FEDERAL COURT OF AUSTRALIA

Velissaris v Fitzgerald [2011] FCAFC 120

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellant pay the costs of the second respondent to be taxed if not agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1    The appellant, Mr George Velissaris, appeals from a discretionary judgment of a judge of this Court entered on 2 March 2011 dismissing his application for an order under s 482(1) of the Corporations Act 2001 (Cth) (the Act) to terminate the winding up of Maryvell Investments Pty Ltd (in liquidation).

Background

2    The following background is taken substantially from the related decision of the Victorian Civil and Administrative Tribunal (VCAT) dated 20 August 2010: Maryvell Investments Pty Ltd (in liq) v Sigma Constructions Pty Ltd (Retail Tenants) [2010] VCAT 1380 at [1]-[5].

3    For many years, George Velissaris was involved with a Greek restaurant on land at 333-335 Sydney Road, Brunswick (the Property) owned by Maryvell. He was the sole director of Maryvell which granted a licence to Sigma Constructions Pty Ltd to gain access, through the land on which the restaurant was situated, to an adjoining property on which it was building a large unit development. Unfortunately, things did not go smoothly and Maryvell commenced proceedings in VCAT in 2003 to have the licence revoked or, as Mr Velissaris describes it, to have Sigma evicted because, as he contended, the heavy equipment used by Sigma damaged the sewerage system and he was forced to close the restaurant. A second proceeding was commenced in 2003 in which Maryvell claimed significant damages.

4    Sigma successfully appealed against VCAT’s decision to grant Maryvell a permanent injunction restraining Sigma, its servants and agents from entering upon any part of Maryvell’s land. In December 2004, the Victorian Court of Appeal having determined that VCAT had jurisdiction, the matter was otherwise remitted to VCAT to consider Maryvell’s outstanding claims. There followed a number of interlocutory hearings when various directions were made for the further conduct of both proceedings.

5    Maryvell was placed into liquidation and Laurence Fitzgerald, the first respondent, was appointed liquidator on 19 June 2006. The property was sold at auction by the liquidator in 2008.

6    Since then, Mr Velissaris has commenced, or sought leave to commence, a number of proceedings in the Supreme Court of Victoria and the Federal Court of Australia and has sought leave to appeal to the High Court of Australia on at least two occasions. Orders have been made in both the Supreme Court of Victoria and the Federal Court of Australia requiring Mr Velissaris to obtain leave before any similar proceedings can be commenced. We will return to these in more detail below.

7    The liquidator has finalised the liquidation, and on 8 November 2010 submitted to ASIC a deregistration request in respect of Maryvell. The final accounts of the liquidator disclose that there are no assets and creditors totalling $4.1 million.

The application below

8    The application below sought the following orders.

1.    LEAVE OF The COURT To BE Granted To the Applicant George Velissaris To BE Allowed to Start Legal Proceedings Against Sigma Constructions (Vic) Pty Ltd & Stelios And Margaret Constantopoulos & Ors, For The Loss & Damages Suffered DUE To Their Repeated Breaches Of The LICENCE Agreement Between Maryvell Inv. P/L And Sigma Constructions (Vic) P/L Dated In July 2002, (Maryvell Inv. P/L Was The Landlord)

And Pursuant To The ORDER Of Her Honour Justice Gordon Of 15/ April /2008.

2.    An Order Of The Court TO TERMINATE The Liquidation Of Maryvell Investments P/L, Forthwith, Under Section 482 1A Of The Corporations Act.

3.    The COURT To Direct ASIC, To STOP The Deregistration Request Form 578 Of Laurence A Fitzgerald Dated The 8/11/2010, AND TO ORDER ASIC, To Forthwith REINSTATE The EX Trustee Co. Maryvell Investments Pty Ltd, To The Full Status And As IT WAS Before The Liquidation Order Of 19th June 2006, And That Mr GEORGE VELISSARIS, TO BE The Director / Secretary & Shareholder Of This Company.

9    The appellant required leave to file the originating proceeding by reason of orders made by Gordon J dated 15 April 2008 under FCR O 46 r 7A: Velissaris v Maryvell Investments (in liq) (No 2) [2008] FCA 511. The terms of the order were, in effect, that no further proceeding concerning Maryvell or the Property be accepted for filing from Mr Velissaris except with the leave of the Court.

