Riva NSW Pty Limited v Official Trustee in Bankruptcy

Court of Appeal (NSW)|2023-09-22|Before: Adamson JA, Kunc J

Solicitors: Craddock Murray Neumann Lawyers (Respondent) File Number(s): 2022/78376 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division Citation: [2022] NSWSC 153 Date of Decision: 22 February 2022 Before: Kunc J File Number(s): 2020/206189; 2021/210771

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

JUDGMENT

THE COURT: On 22 February 2022, Kunc J made orders in the Equity Division striking out proceedings brought by Riva NSW Pty Ltd ("Riva") against the Official Trustee in Bankruptcy, pursuant to s 8(7)(a) of the Vexatious Proceedings Act 2008 (NSW). The judge also made an order against Angelo Ferella prohibiting him from instituting proceedings in New South Wales against the Official Trustee, pursuant to s 8(7)(b) of the Vexatious Proceedings Act. [1] The orders were entered on 4 March 2022.
On 15 June 2022 (some 12 days out of time) Riva and Mr Ferella filed a summons seeking leave to appeal against the orders made by Kunc J. For reasons set out below, it is appropriate to grant the brief extension of time, but leave to appeal should be refused.
It is necessary to set out briefly the nature and history of the proceedings between the parties, both in order to identify the jurisdiction of this Court and to explain why leave to appeal should be refused. It is also necessary to give reasons for the rejection, at the commencement of the hearing, of an application by the applicants to vacate the hearing.

Nature of proceedings

The dispute between the parties arose out of sequestration orders made in October 2005 by the Federal Magistrates Court against Mr Ferella and his father, Gustavo Ferella (since deceased). The Official Trustee in Bankruptcy was appointed to manage their respective estates and promptly lodged a caveat over a property held by them jointly located at Wingadal Place, Point Piper in eastern Sydney. The property was subject to a mortgage and was sold by the mortgagee exercising its power of sale in April 2006. However, the dispute arose from the Ferellas' contention that they had purchased the property in their capacity as trustees of the Cavallino Unit Trust. They further asserted that Riva had replaced them as trustee of the trust in April 2005, some six months before the sequestration orders were made. At all times since about March 2006, Mr Ferella has maintained that the Official Trustee held no interest in the property because it formed part of the trust and that the caveat lodged by the Official Trustee had prevented efforts to refinance.
In a judgment delivered on 8 July 2008, Nicholas J held that the property had been purchased by the Ferellas as trustees of the unit trust and, by a further judgment delivered on 28 August 2009, that Riva was entitled to the bulk of the net proceeds of sale after deduction of amounts due to the mortgagee.
Over subsequent years, Mr Ferella and Riva commenced numerous proceedings seeking to hold the Official Trustee accountable for the family's loss of the Point Piper property. Despite lack of success in earlier proceedings, on 7 July 2020, Riva commenced proceedings in the Equity Division (case no 2020/206189) by summons against the Official Trustee claiming declarations that (i) the property at Point Piper did not vest in the Official Trustee, (ii) the conduct of the Official Trustee in asserting rights in relation to the property was unconscionable and (iii) the Official Trustee held rights over the funds as a constructive trustee for Riva. The claim further sought damages for slander of title, breach of fiduciary duties, breach of trust, together with equitable damages and compensation.
On 19 May 2021, the Official Trustee filed a notice of motion seeking to have the proceedings dismissed on various grounds, including that they be stayed pursuant to s 8(7)(a) of the Vexatious Proceedings Act. The Official Trustee also sought an order against Mr Ferella. However, pursuant to directions given by Ward CJ in Eq on 22 July 2021, the Official Trustee was directed to commence separate proceedings by way of summons (duly filed on 23 July 2021) seeking the order against Mr Ferella under s 8(7)(b) of the Vexatious Proceedings Act, which was done (case no 2021/210771).
The orders made by the primary judge, as entered on 4 March 2022 were as follows: "In matter 2020/206189: 1 Pursuant to the Vexatious Proceedings Act 2008 (NSW) the proceedings herein are permanently stayed. 2 The plaintiff, and Angelo Ferella, pay the defendant's costs as agreed or assessed. In matter 2021/210771: 1 Pursuant to s 8(7)(b) of the Vexatious Proceedings Act 2008 (NSW), that Angelo Ferella be, from the date of this order, prohibited from instituting or conducting any proceedings against the Official Trustee in Bankruptcy, in his own name, or in the names of Gustavo Ferella or [Riva]. 2 The defendant, and [Riva], pay the plaintiff's costs as agreed or assessed."
Section 13 of the Vexatious Proceedings Act provides that where a court makes a vexatious proceedings order prohibiting a person from instituting proceedings the person is prohibited from doing so without leave (s 13(1)(a)), and automatically stays the proceeding (s 13(2)), and causes them to be dismissed after 28 days (s 13(3)). Leave may be sought pursuant to s 14, but was not in the present case. Why the present proceeding was not automatically dismissed under s 13 is unclear, but neither party suggested that had occurred. (It may be that there was thought to be some implied exception for an appeal from the order creating the prohibition.)

