IWANKIW -v- BOORD as executrix of the will of the late ROMAN IWANKIW [2022] WASC 186 (27 May 2022)

4 For the following reasons, I have determined that Boord's application should be dismissed.

5 On 30 June 2020, Iwankiw issued a writ claiming that Boord breached the fiduciary duties owed to Iwankiw. The basis for the claim is allegations that Boord undersold six properties of the estate to family members and that Boord conferred on a family member free occupation of some of those properties.[1]

6 Boord filed a defence on 26 May 2021. The defence denies that Boord breached any fiduciary obligation. It pleads that Iwankiw consented or acquiesced to the sale of the properties and that Iwankiw is estopped from making or alternatively has waived his right to make the breach allegations.[2] Boord further pleads in answer to the whole of the statement of claim that the action should be dismissed as an abuse of process.[3] In addition, Boord seeks relief from personal liability under s 75 of the Trustees Act 1962 (WA).[4]

7 In respect of its abuse of process plea, Boord pleads that the causes of action in these proceedings are encompassed within and were compromised by way of accord and satisfaction reached in settlement of earlier Supreme Court proceedings between the defendants in this action and Jochen Iwankiw and Gwendolyn Jean Iwankiw in CIV 2902 of 2017 (the Boord Action).[5] The accord and satisfaction is said to be constituted by:

(a) a letter from the solicitors for the beneficiaries in the previous proceedings, Solomon Brothers, to the solicitors for the executrix in the previous proceedings, Kitto & Kitto, dated 15 November 2019 by which the beneficiaries offered to compromise 'the subject matter of the Supreme Court proceedings';

(b) a minute of consent orders enclosed in the letter dated 15 November 2019 by which, amongst other things, the beneficiaries proposed to transfer to the executrix 1/1000th of their interests in lots the subject of the estate; and

(c) an email from Kitto & Kitto to Solomon Brothers dated 10 December 2019 accepting the proposal set out in the letter dated 15 November 2019 and enclosing the signed minute of consent orders.[6]

8 Boord pleads that on a proper interpretation of the accord and satisfaction 'the subject matter of the Supreme Court proceedings' as those words are used in the letter dated 15 November 2019 comprise, among other things, allegations that the executrix had breached her duties as executrix by entering into the transactions at alleged undervalue and to the alleged related parties pleaded by Iwankiw at par 7 of the statement of claim in these proceedings.[7]

9 Iwankiw filed a reply on 11 June 2021. The reply denies the abuse of process plea and essentially states that the resolution of the Boord Action was unrelated to any of the claims made by him in this action.

10 By letter to the court dated 22 June 2021 Boord applied for an order that pursuant to O 32 r 4 of the Rules of the Supreme Court 1971 (WA) (the Rules) the matters raised at pars 12 ‑ 15 of the defence and par 3 of the reply be determined at a trial of a preliminary issue.

11 In support of the application, Boord relied on an affidavit sworn 21 September 2020 and filed in TRU 5 of 2020. The affidavit attaches a large number of documents.

12 Order 32 r 4 of the Rules empowers the court to order the trial of separate questions or issues:

4. Time of trial of questions or issues

The Court may order that any question or issue arising in a cause or matter whether of law or fact or partly of law and partly of fact, and whether raised by the pleadings or by agreement of the parties or otherwise be tried separately from any other question or issue whether before at or after the trial or further trial of the proceedings, and may direct that a case and the question or issue for decision be stated.

13 In considering whether to exercise this power, regard must be had to the objects in O 1 r 4A and r 4B of the Rules:

4A. Delays, elimination of

The practice, procedure and interlocutory processes of the Court shall have as their goal the elimination of any lapse of time from the date of initiation of proceedings to their final determination beyond that reasonably required for interlocutory activities essential to the fair and just determination of the issues bona fide in contention between the parties and the preparation of the case for trial.

4B. Case flow management, use and objects of

(1) Actions, causes and matters in the Court will, to the extent that the resources of the Court permit, be managed and supervised in accordance with a system of positive case flow management with the objects of -

(a) promoting the just determination of litigation; and

(b) disposing efficiently of the business of the Court; and

(c) maximising the efficient use of available judicial and administrative resources; and

(d) facilitating the timely disposal of business; and

(e) ensuring the procedure applicable, and the costs of the procedure to the parties and the State, are proportionate to the value, importance and complexity of the subject matter in dispute; and

(f) that the procedure applicable, and the costs of the procedure to the parties, are proportionate to the financial position of each party.

(2) These rules are to be construed and applied and the processes and procedures of the Court conducted so as best to ensure the attainment of the objects referred to in subrule (1).

14 The principles applicable to the exercise of the power were set out by Newnes JA in Landsdale Pty Ltd v Moore:[8]

In relation to the present case, experience has shown that the attraction of the separate trial of issues is often illusory; it is a course that often causes the very delay, additional expense and uncertainty of outcome it was intended to avoid. It is self-evident that generally a trial on liability alone will be shorter and less costly than a trial on both liability and damages. But it is equally self-evident that separate trials will not necessarily lead to the overall action being resolved sooner or at a lesser cost. If the plaintiff is successful on liability and it is necessary to have a further trial on the issue of damages, the contrary may well be the case. Separate trials also raise the prospect of separate appeals on the findings on liability and quantum, which, if it occurs, will increase the time and expense involved in the overall action. The vagaries of litigation are such that its course often does not run smoothly, or predictably. An application for the separation of issues is therefore to be approached with some caution. See generally Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1, 55.

