IMO Kesner
[2014] VSC 86
•12 March 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2012 04832
IN THE MATTER of the Estate of ARMIN KESNER
and
IN THE MATTER of an application pursuant to ss 51(1) and/or 57(a) of the Trustee Act 1958
and
IN THE MATTER of an application pursuant to s 103(1) of the Transfer of Land Act 1958
| JUDITH SAURO | Plaintiff |
| v | |
| CHAYA LEIBOWITZ RABBI YEHUDA MOSHE KARPFEN ARTHUR ROSENSTEIN THE REGISTRAR OF TITLES | Defendants |
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JUDGE: | LANSDOWNE As J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 25 February 2014 | |
DATE OF JUDGMENT: | 12 March 2014 | |
CASE MAY BE CITED AS: | IMO Kesner | |
MEDIUM NEUTRAL CITATION: | [2014] VSC 86 | |
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FOREIGN LAW — Service in Israel — Hague Convention — Recognition of compromise agreement entered into in Israel — Recognition of grant of probate in Israel — Vesting order to give effect to compromise — Supreme Court (General Civil Procedure) Rules 2005 rr 7.01, 7.03, 7.04, 80.10 — Trustee Act 1958 s 51 — Administration and Probate Act 1958 ss 81 and 88 — Foreign Judgments Act 1962 (Vic) — Foreign Judgments Act 1991 (Cth).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Dr G. Moore | Harry Szmerling & Co Lawyers |
| For the Defendants | No appearance |
HER HONOUR:
Introduction
This matter came before me for trial, the plaintiff seeking final orders pursuant to an originating motion filed 23 August 2012. By that originating motion, the plaintiff seeks to give effect, insofar as they relate to her, to orders made in Israel arising out of a settlement of disputed litigation concerning her late father’s will. All parties to that litigation agreed in a document entitled “Compromise” dated 14 June 1993 that the deceased’s real estate in Victoria, a property at 264-266 St Kilda Road, St Kilda, would be transferred to the plaintiff. In return, she gave up any claim to the balance of her late father’s estate in Israel, which was where he died and made his last will. The compromise agreement was given effect to by orders made in Israeli courts on 14 June 1993 and 24 November 1996.
The balance of the deceased’s estate was distributed many years ago, but the real estate has never been transferred to the plaintiff. The plaintiff now seeks orders to achieve that outcome.
The defendants to the proceeding are the principal alternative claimant to the plaintiff’s father’s estate, Ms Leibowitz (who claimed to be a partner of the deceased) and, as second and third defendants, the executors of the deceased’s estate pursuant to order of the Israel District Court made 24 November 1996. The fourth defendant is the Registrar of Titles.
The originating motion, summons on originating motion and three affidavits in support were all filed 23 August 2012, but the matter did not progress and has been successively adjourned since that time due to delay in service on the first three defendants in Israel. Service was effected on those defendants pursuant to Order 80 of the Supreme Court (General Civil Procedure) Rules 2005 (“the Rules”), which deals with service under the Hague Convention (“the Convention”).
The proceeding came before me on 19 February 2004, initially for directions, but as the plaintiff was finally in a position to prove service on the first three defendants pursuant to the Convention, she sought, through her counsel, final orders on that day. No appearance had been filed by any party. The fourth defendant, the Registrar of Titles, was served in 2012 and made comment at that time in respect of the proposed orders, indicating that he did not intend to appear. The first three defendants, all served in Israel, had not filed an appearance and did not enter an appearance on 19 February 2014. On that basis, counsel for the plaintiff sought final orders pursuant to the power of an Associate Judge to hear an undefended trial. For the avoidance of any doubt as to my power to hear the matter, I sought and obtained a referral to hear the trial from Cavanough J, the Practice Court judge.
I adjourned the trial part heard on that day to enable the plaintiff to file further evidence as to whether any request had ever been made of the executors to give effect to the transfer of the real estate to the plaintiff. A subsequent affidavit from her solicitor was filed in that regard and the trial was concluded on 25 February 2014. I made orders as sought by the plaintiff on that day, but indicated that as they were final orders I would also publish reasons. These are those reasons.
