Leventis & Leventis (No 4)
[2023] FedCFamC1F 58
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Leventis & Leventis (No 4) [2023] FedCFamC1F 58
File number MLC 7710 of 2018 Judgment of WILSON J Date of judgment 14 February 2023 Catchwords FAMILY LAW – EVIDENCE – admissibility of evidence at trial – husband's parents as second and third respondents seeking to adduce evidence of a witness in an affidavit prepared on the Sunday prior to the Monday start of trial – the failure to provide the affidavit earlier and in accordance with trial directions unexplained – Aon Risk Services Australia Ltd v Australian National University principles applied – no medical evidence to explain the late provision of affidavit evidence – whether the failure to provide the witness's evidence earlier and in accordance with trial directions was a deliberate tactical decision – held affidavit inadmissible.
FAMILY LAW – TRUSTS AND TRUSTEES – evidence sought to be adduced by the husband’s parents as second and third respondents about the reason why the Leventis Family Trust was created and to interpret its terms – held, in accordance with Byrnes v Kendle (2011) 243 CLR 253, evidence ruled inadmissible.
Legislation Family Law Act 1975 (Cth) ss 69ZT, 79, 79(1)(a) and 79(2)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Rule 1.04
Cases cited Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Ashby v Slipper [2014] FCAFC 15
Ashton v Pratt (2015) 88 NSWLR 281
Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588
Australian Competition and Consumer Commission v Metcash Trading Ltd (2011) 198 FCR 297
BNMB Transport Pty Ltd v Mercedes-Benz Australia Pacific Pty Ltd & Anor [2016] FCCA 2047
Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1
Byrnes v Kendle (2011) 243 CLR 253
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission (ACCC) (2007) 162 FCR 466
Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588
Girlock (Sales) Pty Ltd v Hurrell (1982) 149 CLR 155
Harris v Dewell (2018) 58 Fam LR 313
Holloway v McFeeters (1956) 94 CLR 470
Honeysett v R (2014) 253 CLR 122
Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896
J & A Vaughan Super Pty Ltd (Trustee) v Becton Property Group Ltd [2014] FCA 581
Jenyns v Public Curator (Qld) (1953) 90 CLR 113
Jess & Jess (No 3) [2023] FedCFamC1A 2
Jess & Jess (No 4) [2022] FedCFamC1F 530
John Buttery & Co v A & J Inglis (1877) 5 R 58
Jones v Dunkel (1959) 101 CLR 298
Kauter v Hilton (1953) 90 CLR 86
Kennon v Spry (2008) 238 CLR 366
Lithgow City Council v Jackson (2011) 244 CLR 352
Luxton v Vines (1952) 85 CLR 352
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Mills v Sportsdirect.com Retail Ltd [2010] 2 BCLC 143
Rajavade & Rajavade [2023] FedCFamC1F 32
Prenn v Simmonds [1971] 1 WLR 1381
Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989
Smith v Lucas (1881) 18 Ch D 531
Stanford v Stanford (2012) 247 CLR 108
Richard Evans & Co Ltd v Astley [1911] AC 674
Taylor v Johnson (1983) 151 CLR 422
The Matter Of Petrolink Pty Ltd, Re; Smith v Bone [2014] FCA 1024
Tinkerbell Enterprises Pty Ltd v Takeovers Panel and Ors [2012] FCA 1272
Trident General Insurance Co Ltd v McNiece Brothers Pty Ltd (1988) 165 CLR 107
Trustees of the Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278
Twinsectra Ltd v Yardley [2002] 2 AC 164
Articles cited Chief Justice James Allsopp, “The judicialisation of values” [2018] FedJSchol 14
Joshua D. Wilson, Contractual Composition, Construction and the Matrix of Fact (2003) 89 Australian Construction Law Newsletter 36
Division Division 1 First Instance Number of paragraphs 106 Date of last submissions 14 February 2023 Date of hearing 6, 7, 8, 9, 13 and 14 February 2023 Place Melbourne Counsel for the applicant Mr L. Glick KC with Dr E. Kelly Solicitors for the applicant Lander and Rogers Counsel for the first respondent Dr R. Ingleby Solicitors for the first respondent Vadarlis & Associates Counsel for the second and third respondents Mr I. R. Jones KC with Ms R. Matson Solicitors for the second and third respondents Pauline Madden Conveyancing & Legal ORDERS
MLC 7710 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN MS LEVENTIS
Applicant
AND MR LEVENTIS
First Respondent
MR B LEVENTIS
Second Respondent
MS C LEVENTIS
Third Respondent
order made by
WILSON J
DATE OF ORDER
14 FEBRUARY 2023
THE COURT ORDERS THAT:
1.The affidavit of Mr N made 5 February 2023 is inadmissible and it will not form part of the evidence in this case.
2.Leave is refused for Mr N to make, file and serve an affidavit in the form of the document styled "unsworn evidence of [Mr N]."
3.Evidence about the advances made by the second and third respondents is admissible insofar as it goes to their claim that they are owed over $2 million.
4.Evidence about a second, different version of the Leventis Family Trust is relevant so as to get before the court the best evidence about the correct version of the trust deed of the Leventis Family Trust.
5.The three documents dated 6 February 2011 are relevant to the husband's contentions that he resigned as trustee.
6.The further hearing of the trial of this proceeding is fixed to resume at 10:00am on 8, 9, 10, 11, 15, 16, 17 and 18 May 2023.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
WILSON J
Following detailed openings in the trial of this proceeding by Mr L. Glick KC who appeared with Dr Kelly of counsel for the wife, Dr R. Ingleby of counsel who appeared for the husband and Mr I. R. Jones KC who appeared with Ms Matson of counsel, the balance of the first day was consumed by counsel negotiating with a view to resolving evidentiary objections to affidavits filed in the proceeding. They continued with those negotiations until noon on the second day of the trial. At noon on the second day counsel[1] informed me that they had reached an impasse on a matter that went to the admissibility generally of certain issues but also to the admissibility of an affidavit and a proposed affidavit from a witness to be called on behalf of second and third respondents.
[1] Other than Dr Ingleby.
To understand the objections it is necessary to put the debate in context.