The starting point is that ordinarily the trial of an action should include all issues arising in the action. The determination of an application for separate trials requires a careful balancing of the prospective advantages and disadvantages involved in separating the issues, bearing in mind the uncertainties inherent in litigation, and that, once embarked upon, it is a course from which it may be difficult and even impossible to retreat. It should only be embarked upon where its utility, economy and fairness to the parties is clearly made out: Tepko (55).

It is impossible to provide a comprehensive description of the circumstances in which it is appropriate for there to be separate trials of liability and damages. The exercise of the discretion to make such an order will depend upon what is in the interests of justice in the particular case. However, the separate trial of issues will generally only be appropriate in cases where there is a clear line of demarcation between those issues, and the determination of one in isolation from the other is likely to result in a substantial saving in time, inconvenience and expense : Allen v Gulf Oil Refining Ltd [1980] UKHL 9; [1981] AC 1001; Smith v Maloney (1998) 19 WAR 209 at 223.

15 In Carlo Nobili SpA Rubinetterie v Militaire Nominees Pty Ltd,[9] McKechnie J distilled the relevant principles as follows:

• A separate trial of issues is only appropriate in clear and simple cases.
• Separate trials of issues should only be embarked upon when the utility, economy and fairness are beyond question.
• The fact that the resolution of a separate trial may determine the litigation is relevant.
• Separate trials of issues may be appropriate where it is likely to save expense and inconvenience.
• There is a focus in the Rules of the Supreme Court on the expedition of determination of matters before the Court and separate trials of issues may advance the expedition.
• A possibility that the determination of issues tried separately may lead to settlement should be taken into account even though the issues may not finally dispose of the action.
• In many cases the formulation of specific questions to be tried separately, from and in advance of other issues, will assist in the resolution of the matters in issue if the questions are capable of final answer in accordance with the judicial process.
• Separate trials are inappropriate where the result depends on complex issues of fact or when a preliminary question is one of mixed fact and law.
• The procedure should be confined generally to cases where facts are complicated [sic] and the legal issues short, otherwise it can be a treacherous shortcut.
• Separate trials may be productive of delay, extra expense and uncertainty of outcome, which they are intended to avoid. Saving some time is often illusory when the parties have the necessity of making full preparation and factual matters relevant to one issue are relevant to others which overlap.
• There is potential for further appeals.

16 It seems to me that there is an error in his Honour's statement that 'The procedure should be confined generally to cases where facts are complicated and the legal issues short' (emphasis added), particularly having regard to his Honour's prior observation that the 'separate trials are inappropriate where the result depends on complex issues of fact'. That interpretation has been adopted in subsequent decisions.[10]

17 In determining whether issues should be tried separately, the applicant is required to lead some evidence to establish that separate trials would be cost effective. In Landsdale, Newnes JA stated:[11]

In my respectful opinion, the Master erred in the exercise of his discretion in ordering separate trials of the issues of liability and the quantum of damages in the present case. The material before the Master was not capable of establishing that it would be a practical and more efficient and cost-effective course than a trial on all issues.

The affidavit of Mr Moore did not provide a basis upon which a proper assessment could be made of the likely length and cost of the trial if both issues were tried together or the time or cost that might be saved if there were separate trials. There was also no evidence upon which any assessment could be made as to the extent, if any, to which the trial of the action might be delayed if the action were to proceed to a trial of all issues. There was not, in my respectful opinion, sufficient [evidence] before him to enable the Master to conclude that the damages 'would take some proving' or that expert evidence on damages would delay the hearing of the trial and lengthen the trial considerably. While there is certainly some intimation in the affidavit that, at least in Mr Moore's view, proving the quantum of damages will be a substantial undertaking, the high level of generality of Mr Moore's statements simply did not permit any proper assessment to be made of what was likely to be involved.

18 In support of her application for a preliminary trial, Boord submits that there are three particularly salient points to note about the abuse of process plea:

(1) the factual enquiries relevant to the abuse of process dispute are entirely separate and discrete from any of the other pleaded issues;

(2) the asserted accord and satisfaction arises out of two documents, namely, a letter from Solomon Bros to Kitto & Kitto dated 15 November 2019 and the email response dated 10 December 2019, and their attached consent orders. The plea and reply relevantly involves the proper interpretation of that correspondence and in particular, consideration of the words 'the subject matter of the Supreme Court proceedings'; and

(3) there is no suggestion that any oral evidence will be relevant or admissible in relation to the abuse of process plea. To the extent that the plea and reply involves an analysis of the issues litigated in the earlier proceedings, those issues will appear from the documentary record in the earlier proceedings, including the terms of the consent judgment.[12]

