Distinctive FX Pty Ltd (ACN 075 098 609)& Ors v Elizabeth Anne Van Der Slot
[2016] VSCA 39
•11 March 2016
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2016 0022
| DISTINCTIVE FX PTY LTD (ACN 075 098 609) AND ORS | Applicants |
| v | |
| ELIZABETH ANNE VAN DER SLOT | Respondent |
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| JUDGES: | BEACH and McLEISH JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 9 March 2016 |
| DATE OF JUDGMENT: | 11 March 2016 |
| MEDIUM NEUTRAL CITATION: | [2016] VSCA 39 |
| JUDGMENT APPEALED FROM: | Distinctive FX Pty Ltd v Van Der Slot (Unreported, Supreme Court of Victoria, Elliott J, 5 February 2016) |
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INJUNCTIONS – Interlocutory injunction – Freezing order – Injunction over life insurance proceeds pending trial – Trust property – Application for leave to appeal against order permitting access to life insurance proceeds – Interlocutory order – Prima facie case – Protection of trust property – Recoverability of trust property – Discretionary judgment –Foskett v McKeown [2001] 1 AC 102; Metropolitan Petar v Macedonian Orthodox Community Church St Petka Inc [2006] NSWCA 277; and Palmer v MacDonnell Shire Council (2011) 29 NTLR 90 referred to – Application for leave to appeal refused.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Ms C M Kenny QC with Mr A F Solomon-Bridge | Millens Pty Ltd |
| For the Respondent | Mr P D Crutchfield QC with Mr J Kohn | Tony Hargreaves and Partners |
BEACH JA
McLEISH JA:
Introduction
The applicants are the plaintiffs in a proceeding in the Trial Division in which they seek to recover various sums alleged to have been misappropriated from them. The respondent is the second defendant in that proceeding. There is an ongoing dispute between the applicants and the respondent concerning the respondent’s ability to deal with the proceeds of a life insurance policy that had been taken out on the life of the respondent’s deceased husband.
Pursuant to orders previously made in the Trial Division, the proceeds of the life insurance policy have been paid into a trust account and made the subject of a freezing order. On 11 September 2015, the trial judge made orders permitting the respondent to have access to the proceeds of the life insurance policy to pay up to $2,500 per week on account of expenses and to pay up to the sum of $373,247 on account of the respondent’s legal expenses (without prejudice to the respondent’s right to seek a further sum for costs at some future time). Those orders were the subject of a successful appeal to this Court (‘the appeal judgment’).[1] The orders were set aside, and the issue of the respondent’s ability to access the proceeds of the life insurance policy again became one for the Trial Division.[2]
[1]Distinctive FX Pty Ltd v Van Der Slot [2015] VSCA 328 (‘Appeal Reasons’).
[2]Appeal Reasons [55].
On 5 February 2016, the issue of the respondent’s ability to access the proceeds of the life insurance policy came on for hearing again before the trial judge. After hearing argument, the judge made orders granting the respondent access to the proceeds of the life insurance policy to pay the sum of $2,500 per week for expenses and an amount for legal expenses (not then quantified). On 4 March 2016, the judge made an order quantifying the costs, and permitting the respondent to pay up to a sum of $191,177.35 on account of legal expenses (again without prejudice to the respondent’s right to seek a further sum for costs at some future time).
The applicants now seek leave to appeal against those parts of the orders made by the judge on 5 February and 4 March 2016, that permit the respondent to pay the weekly amount ordered and the costs referred to from the proceeds of the life insurance policy. Additionally, the applicants seek leave to appeal an order made on 5 February 2016, permitting the respondent to pay her costs of the present application for leave to appeal (and her costs of any appeal, if leave is granted), up to $60,000, from the proceeds of the life insurance policy. Specifically, the applicants seek leave to appeal (and to appeal if leave is granted) against paragraphs 2 and 5 of the judge’s orders made on 5 February 2016, and paragraph 2 of the judge’s orders made on 4 March 2016.
This is the hearing of the applicants’ application for leave to appeal and (if leave is granted) the hearing of the appeal.[3]
[3]The President of the Court of Appeal has determined, pursuant to s 11(1A) of the Supreme Court Act 1986 that two judges of appeal constitute and may exercise all of the jurisdiction and powers of the Court of Appeal in this proceeding.
