Supreme Court New South Wales Medium Neutral Citation: Goulston v Bogasi Pty Ltd [2024] NSWSC 47 Hearing dates: 29 January 2024 Date of orders: 29 January 2024 Decision date: 29 January 2024 Jurisdiction: Equity Before: Kunc J Decision: First cross-claimant's notice of motion filed 21 November 2023 dismissed with costs. Catchwords: CIVIL PROCEDURE — Pleadings — Amendment — No issue of principle Legislation Cited: Civil Procedure Act 2005 (NSW) ss 56, 60, 64(2) Cases Cited: Aon Risk Services Australia Limited v Australia National University (2009) 239 CLR 175; [2009] HCA 27 Category: Procedural rulings Parties: Anne Katrine Goulston (Plaintiff/First Cross Defendant Second Cross Claim) Bogasi Pty Ltd (Third Defendant /Fourth Cross Defendant Second Cross Claim) Joakim Sundell (Cross Claimant Second Cross Claim) Tamara Goodwin as administrator of the estate of the late James Ralph Sundell (Second Cross Defendant Second Cross Claim) Three Crowns Investments Pty Ltd (Fifth Cross Defendant Second Cross Claim) Representation: Counsel: J Needham SC/M Short (Cross Claimant) T Catanzariti (Second Cross Defendant) M Condon SC/M Cleary (Fourth Cross Defendant) Solicitors: Brown Wright Stein Lawyers (Cross Claimant) Glass Goodwin (Second Cross Defendant) Piper Alderman (Fourth Cross Defendant) Ronayne Lawyers (Fifth Cross Defendant) File Number(s): 2019/390407 Publication restriction: None EX TEMPORE JUDGMENT (REVISED) INTRODUCTION 1. The Court has before it three sets of proceedings concerning the affairs of the Sundell family and their not inconsiderable assets, which are valued in the many millions of dollars. The proceedings were commenced by various parties in 2019, 2022 and 2023 and I shall refer to the proceedings by the years in which they were commenced. 2. The proceedings raise complex factual and legal questions. There can also be no doubt, as is regrettably often the case in matters of this kind, that the relationships between the family members are at a very low pass. 3. The proceedings involve the family members personally, companies controlled by them and trusts of which they are discretionary beneficiaries. 4. In April 2023, Hammerschlag CJ in Eq fixed the hearing of the 2019 and 2022 proceedings to commence on 8 April 2024. His Honour recognised the complexity of the proceedings and the need for substantial preparation by giving the parties, in effect, one year's notice of the commencement date of the hearing. 5. The matters were subsequently allocated to me for hearing, which will commence on 8 April 2024, and are currently fixed for 20 hearing days. It may be, subject to further interlocutory issues to be determined in the near future, that the 2023 proceedings will also be heard by me at that time. 6. These reasons deal with a motion filed on 21 November 2023 by Mr Joakim (Kim) Sundell, for leave to file a second further amended second cross-claim in the 2019 proceedings. The cross defendant to that claim is Bogasi Pty Ltd. Bogasi is the trustee of the family trusts which are in issue in the proceedings. For the reasons set out below, that motion will be dismissed. 7. Ms J Needham SC appeared with Mr M Short of Counsel for Mr Sundell. Mr M Condon SC with Mr M Cleary of Counsel appeared for Bogasi. PROPOSED AMENDMENT 1. The substantially different nature of the claims now sought to be advanced in the proposed amendment is apparent from the difference between the current relief and the relief sought to be added. That difference, as I will further explain, is a matter of considerable importance in disposing of the present application. 2. The current relief is: 1 Declaration that the cross-claimant is and has been since April 2013 the legal and beneficial owner of 90 units in Commercial Property Trust No. 1 ("CPT No. 1 Trust"). 2 Declaration that the cross-claimant is, and has been since April 2013, the legal and beneficial owner of 90 units in Commercial Property Trust No. 2 ("CPT No. 2 Trust"). 1. The proposed amended pleading seeks to expand the claim to include this relief: 3 An order, pursuant to section 70 of the Trustee Act 1925 (NSW) that: a. Bogasi Pty Ltd ACN 001 169 259 (Bogasi) be removed as trustee of the James Ralph Sundell Trust and the JRS Family Trust; and b. a suitably qualified independent person or persons, be substituted as trustee of the James Ralph Sundell Trust and the JRS Family Trust. 4 An order pursuant to section 1071F of the Corporations Act 2001 (Cth) that the transmission of one (1) ordinary share held by James Ralph Sundell in Bogasi to Joakim James Sundell dated 29 April 2022 be registered. 