SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2015 0110
| ALEXANDRA ANN BENNETT & ORS (according to the Schedule attached) | Applicants |
| v | |
| ESTATE OF JAN EMIL TALACKO (DECEASED) & ORS (according to the Schedule attached) | Respondents |
S APCI 2016 0035
| JAN TALACKO (as executor of the estate of HELENA TALACKO) | Applicant |
| v | |
| ALEXANDRA BENNETT & ORS (according to the Schedule attached) | Respondents |
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| JUDGES: | BEACH, McLEISH JJA and KEOGH AJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 29 May 2017 |
| DATE OF JUDGMENT: | 27 June 2017 |
| MEDIUM NEUTRAL CITATION: | [2017] VSCA 163 |
| JUDGMENT APPEALED FROM: | [2015] VSC 496 (McDonald J) |
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INTENTIONAL TORTS – Appeal – Conspiracy – Unlawful means conspiracy – Pecuniary loss – Requirement to prove pecuniary loss as an element of the tort of unlawful means conspiracy – Whether expenses associated with investigating the conspiracy constitutes pecuniary loss – Whether expense of obtaining advice and taking steps to set aside agreement entered into pursuant to the conspiracy constitutes pecuniary loss – Loss of opportunity claims – Pecuniary loss established in relation to expenses incurred in setting aside agreement entered into pursuant to conspiracy and in relation to loss of opportunity claims.
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| APPEARANCES: | Counsel | Solicitors |
| For the applicants/first, second, third and fourth respondents | Mr P Solomon QC with Dr O Bigos and Mr O Ciolek | Brand Partners Commercial Lawyers |
| For the fourth respondent/ eighth respondent | Mr L Glick QC with Mr J B Masters | Strongman & Crouch Solicitors |
| For the eighth respondent/ applicant | Mr N O’Bryan SC with Mr K A Loxley | Grindal & Patrick |
BEACH JA
McLEISH JA
KEOGH AJA:
On 7 August 2015, following a 12-day trial conducted in March 2015, the trial judge (McDonald J) delivered judgment in respect of six causes of action pursued by the plaintiffs, Jan Talacko (as executor of the estate of Helena Marie Talacko), Alexandra Bennett, Martin Talacko, Rowena Talacko and Alexandra Bennett and David Adams (as executors of the estate of Margaret Helen Beatrice Talacko). The causes of action pursued by the plaintiffs (who are now applicants in this Court) were:
·conspiracy to injure;
·unlawful means conspiracy;
·Barnes v Addy claims;
·inducing breach of contract;
·a claim under s 172 of the Property Law Act 1958 in respect of a property in Glenferrie Road, Malvern (‘the Glenferrie Road property’); and
·a claim under s 172 of the Property Law Act 1958 in respect of a property in Ethel Street, Malvern.
The judge held that the only cause of action that was made out was the one under s 172 of the Property Law Act in respect of the Glenferrie Road property. The plaintiffs’ claims in respect of the other causes of action were dismissed.[1]
[1]Talacko v Talacko [2015] VSC 287 (‘Reasons’).
On 22 September 2015, the judge made orders in accordance with his reasons previously delivered, made orders for costs and delivered reasons in respect of the costs orders made by him.[2]
[2]Talacko v Talacko (No 2) [2015] VSC 496 (‘Costs Reasons’).
In dismissing the plaintiffs’ unlawful means conspiracy case, the judge concluded that three ‘donation agreements’, entered into in May 2009, pursuant to which Jan Emil Talacko (the first defendant) transferred assets to his sons, David Talacko and Paul Anthony Talacko (the second and third defendants), constituted an equitable fraud; and that each of the first to fourth defendants (Jan Emil, David, Paul and Jan Emil’s wife, Judith Gail Talacko) was a party to an agreement to injure the plaintiffs by means of Jan Emil divesting himself of the assets the subject of the agreement against which a judgment debt could attach. However, the judge concluded that, as at the date of his judgment, the plaintiffs had not suffered any pecuniary loss as a result of the conspiracy, and that any pecuniary loss was (at that time) contingent upon the outcome of proceedings in the Czech Republic. Thus, the judge held that the cause of action of unlawful means conspiracy was not made out.[3]
[3]Reasons [2]. The tort of unlawful means conspiracy requires (i) proof of an agreement or combination between the defendants (ii) to commit an unlawful act (iii) with an intention to injure the plaintiff (iv) resulting in pecuniary loss to the plaintiff: Reasons [64].
The second to fifth plaintiffs (Alexandra, Martin, Rowena and Margaret’s estate) seek leave to appeal in relation to the judge’s conclusion on the unlawful means conspiracy cause of action. The first plaintiff (Jan), in separate applications, seeks an extension of time for leave to appeal and leave to appeal in respect of the same cause of action.
Judith Talacko (the fourth defendant at trial, and wife of Jan Emil) was the only defendant who appeared at trial to defend the plaintiffs’ claims. In this Court, Judith opposed the applications brought by the plaintiffs.
Judith opposed the second to fifth plaintiffs’ applications for leave to appeal on the bases that the arguments they seek to run in this Court were not run at trial and are, in any event, without substance. Judith opposed Jan’s application for an extension of time on a number of grounds: first, there was no adequate explanation justifying Jan’s delay in seeking leave to appeal; secondly, the plaintiffs should not be permitted to be separately represented; thirdly, Jan, like his fellow plaintiffs, seeks to run arguments in this Court that were not run at trial; and fourthly, Jan’s proposed grounds of appeal are, like those of the second to fifth plaintiffs, without substance.
In addition to opposing the plaintiffs’ applications in this Court, Judith:
(a) relied upon a notice of contention in which she asserted that the trial judge erred in concluding that she was a party to the agreement that constituted the unlawful means conspiracy, and erred in concluding that she shared any relevant common purpose with the first to third defendants;
(b) filed an application to admit fresh evidence in the form of an email, to which we will refer below, in support of her notice of contention; and
(c) filed an application for leave to cross-appeal in respect of the judge’s costs orders.
Background facts
In 1948, Alois and Anna Talacko left Czechoslovakia and settled in Australia, together with their three children Helena, Peter and Jan Emil. At the time of their departure from Europe, Alois and Anna owned five substantial properties in the centre of Prague (‘the Prague properties’); 17.44 hectares of horticultural land on the outskirts of Prague at Repy (‘the Repy property’); land in Kbely, a suburb of Prague (‘the Kbely property’); a 368 hectare private forest plantation at Sucha in the northeast of Slovakia (‘the Sucha property’) and an apartment building and adjacent vacant land in Dresden, Germany (‘the Dresden property’). Following their departure from Europe, these properties were seized by the Communist regimes in Czechoslovakia and East Germany.
Both Alois and Anna died in Melbourne prior to the end of Communist rule in Czechoslovakia in 1989. Following the end of that rule, discussions took place between Helena, Peter and Jan Emil concerning the restitution of their parents’ property. What agreement, if any, was reached between the siblings in respect of the restitution of the properties underpinned litigation that was commenced in the Trial Division on 2 October 1998 (‘the 1998 proceeding’). In brief, Peter and Helena (and those who claim through them) contended that in March 1991 the three siblings reached an agreement to pursue restitution of their parents’ property together, and to share the proceeds equally. Jan Emil (and those who claim through him), however, denied that any such agreement was reached. As explained below, that litigation was ultimately settled.
In September 1991, Jan Emil applied for the restitution of the Prague properties. At that time, he alone of the three siblings was qualified to make such a claim, being both a Czechoslovakian citizen and a resident in Czechoslovakia. Later, Helena and Peter each made claims for restitution in their own names, but these claims were at least in part affected by limitation provisions in the scheme of the applicable restitution laws.
In March 1992, a series of properties within central Prague were restituted to Jan Emil, either solely or in part. Thereafter, other properties and interests in properties formerly owned by Alois and Anna were restituted to Jan Emil, and in some cases to Jan Emil and Helena jointly.
In November 1995, Peter died. His wife Margaret and their children, Alexandra, Martin and Rowena, together with Helena, instituted the 1998 proceeding in which they claimed an equitable interest in the properties held by Jan Emil that were formerly owned by Alois and Anna, and sought relief for alleged breaches of contract, trust and fiduciary duties.
On 16 October 1998, Jan Emil transferred to his wife, Judith, all of his interest in the Glenferrie Road property. In May 2000, the Glenferrie Road property was mortgaged by Judith for a loan of $400,000 with an interest rate of 7.05 per cent per annum.
The hearing of the 1998 proceeding commenced on 21 January 2001, before Ashley J. On 23 February 2001, the proceeding settled. Handwritten terms of settlement were entered into between the parties (‘the terms of settlement’). The terms of settlement included terms that:
(d) Jan Emil transfer to a person or entity nominated by the plaintiffs[4] all the rights, title and interest that he had in respect of the Dresden property, the Repy property, the Kbely property and the Sucha property (‘the cl 1 properties’); and
(e) in the event that Jan Emil breached any term, condition or warranty in the settlement terms, then the plaintiffs would be entitled to enter judgment for an order that Jan Emil pay equitable compensation for breach of fiduciary duty in respect of each of the properties the subject of the 1998 proceeding (‘the cl 6 properties’).
[4]Although at this time Helena, rather than Jan on behalf of her estate, was a party, for consistency it is convenient to refer to ‘the plaintiffs’.
The cl 6 properties did not include the Dresden property, which was restituted to the siblings in equal shares.[5]
[5]Talacko v Talacko [2009] VSC 533 [79].
After the terms of settlement had been executed by the parties, the plaintiffs retained lawyers to draw up and deliver to Jan Emil documents for the transfer of the cl 1 properties to the plaintiffs (‘the transfer documents’). Jan Emil never executed the transfer documents.
At some time between 23 February 2001 and early 2002, the $400,000 loan secured by the Glenferrie Road property was repaid and the mortgage that had been taken out on that property, in May 2000, was discharged.[6]
[6]Reasons [108(vii)], [214].
On 4 July 2005, the plaintiffs applied for orders that the 1998 proceeding be reinstated and that the plaintiffs be granted leave to enter judgment against Jan Emil for equitable compensation pursuant to the settlement terms.
The matter proceeded to trial in November 2007, with respect to issues of breach of the settlement terms only. On 24 April 2008, Osborn J delivered judgment,[7] on the preliminary question of whether Jan Emil had breached the terms of settlement. His Honour found that Jan Emil had breached the terms of settlement. The question of the assessment of equitable compensation (together with the resolution of Jan Emil’s defences) remained for later judicial determination.