Background
The proceeding in the Trial Division was commenced in July 2013. The orders made by the judge on 11 September 2015 followed judgments delivered by his Honour on 22 June 2015 (‘the first judgment’)[4] and 31 August 2015 (‘the second judgment’).[5] The relevant background of this proceeding can be found in those two judgments.[6]
[4]Distinctive FX Pty Ltd v Wright [2015] VSC 299 (‘First Reasons’).
[5]Distinctive FX Pty Ltd v Wright (No 2) [2015] VSC 454 (‘Second Reasons’).
[6]In fact, as the judge noted in the second judgment (Second Reasons, [1]), as at 31 August 2015 at least 20 interlocutory orders had been made in the proceeding since its commencement in July 2013. For further background detail, see also Distinctive FX Pty Ltd v Wright (No 3) [2015] VSC 482.
The applicants sought leave to appeal from the orders made on 11 September 2015 on the following grounds:
1.The learned trial judge erred in law and fact in holding that the Appellants might only be entitled to a proportion of the Life Insurance Proceeds in circumstances where it was incumbent upon the Respondent to demonstrate that legitimate moneys had been used to pay for the policy to claim a proportionate share of the proceeds, and where the Respondent had put forward no evidence which might suggest that legitimate moneys had been used to pay for the policy.
2.The learned trial judge erred in fact and in law in the evaluation of the balance of convenience in finding and/or holding that:
(a)to defend the proceeding properly, it was necessary for the Respondent to access the Life Insurance Proceeds;
(b)the sale of the Respondent’s personal assets would be insufficient to fund her ongoing legal expenses and legal costs;
(c)the Respondent had no assets other than household and personal effects, jewellery and a car (but rather should have found that, in addition to those assets, she had $47,051.84 in superannuation); and
(d)the Respondent should have access to the Life Insurance Proceeds even though she had not established on the evidence that there were no other funds or assets available to her.
3.In permitting the Respondent to pay the fees of senior counsel from the Life Insurance Proceeds, the learned trial judge erred in law in the evaluation of the balance of convenience by taking into account an irrelevant consideration, namely that it was in the interests of the Court and the administration of justice that senior counsel be briefed.
4.The learned trial judge erred in law when weighing the balance of convenience:
(a)in failing to give predominant consideration to the Respondent’s inability to replenish the Life Insurance Proceeds; and
(b)in failing to draw a distinction between payment of the Respondent’s past costs and future costs.
5.The learned trial judge erred in law in the evaluation of the balance of convenience in:
(a)not making a finding about the strength of Respondent’s defence;
(b)taking into account hardship in the absence of such a finding; and
(c) taking into account irrelevant hardship.
6.Refusal of the injunction by the learned trial judge was, upon the facts, plainly unjust or unreasonable.
On 7 December 2015, this Court[7] delivered the appeal judgment. For the reasons given in the appeal judgment, the Court granted the applicants leave to appeal and allowed the appeal on ground 1. All of the applicants’ other grounds were rejected. In allowing the appeal, the Court said:
In our view, with respect, the judge erred by approaching the interlocutory application on the basis that the extent to which the life insurance premiums might have come from legitimate sources remained uncertain.[8] The applicants were correct to contend, in accordance with Foskett, that in the absence of evidence to the contrary, the whole of the proceeds were to be taken to be trust monies. The respondent has provided no evidentiary material showing that it was arguable that any of the premiums were paid out of legitimate funds. She had the opportunity of doing so, and then applying to the Court to allow access to the life insurance proceeds.
While we acknowledge that the judge correctly stated the principle in Foskett, we do not think, in light of the emphasis he placed on the uncertainty of the ultimate state of the evidence, that he correctly applied that principle. On the evidence as it stood, it was necessary to proceed on the basis that the whole of the proceeds were trust monies.[9]
[7]Beach and McLeish JJA and Ginnane AJA.
[8]See Distinctive FX Pty Ltd v Wright (No 2) [2015] VSC 454 (‘Second Reasons’), [34].
[9]Appeal Reasons [49]–[50] (citation in original).
On 5 February 2016, when the matter returned to the trial judge, the respondent again sought orders permitting her access to the life insurance proceeds for the payment of $2,500 per week on account of expenses and for the payment of her legal costs in defending the applicants’ proceeding. In support of her application, the respondent filed additional affidavit material (an affidavit of the respondent sworn 22 January 2016[10] and an affidavit of James Maitland sworn 3 February 2016). The applicants also filed additional affidavit material (an affidavit of Mario Salvo sworn 3 February 2016). After making rulings about evidence and hearing submissions, the trial judge delivered an ex tempore ruling on the respondent’s application.[11]
[10]We note for the sake of completeness that in this affidavit the respondent deposed to having only transferred the sum of $1,820 per week (rather than $2,500 per week) as a result of her entitlement to a Newstart allowance.
