Plaintiff v Defendant

Supreme Court of Victoria|2011-09-01|Before: VICKERY J

PRACTICE AND PROCEDURE - Issue estoppel precluding relitigation of an the issue determined by an earlier proceeding on the part of the present trustee of a family trust, or any subsequent trustee - Summary dismissal of plaintiff's claim (r 23.03 Supreme Court (General Civil Procedure) Rules 2005) - s 62 Civil Procedure Act 2010 - Proceeding vexatious and an abuse of process - Court's inherent power and r 23.01(1) Supreme Court (General Civil Procedure) Rules 2005 - Proceeding permanently stayed - Inherent power of a court to restrain the commencement of further proceedings which seek to relitigate matters already determined by the same court - Restraint order made.

1 There are two groups of applications before the Court.

2 By his summons dated 28 January 2011 the Defendant seeks the following principal relief:

(1) An order pursuant to Rule 23.03 of the Supreme Court (General Civil Procedure) Rules 2005 that there be judgment for the Defendant on the Plaintiff's claim as set out in the Statement of Claim annexed to its Writ dated 29 October 2010.

(2) In the alternative to order 1, an order pursuant to Rule 23.01(1)(a), (b) and/or (c) of the Supreme Court (General Civil Procedure) Rules 2005 that there be judgment for the Defendant on the Plaintiff's claim as set out in the Statement of Claim annexed to its Writ dated 29 October 2010.

(3) In the alternative to orders 1 and 2, an order pursuant to Rule 23.02 of the Supreme Court (General Civil Procedure) Rules 2005 that the Plaintiff's Statement of Claim annexed to its Writ dated 29 October 2010 be struck out.

(4) An order pursuant to Rule 23.01(a), (b) and/or (c) of the Supreme Court (General Civil Procedure) Rules 2005 that there be judgment for the Defendant on the Defendant's Counterclaim dated 6 December 2010.

(5) An order that the Plaintiff and the Defendants by Counterclaim, and any one or more of them, be restrained from issuing any summonses or other applications in this proceeding or issuing any other proceeding or application in this Court in relation to the subject matter of this proceeding without leave of the Court or causing any other person to do so.

(6) In the alternative to order 5, an order that the Plaintiff and the Defendants by Counterclaim, and any one or more of them, be retrained from issuing any summonses or other applications in this proceeding without leave of the Court or causing any other person to do so.

(7) Further, and in the alternative to orders 1 to 6 above, an order that the Plaintiff be restrained from filing any document in this proceeding other than by a legal practitioner admitted to practice in this Honourable Court and a direction that the Prothonotary not accept for filing any document on behalf of the Plaintiff unless lodged by or on behalf of a legal practitioner admitted to practice in this Honourable Court and having filed a notice acting for the Plaintiff.

(8) In the alternative to orders 1 to 6 inclusive, an order pursuant to Rule 62.01(1)(b) of the Supreme Court (General Civil Procedure) Rules 2005 that the Plaintiff give security for the costs of the Defendant of the proceeding and that the proceeding as against the Defendant otherwise be stayed until such security is given.

3 The Plaintiff, Optquest Pty Ltd, appeared through Mr Andrew Vasiliou (who is also known as Andrew Vasiliou, Andreas Vasiliou and Andreas Vasiliou) ("Mr Vasiliou"). Mr Vasiliou is the sole director and secretary of Optquest. He is the Second Defendant by Counterclaim to the proceeding. The Third Defendant by Counterclaim to the proceeding is Ms Vasiliki Apostolou, who is Mr Vasiliou's wife.

4 Mr Vasiliou made an oral application at the hearing seeking the following relief:

(b) Leave to amend the writ and statement of claim in the proceeding; and

(c) An order directing the Defendant to make funds available for a lawyer to be engaged to represent the Plaintiff in the proceeding and generally, and to pay the necessary Court fees; and

(d) An order directing the Defendant to pay the necessary fees to have the following de-registered companies, re-registered:

(i) Nice Corporation of Australia Pty Ltd; and

(ii) Colourcraft Photolabs Pty Ltd.

5 Also before the Court is a notice of appeal dated 29 April 2011 from orders made by Daly AsJ dated 15 March 2011, although no argument was addressed in relation to it.