[7]Talacko v Talacko [2008] VSC 128 (‘the Osborn J judgment’).
On 12 May 2009, in Prague, Jan Emil and his two sons, David and Paul, executed three ‘donation agreements’ pursuant to which Jan Emil transferred to David and Paul, by way of gift, his interest in the Prague properties, the Repy property and the Kbely property (collectively, ‘the donation agreement’).
On 14 May 2009, applications to transfer ownership of the cl 6 properties from Jan Emil to David and Paul were filed at the City of Prague Cadastral Office.
On 17 June 2009, at 11:38 am and 11:39 am, the solicitor on the record for Jan Emil in the 1998 proceeding, MW, sent two emails (‘the first MW email’ and ‘the second MW email’). The first MW email was not tendered at trial and is the subject of a fresh evidence application by Judith in support of her notice of contention. We will refer to the contents of the first MW email below. The second MW email was an email from MW to Jan Emil and Judith stating that MW had provided a copy of extracts from the Czech Civil Code to Jan Emil’s senior and junior counsel, and had asked counsel to consider whether they felt that Jan Emil should sign an affidavit stating that he was gifting properties to Paul and David in order to avoid Czech inheritance law.
On 17 July 2009, the plaintiffs commenced the present proceeding. The five plaintiffs in the present proceeding correspond with the five plaintiffs in the 1998 proceeding. At the time of commencement of the present proceeding there were only four defendants, Jan Emil, David, Paul and Judith.
A further trial, on the issue of quantum and the remaining issues in the 1998 proceeding, was conducted by Kyrou J in October 2009. On 24 November 2009, his Honour delivered reasons for judgment.[8] After a further hearing, on 11 December 2009, his Honour made final orders, giving judgment against Jan Emil and requiring Jan Emil to pay amounts totalling €10,073,818 to the plaintiffs, together with the costs of the 1998 proceeding on an indemnity basis (‘the Kyrou J orders’).[9]
On 4 November 2011, the plaintiffs lodged two petition proceedings in the District Court of Prague (‘the first Prague proceeding’ and ‘the second Prague proceeding’). The first Prague proceeding was brought against Jan Emil and sought to have the Kyrou J orders (not then made) recognised in the Czech Republic for the purposes of enforcement. The second Prague proceeding was brought against David and Paul and concerned the validity of the donation agreements.
On 7 November 2011, Jan Emil was made bankrupt upon the petition of the plaintiffs.
On 18 November 2011, this Court dismissed Jan Emil’s appeals from the Osborn J judgment and the Kyrou J orders.[10] On 28 October 2011, the High Court refused Jan Emil special leave to appeal.[11]
[11]Talacko v Talacko [2011] HCA Trans 301.
On 3 January 2012, the District Court for the City of Prague 1 approved the Kyrou J orders for recognition and enforcement. Jan Emil subsequently lodged an appeal.
On 10 May 2012, Helena died. Her interests have been, and are now being, pursued by her son and executor of her estate, Jan.
On 4 July 2012, the Prothonotary issued a certificate on behalf of the plaintiffs, purportedly pursuant to the Foreign Judgments Act 1991 (Cth) (‘the FJ Act’) certifying that the Kyrou J orders were final, conclusive and binding (‘the first certificate’).
On 4 October 2012, the Municipal Court for the City of Prague, in reliance on, amongst other things, the first certificate, confirmed the resolution of the District Court for the City of Prague 1.
On 10 December 2012, the Federal Court granted the plaintiffs leave pursuant to s 58(3) of the Bankruptcy Act 1966 (Cth) to continue to take further steps up to judgment against Jan Emil in the first Prague proceeding, provided that no step was to be taken to enforce any judgment against Jan Emil without the prior leave of the Federal Court of Australia.
On 31 December 2012, Jan Emil lodged an extraordinary appeal against the 4 October 2012 decision of the Municipal Court of Appeal for the City of Prague.
On 30 September 2013, the fifth plaintiff in the 1998 proceeding, Margaret, the widow of Peter, died. On 3 November 2014, Jan Emil died.
On 18 December 2014, the Supreme Court of the Czech Republic delivered a resolution repealing the 4 October 2012 resolution of the Municipal Court of Appeal for the City of Prague, and returned the case to the Municipal Court of Appeal for the City of Prague for further proceedings.
On 23 February 2015, the Prothonotary issued an amended certificate on behalf of the plaintiffs, purportedly pursuant to the FJ Act, certifying that the Kyrou J orders were final, conclusive and binding (‘the second certificate’).
The trial of the present proceeding was, as we have said, conducted in March 2015. The trial judge delivered judgment on 7 August 2015.
On 4 February 2016, six months after judgment was given by the trial judge, Sloss J, pursuant to reasons delivered on 12 November 2015,[12] made orders declaring the first certificate and the second certificate invalid. On 28 July 2016, this Court allowed an appeal from the orders of Sloss J and set aside her Honour’s orders.[13] On 3 May 2017, the High Court allowed an appeal by Judith and set aside the orders of the Court of Appeal, and ordered in their place that the appeal to the Court of Appeal from the orders of Sloss J be dismissed.[14]
The proceeding at first instance
At trial, Jan (the first plaintiff) was self-represented. The second to fifth plaintiffs (Alexandra, Martin, Rowena and Margaret’s estate) were jointly represented by senior and junior counsel. There was no appearance for Jan Emil (the first defendant), he having been declared bankrupt and dying before trial. There was no appearance for David and Paul, the second and third defendants, who reside in the United Kingdom and/or Prague. Judith (the fourth defendant) was represented by senior and junior counsel. The fifth and sixth defendants appeared by counsel but, after judgment, subsequently resolved the issues between themselves and the plaintiffs. The seventh defendant, State Trustees Ltd, was a party (as a result of Jan Emil dying intestate). It took no part in the proceeding at trial or in this Court.
Five days after the trial concluded,[15] and before his Honour delivered judgment, the trial judge made an order, relying upon r 47.04 of the Supreme Court (General Civil Procedure) Rules 2005,[16] that if the Court determined that the plaintiffs had suffered any relevant loss or damage by reason of the causes of action pleaded by them, then the quantum of any such loss or damage would be tried separately. This order was made as a result of an application made at trial.
[15]On 1 April 2015.
[16]The rules in force at the time of the making of the order.
During the course of the trial, senior counsel for Judith advised the judge that, in the light of evidence given by Jan Emil, before Osborn J, which could support a finding that Jan Emil had the intent proscribed by s 172 of the Property Law Act 1958 when he transferred his interest in the Glenferrie Road property in October 1998 to Judith, Judith did not oppose an order setting aside the October 1998 transfer of the Glenferrie Road property.[17] The judge accepted this concession, and the cause of action based upon s 172 of the Property Law Act in respect of the Glenferrie Road property was the only one upon which the plaintiffs succeeded.
[17]Reasons [238].
Despite having concluded that the plaintiffs only succeeded on one of their six causes of action, the judge ordered Judith to bear her own costs of the proceeding, to pay 20 per cent of the plaintiffs’ costs, and to pay the costs of one day (4 March 2015) on an indemnity basis. These costs orders are the subject of Judith’s application for leave to cross-appeal.
The proposed grounds of appeal in respect of the substantive judgment
The plaintiffs’ proposed grounds of appeal are all directed to the judge’s conclusion that the unlawful conspiracy cause of action failed because, while the plaintiffs established three of the four elements of that cause of action, they did not establish the fourth element — namely, that they had suffered pecuniary loss.[18]
[18]See n 3 above.
The second to fifth plaintiffs’ proposed ground of appeal is as follows:
The judge erred in concluding[19] that the fourth element of the tort of unlawful means conspiracy — namely, loss — was not made out, thereby dismissing the claim. His Honour should have held that the applicants had suffered loss as a consequence of the donation agreement, comprising:
(i)the loss of a valuable opportunity to have the judgment of Osborn J recognised in the Czech Republic and, thereupon, to commence fresh action in a Czech court relying on that judgment, and to enforce any subsequent money judgment against the properties;
(ii)the loss of a valuable opportunity, upon the subsequent obtaining of a monetary judgment from the Supreme Court of Victoria, to have that judgment recognised and enforced in the Czech courts against the properties;
(iii)the loss of a valuable opportunity, upon the subsequent obtaining of a monetary judgment from the Supreme Court of Victoria, to apply for a receiver by way of equitable execution in respect of the properties;
(iv)the loss of a valuable opportunity to receive a dividend in a future bankruptcy of [Jan Emil] from the proceeds of realisations of the properties, or any of them; and/or
(v)the expenses associated with investigating the conspiracy.
[19]Reasons [160]–[192].
The proposed grounds of appeal sought to be relied upon by the first plaintiff (Jan) are as follows:
1. The judge erred in failing to find that:
(a)the donation agreement had the effect that the properties did not vest in the Australian bankruptcy trustee under s 58(1) of the Bankruptcy Act 1958 (Cth); and
(b)the exclusion of those properties from [Jan Emil’s] bankrupt estate prevented the applicants from recovering the 11 December 2009 judgment debt,
such that the applicants suffered a pecuniary loss and the tort of conspiracy was completed.[20]
[20]Ibid [164]–[168].
2. The judge erred in finding that until:
(a)the applicants succeeded in obtaining recognition of the equitable compensation judgment; but
(b)a court in the Czech Republic refuses to set aside the donation agreement,
any loss attributable to the donation agreement was contingent and did not constitute pecuniary loss for the tort of conspiracy.[21]
[21]Ibid [168].
The issues in this Court
As occurred at trial, there was no appearance in this Court on behalf of Jan Emil (or his estate) or his sons, David and Paul. The contest was between the plaintiffs (now the applicants) on the one hand, and Judith on the other hand.
The issues raised, in this Court, by the parties’ applications for leave to appeal and leave to cross-appeal are:
1.Whether the judge erred in finding that Judith was a party to the agreement that constituted the unlawful means conspiracy (put in issue in Judith’s notice of contention);
2.Whether the judge erred in concluding that the tort of unlawful means conspiracy was not made out because the plaintiffs had not established that they suffered any pecuniary loss (put in issue in the plaintiffs’ proposed grounds of appeal); and
3.Whether the judge erred in making the costs orders about which Judith makes complaint (put in issue in Judith’s proposed grounds of appeal in her application for leave to cross-appeal).
It is convenient to deal first with the issue of whether Judith was a party to the conspiracy (the notice of contention), then the question of whether pecuniary loss was established by the plaintiffs at trial, before then coming to any question of costs.