[11]Distinctive FX Pty Ltd v Van Der Slot (Unreported, Supreme Court of Victoria, Elliott J, 5 February 2016) (‘Third Reasons’).
The third reasons
The judge commenced the third reasons by saying:
Save to the extent necessary to express my reasons on the present application, I will not repeat what is stated in the earlier judgments [the first judgment and the second judgment] as the parties are entirely familiar with their contents.
The judge then noted that the appeal to this Court had been successful because the Court of Appeal had concluded from a reading of [34] of the second judgment that the judge had not applied the principle in Foskett v McKeown.[12] However, the judge then said:
In fact, when I decided the application on 31 August 2015 with the delivery of oral reasons, and subsequently published my written reasons, that is precisely the basis upon which I thought I was proceeding.
[12][2001] AC 102 (‘Foskett’).
The judge continued:
Whilst there was no evidence from the second defendant [respondent] to weaken the prima facie case made out by the plaintiffs [applicants], the fact remains that not all premiums for the life insurance policy had been accounted for by the plaintiffs as coming from the alleged misappropriated funds.
The judge then said that he would continue to proceed on the basis of the principles stated in Foskett.
Next, the judge turned to the evidence. The judge discussed the evidence that had been filed subsequently to the Court of Appeal’s decision. The judge said:
I now turn to the state of the evidence before me, mindful of the fact that I am not in a position to make any final findings of fact on an application such as this, and that their Honours found no error with each of the other matters taken into account in the 31 August 2015 judgment [the second judgment].
The second defendant [respondent] has filed a further affidavit in which she seeks to set out an account of the relevant events that attempts to explain, to a greater or lesser extent, how and why her late husband caused the relevant payments to be made. It refers to sources of income, in addition to payments from the plaintiffs, that were allegedly available to the second defendant and her late husband and to moneys that were paid into various accounts. The affidavit also updated some earlier evidence concerning the value of the second defendant's assets.
I do not propose to go into any detail concerning much of this affidavit. Large parts of the affidavit were inadmissible and entirely speculative. I allowed some of the affidavit to be admitted under s 136 of the Evidence Act 2008 (Vic) to meet the suggestion previously made by the plaintiffs, as I understood it, that the second defendant had not gone on oath to state that the plaintiffs' case was incorrect.
The remainder of the affidavit relating to the payment of life insurance premiums still left questions as to the source of the funds for those payments. In short, based on the evidence now before the court, I will again proceed on the basis, and exercise the court's discretion on the basis that, prima facie, the plaintiffs have an entitlement to the whole of the life insurance proceeds.
The judge then proceeded to determine the application as follows:
As to the matters relevant to the exercise of the court's discretion, the prima facie position is that the court should protect trust property. I refer to His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand v the Macedonian Orthodox Community Church St Petka Incorporated [2006] NSWCA 277 and also Palmer v MacDonnell Shire Council (2011) 29 NTLR 90.
But as explained in the 31 August 2015 judgment, that position does not preclude the court from granting access to such funds in an appropriate case.
The evidence before me now is largely the same as it was previously, albeit the second defendant has put on some positive evidence. The relevant factual matters are as follows:
1.The second defendant presently has no superannuation funds available to her. The plaintiffs do not rely on this resource as a relevant factor to the exercise of the court's discretion.
2.I referred in paragraph 10 of my judgment of 31 August 2015 to (1) the second defendant’s jewellery, and (2) to her household and personal effects, each of which was said to have a value of $100,000. The second defendant now gives evidence that the market value of her jewellery is between $13,200 and $18,300 and that of her overall household effects is $25,210 to $30,310. In other words, her financial position on the evidence before me now appears to be substantially worse than what it was when I previously considered the matter.
3.Next, there is a reference in the evidence to a car, but I was told by the plaintiffs’ senior counsel they are not seeking orders that would require the second defendant to sell her car.
4.Next, living expenses, addressed in paragraphs 11 to 18 of my previous judgment of 31 August 2015, allowed weekly living expenses of $2,500 if access to the funds in question is to be granted. The Court of Appeal in paragraph 57 held that there was no error on this issue. The position remains unchanged on the evidence.