This litigation is in two parts - parenting issues as well as a s 79 property adjustment application. The proceeding has suffered a lamentable fate, it having been commenced in 2018. Now five years later, this proceeding has commenced at trial yet it is at risk of faltering by reason of the ruling I make in these reasons.
The relevant orders made to advance this case to trial were as follows –
(a)4 December 2020 consent orders were made fixing the proceeding for trial on 5 July 2021, on which date consent orders were also made to the effect that no affidavit would be allowed into evidence without my leave;
(b)1 July 2021 orders were made granting leave to the second and third respondents to file and rely on a report prepared by Ms J dated 10 June 2021;[2]
(c)on 12 July 2021 orders for the filing of affidavits in relation to a part property application were made by consent;
(d)on 19 July 2021 orders were made requiring the filing and service of an amended initiating application and amended response along with updated trial affidavits and any other affidavit on which any party wished to rely; and
(e)on 4 November 2022 consent orders were made fixing the trial of this proceeding on 6 February 2023.
[2] The fixture of 5 July 2021 was vacated although the date of the order vacating the trial is not readily apparent.
As will be evident from the foregoing, over several appearances all parties in this proceeding were given ample opportunity to file affidavit material in support of the contentions each party sought to advance in this litigation.
On Sunday 5 February 2023, that is to say the day before the fixed commencement date of the trial of this proceeding, on behalf of the second and third respondent for whom Mr Jones KC appeared, an affidavit was circulated and emailed to my associates, there being no leave to do so. It was made by a deponent whose given name was Mr N. For reasons explained by Mr Jones KC as being referrable to Mr N's very poor health, Mr N did not file and serve his affidavit prior to the date on which the second and third respondents’ solicitors circulated the affidavit, whether in accordance with any one of the orders previously made for the filing of affidavit material or at all.
In debate with counsel I raised the curiosity of the second and third respondents seeking leave to rely on the Mr N affidavit at such a late stage of this litigation, literally, on the eve of trial. I told counsel that it seemed odd that an affidavit having the forensic importance that Mr Jones said it had was not filed and served long before the start of the trial. Mr Jones KC submitted that –
(a)he had advised those in his camp to file the Mr N affidavit long before it was in fact filed;
(b)Mr N's health had been so bleak that the task of preparing his affidavit prior to Sunday 5 February 2023 had been near impossible; and
(c)whatever may have been the explanation for any such omission to file the Mr N affidavit prior to 5 February 2023, the fact remained that Mr N's evidence was crucially important to the second and third respondents, without the admission of which their case was irretrievably compromised and prejudiced.
Mr Jones KC informed me during debate on the second day of the trial of this proceeding that he not only wished to rely on the existing affidavit of Mr N but that he wished to have leave to rely on further Mr N information which had not yet been put in affidavit fom but which, when prepared, would be more expansive than was the existing Mr N 5 February 2023 affidavit. To better understand that proposition it was necessary to record the metes and bounds of the existing Mr N affidavit in respect of which the proposed further Mr N affidavit was to be an expansion.
The starting point was Mr N's 5 February 2023 affidavit on which leave was sought to rely. Relevantly paraphrased, it provided as follows –
(a)Mr N had been the accountant for Ms C Leventis and Mr B Leventis (the second and third respondents) for many years as well as the accountant for the Leventis Family Trust for many years;
(b)he currently is a qualified certified practising accountant and a Fellow of the Association of Taxation and Management Accountants;
(c)he has suffered several serious health issues of late by reason of a medical episode in early 2020 which left him with partial sight in one eye and another medical episode in mid-2022 when he lost most of the sight in his other eye;
(d)he suffers from multiple medical conditions;
(e)following surgery in late 2022 he regained some limited sight (although he did not say in respect of which eye);
(f)since 2021 he has dealt with the estate of his mother and since 2022 he has dealt with the estate of this father;
(g)insofar as Mr Leventis deposed to conversations and interactions between Ms Leventis, Ms C Leventis and Mr B Leventis in Mr Leventis' affidavit sworn 1 September 2022, particularly in paragraphs 4 to 6, 8 to 17 and 21 to 25, those conversations are true and correct;
(h)Mr N confirmed and verified the bundle of documents exhibited to the affidavit of Mr Leventis sworn 1 September 2022 (although he did not say what he meant by "confirmed and verified");
(i)The Leventis Family Trust was implemented because Ms C Leventis and Mr B Leventis were expecting a large payment from VicRoads as amount for the compulsory acquisition of their property at 2 D Street, Suburb F;
(j)a family trust was considered by Mr N to be a better option for them for tax purposes;
(k)Mr N was always aware the trust belonged to Mr B Leventis and Ms C Leventis;
(l)each taxation year the wife in this application telephoned Mr N asking how much she and Mr Leventis lost in family taxation benefits because of distributions and taxation paid by Mr Leventis for properties in his name;
(m)the wife calculated that sum each year;
(n)he understood that "this was paid in each year to her" (although he did not give the basis of any such understanding);
(o)Mr N prepared taxation returns for the Leventis Family Trust as well as for Mr Leventis and Mr B Leventis personally and he also prepared draft financial reports in each year; and
(p)taxation returns are lodged with the Australian Taxation Office but financial reports are not lodged and are often amended at a later date.
In debate during the first and second day of the trial of this proceeding, Mr Glick KC submitted that his client took issue with two main aspects of Mr N’s 5 February 2023 affidavit, namely –
(a)conversations to which Mr N deposed; and
(b)the asserted reason for the creation of the Leventis Family Trust.