The notice of contention: whether Judith was a party to the conspiracy
The issue at trial and the judge’s reasons
At trial, senior counsel for Judith opened Judith’s defence by submitting that the high point of the evidentiary case against her was that she had ‘acquiesced’ in an agreement between Jan Emil, David and Paul to transfer ownership of Jan Emil’s assets in the Czech Republic by way of the donation agreement.[22] However, during final submissions, senior counsel for Judith conceded that the evidence ‘probably’ went beyond mere acquiescence.[23] Nevertheless, senior counsel submitted that the highest that the case could be put against Judith was that she assisted in the conspiracy without being a party to it. At trial, senior counsel for Judith conceded that the evidence supported a finding that, subsequent to 1997, Judith had consistently supported the course of keeping assets out of the reach of the plaintiffs. However, senior counsel also submitted that, while Judith may have been ‘clapping’, there was no evidence to support a finding that she participated in the agreement for Jan Emil, David and Paul to enter into the donation agreement.[24]
[22]Ibid [80].
[23]Ibid.
[24]Ibid [81].
At trial, the plaintiffs contended that, while the conspiracy they alleged arose out of Jan Emil’s breach of the terms of settlement from February 2001, the conduct of the defendants prior to February 2001 was relevant to the question of whether they had a common purpose of depriving the plaintiffs of access to any property within the Talacko family which could be used to satisfy a judgment debt arising out of the equitable compensation proceeding.[25]
[25]Ibid [89].
At trial, a number of emails forwarded by Judith to other family members, and other emails, were tendered covering the period from 29 March 2000 until 1 August 2009. The judge, after setting out some of the emails to which Judith was a party in 2000 and 2001,[26] said that the content of these emails supported the following findings of fact:
[26]Ibid [93]–[107].
(i)the Glenferrie Road property was mortgaged by the fourth defendant [Judith] in May 2000 as security for a loan of $400,000 with an interest rate of 7.05% per annum;
(ii)the timing of the mortgage coincided with the lead up to the proceedings which were subsequently heard by Ashley J in February 2001;
(iii)David Findlay, the lawyer acting for the first defendant in the 1998 Proceedings, advised the fourth defendant that a mortgage should be taken out over the Glenferrie Road property so that the first defendant [Jan Emil] could be easily declared bankrupt. He also advised that the plaintiffs would not be able to access any funds raised by way of a mortgage;
(iv)the $400,000 secured by the mortgage was transferred to an interest bearing bank account established by the first defendant in Prague;
(v)the first defendant assured the fourth defendant that he would arrange for interest to be paid for the fourth defendant ‘one way or the other’;
(vi)the first and fourth defendants gave consideration to paying the interest payments on the loan from the moneys deposited in the Prague account into the trust account of Findlay Arthur Phillips, and for the moneys to then be forwarded onto the fourth defendant; and
(vii)throughout 2000 and 2001 the fourth defendant had limited income such that it would be unlikely that she would have had the capacity to repay the $400,000 loan by early 2002. In this regard, it is to be noted that the sixth defendant gave evidence that she was advised by the fifth defendant in January 2002 that the loan had been repaid.[27]
[27]Ibid [108].
Having read the emails relied upon by the judge for ourselves, we are unable to see any error in the above findings of fact made by the judge. The judge then went on to consider the relevance of the mortgage taken out over the Glenferrie Road property in 2000, coming to the conclusion that, while the 2000 mortgage and the donation agreement were separated by nine years, both were entered into shortly before the commencement of a trial that had the potential to impose a significant financial burden upon Jan Emil. The judge said that notwithstanding the significant passage of time, he had ‘no hesitation in concluding that in respect of both the 2000 mortgage and the donation agreement, the first to fourth defendants were motivated by exactly the same purpose: that of seeking to take the first defendant’s assets out of the plaintiffs’ reach’.[28] The judge then, by reference to subsequent emails said:
I am fortified in reaching the conclusion set out above by the contents of emails sent and received by the fourth defendant throughout the period subsequent to the discharge of the mortgage. The contents of these emails demonstrate unequivocally that at no point did any of the first to fourth defendants resile from their common purpose of preventing the plaintiffs from accessing any of the first defendant’s property.[29]
[28]Ibid [115].
[29]Ibid [116].
In April 2009, Judith organised a Skype conference call. Evidence was given by the fifth defendant (Peter, another son of Jan Emil and Judith) that the purpose of this call was to discuss the possibility of Jan Emil transferring his Czech properties to David and Paul. There was at trial, however, no evidence that Judith made any contribution to the discussion in that call regarding this proposed transfer of property. The judge said:
Although there is no evidence that the fourth defendant actively participated in the April 2009 Skype conference call, she shared a common purpose with the first to third defendants to transfer the Czech properties from the first defendant to their sons in order to take those properties out of the reach of the plaintiffs in the pending equitable compensation proceedings. In reaching this conclusion I have taken into account the refusal of the fourth defendant to give evidence in the current proceedings, notwithstanding that she was afforded the opportunity to do so by way of video link.[30]
[30]Ibid [122].
Judith did not give evidence at trial. After analysing all of the evidence, the judge came to the view that no satisfactory explanation had been provided for her failure to give evidence.[31] In respect of whether Judith was a party to the unlawful means conspiracy involving Jan Emil, David and Paul, the judge concluded:
In circumstances where no satisfactory explanation has been provided for the failure of the fourth defendant to give evidence, coupled with her breach of her obligations of discovery, I am entitled to draw, with greater confidence, the unfavourable inference that had the fourth defendant given evidence in the current proceedings, such evidence would not have assisted her defence of the allegation that she was a party to an agreement with the first to third defendants during the period 2000 through to, at least, May 2009 to take the Talacko family property out of the reach of the plaintiffs. In reaching this conclusion I have had regard to the following matters:
(i)the emails forwarded by the fourth defendant to other family members openly express her contempt for the plaintiffs and their legitimate aspirations to obtain a share of the properties in accordance with the February 2001 terms of settlement;
(ii)the steps which were taken by the fourth defendant in April 2000 to mortgage the Glenferrie Road property, in particular her express statement that she handed the Title over to the bank ‘so Vermin will now have to take on the bank if they want this property or compensation because you [ie Jan Emil] don’t own it now’; and
(iii)the direct evidence of the fourth defendant and the first defendant jointly proposing an explanation to [MW] for the Donation Agreement of May 2009, which was false. [32]
[31]Ibid [124].
[32]Ibid [124].
The ‘direct evidence’ referred to by the Judge was the second MW email, to which we have already referred. The second MW email was sent by MW to Jan Emil and Judith and was in the following terms:
Dear Jan and Judy
Further to our phone call of this morning, attached are some extracts from the Czech Civil Code which, although they do not go as far as you thought, do support what you are saying. I have provided a copy of these to [senior and junior counsel] and asked them to consider whether they feel that Jan should sign an affidavit stating that he was gifting the properties to the boys in order to avoid Czech inheritance law.
The judge concluded that this email was ‘direct evidence that the first and fourth defendants proposed to MW that an affidavit be prepared giving a false explanation for the donation agreement, deposing that the first defendant was gifting the properties to the second and third defendants in order to avoid Czech inheritance laws’.[33] The judge then said:
This is not a case of the fourth defendant [Judith] merely acquiescing in a course of action undertaken by the first defendant [Jan Emil]. Rather, the email supports a finding that both the first and fourth defendants had jointly proposed a false explanation for the donation agreement. Whilst the email post-dates the donation agreement by approximately one month, it is contemporaneous with that transaction. Further, the email pre-dates the transfer which was completed in late July 2009.[34]
[33]Ibid [87].
[34]Ibid.
The submissions of the fourth respondent (Judith)
In this Court, Judith submitted that the judge was wrong in finding that she was a party to the unlawful means conspiracy found against Jan Emil, David and Paul, and that his Honour was wrong in finding that she shared a common purpose with them to transfer the Czech properties in order to put them out of the reach of the plaintiffs in the then pending equitable compensation proceeding. In so submitting, Judith contended:
1.The judge erred in finding that there was direct evidence that Judith had proposed to the solicitor, MW, that an affidavit be prepared giving a false explanation for the donation agreement.[35]
2.The judge’s construction of the second MW email was not open; alternatively, if considered together with the first MW email (the subject of the fresh evidence application), the judge’s construction was not open or, at least, wrong.[36]
3.The judge was wrong to conclude that the second MW email was properly characterised as evidence of facts requiring an answer by Judith, in circumstances where Judith had failed to give evidence without providing a satisfactory explanation. In short, the judge was wrong to draw a Jones v Dunkel[37] inference against Judith in relation to the second MW email.[38]
4.The judge was wrong to conclude that the conduct of Judith, Jan Emil, David and Paul prior to February 2001 was relevant to the question of whether they had a common purpose of depriving the plaintiffs of access to any property which could be used to satisfy a judgment debt arising out of the equitable compensation proceeding.[39]
5.The judge erred in concluding that the contents of emails sent and received by Judith throughout the period subsequent to the discharge of the Glenferrie Road mortgage demonstrated ‘unequivocally’ that at no point did Judith resile from the common purpose of preventing the plaintiffs from accessing any of Jan Emil’s property.[40]
[35]Ibid [85].
[36]Ibid [87].
[37](1959) 101 CLR 298 (‘Jones v Dunkel’).
[38]Reasons [88].
[39]Ibid [89].
[40]Ibid [116].
In order to consider Judith’s arguments, it is necessary to set out the first MW email, which Judith seeks to have admitted as fresh evidence. The email is from MW to senior and junior counsel retained for Jan Emil in the 1998 proceeding, and was sent on 17 June 2009, one minute before MW sent the second MW email to Jan Emil and Judith. The first MW email provided:
I have spoken further with the clients this morning. Jan has given me further instructions that the reason for the transfer of his property to his sons in Prague was that he is concerned that if he dies then Czech inheritance law provides that his estate must pass equally to his wife and children and this cannot be changed by will. He was concerned that he did not wish for his wife or Australian children to receive these properties if he died and therefore given his age and health decided to make these gifts.
I have had a look through the Czech Civil Code on the internet this morning and come across some provisions that would appear to partly support this but only to the extent that his spouse and children must receive one half of their entitlement under law (see attached document). Should we consider Jan swearing an affidavit that he effected the transfers because the Czech inheritance provisions were not in accordance with his wishes? Of course the question that follows this is why did he not want his wife and other children to benefit under his estate to which the answer presumably is because they are in Australia and therefore subject to this Court’s jurisdiction.
