letters. So taking you, for example, to the letter of 19 March 2015, the respondent has said that there's only - on 19 March 2015, the respondent has said that there's only $316,000 in terms of assets in Cliffe's estate. I've already explained to you - and apologies, but I feel like I've laboured the point quite a lot. I've explained to you that there ought to have been at least 600 grand in Cliffe's account by reason of this CMC Markets account. I've explained to you that there are shares missing as evidenced by that document. I've explained to you that there's 180 grand missing. So there ought to have been more in Cliffe's estate. And in every single letter sent by the respondent during the course of the relevant period in the lead up, and up to and including the deed of settlement, he said that there's only $316,000 in Cliffe's estate or whatever; it fluctuated. My client says there ought to have been much more. I don't know why you're shaking your head. It's not difficult to understand. I mean, as I've said to you, far lesser minds are capable of understanding. And if you can't understand what I'm saying, you really ought to recuse yourself and maybe send a judge who can understand what I'm saying because I can put a paralegal up there and they can understand what I'm saying very easily. I could put - a lay person can understand what I'm saying, your Honour. (emphasis added) 49 There was no evidence to which Mr Chang pointed of what shares were held in Mr Cliffe's name or that identified anything that Mr Scott must have known that could have supplied any basis to assert that Mr Scott made any false statements, let alone statements false to Mr Scott's knowledge, in any of the correspondence in which Mr Scott engaged with Mr de Varda and Mr Cliffe including in March, April and May 2015. That latter time period is the one in which Mr Chang, so far as I could understand his submission, asserted was when the unspecified fraudulent representations occurred and coincided with the complaints Mr de Varda and Mr Cliffe made to the Authority. None of what Mr Chang said engaged with why the deed did not operate according to its terms as Mr Scott had argued. 50 Here, the question under s 31A(2) of the Federal Court Act is whether, given Mr Scott's reliance on the effect of the release in cl 7.1(a) and (b) of the deed, Mr de Varda has any reasonable prospect of successfully prosecuting whatever his case is based on Mr Scott's conduct as his trustee in the period prior to the annulment of his bankruptcy. 51 Kiefel CJ and Edelman J said in Price as executor of the estate of Price (dec'd) v Spoor (as trustee) (2021) 391 ALR 532 at 539 [27]: An objective approach is required to determine the rights and the liabilities of a party to a commercial contract, by reference to its text, context and purpose. The meaning to be given to its terms is determined by reference to what a reasonable business person would have understood those terms to mean. (footnote omitted) 52 Here, the release in cl 7.1 of the deed applied to any claims that, after Mr de Varda entered into the deed and received satisfaction under it, he may think he had or could have in circumstances that may arise later. Mr de Varda had legal advice as to the meaning and consequences for him of entering into the deed (cl 8.1). Similarly, Mr Scott's right to plead, or to rely, on the release as a prophylactic before the commencement of any proceedings means that it can be inferred that it was not necessary for him to wait until he needed to plead a defence before he could invoke his rights under cl 7.1(a) and (b). 53 Critically, the release in cl 7.1 was unconditional. Mr de Varda irrevocably released the trustee from any claim he had, may have, could or might at any future time have or have had against the trustee in respect of any matter arising directly or indirectly or out of or in connection with the deed, the proceeding before Gleeson J and any act or default of Mr Scott in the administration of Mr de Varda's estate. 54 In those circumstances, once the parties carried out the provisions of the deed so as to cause, as occurred, the proceeding before Gleeson J to be dismissed and the bankruptcies to be annulled, there was an accord and satisfaction which gave effect to the release and made it legally binding. In McDermott v Black (1940) 63 CLR 161 at 183-185, Dixon J explained how an accord and satisfaction operated: The essence of accord and satisfaction is the acceptance by the plaintiff of something in place of his cause of action. What he takes is a matter depending on his own consent or agreement. It may be a promise or contract or it may be the act or thing promised. But, whatever it is, until it is provided and accepted the cause of action remains alive and unimpaired. The accord is the agreement or consent to accept the satisfaction. Until the satisfaction is given the accord remains executory and cannot bar the claim. The distinction between an accord executory and an accord and satisfaction remains as valid and as important as ever. An accord executory neither extinguishes the old cause of action nor affords a new one…. The distinction depends on what exactly is agreed to be taken in place of the existing cause of action or claim. An executory promise or series of promises given in consideration of the abandonment of the claim may be accepted in substitution or satisfaction of the existing liability. Or, on the other hand, promises may be given by the party liable that he will satisfy the claim by doing an act, making over a thing or paying an ascertained sum of money and the other party may agree to accept, not the promise, but the act, thing or money in satisfaction of his claim. If the agreement is to accept the promise in satisfaction, the discharge of the liability is immediate; if the performance, then there is no discharge unless and until the promise is performed. (emphasis added) 55 In Spoor 391 ALR 532, the question was whether the mortgagor's covenant in a mortgage, that the mortgagor would not rely on any statute of limitations, prevented the mortgagor from pleading that the proceeding that the mortgagee had brought was statute barred. The High Court unanimously held that the covenant was binding in its terms. 