5 An order pursuant to section 175(1) of the Corporations Act 2001 (Cth) that the register kept by Bogasi be corrected to record the members as follows; a. Joakim James Sundell holds 1 share. b. Anne-Katrine Goulston holds 1 share. c. Brett Sundell holds 1 share. d. Christopher Peter Walker holds 2 shares. e. David Roland Wooldridge holds 1 share. 1. The proposed amendments seek to introduce two new issues. The first (Removal) is for the removal of Bogasi as trustee of the relevant family trusts. The second (Share Transfer Order) arises from the refusal of the directors of Bogasi to register the transfer of a share in that company to Mr Sundell pursuant to the provisions of his late father's will. FACTUAL CONCLUSIONS 1. The Removal is based upon a lengthy list of complaints of various kinds levelled against Bogasi by Mr Sundell as a discretionary beneficiary of the relevant trusts. There is a general claim of what is described as "irreconcilable ill will of Bogasi" towards Mr Sundell following the death of his late father. But that overarching allegation relies upon the various specific acts that are subsequently pleaded in the proposed amendment. These allegations include the failure to provide information requested by Mr Sundell concerning the trusts (including annual accounts), the payment of directors' fees and board expenses to directors of Bogasi, the payment of legal expenses of directors of Bogasi, the failure to make distributions to Mr Sundell, the making of advances to other beneficiaries of the relevant trusts, and matters surrounding the settlement of litigation concerning a property at Point Clare. 2. The complaints conclude with the refusal of the directors of Bogasi to register the transfer of a share in that company to Mr Sundell. This last complaint is put forward as both a reason why Bogasi should be removed, but also as the justification for the Share Transfer Order. 3. The significant matter in relation to the various complaints is that many of them were the subject of correspondence between the parties' respective solicitors (and which are properly and compendiously particularised in the pleading) going back to late 2020. It would appear from those particulars that much of the correspondence in relation to the matters complained about occurred between late 2020 and mid to late 2021, with further sparse correspondence at greater intervals occurring during 2022 and some in 2023. The overwhelming impression from the particulars, and from a perusal of some of the correspondence to which I was taken by Mr Condon SC during the course of his address, is that the bulk of the matters complained of were well and truly current between the parties in 2020 and 2021. 4. In reaching this conclusion, I do not overlook, as Ms Needham SC drew to my attention in reply, that there is some correspondence complaining of matters as late as the second half of 2023. That does not change my conclusion that the bulk of the issues sought to be made the subject of the amendment in relation to the Removal were live between the parties in 2020 and 2021. The more recent complaints relate to the provision of the most recent sets of accounts for the family trusts, but these recent complaints are the latest iterations of annual complaints for previous years of the trust accounts going back as far as 2018. 5. The point, for present purposes, is that I conclude as a matter of fact that the substance of the complaints that underlie the Removal were agitated between the parties just over three years ago. 6. I have excepted, from the matters to which I have just referred, the conduct giving rise to the Share Transfer Request. That is because, while the issue of the share transfer had existed between the parties for some time, the actual refusal to register the transfer did not occur until August 2023. The draft pleading, which is the subject of the present application, was provided by Mr Sundell to Bogasi in October 2023. 7. The next matter of factual significance is a letter from Mr Sundell's solicitors to Bogasi's solicitors dated 4 March 2022. That letter referred to previous correspondence passing between the solicitors commencing with letters dated 11 December 2020 and includes: 2. The purpose of this correspondence is to: (a) put Bogasi on notice of each of the breaches of fiduciary duty that our client considers Bogasi has engaged in; and (b) make Bogasi aware of these breaches in the hope that it will act in accordance with its fiduciary obligations and address the concerns raised for the sake of the beneficiaries of the Old Trust and the New Trust. 