Pizzolato v Marques

1. [1]

   BELL CJ: Mr Mario Pizzolato and Mrs Antonella Pizzolato (together, the Applicants) seek leave to appeal from a decision of Justice Black (the primary judge) sitting in the Corporations List of the Equity Division of this Court: In the matter of C&V Engineering Co Pty Ltd and Pizzolato Nominees Pty Ltd [2025] NSWSC 857 (PJ or the primary judgment). The primary judgment was ultimately given effect by subsequent orders made by the primary judge: In the matter of C&V Engineering Co Pty Ltd and Pizzolato Nominees Pty Ltd [2025] NSWSC 965.

2. [2]

   In the proceedings below, the primary judge made orders under s 175 of the Corporations Act 2001 (Cth) (the Act) that the registers of C&V Engineering Co Pty Ltd (CVE) and Pizzolato Nominees Pty Ltd (PNP) (the Second and Third Respondents) be corrected to record Ms Vittoria Marques (the First Respondent) as a tenant in common in equal shares alongside the Applicants in respect of their late mother’s shares. The Second and Third Respondents filed submitting appearances in the present application.

3. [3]

   The Applicants’ narrow complaint in this Court arises from the primary judge’s non-admission of parts of two affidavits each sworn on 28 March 2025 (one of Mario, the other of Antonella) (together, the Two Affidavits) which formed part of the Applicants’ evidence (the impugned evidence). The primary judge rejected the impugned evidence on the basis of relevance and under s 135 of the Evidence Act 1995 (NSW) (the Evidence Act) on the basis that it raised unpleaded factual allegations, and the First Respondent would be prejudiced if required to meet a defence based on factual propositions of which she had no notice.

4. [4]

   The Applicants contend that the primary judge erred by not admitting the impugned evidence because the factual allegations identified in it arose directly from a defence of laches pleaded in paragraph 30 of their Points of Defence filed on 21 November 2024 (see [23] below) (the POD).

5. [5]

   In the event the Applicants are granted leave to appeal, and the proposed ground of appeal is allowed, both parties accepted that there should be a limited retrial on the defence of delay.

Leave to appeal

1. [6]

   Leave to appeal is required because the proposed appeal is from a final judgment or order in proceedings of the Court that involves a matter at issue which has not been shown to amount to, or be of value exceeding $100,000 (Supreme Court Act 1970 (NSW) s 101(2)(r)(i)).

2. [7]

   It was accepted by both sides that leave applications in this Court attract a general obligation on the applicant for leave to establish that there is an issue of principle, a question of public importance, or a reasonably clear injustice going beyond something that is merely arguable: Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46]; Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32]-[38]; Age Co Ltd & Ors v Liu (2013) 82 NSWLR 268; [2013] NSWCA 26 at [13]; Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206 at [28], PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48 at [6].

3. [8]

   A decision to reject evidence on the basis of s 135 of the Evidence Act will rarely raise an issue of principle or a question of public importance and Mr Giles SC, who appeared for the Applicants, did not rely on either basis, volunteering that this was a “visitation” application, and relying on the third limb, namely that the challenged decision had resulted in “a reasonably clear injustice going beyond something that is merely arguable”.

4. [9]

   For the reasons that follow, I do not think that the ruling should or could be so characterised and, in consequence, leave to appeal should be refused with costs.

Factual Background

1. [10]

   The Applicants and the First Respondent are siblings. Their mother, Mrs Carmela Pizzolato, passed away on 15 November 2015. At the date of her death, Carmela relevantly owned a property situated in Concord, New South Wales (the Concord Property), 200 ordinary shares in CVE, two ordinary shares in PNP, as well as shares in a company called “Services”. The First Respondent has not sought relief in relation to the shares in Services.

2. [11]

   By Carmela’s will dated 19 May 1994 (the Will), Mario was appointed the executor of Carmela’s estate and, by clause 3(b), the estate was to be divided in equal shares between the siblings. The Court granted probate of Carmela’s estate on 27 June 2016.