5.Legal costs were previously dealt with in paragraphs 19 to 24 and in those reasons I expressed the view that, if access to funds is given, legal costs should include the costs of senior counsel on a limited basis as set out in the judgment. Although not deciding the position, in paragraph 58 of its judgment, the Court of Appeal effectively endorsed this approach.
6.Finally, in relation to past costs, paragraph 25 of the earlier judgment addressed that. So far as I can see, the Court of Appeal has not specifically addressed this issue in its judgment but, as it was the subject of the application for leave to appeal, implicitly it is incorporated into their Honours reasons.
That deals with the principal factors relevant to both the second defendant’s position and the funds that are now sought to be accessed.
The Court of Appeal stated that there was no error in any of the considerations that were previously taken into account. Accordingly, without expressly setting out the reasons again, I repeat each of the matters set out in the 31 August 2015 judgment, except for paragraph 34 which I have already addressed above. In excluding paragraph 34 from these reasons, I do not exclude the last sentence. The delay in the plaintiffs making the original application remains a relevant factor: Bradto Pty Ltd v State of Victoria (2006) 15 VR 65, 81–82 [81].
The plaintiffs today submitted that I failed previously to properly take into account the principle that the court should protect trust property, as stated in cases such as His Eminence Metropolitan Petar. That case, amongst others on the point, were expressly referred to in my earlier decision. The Court of Appeal referred to this issue in paragraphs 25 and 28 of its judgment without suggesting any error had been made on the previous occasion in that regard.
To emphasise the point, I repeat paragraph 33 of what I said in my judgment of 31 August 2015:
“I am fully aware that, to the extent that the Life Insurance Proceeds are dissipated, they are unlikely to be replenished by Elizabeth in the event the plaintiffs are successful in this proceeding in establishing their proprietary claim. This is self-evidently unsatisfactory.”
Notwithstanding that fact, and notwithstanding the position as stated in His Eminence Metropolitan Petar in relation to the position generally of preserving trust funds, in my view, for the reasons stated in my judgment of 31 August 2015, excluding paragraph 34 (save for the last sentence), on the balance of convenience it is appropriate and just in this case to allow the second defendant access to the funds (that are prima facie the subject of an entitlement for the plaintiffs) for the purposes of maintaining her family and also to have the means of properly defending herself in this proceeding.
Accordingly, order 3 of the orders made 10 July 2015 will be varied so that the preservation of the life insurance proceeds will be subject to allowances for the second defendant’s living expenses in the sum of $2,500.00 per week and for her legal expenses for this proceeding in the amounts authorised by the court.
As to the amounts to be authorised, I will allow past legal costs as I have previously ruled. I will also give access to meet future costs. The future costs will include senior counsel, but on the limited basis previously stated. However, I will not order a specific amount at this time. Given the lapse of time, I will ask for further evidence to be submitted by the second defendant for costs up to getting this proceeding ready to be set down for trial.
I do not propose to allow costs beyond that stage at this point in time. The matter can be revisited once the matter is ready to be set down for trial. By then, more concrete proposals can be given in relation to both junior and senior counsel and also the amount involved for solicitors.
In light of these reasons, it is unnecessary for me to consider whether there is evidence before the court to show a positive case on behalf of the second defendant concerning the payment of premiums and if so to what extent the second defendant could establish that the premiums were paid from legitimate funds, that is, funds that were not the alleged misappropriated funds the subject of this proceeding.
It is sufficient to say that, based on the plaintiff's evidence, the fact that the relevant bank account was repeatedly in overdraft and the bank statements appear to evidence at least some legitimate funds, that a further basis for granting the application may also have been present on the evidence. I refer to In Re Diplock [1948] Ch. 465 at 521.
The applicants’ proposed grounds of appeal
The applicants seek to set aside those paragraphs of the orders made on 5 February and 4 March that permit the respondent to have access to any of the proceeds of the life insurance policy. The applicants’ proposed grounds of appeal are:
1.The decision by the learned trial judge to vary the injunction was plainly unjust or unreasonable.
