Jacobsen v Jacobsen

HOA

1. The HOA is expressed to be "without prejudice and confidential". It was executed "as an agreement" by Colin, Dalys and Amber for "the Colin Jacobsen Family" and by Kevin, Billie and Michael for "the Kevin Jacobsen Family".
2. In the proposed amended statement of claim, the "Kevin Jacobsen Family" is defined as each of Kevin, Billie, Michael, David and Vicki - see [1]; the "Colin Jacobsen Family" as Colin, Amber, Dalys and Clayton - see [9(a)]; and the family members and companies under their control, together, as "the Kevin Jacobsen Family Interests and the Colin Jacobsen Family Interests, respectively - see [16].
3. At the time of entry into the HOA, KJPL was in receivership (as is apparent from the terms of the HOA).
4. The HOA begins with the following disclaimer: 1.1 Nothing in or arising from this document or matter referred to in this document or raised during the course of any negotiations arising from or in relation to the matters contained in this document: 1) may be disclosed to any third party without consent of each party; and/or 2) shall comprise any offer capable of acceptance such as to create a legally binding contract; and/or 3) shall comprise a representation or warranty upon which any party may rely, until such time as final documentation is agreed and executed by each party.
5. The HOA then addresses what was contemplated would occur in relation to each of Jacobsen Holdings (cl 2), JVM (cl 3) and TOML (cl 4), before containing a clause headed "General Issues".
6. In relation to TOML, for example, the HOA provides that the shareholders will enter into a "comprehensive shareholder agreement and implement any necessary amendments to the constitution of TOML to permit implementation of this settlement (in particular the composition of the board and the conduct of a sale process - see below)" (cl 4.1); it being stated that "[a]t this stage, Zoulos and KJPL do not want to sell their respective interests" (cl 4.2). Clause 4.4 of the HOA provides that: Each party to the HOA shall enter into a Deed whereby they each agree that they will not commence any litigation against any of the other parties for any reason, other than to enforce a provision of the Settlement Documents that will be entered into consequent upon this HOA, for a period of at least 18 months. In addition each party will enter into a Deed of Release as referred to in clause 5.4 [sic; scil; [5.5]] of the HOA.
7. It was proposed that a TOML shareholder agreement, covering at least the issues there identified (including "transfer of shares"; "right of refusal"; "drag along and tag along rights"; "change in effective control of a shareholder"; and "default"), would be negotiated, agreed and executed concurrently with other settlement documents, subject to any specific provisions of the HOA (cl 4.16).
8. Clause 5.5 of the HOA provides that: Each party shall enter into a full deed of release whereby all claims any party may have against any of the other parties shall be released and all current litigation between the parties shall cease.
9. The terms of the HOA and any subsequent documentation were said to be subject to the approval of the KJPL Receiver & Manager (cl 5.7) and the stated target date for executing all settlement documents was 5 June 2009 (cl 5.8).

Settlement documents

1. As contemplated by the HOA, a Settlement Deed was then entered into (dated 26 June 2009) by the parties identified in Schedule 1 thereto as the First Group (broadly, Colin's family, Zoulos and another entity) and the parties identified in Schedule 2 thereto as the Second Group (broadly, Kevin's family, KJPL and Amadaeus Pty Ltd, the entity which was the trustee of The Pan Family Trust, a discretionary trust for the Kevin Jacobsen side of the family).
2. The Settlement Deed provided for a raft of "Settlement Documents" to be entered into (see schedule 6) and identified various court proceedings then on foot between one or more of the parties to the Deed (see schedule 5). Clause 3 contained an agreement, with effect from final execution of the Settlement Documentation, by each party to: …forbear from making all claims or demands and from bringing all actions, suits, proceedings and from enforcing all rights, verdicts and judgments of whatsoever kind or nature and whether at law, or in equity, or arising out of the provisions of any statute howsoever and whether for damages, costs, expenses or otherwise and whether for a liquidated or an unliquidated sum, which that party has, or might have, or, but for the provisions of this Deed, could or might have had, against each other party, arising out of, or relating to the Claims and the Proceedings and the Other Proceedings.
3. Clause 4 then contained irrevocable and unconditional releases and discharges from all Claims (as defined earlier in the Settlement Deed).
4. The Settlement Documents executed on the same day as the Settlement Deed included shareholders' deeds and circular resolutions of members of the respective companies (TOML, Jacobsen Holdings and JVM) for the adoption of a new company constitution.
5. Relevantly, the respective shareholders' deeds and the new company constitutions all contained event of default provisions in similar terms, permitting the shareholder not in default to purchase all of the defaulting shareholder's shares in accordance with a particular mechanism. The specified events of default included an "Insolvency Event", which was defined in relation to any entity to include the appointment of a receiver, receiver and manager, administrator, trustee or similar official over any of the assets or undertaking of the entity (though with a carve out, not relevant for present purposes, in the case of KJPL for a receiver or receiver and manager appointed by Allind Pty Ltd in certain specified circumstances) (see for example the definition of Insolvency Event contained in the TOML shareholders' deed).
6. The mechanism for the purchase of the defaulting shareholder's shares included a process for the determination of the purchase price by an independent valuer (to be agreed, out of a specified list of accounting firms, by the directors but in the absence of agreement to be referred for determination in accordance with the procedure provided for in a dispute resolution clause). Part of Kevin's complaint is that the procedure was not followed in that an opportunity was not provided for him to select, brief or consult any valuer to be appointed (see [51] of the proposed amended statement of claim).

Alleged oral agreement in May 2009

1. At this point, though out of chronological order, it is convenient to note that the real thrust of Kevin's complaint is not that he did not have an opportunity to consult with the valuer to be appointed for the share sale process under the event of default provisions or that the shares were purchased by Zoulos at an undervalue, though those are allegations which are made in the pleading and which thus form part of his overall complaint against Colin's side of the family. Rather, Kevin's principal complaint is that there was any provision for an event of default procedure included in the Settlement Documents at all.
2. Kevin alleges that there was a meeting on or about 11 May 2009 between Amber, as the representative of the Colin Jacobsen Family and Zoulos (with actual or alternatively apparent or ostensible authority to represent the Colin Jacobsen Family and Zoulos), and Michael, as the representative of the Kevin Jacobsen Family (with actual authority to represent the Kevin Jacobsen Family) (see [20]-[22]) at which meeting an agreement was reached "to be reduced to writing" ([23]). The alleged "Agreement to be reduced to writing" was, in effect, that there would be an "equal separation" of the assets of the "Business" as between the families and that the assets of the "Business" would be sold and, after payment of debts, the net sale proceeds distributed equally between the two families ([23]).
3. Kevin alleges ([25]) that the HOA reproduced in substance the oral terms of the "Agreement to be reduced to writing". There is no allegation that the alleged "Agreement to be reduced to writing" contained any express term to the effect that there would be no event of default provision in any document entered into for the purposes of achieving the separation of assets there contemplated. Moreover, the HOA itself contemplates the inclusion of a default provision at least in the TOML shareholder's agreement (see [23] above).
4. It is then alleged that, on the evening of 25 June 2009 (after the Settlement Documents had been prepared), there was an agreement between the Colin Jacobsen Family and Zoulos, on the one hand, and the Kevin Jacobsen Family, Amadaeus and KJPL, on the other hand, to remove the various event of default provisions which had been included in drafts of the Settlement Documents (see [37]). The agreement is particularised as having been made between Amber, Kevin and Michael and as being partly oral (in a telephone conversation between Kevin and Amber; see 137) and partly in writing (by an exchange of letters dated 25 June 2009 between Kevin and Amber; see 137). (The authenticity of those letters, marked as Exhibit A in these proceedings, will, I am informed, be an issue in dispute in the proceedings. I also note that, although particularised at 137 as "an exchange of letters each dated 25 June 2009", the letters tendered are in fact dated 24 June 2009 and 26 June 2009, respectively.)