3. [12]

   By a letter dated 20 September 2016, the solicitors acting in respect of the estate advised the Applicants and the First Respondent that the Concord Property had been transferred into their names as tenants in common. That letter also noted that the 200 shares in CVE, as well as the four shares in PNP, had not yet been transferred to the siblings jointly. Mario, as executor of the Will, has since failed to redistribute Carmela’s shares in CVE and PNP in accordance with the grant of probate, instead holding them for himself.

4. [13]

   There was correspondence between the solicitors for the First Respondent and Mario in April and July of 2018, in which the First Respondent’s solicitors indicated their expectation to be provided with share transfers for her one-third interest in respect of her late mother’s shares in CVE and PNP, and threatened legal proceedings seeking the removal of Mario as trustee under the Will.

5. [14]

   By letters on both 22 June 2018 and 4 July 2018 to the First Respondent’s solicitors, Mario’s solicitors indicated that Mario would transfer to the First Respondent her one-third interests in those shares, but, as mentioned above, he never did.

6. [15]

   Following further correspondence between the parties, the First Respondent commenced proceedings by Summons filed on 30 November 2018 seeking an order under s 66G of the Conveyancing Act 1919 (NSW) appointing a trustee (and then, by amended summons, two trustees) for the sale of the Concord Property and associated orders (the 2018 Proceedings). As Counsel for the First Respondent emphasised in the proceedings below, that application did not relate to any non-performance of Mario’s duties as executor of the Will, the Concord Property already having been transferred to the siblings in equal shares. Thus, no order for the removal of Mario as executor was pressed in the 2018 Proceedings.

7. [16]

   The First Respondent accepted in the course of the proceedings below that it would have been “easier and more efficient” for her to compel Mario to transfer the shares in CVE and PNP to her in the 2018 Proceedings, but ultimately, she decided not to do so. The primary judge accepted the First Respondent’s evidence that the reason she chose not to do so was not because she was only interested at that time in obtaining her one-third interest in the Concord property: PJ [12].

8. [17]

   The 2018 Proceedings led to consent orders being issued by Darke J on 5 September 2019 on terms that the Applicants would purchase the First Respondent’s interest in the Concord property under a specified mechanism. On 21 April 2020, the First Respondent was paid $725,000 in settlement of her interest in the Concord Property.

9. [18]

   By way of a letter sent on 16 June 2020, the First Respondent’s solicitors followed Mario’s solicitors up as to the fact that the shares in CVE had not been transferred to the First Respondent (although they did not refer to the position in respect of PNP). Two years later, by a letter dated 28 June 2022, the First Respondent’s solicitors again followed up, this time in respect of the shares in both CVE and PNP. In June 2023, the First Respondent lodged caveats over several properties on the asserted basis that her shares in the companies gave rise to interests in land. Those caveats were subsequently withdrawn.

10. [19]

    By letter dated 25 June 2023, the First Respondent’s (new) solicitors wrote to Mario demanding the transfer of the shares in CVE and PNP within 14 days, and threatened the commencement of proceedings. Following a further letter from Mario’s solicitors on 14 September 2023 and a reply from the First Respondent’s solicitors on 13 November 2023, the proceedings were commenced, after a further delay, on 5 July 2024, seeking correction of the registers of the Second and Third Respondents.

11. [20]

    The primary judge ordered the correction of the share registers of CVE and PNP to indicate that the First Respondent and the Applicants held the shares previously held by Carmela (200 in CVE and two in PNP) as tenants in common in equal shares.

12. [21]

    In order to understand the context of the Applicants’ argument, further attention needs to be given to the procedural background leading to the hearing.

Procedural Background

1. [22]

   Following the commencement of proceedings on 5 July 2024, on 29 October 2024, the First Respondent filed a “Points of Claim” claiming the relief set out above under s 175 of the Act.