Procedural requirements
The originating motion was served out of Australia without order of the Court. That is permitted pursuant to r 7.01 of the Rules in a number of circumstances that apply to this proceeding. They include the circumstances described within r 7.01(1)(a) (the whole subject matter of the proceeding is land situate within Victoria); (b) (the compromise agreement which concerns land in Victoria is sought to be construed and enforced in the proceeding); and (e) (the proceeding is for the execution, as to property situate in Victoria, of the trusts of a written instrument, two of the defendants are the trustees and the written instrument ought to be executed according to the law of Victoria). Where originating process is served out of Australia pursuant to r 7.01, r 7.02 requires the originating process to contain an indorsement stating the facts and the particular paragraph of r 7.01 that is relied upon in support of service out of Australia. The plaintiff neglected to comply with this rule.
I am satisfied, however, that in the interests of justice it is appropriate to dispense with compliance with that requirement. Counsel for the plaintiff has referred me to two authorities[1] to the effect that failure to comply with the requirement results in an irregularity only, and compliance may be dispensed with in the interests of justice where the facts bringing the matter within one of the paragraphs of r 7.01 appear sufficiently from the document served. That is the case here.
[1]Fujitsu Australia Limited v Dewar Electronics Pty Ltd and anor [2001] VSC 222; Schib Packaging SrL v Emrich Industries Pty Ltd [2005] VSCA 236.
Rule 7.03 permits originating process to be served out of Australia to be served in accordance with the law of the country in which service is effected. In this case, the plaintiff pursued service pursuant to the Hague Convention, which is regulated in the Rules by Order 80. Rule 80.10 deals with the power to enter default judgment following service pursuant to the convention. Although the proceeding before me is not for default judgment, r 80.10 provides an appropriate guideline as to the matters of which I should be satisfied. It requires the Court to scrutinise the certificate of service that has been filed and be satisfied that the method of service adopted was one prescribed by the internal law of the convention country within which the documents were served and that the process was served in sufficient time to enable the defendant to enter an appearance. In the context of default judgment, sufficient time means 42 days from the date specified in the certificate of service in relation to the initiating process as being the date on which service of the process was effected.
I am satisfied, having regard to the certificates of service that have been filed in this proceeding, that the first defendant was served with the originating process on 11 September 2013 in accordance with Israeli law. I am also satisfied that the first defendant was served on 2 February 2014 with notification of the adjournment to 19 February 2014, being the date on which the plaintiff sought to proceed with the trial on an undefended basis. I am satisfied that the second defendant was served with the originating process on 20 March 2013 and with notification of the adjournment to 19 February 2014 on 27 November 2013. I am satisfied that in both instances service was in accordance with Israeli law. I am also satisfied that the third defendant was served on 24 March 2013 with the originating process and on 26 November 2013 with notification of the adjournment to 19 February 2014. Again, in both instances that was in accordance with Israeli law.
It follows that a sufficient time has elapsed from service of the originating process and accompanying material (summons and the original three affidavits) for the entry of an appearance by all the Israeli defendants should they have wished to oppose the proceedings.
Rule 7.04 of the Rules provides that in this situation, i.e. where no appearance is filed by a party served with originating process out of Australia, the plaintiff must seek an order conferring liberty to proceed and the Court may grant that order if satisfied:
(a)that the subject matter of the proceeding, so far as that concerns that party, is within Rule 7.01; and
(b)the originating process was duly served on that party.
It follows from what I have expressed earlier that I was satisfied of both of those matters and, accordingly, granted leave to proceed.