Jurisdiction of Courts

There is no dispute that the applicants require leave to appeal under s 101 of the Supreme Court Act 1970 (NSW). The question is whether the matter is a special federal matter from which an appeal lies only to the Full Court of the Federal Court.
So far as relevant, s 7 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) provides: 7 Institution and hearing of appeals … (3) Where it appears that the only matters for determination in a proceeding by way of an appeal from a decision of a single judge of the Supreme Court of a State or Territory are matters other than matters arising under an Act specified in the Schedule, that proceeding shall be instituted only in, and shall be determined only by, the Full Court of the Supreme Court of that State or Territory. … (5) Subject to subs (7) and (8), where it appears that a matter for determination in a proceeding by way of an appeal from a decision of a single judge of the Supreme Court of a State or Territory (not being a proceeding to which subs (6) applies) is a matter arising under an Act specified in the Schedule, that proceeding shall be instituted only in, and shall be determined only by: (a) the Full Court of the Federal Court …. … (7) Where: (a) the Full Court of the Supreme Court of a State or Territory commences to hear a proceeding by way of an appeal; and (b) before the court determines the proceeding, it appears to the court that the proceeding is a proceeding to which subs (5) applies; the court shall, unless the interest of justice require that the court proceed to determine the proceeding, transfer the proceeding to the Full Court of the Federal Court …. (8) Where the Full Court of the Supreme Court of a State or Territory: (a) determines a proceeding to which subs (5) applies as mentioned in subs (7); or (b) through inadvertence, determines a proceeding to which subs (5) applies, nothing in this section invalidates the decision of that court.
The Bankruptcy Act 1966 (Cth) is listed in the Schedule to the Cross-vesting Act. Accordingly, where it appears that "a matter for determination" in the appeal is a matter "arising under" the Bankruptcy Act, then unless satisfied that subs (7) applies, the court should not proceed to hear the appeal.
As succinctly stated by Menzies J in Felton v Mulligan [2] : "A matter arises under a law when it is necessary in litigation to determine whether that law confers a right or affords a defence which is an issue in the litigation. A matter arises under a law of the Parliament when in a proceeding it is necessary that there should be a decision upon a claim made by one of the parties to the litigation which is based upon that law."
This, and statements to similar effect, were cited by Bell CJ in Guan v Li [3] , observing that "[j]ust because a matter may involve or relate to a particular statute, does not mean that it arises under that statute". [4]
Having given consideration to the issue (which was not addressed by the parties), it is clear that s 7(5) is not engaged in the present case. While the claims sought to be agitated by Riva in its substantive proceeding might have given rise to a matter arising under the Bankruptcy Act, namely as to the proper exercise of the functions of the Official Trustee, the only issues for determination on the present application for leave to appeal concerned the operation and application of the Vexatious Proceedings Act.
Accordingly, the Court has jurisdiction to determine the present application for leave to appeal and, if leave were to be granted, the appeal.