6 The Defendant referred to and relied the following relevant matters, which I find as facts and which are summarised in the following chronology:

By Deed of Gift dated 8 October 1987 Mr Vasiliou purported to make a gift of three properties, at Alfriston Street, Elwood, St Kilda Road, St Kilda and Claremont Street, South Yarra, to the Vasiliou Family Trust.

By an Agreement dated 25 March 1989 Mr Vasiliou purported to sell the properties at Alfriston Street, Elwood, St Kilda Road, St Kilda and Claremont Street, South Yarra to the Plaintiff, Optquest Pty Ltd (as trustee of the Vasiliou Family Trust) for $182,000.

The Federal Court of Australia made a sequestration order against the estate of Mr Vasiliou. Brendan Marchesi, the Defendant, became the trustee.

At the time of the making of the sequestration order, the bankrupt, Mr Vasiliou, remained the registered proprietor of three properties, being properties at Alfriston Street, Elwood, St Kilda Road, St Kilda and Claremont Street, South Yarra.

The trustee, the Defendant, commenced a proceeding in the Federal Court (no. VID 235/2005) seeking declarations and orders with respect to beneficial ownership of the three properties.

Weinberg J gave judgment for the trustee, declaring the properties to be assets vested in the trustee under section 58 of the Bankruptcy Act 1966. I have read the reasons for judgment of Weinberg J referred to me by Mr Vasiliou.[1]

The Full Court of the Federal Court set aside the orders of Weinberg J and remitted the matter for retrial before Jessup J. I have read the reasons for judgment of the Full Court. [2]

Jessup J, following the re-trial gave judgment for the trustee.

His Honour concluded (inter alia) that the 25 March 1989 Agreement was not capable of specific performance due to shortfall in payment of the purchase price and that the agreement was, in any event, voidable as against the trustee by operation of s 121 of the Bankruptcy Act 1966. I have read the reasons for judgment of Jessup J.[3]

Jessup J made further orders that Ms Apostolou, Mr Vasiliou's wife, deliver up to the trustee the certificate of title in respect of the St Kilda Road property and withdrawals of caveat over the properties.

The bankrupt, Mr Vasiliou, was discharged from bankruptcy.

The Full Federal Court dismissed Ms Apostolou's appeal from the orders of Jessup J made 13 August 2007.

The High Court dismissed Ms Apostolou's application for leave to appeal from the orders of the Full Federal Court dated 14 July 2008.

Heerey J made orders (in VID 235/2005) requiring the removal of a caveat lodged by Optquest on the properties and restraining Mr Vasiliou and Ms Apostolou from lodging further caveats.

Marshall J (in VID 235/2005) refused a stay of Heerey J's orders dated 17 December 2008.

Optquest (as trustee of the Vasiliou Family Trust) lodged a further caveat (no. AG265788X) on the properties, claiming an interest under the 25 March 1989 Agreement.

Tracey J refused an application by Mr Vasiliou and Ms Apostolou for leave to appeal from the judgments of Heerey J (17 Dec 08) and Marshall J (23 Dec 08).

The trustee became registered as the proprietor of the Claremont Street property and subsequently sold the property.

In default of Optquest's failure to comply with Heerey J's orders of 17 December 2008 (for the removal of its caveat), Tracey J made an order for substituted performance, requiring Registrar Moore to execute a withdrawal of caveat.

On the application of the trustee, Hansen J made orders requiring the removal of Optquest's caveat and restraining it, Mr Vasiliou and Ms Apostolou from lodging any further caveats. Hansen J found (at [98]) that Optquest is estopped by the findings of Jessup J from asserting an equitable interest in the properties on the basis of the 25 March 1989 Agreement. I have read the reasons for judgment of Hansen J.[4]

The Court of Appeal (Buchanan & Ashley JJA) dismissed an application by Optquest, Mr Vasiliou and Ms Apostolou seeking to set aside the orders of Hansen J made on 5 June 2009.

Optquest commenced the present proceeding (5871/2010).

Macaulay J dismissed an application by Optquest in the present proceeding seeking to restrain the trustee from entering into possession of, or selling, the Alfriston Street and St Kilda Road properties (the Claremont Street property having already been sold).

Ferguson J ordered the issuance of new Certificates of Title for the St Kilda Road property by reason of the failure of Mr Vasiliou and Ms Apostolou to give up the existing certificates.

