Solicitors:
Zali Burrows Lawyers - for the plaintiff
Craddock Murray Neumann - for the defendant
File Number(s): 2018/069230
[2]
Introduction
This litigation arises out of events that took place more than a decade ago. It raises issues that have been comprehensively investigated, analysed, probed and contested before other judges in other courts. There have been ten previous judgments in proceedings both in this court and in the Federal Court of Australia. My judgment is the eleventh in a long procession that 'drags its weary length before the court'. To adapt another colourful phrase of Charles Dickens, there has been too much 'swearing and interrogating, filing and cross-filing, arguing and sealing and motioning, and referring, and reporting…'.
All of these judgments arise out of the same substratum of facts. Those facts occurred in 2005-6. The public resources of the courts, the funds of the taxpayer and considerable time and expense have been made available to Gustavo and Angelo Ferella and their companies to ventilate their claims. Underlying all of the claims is a property in Point Piper, Sydney that has long since passed into new ownership. The plaintiff and those associated with it have failed at almost every step of the way.
The earlier judgments represent considerable judicial diligence and thoroughness. Some were exceedingly lengthy and minutely detailed. The judgment of Nicholas J given on 8 July 2008 followed five hearing days in February, March, May and June. The judgment was 68 paragraphs long. In June 2009, the Court of Appeal gave judgment on an appeal. That judgment was 53 paragraphs long. The judgment of Yates J, given on 6 June 2011, followed four hearing days in October 2010. It was 62 pages long and consisted of 227 paragraphs. There was an appeal from that judgment as well. On 7 May 2013, the Full Federal Court dismissed the appeal. Its judgment was 82 paragraphs long. The judgment of Perry J, given on 3 March 2017, consisted of 110 paragraphs. Her Honour considered her decision over a ten month period. An appeal was lodged but subsequently abandoned.
The resources of the courts are not available to indulge endlessly the misconceived whims and unshakeable convictions of disappointed litigants. The public interest in the finality of litigation requires that an end be brought to causes that have already been given a fair opportunity. In this case, I have concluded that it is time to close the book. The most recent iteration of the claim is not a case of fresh evidence, but an attempt to re-agitate earlier claims. At its most generous, it constitutes a marginally new legal perspective on old facts. Nonetheless, it is appropriate to repeat the wisdom of Lord Wilberforce in The Ampthill Peerage [1977] AC 547 at 569 :
… the law aims at providing the best and safest solution compatible with human fallibility and having reached that solution it closes the book. The law knows, and we all know, that sometimes fresh material may be found, which perhaps might lead to a different result, but, in the interest of peace, certainty and security it prevents further inquiry. It is said that in doing this, the law is preferring justice to truth. That may be so: these values cannot always coincide. The law does its best to reduce the gap. But there are cases where the certainty of justice prevails over the possibility of truth (I do not say that this is such a case), and there are cases where the law insists on finality.
[3]
The Facts
The saga began at the turn of century. In October 2000, Gustavo and Angelo Ferella purchased the Point Piper property as trustees of the Cavallino Unit Trust. In April 2005, they resigned as trustees. The plaintiff was appointed as the new trustee but the Ferellas remained the registered proprietors. In the first of the series of judgments, Nicholas J held that the trust property never vested in the plaintiff because there had been no compliance with the trust deed. In October 2005, Gustavo and Angelo Ferella were made bankrupt. In April 2006, their mortgagee sold the property. The net proceeds of sale of approximately $1.7 million was remitted to the defendant. It was accepted that the defendant was entitled to be indemnified from the net proceeds of sale in respect of certain debts for which proofs had been lodged in the bankruptcy.
Having failed in 2008-9 to establish that the property was held by the plaintiff at the time of their bankruptcy, the Ferellas turned their attention to the defendant's conduct of the administration of their bankrupt estates. Their claims in the 2010 proceedings before Yates J, and on appeal in the Full Federal Court, were an attempt to obtain an order that an inquiry be made by the court into the conduct of the defendant. They sought consequential orders that the defendant be removed from office and funds held by it released. Those claims were dismissed.
In 2015, two years after the dismissal by the Full Federal Court of the appeal from the decision of Yates J, Gustavo and Angelo Ferella adopted a different tack. Together with the plaintiff (Riva), they commenced proceedings seeking damages and related orders for alleged breaches of duty by the defendant in its conduct of the administration of their bankrupt estates. A central component of the claim was the allegation that the defendant owed obligations to Riva as a trustee de son tort and as a fiduciary. Perry J dismissed the claims and gave summary judgment for the defendant. As I have mentioned, an appeal was abandoned.
Another year elapsed. Riva tried again. In 2018 it commenced these proceedings. This time it alleged that the defendant was a constructive trustee for Riva - rather than a fiduciary or trustee de son tort. The claim is based on the same facts. It is going over old ground. The defendant has reacted predictably by seeking the dismissal of the claim and summary judgment against the plaintiff, or a permanent stay. It is justified in doing so.
[4]
Repetition & Duplication
Courts are wary of attempts to re-litigate issues. And they are mindful of the oppression and vexation caused to defendants by plaintiffs who are unreasonably fixated with the righteousness of their claim or who may be motivated by extraneous considerations. In Aon Risk Services Aust Ltd v ANU [2009] 239 CLR 175 at 193, French CJ said:
Abuse of process principles may be invoked to prevent attempts to litigate that which should have been litigated in earlier proceedings as well as attempts to re-litigate that which has already been determined.