Before addressing those issues, it is first necessary to make certain observations about the details of the 5 February 2023 affidavit. In no special order of importance –
(a)Mr Jones KC informed me during debate that the affidavit of Mr N made 5 February 2023 was prepared at the insistence of Mr Jones despite instructions given to Mr Jones prior to 5 February 2023 that Mr N would not be making an affidavit in this proceeding;
(b)no medical evidence from a legally qualified medical practitioner had been filed to depose to Mr N’s medical conditions asserted in paragraph 3 of Mr N’s affidavit;
(c)Mr N did not depose to the date when he said he began to suffer from his medical conditions nor did he say in what way any of those conditions may have prevented him from making his affidavit earlier than 5 February 2023;
(d)he did not say how the two medical episodes from which he said he suffered impaired his ability to practise accountancy or to provide advice to his clients in the period from February 2020 to date;
(e)he did not say how his having suffered from two medical episodes impaired his ability to deal with the estate of his late mother during 2021 and his later father on some unspecified date in 2022;
(f)when he deposed in paragraph 4 of his 5 February 2023 affidavit to certain paragraphs of Mr Leventis’ 1 September 2022 affidavit being true and correct as to conversations and interactions with Mr Leventis, Ms Leventis, Ms C Leventis and Mr B Leventis, Mr N did not identify –
(i)which aspect of each such conversation and interaction with each of those four persons was true and correct;
(ii)what component of each such conversation and interaction with each of those four persons was not true and correct;
(iii)what component of each such conversation and interaction with each of those four persons was beyond his knowledge;
(g)Mr N did not say what he meant by the term "confirm and verify" in respect of the bundle of documents exhibited to the affidavit of Mr Leventis made 1 September 2022 nor did Mr N identify which documents in the bundle of documents he could "confirm and verify", whatever that expression meant;
(h)he did not say why he considered that a family trust was a better option for tax purposes for Ms C Leventis and Mr B Leventis;
(i)he did not say on what information he relied when asserting that he was always aware that the trust (being the Leventis Family Trust) belonged to Mr B Leventis and Ms C Leventis;
(j)he did not explain what he meant by his assertion that the "trust belonged to [Mr B Leventis] and [Ms C Leventis]";
(k)in respect of paragraph 5 of his affidavit, Mr N did not give details of when Ms Leventis telephoned him nor of the details of each such conversation; and
(l)further in respect of paragraph 5, Mr N did not give the basis of his understanding that "this was paid" (whatever he meant by the word "this") each year.
Mr Jones KC argued that the objections taken to Mr N's affidavit were little more than complaints as to form. Having regard to the deficiencies in Mr N's affidavit that I have surveyed immediately above, I take the view that those deficiencies went very much beyond mere objections as to form. They were substantive objections.
Before turning to the method proposed by Mr Jones KC to remedy the objections raised about the Mr N affidavit, it became necessary to address a significant broader issue in the context of the case of the second and third respondents, namely, the real reason why those respondents are so keen to ensure that Mr N's evidence is admitted. It must be recorded that several times over the first and second days of the trial of this proceeding, Mr Glick KC was at pains to submit that he raised no issue of fraud in this case, whether in respect of the creation of the Leventis Family Trust or about the circumstances surrounding Mr Leventis’ purported resignation from his role as appointor and trustee. He made that submission even after Mr Jones KC contended that any attempt to impugn the date on which a document was executed (when it is later asserted that the document was not executed on the date it bears) amounts to common law fraud. In debate I raised with Mr Jones my recent decision about aspects of fraud[3] and how in Jess & Jess[4] an appeal from my decision was dismissed,[5] aspects of fraud were similarly addressed. Mr Jones contended that his clients seek to rely on the evidence of Mr N to fortify their evidence to the effect that the Leventis Family Trust was created so as to make provision for Mr B Leventis and Ms C Leventis and that the Leventis Family Trust was not, in fact and in law, to be construed in the manner advance by Mr Glick KC, namely, as holding property of the marriage and therefore amendable to property alteration orders under s 79 of the Family Law Act. Mr Jones submitted that consonant with principles concerning the construction of a contract, in which evidence of surrounding circumstances of the contract's creation may be admissible, so too in the context of the creation of a trust may evidence of the circumstances of the creation of the trust be admissible.
[3] Rajavade & Rajavade [2023] FedCFamC1F 32.
[4] Jess & Jess (No 4) [2022] FedCFamC1F 530.
[5] Jess & Jess (No 3) [2023] FedCFamC1A 2.
The issue was fairly joined at that point. In support of his contentions on point Mr Jones KC relied on the observations of the High Court in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales[6] to contend that evidence of surrounding circumstances can in some circumstances be admissible when determining the meaning and effect of contractual terms. He submitted that evidence of the surrounding circumstances leading to the creation of the Leventis Family Trust went to the matrix of fact and that the court may construe a trust in light of those circumstances.
[6] (1982) 149 CLR 337.
Mr Glick KC resisted any such proposition, arguing instead that the subsequent decision of the High Court in Byrnes v Kendle[7] set out in unambiguous terms the manner in which a deed of trust is to be construed and, consistent with the reasons of the members of the court in that case, evidence of the circumstances of the entry into the deed of trust was inadmissible.
[7] (2011) 243 CLR 253.
Several matters fell from the decision in Byrnes v Kendle. In no particular order they include the following –
(a)French CJ held that the relevant intention is that as manifested by the declaration of trust and that there is no requirement to make any further inquiry into the subjective (or the asserted "real") intention of the settlor;
(b)Gummow and Hayne JJ held that where there is no informality in the creation of a trust (that is to say where the trust is manifested and proved by deed) it is not appropriate to infer intention from language used by the parties, calling in aid the decision in Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd;[8]
[8] (2000) 202 CLR 588.