Adjournment application

The adjournment application bore a close connection with the proposed appeal. The substantive grounds in the draft notice of appeal (grounds 1-4) each alleged error on the part of the primary judge in making findings as to re-litigation of earlier issues, referred to an amended statement of claim. Thus, proposed ground 1 referred to "the statement of claim of 18 February 2021 which was no longer the prevailing claim". Each of proposed grounds 2, 3 and 4 referred to "issues to be raised in the amended statement of claim below".
The only pleading before the primary judge was the statement of claim filed in case 2020/206189 on 18 February 2021. Proposed ground 2, perhaps less inaccurately, referred to issues "to be raised" in the amended statement of claim; however, proposed grounds 3 and 4, asserting that findings had been made as to "the pleadings of the amended statement of claim", were false. A document entitled "amended statement of claim" and signed by Mr Ferella on 7 February 2021 is contained in the papers before this Court. The hearing before the primary judge occurred on 31 January 2022. The further amended statement of claim was therefore not in existence at that time. The primary judge did not have an amended statement of claim before him, and therefore did not make any findings with respect to it.
However, Mr Ferella may have had a plan in mind, because an application was made on 27 January 2022 to vacate the hearing date. It was dealt with by the primary judge in the following passage in his judgment of 22 February 2022: "17 On 27 January 2022, Riva applied to me to vacate the hearing date on the basis that it was not ready to proceed. Two reasons were provided. First, Riva intended to add a cause of action in slander of title to their claim, although it was noted that this already appeared in Riva's pleadings. Second, Riva desired further time to prepare a response to submissions by the Official Trustee regarding the Limitation Act 1969 (NSW) (Limitation Act). The application was refused on the basis that the Court would deal with the relief claimed by the Official Trustee under the Act which, if successful, would render the remaining issues between the parties nugatory."
By a notice of motion signed on 31 May 2023 (and filed on 2 June 2023) in case number 2020/206189, the applicants sought leave to set aside or vary the orders made by Kunc J, or continue the proceedings on the basis of the amended statement of claim of 7 February 2022. The motion acknowledged that the applicants were precluded from filing the document by the orders made by the primary judge. On 27 July 2023, Black J dismissed the motion and ordered that the applicants pay the respondent's costs.
Black J explained, consistently with authority, that where a proceeding (including an application for leave) is filed in the Court, it constitutes the instituting of a proceeding. Pursuant to s 13(2) of the Vexatious Proceedings Act, the institution of a proceeding without leave results in the proceeding being stayed until dismissed or taken to be dismissed under s 13. If no other order is made within 28 days, the proceeding is taken to be dismissed by the operation of s 13(3).
The summons seeking leave to appeal was signed by Mr Ferella on 4 June 2022 and filed on 15 June 2022, that is after the applicants had attempted to have a single judge in the Division set aside the orders made by Kunc J, but before the motion was determined.
By notice of motion filed in this Court on 26 April 2023, the applicants sought an order that the application for leave to appeal be "stayed until further orders of the court". One purpose of the proposed stay (as explained in an affidavit filed by Mr Ferella on 26 April 2023) was to allow the applicants to file "the amended statement of claim relied upon", presumably by leave in the Equity Division.
Not deterred by their failure before Black J, on 28 August 2023 the applicants filed a further notice of motion in case number 2020/206189 seeking leave to file a further notice of motion in the form annexed. This course was taken because Black J had held (correctly) that a grant of leave was required before a further claim could be made. Again, the substantive purpose of the proposed motion was either to set aside or vary the orders made by the primary judge, or to be granted leave to "continue the proceedings" on the basis of the amended statement of claim of 7 February 2022.
Given the repetitive nature of the application and the extant appeal to this Court, it might have been expected that the notice of motion filed on 28 August 2023 would simply have been dismissed as an abuse of process. However, that did not happen, perhaps because the applicants saw the dismissal by Black J as turning on their procedural mistake. Slattery J heard submissions on 28 August and adjourned the matter; on 4 September he listed it for 18 September 2023. The matter has been further adjourned until 4 October 2023, being a date after the date on which this application for leave to appeal was to be heard. The basis of the current adjournment application is to allow for the fate of the notice of motion for leave heard by Slattery J to be revealed.
While there are circumstances in which it may be appropriate to ask a trial judge to reopen orders which are the subject of an application for leave to appeal, and to seek to have that application determined before the appeal is addressed, this is not such a case. There was no material before this Court which demonstrated any reasonable basis upon which to reopen the judgment below. Nor was there any evidence to support a change of circumstances since the orders made by Kunc J.
There is a further difficulty for the applicants. No grant of leave has been made, there being no such entry recorded on JusticeLink. The order made with respect to leave under s 14 of the Vexatious Proceedings Act, cannot be appealed: s 14(6). The idea that this Court should wait to allow a further order to be made, and a further appeal to be lodged by the unsuccessful party, so as to allow some greater degree of "finality" to be achieved is not consistent with the overarching principle in favour of the just, quick and cheap disposal of the real issues in the proceeding. [5]
Importantly, the notice of motion in the Division sought orders setting aside the orders of the primary judge, staying those orders or otherwise varying them. The disposal of the appeal would put an end to such claims and require that the applicants obtain leave to commence fresh proceedings before any notice is given to the Official Trustee. There is no point in delaying the resolution of the application for leave to appeal until that step is taken. Accordingly, the application to adjourn the hearing of this matter in this Court was refused.