Appointment of receivers to KJPL in 2010 and subsequent events

1. The receivers who had been appointed to KJPL on 2 April 2009 under a charge registered by Allind Pty Ltd (and who were in place at the time the settlement documentation was negotiated), Brian Silvia and Andrew Cummins, retired on 24 June 2009.
2. However, on 19 February 2010, receivers and managers were again appointed to KJPL (this time, John Lord and Atle Crowe-Maxwell). It is not suggested that Colin or anyone from his side of the family played any role in the appointment of the receivers. Rather, they were appointed under a second fixed and floating charge registered by Allind Pty Ltd over the assets of KJPL, including the assets and undertakings of The Pan Family Trust (a Kevin Jacobsen family trust). On 3 March 2010, Andrew Wily was appointed as receiver under a third charge (a fixed and floating charge registered by Syndicate Mortgage Securities Pty Ltd, Starberg Investments Pty Ltd and Commercial Mortgage Trade Pty Ltd over the entirety of the assets of KJPL).
3. Zoulos asserted that the appointment of receivers triggered the rights held by it under the event of default provisions contained in the respective shareholders' deeds and constitutions of each of TOML, Jacobsen Holdings and JVM. On or around 18 March 2010, default notices were issued on behalf of Zoulos to Kevin, as director of KJPL, in respect of TOML, Jacobsen Holdings and JVM. Under the respective companies' constitutions, this had the effect of suspending KJPL's rights and entitlements as a shareholder of each of the companies (other than in relation to the appointment of the independent valuer in respect of a sale of the shares) and Zoulos became entitled to acquire (as it then proceeded to do) KJPL's shares in each of those companies.
4. On 3 March 2011, John Sheahan and Ian Lock were appointed by Kevin as joint and several administrators of KJPL pursuant to s 436A of the Corporations Act 2001 (Cth). At the second meeting of creditors on 7 April 2011, it was resolved that the company be placed into liquidation and the administrators were appointed joint and several liquidators. (Copies of the liquidators' report dated 6 September 2012 recording the above information was in evidence before me.)
5. A sequestration order was then made against Kevin's estate on 24 June 2011. (He was discharged from bankruptcy on 13 April 2015. His wife, Billie, was also made bankrupt and has also recently been discharged from bankruptcy.)
6. As at September 2012, the liquidators of KJPL were considering potential claims against Allind Pty Ltd and Zoulos in relation to the circumstances in which KJPL's shareholdings in the three companies referred to above were dealt with by those entities. The potential claims identified by the liquidators were claims "in respect of uncommercial transactions in relation to the sale of the company's shares".
7. By August 2017, as stated in the liquidators' report to creditors of 15 August 2017, the remaining issue in the administration of KJPL was: … the extent to which the potential legal claims available to the Company and us as the Company's liquidators against Allind Pty Ltd (now deregistered) (Allind), Zoulos Pty Ltd (Zoulos) and others, could be pursued.
8. The liquidators reported to creditors as to earlier discussions concerning the assignment of the claims to Kevin, noting (among other things): that those discussions had progressed to the point where, in June 2015, a deed of assignment was executed whereby the claims available would be assigned to Kevin; that an application for court approval to enter into the assignment deed had been filed in August 2015; that Black J had determined that the application be held over until such time as Kevin could demonstrate that he had the capacity to fund any proceedings that might be brought should the assignment be effected; and, ultimately, that the liquidators considered that Kevin had repudiated the assignment deed and orders were made by consent on 6 September 2016 that the proceedings before Black J be discontinued with the court noting that the assignment deed was no longer in effect.
9. The liquidators' report further noted that Kevin's solicitor had written on 22 September 2016 putting forward three options that might allow Kevin to pursue his claims: first, that the company commence fresh proceedings (retaining the said solicitor to represent the company); second, that the company, under the control of Kevin's son David and subject to creditor approval, commence fresh proceedings again retaining the said solicitor); and, third, that Kevin apply to the Court to seek leave to take action in the company's name. The liquidators rejected the first option (as the litigation was inherently unpredictable and the proposal as put did not take into account possible adverse costs orders or their remuneration), advised that the second option entailed the convening of a meeting of creditors (and a request had been made for the liquidators to be put in funds to meet the associated costs); and that the third option was a matter for the Courts. A further proposal was apparently put to the liquidators on 4 April 2017 (the contents of which were not explained in the report to creditors) but the liquidators required legal advice and funds to meet the costs of that advice in order to consider the fresh proposal; and it appears that this was not forthcoming.
10. The liquidators have advised creditors that it is currently expected that the liquidation would be completed towards the end of 2017.

Commencement of Proceedings

1. The statement of claim commencing these proceedings (which Kevin now accepts was unnecessarily prolix) was filed on 24 June 2015, the day before the expiry of statutory limitation periods for at least some of the causes of action then pleaded. Nothing was apparently done to effect service until mid-December 2015, a week before the expiry of the time for service under the UCPR.
2. The first attempt to serve Dalys was made on 17 December 2016 (see the affidavit of attempted service of Nick Tsioukanis sworn 23 December 2015 at [5]-[8]). The process server was told by Dalys' husband that she "was away up north and will be back after Christmas". The next day the process server tried again. He was again told that Dalys was not there. Her husband offered to pass the documents on to her. The process server tried again on two further consecutive days. Nothing further was done until May the next year, when a process server returned to her house and delivered the statement of claim to her (see affidavit of service of Perry Gamsby sworn 11 May 2016). For Amber and Dalys it is said that, once Kevin was told that Dalys would be away until after the expiry of the time for service, Kevin should have made an application for an extension of time for service or for substituted service.
3. Kevin, however, submits that it can be inferred that the offer by Dalys' husband to pass the documents on to her was accepted and that the documents were left with him on or about 18 December 2016. I would not draw any such inference. Not only is this something the process server could readily have said in his affidavit had that been the case; but it does not explain the further attempts to effect service on the following days, which would have been unnecessary had it been understood that service had already by then been effected.
4. In the case of Amber, service was effected at her place of business in New York on 18 December 2016 but not in accordance with UCPR Pt 11A. The need to comply with UCPR Pt 11A was drawn to the attention of Kevin's solicitors (i.e., the need to abide by the Hague Convention) on 12 February 2016 and again on 18 May 2016.
5. Amber and Dalys dispute that service of the existing statement of claim was validly effected on them before the statement of claim became "stale" and have filed a notice of motion under r 12.11 of the UCPR seeking orders in that regard. Clayton has taken no step in the proceedings. He also was not served with the statement of claim before it became stale.