(c)Gummow and Hayne JJ further held that evidence of the parties' intention in creating the trust, as accepted by the trial judge, was inadmissible;
(d)Gummow and Hayne JJ further held that where an express inter vivos trust concerning land is manifested and proved by some informal writing, any dispute about the absence or presence of the requisite intention, despite inexplicit language is to be resolved by evidence identified as "all the relevant circumstances", citing Kauter v Hilton;[9]
(e)a settlor's subjective intentions in creating a trust are irrelevant, as Gummow and Hayne JJ held in Byrnes v Kendle, citing with approval the holdings of Lord Millett in Twinsectra Ltd v Yardley[10] and Mills v Sportsdirect.com Retail Ltd;[11]
(f)the objective theory of contract formation as espoused in Taylor v Johnson[12] is concerned, not with the real intention of the parties, but with the outward manifestation of those intentions, as Gummow and Hayne held in Byrnes v Kendle, hence the significance of consistency between trust and contract with respect to matters of intention in contract formation and trust declaration;
(g)Heydon and Crennan JJ held that the trail judge's estimate of the parties' evidence concerning subjective intention was irrelevant;
(h)in the construction of trusts, the rules for the construction of contracts apply although the institutions of trust and contract are different, as Heydon and Crennan JJ held;
(i)the same considerations which limit recourse to surrounding circumstances and oral testimony in relation to contracts apply in relation to trusts, citing John Buttery & Co v A & J Inglis,[13] as Heydon and Crennan held;
(j)as applies to contracts so too does it apply to trusts that the search for "criterion" is only a search for intention as revealed in the words the parties used as was held in Smith v Lucas,[14] as Heydon and Crennan held;
(k)a refence to "matrix of circumstances" is a reference to the statements of Lord Wilberforce on contractual interpretation in Prenn v Simmonds[15] and Reardon Smith Line Ltd v Hansen-Tangen[16] as well as to the observations of Deane J in Trident General Insurance Co Ltd v McNiece Brothers Pty Ltd;[17]
(l)the question is what the settlor did, not what the settlor intended, according to Heydon and Crennan JJ; and
(m)subjective intention is irrelevant to the question of whether a trust exists and to the question what are its terms, according to Heydon & Crennan JJ.
[9] (1953) 90 CLR 86, 100.
[10] [2002] 2 AC 164.
[11] [2010] 2 BCLC 143, 158.
[12] (1983) 151 CLR 422, 428.
[13] (1877) 5 R 58, 70.
[14] (1881) 18 Ch D 531, 542.
[15] [1971] 1 WLR 1381, 1384.
[16] [1976] 1 WLR 989, 997.
[17] (1988) 165 CLR 107, 148.
Interestingly, Codelfa was decided in May 1982 and Byrnes v Kendle was decided in August 2011, 29 years later, yet Codelfa was mentioned in Byrnes only in footnote 155. That reference arose from a statement in paragraph 99 of the reasons of Heydon and Crennan JJ where their Honours said the following –
One reason why the examination of surrounding circumstances in order to decide what the words mean (155) does not permit examination of pre-contractual negotiations is that the latter material is often appealed to purely to show what the words were intended to mean, which is impermissible.
Footnote 155 recited that any reconciliation of the opinions in Investors Compensation Scheme Ltd v West Bromwich Building Society[18] and in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales[19] had not yet been undertaken by the High Court. In any event, in the specific context of a deed of trust, the overwhelming preponderance of opinion, it seemed to me, is that a deed of trust is to be construed according to its terms and that subjective evidence of intention of the settlor or any other person is irrelevant. To that end, evidence of intention would include the reason why a deed of trust was created, what a party to the deed expected to achieve by the deed’s operation and how a party to the deed intended the deed to work. The settlor of the Leventis Family Trust was Mr N.[20]
[18] [1998] 1 WLR 896.
[19] (1982) 149 CLR 337.
[20] (CB 242 of 1401).
It will be recalled that Mr Glick's basal submission in relation to the Leventis Family Trust is that it operates in such manner that Mr Leventis controls it and that pursuant to the decision in Harris v Dewell,[21] in relation to trusts the critical issue was not simply control but whether a party to the proceeding could use the powers pursuant to the trust or through a trustee company to effect the distribution of trust assets to himself or herself. Mr Glick submitted that under the Leventis Family Trust, Mr Leventis remains the trustee and designated beneficiary and that instruments pursuant to which Mr Leventis purported to retire as trustee were ineffective. Mr Glick was careful to submit that he did not allege fraud in relation to the instruments that purported to record Mr Leventis' cessation to act as trustee.
[21] (2018) 58 Fam LR 313.
In debate with all counsel I raised the application of principles espoused in Aon Risk Services Australia Ltd v Australian National University.[22] Certain similarities existed in the facts of this case, especially the late nature of the relevant application in Aon and the consequences of that lateness to the trial.
[22] (2009) 239 CLR 175.
In that case, during the trial ANU settled its litigation between its insurer and insurance broker by compromising its claim against its insurer but leaving on foot its claim against its broker Aon. ANU applied to adjourn the trial to make substantial amendments to its statement of claim. The adjournment application was granted, the amendment application was heard two weeks later and judgment was reserved for almost a year. The trial judge granted the amendment. On appeal against the grant of leave, the majority of the Court of Appeal of the Supreme Court of the Australian Capital Territory dismissed the appeal. Special leave to appeal to the High Court of Australia was granted. The appeal was allowed. So far as is relevant to this application, French CJ made a variety of observations about the acceptability of the unduly permissive approach demonstrated by the Court of Appeal towards an application made late in the day, which was inadequately explained and which necessitated the vacation or adjournment of the trial and which raised new claims not previously agitated by reason of a tactical decision deliberately taken not to do so.
French CJ held that in such circumstances the party making the application bore a heavy burden to show why leave should be granted.
French CJ also held that the discretion conferred upon the primary judge miscarried. French CJ held that an application for amendment and adjournment are not to be considered solely by reference to prejudice being compensated by a costs order and that irrespective of costs an irreparable element of unfair prejudice is involved in unnecessarily prolonging the proceeding. Further, the chief justice held that inefficiencies arising from vacating or adjourning trials should be taken into account. His Honour held that public confidence in the judicial system is also relevant. His Honour held that the lack of a satisfactory explanation for seeking the amendment should have led to the amendment application being refused.
The plurality (Gummow, Hayne, Crennan, Kiefel and Bell JJ) relied on the substantial nature of the amendments to ANU’s claim. The plurality addressed the suggestion that an amendment application involving a waste of some costs and some degree of delay should be refused, holding that factors including the nature and importance of the amendment to the party applying cannot be overlooked. The plurality held that the extent of delay and the costs associated with it together with the prejudice which might reasonably be assumed to follow and that which is actually shown which must be weighed against the grant of permission to a party to alter his, her or its case, in respect of which a great deal may depend upon –
(a)the point the litigation has reached relative to a trial when the application to amend is made; and
(b)an assessment of whether the party seeking to amend has had sufficient opportunity to advance his, her or its case and that it is too late for a further amendment having regard to the other party and other litigants awaiting trial.