On balance, I would not have him swear an affidavit as I doubt that unless he said that he did this in order to avoid the assets being available to the plaintiffs then he would not be believed. However, I would welcome your views.
The application to admit fresh evidence
The principles governing the exercise by this Court of its jurisdiction to admit fresh evidence were recently summarised by this Court in Giles v Jeffrey.[41] In that case, the Court said:
[41][2016] VSCA 314 (Santamaria and Kyrou JJA and Elliott AJA).
In order to succeed in her application for leave to adducefresh evidence, the applicant had to establish the following:
(a)By the exercise of reasonable diligence the evidence could not have been discovered in time to be used in the hearing of the [earlier] proceeding.
(b)It is reasonably clear that if the evidence had been available at the hearing of the [earlier] proceeding, and had been adduced, an opposite result would have been produced.
(c) The evidence proposed to be adduced is reasonably credible.[42]
[42]Ibid [207]. The Court referred to Refaat v Barry [2015] VSCA 218 [76]–[77]; Clark v Stingel [2007] VSCA 292 [25], citing Orr v Holmes (1948) 76 CLR 632, 635–6; Commonwealth Bank of Australia v Quade (1991) 178 CLR 134, 141–2.
In Commonwealth Bank of Australia v Quade,[43] the High Court said:
In cases where all that is involved is the discovery by the unsuccessful party of fresh evidence, Orr v Holmes and Greater Wollongong Corporation v Cowan establish that the reconciliation of ‘the demands of justice’ and the ‘policy’ that there be an end to litigation at least prima facie (or ‘generally’) dictate that the successful party should be deprived of the verdict in his favour only if the unsuccessful party persuades the appellate court that there was no lack of reasonable diligence on his part and that it is reasonably clear that the fresh evidence would have produced an opposite verdict. Such a stringent rule in that ordinary class of case is supported by considerations of both justice and public interest. Considerations of justice support it in that it would be unfair to the successful party if he were to be deprived of a verdict obtained after a trial on the merits and be subjected to the expense, inconvenience and uncertainty of a further trial merely because some relevant evidence had, without fault on his part, been unavailable to the unsuccessful party at the time of the trial. Considerations of public interest support it in that it is desirable in the public interest that there be finality in litigation in other than the truly exceptional case. If all that was necessary to procure the setting aside of a regularly obtained verdict was that the unsuccessful party show that fresh evidence which might have affected the outcome of the trial has become available after the trial, the verdicts of the courts would be of a provisional character only, being subject to the discovery of further relevant evidence.[44]
[43](1991) 178 CLR 134.
[44]Ibid 141–142.
In support of the application to admit the first MW email as fresh evidence, Judith’s solicitor (Mr Jonathan Joseph) swore an affidavit[45] that he did not become aware of the first MW email until after judgment was delivered, and that he was first provided with a copy of the first MW email on 17 November 2015. In addition, Mr Joseph deposed in his affidavit that he was informed by his client and believed that she, too, had not seen or been provided with a copy of the first MW email before 17 November 2015.
[45]On 30 November 2015.
While the parties’ written submissions on the application to adduce fresh evidence dealt with the circumstances in which Judith came to be aware of the first MW email and the question of reasonable diligence, the issue upon which emphasis was placed in oral argument was whether the first MW email threw light on, or altered the construction of, the second MW email. Judith submitted that the judge was wrong in his construction of the second MW email. She also submitted that the first MW email demonstrated positively that the judge’s construction of the second MW email was wrong. On the other hand, the plaintiffs submitted that the judge’s construction of the second MW email was correct and that, even if admitted into evidence, the first MW email did not show that the judge’s construction of the second MW email was wrong.
In order to determine whether the first MW email should be admitted as fresh evidence, it is necessary to examine the judge’s construction of the second MW email. The second MW email fell to be construed by the judge in the context of all of the other relevant evidence called at trial. That evidence disclosed that Judith, Jan Emil, David and Paul were concerned from an early point in time to ensure that property held in the name of Jan Emil not be available for execution at the suit of the plaintiffs. It also discloses that they did not seek or receive advice about Czech inheritance law until July 2009. We see no error in the judge’s conclusion that the second MW email, construed without the benefit of the first MW email, disclosed that both Judith and Jan Emil proposed to MW that an affidavit be prepared giving a false explanation for the donation agreement — namely, that Jan Emil was gifting the Czech properties to David and Paul in order to avoid Czech inheritance laws. Such a conclusion is consistent with the text of the second MW email and the tenor of Judith’s emails that were in evidence. Certainly, there is nothing ‘glaringly improbable’ about the judge’s conclusions on this issue; nor were those conclusions demonstrated to be wrong by ‘incontrovertible facts or uncontested testimony’; nor were they ‘contrary to compelling inferences’.[46]
[46]Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679, 686–7 [43] (‘Robinson Helicopter’).
The question in this Court thus becomes whether it is reasonably clear that, if the first MW email had been tendered at trial, the first MW email would have led to a conclusion different from the judge’s conclusion that Judith and Jan Emil jointly proposed the preparation of an affidavit giving a false explanation for the donation agreement. The answer to that question is to be found in the first sentence of the first MW email. In the first sentence, MW said that he had spoken with ‘the clients’. While the first MW email then goes on to say that it was Jan Emil who had given the relevant instructions about Czech inheritance law, a plain reading of the email provides support for the proposition that both Jan Emil and Judith had sought MW’s advice about whether an affidavit giving a palpably false explanation for the donation agreement could be prepared and relied upon. We would reject the adducing of the first MW email as fresh evidence in this Court on the basis that it is not reasonably clear that had the first MW email been adduced at trial an opposite conclusion would have been reached by the judge about Judith’s involvement in the proposal to give a false explanation for the donation agreement. Moreover, even if the first MW email was to be admitted in this Court, we are unable to see any basis upon which the judge’s conclusion on this issue should be disturbed.
The resolution of Judith’s notice of contention
The judge concluded from a series of emails from 29 March 2000, to which Judith was a party, the steps taken by Judith in April 2000 to mortgage the Glenferrie Road property (and express statements by her in relation to that transaction) and the second MW email (described by the judge as ‘direct evidence’), that Judith was a party to the unlawful means conspiracy to which Jan Emil, David and Paul were also parties. In attacking the judge’s conclusion, Judith made a number of submissions: first, the judge erred in his construction of the second MW email; secondly, on a proper construction of the second MW email there was no ‘direct evidence’ as asserted by the judge; thirdly, the judge was wrong to draw any Jones v Dunkel inference against Judith; fourthly, the judge was wrong to take into account any conduct of Judith prior to February 2001; and fifthly, the necessary ‘clear or cogent or strict proof’ required to establish that Judith was a party to the fraud found by the judge was lacking.
In support of these submissions, Judith contended:
1.The donation agreement was executed on 12 May 2009, and so preceded the second MW email by more than a month. It was therefore erroneous for the judge to find that the email was contemporaneous with the transaction constituted by the donation agreement.[47] The judge was also in error when he said that the second MW email ‘pre-date[d] the transfer which was completed in late July 2009’,[48] given that the second to fifth plaintiffs’ Czech solicitor, Josef Hlavicka, had deposed that ‘[t]he transfer of Czech properties from [Jan Emil] to his sons took place legally on 2 May 2009 (date of filing the application for registering the transfer to the sons)’.
2.The second MW email does not constitute the ‘clear or cogent or strict proof’ that would be required to support a finding that Judith was a party to any agreement to deny the plaintiffs access to property by the vehicle of the donation agreement.
3.It was erroneous for the judge to have regard to the conduct of Judith prior to February 2001 in deciding whether she was a party to an agreement in May 2009, when the judge found that the fact that in April 2000, Judith and Jan Emil’s son, Peter, shared a common purpose of taking the Glenferrie Road property out of the reach of the plaintiffs did not dictate a finding that in 2009 he similarly shared a common purpose that Jan Emil’s properties in the Czech Republic should be gifted to David and Paul.
[47]Reasons [87].
[48]Ibid.
None of Judith’s submissions are persuasive. A close reading of Judith’s emails from March 2000 shows a high level of antipathy towards the plaintiffs, whom she variously describes as ‘vermin’ and ‘scum’. Moreover, the emails disclose a clear and ongoing intent to take whatever steps are available to put properties against which the plaintiffs might levy execution out of the reach of the plaintiffs. We see no error in the judge relying on conduct prior to February 2001 as supportive of Judith’s common intention with Jan Emil, David and Paul to take whatever steps might be required to injure the plaintiffs by having Jan Emil divest himself of assets against which a judgment debt might attach.
The plaintiffs’ case against Judith was a strong circumstantial case. It required an answer by her. The evidence led against Judith at trial was capable of supporting an inference that she was a party to the unlawful means conspiracy found by the judge. Moreover, this evidence was of such a strength that one might reasonably have expected that Judith would have given evidence on her own behalf if her evidence would have been favourable to her on this issue. The judge was plainly correct when he drew a Jones v Dunkel inference against Judith in relation to her failure to give evidence at trial.[49] This was not a case of a judge drawing a Jones v Dunkel inference in the absence of any evidence requiring an answer.[50]
[49]Cf O’Donnell v Reichard [1975] VR 916 (‘O’Donnell v Reichard’).
[50]Cf Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 121, 142–3 [51] (‘Schellenberg’).
As to the differential treatment between Judith and Peter about which Judith now makes complaint, the short answer is that Peter gave evidence at trial that he did not support the donation agreement. The judge gave detailed reasons why he accepted Peter’s evidence on that issue.[51] No such evidence was given by Judith. We see no error in the judge’s analysis so far as Peter was concerned. The judge’s analysis more than justifies different conclusions being reached about the involvement, and participation in, the unlawful means conspiracy by Judith and Peter in 2009.
[51]Reasons [133]–[156].
The complaints by Judith about the judge’s conclusions, that the second MW email was contemporaneous with the donation agreement, and that the transfer of the Czech properties was not completed until late July 2009, are without substance. There was no error in the judge describing the second MW email (sent on 17 June 2009) as being contemporaneous with the donation agreement. While the second MW email was sent approximately one month after the donation agreement was executed, the description of those events as ‘contemporaneous’ was, in all of the circumstances, not unreasonable — and certainly not appellably wrong.
