Lafiatis BHT NSW Trustee and Guardian v Australian-Greek Investments Pty Ltd

[2014] NSWSC 884

Supreme Court

New South Wales

Medium Neutral Citation:

Lafiatis BHT NSW Trustee & Guardian v Australian-Greek Investments Pty Ltd [2014] NSWSC 884

Hearing dates:

1 July 2014

Decision date:

01 July 2014

Jurisdiction:

Common Law

Before:

Davies J

Decision:

Settlement approved as agreed between the parties in the following terms:

1. Order pursuant to Civil Procedure Act s 76 that the settlement of the litigation as provided in the Deed of Settlement and Release executed by the parties and dated 1 July 2014 is approved.

2. Order pursuant to Civil Procedure Act s 77 (3) that the amount payable to the Plaintiff in clause 3.1 of the Deed be paid to NSW Trustee and Guardian.

3. Order that all previous costs orders are vacated and any outstanding Notice of Motion is dismissed.

4. Grant leave to the Plaintiff to file a Notice of Discontinuance which provides that each party shall bear their own costs in the proceedings.

Catchwords:

PROCEDURE - approval of settlement of proceedings - plaintiff under a legal incapacity - whether settlement beneficial to the plaintiff - risks in the litigation - limited pool of funds to satisfy judgment - settlement approved

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Cases Cited:

Fairhurst and Fairhurst [2012] NSWSC 388

Category:

Interlocutory applications

Parties:

George Lafiatis by his tutor NSW Trustee and Guardian (Plaintiff)
Australian-Greek Investments Pty Ltd (First Defendant)
Lafiatis Investments Pty Ltd (Second Defendant)

Representation:

Counsel:
C Zucker (Plaintiff)
I Wallach (Defendants)
Solicitors:
Zucker Legal (Plaintiff)
Bellissimo Lawyers (First and Second Defendants)

File Number(s):

2013/61186

Judgment

1. The parties seek approval of a settlement reached in proceedings brought by the Plaintiff, in respect of whom the Public Trustee and Guardian has been appointed by the Guardianship Tribunal as his manager on 29 May 2012. The proceedings relate to the transfer of two pieces of real property by the Plaintiff to two companies of which he was, for a short period of time relative to the transfer, a shareholder and director.

1. The property at 62 Lancaster Road, Dover Heights, was transferred to the First Defendant and the property at 60 Lancaster Road was transferred to the Second Defendant. The consideration in each case was the amount of $1.385 million.

1. The claim by the Plaintiff is that the consideration for each transfer was never paid. Shortly after the transfer the Plaintiff ceased to be a shareholder and director of both companies.

1. Again, shortly after the transfer, each of the properties was mortgaged, one to the Bendigo and Adelaide Bank for $840,000 on 19 August 2009 and the other to Permanent Custodians for $700,000 on 30 November 2009. Default ultimately took place in the relation to each of those loans and the properties were sold leaving a surplus of about $640,000

1. At the present time there is money in a controlled account in the amount of $537,804.30. The person who is said to have organised all of these transactions is a person by the name of George Karmas.

1. The proceedings went to mediation and there was a dispute over whether they were settled at that mediation. Indeed, the Defendants sought by notice of motion to enforce the agreement said to have been reached there, but that motion has not been pursued. Subsequently, agreement has been reached, and is undisputed, to settle the proceedings for $340,000 inclusive of costs. The Plaintiff is, as I have indicated, under a legal incapacity.

1. The solicitor who has the conduct of the proceedings for the Plaintiff on the instructions of the New South Wales Trustee and Guardian has sworn a lengthy affidavit which has not only detailed the transactions but has provided the reasons why in his opinion the settlement is in the best interests of the Plaintiff.

1. It is not necessary to recite all of that material but it concerns the scarcity of evidence in relation to the Plaintiff's mental state at the time of the transfer of the properties and the scarcity of evidence generally in relation to the transactions. These matters give rise to some risk of the proceedings ultimately being unsuccessful. The solicitor is also quite rightly concerned about the future costs of running the proceedings which he estimates in the vicinity of 150 to $200,000. By reason of the nature of the proceedings and what I have read about them, that estimate does not seem to me to be unreasonable.

1. The principles that the Court must have regard to in approving settlements of this nature are well summarised by Hallen AsJ (as his Honour then was) in Fairhurst and Fairhurst [2012] NSWSC 388 at [30] to [38]. In general terms the concern is that the settlement should be beneficial to the interests of the person under the incapacity.

1. Although when I read this material my mind wavered about whether the settlement was appropriate, on a reconsideration of the matter, I am now satisfied that the settlement is appropriate. In addition to some of the difficulties that I have referred to that are mentioned in Mr Zucker's affidavit, is the further fact that it does not appear that either of the present defendants or Mr Karmas (who it is proposed might be joined to the proceedings) has any known assets.

1. That obviously provides a difficulty for the ultimate beneficial outcome of the proceedings in favour of the Plaintiff. It also has the result that the Defendants may apply to use, and be granted, some of the funds that are currently held in the controlled account to fund their defence of the proceedings. These are the only funds that the Plaintiff is ever likely to recover. There is certainly the possibility that the continuation of the proceedings would be a futility in that way.

1. Accordingly, the settlement that has been reached between the parties is approved.

1. I make orders in terms of paragraphs 1, 2 and 3 of the Short Minutes of Order and I grant leave to the Plaintiff to file a Notice of Discontinuance in accordance with paragraph 4.

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