3. To the extent that our client is involved in litigation with Bogasi at present, our client, at this stage, does not intend to commence proceedings: (a) seeking to remove Bogasi as trustee of the Old Trust and/or the New Trust; or (b) seeking leave to bring a derivative action on behalf of the Old Trust against Mr Walker to seek repayment of improperly funded personal legal fees and director's fees. 1. I accept Ms Needham's submission that paragraph 3, which I have reproduced above, is, as one might expect, limited to the statement of intention being, "at present," and "at this stage." However, the clear statement of what I find was a legally informed position in March 2022 (because it was communicated as part of long running solicitors' correspondence) not to commence proceedings seeking to remove Bogasi, is of special significance in relation to the point to which I refer in the next paragraph. 2. Ms Needham SC accepted that there is no sworn explanation in the material on which her client relies as to why the application to amend to raise the new issues was only foreshadowed by a draft pleading provided in October 2023. In particular, there is no evidence, as Ms Needham SC also accepted, as to what might have changed to bring about an alteration in what was the considered forensic position adopted by Mr Sundell in March 2022. 3. Ms Needham SC submitted, no doubt upon instructions, that the process of discovery in these proceedings and the on-going conduct of the proceedings themselves by Bogasi, taken together with the recent refusal to transfer the share, had culminated in a decision to seek to litigate the new issues. The difficulty for Mr Sundell's application is that there is no evidence in support of that submission. 4. Furthermore, Ms Needham SC eschewed a proposition that I put to her that if the share transfer had occurred, then the amendment to bring in the Removal would not have been brought. In other words, it could not be said that the recent refusal to transfer the share was the straw which broke the camel's back to cause the amendment application to be brought. 5. The next matter of significance is that Ms Needham SC also accepted that none of the facts alleged to substantiate the specific complaints relied upon to justify the Removal were facts which the Court will have to decide on the case as presently constituted. The new issues do not arise from the facts and issues that are fixed for hearing in April 2024. This conclusion confirmed my impression which I had formed on a close review of the amended pleadings, that the new issues constitute an entirely new case which is factually independent from the matters going to trial in April. 6. For Bogasi's part there is evidence from Bogasi's solicitor, who is well experienced in significant commercial litigation, that given the detail and nature of the allegations which comprise the new issues, and the need by Bogasi as a trustee to obtain judicial advice as to whether it should defend an application for its removal,that Bogasi could not be ready to go to hearing on the new issues by April 2024. That evidence was not challenged and I accept it. CONSIDERATION 1. There was no dispute between the parties as to the relevant principles. The first issue is whether the amendments are "necessary amendments," for the purposes of s 64(2) of the Civil Procedure Act 2005 (NSW): (2) Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings. 1. An amendment will not be "necessary" just because a party wants to amend. It may be necessary to that party, but that does not make it "necessary" for the purposes of s 64(2). 2. I accept Mr Condon's SC submission that the relevant distinction, insofar as an amendment being "necessary" is concerned, was captured in the judgment of French CJ in Aon Risk Services Australia Limited v Australia National University (2009) 239 CLR 175; [2009] HCA 27 at [14] where his Honour observed: "There is a distinction between the discretion of a court to allow a party to amend its pleading on that party's motion and the requirement to make all such amendments as maybe necessary to determine the real questions in controversy." 1. The real questions in controversy are determined by reference to what the issues are at the time the amendment application is made. Putting the matter broadly, an amendment will be necessary insofar as it relates to the facts and legal issues that are presently on foot between the parties. An amendment will not be necessary, in the relevant sense, if it seeks to introduce an entirely new case based on facts and issues that are not already in controversy before the court. 2. By reference to the factual conclusions I have set out above, it will be apparent that the new issues are a new case and are therefore not "necessary" for the purposes of s 64(2). That conclusion does not mean that the Court does not go on to entertain, on more general discretionary grounds, whether or not the amendment should be allowed. The Court must then fall back on the overriding purpose expressed in s 56 to s 60 of the Act, being most importantly the just, quick and cheap resolution of the matters genuinely in dispute between the parties. 