While it is true that the second to fifth plaintiffs’ Czech solicitor, Mr Hlavicka, deposed that the transfer of the Czech properties from Jan Emil to his sons ‘took place legally on 2 May 2009’, being the date of filing of the application for registering the transfer, the following points may be made. First, Mr Hlavicka was, in any event, wrong when he said that the date was 2 May 2009. The donation agreement was not entered into until 12 May 2009. Secondly, as the emails tendered at trial show, steps to register the transfer of the Czech properties were ongoing throughout July 2009, with Mareva-type orders being made against David and Paul by Kyrou J on 24 July 2009. In the circumstances, we see no error in the judge saying that the second MW email pre-dated the transfer which was completed in late July 2009 — even if the transfer took place ‘legally’ on the date of filing of the application to register such a transfer.
To repeat, the case against Judith on the unlawful means conspiracy cause of action was a strong circumstantial case. It relied upon a number of strands. Undoubtedly, in deciding whether to find the case proved against Judith, the judge was required to take into account, amongst other things, the gravity of the matters alleged against Judith.[52] The judge was alive to this matter. So much is demonstrated by the judge’s carefully reasoned analysis of the parties’ competing cases. There is no substance in Judith’s complaint that the evidence at trial did not support the judge’s conclusions concerning Judith’s involvement in the unlawful means conspiracy found by the judge.
[52]Cf s 140(2)(c) of the Evidence Act 2008.
For these reasons, each of the grounds in Judith’s notice of contention must be rejected.
The applications for leave to appeal: whether the plaintiffs established pecuniary loss
In their application for leave to appeal, the second to fifth plaintiffs (who, in their application, have joined the first plaintiff as the eighth respondent in order that he be bound by the result of their application) contend that the judge was wrong when he concluded that the plaintiffs had not established that they had suffered pecuniary loss as a result of the unlawful means conspiracy. In the first plaintiff’s application for leave to appeal (for which he requires an extension of time), he seeks to make the same complaint — albeit advancing different arguments from those advanced by the second to fifth plaintiffs. In argument, senior counsel for the second to fifth plaintiffs and senior counsel for the first plaintiff each submitted that their respective clients were entitled to succeed in this Court if arguments raised by any plaintiff were to be accepted by us. That is, success by either the second to fifth plaintiffs or the first plaintiff would inure to the benefit of all plaintiffs.
At the hearing in this Court, we permitted senior counsel for the first plaintiff (Jan) to advance argument on the merits of the applications for leave to appeal on the basis that there was to be no duplication of the arguments advanced on behalf of the second to fifth plaintiffs. The argument before us proceeded accordingly.
Jan’s application for an extension of time
McDonald J delivered judgment on 7 August 2015. The time for seeking leave to appeal expired on 4 September 2015. Jan, however, filed his application for an extension of time within which to seek leave to appeal on 24 March 2016. At the same time, Jan filed his application for leave to appeal and a written case in support of that application. The application for an extension of time was made pursuant to r 64.08(1) of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’). The grounds of Jan’s application for an extension of time were expressed to be that Jan’s application for leave to appeal and written case disclosed proposed grounds of appeal that had a reasonable prospect of success; the appeal was required to enable the court to do justice between the parties; the delay had been reasonable in the circumstances; and there had been no prejudice to any party as a result of the delay.
In an affidavit in support of his application, Jan set out his reason for not filing his application for leave to appeal within time. Jan’s reason was that, on 12 November 2015, Sloss J made certain ‘findings’ which resulted in her Honour declaring that the two certificates issued by the Prothonotary, purportedly pursuant to the FJ Act, were invalid.[53] In his affidavit in support, Jan deposed that Sloss J’s findings ‘caused me to reconsider the decision of McDonald J and … led me to bring this application for leave to appeal’.
Putting the merits of Jan’s proposed grounds of appeal to one side, Judith opposes Jan’s application for an extension of time on the basis that Jan’s explanation for his delay was not adequate and, in any event, did not explain the delay between 12 November 2015 and 24 March 2016. Judith also submitted that separate representation of the plaintiffs should not be permitted — it being an ‘underlying principle … that a respondent to litigation should not normally have to face two separate sets of applicants’ representatives’.[54]
[54]In written submissions, dated 14 April 2016, Judith also contended that she would suffer substantial prejudice as a result of delay that would be occasioned if Jan’s extension of time application was granted. This matter was not pressed in oral argument — no doubt because at the time of the hearing before us there was no evidence of any actual delay occasioned by the filing of Jan’s applications.
As has been said before, as with the exercise of any other discretion by the Court, the Court must seek to give effect to the overarching purpose in s 7 of the Civil Procedure Act 2010, namely to ‘facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute’.[55] The factors that are relevant to the exercise of the discretion under r 64.08 include the length of the delay, the reasons for the delay, the prospects of the application for leave to appeal succeeding and the extent of any prejudice to a respondent.[56]
[55]Gippsreal Ltd v Kenny [2016] VSCA 65 [21] (Kyrou JA); Pateras v State of Victoria [2017] VSCA 31 [100].
[56]Ibid.
In the present case, senior counsel for the plaintiffs have advanced separate arguments in support of the same complaint, namely that the judge was wrong to conclude that the plaintiffs had not established that they had suffered pecuniary loss. There has been no duplication by the plaintiffs in the presentation of their arguments. Senior counsel have advanced their own arguments, and then relied upon the arguments advanced by the other. In our view, the course taken by the plaintiffs has not occasioned relevant prejudice to Judith. That is not to say that the course taken by the plaintiffs in this case should be encouraged more generally. Specifically, it should be observed that a respondent in Judith’s position should not ordinarily be required to incur additional costs, or be exposed to a liability for additional costs, as a result of multiple plaintiffs with the same interests being separately represented. It is to be remembered that, absent Jan’s application for an extension of time, he was in any event a respondent with a right to be heard in the second to fifth plaintiffs’ application for leave to appeal.
However, there is force in Judith’s submission that Jan’s explanation for his delay is unsatisfactory. Even accepting that Sloss J’s decision had a relevant impact on Jan, one might have expected Jan to seek his extension of time some weeks earlier than the date upon which he ultimately filed his application for an extension of time and supporting documents.
Nevertheless, in the unusual circumstances of this protracted, difficult and hard-fought litigation, we would be disinclined to shut Jan out if there is merit in one of his proposed grounds of appeal.
In these circumstances, it is appropriate to turn now to consider the merits of the plaintiffs’ complaints about the judge’s conclusion that they failed to establish the pecuniary loss element of the tort of unlawful means conspiracy.
The claim for pecuniary loss at trial
At trial, the judge identified six categories of pecuniary loss alleged by the plaintiffs in their fifth amended statement of claim and supplementary further and better particulars.[57] Those losses were identified by the judge in the following terms:
[57]Reasons [161].
(i)Were the plaintiffs prevented from obtaining the benefit of the terms of settlement because the Czech properties were transferred from the first defendant to the second and third defendants?
(ii)Were the plaintiffs prevented from recovering the 11 December 2009 judgment debt because the properties were transferred?
(iii)Did the plaintiffs lose the amount of €10,073,818 together with accruing interest and indemnity costs because of the transfer of the properties?
(iv)Have the plaintiffs incurred costs and expenses of the current proceeding, including incidental and consequential costs?
(v)Have the plaintiffs incurred costs and losses in seeking to enforce the December 2009 judgment debt in the Czech Republic?
(vi)Have the plaintiffs incurred the costs and expenses of seeking to ascertain the steps taken by the first, second and third defendants and obtaining advice about the consequences of the May 2009 transfers?
After examining each of these categories, the judge held that the plaintiffs had not established any pecuniary loss. The plaintiffs contend that, in so holding, the judge erred. The plaintiffs submitted that of the categories of loss set out by the judge, the losses in categories (ii), (v) and (vi) had been established to have been suffered by them. It is, therefore, necessary to look at the judge’s reasons in respect of those three categories.
In respect of category (ii), the judge said:
There are currently two sets of proceedings on foot in the Czech Republic. In the first set of proceedings the plaintiffs are seeking recognition and enforcement of the 11 December 2009 judgment debt. In the second set of proceedings the plaintiffs are seeking to set aside the transfer of the properties from the first defendant to the second and third defendants. To date the plaintiffs have been unable to have the judgment debt recognised in the Czech Republic. Their attempts to do so [are] subject to on-going litigation. Thus, absent the Donation Agreement, the judgment debt would still not have been enforced to date.
A certificate issued pursuant to s 15 of the Foreign Judgments Act is an essential precondition to the recognition and enforcement of the 11 December 2009 judgment. There are presently proceedings on foot in the Supreme Court of Victoria in which the first defendant is seeking to challenge the validity of the certificate which has been issued under the Foreign Judgment Act and which is relied upon by the plaintiffs in the Czech proceedings. In proceedings before Sloss J, the first defendant has submitted that the Prothonotary had no power to issue a certificate without the leave of the Federal Court pursuant to s 58(3) of the Bankruptcy Act 1966 (Cth). Her Honour has reserved her judgment in respect of this submission. If the first defendant’s submission is ultimately accepted and if the Federal Court does not grant leave in the future then, even if the May 2009 property transfer had not occurred, the plaintiffs will not succeed in enforcing the 11 December 2009 judgment in the Czech Republic.
Assuming in the plaintiffs’ favour that it is ultimately held that there is a valid certificate under the Foreign Judgments Act and that the first defendant’s bankruptcy is no impediment to the plaintiffs enforcing the judgment, the plaintiffs have not been prevented from recovering the 11 December 2009 judgment by reason of the May 2009 property disposition.
The plaintiffs may succeed in the Czech proceedings in setting aside the May 2009 property transfer. They have not been prevented from enforcing the judgment debt by reason of the Donation Agreement. The plaintiffs’ real complaint is not that they have been prevented from recovering the judgment debt because of the May 2009 property transfer, rather, it is the expense that they have incurred in seeking to set aside the transfer. That is a separate head of alleged pecuniary loss which is dealt with below.
A finding that the Donation Agreement prevented the plaintiffs from enforcing the December 2009 judgment debt could only be made if:
(i)the plaintiffs succeeded in obtaining recognition of the equitable compensation judgment; but
(ii)a court in the Czech Republic refuses to set aside the Donation Agreement.
If this were to occur the plaintiffs could legitimately contend that but for the Donation Agreement they would have been able to recover the judgment debt against the properties transferred to the second and third defendants. However, until the preconditions in (i) and (ii) do occur, any loss attributable to the Donation Agreement is contingent. As such, it does not constitute pecuniary loss for the tort of conspiracy.[58]
[58]Ibid [164]–[168].