The trustee filed the present application, seeking summary dismissal of Optquest's claim and summary judgment on his counterclaim against Optquest, Mr Vasiliou and Ms Apostolou. The application was first returnable in the Practice Court on 4 March 2011.

On the return of the summary judgment application, Emerton J referred the summary judgment application to an Associate Judge for purposes of listing as a special fixture.

The trustee's summary judgment application came before Daly AsJ for listing. Mr Vasiliou telephoned the Court to advise that he was unable to attend due to ill health, and sought an adjournment. The Associate Judge stood the matter down until 12.00 pm to enable Mr Vasiliou to attend. Daly AsJ listed the trustee's summary judgment application for hearing on 5 May 2011 on an estimate of ½ day to a day.

Optquest, Mr Vasiliou and Ms Apostolou filed a notice of appeal from Daly AsJ's orders of 15 March 2011. The notice of appeal was returnable for hearing in the Practice Court on 4 May 2011.

The notice of appeal issued on 29 April 2011 came before Robson J in the Practice Court. On the morning of the hearing, Mr Vasiliou informed the Court and the trustee's solicitors by email that he was unable to attend due to ill health, and sought a 2-3 week adjournment. Robson J adjourned the application to be heard at the same time as the summary judgment application (on 5 May 2011).

The Court subsequently adjourned the hearing scheduled for 5 May 2011.

Trustee's summary judgment application before Vickery J.

7 I have examined the statement of claim in the present proceeding, and the amended statement of claim proposed by Mr Vasiliou in the same proceeding. I am satisfied that the Plaintiff seeks to re-agitate matters which have already been finally determined in the Federal Court and in this Court.

8 The primary relief sought by the Plaintiff was an order of the specific performance of the 25 March 1989 Agreement. The Plaintiff also sought a consequential declaration as to its entitlement (as trustee of the Vasiliou Family Trust) to be registered as proprietor of the two remaining, unsold properties (Alfriston Street and St Kilda Rd), an injunction restraining the trustee from selling them, a declaration that the trustee wrongly sold the Claremont Street property and damages.

9 The trustee denied the Plaintiff's claims saying that the Plaintiff was precluded from making them by an issue estoppel. The claim on behalf of the trust to an interest in the properties by reason of the 25 March 1989 Agreement, was expressly rejected by Jessup J in his judgment delivered on 4 July 2007 on the following two principal grounds:

Specific performance of the agreement was not available, as the Plaintiff was in breach of essential conditions, including payment of the full purchase price and payment of rates and outgoings (at [110]-[111]); and
In any event, the agreement was void as against the trustee by operation of s 121 of the Bankruptcy Act 1966, in that its central purpose was to defeat Mr Vasiliou's creditors, the main creditor being the Deputy Commissioner of Taxation (at [134]).

10 Notwithstanding Jessup J's judgment and orders of 24 December 2008, the Plaintiff in the present proceeding, Optquest Pty Ltd ("Optquest"), lodged a caveat on the properties claiming the very same rights and interests which had been asserted in the earlier proceeding. These are the same rights and interests which are persisted with in the present proceeding.

11 On 5 June 2009, in Marchesi v Vasiliou,[5] a proceeding in this Court, Hansen J granted orders sought by the trustee for the removal of the caveat and restraining Mr Vasiliou, his wife Ms Apostolou, and Optquest from lodging further caveats. Significantly his Honour said of Mr Vasiliou's submissions in the application:[6]

It is plain beyond argument that there is no serious question to be tried, or to put it another way there is no prima facie case to be tried, as to the existence in Optquest as trustee of the Vasiliou Family Trust of the equitable interest claimed. That is because the question whether the trust holds that equitable interest pursuant to the Sale Contract was squarely raised and litigated before, and decided by, Jessup J. The consequence is that his judgment determining the issue, together with his orders based thereon, constitute an issue estoppel precluding relitigation of the issue. It matters not that Optquest was not a party to the proceeding, because the trust acts through its trustee and the then trustee/caveator was a party. Optquest was a deregistered entity at all times relevant to the proceeding. Hence, there would have been no different result if Optquest had been a defendant in the proceeding determined by Jessup J.