Previous iterations of the claim

1. As has already been noted, the pleading initially filed was predicated on the assignment to Kevin from KJPL of the causes of action there pleaded. A deed of assignment to that effect was entered into on 23 June 2015 but this was conditional on the liquidators obtaining Court approval to the assignment, under s 477(2B) of the Corporations Act. As noted above, proceedings were brought by the liquidators to seek such approval and those proceedings were ultimately dismissed by Black J when the liquidators withdrew their application for approval.
2. In a proposed amended statement of claim served on 30 October 2016, Kevin sought to re-frame his claim based on an entitlement to sue as beneficiary of a trust (the Pan Family Trust). That proposed pleading did not contain an allegation that KJPL held the relevant shares on trust for Kevin; rather the allegation was that KJPL held the shares as a nominee (or agent) for a trustee of a discretionary trust (the trustee being Amadaeus Pty Ltd, which by then had been de-registered) (see [6] of the then iteration of the proposed amended statement of claim). Kevin does not now seek to bring his claim on that basis.
3. On 4 April 2017, a further iteration of the proposed amended statement of claim was served. This version of the pleading named an additional plaintiff, KevJac Pty Ltd (KevJac), a company that it was alleged had been appointed by Kevin as a new trustee of the Pan Family Trust.
4. On 26 April 2017, when the present applications were listed before Hallen J, his Honour was informed that KevJac proposed to seek an assignment of KJPL's causes of action from the liquidators (and that, in the event that the liquidators declined to assign those causes of action, an application would be made to the Corporations Judge to that effect) (see T 2.8). However, there is no evidence of any such assignment having occurred and no application in relation to any such assignment has been made.

Further proposed amended statement of claim for which leave is now sought

1. The basis on which Kevin now seeks to press his claims (see [2] of the further proposed amended statement of claim) is as assignee of all rights in respect of the causes of action pleaded that were formerly held by his trustee in bankruptcy, by Billie's trustee in bankruptcy, and by his children (i.e., Michael, David and Vicki).
2. Kevin says that he is authorised by the members of his side of the family to prosecute the proceedings on their behalf. He says that the basis of the claim "no longer relies on the assignment of the liquidator but on the personal contract between each side of the family, the equitable interest of the plaintiff arising from the fiduciary relationships between him, his brother, his sister in law, his nephew, his niece and interests associated with them" (written submissions at 5). He says that he "further relies upon the equities arising from the representations which induced him to enter into the series of transactions which resulted in his bankruptcy and the loss of the interests that he had in the assets of the companies prior to the decision on each side of the brothers' respective families to divide those assets between them".
3. The essence of Kevin's claim, as articulated in oral submissions, is based on the alleged agreement (evidenced by the two letters referred to above at [35] - Exhibit A) between Kevin and his brother, and their respective families, in relation to the division of assets of the business they had carried on, to the effect that there would not be any kind of default provision which would permit one party to acquire the assets of the others. Kevin's complaint is that, contrary to that agreement, the parties entered into a series of documents "which produced the result that the default provision came into existence", as a result of which Colin's side of the family was later able to acquire the assets which it is said it had been the intention of the parties were to be divided equally between the two of them. As already noted, a dispute as to the authenticity of the letters has been foreshadowed. There was no answer by Kevin to a notice for the production of the original of those letters, that notice being returnable on the date of the hearing of these applications.
4. Before turning to the structure of the now proposed pleading, I make the following observation.
5. How a constructive trust would be said to arise or should be imposed in favour of Kevin (whether in his own right or, as now sought to be pleaded, assignee of rights held by members of his family or his and his wife's trustees in bankruptcy) or the Kevin Jacobsen Family, when neither Kevin nor any of the members of his family was at the relevant time alleged to be the owner of, or to have any entitlement to, the shares that were the subject of the impugned transfer to Zoulos, was not articulated in any meaningful way on the present application. The criticisms made of the pleading in this regard, in the comprehensive submissions served on behalf of Colin in advance of the hearing of the present applications, went unanswered other than by the general invocation of the exclusive jurisdiction of equity. This is not a mere pleading point. It strikes at the fundamental basis of the proposed claim. And its significance is underscored by the various (ultimately unsuccessful) attempts made to date on behalf of Kevin to secure the assignment to him of the potential causes of action reposing in KJPL.

Structure of the proposed pleading

1. The structure of the proposed pleading can be outlined as follows.
2. The pleading commences (see [1]-[10]) with introductory paragraphs, including (at [2]) the allegation that Kevin obtained the right to sue as a result of various assignments "in respect of" the causes of action therein and the allegation (at [6]) that KJPL held the shares in TOML, JVM and Jacobsen Holdings as nominee for the (now de-registered) trustee (Amadaeus) of the Pan Family Trust and the subsequent appointment of KevJac as trustee of the trust.
3. Paragraphs [11]-[18] plead an oral joint venture (with a view to mutual profit), or alternatively a partnership, between Kevin and Colin in or about the late 1960's, for the purpose of "the continuing promotion of the musical group, and for the purposes of the promotion and production of pop and rock music concerts, and the promotion and capitalising upon activities associated with the music and entertainment industry", defined at [12] as the "Business". It is alleged that upon entry into the said joint venture, or alternatively the partnership, and commencement thereof, each of Kevin and Colin became a fiduciary and each assumed and owed fiduciary duties to each other (in particular, the duties alleged at [14]).
4. It is then alleged that, from about 1997, there was an agreement by Kevin and Colin "to extend membership of the Business" to members of their respective families and companies under their control with respect to each of their respective equal shares of the "Business" ([16]). At [18] it is alleged that thereafter a number of operations and activities were included within the Business. Those operations and activities were particularised as including various operations or activities conducted "through" TOML, JVM and Jacobsen Holdings ([18]).
5. From [19]-[43], the pleading recounts that, as at April 2009, the respective families were in dispute relating, inter alia, to matters concerning the affairs of TOML, JVM and Jacobsen Holdings, and pleads the agreement by the parties to settle their disputes on terms set out in the HOA and the execution of the Settlement Documents (as referred to earlier). In particular, it is alleged that the Settlement Documents initially drafted pursuant to the HOA included various "event of default" provisions; that there was an agreement and/or representations made by the defendants that the "event of default" provisions would be removed from the execution copies of the Settlement Documents ([37]-[40]); that in breach of the alleged agreement, or contrary to the alleged representations, the "event of default" provisions were in fact included in the execution copies of the Settlement Documents ([42]); that Kevin and his family did not know about the inclusion of these "event of default" provisions in the Settlement Documents ([34]); that Kevin and Billie signed the Settlement Documents without reading them, without knowing what was in them, and in circumstances where Kevin was under financial pressure from the then receivers of KJPL, and that the defendants knew these things ([34]-[36]).
6. At [43], it is alleged that the conduct of the Colin Jacobsen Family and Zoulos (in not causing the event of default provisions to be removed and in providing execution copies of the various settlement documents without ensuring the amendments were made to those documents in accordance with the alleged agreement/representations) was conduct deliberately engaged in, in order to obtain a "commercial advantage" at the expense of the Kevin Jacobsen Family, Amadaeus and KJPL; and (at 43) that this constituted: i. unconscionable conduct in equity; ii. innocent misrepresentation; or iii. an intention to deceive which was fraudulent.
7. See also the similar pleading of fraud at [54] in relation to the conduct of Zoulos in issuing, and of the Colin Jacobsen Family in causing or permitting Zoulos to issue, the respective default notices; and at [86] in relation to the conduct comprised in the overall introductory phrase "in the premises". As adverted to above, in the interlineated copy of the further proposed amended statement of claim (annexure A to Mr Carroll's affidavit) there is no such allegation of fraud - simply the allegation (at [43], [54] and [86]) of "unconscionable conduct in equity".
8. Paragraphs [44]-[85] then deal with the appointment of receivers to KJPL in February and March 2010 and the steps that led to the transfer of KJPL's shares in TOML, Jacobsen Holdings and JVM to Zoulos. It is alleged that, to the knowledge of the defendants, the "event of default" provisions did not entitle Zoulos to exclude KJPL's nominated director from the process of selecting an independent valuer to value KJPL's shares in the three entities ([50]); that Zoulos in fact excluded KJPL's nominated director from that process ([51]); that, as a result, the transfers of shares did not occur in accordance with the "event of default" provisions ([60(b)], [79(c)] and [85(b)]); that the transfer of the shares occurred at an undervalue and the valuations obtained for them were not independent ([60(a)], [60(d)], [79(b)], [79(e)], [85(a)] and [85(d)]); and that the receivers of KJPL had no power to transfer the shares ([58]).
9. Paragraph [86] pleads that, in the premises and by reason of the unconscionable conduct, the innocent misrepresentation or the fraudulent intention to deceive, the defendants are estopped from asserting or relying upon: the provisions of the settlement documents included in breach of the alleged representations/agreement (i.e., the event of default provisions); the circumstances giving rise to the issue of the notices of default; and their claimed entitlement to purchase KJPL's interest in the three entities.
10. At [87] it is asserted that, further in the premises, KJPL's interests in the three entities are held on trust by the defendants for the Kevin Jacobsen Family. In other words, the allegations of unconscionable conduct and the like, by reason of which Zoulos is said to have acquired the interest of KJPL in the relevant companies, are not said to give rise to any relief in favour of KJPL (the former legal owner of the shares in question, as trustee, it is said, for the Pan Family Trust). Rather, the relief claimed is a (constructive) trust in favour of Kevin and his family.