19 Boord submits that there is very considerable utility, economy and fairness in determining the abuse of process plea preliminary to any other issue. She asserts that if the plea is successful it would be 'stopped in its tracks' without Boord having to deal with Iwankiw's allegations on their merits.[13] Alternatively, Boord submits that if the plea is not successful, there would be no detriment to Iwankiw or the administration of justice because the remaining issues in dispute would proceed to trial without any possibility of them having been contaminated by anything which occurred in the earlier trial.[14] Further, if the plea is unsuccessful then the action would proceed with the parties benefiting from the knowledge that the case will be tried on its merits. In this respect, Boord contends, a split trial is likely to facilitate earlier resolution.[15]

20 Boord further submits that a separate trial would save considerable expense and inconvenience. If successful, it would obviate the need to call a wide variety of lay and expert evidence relevant to the other issues in dispute. If unsuccessful, it would not add to the burden of the parties because the issues in the two trials would be and are separate and distinct.[16]

21 Iwankiw submits that Boord has not provided the court with any material capable of establishing that the trial of the abuse of process plea would be a practical and more efficient and cost-effective course than a trial on all issues.[17] She says that the affidavit sworn 21 September 2020 provides no basis upon which a proper assessment could be made as to the length and cost of a trial on all issues compared to separate trials.[18]

22 Iwankiw asserts that Boord's submissions make the flawed assumption that success in the proposed trial of a preliminary issue will itself wholly determine and conclude the action because it overlooks the existence of the claim that Boord conferred free occupation of the estate land of a family member.[19] Consequently, Iwankiw argues, a successful abuse of process plea would not, or alternatively would have a high probability that it would not, defeat the claim for the conferral of occupation and the claim would need to be tried on its merits.[20]

23 Alternatively, Iwankiw submits that if the abuse of process plea was wholly rejected, there would be no benefit to the parties in having it tried as a preliminary issue because the parties would have incurred additional costs and the final resolution of the action would have been delayed.[21] Iwankiw asserts that a trial of a preliminary issue would only serve to bifurcate the trial of the issues, involve far greater expense and delay and would accordingly not be in the interests of justice.[22]

24 Iwankiw further submits that the abuse of process plea has limited prospects of success.[23] She contends that the subject matter of the Boord Action was limited only to:

(1) whether the relevant 1/1000th interests should be transferred to the defendant; and

(2) whether, and if so on what terms, orders should be made for the sale of properties in which 1/1000th interests were held.[24]

25 Iwankiw contends that these two issues are all that was resolved by the resolution of the subject matter of the Boord Action. Further, there is no agreement to provide any release or otherwise exonerate Boord from the claims made by Iwankiw in this action, and the subject matter of each of the Boord Action and this action is clearly sufficiently distinguished that pursuit of this action could not constitute an abuse of process.[25]

26 Even if the subject matter of this action overlapped that of the Boord Action, Iwankiw submits that there is no basis for it to be estopped from bringing this action because the Boord Action was not determined on its merits.[26]

27 Boord has not led any evidence to enable the court to form a view as to the likely length and cost of the trial if all issues were tried together or the time or cost that might be saved if there were separate trials. Separate trials of issues should only be embarked upon when the utility, economy and fairness are beyond question. On that ground alone the application should be dismissed.

28 I accept Iwankiw's submission that the subject matter of the claim for the defendant conferring free occupation of estate land on a family member was not raised or retained in any way in the Boord Action. Boord fails to explain the basis on which she contends that this claim is susceptible to being defeated upon by the abuse of process plea. Although the claim is unlikely to be for a large sum, it is nevertheless a live issue on the pleadings.

29 Boord submits that the preliminary issue could be resolved without oral evidence. If nothing else, having regard to the terms of the alleged settlement, evidence as to the matrix of facts may be admissible and this is likely to involve oral evidence.

30 It is not obvious that separate trials of issues will likely save expense and inconvenience given that all matters may not be resolved by a separate trial. Further, for that reason I am not persuaded that a separate trial will be expeditious.

31 I am not persuaded that there is utility, economy and fairness in determining the abuse of process plea preliminary to any other issue.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Statement of claim filed 30 June 2020 [7] - [8].

[2] Defence filed 26 May 2021 [7.4], [8] (Defence).

[8] Landsdale Pty Ltd v Moore [2009] WASCA 176 [20] ‑ [22].

[9] Carlo Nobili SpA Rubinetterie v Militaire Nominees Pty Ltd [2004] WASC 47 [4]. See also M+W Singapore Pte Ltd v Multiplex Constructions Pty Ltd [2018] WASC 253 [114] - [115]; Terravision Pty Ltd v Black Box Control Pty Ltd [2014] WASC 261 [7] - [9].

[10] See, for example, M+W Singapore [115].

[12] Defendant's submissions in support of application for trial of a preliminary issue dated 9 July 2021 [7] (Defendant's Submissions).

[17] Plaintiff's submissions in opposition to the defendant's application for a trial of a preliminary issue dated 19 July 2021 [12] (Plaintiff's Submissions).

[22] Plaintiff's Submissions [17] - [18].

[25] Plaintiff's Submissions [26] - [28].