10    The leave application proceeded ex parte on the papers and leave to file was granted by the primary judge on 17 January 2011. The primary judge notified the District Registry on that date by memorandum that:

Having read –

(a)    the order of Gordon J made on 15 April 2008 in proceeding (P) VID1164/2007;

(b)    the application of George Velissaris dated 14 January 2011 for leave to commence a proceeding concerning Maryvell Investments Pty Ltd; and

(c)    the affidavit of George Velissaris sworn on 14 January 2011.

I am satisfied that grounds exist for the grant of leave for the said application to be accepted for filing.

11    It seems that the appellant, at this time, did not disclose to the primary judge the several proceedings subsequent to the judgment of Gordon J which the appellant instituted and later sought leave to re-institute in the Supreme Court of Victoria. It is highly likely that if the primary judge had had the benefit of such disclosure, which ought to have been made, he would not have granted leave or, at least, would not have granted leave without allowing the putative respondents to be heard on that question.

12    ASIC filed written submissions on 25 February 2011 as to why leave should not be granted, apparently unaware that leave had already been granted.

13    Mr Velissaris applied for orders under s 482 of the Act by para 2 of the originating motion. In any event ASIC submitted that the grant of leave appears to have been treated at the hearing before the primary judge as satisfying proposed order 1 of the originating motion. It must necessarily also have been treated as leave in respect of proposed order 2. An order under proposed order 3 of the originating motion was not required because ASIC had agreed not to deregister Maryvell until determination of this proceeding.

14    ASIC opposed the application, and filed an affidavit exhibiting various company documents, including reports by the liquidator. The liquidator did not appear, but filed a letter dated 25 January 2011 attaching copies of reasons for decision in various proceedings involving Maryvell and Mr Velissaris.

15    Mr Velissaris relied on his affidavits dated 14 January 2011, 31 January 2011, and 28 February 2011. The affidavits reveal that Mr Velissaris wishes Maryvell to pursue claims against a number of parties, including:

(a)    Sigma Constructions (Vic) Pty Ltd (Sigma), and associated persons, in relation to alleged damage to the Property caused upon access pursuant to a licence agreement described earlier in these reasons;

(b)    former solicitors of Maryvell, in relation to the conduct of certain proceedings;

(c)    the liquidator of Maryvell, in relation to the conduct of the liquidation and sale of the Property and in particular his alleged sale of the Property for only one-third of its value;

(d)    ASIC, for allegedly failing to address Mr Velissaris’ complaints concerning the liquidator; and

(e)    a local council, in relation to proceedings brought for breaches of health legislation.

16    Maryvell is still an applicant in the proceeding against Sigma Constructions in VCAT to which we referred and which was not pursued by the liquidator. Mr Velissaris made an application to be joined as a co-applicant or substituted as the applicant in that proceeding but this was dismissed on 20 August 2010. No step has been taken in this proceeding since then.

17    The primary judge dismissed the application, including on the grounds that the liquidator’s report viewed the company’s position as hopeless (at [15]), and that the Court could not be satisfied at any level that there would be any funds to prosecute the claims set out above (at [19]).

The appeal

18    The power conferred on the Court by s 482(1) is discretionary. Accordingly, well established principles govern the approach of an appellate Court: House v R (1934) 55 CLR 499 at 504-5.

It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.

19    There is a question whether, apart from the leave required as a result of Gordon J’s order, general leave to appeal was required on grounds that the nature of the orders sought by Mr Velissaris was interlocutory: von Risefer v Mainfreight International Pty Ltd (2009) 25 VR 366. Such leave was neither sought nor granted. Nevertheless, the appeal has been heard on its merits and should also be determined on that basis.

20    The notice of appeal does not identify any grounds of appeal directed to the miscarriage of the exercise of the discretion of the primary judge. Rather, the grounds refer to “error at law” and his Honour’s reasons being “against the weight” of the appellant’s evidence, but properly understood they, in effect, merely restate the case argued below. The appeal should be dismissed for that reason alone.