Relief claimed

1. A variety of relief is claimed in the further proposed amended statement of claim.
2. First, a declaration is sought in the following terms (prayer 1): A declaration that the agreement made 26 June 2009 between the Plaintiff on behalf of the Kevin Jacobsen Family and the Defendants on behalf of the Colin Jacobsen Family that, upon the sale of assets of the Jacobsen Group and payment of debts to John David, Allind and other third parties, the net proceeds of sale would be distributed equally between, and the remaining assets of the Group would be jointly and equally owned and operated by the Colin Jacobsen Family and their related interests the terms of which are evidenced in the Heads of Agreement dated 25 May 2009 are valid and binding.
3. Second, a declaration is sought (prayer 2) that, by reason of the matters set out at [36], [41]-[43], [46]-[53], [61], [63]-[68] and [76], the defendants are in breach of their fiduciary duties owed to Kevin.
4. Third, a declaration is sought (prayer 3) that the "undisclosed amendments" to the shareholders' agreements and company constitutions "made in contravention of" the alleged agreement/representation (i.e., the event of default provisions) do not form part of the agreement in prayer 1.
5. Fourth, a declaration is sought (prayer 4) that the defendants are estopped from asserting or relying upon the matters referred to at [69] above.
6. Fifth, a declaration is sought (prayer 5) that the defendants hold half of all interest in TOML and hold half of all benefits derived from TOML, Jacobsen Holdings and JVM on constructive trust for Kevin. (Pausing there, only Zoulos holds the shares in TOML. Any rights that Colin or the family members would have to benefits derived from the three companies by reason of Zoulos' shareholding would be limited to any distributions to them as shareholders of Zoulos, but it holds the shares as trustee for the Orpheous Family Trust, of which Colin and his family are discretionary objects).
7. There then follows a series of orders sought (prayers 6-9) for the transfer and payment to Kevin of all interests and benefits held by the defendants on trust for Kevin in the three companies; for enquiry into and the taking of account from the defendants in relation to all benefits received or arising out of TOML or relating to certain other transactions; to permit "tracing of any benefits on behalf of the Defendants, the subject of the said account into the hands of third parties for the Defendants"; and for the defendants to pay to Kevin "such amount as it is certified consequent upon tracing and the taking of account as being due to him".