12 I follow and apply the reasoning of Hansen J referred to above.

13 The consequence is that the judgment of Jessup J determining the issue, together with his orders based thereon, constitute an issue estoppel precluding relitigation of the issue on the part of Optquest, or any subsequent trustee of the Vasiliou Family Trust.

14 The Court may give judgment for a defendant if it is satisfied that the defendant has a good defence on the merits (r 23.03).

15 Further, s 62 of the Civil Procedure Act 2010 (Vic) provides that a defendant in a civil proceeding may apply to the court for summary judgment on the ground that a plaintiff's claim has no real prospect of success.

16 That the Defendant trustee has a good defence on the merits in the present case. Further, Optquest has no real prospect of success.

17 On this basis it is open to find that there should be judgment for the Defendant trustee on Optquest's claim in the present proceeding.

18 Alternatively, the Defendant trustee sought a permanent stay of the proceeding under r 23.01(1).

19 The Court has an inherent power, as well as power under the rules, to control and supervise its processes to prevent injustice by the imposition of a permanent stay of the proceeding or the entry of judgment against the offending party. Proceedings which are "seriously and unfairly burdensome, prejudicial or damaging" and "productive of serious and unjustified trouble and harassment" are regarded as "oppressive" or "vexatious"[7] and would invite such orders being made. Deane and Gaudron JJ put it this way:[8]

The inherent power of a court to control and supervise proceedings includes the power to take appropriate action to prevent injustice. See Cocker v Tempest [1841] EngR 242; (1841) 7 M & W 502 at pp 503-504; [1841] EngR 242; (151 ER 864 at p 865). In the case of the Supreme Court of New South Wales that power is confirmed by s 23 of the Supreme Court Act 1970 (NSW) which states that the "Court shall have all jurisdiction which may be necessary for the administration of justice in New South Wales." See Riley McKay Pty Ltd v McKay (1982) 1 NSWLR 264; Jackson v Sterling Industries Ltd [1987] HCA 23; (1987) 162 CLR 612 at p 617.

The power of a court to control and supervise its process to prevent injustice is not restricted to defined and closed categories: Jackson v Sterling Industries Ltd, at p 639; Tringali v Stewardson Stubbs & Collett Ltd (1966) 66 SR (NSW) 335 at pp 340 and 344. In this context injustice is not simply a question of the purpose or motive for which the relevant proceedings were instituted but includes a consideration of the consequences of the proceedings for the person invoking the power. The terms "oppressive" and "vexatious" are often used to signify those considerations which justify the exercise of the power to control proceedings to prevent injustice, those terms respectively conveying, in appropriate context, the meaning that the proceedings are "seriously and unfairly burdensome, prejudicial or damaging" and "productive of serious and unjustified trouble and harassment": Oceanic Sun Line Special Shipping Co Inc v Fay [1988] HCA 32; (1988) 62 ALJR 389, per Deane J at p 411 ; [1988] HCA 32; 79 ALR 9 at p 45.

21 The present proceeding is vexatious and an abuse of process.

22 It is vexatious because it is the latest in a long history of attempts by Mr Vasiliou, to frustrate the lawful administration of his bankrupt estate by the realisation of the three properties.

23 It is an abuse of process because it seeks to re-agitate issues which have already been finally determined. The proceeding, in substance, amounts to a collateral attack on the judgments of Jessup J, the judgment of the Full Court in the appeal therefrom, and the judgment of Hansen J in proceeding determined in this Court.[9]

24 In Lewis v Hillhouse[10] (cited by Emerton J in Walsh v Croucher)[11], Keane JA said as to the public policy against collateral attack on a judgment:[12]

The authorities show that the immunity is a manifestation of a more fundamental public policy in favour of public confidence in the administration of justice and finality in litigation. That public policy precludes a final decision which has not been set aside being "called into question" in subsequent proceedings.

25 Further, the joint judgment of Gleeson CJ, Gummow, Hayne and Heydon JJ in D'Orta-Ekenaike v Victorian Legal Aid[13] held that public confidence in the administration of justice requires that justiciable controversies, once finally decided, are "not to be re-opened except in a few narrowly defined circumstances" and reiterated that this was a fundamental consideration of public policy.