So far as an explanation is required, the plurality held that where a discretion is sought to be exercised in favour of one party to the disadvantage of the other, an explanation will be called for. In the case of delay, an explanation will be required to show that the application is brought in good faith and to show the circumstances giving rise to the application so that it can be weighed against the effects of any delay.
Heydon J uttered the immortal phrase –
“The torpid languor of one hand washes the drowsy procrastination of the other”.
Here, in my view there was next to no attempt made on behalf of the second and third respondents to explain –
(a)why the application to adduce the evidence of Mr N was made during the running of the trial;
(b)why Mr N’s evidence was not prepared when the other affidavits in this case were prepared; and
(c)why actual medical evidence did not attend the suggestion that on specific dates Mr N suffered from the complications about which he purported to offer lay evidence of medical matters, contrary to what was said on the matter of the giving of expert evidence by a layperson in such cases as Dasreef Pty Ltd v Hawchar,[23] Makita (Australia) Pty Ltd v Sprowles[24] and Honeysett v R.[25]
[23] (2011) 243 CLR 588.
[24] (2001) 52 NSWLR 705.
[25] (2014) 253 CLR 122.
It must not be over looked that under Rule 1.04 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, one of the overarching purposes of the rules is the facilitation of the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible. Parties to family law litigation must conduct each proceeding in a manner that is consistent with that overarching purpose.
In my view, this late application to adduce Mr N’s evidence is contrary to Rule 1.04 and the overarching purpose embedded in it. That is reinforced by the absence of a meaningful (or, for that matter, any) explanation on behalf of Mr N. While I accept that he has endured very poor health, no medical evidence has been given to verify what is otherwise lay evidence of a medical matter. Precisely how Mr N was impaired from the date when the statement of claim was filed and served (October 2020) and why he was inhibited in his giving instructions to prepare an affidavit was not stated. Mr Jones KC submitted that the second and third respondents are unduly prejudiced if Mr N’s evidence is not admitted. I confess to having very real difficulty acceding to that submission especially in circumstances where the significance of Mr N’s evidence, if it truly assumes the significance Mr Jones says it should be accorded, must have been obvious to those representing the second and third respondents well prior (by many years) to 5 February 2023.
In my view the explanation for the lateness of this application to adduce Mr N’s evidence is inadequate.
That then enlivened a consideration of the disadvantage to the wife if the Mr N material were to be allowed into evidence. In order to comprehend this component of the application, it became necessary to address the matters to which the proposed evidence went. To that I say the following –
(a)to the generic statement given by Mr N that in his view the statements in paragraphs 4‑6, 8-17 and 21-25 of Mr Leventis’ affidavit of 1 September 2022 are true and correct as to conversations and interactions with Mr Leventis, Ms Leventis, Ms C Leventis and Mr B Leventis, the statement is so vague as to be near meaningless;
(b)to Mr N’s statement to the effect that he confirms and verifies the bundle of documents attached to Mr Leventis’ affidavit, without his identifying which precise document he is addressing, his statement is largely meaningless especially in its reference to his “confirming and verifying” each document;
(c)so far as his statement of the reason for the Leventis Family Trust being “implemented” (whatever that meant) was concerned, his intention for the creation of the trust is inadmissible according to Byrnes v Kendle and to the extent that such a comment is somehow relied on in construing the terms of the trust, the trust deed is to be construed by resort to the written words, not to aspirational intention subjectively held by the settlor;
(d)his statement that he was always aware that the trust belonged to Mr B Leventis and Ms C Leventis is meaningless in fact and in law because neither the trustee or beneficiaries under a trust have full beneficial ownership of trust property; and
(e)his assertions about conversations between Mr N and the wife as mentioned in paragraph 5 are bereft of details about who said what to whom so they are purposeless.
The contentions of the wife about the irrelevance of a great deal of the information in the Mr N 5 February 2023 affidavit underpinned Mr Glick’s submission that no useful purpose would be served in admitting the affidavit into evidence for the simple reason that it did not relevantly advance any particular issue in the proceeding.
Pleadings were ordered, filed and served in this proceeding. In paragraph 15 of the wife’s statement of claim dated 16 October 2020, she alleged that Mr Leventis at all material times had the capacity to exercise discretionary powers to cause trust assets to become his property or the wife’s property. In paragraph 15 of their defence and counterclaim dated 9 November 2020, the second and third respondents denied the wife’s allegations in paragraph 15 of her statement of claim stating as follows –
“They deny paragraph 15 and say that the trust was established and conducted primarily for the benefit of the [Leventis family]. Further, even if he had capacity to exercise discretionary powers to cause any trust assets to become his property or [Ms Leventis’] property, he never did so.”
On behalf of the second and third respondents, the relevance of the proposed evidence of Mr N was variously stated at several points of the debate over several days. The following is a snapshot of the way it was put –
(a)at lines 5 to 26 of page 72 of the transcript (with errors in the original) –
MR JONES – Thank you, your Honour. Question ..... the affidavit, your Honour, has become a bit of a mixed bag, like a lot of things in this matter. The genesis of the affidavit being sought from [Mr N] was in circumstances where we had received objection to [Mr Leventis’] affidavit of 1 September which relates to these resolutions, which are obviously of some, if not critical, moment in the case. And part of the objection was that it was hearsay insofar as we were seeking to rely upon 1statements made to [Mr Leventis] and communications and interactions between [Mr Leventis] and [Mr N] in circumstances where [Mr N] was not a witness.