Complaints made by Colin as to the further proposed amended pleading

1. Colin makes various complaints as to the amended pleading for which leave is now sought. A number of those complaints raise what might be termed pure pleading points. So, for example, Colin complains that the introductory paragraphs ([1]-[10]) are confusing and irrelevant. He points out that upon the deregistration of Amadaeus, its assets vested in the Commonwealth (Corporations Act, s 601AD(1A)) and that those assets (including any choses in action it held), will not pass to KevJac (the new trustee appointed by Kevin) unless and until it successfully applies for a vesting order under s 71 of the Trustee Act 1925 (NSW) or in the Court's inherent jurisdiction (referring to Danich Pty Ltd; Re Cenco Holdings Pty Ltd (2005) 53 ACSR 484; [2005] NSWSC 293 at [25]). He says that, in circumstances where Kevin is no longer alleging that he sues, by reason of "special circumstances", as a potential beneficiary of the Pan Family Trust, the significance of KJPL being a "nominee" for the trustee of the Pan Family Trust is not apparent.
2. More fundamentally, Colin complains as to the pleading based on fiduciary duty: first, that the existence and extent of the alleged fiduciary duties are pleaded in a vague, rolled up way; and, second, that (despite a declaration as to breach of fiduciary duty being sought) there is no pleading of any breach of fiduciary duty as such. Apart from the inconsistency between the allegation that the parties were in dispute as at April 2009 (and potentially as far back as October 2007) and the proposition that any of the parties owed any fiduciary duties to each other from April 2009, Colin points out that Kevin was not a party to any of the five transaction documents that contained the "event of default" provisions; rather, KJPL was a party to them and Kevin signed each of them as a director of KJPL and not in his own capacity.
3. He also complains as to the pleading of "unconscionable conduct in equity", noting that there is no free-standing cause of action for "unconscionability" (Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 at [23]-[26]). He argues that, insofar as Kevin may be attempting to invoke the equitable jurisdiction to set aside transfers of property in circumstances where the transfer is made by a person suffering from a "special disadvantage" of which "unfair or unconscientious advantage" is taken (see, for example, Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25 at [6], [15]-[18]), that doctrine does not assist Kevin: first, because the cause of action relied upon is available only to KJPL and its liquidators (since the property said to have been transferred in circumstances of "unconscionability" was KJPL's property not Kevin's property); and, second, because Kevin does not seek to rescind or set aside any of the agreements containing the "event of default" provisions (and no constructive trust could be imposed without rescission - Hancock Family Memorial Foundation Ltd v Porteous (2000) 22 WAR 198; [2000] WASCA 29 at [173]-[192]).
4. Relevantly, there is no pleading of any special disadvantage suffered by KJPL at the time of the share transfers nor of any exploitation of such by Zoulos. In this regard, Colin points out that the transfers of the shares were made by KJPL's receivers as KJPL's agent and notes that there is no allegation that KJPL's receivers had any relevant inability or incapacity such as to put them in a position of special disadvantage.
5. As to the pleading of fraud (which appeared for the first time in the so-called "clean copy" of the further proposed amended pleading), in the course of oral argument Colin embraced the proposition that it is deficient as a pleading of fraud (asserting no more than "an intention to deceive which is fraudulent", without proper particularisation of that allegation) (T 34; see generally, Nadinic v Drinkwater [2017] NSWCA 114).
6. Insofar as the allegation is that Zoulos breached its contractual obligations to KJPL (whether as to non-compliance with the sale procedure or by reference to the alleged 25 June 2009 agreement) Colin argues that any causes of action arising out of such a breach are causes of action of KJPL not Kevin (again, noting that Kevin was not himself a party to any of the agreements that he alleges were breached). Similarly, Colin says that to the extent that it is alleged that KJPL's receivers breached their obligations to KJPL in disposing of the shares that KJPL held (pointing to the allegation that the receivers lodged notices with ASIC stating that the shares in question were released from the charge on the same day as the transfers were made), any cause of action arising out of this would be KJPL's and not Kevin's.
7. As to the relief claimed, Colin complains (with good reason) as to uncertainty as to what is sought by the declaration in prayer 1. Insofar as it seeks a declaration that the agreement evidenced by the HOA "valid and binding", Colin argues that: it has no utility because no particular term of the HOA is said to have been breached or is sought to be enforced; it mis-describes the effect of the agreement (there being no term in the HOA to the effect of that set out in order 1); and in its terms the HOA states that it is not a legally binding contract (cl 1.1) and requires that, upon execution of the settlement documents, all parties shall release each other from any claims they may have (cl 5.5). (In oral argument, Kevin's Counsel appeared to disavow the suggestion that prayer 1 sought a declaration that the HOA terms are valid and binding; rather, the declaration sought is said to be as to the binding nature of the alleged 25 June 2009 agreement. If so, the reference to the HOA in declaration 1 seems to be superfluous - in effect, a submission contained within the declaration itself.)
8. As to the declaration sought in prayer 2, to the effect that fiduciary duties have been breached, Colin points out that there is no pleading of breach of fiduciary duty in the body of the pleading and argues that the paragraphs in the pleading to which reference is made in prayer 2 do not correspond with any recognised breach of fiduciary obligation ([41]-[43] being a pleading of unconscionable conduct; [46]-[53] being allegations as to the triggering of "event of default" provisions; [61], [63]-[68] and [76] being allegations to the effect that Zoulos purchased KJPL's shares in TOML, JVM and Jacobsen Holdings for inadequate consideration).
9. Colin further argues that prayer 2 lacks utility since no consequential relief flowing from any breach of fiduciary duty owed by Colin to Kevin is claimed and none would be available. He argues that if KJPL's shares were transferred in breach of fiduciary duties owed to KJPL (which I note is not what is pleaded, since the pleaded fiduciary duty is one alleged to be owed to Kevin - see [14]), then any cause of action to recover the shares would be that of KJPL (not that of Kevin). Colin points out that if the transfer of the shares was not in breach of fiduciary duties owed to KJPL, then a claim for breach of fiduciary duty could not result in relief that those shares were held by the transferee on constructive trust.
10. As to the declaration sought in prayer 3, Colin argues that such relief serves no purpose since the HOA does not include any "event of default" provisions (though he points out that it does contemplate that the TOML shareholders' deed will contain the matters that were ultimately included in the "event of default" provision in that agreement - cl 4.16 of the HOA).
11. As to the declarations sought in prayer 4, Colin argues that there is no utility to such relief since, if granted, it would not result in the re-conveyance of any of these shares or have any other consequence. Colin notes that Zoulos does not need to assert or rely on any of these matters to retain the legal title to the shares; rather, it relies on the register of those companies as the owner of their shares. Thus Colin says that an order preventing Zoulos (or the other defendants) from asserting or relying on these matters would have no consequence. Further, he argues that if there is an estoppel of this kind, KJPL is the only proper plaintiff to obtain relief in respect of it.
12. As to the balance of the relief sought, Colin emphasises that if there is a cause of action that would support the imposition of a constructive trust (or the ancillary relief sought in prayers 6-9), that would be KJPL's cause of action (not Kevin's), the shares that were transferred having been KJPL's shares, not Kevin's shares. Thus it is said that if the transfers did occur in circumstances that would be "unconscionable", and if the remedy of a constructive trust were otherwise appropriate, then the result of equitable intervention would be that KJPL would be regarded as having retained beneficial ownership of the shares (see JD Heydon and MJ Leeming, Jacobs' Law of Trusts in Australia (8th ed) at [13-02]). In the absence of Kevin having ever had any legal or equitable interest in the relevant shares, it is said that there is no basis on which he could obtain an order that those shares be held on constructive trust for him. Further, as adverted to earlier, Colin notes that Kevin has not sought to rescind any of the instruments pursuant to which the transfers occurred and that Kevin could not do so (not least because he was not a party to any of them).
13. Fundamentally, Colin's complaint is that the causes of action said to arise from the pleaded facts, and the relief sought, are causes of action that repose in KJPL and that, absent an assignment to Kevin of any causes of action on the part of KJPL in relation to the impugned transfers (or leave being granted for Kevin to bring a derivative suit), Kevin has no cause of action and the proceedings should be dismissed.
14. Insofar as Kevin brings these proceedings as assignee (of rights held by his or his wife's trustee in bankruptcy or by his children), Colin points out that none of the causes of action pleaded is a cause of action which was previously vested in the trustees in bankruptcy of either Kevin or Billie; nor in Kevin's children; but argues that in any event even if one could identify causes of action that vested in either of the trustees in bankruptcy (or Kevin's children) there has been no effective assignment of them.
15. In that regard, Colin notes that a bare right of action may only be assigned ("if at all", reference being made to Poulton v Commonwealth (1953) 89 CLR 540 at 602) if the assignee has a "genuine commercial interest" (referring to Dover v Lewkovitz [2013] NSWCA 452 at [14]-[15]; Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd (2004) 220 ALR 267; [2004] NSWSC 1041 at [43]-[53]). (Although that principle is not applicable to liquidators and trustees in bankruptcy (see, for example, UTSA Pty Ltd (in liq) v Ultra Tune Australia Pty Ltd [1997] 1 VR 667 at 682), it is noted that Kevin did not obtain his assignments from a trustee in bankruptcy or liquidator.)
16. Colin submits that Kevin can have had no pre-existing "genuine commercial interest" in any of the causes of action that were purportedly assigned to him in the requisite sense (see Lindgren J in National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514 at 540) since, at the time of the assignments (24 June 2015), he had only recently been discharged from bankruptcy (as at 13 April 2015) and any property that he had at the time of his discharge vested in his trustee at the commencement of the bankruptcy by operation of s 58 of the Bankruptcy Act 1966 (Cth) and remained with his trustee after his discharge. Thus it is submitted that the purported assignments cannot be supported on Trendtex principles (Trendtex Trading Corporation v Credit Suisse [1982] AC 679) and are void on public policy grounds
17. In circumstances where there has been no assignment of any causes of action held by KJPL arising out of the matters pleaded, and the liquidators have reported to creditors as to potential causes of action for KJPL and have not pursued them, it is submitted that leave to amend should be refused and that leave to re-plead should also be refused.