2. [23]

   On 21 November 2024, the Applicants filed Points of Defence (POD) admitting each paragraph of the Points of Claim but raising five defences: (1) a defence under the Limitation Act 1969 (NSW); (2) a defence in respect of Anshun estoppel; (3) a defence of abuse of process; (4) an estoppel by representation defence; and (5) a defence of laches. None of these defences succeeded. For present purposes, it is sufficient to set out the paragraphs of the POD relating to the fourth and fifth defences, noting that the Limitation Act defence was not pressed and that the Anshun and abuse of process defences failed (and there is no appeal made in relation to those failures):

3. [24]

   The First Respondent filed a “Points of Reply” on 13 December 2024 in response to the POD, paragraphs [7](a) and (b) of which raised Mario’s failure properly to administer his late mother’s estate by way of what was essentially an “unclean hands” answer to his invocation of equitable arguments to resist the correction of the companies’ registers.

4. [25]

   There was then a directions hearing on 31 March 2025 with a view to allocating a hearing date (the March Directions Hearing). In the course of the March Directions Hearing, the Applicants read the affidavit of their solicitor, Mr Dean Joubert De Villiers, affirmed on 28 March 2025. The purpose of Mr De Villiers’ Affidavit was to secure an extension of time to file the Two Affidavits referred to at [3] above. Relevantly, paragraph [15] of that Affidavit was as follows:

5. [26]

   After Mr De Villiers’ affidavit had been read, the following exchange occurred between the primary judge and Mr Charlton, who at that stage was acting for the Applicants in the proceedings below:

6. [27]

   In addition to other orders in relation to the filing of expert evidence, directions to the parties to attend a mediation, the listing of the matter for further directions on 2 June 2025, and tentatively listing the matter for hearing on 29-31 July 2025, the primary judge relevantly made the following orders:

7. [28]

   The impugned evidence the non-admission of which gave rise to the present application was contained in the Two Affidavits referred to at Order 1 extracted immediately above, specifically at [19]-[44] of Antonella’s affidavit, and [3]-[4], [12]-[16], [28]-[30], [32]-[73] and [78] of Mario’s affidavit. Without outlining the contents of that evidence in full, the First Respondent did not take issue with the Applicants’ characterisation of that evidence in their submissions before this Court as follows:

8. [29]

   By way of example, paras [19]-[33] of Antonella’s affidavit were under the heading “Mascot Development”, and outlined the involvement of Antonella and Mario in development activities for a property in Mascot related to the relevant companies. In those same paragraphs of Antonella’s affidavit, she outlined the tasks she personally had carried out for CVE and PNP in the period since the passing of Carmela in November 2015, including:

9. [30]

   The Applicants further submitted that the impugned evidence in the Two Affidavits indicated that they had actively pursued the development of various properties, through PNP and CVE, at personal cost and risk, including the assumption of personal guarantees if the companies failed to repay loans owed to their lenders.

10. [31]

    On 14 May 2025, the First Respondent filed an affidavit sworn that day in reply to the Two Affidavits. Relevantly, at paras [5] and [16], the First Respondent deposed as follows:

11. [32]

    Prior to the hearing, the First Respondent filed a Schedule of Objections in relation to considerable portions of the Two Affidavits. All of the impugned evidence was objected to, almost exclusively on the following basis (in terms): “relevance: estoppel defence struck out”.

The Primary Judge’s Non-Admission of the Impugned Evidence

1. [33]

   The hearing before the primary judge took place over two days on 29-30 July 2025. At least three days prior to the commencement of the hearing, the parties filed their respective outlines of submissions. The Applicants’ outline of submissions acknowledged that the limitation defence in paras [11]-[14] was no longer pressed. That much, along with a re-iteration of the abandonment of the estoppel defence, was recorded in the following exchange between Mr Alexis (counsel for the First Respondent below) and the primary judge at the commencement of the hearing:

2. [34]

   Counsel for the Applicants below was Mr d’Arville. In his written opening submissions, Mr d’Arville expressed the laches defence (pleaded at POD [30]) as follows:

3. [35]

   At the conclusion of Mr d’Arville’s opening statement, he again summarised the laches defence as follows:

4. [36]

   At that point, the primary judge intervened and the following important exchange ensued:

5. [37]

   Following each party’s opening submissions, the primary judge dealt with objections to all evidence prior to the cross-examination of the witnesses. The primary judge’s approach was to make preliminary rulings on the admissibility of the evidence, then hear from the parties, and then make final rulings. Thus, in relation to the affidavit of Antonella Pizzolato affirmed on 28 March 2025, the primary judge made the following preliminary rulings in relation to the relevant paragraphs [19]-[44]:

6. [38]

   Mr d’Arville responded as follows:

7. [39]

   The primary judge ruled on those paragraphs as follows:

8. [40]

   Thus, his Honour formally ruled on the objections in a manner consistent with his preliminary ruling.

9. [41]

   In relation to Mario’s affidavit dated 28 March 2025, his Honour relevantly rejected, on the grounds of relevance, paras [3]-[4], [12]-[16], [28]-[30], and [78]-[80], as well as paras [32]-[73] on the grounds of relevance and under s 135 of the Evidence Act:

10. [42]

    Mr d’Arville did not raise any argument in relation the non-admission of those paragraphs. In the Applicants’ written submissions in this Court, they cited the primary judge’s earlier rejection of Antonella’s evidence as the reason he did not do so.

11. [43]

    At PJ [14]-[15], his Honour referred to his rejection of the impugned evidence in the Two Affidavits as follows:

12. [44]

    At PJ [65] and [68], and [71]-[72], his Honour made findings in essence acknowledging the First Respondent’s delay in commencing the proceedings but emphasising that his Honour was not persuaded that there was sufficient evidence of prejudice to the Applicants caused by that delay to preclude the granting of the relief sought by the First Respondent. Thus, at PJ [65], his Honour observed:

Submissions and Disposition

1. [45]

   The Applicants raised the following two proposed grounds of appeal:

2. [46]

   The contest between the parties centred around the first proposed ground of appeal, namely whether the primary judge erred in not admitting the impugned evidence in the Two Affidavits.

3. [47]

   The Applicants founded their argument principally on POD [30] which incorporated, in [30(c)], a reference to [11]-[29] of the POD. The relevant parts of those paragraphs had already been abandoned. In particular, [25]-[29] which have been set out at [23] above were the subject of Mr De Villiers’ unqualified statement in his Affidavit of 28 March 2025, namely that “paragraphs 26 and 27 of the Points of Defence are unsupportable and therefore the entire pleading at paragraphs 25 to 29 would fail”: see [25] above. The Applicants relied especially on POD [26] and contended that, although abandoned for the purposes of the estoppel defence, that paragraph remained of continuing vitality for the purposes of the laches defence on the basis that it had been incorporated by reference.

4. [48]

   That was plainly not the view taken by the learned primary judge, and his Honour was correct in his assessment of the situation. There was nothing hedged or qualified about Mr De Villiers’ evidence. If what was put in POD [26] (which was what the impugned evidence purportedly went to) was unsupportable, it must have also been unsupportable for the purposes of the laches defence. Following the abandonment of the estoppel defence and those paragraphs of the POD, it was reasonable for the First Respondent and the primary judge to proceed on the basis that, to the extent that the laches defence was in some way connected with what had been pleaded in [26] and, in particular, the provision by the Applicants of personal guarantees to the lenders for facilities necessary to continue the business of the companies and of funds for the same purposes, reliance was no longer put on those matters.

5. [49]

   Even if what was abandoned was the plea of reliance embedded in POD [26], it was not explained how entry into financial guarantees per se relevantly constituted “prejudice” for the purposes of the laches defence, and the ever-candid Mr Giles was unable to point to an identification or particularisation of the relevant prejudice in any part of the POD.