56 Kiefel CJ and Edelman J referred to Lord Campbell's advice on behalf of the Privy Council in The East India Company v Paul (1849) 7 Moo PCC 85 at 111; 13 ER 811 at 821, saying (391 ALR at 539 [30], 540 [35]): 30. The fact that the Limitation Act does not of itself have the effect of defeating the respondents' rights to claim under the mortgages and that a plea by the appellants is required to do so does not take the matter outside the purview of the clause. It is clear that the parties intended that it have a wide operation and that it extend to any consequences flowing from a statutory provision ("whereby or in consequence whereof") which would defeat the mortgagee's rights. It was clearly intended that provisions which might have that result were not to apply to affect the rights and obligations of the parties. It is not difficult to infer that it was intended to apply to a benefit given by statute to a defendant by which the mortgagee's right could be defeated. By agreeing to the terms of cl 24 the appellants effectively gave up the benefit provided by the Limitation Act. … 35. As to the correctness of its implication, that even a binding agreement cannot prevent the statute taking effect, no explanation is given as to why such an agreement could not be enforced. It appears to proceed from a misapprehension about the operation of a limitations provision. At an earlier point in the judgment [East India Co 7 Moo PCC at 111 [13 ER at 821]], his Lordship said that once the cause of action "began to run… nothing could stop it", even if there was fraud on the part of the defendant. Such an opinion does not acknowledge, in accordance with more modern authority, that the statutory bar is not raised for the court's consideration unless and until a defence is pleaded and that a defendant has a choice whether to do so. A defendant may bargain away the statutory right and that bargain may be enforced. (emphasis added) 57 Gageler and Gleeson JJ came to a similar conclusion, saying (at 544 [51]): where a clear legal duty is imposed by contract to refrain from some act, then, prima facie, an injunction should go to restrain the doing of that act. Put in different terms, if there is a breach of such a contractual promise, specific performance of the contract may be ordered where damages would be inadequate. (footnote omitted, emphasis added) 58 There is no intelligible allegation before me of any false representation that Mr Scott made to Mr de Varda that induced his entry into the deed or that, even if there were one (which, as I say, is bereft of any coherent evidence of falsity or allegation in the statement of claim, or otherwise) to suggest why the deed should not operate according to its terms: Spoor 391 ALR at 539 [30], 540 [35]. 59 In my opinion, on the material before me, having regard to cl 7.1(a)(iii) and (b) of the deed, there is no reasonable prospect that Mr de Varda could succeed in prosecuting this proceeding to obtain any relief he seeks, including for an inquiry into Mr Scott's conduct as trustee or damages for any alleged but unidentified fraud or misrepresentation. 60 Many of the claims which Mr de Varda seeks to agitate in the statement of claim involved conduct of others, concerning the affairs of the Synagogue, or the company that owned the land on which it was, and an unfortunate dispute within the congregation. Those had nothing to do with Mr Scott and could not possibly have been relevant to pleading any reason for an inquiry under the Bankruptcy Act, in respect of his conduct. That is because those events took place well before his appointment on 7 April 2014. Moreover, there is nothing to suggest that Mr Scott acted otherwise than appropriately in administrating the bankrupt estates, particularly in the face of difficult circumstances occasioned by the failures of Mr de Varda and Mr Cliffe to cooperate in those administrations. 61 So far as the statement of claim seeks to allege, or could be understood to make allegations, that Mr Scott acted in breach of his duties as trustee, Mr de Varda expressly released him from any such claims in cl 7.1 of the deed based on legal advice, making any such claim unmaintainable: Spoor 391 ALR at 539 [30], 540 [35], 544 [51]. 62 The claims that Mr de Varda appears to be making would necessarily impugn the agreement pursuant to which Gleeson J made the consent orders on 19 August 2015 that $400,000 held in the joint account of himself and his wife was property that Mr Scott could use to distribute to creditors in accordance with the parties' mutual obligations under cl 3 of the deed. Those orders created a res judicata because whatever rights Mr de Varda may have had in respect of the $400,000 merged in her Honour's orders of 19 August 2015. There is no apparent pleaded claim that those orders were procured in a way that would allow a court to set them aside. Moreover, if the deed were set aside, the consequence would be that the annulment should be too. 63 Mr Scott made numerous other arguments as to why the pleading of the statement of claim is hopelessly deficient. I agree with those arguments and, had I not found that Mr de Varda's claim had no reasonable prospect of succeeding, I would have struck out the statement of claim and ordered it to be repleaded in accordance with Pt 16 of the Rules. 64 Mr de Varda has not given any, let alone a proper, explanation for his default in complying with order 4 made on 18 February 2022 that he identify, with precision, why the deed would not be enforceable. His claim has no apparent basis. 65 I am satisfied that Mr de Varda has no reasonable basis of successfully prosecuting the proceeding in face of the provisions of the deed and that the proceeding, therefore, should be dismissed under s 31A(2).

Costs 66 On 29 September 2021, Mr Scott's solicitors wrote to Mr Chang, first, pointing out the incomprehensibility of the original version of the statement of claim and, secondly, identifying the preclusive force of the release in cl 7.1 of the deed. The letter stated that the release meant that Mr de Varda was not entitled to commence any proceedings against Mr Scott or to continue the existing claim against him. It invited Mr de Varda to agree to a discontinuance of this proceeding within seven days, failing which Mr Scott's solicitors foreshadowed the bringing of an interlocutory application seeking the result I have ordered today. They said that in that event, they would rely on the letter on the question of costs and seek Mr Scott's costs on an indemnity basis. 67 In my opinion, the proceeding is a plain abuse of process. The conduct of the argument by Mr Chang has enhanced that abuse of process, including his failures timeously to comply with Court orders and to inform the Court of the alleged difficulty, about which I am not satisfied, he claimed that he had with his ability to continue to act for Mr de Varda. 68 This is a case in which Mr Scott has been put to completely unnecessary cost and expense by reason of the oppressive and vexatious conduct of the proceeding by and on behalf of Mr de Varda. I will order Mr de Varda to pay Mr Scott's costs on an indemnity basis. I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rares.