Determination

1. The pleading complaints made by Colin are in my opinion well founded. Leaving aside the seeming irrelevance of some of the introductory allegations, and other difficulties (such as the uncertainty in the scope of the relief sought at prayer 1, the generality of the allegation at [87], and the difficulty in seeing how the alleged estoppel claim has any utility), the pleading of fiduciary duty is wholly inadequate as is the pleading of fraud, and the pleading of unconscionable conduct in equity does not articulate the basis on which this is said to give rise to the relief sought.
2. The sole pleaded basis for the allegation of a fiduciary duty is the entry by Kevin and Colin into a joint venture or alternatively a partnership ([14]). The authorities make clear that simply to characterise a relationship as a joint venture is not determinative of whether a fiduciary duty is owed (see United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1; [1985] HCA 49 at 10 (Mason, Brennan and Deane JJ); and, more recently, John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [44]; see also JD Heydon, MJ Leeming and PG Turner, Meagher Gummow & Lehane's Equity: Doctrines and Remedies (LexisNexis, 5th ed, 2015) at [5-030]).
3. Furthermore, if what is intended (by the allegation that the brothers agreed to extend the membership of the "Business" to members of their respective families and companies under their control - see [16]) is to allege that those members of the extended "Business" also owed fiduciary duties to the others involved in the "Business" (or the joint venture/partnership) then that is by no means made clear in the pleading (and nor is the basis on which the extended members of the enterprise might be said to have assumed those fiduciary obligations).
4. The subject matter over which the alleged fiduciary obligations extend has not been clearly identified in the pleading (see Yeshiva Properties v Marshall (2005) 219 ALR 112 at [16]; [2005] NSWCA 23; Breen v Williams (1996) 186 CLR 71 at 82; [1996] HCA 57); in particular, it is not clear whether, and if so how, it is alleged that fiduciary obligations were owed by parties at a time when they were in dispute with each other and in the course of negotiations to sever or dissolve their joint venture or partnership, nor how it was that Zoulos came to be a fiduciary or owed fiduciary obligations to Kevin.
5. It is not here the place to enter into the interesting academic debate as to when fiduciary duties arise in ad hoc contractual or other relationships (see for example PD Finn, "Fiduciary Reflections" (2014) 88 ALJ 127, M Conaglen, Fiduciary Loyalty: Protecting the Due Performance of Non-Fiduciary Duties (2010, Hart Publishing), J Edelman, "When do Fiduciary Duties Arise" (2010) 126 LQR 302; discussed by Black J in his paper "Modern indicia of fiduciary relationships in a commercial setting and the interaction of equity and contract" (delivered at the Supreme Court Corporate and Commercial Law Conference, 15 November 2017)). What is significant here is that the circumstances in which it is alleged that a fiduciary obligation arose (on the part of Colin, let alone on the part of those to whom 'membership' of the "Business" was extended) are not articulated, nor is the scope of any fiduciary obligation adequately pleaded.
6. Also problematic is the lack of any proper pleading of alleged breach of fiduciary duty. It is not sufficient (as the proposed amended pleading presently does) simply to allege that a fiduciary relationship has arisen; plead the content of the fiduciary duties in the most general of terms (as at [14]); not plead any breach of the fiduciary duties; and then seek a declaration of breach of fiduciary duty by reference to a range of paragraphs in the pleading the relevance of which to any allegation of breach of a recognised fiduciary obligation is not made clear.
7. Even if those defects could be remedied by a redrafted pleading, the fundamental problem is that it is not made clear how any breach of a fiduciary duty or duties owed by Colin (or even, if the pleading is intended to extend that far, a breach of a fiduciary duty or duties owed by Colin's family members or controlled companies) to Kevin or his family members or controlled companies gives rise to the imposition of a constructive trust in favour of Kevin over shares transferred by KJPL's receivers (as agents of KJPL) to Zoulos, when those shares were never owned by Kevin (or his family members).
8. Even if, for example, a Barnes v Addy type claim could be pleaded - say, a claim of knowing assistance by Zoulos in a fraudulent or dishonest design on the part of a fiduciary or trustee (assuming for this purpose that Colin or one or more of his family members was a fiduciary or owed fiduciary duties of some kind) in acting to effect the transfer in breach of his or her duties; or a claim that Zoulos is the knowing recipient of property transferred in breach of trust - and there is no such claim pleaded at present - the proper plaintiff would be KJPL, that being the entity whose shares were transferred to Zoulos.
9. Similarly, the basis for the allegation (at [87]) that KJPL's interest in the three companies is held on trust by the defendants (i.e., not just by Zoulos but by a range of family members to whom the shares have not at any stage been transferred) for the Kevin Jacobsen Family is not articulated (and would appear to me to be untenable).
10. Insofar as Kevin invokes the concept of "unconscionable conduct in equity", in Tanwar v Cauchi, the plurality noted (at 325) that the phrase "unconscionable conduct" tends to mislead, referring to the false notion that "there is a distinct cause of action, akin to an equitable tort, which merits the epithet 'unconscionable'". Their Honours also observed, as a corollary to this proposition, that: … to speak of ''unconscionable conduct'' may, wrongly, suggest that sufficient foundation for the existence of the necessary ''equity'' to interfere in relationships established by, for example, the law of contract, is supplied by an element of hardship or unfairness in the terms of the transaction in question, or in the manner of its performance. …
11. More recently, Edelman J (then sitting in the Supreme Court of Western Australia) has spoken of the need for "vigilance to ensure that conclusory references to 'unconscionability' are delineated" (Anderson v McPherson [No 2] [2012] WASC 19 at [257]). The absence of such delineation in the pleading was one vice, among others, attending the pleading in Watiwat v Dixon [2017] NSWSC 360. There, although it was apparent on the face of the pleading that an assertion of unconscionable conduct was intended, there was no pleading of what was alleged to have constituted any victimisation of the person alleged to have been under a special disadvantage (see Kakavas v Crown Melbourne Ltd at [117]; [161]). The same problem is apparent here.
12. As to the allegation of fraud, there is no properly particularised pleading of the facts, matters and circumstances by reference to which it is alleged that the relevant members of the family (identifying which) had the requisite intention. If some form of equitable fraud is intended by reference to the allegation that the defendants knew that Kevin and his family signed settlement documents in the mistaken belief that they did not contain the event of default provisions, this should be made clear. In any event, again, the proper plaintiff on a claim for a constructive trust in relation to the shares by reference to any such fraud is KJPL.
13. The fundamental problem is that if a declaration is sought as to the existence of a constructive trust, the basis of this claim should be apparent from the pleading. It has been suggested that the category denoted by the label "constructive trust" is, in a sense, residual (or, less charitably, referable to a legal "dust-heap": E Sykes, "The Doctrine of Constructive Trusts" (1941) 15 Australian Law Journal 171 at 175), but it does not follow from that proposition that such a trust will be recognised in accordance with anything other than established principle. To apply what was said, albeit in another context, in Re Diplock [1948] Ch 465 at 482, the claim must be shown to have "an ancestry founded in history and in the practice and precedents of the courts administering equity jurisdiction".
14. When pressed, the basis of Kevin's claim for a constructive trust was put as follows (T 37-38): BARRY: What happened, as is pleaded, is then [after the alleged binding oral agreement made on 11 May 2009 and/or the alleged binding agreement in June 2009 not to include event of default provisions in the settlement documents] a series of documents that came into existence which created a set of legal relationships which were different from those that had been the subject of the agreement, and the nature of the jurisdiction that is thought to be exercised as an exclusive jurisdiction in relation to the creation of a trust that would give effect to what was the intention of the parties notwithstanding the fact that they didn't bring that intention into effect by the execution of the 79 documents. … BARRY: It is pleaded as being a claim that is being brought by the individual arising out of the oral agreements as pleaded, your Honour. HER HONOUR: That is the difficulty. How does an oral agreement between members of a family to divide up assets between themselves in a particular way give rise to the claimed constructive trust? BARRY: Only to the extent that the agreement that was entered into was for the division of the assets, so that the assets that were the subject matter of the agreement, the argument must be that those assets are capable of being the subject of the Court ordering a constructive trust in respect of those assets, even though, as your Honour says, there has been no assignment of the KJPL.
15. On one reading of this exchange (taken together with the pleadings), the proposition on which Kevin's present case rests is the following (where A is Kevin, B is Colin, C is KJPL and D is Zoulos): that an oral agreement between certain persons (A and B) (in their own capacity or as agents for other persons or entities, say C and D) as to the division of certain property owned at law by a third person (C) may give rise to a constructive trust, the beneficiary of which is A, in respect of that property if transferred by C to a further person (D); on the basis that the dealing between A and B (a contributing cause of the transfer of property from C to D) was vitiated by "unconscionable conduct in equity", "innocent misrepresentation" or "an intention to deceive which was fraudulent". I was not referred to any authority establishing that proposition; nor is it clear from the proposed amended pleading that this is indeed the position which is now sought to be advanced by Kevin.
16. There are well-settled classes of case in which a court of equity will declare that one person is a constructive trustee. In each of these cases - whether what is alleged is, for example, a trust arising from a transaction vitiated by a fraudulent misrepresentation (see Shalson v Russo [2005] Ch 281), or a so-called common intention constructive trust (see Shepherd v Doolan [2005] NSWSC 42 at [31]), a joint endeavour constructive trust (see Muschinski v Dodds (1985) 160 CLR 583; Baumgartner v Baumgartner (1987) 164 CLR 134), a trust imposed upon a thief (see Fistar v Riverwood Legion and Community Club Ltd (2016) 91 NSWLR 732; [2016] NSWCA 81, [37]-[39]; [43]), or even a form of ancillary liability couched in the language of constructive trusts (such as a claim for knowing receipt or knowing assistance) - it is necessary that the basis of the claim to a constructive trust be articulated in the pleadings.
17. A bare pleading of unconscionability, for the purposes of obtaining proprietary relief (potentially to the prejudice of third party creditors), is unsatisfactory, not least if it appears from the pleading that all that is meant by such a pleading is an allegation of personal hardship or unfairness in a lay sense.
18. Insofar as Kevin's principal complaint is as to a failure by Colin or his family members (or perhaps even Zoulos) to adhere to an alleged oral agreement not to include default provisions in the Settlement Documents, any claim for breach of such an agreement is one that would ordinarily sound in damages; and no such claim is made.
19. Insofar as the complaint is a complaint of equitable fraud (i.e., that Colin or members of his family were aware that KJPL was entering into Settlement Documents at a time when Kevin, or perhaps KJPL insofar as Kevin's knowledge is impute to it, was labouring under a unilateral mistake of fact - namely that there were no event of default provisions in the relevant documents) so as to enliven equity's jurisdiction to relieve against unconscionable conduct in circumstances as those considered in Taylor v Johnson (1983) 151 CLR 422, that too would be a cause of action for KJPL (not Kevin) to pursue and any relief would be premised on rescission of the relevant agreements (which, as Colin points out, Kevin does not and cannot seek as he was not a party to them). Again, no such claim was clearly pleaded nor was any such claim articulated in the oral argument on the present application.
20. Given the above, it is not necessary to consider the arguments raised by Colin to the effect that any assignment to Kevin of bare causes of action is ineffective in the absence of a genuine pre-existing commercial interest.