6. [50]

   At first instance, Mr d’Arville recognised the dilemma he was under after the primary judge reminded him of the procedural history of the case: see [36] above. He endeavoured (in the passage reproduced at [38] above) to characterise the prejudice germane to the laches case as bound up in the possibility that “[a]n order by your Honour which alters or has the effect of altering the ownership of that company is a potential event of default subject to the financier’s consent” (emphasis added). He continued that “that’s a matter that I will be ultimately saying is a reason that your Honour would not make the orders sought in addition to obviously the Anshun estoppel” (emphasis added). As the learned judge said in his ruling in the passage set out at [39 ] above, which was then also applied to the relevant parts of Mario’s affidavit in the ruling set out at [41] above, that identification of prejudice was not pleaded and it gave rise to prejudice to the First Respondent of a kind which engaged and resulted in the exclusion of the evidence pursuant to s 135 of the Evidence Act.

7. [51]

   During the hearing of the application for leave to appeal, Mr Giles did not seek to rely upon the formulation of prejudice articulated by Mr d’Arville at first instance but, rather, on the fact, simpliciter, that the Applicants had caused the companies to enter into financing arrangements for the purpose of development of land and in respect of which they had provided guarantees, whereas the First Respondent had not done so. Mr Giles accepted that there was no basis in the evidence for submitting that this would not have been done but for the delay in bringing the proceedings, or that it was done in the belief that the Respondent had abandoned her claim. Indeed, although there was delay in bringing the claim that was eventually brought, the First Respondent, through correspondence in 2018, 2020, 2022 and 2023, had continued to assert her entitlement to the effectuation of her mother’s testamentary wishes: see [13], [18], and [19] above.

8. [52]

   Mr Giles did not put the asserted prejudice to the Applicants as involving any detrimental reliance upon anything done or not done by the First Respondent (including delay in commencing proceedings) but merely as steps which had been taken during the period of delay. There was no nexus between these steps and any delay by the First Respondent notwithstanding that POD [30(e)] recognised the need in the circumstances of this case for some causal nexus between the delay and prejudice: “says that the delay has caused prejudice to the Defendants”.

9. [53]

   In what is probably the leading authority on the question of delay, Orr v Ford (1989) 167 CLR 316 at 340-342; [1989] HCA 4 (Orr), Deane J (with whom Mason CJ agreed) observed that:

10. [54]

    Two key observations may be derived from this passage. First, Mario, as executor of his late mother’s estate, was a trustee of the property intended to be transferred to the First Respondent under the Will, and a trustee within the meaning of the Trustee Act 1925 (NSW): see also JD Heydon and MJ Leeming, Jacobs Law of Trusts in Australia (8th ed., 2016, LexisNexis Butterworths) at 2.40ff. That results in at least Mario’s reliance on the doctrine of laches as facing a particularly high hurdle which the cases cited in Orr have indicated require a demonstration of “gross” delay. Allied to this, the invocation of “traditional notions of equity and good conscience” focuses attention on Mario’s failure to discharge his obligations as executor of his mother’s estate and whether he proffered any explanation to the Court for his failure to do so. He did not offer such an explanation (other than in the most generalised assertion that he did not believe that the Will reflected the beliefs of his mother), and Mr Giles candidly accepted that his failure to perform his duty as executor entailed an “egregious” breach of duty. Second, as Deane J observed, “it is difficult to envisage circumstances, falling short of waiver, release, election or estoppel, in which the laches of a beneficiary would produce a situation in which it was inequitable and unreasonable to grant relief”. Neither of the two exceptions noted by his Honour in Orr was suggested to be applicable in the present case, and the estoppel case was abandoned.

11. [55]

    The Applicants placed some reliance on Macquarie Units Pty Ltd v Sunchen Pty Ltd [2023] NSWCA 116 (Macquarie Units) in support of how they characterised “prejudice” arising from delay in the context of an application for the rectification of the share register, namely the acquisition of a business and the development of real property. At [101] of Macquarie Units, Meagher JA observed:

12. [56]

    There was no evidence in the present case (including in the impugned evidence) that the Applicants only sought to develop the property and gave the financial guarantees on the basis that the First Respondent abandoned any claim to her entitlement under the Will. Indeed, much of the relevant development activity and financing had occurred in the period during which the First Respondent was actively seeking performance by Mario of his obligations as executor. Nor was this a case, like Macquarie Units, where particular property was acquired to undertake commercial developments after the failure to take any active litigious step; rather, the property upon which the relevant developments were being undertaken by the Applicants in the present case was property owned by one of the two companies at the time of their mother’s death, together with an adjoining property that had been acquired by the Applicants, through a further company, also prior to their mother’s death.