3. Looked at in that way, I have no doubt that it would be convenient to the parties if all of the issues, including the new issues, could be heard together. But convenience is not the test. By reference to the more general principles that are engaged at this point, the Court rejects the proposed amendment for four reasons. 4. First, there is no verified explanation for the delay in bringing the present application, given the conclusion I have set out in [16] above. The essential subject matter of the dispute set out in the new issues was well known and well agitated between the parties in 2021 and 2022 (except the refusal to register the share transfer in Bogasi). 5. Second, by reason of my conclusion in [24] above, there would be irredeemable prejudice to Bogasi because it cannot be ready to meet the new issues by 8 April 2024. 6. Third, if the new issues were accommodated without prejudicing Bogasi, it would necessarily result in a matter that has been fixed for more than a year for 20 hearing days having to be adjourned. That would cause prejudice to the other parties to the litigation, of whom there are several. It would also create an important, although less readily identifiable form of prejudice, being to other parties whose matters could have been fixed for hearing if those dates were available. 7. Fourth, failure to grant the amendments does not cause any prejudice to Mr Sundell for two reasons. 8. First, there is no limitation or similar issue imminent. As Ms Needham SC's submissions properly pointed out, the new issues could be the subject of a separate action. That can commence in the future at a time of Mr Sundell's choosing, perhaps with the benefit of the outcome of the proceedings which I will be hearing as part of the considerations relevant to whether the new issues should be litigated. 9. Second, to deal with one possible form of prejudice which Ms Needham SC drew to the Court's attention, Mr Condon SC has undertaken to the Court, on behalf of Bogasi, that if the new issues are sought to be the subject of future litigation, Bogasi will not seek to rely on a plea of Anshun estoppel. 10. Finally, I should record that I gave consideration to two other possibilities to deal with the present application. 11. The first alternative was to allow the amendments, yet also order that the new issues be determined at a later date. I have come to the view that so to proceed would achieve no advantage to any party or the Court over what will occur if separate proceedings are brought in due course. Quite apart from there being no advantage, I am satisfied that to grant the amendment only to be dealt with later, runs a real risk of practical and procedural complications and confusion, including the prospect of a substantial delay if any party unhappy with the determination of the main proceedings exercises its right to seek leave to appeal from that decision. 12. The second alternative (to which I had some initial attraction) was to allow the amendment for, and hear in April 2024, the Share Transfer Request. My original impression was that this would involve a short point of company law which could be conveniently disposed of without prejudice to any party. However, I accept Mr Condon SC's submission that Bogasi's defence will necessarily raise, at length, the history between Mr Bogasi and Mr Sundell. That history is not relevant to the proceedings as currently constituted. However, that history is relevant to both the Removal and the Share Transfer Request. 13. In other words, the factual commonality is not between the current proceedings and the Share Transfer Request, but between the Removal and the Share Transfer Request. On the basis of how matters were explained to me by counsel today, it is those two claims (the Removal and the Share Transfer Request) which should be heard together, rather than attempting to add the Share Transfer Request to the present proceedings. 14. The orders of the court are: 1. The first cross-claimant's notice of motion filed 21 November 2023 is dismissed. 2. The first cross-claimant is to pay the fourth cross-defendant's costs of the motion. 3. Note the undertaking of Bogasi Pty Ltd to the Court by its Senior Counsel that in any future proceedings which may be brought against it by Mr Sundell for the relief which is the subject of the amendments in the proposed second further amended second cross-claim in these proceedings, Bogasi Pty Ltd will not seek to rely upon an Anshun estoppel as a defence to that relief. ********** Amendments 20 February 2024 - Amendment to case title 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: 20 February 2024