Leave to re-plead?

1. Colin submits that leave to re-plead should not be granted for a number of reasons.
2. First, that this is the sixth (or seventh, if the amendment made for the first time to the clean copy of the last marked up draft is counted) attempt that Kevin has made to plead his case; the first and second attempts being made in 2011, prior to Kevin's bankruptcy, in the Federal Court, those proceedings being discontinued with costs in March 2011. Colin says that Kevin has been represented by at least three different firms of solicitors and six counsel. He argues that the basic pleading problem cannot be cured merely by drafting changes (and says it cannot be cured without KJPL assigning the causes of action on which Kevin relies).
3. Second, Colin points to the mutual releases contemplated in the HOA and effected by the execution of the Settlement Deed on 26 June 2009, which he claims cover the allegations made in the present proceedings ("claim" being defined as including "any right, action or suit prior to the Deed or arising from or relating to any circumstances that may have arisen prior to the date of the Deed"). Colin notes that the pleading does not seek any orders setting aside the Settlement Deed and argues that none would be available on the basis of the facts that Kevin has alleged.
4. Third, Colin says that significant legal costs have been incurred by him and by Zoulos in the Federal Court proceedings ($82,436.18) which remain unpaid. It is submitted that if Kevin can in fact sue as an assignee of causes of action that he held prior to his bankruptcy, then he took any assignment subject to the operation of UCPR r 12.4, which vests in the Court a discretion to stay proceedings brought following discontinuance of proceedings on substantially the same cause of action where there is an unsatisfied costs order.
5. Fourth, Colin notes that the events in question took place over eight years ago and that these proceedings have been on foot since June 2015. He says that both Kevin and Colin are in their 80's and that Dalys is in her early 70's; and argues that there is presumptive prejudice in this litigation remaining on foot for so long.
6. I agree that leave to re-plead should be refused. Kevin has apparently exhausted his ability to obtain an assignment of KJPL's rights, such as they might be, arising out of the pleaded facts. His present claims are misconceived. On the argument before me, I have struggled to find any way in which Kevin's claims could be formulated other than as claims by KJPL. There is no basis on which to conclude that the problems in this regard can be remedied. And, contrary to Kevin's submissions, there is obvious presumptive prejudice in litigation relating back to events taking place over eight years ago remaining on foot where at least two of the defendants are elderly.

