Riva NSW Pty Limited v The Official Trustee in Bankruptcy

The Amended Statement of Claim

1. Even a short analysis of the Amended Statement of Claim shows that on its face it merely seeks to relitigate issues that have already been determined in the litigation which were thoroughly examined by Kunc J. The Court readily concludes that to allow it to be filed and for the proceedings to continue upon it would amply make these proceedings "vexatious proceedings": the Act s 15(1)(b). Moreover there is no prima facie ground for the proceedings as constituted by the Amended Statement of Claim: the Act s 15(1)(c).
2. Prayers for relief 1 to 3 of the Amended Statement of Claim seek declarations that the Point Piper property never vested in the Official Trustee, that the Official Trustee was "fraudulent and unconscionable" in asserting rights inconsistent with the trustee and beneficiaries of the Trust and that the Official Trustee "from the beginning held all rights as constructive trustee for" Riva in its capacity as trustee of the Trust.
3. Prayers for relief 4 to 10 of the prayers for relief in the Amended Statement of Claim seek declarations and damages on the basis that the Official Trustee engaged in slander of title and malice, fraudulent concealment, conspiracy to defraud, damages for acting as a constructive trustee without consent, and damages for lodging two caveats.
4. The pleadings and particulars in the Amended Statement of Claim supporting the relief plead facts that substantially reproduce the issues litigated and decided in the earlier proceedings. The structure of the pleading may be briefly recounted in what is only a high-level summary. 1. Paragraphs 1 - 12. Mr Ferella and his father became trustees of the Trust, were replaced by Riva as trustee, but they committed an act of bankruptcy and the Official Trustee became their trustee in bankruptcy, they informed officers of Official Trustee of the existence of the Trust but Riva was at all times entitled to enjoy legal ownership of the Point Piper property, subject to a mortgage to Key Nominees Pty Ltd (Key) and to hold the property on trust for the beneficiaries of the Trust subject to keys rights, although the Official Trustee lodged a caveat on the title to the Point Piper property claiming an interest in it. 2. Paragraphs 13 - 18. Mr Ferella and his father delivered statements of affairs to Official Trustee giving further notice of the Trust to the Official Trustee and lapsing notices with respect to the caveat. Key obtained an order for possession of the Point Piper property and a financier agreed to refinance the land to pay out the indebtedness to Key but the Official Trustee declined to allow transfer of the legal title of Point Piper property at the direction of Riva to Mr Ferella's father pursuant to the refinancing and so the refinancing could not proceed. 3. Paragraphs 19 - 20. Lawyers on behalf of the Official Trustee made representations that caused the refunding of the Point Piper property to be abandoned, and these representations were said to be false because they asserted that the land was vested in the Official Trustee and no one else was authorised to deal with it. The Official Trustee filed a second caveat setting an interest in the Point Piper property. 4. Paragraphs 21 - 22. Based on evidence in its own possession and giving notice to it, the Official Trustee was always a constructive trustee for Riva of the Point Piper property and its proceeds of sale. 5. Paragraphs 23 - 28. Lawyers acting on behalf of Official Trustee and officers of Official Trustee made wilfully false statements and deliberately suppressed and concealed material facts about the true title of the Point Piper property to mislead various courts and deliberately filed false caveats to support those wilful false statements. This conduct was said to have taken place in all the proceedings in which Riva was involved and is also said to be malicious and to slander Riva's title to the Point Piper property. The Courts allegedly misled by these wilfully false statements included the Supreme Court of New South Wales and the Federal Court of Australia sitting in bankruptcy. Various lawyers allegedly conspired with a petitioning creditor in the bankruptcy proceedings to intentionally conceal material facts from the Court, apparently as to the true ownership of the Point Piper property. 6. Paragraphs 29. But now "new evidence" that has become available relevant to the 2015 proceedings which shows that many of the facts asserted against Mr Ferella and his father were incorrect. Due to the fraudulent concealment of documents from Riva by persons who had acted for the Official Trustee the limitation period for the causes of action which Riva now seeks to maintain only commenced when this new evidence was made available to Riva between June and December 2021. 7. Paragraph 30. Various proceedings relating to Mr Ferella and his father and Riva have resulted in judgments in the various proceedings that have become "grossly infected, false and made without merit" including various proceedings in the Federal Court of Australia, the Supreme Court of New South Wales at first instance and on appeal and in the High Court of Australia's refusal to allow leave to appeal from a decision of the New South Wales Court of Appeal. And in the 2015 proceedings the Official Trustee's witnesses first allegedly perjured themselves and then made concessions. 8. Paragraphs 31 - 34. Riva and Mr Ferella sought various documents on discovery concerning costs charged to the estate of Mr Ferella's father and these documents were allegedly not produced during the conduct of any of the proceedings. The documents not produced are said to include advice from counsel conceding that the Point Piper property was held on the Trust and invoices from the solicitors and counsel involved in the 2006 proceedings. 9. Paragraphs 35 - 44. In this final section of the Amended Statement of Claim the claimed causes of action are summarised against the Official Trustee, to include wilful and fraudulent intent to conceal material facts and deliberately to make false representations regarding the ownership of the Point Piper property. This said to have occurred "from the beginning", which appears to allege conduct in all proceedings commencing with the 2006 proceedings, and then to continue into the 2015, 2018 and 2019 proceedings. This part of the leading repeats the allegations of fraudulent and intentional conduct. Riva further contends that this misconduct led to the wrongful sale of the Point Piper property under the "purported exercise of a power of sale by Key" over the property, causing damage to Riva.