13. [57]

    Further, their attempt to develop the adjoining properties may or may not ultimately be a source of benefit or prejudice to the Applicants. That will no doubt be a function of many factors but there was no asserted correlation between any such potential prejudice and the delay in the First Respondent seeking to correct the register of the two companies. Further, the Applicants’ case appeared to proceed on the basis that, had the First Respondent been a shareholder, she would have been required to participate in the development of the properties. It was not explained what the source of any such obligation was so as to sustain any case of prejudice.

14. [58]

    The Applicants have failed to establish the existence of any “reasonably clear injustice going beyond something that is merely arguable”, and that which was argued on the application for leave to appeal was, on a proper understanding of the doctrine of laches and in light of the abandonment of any case based upon estoppel, at best only barely arguable.

15. [59]

    The First Respondent should never have been required to bring proceedings. The estoppel case had to be abandoned because, notwithstanding what had been put in the POD, the position was ultimately responsibly taken that the alleged detrimental reliance essential to the defence could not be made out. There was no evidence in the impugned evidence or otherwise that the Applicants would not have entered into the financial guarantees they did had they known the First Respondent would bring proceedings. Even on the revamped case sought to be agitated at first instance, namely that the Applicants were prejudiced by the risk that the financier may terminate the loan facility because of some change in ownership (which was entirely speculative), that case was never pleaded, as the primary judge pointed out.

16. [60]

    In my opinion, the primary judge was correct, for the reasons he gave, in rejecting the impugned evidence. The application for leave to appeal should be refused with costs.

17. [61]

    LEEMING JA: I agree with the Chief Justice that leave to appeal should be refused, and I agree with his reasons. The following is added by way of emphasis rather than qualification.

18. [62]

    The evidence to which objection was taken was inadmissible unless it was relevant: Evidence Act 1995 (NSW), s 56. The evidence was said to be relevant as bearing upon the issue arising from paragraph 30(e) of the points of defence, which was that the plaintiff’s delay had caused prejudice to the defendants. No prejudice was particularised. True it is that paragraph 30 commenced with a repetition of paragraphs 11-29 of the points of defence. But paragraphs 25-29 had been formally abandoned four months earlier, accompanied by a solicitor’s affidavit saying that “paragraphs 26 and 27 of the Points of Defence are unsupportable”. As Mr Giles SC noted, when that occurred, his predecessor had expressly confirmed that “[w]hat remains in the case … is [a] prejudice point arising from delay”. So much may be acknowledged. However, the alleged prejudice was unparticularised. All that was clear was that the defendants had formally disavowed reliance on the allegations at paragraphs 26 and 27 as unsupportable. There was nothing subsequently to qualify the solicitor’s unqualified disavowal, on the strength of which the defendants had obtained a further indulgence as to the time for the service of their evidence, until an attempt was made to resurrect the matters at the commencement of the trial. In those circumstances, the primary judge was correct to hold that the paragraphs in the affidavits to which objection was taken were matters outside the issues raised by the points of claim and points of defence, and therefore irrelevant and inadmissible.

19. [63]

    A further point was raised at the hearing at first instance, namely, that a change in ownership of one of the companies might be an event of default. That was rejected on the basis of s 135 of the Evidence Act, there having been no indication hitherto that any such point might be advanced, and that aspect of the case was not (for good reason) repeated in this Court.

20. [64]

    Parts of the hearing in this Court traversed broader matters, as the Chief Justice has explained. The wider debate only serves to confirm the conclusion that the decision of the primary judge was correct.

21. [65]

    McHUGH JA: I agree for the reasons given by the Chief Justice that leave to appeal should be refused with costs. I also agree with the additional observations of Leeming JA.