In her originating motion, the plaintiff sought declarations that the compromise agreement and the two Israeli judgments were valid and binding according to their respective terms pursuant to the laws of the State of Israel; that the compromise agreement is valid and binding as a contract according to its terms pursuant to the laws of the State of Victoria and, accordingly, the plaintiff is entitled to be registered as the sole proprietor of the real property in question; an order pursuant to s 51(1) of the Trustee Act 1958 and/or in equity vesting the property absolutely in the plaintiff and various alternative orders, including an order pursuant to s 103(1) of the Transfer of Land Act1958 directed to the Registrar of Titles requiring amendment of the register. As indicated earlier, the Registrar of Titles made comment on the orders as sought and suggested a slightly different course. In accordance with those suggestions, the plaintiff no longer seeks the declarations earlier sought and seeks only an order pursuant to s 51 of the Trustee Act1958 vesting in her all of the right title and interest in the property in question, together with orders directed to the Registrar of Titles that he cancel the current Certificate of Title, create a new folio in the register and a new Certificate of Title for the property and a declaration that the plaintiff is the person entitled to delivery of that new Certificate of Title. The orders directed to the Registrar are sought because the plaintiff deposes that the original Certificate of Title cannot be located.
Facts
The property in question was acquired by the deceased and his then wife in 1955. Following his wife’s death in 1977, the deceased was registered as the surviving proprietor on 17 February 1978. The extract from the registrar exhibited to the affidavit of Judith Sauro, sworn 20 August 2012, shows that the property has been, since that time, unencumbered. Ms Sauro deposes that she is not aware of the whereabouts of the physical Certificate of Title to the land.
The deceased emigrated to Israel in March 1981, where he made two wills, one on 17 May 1989 and a later will on 26 January 1990. The deceased died in Israel on 18 February 1990. By the first will made in Israel, the deceased appointed three executors, two of whom are the second and third defendants. The other executor died prior to the commencement of these proceedings. By this will, the deceased devised the land to the plaintiff absolutely.
By his later will, the deceased appointed the first defendant his executor and bequeathed her his entire net estate for her own use absolutely.
Proceedings were commenced in Israel as between the first defendant, the second defendant (as executor of the first will) and various other parties. The proceedings were eventually settled by a compromise agreement entered into in Israel shortly before 14 June 1993 which contained a provision that the land was to be transferred to the plaintiff absolutely.
The compromise agreement was given effect by an order made by Judge Kling in the District Court of Tel Aviv on 14 June 1993. The effect of that judgment was that the estate of the deceased be administered in accordance with the compromise agreement. On 24 November 1996, a different judge in the District Court of Tel Aviv issued a decree granting probate of the first will, without derogating from Judge Kling’s judgment or from the compromise agreement. The remaining executors of the first will are the second and third defendants.
By his affidavit sworn 20 February 2014, the solicitor for the plaintiff deposes that it was not possible to secure registration in Victoria of either the judgment of Judge Kling or the grant of probate, and nor was it possible in Victoria to secure the re-sealing of the grant of probate in reliance on s 81 of the Administration and Probate Act 1958. For that reason, he deposes that he did not make any request on behalf of the plaintiff of the second and third defendants that they execute an instrument of transfer to the property or that they take any other step to convey the property to the plaintiff.
Applicable law
Section 51 of the Trustee Act 1958 empowers the Court to make an order, called a ‘vesting order’ which has effect as provided in s 58 of that Act. Such an order may be made in any of the circumstances provided for in s 51(2) of the Trustee Act. The circumstances now relied upon by the plaintiff are s 51(2)(f), which applies where a trustee is out of the jurisdiction of the court, and paragraph (o), which applies where property is vested in a trustee and it appears to the Court to be ‘expedient’ to make a vesting order.
The effect of section 58(2) is that if a vesting order was made under either of these paragraphs it would have the same effect as if the trustees in question, here the surviving executors who are the second and third defendants, had executed a conveyance to the effect intended by the order, ie a transfer of their interest in the property to the plaintiff.
Discussion
I am satisfied that it is appropriate to make the vesting order sought pursuant to s 51(2) paragraph (o). My reasons for this conclusion are as follows.
The extract from the register exhibited to the affidavit of Judith Sauro shows that the property remains registered in her late father’s name. According to Victorian law, for the property to be transferred to her, the usual process would be registration in the name of the executors of her father’s will and then be a transfer to her pursuant to that will. This would require recognition of their status as executors by a grant of probate conferred or re-sealed in Victoria.