26 The findings I have made justify the permanent stay of these proceedings.

Injunction to Restrain Commencement of Further Proceedings

27 By his counterclaim and summons, the trustee sought orders against Optquest, Mr Vasiliou and Ms Apostolou restraining them from interfering with the trustee taking possession of the Alfriston Street and St Kilda Road properties and from commencing any further proceedings in relation to the properties.

28 The evidence before the Court as to alleged interference with the trustee taking possession of the Alfriston Street and St Kilda Road properties is confined to one piece of conduct. That conduct was described in the affidavit of the Defendant trustee as follows:

Following my taking possession of the Alfriston Street Property I am informed and verily believe that on 25 November 2010 Mr Terry Finn of my office attended at that property at which time it appeared the Bankrupt had attempted to move into possession of the property as a new lock had been installed onto the door at that property and a sign had been erected on the door to that property stating:

It is in possession of ANDREW VASILIOU and he occupies same as his Residence as of the 8th of November 2010 when it took possession.

Anyone including a locksmith or AGENT(s) interferes with this property will face prosecution for a breach of privacy to a person & other remedies.

The LOCKS are being changed in this respect to the property .

Also a proceedings/WRIT is in progress in the Supreme Court of Victoria NO SCI 2010/5871 about issues of ownership by OPTQUEST PTY LTD ACN 006 828 664 in which ANDREW VASILIOU he is the SOLE director & Secretary of this Company also.

I respectfully I am asking ALL PARTIES not to interfere with this property at ALL.

29 However, there has been no further conduct, either before or since the incident described, which has been alleged as amounting to physical interference with either property, or with the trustee otherwise lawfully carrying out his duties.

30 Some 9 months have now passed since the conduct complained of. Further, there is no evidence that the Defendant trustee has had difficulty realising or otherwise dealing with the remaining two properties other than by the present proceeding which has to date been on foot.

31 For these reasons, I am not satisfied on the present evidence that there is any future conduct which has been threatened which would justify the injunction sought by the Defendant trustee restraining any of the Defendants by counterclaim from any further physical interference with the two properties.

32 The restraint on the commencement of further proceedings sought by the Defendant trustee, however, is in an entirely different position.

33 Quite apart from the Court's power under s 21 of the Supreme Court Act 1986 (Vic) to declare a person to be a vexatious litigant, the Court has a well-recognised inherent jurisdiction to protect itself from abuses of its process.[14] That jurisdiction is reflected in, but not circumscribed by, the Rules of Court.[15]

34 In England, it has long been accepted that this jurisdiction extends to the making of orders restraining the commencement of proceedings, as well as the institution of applications within a proceeding.[16]

35 However, Barwick CJ and McTiernan J in Commonwealth Trading Bank of Australia v Inglis,[17] in the context of the lodging of appeals, whilst accepting that there is an inherent power in the Court to control the bringing of applications in the course of an action, identified a fundamental distinction between bringing applications within the proceeding, and instituting a new proceeding.

36 Nevertheless, in Hunter v Leahy,[18] French J did not regard their Honours' decision in Inglis as operating to confine the inherent jurisdiction of a superior court (or the implied incidental power of the Federal Court) to prevent a court, in the appropriate case, from restraining the institution of proceedings which, in effect, seek to relitigate the substance of matters determined in earlier proceedings in the same court,[19] noting that: " ... the touchstone of the court's power must be substance rather than form".[20] Nevertheless, if such an order is to be made, as is also clear from the approach of French J in Hunter v Leahy,[21] the order ought to be cast no wider than necessary.

37 In the present case, given the conduct of the Plaintiff Optquest, and that of its principal officer, Mr Vasiliou, in instituting these proceedings in the face of the clear findings and determination of Hansen J in Marchesi v Vasiliou[22] of 5 June 2009, an appropriate restraint order is called for.

2. Proceeding S CI 2010 5871 be permanently stayed.

It is directed that the Plaintiff in the proceeding, Optquest Pty Ltd, and the Second Defendant by Counterclaim, Mr Andrew Vasiliou, and the Third Defendant by Counterclaim, Ms Vasiliki Apostolou, not commence or cause any other person to commence, any proceeding in this Court which seeks to relitigate any of the issues determined by Hansen J in Marchesi v Vasiliou[23] dated 5 June 2009, without the leave of a Judge of this Court.