And the reason historically [Mr N] had not been put on affidavit was because of his very significant health issues. At least now he – although the relevant documents were read to him, at least now he has some, only partial, eyesight. Now, when we came here yesterday, I mentioned, I think, this to you at some point: that there’s a real issue about lateness, and I would have to deal with that. And I think I’ve said in discussion with the court that in circumstances where, on my learned friend’s bold opening, he was saying that he was questioning the authenticity of these resolutions; he was questioning whether they were made on the date they were made; he was questioning, obviously, the efficacy of them as legal documents; but he was seeking to probe and understand all of the circumstances surrounding them appearing and being made on 6 February, it was decided that if we could get an affidavit from [Mr N], we should. So I think ..... late Sunday, my instructing solicitor went and met with him and read documents to him, and this was what was produced;
(b)at lines 13 to 36 of page 93 of the transcript (with errors in the original) –
MR JONES – Okay. Now, the notes came about last night, given what had happened yesterday. What we are suggesting is that the – an affidavit be sworn by him. I said three or four is what my learned junior says. We’re losing time all the time, but it will – once we get hold of him today, we will do it today. It does stick in the craw a bit, your Honour, that my learned friend says, well, all this is irrelevant in any event. As I understood, there was a central part of his vigorous opening yesterday morning that these documents that came into existence on 6 February did not come into existence on the day that they bear, and there was a real doubt as to their authenticity in any event.
Now, as I understand the common law fraud or fraud, that’s an allegation of fraud. We, when we’re subject to the gravest allegation you can make in a civil court, must be given the opportunity to respond to that, and the response to that is to get evidence both from [Mr Leventis] and, more importantly, [Mr N] that these documents came into existence on or about 6 February; they were signed on 6 February; they had legal efficacy as from 6 February.
We must be able to lead that evidence, your Honour, if we’re facing an allegation of fraud, and we would say that we face irretrievable prejudice if we’re not afforded that opportunity. My learned friend can only say, “What’s the prejudice?” Well, it’s delay again. But if the issue seems to be that he has been trying to get [Ms Leventis] into the witness box for two days, I would invite the court to ask him, “What process did you, Mr Glick, set-up prior to yesterday to work through all the objections?”, as we did yesterday afternoon till 6 o’clock;
(c)at line 43 of page 95 to line 34 of page 96 of the transcript –
MR JONES – But the intention for setting up this trust is obviously a most important matter for the court’s consideration, because under Kennon & Spry and that line of authority, it is relevant objectively for a court to assess as to whether a trust has been set up in respect of assets acquired, contributed, managed, like the Kennon assets, in the context of the marriage with a direct link to the marriage. Our case is that the applicant wife and the respondent husband, the first respondent, have made no financial contributions to any of these assets, and obviously, the purpose, your Honour, the objective purpose of setting up the trust, is a relevant matter for the court’s consideration in determining whether or not the trust assets are section 79 matrimonial property.
So we say, your Honour, this evidence is relevant directly to (a) the objective intention and purpose of setting up the trust, (b) and more materially in terms of your Honour’s giving leave to call it, to refute the allegations of fraud in relation to the creation of these documents and their efficacy in 6 February 2011. My learned friend yesterday afternoon casually says, “Well, I’m not asserting fraud.” Well, as I’ve always understood common law fraud, if you assert that a document was not brought into existence on the days it bears and was brought in, as he said, in suspicious circumstances, as he indeed suggest that most of the dealings of this family are suspicious, should be vetted – he went through a series of examples, the relevance of which is beyond my ken, to show that, somehow or other, everything to do with the [Leventis] family was suspicious. There’s this general allegation of surreptitious activity. We seem to spend half an hour on the fact that one of the sons unfortunately ran into a drug problem.
Now, what was the relevance of all this? I mean, what he says in the end is you ignore all the assets in the trust and all the circumstances by which they’re required because of the fact that, somehow or other, under the trust deed, he has some argument that even though clause 4.1.2 says you can resign in writing as appointor, that that has no legal efficacy. Your Honour, we, as I say, have had no opportunity, because of that injunction of 14 August 2018, to do anything with this trust. If he’s really saying, well, [Mr Leventis] has properly resigned but there’s no appointor, we would have got the Law Institute to appoint someone, as that provision provides.
So, your Honour, we say that we should be allowed to call this evidence; we say that my learned friend can only refer to delay as prejudice; we say that the delay yesterday and today is directly of the wife’s making; and we say that, in any event, if a person like my parties is facing an allegation of fraud, then they should be able, given the seriousness of that as a civil allegation, to lead evidence to contradict it.
(d)the evidence went to the purpose of the creation of the trust, so its relevance under Kennon v Spry[26] was demonstrated;
(e)the trust was set up to protect the parents; and
(f)at line 30 of page 116 to paragraph 30 of page 117 of the transcript –
MR JONES – No, your Honour, obviously one of the issues for your Honour’s consideration is the relevance of this material and the materiality of the material. And we say that the circumstances surrounding the creation of the trust in or about December 2010 are directly relevant to the critical issue which my learned friend Mr Glick moved for, which is these orders that the net assets of the trust are property assets belonging to the parties to the marriage and should then be subject to a division, if you recall his final orders, 60 per cent to [Ms Leventis] – yes, it might be handy – does your Honour have those final orders? I had them at page 28.
HIS HONOUR – No, I remember it from the transcript.
MR JONES – Do you? Thank you, your Honour. Because it does become relevant in this sense. While when we look at cases like Kennan one sees husband, wife and children, one can reasonably imagine a family court and, indeed, the High Court is interested in the situation where the people holding beneficiary interests in the trust are all within the same biological family.
Now, this is, though, quite different and it arises in this way, your Honour, in that when one looks – and as I understand it, when one looks at page 44 of the court book and looks at that statement of claim, which my learned friend says he does rely on totally, saying he was not going to change that, it is one thing, your Honour, to come to court with the proceeding constituted as it is the present by the parties before you in terms of meeting an allegation in paragraph 17 that, pursuant to section 79 of the Act, may be subject to such orders as this honourable court considers appropriate. Now, this is the critical matter. Taking into account the financial contribution made directly or indirectly by or on behalf of [Ms Leventis] and [Mr Leventis] to the acquisition, conservation or improvement of any of the trust assets. Now, that’s one case.
But we, of course, can meet that case because we say the contribution of that ilk is zero. But that’s not what my learned friend seeks, because even when we look at the joint venture agreement that is pleaded at paragraph 19, if you recall I misunderstood my learned friend. I thought that he was giving away the joint venture. He’s not. And he’s seeking to prove a joint venture whereby upon the sale of a property the parties who have the interest in the trust were repaid their capital contributions. So the joint venture that he pleads envisages that the parties with the interests in the trust who have made financial contributions to assets receive back their capital contribution upon the sale of that property. So that’s one.