5. The Court does not need to hear from the Official Trustee before declining leave to allow this proposed pleading to be filed. The document is manifestly embarrassing in multiple ways. To permit it to be filed would only invite an application to strike it out. The pleading is so obscure in places that no proceeding could be conducted in this Court based on this pleading in manner consistent with the Court's objective of conducting proceedings justly, quickly, and cheaply: Civil Procedure Act 2005, ss 56 - 60. And for the many reasons which follow, it is not a pleading which is capable of amendment, to plead recognisable and maintainable causes of action or claims for relief. Despite attempts at amending the pleading after the decision of Kunc J, it still exhibits the same basic defects upon which Kunc J commented and it has collected a few more.
6. First, the pleading merely attempts to relitigate earlier proceedings which have already determined the matters pleaded. The following observations Kunc J made (at [90]) about the pleading then under consideration are equally true of the present pleading: "[90] It is undeniable that there are strong similarities in the material advanced by Riva in the current proceedings when compared to the proceedings before Perry J in the Federal Court of Australia and Pembroke J in the Supreme Court of NSW. The Official Trustee - as it did in the matter before Pembroke J - provided a side-by-side comparison of the statements of claim in each matter which exposed these consistencies. There are few differences to be identified between the statement of claim filed in the current proceedings and those before Pembroke J. As was put by Mr Lynch SC for the Official Trustee, they are "near identical". The Court accepts that submission. Of 39 paragraphs, 28 are materially the same with a few inconsequential alterations. The only substantive new material in the statement of claim arises in relation to particulars for claims of fraud and perjury by the Official Trustee. With the exception of a claim for slander of title, the matters Riva seeks to litigate have already been considered by this and other courts."
7. The amendments that have been made to the proposed pleading do not change its basic structure. They mostly only change the intensity of the allegations of alleged misconduct. Indeed, prayers for relief 1,2 and 3 of the same. Kunc J demonstrates, at [91] to [95] that these claims are nothing more than matters already determined in earlier proceedings: "[91] By prayer one, Riva seeks a declaration that the property never vested in the Official Trustee. This appears to be a revival of the long-settled findings of Nicholas J in the Supreme Court of NSW ([2008] NSWSC 685). His Honour held that the property was never validly vested in Riva because it remained vested at all times in Angelo and Gustavo. Upon their bankruptcy, an interest was conferred upon the Official Trustee sufficient for it to lodge a caveat against the property and exercise a lien over the proceeds of sale. Riva never obtained any interest. This was reiterated by Yates J in the inquiry proceedings, Perry J in the Federal Court of Australia, and Emmett AJA (Bell P agreeing) in the NSW Court of Appeal. [92] By prayer two, Riva alleges unconscionability by the Official Trustee founded on accusations of breach of trust, consisting of fraud and perjury. Riva had previously sought leave to amend its pleadings before Perry J to include a claim of fraud but was refused (at [88]). Fraud was again raised before Pembroke J. His Honour determined the claims had "no prospect of success and should not have been made" (at [18]). [93] New particulars of fraud have been included in the current statement of claim. These relate largely to the invoices referred to at [87] above. Riva also alleges that the invoices form the basis for an accusation of perjury. These claims rise no higher than speculation and are without reasonable foundation. They should not have been made. [94] In any event, any claim of fraud would be untenable because it is beyond the 12-year limitation period set out in s 55 of the Limitation Act. Mr Lynch SC raised the limitation issue at hearing, submitting that any claim of fraud was hopeless as the period in which to bring such a claim would have lapsed in 2018. The Court accepts that submission. [95] By prayer three, Riva seeks a declaration that the Official Trustee held the property as constructive trustee for Riva. Riva sought the same relief in proceedings before Pembroke J which his Honour held was a reiteration of the relief sought before Perry J (albeit using the language of de son tort as opposed to constructive trustee). In both matters there was no reasonably arguable case to answer ([2017] FCA 188 at [64]-[67]; [2019] NSWSC 49 at [14]-[15]). Perry J noted that a finding in favour of Riva on the question of a trustee de son tort would be contrary to the decision of Nicholas J (at [66]). Her Honour also held that such a claim was barred by the operation of s 48 of the Limitation Act (at [84]). Emmett AJA (Bell P agreeing) in the NSW Court of Appeal also dealt with this issue of a constructive trustee, concluding that it was "not possible" to establish a constructive trust on the available material (at [36]). There is nothing new, either in the facts or the evidence before the Court, to justify any divergence from these findings."