Question of leave

As noted above, the parties appear to have assumed that the order prohibiting Mr Ferella from instituting or conducting any proceedings against the Official Trustee in his own name, or in the name of Riva, did not extend to an application for leave to appeal from that judgment. As the matter has proceeded to a hearing in this Court, the appropriate course is to accept the correctness of that assumption and deal with the matter as one requiring leave to appeal under s 101(2) of the Supreme Court Act, but not requiring leave under the Vexatious Proceedings Act. (If leave be refused, the basis of refusal may not matter.)
For reasons explained in considering the adjournment application, grounds 1-4 provided no coherent basis for challenging the judgment below. Ground 5 challenged the ultimate finding that the proceedings below were an abuse of process; ground 6, no doubt consequentially, stated that the primary judge erred in permanently staying the proceedings below.
Ground 7 referred to the court "joining" Mr Ferella to the proceedings, which was procedurally incorrect. The order in relation to Mr Ferella was made pursuant to a separate summons filed by the Official Trustee. Otherwise, ground 7 alleged error on the part of the primary judge in declaring Mr Ferella to be a vexatious litigant (which was not expressly stated in the order) and prohibiting him from instituting or conducting proceedings against the Official Trustee. It stated a conclusion, but no basis for asserting error. Ground 8, with an equal lack of precision, merely alleged error in giving judgment for the Official Trustee.
The further amended summary of argument filed by the applicants on 27 January 2023 added little by way of substance, although the document expanded upon the ways in which the findings of the judge were said to be inconsistent with or unsupported by the "new evidence" referred to in the "amended statement of claim". Each of the findings relied upon in support of the conclusion that the applicants had frequently commenced vexatious proceedings was also challenged upon the same basis, namely the "new evidence" referred to in the "amended statement of claim".
The oral submissions dealt with the issues in a somewhat different manner, and with limited regard to the proposed grounds of appeal. However, grounds 1-4 were not so much abandoned as recast into a complaint that by rejecting the adjournment application at [17] (set out at [19] above) the primary judge proceeded to "render nugatory the remaining issues between the parties". [6] The submission continued by suggesting that the primary judge "appears to have set his course in that fashion from the outset, and effectively curtailed the applicants' ability to propound the amendments that they foreshadowed and which on their case before Kunc J and in this Court were, in a very real sense, integral to their liability to be found one way or the other in terms of what the Vexatious Proceedings Act sets up as the test".
There are several problems with that submission. First, neither the proposed grounds of appeal nor the summary of argument raised expressly an error on the part of the primary judge in failing to grant an adjournment to allow the applicants to replead. Secondly, and putting that difficulty to one side, the suggestion that after 15 years the applicants had not been able to formulate a pleading which satisfactorily identified a cause of action against the Official Trustee cast doubt upon the credibility of the submission. Attempts had already been made to excuse the delay by claims of fraudulent concealment, but there was no evidence to support such claims. Thirdly, the very existence of the fresh application presently pending in the Equity Division demonstrated that nothing which was truly available as a new cause of action, only discoverable in recent times, had been rendered nugatory or otherwise unavailable to the applicants.
Next, counsel submitted that the finding that Mr Ferella was a vexatious litigant, or that there was reason to stay the Riva proceedings, was unsupportable "in circumstances where at least the genesis of the proceedings before Nicholas J are concerned, cannot be said to have been without substance". [7]
That Riva enjoyed an element of success in proceedings brought in 2008 and 2009 said nothing about attempts to relitigate matters on which it had been unsuccessful, virtually continuously, in several separate proceedings, over the subsequent 11 years. The primary judge had not found the initial proceedings to be vexatious. [8]
Counsel then submitted that the conduct of the applicants could not be described as "completely unscrupulous and unprincipled". [9] The primary judge made no findings in those terms, although he did note that Perry J in the Federal Court had found that the litigation before her "was infected with re-litigation, contained serious allegations without substance, raised claims without merit and suffered from extensive - and fatal - delay in bringing the particular causes of action". [10] Similar allegations were made by Pembroke J in the Equity Division. However best described, this conduct was neither to be applauded nor excused.
Although, as counsel for the Official Trustee noted, it had not been raised in the proposed grounds of appeal, counsel for the applicants also challenged the finding that Mr Ferella had "frequently instituted or conducted vexatious proceedings" for the purposes of s 8(1)(a) of the Vexatious Proceedings Act. Combined with that proposition was the suggestion that the reasoning in finding some proceedings vexatious was inadequate or lacked nuance. There was no proposed ground of appeal relying upon a lack of adequate reasons. That there was no moral turpitude, nor criminality, is beside the point.
In any event, neither of these complaints was plausible. The primary judge gave careful and detailed consideration to the history of the litigation between the parties from 2006 until 2021. The judge further provided a careful and detailed analysis of the claims in the 2020 proceedings which were then before him. [11] The judge stated: "102 The Court concludes that there is no merit in the current proceeding brought by Riva. In almost every claim for relief there has been finality by way of a previous decision with nothing fresh to justify resuscitation. In other claims there is either no sound basis or a statutory limitation barring the cause of action (if there had been one). It follows that the current proceeding is an abuse of process because it was brought without reasonable ground, raising serious allegations of fraud and perjury without substance, and has been instituted for some purpose other than the relief claimed, which the Court infers from these findings can only be to harass the Official Trustee. The proceeding is therefore vexatious within the meaning of s 6 of the Act." There was no basis for challenge to any part of this conclusion.
The primary judge also took note of the separate proceedings in which Mr Ferella was a plaintiff or an appellant, which were dismissed as being without substance, hopeless or without reasonable grounds. The judge concluded: "108 Since 2015, and including the current proceeding, there are six proceedings that have been instituted by Riva which constitute an abuse of process. Accepting Mr Lynch SC's submission that Riva and Angelo have acted in concert with each other and are interchangeable, proceedings instituted by Angelo are also woven into the tapestry of vexatious litigation. At least one proceeding in which Angelo was plaintiff is an abuse of process, with a further five in which he had substantial involvement in their conduct to the extent that the Court finds, without hesitation, that he was the driving force behind them and therefore 'conducted' them for the purposes of the Act. In sum, there are twelve matters that are 'vexatious proceedings' as defined in s 6 of the Act." No plausible challenge was mounted to these conclusions either.
Although counsel for the applicants developed these and other arguments, there was no basis for finding that the judgment of the primary judge was other than correct. In accordance with the well-established principles, [12] it could not be said that the applicants had demonstrated that the judgment was more than merely arguably wrong. The case did not raise any issue of general principle, nor any clear case of an injustice visited upon the applicants. Accordingly, leave to appeal must be refused.