But what he now seeks, your Honour, is he now seeks an order that extinguishes the interests of all the other beneficiaries in the trust other than [Mr Leventis] and [Ms Leventis] without them receiving any compensation and, indeed, without them receiving any opportunity to appear before the court, to receive legal advice, to review the documents and to make submissions as they are minded as to why your Honour should not make the order that my learned friend seeks, which is an order that the net assets – if you recall he took you to – if we go to his pleading, he took you to the top of page 57 of the court book. And he seeks the declaration – this is what he said the case was all about:
[26] (2008) 238 CLR 366.
Mr Glick KC submitted that since the date of the second and third respondents’ defence and counterclaim, the second and third respondents have been aware of the significance of the issue they raised in their own version of paragraph 15 of the counterclaim. He submitted that it was factually wrong to submit, as the second and third respondent argued, that the involvement of Mr N in the evidence he presently proposed to give was only recently available to them. Mr Glick submitted that no valid reason existed why Mr N could not have earlier given the evidence he now proposes to give and that I should conclude that the second and third respondents (possibly on advice) made a deliberate tactical decision not to call Mr N earlier than February 2023.
Mr Jones submitted that irreparable harm will be caused to the second and third respondents unless the Mr N affidavit is permitted to go into evidence.
On the third day of the trial, debate continued about the admissibility of evidence to be given by Mr N. By the close of the second day, Mr Jones KC had indicated that he proposed to provide a draft of an expanded version of the affidavit already sworn by Mr N (made 5 February 2023) to ensure that all propositions to which he was capable of deposing were incorporated. Mr Jones had earlier indicated that the task of preparing that expanded affidavit was a matter of applying the information recorded on notes that had already been taken, although Mr Jones also indicated that he was not aware of Mr N’s physical location so it was unlikely that a sworn version of the expanded affidavit would be obtained. In the upshot, Mr Jones produced a document headed “unsworn evidence of [Mr N]”. That was not strictly correct in terms of the document’s description because it more closely approximated a proof of evidence. For that matter, “evidence” must be sworn or affirmed and this document was neither. Despite the statement in it that a collection of documents were attached, none was. In any event, on behalf of the wife Mr Glick KC addressed every sentence of the documents with a view to Mr Glick demonstrating that –
(a)the contents of Mr N’s unsworn evidence was defective in form and was therefore inadmissible with the consequence that no useful purpose would be served by allowing Mr N to convert his unsworn evidence into an affidavit;
(b)even if the unsworn evidence were ruled to be relevant and probative of one or more issues that fall for determination in the case, the trial is likely to be torpedoed because –
(i)Mr Glick said he will call for the production of Mr N’s own notes pertinent to issues to which Mr N purportedly deposes in his unsworn evidence;
(ii)the wife is likely to want to file her own response to the material in Mr N’s unsworn evidence and that will take time to prepare, swear, file and serve; and
(iii)consistent with the manner in which a trial is customarily conducted, the wife is entitled to have before her the totality of the evidence in the case before she is required to start her own case.
To my way of thinking, there was considerable merit in Mr Glick’s propositions recorded immediately above.
It must not be forgotten that in this proceeding the second and third respondents, through Mr Jones KC, submitted that not only should the wife’s construction of the deed of trust be rejected but her entire application should be dismissed. On the third day of the trial, the point never having been earlier articulated, Mr Jones foreshadowed a submission he said he will make in final addresses, namely, that this entire proceeding was incompetent because all beneficiaries under the Leventis Family Trust were not before the court nor had they been given an opportunity to be heard and more importantly, to the extent that any interest they may have is potentially compromised by this litigation, then procedural fairness requires that they be first heard. I asked Mr Jones whether he intended to bring some form of application challenging the competence of this proceeding and is so, when. He said the problem was the wife’s. By way of response, Mr Glick KC submitted that there was no incompetence in this proceeding nor in the relief the wife seeks and that in respect of the beneficiaries of the Leventis Family Trust (being beneficiaries of a discretionary trust) they enjoy the right to due consideration and the right to due administration and no more, as was surveyed in Jess & Jess[27] (an appeal from which decision was unanimously dismissed).[28]
[27] [2021] FedCFamC1F 24.
[28] Jess & Jess (No 3) [2023] FedCFamC1A 2.
Mr Jones KC has not moved on any application to dismiss this proceeding for being allegedly incompetent. In the absence of any formal application on the issue, I take the view that it is desirable to say no more about it now.
Returning to the many paragraphs of Mr N’s unsworn evidence, it is necessary to address each paragraph, to which I now turn.
Paragraphs one, two and three recorded Mr N’s professional practising history. It was uncontroversial but irrelevant unless the balance of his proposed evidence was admissible.
In paragraph four, Mr N recorded that in early 2020 he suffered a medical episode then another in mid-2022. He said the 2020 episode left him with significant loss of sight in one eye. Mr Glick correctly submitted that as a layperson Mr N was not qualified to give evidence of a medical nature characterising the condition he suffered in early 2020 and mid-2022. That submission corresponded with the authorities mentioned above.[29] In any event, Mr Glick submitted that the witness’s information about his having suffered two medical episodes was irrelevant in view of his other evidence that in the same period the witness deposed to attending to matters consequent upon the passing of each of his parents. In my view the witness’s health issues had no bearing on anything to do with the Leventis Family Trust and was therefore irrelevant.
[29] Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588, Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 and Honeysett v R (2014) 253 CLR 122.
In paragraph five of his unsworn evidence Mr N set out the medications he took between the two medical episodes he mentioned in early 2020 and mid-2022, Mr Glick submitted that any such evidence was irrelevant. I agree.
In paragraph seven of his unsworn evidence Mr N said he drove on very limited occasions between the two medical episodes already narrated. Mr Glick submitted that any such evidence was irrelevant. I agree.
In paragraph eight of his unsworn evidence Mr N described a procedure he underwent in late 2022. This paragraph was said to be irrelevant. I agree.
In paragraph nine of the same document Mr N stated that his father was admitted to an aged care home in 2018 and his mother was admitted to an aged care home in 2020, with his father passing away in 2021 and his mother in 2022. This information was said by Mr Glick KC to have nothing to do with the issues I need to determine in this case. I agree. It is wholly irrelevant.