In respect of category (v), the judge said:
The plaintiffs have commenced two sets of legal proceedings in the Czech Republic. First, proceedings against the first defendant to obtain recognition and enforcement of the December 2009 judgment debt: Proceeding 49 EXE 2107-2011 and 50 EXE 2107-2011. Second, proceedings against the first to third defendants seeking to set aside the transfer of properties pursuant to the May 2009 Donation Agreement.
To date the plaintiffs have not been successful in obtaining recognition and enforcement of the December 2009 judgment debt in the Czech Republic. Thus, even if the May 2009 Donation Agreement had never been entered into, the plaintiffs would not yet have been able to recover the judgment debt against any of the first defendant’s assets in the Czech Republic. There is no nexus between the costs incurred by the plaintiffs in the enforcement and recognition proceedings and the May 2009 Donation Agreement. Those costs simply reflect the fact that the plaintiffs obtained a judgment debt against a defendant who had no assets in Australia. Any costs or expenses related to the enforcement and recognition proceedings do not constitute pecuniary loss for the purpose of the plaintiffs’ claims against the defendants in conspiracy.
The fact that the plaintiffs have not yet secured recognition of the December 2009 judgment debt in the Czech Republic is a fundamental obstacle to any finding that the expenses incurred by them in seeking to set aside the Donation Agreement in the Czech Republic has crystallised a pecuniary loss in respect to the plaintiffs’ claim in conspiracy. The Donation Agreement lies at the heart of the conspiracy claim. As such, unlike the enforcement and recognition proceedings, there is a direct nexus between the alleged conspiracy and the expenses incurred in seeking to set aside the Donation Agreement. However, if the plaintiffs do not succeed in obtaining recognition and enforcement of the December 2009 judgment debt there is no basis for concluding that the Donation Agreement affected the plaintiffs in any way. If the plaintiffs would not have recovered the December 2009 judgment debt in any event, then the Donation Agreement could not have caused any loss. Mr Glick submitted that the costs of the proceedings in the Czech Republic cannot constitute a pecuniary loss flowing from the alleged conspiracy. He submitted that until such time as the proceedings in the Czech Republic are concluded, any loss referable to the costs related to those proceedings is contingent. He further submitted that, absent evidence to the contrary, I am entitled to assume that the Czech courts have the same powers to order full indemnity costs as the Victorian Supreme Court. I accept these submissions.[59]
[59]Ibid [171]–[173].
The judge then referred to Wardley Australia Ltd v Western Australia,[60] Kenny & Good Pty Ltd v MGICA (1992) Ltd[61] and Hawkins v Clayton.[62] These decisions were referred to as authority for the proposition that, generally in tort cases, a plaintiff does not suffer pecuniary loss in respect of a loss that is contingent until the loss crystallises. The judge then said:
[60](1992) 175 CLR 514 (‘Wardley’).
[61](1999) 199 CLR 413 (‘Kenny’).
[62](1988) 164 CLR 539 (‘Hawkins v Clayton’).
If the legal expenses incurred in proceedings in the Czech Republic are capable of constituting pecuniary loss for the purposes of the present proceedings, such loss is contingent. The plaintiffs sustain no pecuniary loss until such loss is crystallised. Contingent loss does not constitute pecuniary loss for the purposes of completing the cause of action in conspiracy. As matters presently stand there is a prospect that:
(i)the plaintiffs will obtain recognition of the judgment debt in the Czech Republic; and
(ii)the plaintiffs will succeed in having the transfer of the properties from the first defendant to the second and third defendants set aside; and
(iii)the plaintiffs will obtain a costs order which fully compensates them for the costs of bringing the proceedings in the Czech Republic.
In this event, any expenses flowing from the Donation Agreements will be recouped and so there will be no loss. However, it is also possible that:
(iv)the plaintiffs will not succeed in obtaining recognition of the 2009 judgment debt (in which case the Donation Agreement made no difference to the plaintiffs’ position in the Czech Republic); or
(v)they will obtain recognition of the judgment debt but will not be able to persuade a Czech court to set aside the property transfers; or
(vi)they will obtain an order setting aside the property transfer but will obtain a costs order which does not fully indemnify them.
There are a number of potentially different outcomes from the proceedings in the Czech Republic. However, presently it is not open to conclude that a pecuniary loss attributable to the May 2009 Donation Agreement has crystallised. The plaintiffs sustained detriment in a general sense upon the first defendant entering into the Donation Agreement with the second and third defendants. That detriment flowed from the fact that the Donation Agreement disposed of assets of the first defendant which, subject to obtaining recognition of the equitable compensation judgment, might otherwise have been available to satisfy a judgment debt. However, as is plain from the judgment in Wardley, detriment does not necessarily equate with pecuniary loss.
Putting to one side the fact that any loss attributable to legal expenses incurred in the Czech proceedings is contingent, there are numerous authorities in support of the proposition that a successful plaintiff or defendant cannot recover the difference between legal costs awarded in its favour, or withheld, as the case may be, in one civil proceeding and legal costs it actually incurred in that proceeding, as damages in a subsequent civil action against the same opponent. Whether and to what extent a party is entitled to recover its costs from an opponent is regarded as having been finally determined in the first proceeding. If this were not the case, a successful plaintiff could bring a second action against the same defendant to recover the costs not awarded upon taxation, as damages flowing from the original wrong.
In the present proceedings, the plaintiffs are suing the first to third defendants. The plaintiffs contend that the legal expenses incurred in the Czech Republic suing the same defendants to set aside the Donation Agreement constitute pecuniary loss which completes the cause of action of conspiracy. No authority was cited by counsel for the plaintiffs which supports the proposition that costs incurred in proceedings in a foreign jurisdiction where the court in question has power to award full indemnity costs, can constitute a head of pecuniary loss against the same defendants in proceedings in the Supreme Court of Victoria.
In Anderson v Bowles, Dixon, Williams, Fullagar and Kitto JJ stated:
It is a general rule that where it is sought to include costs incurred in other proceedings in the damages arising upon a cause of action, costs shall not be included, if as a matter of judicial determination or by a positive rule of law they are treated as costs which should be borne by the party suing. Accordingly it is not possible to recover as part of such damages the difference between party and party costs awarded to the plaintiff in the original litigation and the costs as between solicitor and client which he has incurred: Barnett v Eccles Corporation (1900) 2 QB 423, at p 428. Further, if costs are expressly withheld by the court in the original proceeding none can be recovered in the action for damages brought by the plaintiff from whom they were so withheld.
The only circumstance where it has been held that costs incurred in foreign civil proceedings may be claimed as damages in subsequent proceedings against the same parties is where the foreign law did not allow recovery of costs in the foreign civil proceedings. In the absence of evidence to the contrary, I am entitled to proceed on the basis that the courts in the Czech Republic have the same powers to award costs, including full indemnity costs, as the Victorian Supreme Court. Therefore, the costs incurred by the plaintiffs in the proceedings in the Czech Republic do not constitute a category of pecuniary loss for the purpose of their claim in unlawful means conspiracy.[63]
[63]Reasons [176]–[181] (citations omitted).
As to category (vi), after analysing relevant authority,[64] the judge said:
The expenses incurred by the plaintiffs in seeking to unravel the Donation Agreement are not expenses incurred by way of a defensive measure or mitigation in respect of some other loss directly attributable to the Donation Agreement. Rather, they are a standalone category of loss, as I have rejected the plaintiffs’ contention that any of the other five categories of loss constitutes pecuniary loss for the cause of action of unlawful means conspiracy.
If expenses incurred by the plaintiffs investigating the Donation Agreement were held to constitute the element of pecuniary loss to complete the tort of conspiracy, it would mean the plaintiffs by their own action were completing the elements of the tort. I can find no authority in support of the proposition that where expenses incurred by the plaintiff investigating conduct of the defendant is the only category of pecuniary loss, this will suffice to complete the cause of action of unlawful means conspiracy. Absent any authority on point, I am not prepared to find that expenses incurred by a plaintiff can complete the elements of the cause of action.[65]
[64]British Motor Traders Association v Salvadori [1949] Ch 556 (‘Salvadori’); Coomera Resort Pty Ltd v Kolback Securities Ltd [2004] 1 Qd R 1 (‘Coomera’); Lonrho Plc v Fayed (No 5) [1993] 1 WLR 1489 (‘Lonrho’).
[65]Reasons [191]–[192].
The parties’ submissions
The plaintiffs submitted that the judge erred in not finding that losses in categories (ii), (v) and (vi), as described by the judge, had been suffered. The plaintiffs contended that, within those categories, as a consequence of the donation agreement, they suffered:
(a)the loss of opportunity to enforce the future judgment against [Jan Emil’s] Czech properties which were divested under the donation agreement;
(b)the loss of opportunity to receive a dividend in a future bankruptcy of [Jan Emil] from the proceeds of realisations of the Czech properties; and
(c)the expenses associated with investigating the conspiracy.
The plaintiffs also contended that the judge erred in failing to find that the donation agreement had the effect that the Czech properties did not vest in the Australian bankruptcy trustee under s 58(1) of the Bankruptcy Act 1966 (Cth), and that the exclusion of those properties from Jan Emil’s bankrupt estate prevented the plaintiffs from recovering the 11 December 2009 judgment debt.
Additionally, the plaintiffs contended that the judge erred in finding that until the plaintiffs succeeded in obtaining recognition of the equitable compensation judgment, and a court in the Czech Republic refused to set aside the donation agreement, any loss suffered by the plaintiffs was ‘contingent’ and did not constitute pecuniary loss for the tort of unlawful means conspiracy.
In respect of each of the losses that the plaintiffs advanced in this Court as pecuniary losses, Judith submitted:
(i)the case for pecuniary loss, insofar as it was said to be a ‘loss of opportunity’ or ‘loss of a chance’, now advanced by the plaintiffs was not run at trial; and
(ii)the losses now advanced by the plaintiffs were not, in any event, established at trial.
So far as the plaintiffs advanced in this Court a case that they had suffered pecuniary loss in the form of a particular loss of opportunity, Judith contended that the plaintiffs did not plead, or run at trial, any loss of opportunity case. In support of this contention, and to illustrate her point, Judith relied upon a recent decision of the Full Court of the Federal Court in Barnes v Forty Two International Pty Ltd[66] as an example of a case that showed how a claim for loss of opportunity needed to be pleaded and conducted at trial before it could be raised on appeal. Judith submitted that, as had been held by the Full Court in respect of the applicants in Barnes, the plaintiffs’ pleadings and particulars in, and their conduct of, the present case were insufficient to raise a loss of opportunity case.[67]
[66](2014) 316 ALR 408 (‘Barnes’).