21    In any event, the reasons of the primary judge do not reveal any appealable error.

22    The primary judge correctly identified the relevant principles: [2]–[4], [13]–[14]. These, as his Honour set out at length, are to be found in the judgment of Hammerschlag J in Gematech Pty Ltd v Bardi Investments Pty Ltd (2008) NSWSC 196. His Honour had regard to relevant considerations, in a manner which was open to him on the evidence, as follows:

(a)    the view of the liquidator that the financial position of Maryvell as disclosed by his final accounts is hopeless. There was no admissible evidence to the contrary: [15]–[17];

(b)    the failure to discharge the onus of proving the capacity of Maryvell to fund the contemplated litigation. Although Mr Velissaris referred in oral submissions to assets held in the name of family members there was no actual evidence to support these submissions;

(c)    Mr Velissaris’ conduct in relation to the liquidation: the liquidator’s supplementary report to ASIC referred to possible misconduct and contraventions by Mr Velissaris: [17]; and

(d)    the opposition by ASIC to the application: [20].

23    Mr Velissaris’ submissions essentially restate the grounds of appeal which, as we said, in effect restate the allegations before the primary judge. Even accepting that Mr Velissaris, who is not legally trained, has represented himself in the Court below and before this Court he has nonetheless failed to address the necessary legal questions which arise in his application.

24    His submissions below, and before this Court, in effect, that his former wife and members of his family are prepared to put Maryvell in funds to prosecute the various claims was not supported by any relevant evidence. There was no evidence beyond the mere assertion of Mr Velissaris that Maryvell would have the capacity to pay lawyers or meet the inevitable application for security for costs let alone the “fullest and best evidence of the company’s financial position [with] proper verification of assets and liabilities sufficient to rebut the presumption of insolvency”: Gematech Pty Ltd at [26].

25    However, and most importantly, there was no evidence to counter the fact that Maryvell is hopelessly insolvent. A company’s capacity to operate in a financially sound and responsible way to service foreseen indebtedness is a central element in an application under s 482. Its liquidation is complete and but for these proceedings Maryvell would by now have been deregistered by ASIC.

26    The primary judge also noted that, although the Court could make no conclusive observations about the merits of the purported causes of action, several of the allegations have been previously considered by other courts, adversely to Mr Velissaris’ interests: [6]–[7].

27    The following cases are related to this matter:

28    A number of these are of particular significance to this appeal.

29    In the 2008 proceeding brought in this Court by Mr Velissaris concerning the sale of the Property mentioned above, he alleged principally that Maryvell and the liquidator contravened s 52 of the Trade Practices Act 1974 (Cth). These were in substance the same allegations as are levelled by him in these proceedings against the liquidator. The central allegation was that the liquidator sold the Property for only one-third of its value.

30    Various competing motions came before the Court in that case and in dealing with these Gordon J at [15] found that the allegation that the Property had been sold for less than its market value did not have reasonable prospects of success for the purposes of s 31A(2) of the Federal Court of Australia Act 1976 (Cth). Her Honour also concluded that the proceeding was frivolous, vexatious and an abuse of process of the Court (at [17]). The proceeding was for those reasons dismissed. An order was also made on the motion of Maryvell and the liquidator that no proceeding concerning Maryvell or the Property be accepted for filing from Mr Velissaris except with the leave of the Court: Velissaris v Maryvell Investments (in liq) v Fitzgerald (No 2).

31    Later, Mr Velissaris applied in the Supreme Court of Victoria for orders under s 482(1) of the Act, as he did in the present case. The liquidator in turn applied to have this application dismissed on the grounds that it was scandalous, vexatious and an abuse of process of the Court: Re Maryvell Investments Pty Ltd (In Liq) [2009] VSC 61.

32    Mr Velissaris’ complaint in that application was summarised by Robson J as follows at [8]-[9]:

8     As mentioned above, the substance of Mr Velissaris’ complaint is that the liquidator sold the property for less than its market value. Mr Velissaris asserts that the market value of the property was approximately $6 million. Mr Velissaris exhibits a valuation assessment of the property as at 22 April 2008 prepared for One Stop Finance by Megaw and Hogg National Valuers and signed by Mr Les Cooper, certified practising valuer, and Mr Drew Hendrey. The report notes that the opinion of the value expressed in the report had been arrived at entirely by the prime signatory, Mr Les Cooper, not the co-signatory, Mr Drew Hendrey.