39 Consequent on the finding that the proceeding was vexatious and an abuse of process, and a further finding which I make that the proceeding was instigated by Mr Vasiliou as the sole director and secretary of the Plaintiff, Optquest Pty Ltd, it is ordered that the costs of the Defendant be paid by the Plaintiff and Mr Vasiliou, and on an indemnity basis.

(e) leave to amend the writ and statement of claim in the proceeding; and

(f) an order directing the Defendant to make funds available for a lawyer to be engaged to represent the Plaintiff in the proceeding and generally, and to pay the necessary Court fees

by reason of the present proceedings being permanently stayed, and the orders which I have made, each of these applications is dismissed.

41 In relation to Mr Vasiliou's application for an order directing the Defendant to pay the necessary fees to have Nice Corporation of Australia Pty Ltd and Colourcraft Photolabs Pty Ltd, re-registered, I am not satisfied that such an order should be made, even assuming the Court has power to make such an order, a matter about which I make no finding because no submissions were directed to the issue.

42 On 24 August 2011, following the conclusion of the hearing before me, my Associate received an email apparently from Mr Vasiliou addressed to me and copied to the Defendant trustee and his solicitors, relating to the proceeding. The email included the following passages:

IN regards to my CRIMINAL TRUSTEE in BANKRUPTCY I am very SORRY for myself that I did NOT KILLED him back before he FUCK ME and my FAMILY UP and I would have being out of JAIL by NOW and my FAMILY'S "3 properties" will be still there for that matter INDUCTED and NO DAMAGE to heart either in this RESPECT.

...

NOW PART of his APPLICATION is for the COURT to make ORDERS that I will be NO LONGER permitted to sue OTHERS including HIM unless I received COURT LEAVE but if you DARE to make SUCH ORDERS the other option that it will REMAIN under my discretion is to START KILLING PEOPLE instead of SUING them in COURTS.

43 The email had no effect on the determination of the applications before me made by either party.

44 However, by reason of the content of the email, and in particular the paragraphs referred to, the proceeding, the email and the other emails apparently sent by Mr Vasiliou to the Court in the course of the present applications in the proceeding, will be referred to the Prothonotary to be dealt with according to law.

45 Pursuant to s 75.07 of Supreme Court (General Civil Procedure) Rules 2005 the Prothonotary is directed to apply by originating motion for punishment of the possible contempt.

[1] Re Bankrupt Estate of Vasiliou; Marchesi (as Trustee of the Bankrupt Estate of Vasiliou) v Apostoulou (As Trustee of the Vasiliou Family Trust) [2006] FCA 1122.

[2] Vasiliou v Marchesi [2006] FCAFC 197.

[3] Marchesi v Apostolou [2007] FCA 986

[4] Marchesi v Vasiliou [2009] VSC 213

[7] Hamilton v Oades per Dean and Gaudron JJ [1989] HCA 21; (1999) 166 CLR 486 at 502

[9] Marchesi v Vasiliou [2009] VSC 213 at[98].

[14] Bhamjee v Forsdick [2003] EWCA Civ 1113; [2004] 1 WLR 88 at [11]; Von Risefer v Permanent Trustee Company Limited [2005] 1 Qd R 61).

[15] Von Risefer v Permanent Trustee Company Limited [2005] 1 Qd R 61); Manolakis v Commonwealth Director of Public Prosecutions [2009] SASC 193 (Gray J); Hillston v Bar-Morecai [2002] NSWSC 975 at [4]; c.f. the Federal Court's "implied power": Hunter v Leahy [1999] 91 FCA 214 (per French J)).

[16] Grepe v Loam (1887) 37 Ch D 168; Ebert v Venvil [2000] Ch 484.

[19] See also A-G (Vic) v Kay [2006] VSC 9 (Osborne J); Manolakis v Commonwealth Director of Public Prosecutions at [21]; Westwill Pty Ltd v Heath [2010] SASC 358 (Gray J) at [38]; NAB v Freeman [2006] QSC 86 (Muir J). The existence of the wider principle was left open by the Full Court in Stan Stergiou v Clynes, Full Court, SCSA, 24 April 1997, Miles CJ, Gallop and Madgwick JJ).

Court (General Civil Procedure) Rules 2005

At a glance

Court

Decision date

Before

Source

Judgment (112 paragraphs)

Parties

Legislation Cited (32)

Cases Cited (6)