2.In varying the injunction to allow the Respondent access to the life insurance proceeds to pay for legal and living expenses, the learned trial judge took into account irrelevant considerations and/or mistook the facts, namely, in taking into account that:
(a) there was little utility in requiring the Respondent to sell the remaining household effects as the Applicants had submitted she should, when the Applicants made no such submission;
(b) if the Respondent was forced to sell her jewellery (which was already protected by the freezing order) and then succeeded at trial damages might not be an adequate remedy, when the Applicants did not submit she should be required to sell her jewellery;
(c) the Respondent had been required to sell the family home, when that fact was not relevant to the exercise of the discretion, and the Applicants had not caused or contributed to the Respondent’s decision to sell the family home.
(d) proper provision out of the trust fund should be made for the Respondent’s children, which was irrelevant generally, and more specifically to the release of funds for the Respondent’s defence costs.
(e) there had been delay on the part of the plaintiffs in prosecuting the proceeding, in the absence of any finding that there was unreasonable delay or prejudice.
3.The learned trial judge erred in law in failing to give predominant consideration to the respondent’s inability to replenish the life insurance proceeds and the court’s duty to be attentive to the protection of trust property.
4.The learned trial judge erred in law by failing to give adequate reasons for decision.
5.Further or alternatively, the learned trial judge erred in law and fact by holding that the Applicants might only be entitled to a proportion of the life insurance proceeds in circumstances where it was incumbent upon the Respondent to demonstrate that legitimate moneys had been used to pay for the policy to claim a proportionate share of the proceeds, and where the evidence put forward by the Respondent was found to be, in large part, inadmissible and entirely speculative, and was otherwise found still to leave questions as to the source of the funds for the payments of the premiums.
Immediately one notices the similarity and equivalences between the current ground 1 and the former ground 6; the current ground 3 and the former ground 4(a); and the current ground 5 and the former ground 1. However, the applicants submit that the apparent similarities are not real, because the decisions sought to be appealed from in each case are fundamentally different: one applying the principles in Foskett and the other having failed to do so.
Analysis
The decision of the trial judge to grant the respondent access to the proceeds of the life insurance policy to pay expenses and legal costs was an interlocutory
discretionary decision that involved aspects of practice and procedure.[13] That said, to the extent that the judge’s orders permit the respondent to spend money that might ultimately be found to belong to the applicants, the judge’s orders have an aspect of finality about them. Specifically, the orders have the capacity to be final in character in respect of moneys, prima facie belonging to the applicants, which the respondent is likely to be unable to repay.
[13]Cf in Re the Will of Gilbert (Deceased) (1946) 46 SR (NSW) 318, 323 (Sir Frederick Jordan); and Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, 177 (Gibbs CJ, Aickin, Wilson and Brennan JJ).
The judge’s reasons for making the orders sought to be impugned are not contained merely in the third reasons. As the judge made plain in the third reasons, the third reasons need to be read in context with the first and second judgments. Further, the third reasons specifically incorporate all of the second judgment, save for a portion of paragraph [34].
A great deal of the applicants’ submissions are premised upon what the applicants contend are propositions that can be derived from the decisions of His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand v The Macedonian Orthodox Community Church St Petka Inc[14] and Palmer v MacDonnell Shire Council.[15] The applicants contend that these two decisions (being decisions of the NSW Court of Appeal and the Northern Territory Court of Appeal respectively) stand for two propositions: first, in the case of the present kind where the property that a party seeks to access is trust property, the Court ‘should be attentive to [the] protection of such property’;[16] and secondly, where the funds are trust funds, the question of the recoverability of such funds is an important factor in determining whether access should be granted.[17] So much may be accepted.
[14][2006] NSWCA 277 (‘Petar’).
[15](2011) 29 NTLR 90 (‘Palmer’).
[16]Petar [85]; and Palmer 99 [36].
[17]Petar [60]; and Palmer 100 [38].
On the application for leave, senior counsel accepted that there was a discretion, but submitted that a proper application of Petar and Palmer compelled the conclusion that it had to be exercised favourably to the applicants. It was submitted that these cases stood for the proposition that the respondent’s inability to replenish the trust fund must be regarded as the ‘predominant’ consideration. Alternatively, it was argued that the facts in those cases were relevantly indistinguishable from the present, and that the Court was bound to follow them unless persuaded that they were plainly wrong.