9     Mr Velissaris specifically complains that the property was not advertised sufficiently prior to the auction and the subsequent tender sale. Further, he complains that the specified settlement date of 30 days after sale was too short. He claims settlement should have been at least 60 days. During his submissions, Mr Velissaris referred to many sales of other properties and submitted that these sales indicated that the amount realised by the liquidator was grossly deficient. Mr Velissaris also alleges that the liquidator procured an artificially low valuation to justify the sale and fraudulently paid the valuer to do so. He also alleges that the liquidator was fraudulently paid by the purchaser “under the table” to sell it for an under value. He also complains that the liquidator did not sell the property to him.

33    Robson J stayed Mr Velissaris’ application on the grounds contended for by the liquidator and made an order preventing Mr Velissaris from filing further applications concerning the sale of the Property without the leave of the Court.

34    Robson J set out at length the very many legal proceedings instituted by Mr Velissaris, most of which concerned in one respect or another, the Property: [16]. These were made principally in the Supreme Court of Victoria and this Court.

35    The precise order made by Robson J was :

No further proceeding or process of any kind in the trial division of the Supreme Court of Victoria, including in this proceeding concerning Maryvell Investments Pty Ltd (In liquidation), the conduct of the liquidator, the liquidator or the property at 333 Sydney Road, Brunswick be accepted for filing by the Prothonotary from George Velissaris except with the prior leave of the Court.

36    Mr Velissaris again sought leave in October 2009 in the Supreme Court of Victoria to commence a proceeding again in relation to the alleged conduct of the liquidator in relation to the sale of the Property at an undervalue. Leave was refused by Vickery J: George Velissaris v Maryvell Investments Pty Ltd (In Liq) [2009] VSC 448.

37    Undaunted, Mr Velissaris, before Davies J in the Supreme Court of Victoria in June of last year sought leave to file another application to terminate the liquidation of Maryvell. Yet again leave was refused: Re Maryvell Investments Pty Ltd (in liq) [2010] VSC 278.

38    Even then Mr Velissaris, in September 2010, again sought leave to institute proceedings in the Supreme Court of Victoria to raise precisely the same matters as had been dealt with by Gordon J and Robson J in the matters to which we have referred. Leave was, unsurprisingly, again refused by Davies J: Re Maryvell Investments Pty Ltd (in liq) (No 2) [2010] VSC 401.

39    There is authority to support the proposition that, in determining whether to grant a termination of a winding up, there should be evidence of the regulator’s support or at least a demonstrated lack of regulatory opposition to the order: Re United Medical Protection Ltd (2003) 47 ACSR 705.

40    ASIC opposed the application below and opposes this appeal.

41    The Court provisionally admitted a number of documents which had not been before the primary judge but which Mr Velissaris said were relevant to his appeal. These were:

(1)    Complaint in Melbourne Magistrates Court by Maryvell against a Mr Robert Jones for damage to the Property caused by a vehicle colliding with the front and side verandah of a building there.

(2)    Licence Agreement dated 18 July 2002 between Maryvell and Sigma Constructions concerning the latter’s access to and use of land at the rear part of the property.

(3)    Orders made by Judge Bowman in the VCAT proceeding dated 4 November 2005.

(4)    Maryvell’s amended points of claim dated 23 November 2005 in the VCAT proceeding.

(5)    Maryvell’s amended points of claim dated 15 February 2006 in the VCAT proceeding.

(6)    Valuation and Report dated 10 December 2007 on the Property by Mr V L Cooper of V L Cooper & Associates Pty Ltd based on an external inspection only for the purposes of litigation.

(7)    Facsimile from Colliers International to a Mr Bill Papas dated 20 October 2010 with information memorandum re Sale by Auction of Property at 270-272 Swan Street, Richmond, Victoria with handwritten annotations to the effect that the Property was sold at auction for $3.26 million equating to $8834.68 per square metre.

(8)    Copy correspondence dated 7 May from Ms Leanne Arndd of Hocking Stuart to Mr George Papas re property at 445 Sydney Road, Brunswick, Victoria sold at auction for between $1.35 - $1.4 million.

42    The tender of these documents is yet another attempt by Mr Velissaris to reargue claims which are not before this Court and which have been resolved against him in other courts. This constitutes an abuse of the process of this Court.

43    We would for that reason refuse to admit them as evidence on the appeal.

44    Mr Velissaris has failed to demonstrate any appealable error in the exercise of discretion by the primary judge. The appeal will accordingly be dismissed. Mr Velissaris should pay ASIC’s costs of the appeal to be taxed if not agreed.

Associate:

Dated:    9 September 2011