These proceedings concern parties who are said to have benefited from, or been involved in, a company called Life Order Products Pty Ltd (the Company), which has since been deregistered. The proceedings have a long and complex interlocutory history.
In short, the first plaintiff, George Dimitrovski, brought proceedings, together with his sister Susan Vasil, by statement of claim filed on 4 June 2021, against Brian and Helen Boland, a company of the Bolands known as Avid Business Pty Ltd, and the accountant to the Company, Mr Murray Reid. Ms Vasil has since died. In a further iteration of the proceedings, they have been sought to be brought against those defendants by Mr Dimitrovski, and Nada Boceska, as administrators of Ms Vasil's estate.
Previous judgments of this Court have confirmed the conclusion that Mr Dimitrovski could not personally maintain the causes of action which he then sought to plead. It is unnecessary for me to go into the detail of why this is so. Mr Dimitrovski has sought to replead the proceedings on the basis that he at all relevant times held his shares in the Company on behalf of his late sister. In response, the Bolands have sought to prove before me that Mr Dimitrovski's assertions to that effect are recent invention. I have explained to them that in relation to that question there is a triable issue of fact which cannot be determined on a summary basis.
In an earlier part of the hearing before me, it was accepted by Mr Allan of Counsel, who was appearing for Mr Dimitrovski and Ms Boceska, that the only cause of action that could now be prosecuted would be a cause of action that properly belonged to Ms Vasil and formed part of her estate.
The proceedings came before me in the Applications List to determine two notices of motion. The first was a notice of motion filed by Mr Dimitrovski and Ms Boceska as administrators of Ms Vasil's estate, seeking leave to file a third further amended statement of claim. That motion was filed on 19 September 2023. The Court also had before it a motion filed on 14 February 2023 by the defendants for the striking out, or summary dismissal, of what was then the second amended statement of claim. That motion had partly been dealt with by Henry J.
Dimitrovski v Boland [2023] NSWSC 1371 | Case summary | Zoe
During the course of the hearing of those motions before me, the plaintiffs were given an opportunity, with the assistance of Mr Allan of Counsel, to replead the proposed third further amended statement of claim, recognising that whatever cause of action was sought to be prosecuted had to be a cause of action which belonged to Ms Vasil's estate. That has now been done, and a document described as "Proposed (Third) Statement of Claim" has been propounded.
What is important to note for present purposes is that all of the claims brought in previous iterations of the pleadings by Mr Dimitrovski have now been abandoned. An entirely new claim has been pleaded which, if allowed to proceed, is a derivative claim proposed to be brought on behalf of the Company against the defendants (other than Mr Reid, for reasons which I will shortly explain) alleging dealings with the assets of the Company said to be in breach of fiduciary duty, or receipt of property pursuant to such alleged breaches, by the defendants (other than Mr Reid). Before those proceedings can be prosecuted, it will be necessary for an application to be brought for leave to reinstate the Company, and then to bring the proceedings on its behalf.
Before going any further, I will say something about the position of Mr Reid. In the "Proposed (Third) Statement of Claim" no allegation of wrongdoing is made against Mr Reid. His sole pleaded role was to convene a meeting of directors of the Company, there being a dispute about that meeting.
While no allegation of wrongdoing (as opposed to error of some kind) is made, or final relief sought, against Mr Reid, the proposed pleading nevertheless sought these declarations against Mr Reid:
"13 A declaration that the third defendant incorrectly:
a. Counted and recorded the voting result for the cease-trade resolution in prayer 12a;
b. Determined that a quorum was present for voting on the sale resolution in prayer 12b;
c. Counted and recorded the voting result for the sale resolution in prayer 12b;
d. Determined that the first defendant could vote on the sale resolution in prayer 12b.
14 A declaration that the third defendant did not put the resolution of 11 June 2009 to a vote of company members or do so in accordance with their articles of association."
Mr Reid, who appeared for himself, maintained his submission that the proposed pleading should be struck out as against him. Given the case now sought to be pleaded, I accept that it is neither necessary nor proper for Mr Reid to be a party. Insofar as a factual allegation is made about something which Mr Reid did, in the absence of any suggestion that he breached any duty or behaved improperly, it is not appropriate that he continue to be a party solely through the medium of the declarations that were sought, which really go to matters of fact that are steps to some larger conclusions against the other defendants.
Mr Allan properly conceded that no ultimate relief was sought against Mr Reid. In those circumstances, I indicated to Mr Allan that I would not permit the proposed pleading to be filed with Mr Reid as a party. Mr Allan then applied for leave on behalf of his clients to discontinue the proceedings against Mr Reid. I granted that leave on the usual terms, namely that the plaintiffs pay Mr Reid's costs of the proceedings.
Turning to the balance of the proposed pleading, on its face it discloses potential causes of action in relation to the affairs of the Company. However, there is a necessary anterior question before even an application to reinstate the Company can, or should be allowed to, be brought. That question is whether or not these proceedings can be brought by Ms Vasil's estate at all. There is a hotly disputed question between the parties as to whether or not Mr Dimitrovski ever held shares in the Company on behalf of Ms Vasil.
By reason of facts alleged in paragraphs 5 to 9 of the "Proposed (Third) Statement of Claim", it is said that Mr Dimitrovski held 500,000 ordinary shares in the Company on trust for Ms Vasil. If that proposition is not accepted as a matter of fact, then Mr Allan candidly accepted that the entire repleaded claim must fail, for want of standing on behalf of the estate of Ms Vasil.
Because an application to reinstate the Company and for leave to bring proceedings on its behalf will be necessary, and if granted would then result in a trial of the causes of action alleged against the defendants, I came to the view that the just, quick and cheap way of dealing with these proceedings, given their long and tortured history, is that there should first be a separate question determined as to the nature of Mr Dimitrovski's ownership of shares in the Company. Mr Allan made no submission against that course, and neither did the defendants. There seems to me to be a great deal of utility in that question, which raises discrete factual matters, being determined first because if it is determined adversely to the plaintiffs, that will be the end of the proceedings.
In addition to ordering the separate question, it is necessary that I say something briefly about the final disposition of the two motions that originally brought the matter into the Applications List.
Insofar as the notice of motion filed by the plaintiffs is concerned, its subject matter was a proposed third further amended statement of claim, which has now been completely abandoned. In those circumstances, I acceded to the defendants' submission that in addition to dismissing that motion, the plaintiffs should be ordered to pay the defendants' costs on the indemnity basis. The complete abandonment of the claim is sufficient to engage the principle in relation to indemnity costs that the plaintiffs knew, or ought to have known, with proper advice, that the claim which they had completely abandoned was hopeless. For identical reasons, I have determined that the order for costs thrown away by reason of the amendment which the Court will allow should also be on the indemnity basis.
The same applies to the defendants' motion that the proceedings should be summarily dismissed or struck out, at least insofar as the plaintiffs persisted with their earlier proposed third further amended statement of claim after the hearing before Henry J.
Insofar as the plaintiffs persisted before me with a claim which they have now completely abandoned, I am of the view that the defendants should have their costs of their motion paid by the plaintiffs on the indemnity basis after the hearing before Henry J, but on the ordinary basis up to and including that hearing. This is notwithstanding that as a matter of form I will dismiss the defendants' motion, but only because the pleading to which the defendants' motion was directed is for all intents and purposes no longer pressed by the plaintiffs.
I have, therefore, made orders and directions disposing of the two notices of motion, permitting the discontinuance of the proceedings against Mr Reid, and made provision for the preparation and hearing of the separate question.
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Decision last updated: 13 November 2023