The reasoning in Petar and Palmer supports neither of these arguments. Neither case purported to state any proposition of law to the effect that the respondent contends. In Petar, the NSW Court of Appeal described the ‘question of recoverability’ of the relevant funds as ‘an important factor in the balance of convenience’.[18] The Court went on to undertake a process which it repeatedly described as a ‘balancing’ exercise.[19] In Palmer, the Court of Appeal of the Northern Territory applied the principles enunciated in Petar, namely that the Court should be attentive to the protection of trust property and consider the risk of injustice to the respondent in having its own property used against it by the opposing parties in the litigation; again, the process was characterised as a balancing exercise.[20]
[18][60].
[19][84]–[86].
[20]99–100 [37]–[40].
Neither judgment attaches ‘predominant’ weight, as a matter of law, to the likelihood that the trust fund will not be able to be replenished. Nor do they hold that, where the trust fund is likely not to be able to be replenished, the risk of injustice to the beneficial owner requires that access to the trust fund be refused. Instead, the cases stand for the two propositions mentioned in paragraph 20 above. Moreover, it has not been shown that the cases are indistinguishable from the present. In substance, the applicants instead argued for a proposition of law which rendered other factual considerations legally irrelevant. We return to these matters in considering ground 3, below.
We turn now to the applicants’ proposed grounds of appeal. We will deal first with proposed ground 2, before turning to proposed grounds 3, 5, 4 and 1.
In proposed ground 2, the applicants make complaint that the judge took into account irrelevant considerations and/or mistook the facts. Five matters are relied upon. None of them have any substance. As to the first two matters, going to the respondent’s household effects and jewellery (sub-paragraphs (a) and (b) of proposed ground 2), it was originally part of the applicants’ case that the respondent should be required to sell all of her assets (including jewellery) before being permitted access to the proceeds of the life insurance policy. The fact that the applicants abandoned these arguments in the face of additional affidavit material filed by the respondent, after the appeal judgment, is of no moment. In the proper consideration of the respondent’s application, the judge was bound to look at the assets of the respondent that may have been available for realisation to pay expenses and costs. The judge’s reference to these matters does not imply that he mistook the nature of the application being made or took account of irrelevant considerations.
As to the third and fourth matters relied upon, the sale of the respondent’s family home and the need for her to provide for her children (sub-paragraphs (c) and (d) of proposed ground 2), these were matters noted by the judge in the second judgment. They were relevant at least to the question of the respondent’s living expenses, for which the applicants were resisting the respondent having access to the trust fund. Moreover, it is plain from a reading of the second judgment that the statements about which complaint is now made[21] were of little (if any) real moment in the judge’s reasoning process.
[21]Second Reasons [35].
As to the fifth matter relied upon (sub-paragraph (e) of proposed ground 2), we think the judge was entitled to conclude that there has been a delay on the part of the applicants prosecuting this proceeding. While the applicants sought to defend the amount of time this proceeding has been on foot, by reference to a chronology which shows many steps being taken at regular intervals, we are not persuaded that the judge’s criticism of the conduct of this proceeding by the applicants was unwarranted. Many more complicated proceedings in the Trial Division are heard and determined in a fraction of the time for which this proceeding has now been on foot.
We turn now to proposed ground 3. For the reasons already set out, the ground is misconceived in so far as it asserts that the judge was required to give ‘predominant’ consideration to the respondent’s likely inability to replenish the trust. In our opinion, the judge correctly applied the principles in Petar and Palmer. In the third reasons, he expressly stated that he took into account the respondent’s inability to replenish the life insurance proceeds. Further, as we have said, the judge was plainly aware of the Court’s duty to be attentive to the protection of trust property. We have no reason to doubt that the judge appropriately took into account the matters referred to in proposed ground 3.
Proposed ground 5 makes a similar complaint as was made when the applicants successfully argued in this Court that the orders of 11 September 2015 should be set aside. It is submitted that it was incumbent on the respondent to demonstrate that legitimate moneys had been used to pay for the policy, and that the evidence she had advanced had failed to do so. If by this it is meant to contend that the judge was bound to refuse the application unless the respondent discharged the suggested burden, then the ground fails for the same reasons as ground 3. If it is suggested that the judge again failed to apply the correct principles, the ground is plainly untenable. There can be no doubt that the judge has applied himself to the relevant principles — and in particular those contained in Foskett, Petar and Palmer.
We turn now to proposed ground 4 (the complaint that the judge failed to give adequate reasons). The applicants submit that ‘in light of the significance of the decision, the trial judge’s reasons were inadequate’. We disagree.
