Trustee’s tribulations span eight years, so far

A recent court judgment dismissing proceedings which have been previously litigated unsuccessfully in other courts provides useful insights for trustees who find themselves the object of sustained hostility.

To sum up, in the absence of an individual being declared a vexatious litigant, the February 24 judgment of NSWC Supreme Court judge David Davies indicates that practitioners need to endure whatever angry plaintiffs throw at them, even when the projectiles are re-agitated claims courts previously denied.

In Gemma Constantinidis v Maxwell William Prentice in his capacity as trustee for the Estate of George Constantinidis [2023] NSWSC 128 the judge recounted how Ms Gemma Constantinidis pursued a raft of claims against, among others, BPS Recovery’s Max Prentice, David Sampson and Mitchell Ball, the latter of whom was at BPS when Gemma’s husband George Constantinidis was bankrupted in 2014 but has since moved to Mackay Goodwin.

After being appointed as George’s trustee Prentice went on to take possession of various properties including a boarding house in suburban Rockdale that would come to be described in subsequent Family Court proceedings as the “matrimonial home”.

While Gemma and George did live at the property before their separation, so at times did handfuls of boarders, thereby expanding the concept of the “matrimonial home” to encompass a definition of inclusiveness not previously contemplated by your correspondent.

Prentice however obtained orders in 2015 through the Federal Circuit Court for possession and on November 7, 2015 the matrimonial home was sold for $1.3 million.

After paying out Westpac’s security about $250,000 went to Prentice to pay his costs and expenses.

But a few months earlier the unhappy protagonist had commenced proceedings in the Family Court naming Prentice and George Constantinidis as respondents. An incorporated association controlled by Gemma and George and which owned a commercial property in Rockdale was also joined to those proceedings.

Among the applications made in those Family court proceedings was one for orders restraining Prentice from selling the matrimonial home. That application was filed a day before the property was sold but too late to stay the transaction. So the application was amended to prevent Prentice dealing with the proceeds.

Over the next two years the plaintiff had only the merest modicum of success with Family Court judge Tom Altobelli ruling that while Prentice was able to deal with the $250,000 to pay his costs and expenses he had to excise $25,000 for the plaintiff to apply to her own costs. But if Prentice thought that represented the end of the tribulations then that conclusion was premature.

On 8 February 2017, in a further interim application filed by Ms Constantinidis sought 19 additional orders.

These included that Prentice be compelled to return to the trust account of the court all the surplus funds from the sale of the matrimonial home less discharged mortgages; that he replenish the matrimonial pool by $25,000.00 from his personal indemnity insurance; that he be compelled to replenish the matrimonial pool by $250,000.00 from his personal indemnity insurance on the basis that he allegedly failed to provide adequate building insurance on the matrimonial home and as a result the matrimonial home was sold storm damaged and under true market value; and that he pay $25,000.00 from his personal indemnity insurance to compensate the applicant for the loss of furniture, white goods, electrical goods, appliances and kitchen equipment, when she was not granted access to remove items.

This represented just a selection of the orders sought against Prentice. She also wanted access to records of the BPS Recovery trust account and justified the orders by arguing that Prentice had acted male fides, meaning bad faith, an allegation every court that’s heard these matters has rejected.

But the 19 orders sought in the February 8 application were shortly afterwards fortified with an application on February 10 for a further 25 orders.

These included orders compelling Prentice to return any payment received in relation to the Family Law proceedings and return it to a trust fund to form part of the matrimonial pool, an order for the removal of Prentice’s lawyers Polczynski Robinson, and an order that those lawyers return any payment received to the trust account of the Court.

Judge Altobelli gave judgment in the Family Law Proceedings on 22 February 2018. While he found that the plaintiff did have an entitlement to 40 per cent of the commercial property held by the incorporated association and a share in a property at Erowal Bay on the NSW South Coast he also ruled that there was no reason for Prentice or any other third party to return anything to the matrimonial pool relating to the matrimonial property.

Ensuring the salt was rubbed right in his honour also made a costs in Prentice’s favour for $62,772.50c.

At this juncture it seems almost unnecessary to report that the plaintiff appealed, but in this case there was a twist. For reasons unknown the required procedural steps weren’t taken and her appeal was dismissed, as was a subsequent application seeking to have it reinstated.

But this plaintiff reasoned that there is more than one way to flense a trustee.

On 15 March 2019 she filed six applications in the Family Law proceedings seeking a large number of orders that, in effect, sought to challenge all of the findings made by Judge Altobelli.

Mindful of the adverse credit findings he’d made against the plaintiff Judge Altobelli recused himself from hearing the fresh applications, all of which were then dismissed in a judgment delivered on February 28, 2022.

Whilst the plaintiff chose not to appeal the decision and the orders made, she didn’t relent. On April 1, 2022 she commenced proceedings for default judgment in the NSW Supreme Court naming Prentice, Sampson, Ball, and then BPS Recovery senior manager Nicole Greentree as defendants.

On April 29 an amended statement of claim was submitted showing a further 12 response defendants.

From the BPS defendants alone she was seeking more than $7 million.

Those proceedings were scheduled to be heard on November 30, 2022 but on the day the plaintiff appeared unrepresented and objected to her matter being heard then on that basis of an additional notice of motion she’d filed a week earlier which had return date of February 8, 2023. She then left the court.

Inevitably the hearing proceeded without her and the court dismissed her claims against Prentice and almost every other defendant, given they’d not been properly served and were anyway largely estopped by the conclusions of other judges ruling on the same issues in previous proceedings. Costs were awarded against the plaintiff.

So it that the end? We think it’s doubtful that Prentice or any of the other defendants will seek to enforce the costs orders. Justice Davies’ judgment represents the real possibility of an end to almost a decade of torturous litigation.