On 30 October 2019 Finsec Pty Limited ("Finsec") as trustee for the Batterham Retirement Fund ("BRF"), commenced proceedings in this Court against Marcel Andre Nauer ("Nauer") by suing out a Summons and an accompanying Commercial List Statement. There is no solicitor on the record for Finsec. The Summons and Commercial List Statement were signed by Mr Peter Batterham ("Batterham") on behalf of Finsec, as its sole director.
The starting point is that the public interest in the efficient and proper conduct of litigation is served by the contesting parties being represented by properly qualified legal practitioners. This is because the Court relies on practitioners to meet the significant obligations on them in conducting proceedings in the Court. The Court relies on their competence and their probity.
Under the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) a company can commence proceedings by a director, if the director is a plaintiff (UCPR rr 7.1, 7.2 and 7.3). However, under s 14 of the Civil Procedure Act 2005 (NSW), in relation to particular civil proceedings, the Court may, by order, dispense with any requirement of rules of court if satisfied that it is appropriate to do so in the circumstances of the case.
Batterham is not a plaintiff in the proceedings and he accepts that in his personal capacity he has no rights or claims against Nauer, which would give him standing properly to join as a plaintiff against Nauer. The question is whether the Court should dispense with the requirements of the rules of court and allow Finsec to conduct these proceedings by Batterham, without a legal practitioner on the record. Finsec seeks this leave by Notice of Motion filed on 20 November 2019.
I do not think that it is appropriate to dispense with the requirement. Justice dictates that leave should be refused. These proceedings have been preceded by various failed other proceedings motivated by Batterham through Maylord Equity Management Pty Limited ("Maylord") against Nauer, in this and the Federal jurisdiction, all arising out of substantially the same matrix of facts and all seeking to assuage the same basic complaint.
Finsec replaced Maylord as trustee of BRF on 27 June 2018. It is, as was Maylord, Batterham's vehicle. There are significant outstanding orders for costs against Batterham in favour of Nauer in this and that jurisdiction. Batterham has no prospect, he says, of paying them.
There are significant costs orders against Maylord. It is plain that it has no prospect of paying them.
Doing the best I can to describe it, Batterham's underlying grievance is that he had, or was to have, a minority interest through corporate entities in a joint venture with Vesture Limited ("Vesture") and perhaps others, in a strata property management business conducted through an entity called Victorian Body Corporate Services Pty Limited ("VBCS"). Vesture is associated with Nauer. Batterham complains that he did not get his fair share of the venture and that the other joint venture participants divested themselves of their interests in the venture for value, but left Batterham out of the process, as a consequence of which he says he suffered economic loss and personal stress. The relevant events occurred principally between 2007 and 2011.
A Settlement Deed was entered into on 4 July 2011, under which Vesture, asserted by Batterham to be controlled by Nauer, bought from Maylord, the shares through which it participated in the venture. Maylord and Batterham released Vesture and all others from all claims. Vesture paid Maylord $450,000. By express provision, Nauer has the benefit of the releases under the Settlement Deed in certain events, which, I am prepared to accept, have occurred.
In 2011, Batterham, through Maylord, sued an entity called Parazelsus in the Federal Court in connection with the same venture, saying that Parazelsus, apparently also associated with Nauer, had a majority interest in the joint venture and had agreed, but had failed, to ensure that he received certain shares in VBCS and to pay him certain fees. Parazelsus, which was a Hong Kong entity, did not defend and Maylord obtained judgment for $952,775. Parazelsus never met the judgment. No claim was made against Nauer in those proceedings.
Batterham was made bankrupt on 13 November 2014, in circumstances unrelated to this present case.
Maylord then commenced new proceedings against Nauer in this list on 19 December 2014. A new director, Mr Ohlson, was appointed to Maylord and I gave him leave to conduct the proceedings. Maylord failed to comply with directions and I dismissed the proceedings on 24 April 2015, on terms that it was without prejudice to it recommencing them within 12 months. Maylord recommenced two days before the expiry of the 12 months.
On 24 October 2016, Bergin CJ in Eq struck out the Commercial List Statement and ordered Maylord to pay Nauer's costs, fixed at $25,000, prior to filing any proposed amended pleading. Maylord moved by motion to set those orders aside. On 6 February 2017 I dismissed the motion with costs, but I was told that more information which could sustain the motion, might be available and I gave leave for it to be remotivated within six months. Maylord was thus given another indulgence. Maylord filed a further Notice of Motion, which I dismissed on 7 April 2017 when Maylord did not appear. On that day, Maylord filed a Notice of Motion seeking to set aside my orders.
On 28 April 2017 Nauer filed a Notice of Motion seeking orders that the proceedings be stayed or dismissed because Maylord under superannuation legislation lacked authority to represent a superannuation fund as a consequence of Batterham's bankruptcy.
On 12 May 2017, Ward CJ in Eq found that Maylord did not have authority. Her Honour dismissed Maylord's Notice of Motion and made a costs order in favour of Nauer for $55,000.
On 2 August 2017, Nauer filed a Notice of Motion seeking an order that the proceedings be dismissed for want of prosecution and that Batterham pay part of the costs.