Costs

The applicants accepted that costs should follow the event. Accordingly, they must pay the Official Trustee's costs of the proceedings in this Court.

Orders

The Court makes the following orders: 1. Refuse the applicants leave to appeal from the judgment of Kunc J delivered on 22 February 2022 and orders entered on 4 March 2022. 2. Order that the applicants pay the respondent's costs in this Court.

Endnotes

Riva NSW Pty Limited v The Official Trustee in Bankruptcy; The Official Trustee in Bankruptcy v Ferella [2022] NSWSC 153 ("Primary judgment").
(1971) 124 CLR 367 at 382; [1971] HCA 39.
[2022] NSWCA 173 at [41]-[50].
[2022] NSWCA 173 at [40].
Civil Procedure Act 2005 (NSW), Pt 6.
CA Tcpt, 22/09/23, p 14(25).
CA Tcpt, p 14(10).
Primary judgment at [79].
CA Tcpt, p 17(5).
Primary judgment at [80].
Primary judgment at [84]-[101].
See The Age Company Ltd v Liu (2013) 82 NSWLR 268; [2013] NSWCA 26 at [13] (Bathurst CJ, Beazley and McColl JJA agreeing); Paramasivam v Sabanathan [2013] NSWCA 362 at [2] (Gleeson and Leeming JJA). DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 October 2023

At a glance

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Judgment (11 paragraphs)

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Legislation Cited (6)

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