[67]Barnes (2014) 316 ALR 408, 414–5 [30], 422–4 [73]–[82].
Judith submitted that if the plaintiffs had pleaded or run a loss of opportunity case at trial then they would have had to plead and prove a relevant ‘counterfactual’. That is, the plaintiffs would have had to establish, in respect of each of the circumstances of lost opportunity for which they now contend, what would have happened if the donation agreement had not been entered into between Jan Emil, David and Paul. This, it was submitted, the plaintiffs did not do. In support of these submissions, Judith relied upon what was said by this Court in Price Higgins & Fidge v Drysdale[68] and Masters Home Improvement Pty Ltd v North East Solutions Pty Ltd.[69] In Price, Winneke P[70] said:
[68][1996] 1 VR 346 (‘Price’).
[69][2017] VSCA 88 (‘Masters’).
[70]With whom Ormiston and Charles JJA agreed.
While the plaintiff is required to prove to the appropriate standard of proof the existence of a valuable loss of opportunity and the fact that it was caused by the defendant’s negligence, the plaintiff is not required to prove, on the balance of probabilities, the value or extent of the loss because of the difficulties associated with proof of past hypothetical fact situations; in those circumstances the value or extent of the loss is to be ascertained by reference to degrees of possibilities or probabilities.
…
[T]he existence of the relevant loss, be it a lost commercial opportunity or a prospective physical injury, must be proven by evidence. It seems to me that one cannot simply assume that a plaintiff has lost a valuable opportunity because events supervening upon the defendant’s conduct might suggest that such a loss has occurred. To prove that the loss has, to the requisite standard, occurred and that it has been caused by the defendant’s contravening conduct, the plaintiff is required to demonstrate by evidence not only that the prospect had a real value but also that, if the true position had been disclosed, he or she would have acted to secure the benefit:
To prove the sustainability of a prospect of acquiring a benefit … and what would have been the plaintiff’s actions if the opportunity had been offered, it will usually be necessary to tender evidence to establish the plaintiff’s objectives and the contingencies in the way of their achievement. Evidence of that kind will bear upon both the existence and the value of the lost opportunity.
per Brennan J, Sellars v Adelaide Petroleum N.L. (1994) 179 CLR 332, 365.[71]
[71]Price [1996] 1 VR 346, 354–5.
In Masters, the Court said:
In considering damages for loss of a commercial opportunity, the court asks first whether there was a commercial opportunity of some value (which is more than speculative or negligible); that is, was there a chance? Secondly, the court looks to whether that opportunity has been lost; that is, would the plaintiff have pursued the opportunity? The third step is to consider what amount should be awarded having regard to the prospects of success if the opportunity had been pursued. In taking this third step, the courts’ task is to apply a discount which reflects the prospects of success. This is sometimes referred to as a Sellars discount.[72]
[72]Masters [2017] VSCA 88 [411] (citations omitted).
Judith submitted that the plaintiffs should not now be allowed to run any loss of opportunity case in this Court. She contended that if the plaintiffs had pleaded or run a loss of opportunity case at trial, then she would have adduced evidence, in respect of each opportunity said now to have been lost, to show that no such loss of opportunity occurred; alternatively, she would have adduced evidence that any such alleged loss of opportunity had no value and was not a pecuniary loss.
In summary, in this Court, Judith supported the judge’s analysis of the pecuniary loss issue, and contended that any differently formulated claim by the plaintiffs was without substance and should not be countenanced by us in these applications.
Analysis
It is convenient first to consider the final category of loss identified by the plaintiffs in this Court, namely ‘expenses associated with investigating the conspiracy’. That shorthand description does not fully capture the expenses for which the plaintiffs contended, either at trial or in this Court. By their particulars of loss, the plaintiffs claimed for the trouble and expense involved not only in ascertaining what steps the defendants took in relation to the donation agreement, but also in obtaining advice as to the means by which it could be set aside and in taking steps to recover against the parties to the agreement in the Czech Republic. This was described at trial as the cost of ‘undoing’ a transaction whereby a defendant formerly of substance was rendered impecunious.
The judge concluded that any loss attributable to the donation agreement was contingent until the plaintiffs succeeded in obtaining recognition of the equitable compensation judgment and a court in the Czech Republic refused to set aside the donation agreement.[73] However, it is inherent in that finding that the unlawful means conspiracy entered into between Jan Emil, David, Paul and Judith required the plaintiffs, if they were to be able to enforce the equitable compensation judgment, to take steps that would result in a court in the Czech Republic setting aside the donation agreement. Such steps involved expenses that were incurred by the plaintiffs. Moreover, those costs were pecuniary losses at the time at which they were incurred by the plaintiffs.
[73]Reasons [168]; see [86] above.
The trial judge dismissed this aspect of the plaintiffs’ claim on the basis that expenses incurred in investigating the loss could not be recovered as a standalone category of loss.[74] However, this did not take account of other expenses claimed by the plaintiffs. While the expenses of merely investigating a conspiracy might not (without more) be sufficient to constitute the pecuniary loss required to establish the tort of unlawful means conspiracy,[75] the expenses incurred in setting aside the donation agreement in this case went beyond investigating what happened and extended to attempting to remove the obstacle to recovery which the donation agreement placed in the plaintiffs’ path. (They also went beyond costs incurred in various legal proceedings.) For that reason, it is not necessary to decide whether, if only the costs of other proceedings were being claimed, there would be a bar to their recovery.[76]
[74]Ibis [191]-[192]; see [89] above.
[75]See Lonrho [1993] 1 WLR 1489, 1497 (Dillon LJ), 1505 (Stuart-Smith LJ), 1507 (Evans LJ). See also the reservations expressed by Stuart-Smith LJ excised from that report but found at [1994] 1 All ER 188, 207, upon which the trial judge relied at Reasons [188]–[189].
[76]See Lonrho [1993] 1 WLR 1489, 1497–8 (Dillon LJ), 1505–6 (Stuart-Smith LJ), 1510–11 (Evans LJ); Reasons [173]; see [87] above.
It is no answer to say that if the plaintiffs are successful in persuading a court in the Czech Republic to set aside the donation agreement, then all of their expenses incurred in taking that step might be ordered to be repaid to them by the relevant Czech court.[77] In the first place, Judith is not a party to the relevant Czech proceedings and even if the parties to the donation agreements were ordered to pay the plaintiffs’ costs this would not serve to answer any liability of Judith to pay those same costs.[78] Moreover, the recovery of all of those expenses was at the time of trial (and is now) a mere possibility, contingent upon a court in the Czech Republic making an order for the payment of all of those expenses, and also contingent upon the plaintiffs recovering all of those expenses pursuant to such an order. Here, the very conspiracy entered into by Jan Emil, David, Paul and Judith required the plaintiffs to incur the expense of taking proceedings to set aside the donation agreement in order that they might be able to levy execution on the equitable compensation judgment. The amounts already expended represent immediate pecuniary loss, albeit that on an assessment of damages it might be found that some, or even all, of that amount might stand to be recovered by other means.
[77]Cf Reasons [181].
[78]See Lonrho [1993] 1 WLR 1489, 1510 (Evans LJ).
In any event, even if it could be said that a court in the Czech Republic had a power to order indemnity costs, there is no basis for concluding as a probability that all of the plaintiffs’ expenses incurred, both here and in the Czech Republic, in seeking to set aside the donation agreement would be ordered on a full indemnity basis by a court in the Czech Republic.[79]
[79]The fact that the plaintiffs reside in Australia, and the litigation to set aside the donation agreement is in the Czech Republic, might be thought to make such a result less, rather than more, likely.
Subject to taking account of the judge’s conclusion that the expenses of having the donation agreement set aside were wholly contingent on first having the equitable compensation judgment recognised in the Czech Republic, those expenses are therefore properly claimed as pecuniary loss. We return to the question whether the loss is wholly contingent below.
We turn now to consider the plaintiffs’ loss of opportunity claims. These were resisted by Judith on the basis that:
(f) they were not run at trial; and
(g) they were not established at trial because no counterfactual was pleaded or proved at trial.
We are not persuaded that no loss of opportunity case was run at trial. The plaintiffs’ pleadings alleged an immediate loss upon the entering into of the donation agreement. At the time the donation agreement was entered into, there was no money judgment. Inevitably, the plaintiffs’ case at trial was one about loss of a chance. While the plaintiffs’ pleadings and particulars do not expressly use the terms ‘loss of opportunity’ or ‘loss of a chance’, it is plain from a fair reading of the pleadings, the particulars and the way in which the case was argued at trial that the gravamen of the plaintiffs’ case was the loss of the opportunity to enforce the equitable compensation judgment against the properties that were the subject of the donation agreement. The very first particular of loss and damage was that the plaintiffs had been denied the fruits of their judgment. That is inherently an argument about the loss of the opportunity to recover the judgment debt.
In final address, senior counsel for Judith submitted that the plaintiffs had not run their case as a loss of chance case.[80] The judge responded by saying that he did not have a concluded view about that. The matter was not further argued at trial. We are not persuaded that the interchange between senior counsel for Judith and the trial judge, in final address, establishes that what could only have been a loss of opportunity case should not now be so regarded.
[80]Written closing submissions made the same assertion.
The plaintiffs put their loss of opportunity cases on a number of bases. Those bases may be summarised as a loss of opportunity to enforce the equitable compensation judgment against the properties divested under the donation agreement, and a loss of opportunity to receive a dividend in Jan Emil’s bankruptcy. Judith submitted that in respect of each scenario or basis upon which the plaintiffs rely as a foundation for a loss of opportunity, a relevant counterfactual must be established by the plaintiffs.
There can be no doubt that, in order to recover damages, the plaintiffs must establish loss. In professional negligence claims and claims for damages for misleading or deceptive conduct, this is routinely done by a plaintiff seeking to prove what would have occurred but for the defendants’ negligence or misleading or deceptive conduct (a counterfactual). It is not invariable, however, that for all causes of action a plaintiff must establish a counterfactual. Each case will depend upon the nature of the cause of action and the facts that underpin the cause of action.
The judge applied Wardley to hold that no loss arose from the unlawful means conspiracy because any loss was contingent upon the obtaining of recognition of the equitable compensation judgment but the refusal of a court in the Czech Republic to set aside the donation agreement. In HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd,[81] the High Court, in a case dealing with the purchase of a shopping arcade in reliance upon an erroneously low valuation, distinguished Wardley, likening the assessment of the claim for damages against the valuer in that case to ‘cases where a wrong results in the immediate loss of a chance or commercial opportunity which has some value, although the process of measuring the worth of that chance or opportunity depends on estimating the significance of events which are, or may be, yet to come’.[82]
[81](2004) 217 CLR 640 (‘HTW Valuers’).