8. Moreover, the other relief claimed in the present pleading including slander of title breaches, fiduciary duty and breach of trust, and claim for equitable compensation Kunc J pointed out (at [97] to [101]) have already been determined.
9. Secondly, many of the changes made introduce additional and broader charges of fraudulent conduct, including false representations, slander of title, perjury, conspiracy, and fraudulent concealment which bring with them other pleading issues. Only a few of them need be mentioned. The fraud allegations include allegations against solicitors and counsel, who are not joined as defendants and whose level of participation in the alleged misconduct is unclear on the pleading. In places for example they are said to be responsible for their client's "perjury". The conspiracy allegations do not identify the parties to the alleged conspiracy, the common agreed scope of the conspiracy, and whether it was a conspiracy to use lawful or unlawful means to achieve its conspiratorial end.
10. Thirdly, many of the causes of action are inappropriately pleaded and do not suit the underlying facts. For example, the tort of slander of title is expressly invoked but is hardly an appropriate label for the pleaded circumstances. The 2006 proceedings involved a reasonably unremarkable contest about the beneficial ownership of certain property, which may or may not have become part of a bankrupt estate.
11. Fourthly, a clear distinction is not drawn in the pleading between misleading conduct which is alleged to take place by lawyers in the context of litigation or parties exercising their procedural rights to advance their cases in the courtroom and other conduct outside that context. The former would attract absolute privilege against defamation for the client and immunity from suit for the advocate. The latter would not.
12. Fifthly, the pleading invites an impermissible indirect challenge to the integrity of earlier decisions of the Court by collateral attack. Several judges' decisions that are said to have been influenced by the fraudulent nondisclosure are said as a result to have been "grossly infected false and made without merit". A new proceeding seeking by indirect collateral attack to undermine a previous decision of the court, which decision could have been, or has been, the subject of an appeal is an abuse of process. Appeals are the correct way of challenging decisions not the filing of a statement of claim in fresh proceedings.
13. Sixthly, there is nothing in the allegation of fraudulent concealment which would be likely to extend any applicable limitation period for the causes of action or the claim for equitable relief. Nothing suggests that a claim for relief has been suppressed and kept away from Riva or that most of the material facts have not long been known to Riva. At best the material said to have been concealed is material that does not appear to be decisive in establishing an otherwise known cause of action or claim for relief but to be merely additional evidence. In this respect the Court agrees with what Kunc said at (at [89]): "[89] The notion that the Official Trustee was aware of the status of the property as trust property has been well traversed. It received consideration in the original proceedings before Nicholas J, inquiry proceedings before Yates J and on appeal before Dowsett, Foster and Nicholas JJ. It was also raised in the vexatious proceedings before Perry J and again before Pembroke J. Yates J noted specifically that "by July 2006 the respondent had formed the view, no doubt assisted by the legal advice it had obtained, that it was not satisfied that the Point Piper funds were an asset of a trust" and it was "not unreasonable" in doing so (emphasis added) ([2011] FCA 69 at [165], [167]). Nothing in the invoices undermines this conclusion except insofar as the Official Trustee was reluctant to provide Riva with the documents in circumstances where Riva was already engaged in vexatious proceedings against it. It follows that the documents now before the Court are not new in any meaningful way. They are merely a convenient vehicle for Riva and Angelo to resurrect old grievances"
14. In conclusion therefore, notwithstanding Mr Maroya's careful submissions to the contrary, the Court will therefore dismiss this application under the Act, s 15(b) and (c) on the basis that the application is a "vexatious proceeding" as defined by the Act and there is "no prima facie ground for the proceedings". The proceedings seek to relitigate earlier proceedings and therefore are an abuse of process. Their pleaded form and their obvious similarity to what was considered by Kunc J allows the Court to infer that they were instituted "to harass or annoy, to cause delay or detriment, or for another wrongful purpose" because they do not plead maintainable forms of relief and are likely be struck out as being embarrassing in form.
15. Notwithstanding the lack of success on Riva's part, the Court has been assisted by the careful arguments of counsel Mr Maroya that were put on Riva's behalf.

Conclusions and Orders

1. Riva has been unsuccessful. But because the Official Trustee has not been served, it has not incurred any legal costs. It is therefore not necessary for a costs order to be made. The Court will therefore make the following orders: 1. The plaintiff's motion filed on 28 August 2023 is dismissed under Vexatious Proceedings Act 2008 s 15(b) and (c); and 2. Note that there is no order as to costs made in relation to the plaintiff's motion.

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: 03 November 2023