On 6 November 2007, Slattery J dismissed Maylord's proceedings for want of due dispatch, and ordered Batterham to pay part of Nauer's costs. Slattery J assessed Batterham's share of those costs as $163,456.71.
On 13 December 2017, Maylord filed a Notice of Motion seeking that Slattery J's orders be set aside. On 2 February 2018, I dismissed it with costs. Maylord and Batterham sought leave to appeal from the Court of Appeal in relation to the orders of Bergin CJ in Eq, Ward CJ in Eq and Slattery J. That Court refused leave on 10 April 2018.
On 24 May 2018, Nauer served Batterham with a Bankruptcy Notice. Batterham then moved the Federal Court to set aside the Bankruptcy Notice. In those proceedings he sought to raise by cross-claim the substance of the claim in the proceedings dismissed by Slattery J. He also commenced new proceedings in the Federal Court by Originating Application and Statement of Claim, this time in his own name against Nauer, seeking to vindicate the same grievance.
On 11 April 2019, Gleeson J of the Federal Court dismissed Batterham's proceedings. Batterham sought leave to appeal out of time. This extension was refused by Flick J on 18 October 2019.
On 30 October 2019, Finsec started this case.
It is against this background that Finsec seeks dispensation from the requirement that it have a solicitor on the record and seeks leave for these proceedings to be conducted by Batterham. There is no good reason to permit this, and every good reason not to permit it. To permit it would undermine the significant policy reasons underlying the Rule. Where serious allegations of dishonesty are proposed to be made, legal practitioners have significant responsibilities to the Court. Batterham has none of these. I have no confidence that he will behave ethically or responsibly, especially where what he says is clothed with absolute privilege. A symptom of the absence of the safeguard of a qualified practitioner is the Commercial List Statement, which is embarrassing and would be struck out if the proceedings continued. I shall refer to this later. I am not satisfied that the proceedings have any prospects of success, not least of all because of the terms of the Deed of Settlement. The Commercial List Statement is fraught with difficulties. As an articulation of a claim it is unintelligible.
Amongst others, it makes allegations of intentional and willful misrepresentation, conspiracy, fraudulent conspiracy, conspiracy to defraud, breaches of joint venture fiduciary obligations, non-disclosure, intended acts of deception and fraud. It incorporates a definition of fraud said expressly to come from the Crimes Act 1900 (NSW). It includes the following paragraphs:
80. The defendant claims to hold master in economics from St Gallen University, plus a bachelor in business administration and has been or is a board member and/or chairman of several international companies. With such credentials, he must know the difference between what is honest and dishonest business behaviour, plus make it his business to become aware of regulations affecting a listed company in Australia prior to becoming a shareholder in an Australian listed company
82. By reason of the offer made by Vesture to Promoter on 8 June 2011, the defendant deprived Promoter of fair value for its promotion of the joint venture by misrepresentation, deceit and fraud to gain a financial advantage for himself and expense of Promoter.
83. By reason of conspiracy to defraud and the breaches of his joint venture fiduciary obligations as a joint venturer, the defendant deliberately and purposely and with the requisite intent, caused Promoter as a minority shareholder to have no bargaining power for the sale of its shares. This resulted in Promoter not being able to obtain any further value for its ZL and ZCL shares, other than the offer made on 8 June 2011.
(The pleading defines Finsec, Maylord and BRF as Promoter. ZL and ZCL are Ztrata and Ztrata Capital Limited which were apparently to be corporate vehicles for the joint venture.)
Despite the manner in which it is now framed, it is plain that these proceedings seek to motivate the same complaints dealt with in earlier proceedings in this Court and dismissed, and proceedings dealt with in the Federal Court and dismissed.
A body of correspondence between Batterham and the solicitors acting for Nauer is in evidence. They include the following things said by Batterham In an email of 27 January 2017 Batterham wrote to Nauer's solicitor:
"I tell you you fucking arsehole, I do all I can to destroy you."
In an email to the solicitor of 22 April 2017:
"This matter has a long way to go, my friend, and I have nothing to lose."
In an email to the solicitor of 27 May 2017:
"I am 69 years old and living on a pension. I have nothing to lose by causing Nauer as much pain as I can, as he took away my retirement nest egg for reasons that I am unable to fathom."
In an email to the solicitor on 12 April 2018 he wrote:
"I suggest that you do not tell Nauer that it is all over, as it is not. I am now moving to plan B."
(I interpolate that when I asked Mr Batterham what plan B was, he said "these proceedings").
In an email to Nauer's solicitor on 24 May 2018 he wrote:
"By now you will realise that I am not going away. As such, I imagine I will be seeing you on many more occasions in various courts."
Batterham has plagued Nauer for some years now with multiple unsuccessful proceedings, including motions and appeals. He owes Nauer a significant amount of money for costs and he has no resources to pay. His correspondence indicates an intention to keep on going to cause Nauer harm and inconvenience.
The motion is dismissed. Given Batterham's unequivocal statements that neither he nor Finsec have any resources to pay a lawyer, it seems inevitable that the proceedings should be dismissed. I will hear the parties on this and on the question of costs
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Decision last updated: 18 December 2019
Parties
Applicant/Plaintiff:
Finsec Pty Limited as Trustee of the Batterham Retirement Fund