New South Wales Supreme Court CITATION : Bizzanelli & Anor v Bizzanelli & Anor [2007] NSWSC 1085 HEARING DATE(S) : 26 September 2007 JURISDICTION : Equity Division JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 26 September 2007 DECISION : Application to adduce expert evidence refused CATCHWORDS : PROCEDURE – Expert evidence – expert evidence list – where proposed expert evidence does not relate to any real issue in the proceeding LEGISLATION CITED : (NSW) Conveyancing Act 1919 s 66G (NSW) Uniform Civil Procedure Rules 2005 rr 31.17, 31.19 Brunninghausen v Glavanics [1999] NSWCA 199 CASES CITED : McNamara and the Conveyancing Act (1961) 78 WN 1068 Stephens v Debney (1959) 60 SR (NSW) 468 Woodson (Sales) Pty Limited v Woodson (Australia) Pty Limited (1996) 7 BPR 14,685 Oreste Bizzanelli (first plaintiff) PARTIES : Angela Bizzanelli (second plaintiff) Crispino Bizzanelli (first defendant) Giovanna Bizzanelli (second defendant) FILE NUMBER(S) : SC 1876/07 COUNSEL : Ms H Durham (plaintiffs) Mr D M Macfarlane (defendants) SOLICITORS : Lapaine Pomare & Forster (plaintiffs) John R De Mattia & Co (defendants) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EXPERT EVIDENCE LIST BRERETON J Wednesday, 26 September 2007 1876/07 Oreste Bizzanelli & Anor v Crispino Bizzanelli & Anor JUDGMENT (ex tempore) 1 HIS HONOUR: Since 8 December 2006, (NSW) Uniform Civil Procedure Rules 2005, Pt 31 Div 2, has required (by r 31.19) that any party intending to adduce expert evidence at trial, or to whom it becomes apparent that, he or she or any other party may adduce expert evidence at trial, must promptly seek directions from the Court and that, unless the Court otherwise orders, expert evidence may not be adduced at trial unless directions have been sought and, if directions have been given, otherwise than in accordance with those directions. As r 31.17 states, the main purposes of these provisions include to ensure that the Court has control over the giving of expert evidence, to restrict expert evidence to that which is reasonably required to resolve the proceeding, and to avoid unnecessary costs associated with the parties in the proceedings retaining different experts. 2 The plaintiffs Oreste Bizzanelli and his wife Angela Bizzanelli and the defendants, Oreste's brother Crispino Bizzanelli and his wife Giovanna Bizzanelli, are co-owners of two properties, but in particular a property at 18/22 Loftus Street, Riverstone. The Summons in these proceedings claims only orders appointing trustees for sale of the two properties, pursuant to (NSW) Conveyancing Act 1919, s 66G. 3 The defendants have served evidence, the burden of which is that at least until relatively recently, a company, B & G Painting and Sandblasting Pty Limited, in which Oreste is a 50 percent shareholder and Crispino a 50 percent shareholder, carried on business from the Riverstone property; and that the business formerly carried on from the Riverstone property by B & G, is now carried out by another company, Dynacoat Pty Ltd, in which each of Oreste and Angela is a 25 percent shareholder, and Crispino appears to be a 50 percent shareholder, but Crispino denies he has ever consented to being a shareholder in Dynacoat. In short, the defendants say that B & G has ceased trading and that its business is now being carried on by Dynacoat, without the consent of Crispino. 4 The defendants wish to adduce evidence from an accountant. The question which it is proposed that the accountant be asked to address is, what were the financial implications to the defendants of B & G having ceased to trade from the Riverstone property and Dynacoat having commenced to trade in its place. The defendants say that this will assist them to know whether they have a claim for breach of fiduciary duty, and what is the value of the property. 5 The defendants wish to contend that relief under s 66G should be declined as a matter of discretion, and they refer to a line of authority, which is uncontroversial, the effect of which is that – although it was once thought that there was virtually no defence to an application under s 66G – there are some circumstances in which the Court may decline to make a s 66G order, including where a party has a proprietary right or some contractual or fiduciary obligation inconsistent with an order for sale. But it is worth bearing in mind that Myers J, who first enunciated the discretion in Stephens v Debney (1959) 60 SR (NSW) 468, explained in McNamara and the Conveyancing Act (1961) 78 WN 1068, that the Court did not have a general discretion to refuse a s 66G application on such broad grounds as hardship or unfairness; see also Woodson (Sales) Pty Limited v Woodson (Australia) Pty Limited (1996) 7 BPR 14,685 (Santow J). 6 No proprietary fiduciary or contractual or other obligation relevant to the relationship of the parties as co-owners has been identified or proposed. No undertaking, promise, representation or even understanding to the effect that the land would be retained and not sold has been suggested. No proposition that although a legal co-owner, the plaintiffs hold their shares in the land upon trust for the defendants has been advanced. All that has been suggested is that there may be breaches of fiduciary obligation owed by the plaintiffs in their capacity as directors of B & G. 7 As I understand it, the defendants may wish to allege – and I use the word "may" advisedly, because the defendants have made clear that they do not necessarily so allege – that the transfer of the business from B & G to Dynacoat involved a breach by the plaintiffs of their fiduciary obligations as directors of B & G, which necessarily they owed to the company B & G as a whole, and arguably to the shareholders in B & G. I say arguably, because while the decision of the Court of Appeal in Brunninghausen v Glavanics [1999] NSWCA 199 shows that directors may owe fiduciary obligations to a shareholder, the circumstances in which it was held in that case that a director owed a fiduciary obligation to a shareholder were far removed from the present. But nonetheless I will assume, for present purposes, that it is arguable that plaintiffs, as directors of B & G, owed a fiduciary obligation to Crispino as a shareholder in B & G. 8 I do not see how the answer to the question proposed to be asked of the accountant could possibly inform the exercise of the limited discretion that the Court has in respect of s 66G. Nor do I accept the submission that it is premature to decide the scope of the discretion under s 66G; in my view, cases such as those to which I have already referred make tolerably clear that the discretion has a relatively narrow scope, but on any view does not extend to fiduciary obligations unrelated to the relationship of co-ownership, which are not inconsistent with an order for sale. 9 It may well be that the first defendant has a remedy for breach of fiduciary duty against the plaintiffs because that is for a breach of fiduciary owed in respect of the affairs of B & G as distinct from in respect of the land, which is not an asset of B & G. In my view, that is utterly irrelevant to a case brought under s 66G for the appointment of trustees for sale of the land. Such a fiduciary obligation is not one inconsistent with an order for sale of the land. It is true that, even in the present proceedings, arguably a cross-claim might be brought in respect of a breach of fiduciary of the type that has been suggested, but no such cross-claim has been brought, and submissions made on behalf of the defendants make tolerably clear that the defendants do not know at this stage whether they have or want to bring any such cross-claim, but rather want to investigate the circumstances to see if they want to bring any such claim. 10 In those circumstances, it seems to me quite inappropriate to grant leave to adduce expert evidence, which could not possibly inform the real issues in the proceedings as presently constituted. It is not for me to rule at this stage on the admissibility, on a s 66G application, of the lay affidavit evidence which has so far been served by the defendants, but prima facie, it too, is quite irrelevant to the s 66G claim in the case as presently constituted. 11 I refuse the application to adduce expert evidence. I order that the defendants pay the plaintiffs' costs of the application. I note the matter is listed before the Registrar on 2 October 2007 at 9.30am. ********** 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.