[82]HTW Valuers (2004) 217 CLR 640, 656 [32]. See also Henvile v Walker (2001) 206 CLR 459, 471 [22].
In our view, upon the entry into the donation agreement there was an immediate loss of opportunity to recover the amount of the anticipated equitable compensation judgment. The measure of that loss of opportunity depended upon estimating the significance of events that had not then occurred, and to which reference has now been made. The plaintiffs’ loss occurred when the donation agreement was entered into and the prospect of enforcement of the money judgment, yet to be entered, was impeded by the transfer of the Czech properties from Jan Emil to David and Paul. While it was always going to be necessary to have the Victorian judgment recognised in the Czech Republic, the donation agreement created an additional barrier to enforcement which was from the outset going to cost the plaintiffs money to overcome.
It follows that the possibility that the donation agreement made no difference to the plaintiffs’ position, because they might have been unable to recover against Jan Emil in the Czech Republic in any event, is a matter that goes not to the existence of loss, but to its quantification. However difficult it might already have been to recover against Jan Emil, the donation agreement was calculated to make it harder, as the parties to the conspiracy plainly intended. The additional impediment to recovery was both the loss of an opportunity to recover the fruits of the anticipated judgment and the occasion for pecuniary loss consisting of expenses incurred in seeking to undo the donation agreement. As far as the former head of loss is concerned, the value of the opportunity the plaintiffs had enjoyed, and the extent of the impact of the donation agreement on that opportunity, are matters for assessment of damages.
For these reasons, we would hold that the plaintiffs have established pecuniary loss in relation to expenses incurred in seeking to set aside the donation agreement, as well as the loss of opportunity for which they contended at trial to execute the equitable compensation judgment against the Czech properties.
The plaintiffs put their loss of opportunity case in a second way, by reference to the loss of opportunity to receive a dividend in a future bankruptcy of Jan Emil. Since the fourth element of the tort of unlawful means conspiracy has been established in the manner set out above, the tort is perfected and it is not necessary to say more about that aspect of the case. Damages are then at large and the plaintiffs are entitled to claim and prove any loss or damage forming part of their case.[83]
[83]Lonrho (1993) 1 WLR 1489, 1494B (Dillon LJ), 1504–5 (Stuart-Smith LJ). Similarly, although the claimed costs and expenses associated with merely investigating the donation agreement might not suffice of themselves to make good the fourth element of the tort, costs and expenses of that kind are not necessarily excluded from any assessment of damages, once pecuniary loss is otherwise established: Salvadori [1949] Ch 556, 569; Coomera [2004] 1 Qd R 1, 36 [45]; Lonrho [1993] 1 WLR 1489, 1497D (Dillon LJ).
However, for the avoidance of doubt, we should make it clear that we consider that our reasoning regarding the loss of opportunity to recover against the Czech properties applies equally to the loss of opportunity to recover in any bankruptcy of Jan Emil. Upon the making of the donation agreement the plaintiffs immediately lost the opportunity of recovering their judgment debt against Jan Emil’s future trustee in bankruptcy by resort to the Czech properties. At that point, the prospect of recovery of the anticipated judgment was impeded by the transfer of the Czech properties. Again, the value of the chance of recovery which the plaintiffs had before the donation agreement, compared to what they had after it, is a question for assessment of damages.
It is not to the point that the defendants can argue, as Judith does in this Court, that the donation agreement may be void against Jan Emil’s trustee in bankruptcy as being made for the purpose of preventing the Czech properties from being divisible among his creditors, contrary to s 121 of the Bankruptcy Act 1968 (Cth). Any such argument that might be available to the trustee in bankruptcy represents only one of myriad possible outcomes of the administration of Jan Emil’s bankrupt estate. Whatever course the administration ultimately takes, it is apparent from the outset that the chances of the plaintiffs receiving a dividend from the bankrupt estate were diminished by the entry into the donation agreement, and the prospects of recovery arising from that administration, again, await assessment.
In the result, the plaintiffs have perfected the tort of unlawful means conspiracy by reference to each of the heads of pecuniary loss on which they relied in this Court. We will grant the first plaintiff’s application for an extension of time within which to seek leave to appeal, grant the plaintiffs’ applications for leave to appeal and allow the appeals.
Judith’s cross-appeal on costs
In circumstances where the plaintiffs’ appeals will be allowed, it will be necessary for the question of costs to be reargued, save for the order made by the trial judge that Judith pay the costs of 4 March 2015 on a full indemnity basis. It follows that the only part of Judith’s application for leave to cross-appeal that needs to be considered at this stage is her complaint about the judge’s order concerning the costs of 4 March 2015.
The circumstances surrounding the order for costs made against Judith in relation to 4 March 2015 were described by the judge as follows:
Third, whilst the fourth defendant was entitled to refrain from giving evidence in the current proceedings, she was not entitled to waste the court’s time whilst vacillating whether or not to do so. The principal judgment records my findings relating to the fourth defendant’s foreshadowed application under s 42E of the Evidence (Miscellaneous Provisions) Act 1958 (Vic) (‘s 42E application’) to give evidence via video link rather than in person. A hearing on 4 March 2015 was confined solely to this foreshadowed application. Further time was taken up with the matter on 5 March and 6 March 2015. Ultimately, the fourth defendant did not pursue the s 42E application and did not give evidence in the proceedings. The foreshadowed application resulted in a waste of time and necessarily resulted in costs being incurred by the second to fifth plaintiffs and fifth and sixth defendants.[84]
[84]Costs Reasons [26].
In ruling that the costs of 4 March 2015 should be paid on an indemnity basis, the judge said:
Such an order is warranted in circumstances where the foreshadowed s 42E application arose out of an improper request by the fourth defendant’s solicitors for an undertaking from the second to fifth plaintiffs’ solicitors that if the fourth defendant returned to Victoria to give evidence no application would be made seeking to restrain her leaving the jurisdiction.[85]
[85]Ibid [31].
In Judith’s written case, she submitted that the trial judge placed too much weight on his finding that the foreshadowed application under s 42E of the Evidence (Miscellaneous Provisions) Act 1958 arose out of an improper request by Judith’s solicitors for an undertaking from the plaintiffs’ solicitors that if Judith returned to Victoria to give evidence no application would be made seeking to restrain her from leaving the jurisdiction. In argument, Judith submitted that, rather than it being a question of too much weight being placed on this finding, the finding was ‘not a relevant consideration’. Judith submitted that it could not be inferred that a s 42E application would not have been foreshadowed at trial had Judith’s solicitors not made the request described by his Honour as ‘improper’.
There can be no doubt that the judge was correct, for the reasons he gave, to order Judith to pay the costs of 4 March 2015. The only question is whether those costs should have been ordered on an indemnity basis. That was a discretionary question, involving a matter of practice and procedure, decided by the judge who was then fully immersed in the conduct of the trial. We see no error in the exercise of the judge’s discretion. Judith’s application for leave to appeal in respect of the costs of 4 March 2015 will be refused.
Conclusion
The first plaintiff’s application for an extension of time within which to seek leave to appeal will be granted. The plaintiffs’ applications for leave to appeal will be granted and the appeals will be allowed. Judith’s application for leave to appeal against the order for costs made in respect of 4 March 2015 will be refused. Otherwise, we will hear the parties further on the issue of costs.
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SCHEDULE OF PARTIES
S APCI 2015 0110
BETWEEN
ALEXANDRA ANN BENNETT First Applicant
MARTIN THORBURN JAN TALACKO Second Applicant
ROWENA KIRSTEN EVE TALACKO Third Applicant
ALEXANDRA ANN BENNETT AND DAVID
ADAMS (AS EXECUTORS OF THE ESTATE
OF MARGARET HELEN TALACKO) Fourth Applicantand
ESTATE OF JAN EMIL TALACKO
(DECEASED) (AN UNDISCHARGED BANKRUPT) First RespondentDAVID TALACKO Second Respondent
PAUL ANTHONY TALACKO Third Respondent
JUDITH GAIL TALACKO Fourth Respondent
PETER ANDREW NOEL TALACKO Fifth Respondent
AMANDA MAREE FISCHER Sixth Respondent
STATE TRUSTEES LTD (ACN 064 593 148) Seventh Respondent
JAN TALACKO (AS EXECUTOR OF THE
ESTATE OF HELENA MARIE TALACKO) Eighth Respondent
S APCI 2016 0035
BETWEEN
JAN TALACKO (AS EXECUTOR OF THE
ESTATE OF HELENA MARIE TALACKO) Applicantand
ALEXANDRA ANN BENNETT First Respondent
MARTIN THORBURN TALACKO Second Respondent
ROWENA KIRSTEN EVE TALACKO Third Respondent
ALEXANDRA ANN BENNETT AND DAVID ADAMS
(AS EXECUTORS OF THE ESTATE OF MARGARET
HELEN TALACKO) Fourth RespondentESTATE OF JAN EMIL TALACKO (DECEASED)
(AN UNDISCHARGED BANKRUPT) Fifth RespondentDAVID TALACKO Sixth Respondent
PAUL ANTHONY TALACKO Seventh Respondent
JUDITH GAIL TALACKO Eighth Respondent
PETER ANDREW NOEL TALACKO Ninth Respondent
AMANDA MAREE FISCHER Tenth Respondent
STATE TRUSTEES LTD (ACN 064 593 148) Eleventh Respondent
- AGLC
- Bennett v Talacko [2017] VSCA 163
- Case
- [2017] VSCA 163
- Decision Date
CaseChat Overview and Summary
The court examined the nature and scope of pecuniary loss in the context of the tort of conspiracy by unlawful means. It held that pecuniary loss is indeed an element of this tort. The court further elaborated on the types of expenses that could be considered as pecuniary loss, ruling that the costs incurred in investigating the conspiracy and the expenses associated with obtaining legal advice and taking steps to set aside the agreement were valid claims of pecuniary loss. This decision clarified the extent to which the plaintiff could recover losses in such cases.
In its judgment, the High Court concluded that the plaintiff had established pecuniary loss in relation to the expenses incurred in setting aside the agreement and in relation to the loss of opportunity claims. The court found that these expenses were directly related to the unlawful conduct and thus constituted recoverable pecuniary loss. The decision provided significant guidance on the scope of recoverable losses in cases involving conspiracy by unlawful means.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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