Disputes as to service

1. It is not necessary, in light of the conclusion that I have reached as to the further proposed amended statement of claim, to deal in any detail with the respective motions as to service. Broadly, Kevin seeks an extension of time for service of a statement of claim (on which he no longer wishes to proceed) and orders for substituted service under UCPR r 10.14 (when he has not established any basis to suggest that service could not be effected in the ordinary course); whereas Amber and Dalys seek orders under UCPR r 12.11 dismissing the proceedings and/or declaring that they have not been served.
2. Colin points out that the statutory and common law causes of action relied upon by Kevin became limitation barred shortly after the time these proceedings were commenced and suggests that those limitation bars may be applied in equity by analogy to some or all of the causes of action pleaded (such as statutory claims for "unconscionable conduct").
3. I have already adverted to the relevant time frame. The statement of claim was filed on 24 June 2015. By UCPR r 6.2(4), service was required to be effected within six months (i.e., by 24 December 2015). Neither Dalys nor Clayton was served within that time. Amber did receive a copy of the statement of claim at her business address in New York on 18 December 2015. However, complaint is made that service was not effected on her pursuant to UCPR Pt 11A (applicable since the United States of America is a signatory to the Hague Convention). Reference is made to UCPR Pt 11A.2, which provides that if Pt 11A applies, then it prevails to the extent of any inconsistency; and to Pt 11A.3 (it being noted that there is no dispute that the United States of America is a convention country or that a statement of claim issued out of this Court is a local judiciary document). (See M Davies, A Bell, P Brereton, Nygh's Conflict of Laws in Australia (9th ed, 2013, LexisNexis) at [3.29]-[3.30].)
4. Although it was suggested in the course of argument that service on Amber was effected under the previous rules (T 32), it was not explained how those rules differed in any relevant way in relation to service pursuant to Pt 11A.
5. For Amber and Dalys, it is argued that Kevin has not discharged his onus of showing good reason for the renewal, nunc pro tunc, of a stale statement of claim. There is much to be said for that proposition.
6. The applicable principles in determining an application under UCPR r 1.12 to extend time were summarised by the Court of Appeal in Weston v Publishing and Broadcasting Ltd (2012) 88 ACSR 80; [2012] NSWCA 79 at [20] and need not here be restated. Matters to be considered include: the attempts that have been made at service, the length of the delay, the reasons for the delay, whether the delay was deliberate, whether notice was given to the defendant, the conduct of the parties generally and the hardship or prejudice caused to the parties by the grant or refusal of the extension as the case may be. That said, as there recognised, if a defendant knows that claims have been made against him or her and understands the nature of the claims that have been made, that may mitigate the prejudice the defendant might otherwise suffer by reason of a delay in service. (See also Mcintosh v Maitland [2016] QSC 203; Jackson J at [36].)
7. In the exercise of the discretion in a case in New South Wales (having regard to ss 56-59 of the Civil Procedure Act 2005 (NSW)) regard must be had to whether the relevant party has: diligently pursued the object of disposing of the proceedings in a timely way; used, or could reasonably have used, available opportunities under the rules or otherwise, to avoid delay; and reasonably implemented the practice and procedure of the court with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination. Account must also be taken of the policy considerations underlying the relevant limitations statute.
8. For Amber and Dalys, it is noted first that Kevin has not made any attempt to effect service on Amber in accordance with Pt 11A of the UCPR and it is submitted that in order for there to be any grounds for orders of the kind Kevin is seeking, Kevin must demonstrate at least that he was unable to effect service under the rules after having made reasonable efforts to do so (see Ricegrowers Co-op Ltd v ABC Containerline NV (1996) 138 ALR 480 at 482-483; [1996] FCA 1663; Davies v Beyond Building Systems Pty Ltd [2009] NSWSC 1489 at [12]). They point to the fact that no attempt was made to apply to the Court to cure the defects in relation to service until 23 November 2016. Insofar as Kevin relies on the fact that there were proceedings on foot before Black J (brought by the liquidators of KJPL in relation to the proposed assignment of KJPL's causes of action) as explaining the lack of an attempt to take action to effect service, Amber and Dalys say this is immaterial since Kevin's intention has always been to proceed with the case regardless of whether the assignment was approved by the Court.
9. Further, in relation to Dalys, it is pointed out that when the issue as to service was raised with Kevin's solicitors, there was no request for service to be accepted by Colin's solicitors; rather a process server was engaged personally to serve her with what was by then a stale statement of claim. It is submitted that this was quite inappropriate conduct.
10. It is thus submitted that (if the proceedings are not dismissed) the appropriate course is for no orders to be made in relation to the service of the pleading on Amber and Dalys; alternatively, for orders to be made under UCPR r 12.11(1) deeming proceedings against Amber and Dalys to have been commenced on the date of the filing of Kevin's motion.
11. Kevin submits that an order should be made that the service of the statement of claim was effective on Amber and Dalys and, or in the alternative, that substituted service be ordered upon them and Clayton, relying upon the following affidavits of attempted service: an affidavit sworn by Anthony Scarcella on 23 November 2016 (at [13]-[18]) as to attempted service of the second, third and fourth defendants; an affidavit of attempted service sworn by Nick Tsioukanis on 23 December 2015 and an affidavit sworn by Perry Gamsby on 11 May 2016 with respect to service upon the third defendant; and affidavit affirmed by Mohamed Bouri on 27 November 2015 together with the affidavit sworn by Anthony Scarcella on 8 February 2017 as to service upon the second defendant; and the sworn 23 November 2016 by Anthony Scarcella sworn 23 November 2016 as to attempts at service upon the fourth defendant. Kevin points to the fact that the solicitor acting for the first and fifth defendants also acted for the second, third and fourth defendants in relation to the preparation of the settlement document and in both the bankruptcy proceedings and the contest application for approval of the assignment of KJPL's choses in action before Black J. He points to the unlikelihood that the solicitor would not know the whereabouts of his clients or could not readily ascertain their whereabouts; and the probability that Colin knows the whereabouts of his children. He further points to the common interest of and common issues between all the defendants (though that obscures the different position of Zoulos, to which the shares in question were transferred).
12. It is submitted for Kevin that, given the close family connection between all the defendants and the failed attempts of service, the second, third and fourth defendants are aware of the statement of claim and are avoiding service; and that it is in the interests of justice that the Court order service of the amended statement of claim on the second, third and fourth defendants in the manner sought in the orders. Pausing there, I do not accept the submission by Kevin that it should be inferred that the second, third and fourth defendants have attempted to avoid service. There is nothing to support that submission. The fact that a party insists upon proper procedures to be followed in relation to the service of pleadings before the date on which those pleadings become stale is not tantamount to avoiding service.
13. Reliance is placed by Kevin on the approach taken by Young CJ in Eq (as his Honour then was) in Gate Gourmet Australia Pty Ltd (in liquidation) v Gate Gourmet AG [2002] NSWSC 727. Kevin submits that time for service of the statement of claim should be extended for the reason that there are no new allegations (and some allegations are no longer pressed) and he asserts that there is no prejudice to the defendants. (That, however, does not take into account the new fraud allegations, which are not properly pleaded in any event.)
14. Kevin says that the allegations and causes of action rely on the same facts and that the additional facts alleged "are more of the nature of particulars"; that the defendants have long been aware of the nature of the claim and allegations; that it is in the interests of justice that the proposed amendments be granted, as all the issues between the parties will be litigated; and that no injustice will be suffered by the defendants in granting the leave.
15. The position taken by Amber and Dalys in relation to service (if the amendments were to be allowed) was not that the proceedings now be held up or stultified in order for service to be properly effected. Rather, what was put was that the issue was whether (having acted as he did in relation to service), Kevin should have the benefit of the extension of any limitation periods that might otherwise be applicable. It was submitted for Amber and Dalys that, if the amendments to the pleading were to be allowed, the Court should either dismiss the proceedings as against Amber and Dalys and allow fresh proceedings to be commenced against them on the same terms (the two sets of proceedings then to be heard together) or should fashion orders under UCPR 12.11 that would in effect have the result that the amendments take effect as against Amber and Dalys from the date of the orders granting leave for the amendments.
16. Had the issue been necessary to determine, I would have held that, in the absence of any attempt to comply with Pt 11A in relation to Amber or to take steps within a reasonable time to effect service validly, whether by substituted service or otherwise, in relation to Dalys - and in circumstances where the statement of claim as filed is no longer pressed; but where (if the amendments were to be allowed) the defendants do not seek to stultify the proceedings but, rather, to preserve the benefit of any applicable limitations periods, the appropriate course would have been to permit amendment of the pleading; to declare that service of the initial pleading was not validly effected on Amber and Dalys; and to make provision for substituted service (via their solicitors) of the amended pleading but on the basis that the amendments take effect as against them only from the date that substituted service is effected.
17. As it is, however, this issue does not arise.

Orders

1. For the reasons set out above, I make the following orders: 1. Dismiss the plaintiff's application for leave to amend the statement of claim. 2. Refuse leave to re-plead. 3. Dismiss the proceedings with costs. 4. Dismiss the respective motions as to service with no order as to costs.
2. Colin and Zoulos sought indemnity costs. The basis of that application was not articulated. If that application is pressed, then short written submissions should be filed and served by Colin and Zoulos within 7 days, with Kevin to file and serve any submissions in reply within a further 7 days, and I will determine that issue on the papers.

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