Similar sentiments were expressed in Walton v Gardiner [1993] 177 CLR 378 at 393 by Mason CJ, Deane and Dawson JJ:
Proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings.
The allegations and the pleadings in the 2015 proceedings and in these proceedings are overwhelmingly similar. The actual language of each claim is substantially identical, with only a few minor variations. The substance of both proceedings - their pith and core - is the same. The commercial objective is the same. Both agitate the same complaint, point to the same conduct, and propound effectively the same relief. The defendant's solicitor has prepared a schedule comparing the formulation of the statements of claim in the 2015 proceedings and in these proceedings. The comparison is revealing. The correspondence between them is alarming. I will not repeat the schedule but I adopt it for the purpose of these reasons.
The recitation of the facts in each pleading is all but identical. Any differences are minor and immaterial. They represent no more than attempts at drafting refinement. They deal with the longstanding complaint by Gustavo and Angelo Ferella that the defendant's conduct thwarted a proposed re-financing of their borrowings secured over the Point Piper land. They allege that, but for the defendant's conduct, the mortgagee sale of the land would not have occurred.
From these facts, the drafter has made an attempt to propound a different legal characterisation. But it is a distinction without a difference, at least a material difference. It is useful to consider the findings of Perry J. Her Honour held in the 2015 proceedings that the position of Riva and that of Gustavo and Angelo Ferella had been conflated. She held that the contention that the defendant owed any statutory or implied duty to Riva was untenable. She also held that the claim of breach of fiduciary duty was 'similarly devoid of merit': [68].
More significantly, in the context of the allegations advanced in these proceedings, Perry J held that the claim that the defendant owed the obligations of a trustee de son tort to the Cavallino Trust 'cannot succeed': [64]. Among other things, her Honour adopted the reasoning of Ormiston JA in Nolan v Nolan [2004] VSCA 109 at [78]. His Honour found, on the facts of that case, that it was almost impossible to suggest that the relevant conduct by Sidney Nolan could be characterised as that 'of a trustee de son tort or any other form of constructive trustee' [emphasis added].
The legal analysis by Ormiston JA of the nature and scope of constructive trusteeship was clear and comprehensive. Perry J adopted it. The former referred at [25] to the 'characterisation of Sidney Nolan's acts as those of a trustee de son tort and thus of a constructive trustee' [emphasis added]. He supported that analysis with detailed reasoning at paragraphs [26] - [29] that included reference to the well-known cases on constructive trusts - Barnes v Addy (1874) LR 9 Ch App 244 at 251 and Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373. To those authorities, one could add the remark of Smith LJ in Mara v Browne (1861) 1 Ch 199 at 209, referring to '…a trustee de son tort, or as it is also termed, a constructive trustee' [emphasis added]. It is clear that Ormiston JA regarded the obligations of a trustee de son tort as a form of constructive trusteeship. Perry J agreed. So do I.
In the result, relying on the same facts, Riva has merely substituted in its allegations in these proceedings, the duties of a constructive trustee for those of a trustee de son tort and those of a fiduciary - on which it relied in the 2015 proceedings. It is the same underlying complaint. The choice of legal terminology makes no difference. I am not satisfied that invoking the concept of a constructive trustee involves any substantial difference to the legal analysis that will be required. It certainly makes no difference to the facts.
It is not in the interests of justice, let alone the interests of the defendant, to allow the claim to be maintained. It is an abuse of process for the plaintiff to pursue this claim given the previous findings, the extensive prior litigation, the use of public resources, the vexation to the defendant and the unlikely prospects of success.
I should not overlook the fact that the plaintiff has expressly, and somewhat cavalierly, added in these proceedings allegations that the defendant acted 'with reckless disregard and wilful blindness' and in 'fraudulent and deliberate disregard for the defendant's duty as trustee'. These allegations have no prospect of success and should not have been made - all the more so because they are based, not on new facts, but on facts which have been traversed scrupulously in the preceding litigation and which do not support such a serious allegation.
In the 2015 proceedings, a suggestion of an amendment to add an allegation of fraud was treated with the disdain that it deserved. Perry J observed at [88]:
Nor is it apparent that any amendment to plead a case of fraud would not equally constitute an abuse of process, there being no suggestion by counsel for the applicants that such a claim would be based upon any new material which has not been available to the applicants since the relevant events took place in 2006.
I am afraid to say that the persistence of Gustavo and Angelo Ferella in their ongoing disputation with the defendant, suggests some of the characteristics that I described in Zepinic v Chateau Constructions (Aust) Limited; Chateau Constructions (Aust) Limited v Zepinic [2017] NSWSC 582 at [46]:
In this case, and in many similar such cases, the litigant's enthusiasm and passionate engagement in his quest for supposed justice, obscures the essential unreality of his expectations; blinds him to the chaos that his pursuit has created; and renders him oblivious to the waste and expense that he has generated or the disproportionate court time that he has consumed. Such a litigant's level of pre-occupation, ruminative thinking, pedantic attention to the minutiae of his case and dogged persistence, serve only to hinder the efficient administration of justice. It is usually made worse by extravagant language, repeated assertions of fraud and the constant denunciation of the tactics or behaviour of the opposing party.
For those reasons, I have concluded, in the exercise of my discretion, having regard to the interests of justice, that the plaintiff should be stopped. I make the orders set out in prayers 1, 2, 3 and 6 of the defendant's notice of motion filed on 6 July 2018.
[5]
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Decision last updated: 07 February 2019