In this instance, I accept the submission of counsel for the plaintiff that that process is not possible. Sections 81 and 88 of the Administration and Probate Act 1958 provide for the re-sealing of foreign grants of probate in Victoria. They require, however, that the foreign state in question have been recognised by proclamation within Australia. Counsel for the plaintiff has examined the question and states that there is no such proclamation in respect of the state of Israel. I accept that submission.
An alternative course that may have been available would be by registration of the judgment of the District Court of Tel Aviv giving effect to the compromise agreement. I accept the submission of counsel for the plaintiff that this course is also not available to the plaintiff. Registration of a foreign judgment pursuant to the Foreign Judgments Act 1962 (Vic) applies only in respect of money judgments[2]. Accordingly, that Act could not apply to the judgment of the District Court to give effect to the compromise, as the compromise and order do not provide for the payment of any money to the plaintiff.
[2]By virtue of s.4(3)(b) of that Act.
Registration of non-money judgments is provided for by the Foreign Judgments Act 1991 (Cth). Part 2 of that Act provides for the reciprocal enforcement of judgments, including non-money judgments, by way of regulations specifying the country in question, the courts of that country, the kinds of proceedings and the kinds of non-money judgments to which the Part extends. Section 5(8)(c) provides that Part 2 does not apply to non-money judgments -
of a particular kind given in a court in proceedings of a particular kind before the day on which the regulations apply this Part 2 to non-money judgments of that kind given in that court in proceedings of that kind.
The judgment giving effect to the compromise was given by the District Court of Tel Aviv on 14 June 1993. Regulations were made extending Part 2 to the District Court of Israel on 25 June 1993. The effect of s 5(8)(c) is that that judgment of 14 June 1993 cannot be registered in Australia as it was given before the date of proclamation of the regulation.
It follows that the court order in Israel giving effect to the compromise agreement cannot be registered for the purpose of enforcement in Victoria, and nor can the grant of probate without derogation from that judgment be re-sealed in Victoria.
The making of a vesting order pursuant to s 51(2)(o) requires that the property be “vested” in a trustee. Counsel for the plaintiff did not direct any submissions directly to this requirement, and in particular as to whether this requirement itself would require recognition of the foreign grant of probate. To require it to do so could have the effect of making the plaintiff’s dilemma irremediable. I do not construe the requirement in that way. I consider that for the purposes of the application of that paragraph, the Court can take into account the foreign grant of probate as vesting the real estate in the executors appointed under Israeli law.
Counsel for the plaintiff also relied on s 51(2)(f) as conferring jurisdiction to make the vesting order. That applies where the trustee is “out of the jurisdiction of the Court”. No submissions were made as to the meaning of this phrase, and in particular whether it applies where proceedings have been served out of Victoria on the trustees and leave to proceed has been given. In the absence of such submissions, I consider that it is preferable to base the exercise of the vesting power on expedience, without determining whether or not the second and third defendants are “out of the jurisdiction of the Court” in a jurisprudential sense. Certainly as a matter of practicality, if not law, enforcement of any order made directly against them may be difficult, thus establishing a further ground of expedience.
In determining that it is expedient to make the vesting order I also take into account that the compromise was entered into more than 20 years ago. The plaintiff deposes that she has collected the rent from the property and applied it pursuant to her late father’s wishes (initially to the outgoings on the property, and then for her own use) for an even longer period – ever since he emigrated to Israel. There is no indication that these acts in relation to the property have been the subject of objection from any other person. Finally, neither the principal other claimant to the estate nor the executors to whom probate was granted have sought to oppose the plaintiff’s application. In all these circumstances, an order directly vesting the property in the plaintiff is expedient and the appropriate order to make.
Having regard to the evidence of the plaintiff that the original certificate of title cannot be located, the other orders sought are necessary to give effect to the vesting order. The Registrar of Titles himself suggested these orders by way of mechanics and I am satisfied that they are appropriate.
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