Across three separate judgments, the judge gave careful consideration to all of the issues and arguments put to him by the parties. The judge’s reasons disclose a clear path of reasoning to the conclusion reached by his Honour. The judge’s decision was a discretionary decision, requiring an exercise of evaluative judgment, once all the relevant matters had been taken into account and properly weighed. Frequently (as in the present case) such decisions are not susceptible of any great explication. There is no difficulty in understanding the reasons the judge gave for the 11 September 2015 orders, or the manner in which the judge relied on most of those reasons in the course of explaining the third judgment. The complaint that the third reasons (which, as we have noted, incorporate the first judgment and the second judgment) failed to disclose a path of reasoning is wholly without merit.
Finally, we turn to proposed ground 1. This ground, as argued, involved three strands of reasoning. Each must be rejected.
First, it was submitted that the decision was plainly unjust or unreasonable because the judge had found, at least on a prima facie basis, that the respondent had helped to facilitate some of the misappropriations from which insurance premiums had been paid, and that she had been dishonest in statements she had made regarding her income. It was put that it was ‘plainly unjust’ to allow ‘an accessory’ to enjoy the fruits of her wrongdoing.
This amounts to a challenge to the merits of the decision. The ‘plainly unjust or unreasonable’ formulation derives from the grounds articulated in House v King[22] for interfering with an exercise of discretion. The formulation may be compared with other descriptions of decisions whose unreasonableness is such that the decision-maker has exceeded the bounds of his or her lawful authority.[23] It cannot be said that it was not reasonably open for the judge to place greater weight on matters favouring granting access to the trust fund than to the consideration now relied upon. In that regard, it may be noted that the consideration said to render the decision plainly unjust or unreasonable was not relied upon when the matter was before the primary judge.
[22](1936) 55 CLR 499.
[23]See Minister for Immigration and Border Protection v Stretton [2016] FCAFC 11 [4]–[5].
Secondly, it was argued that the decisions in Petar and Palmer compelled the conclusion for which the applicants contend, especially given that, it was submitted, the respondent had demonstrated by the inadequacy of the evidence upon which she relied that she lacked an adequate defence. As to the status of these authorities, enough has already been said. As to whether the respondent lacks an adequate defence, neither the primary judge nor this Court is in a position to determine this question on the current material. No application for summary judgment has been brought by the applicants. Short of a finding that the applicants are entitled to summary judgment, the adequacy of the respondent’s defence is only one factor bearing on the exercise of the discretion. In any event, the judge plainly had regard to the evidence advanced by the respondent.
Finally, it was contended that the question of reasonableness should be evaluated on the basis that the only matters in the balance were the fact that the trust property was unlikely to be replenished and that the applicants had been guilty of delay. If correct, this might have made it easier to make out the claim of legal unreasonableness. But on a fair reading of the judge’s reasons, much more was ‘in the balance’. He made reference, among other things, to the desirability, both for the respondent and the administration of justice, that the respondent’s legal case be adequately presented to the Court. The general financial circumstances of the respondent were relevant to her ability to fund her living expenses and her legal costs. On the applicants’ own case, the strength of the respondent’s case and her involvement in the wrongdoing of her late husband were also relevant. The judge also referred to the overarching purpose in the Civil Procedure Act 2010, namely to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.[24]
[24]Sections 7, 8.
In conclusion, we are quite unpersuaded that the orders made by the judge were plainly unjust or unreasonable. Different judges may have come to different conclusions in respect of the respondent’s application. We may have come to a different conclusion ourselves. But that is not to say that the judge’s conclusion was unjust or unreasonable. For the reasons given by the trial judge, and noting that neither Petar nor Palmer mandated a conclusion in favour of the applicants, we think it was open to the judge to make the orders that he made. Proposed ground 1 is thus without merit.
We observe in conclusion that the applicants also contended that the judge had erred in treating the issue of delay as a factor in the balance of convenience, rather than as a matter going only to the exercise of discretion once that balance had been determined. We are far from persuaded that this is so. The judge cited the very decision upon which the applicants rely to assert error.[25] In any event, there can be no suggestion that anything turned on the manner in which the judge approached the issue of delay in this matter.
[25]Bradto Pty Ltd v Victoria (2006) 15 VR 65, 81-2 [81].
Conclusion
The proposed appeal has not been shown to have a real prospect of success. Accordingly, leave to appeal must be refused.[26]
[26]Supreme Court Act 1986, s 14C.
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