In paragraph 10 of his unsworn evidence Mr N recorded that he has known Ms C Leventis, Mr B Leventis, Mr Leventis and Ms Leventis for a number of years, although he omitted to say how many nor even an approximation of number. The purpose of his evidence that he has known four witnesses in this case for “a number of years” added nothing useful to the factual issues in this case. The first sentence of paragraph 10 is inadmissible. In the same paragraph Mr N stated that prior to the establishment of the Leventis Family Trust in 2010 he was the family’s tax agent and accountant for a number of years. In that sentence Mr N did not specify which member of the Leventis family he served as tax agent and accountant nor for how many years he served any such Leventis family member. In the absence of that information the evidence Mr N proposed to give on point was of no probative value any more than his evidence may have been had he narrated decades of service as a tax agent for parties unrelated to this litigation. Paragraph 10 was irrelevant and therefore inadmissible.
The information in paragraph 11 was said by Mr Glick to be hearsay. That was true. The more important issue is whether and if so when a sum of money was paid to the second and third respondents and received by them in respect of the compulsory acquisition of the land and improvements at 2 D Street, Suburb F. In this paragraph, Mr N conceded that he was unable to say who told Mr N about the compulsory acquisition or the funds that would be received. That rendered the paragraph as being made up of hearsay information from a source the identity of which Mr N was unable to say. To my way of thinking, the entirety of paragraph 11 is of next to no probative value. If I were to admit it, counsel for all parties would be unable to pursue, when cross-examining Mr N, who told him what about those matters. No useful purpose is gained by admitting such hearsay evidence. It is inadmissible.
In paragraph 12 Mr N spoke of his thoughts on two issues. His subjective thoughts are not evidence. Paragraph 12 is inadmissible.
In paragraph 13 of Mr N’s unsworn evidence was the commencement of information of some modest utility. In the first sentence he stated that in 2010 he discussed with Ms C Leventis, Mr B Leventis and Mr Leventis his idea of setting up a trust. He then added “for [Ms C Leventis] and [Mr B Leventis] to hold the payment they received from VicRoads” (his words). The trust that is in evidence in this case is the Leventis Family Trust. Its provisions are to be construed in accordance with the words used in the instrument, as was addressed in cases which the Court considered in Byrnes v Kendle. The trust was settled by Mr N. How the trust operates, especially holding the payment of money received from VicRoads, depends entirely on the terms of the trust. Mr N is not permitted to interpret the terms of the trust as to do so would be to usurp the function of the court. Whether the establishment of the Leventis Family Trust operated as Mr N stated in the first sentence of paragraph 13 of his unsworn evidence depended on the terms of the trust. In my view the words of the first sentence of paragraph 13 “[Ms C Leventis] and [Mr B Leventis] to hold the payment they received from VicRoads” were objectionable and inadmissible. Whether the Leventis Family Trust operated in such manner that it held money received from Ms C Leventis and Mr B Leventis being funds from VicRoads fell for construction of the trust instrument, not for comment by Mr N.
The second sentence of paragraph 13 of Mr N’s unsworn evidence recorded his statement that he often went to Ms C Leventis and Mr B Leventis’ property at 2 D Street although he said he does not recall the discussions. No issue in this case arose about Mr N travelling to 2 D Street so Mr N’s purported evidence on point is irrelevant.
In the third sentence of paragraph 13 of Mr N’s unsworn evidence he stated he recalls speaking to Ms C Leventis and Mr Leventis explaining the purpose of setting up a trust for Ms C Leventis and Mr B Leventis. Objection was not taken to the fact of Mr N speaking to Ms C Leventis, Mr B Leventis and Mr Leventis about setting up a trust. However, Mr Glick submitted that it was not permissible for Mr N to purport to give evidence about the way the Leventis Family Trust operated in this case because that was a matter of construction of the instrument itself. I agree.
In my view, Mr N’s statement of the way the Leventis Family Trust operates is inadmissible.
Paragraph 14 is not probative so it is not admissible.
The whole of paragraph 15 was premised on Mr N’s subjective state of mind, in which he incorporated phrases such as “I was aware that”, “I did not think they”, “I formed the view that” and “I knew of” various matters. A witness’s subjective state of mind on matters of the sort stipulated by Mr N in paragraph 15 is inadmissible.
In paragraph 16 Mr N stated that towards the end of 2010 Mr N had a conversation with a person whose identity he could not recall with instructions about the trust and that he discussed aspects of the trust with that person. The trust instrument is the critical document. Information about antecedent discussions leading to the entries on the trust instrument are not admissible. I consider that the whole of paragraph 16 is inadmissible.
In paragraph 17 of his unsworn evidence Mr N stated that he ordered a trust deed from a third party. Beyond that information being part of his chronological narrative of events, the fact of ordering the trust deed or even the date of its order is irrelevant because the critical matter is the settled trust deed itself, already in evidence. Whose idea it was to name the trust is irrelevant as the executed deed is named and that is the relevant fact. Why Mr N is unable to recall the reason attributable to his failure to name the trust some other name is not relevant. Mr N’s views of whether that mattered is also irrelevant. The whole of paragraph 17 is irrelevant and therefore inadmissible.
In paragraph 18 of his unsworn evidence Mr N purported to explain why he named Mr Leventis as the designated beneficiary. His reason for so doing is irrelevant. The facts is – he was named as the designated beneficiary. The whole of paragraph 18 is inadmissible.
In paragraph 19 Mr N purported to give a reason why he named Mr Leventis as the appointor. That evidence and the balance of paragraph 19 is irrelevant as the deed and its schedule speak for themselves.
In paragraph 20 of his unsworn evidence Mr N stated that he had a meeting with Mr Leventis in February 2011 at which he explained aspects of the trust deed including how it worked. That is inadmissible. The deed speaks for itself.
Paragraph 21 is inadmissible. Mr Leventis’ state of concern with the deed is irrelevant. The deed was executed. No claim to rectification is made nor is a claim of non est factum made.
Similarly, paragraph 22 is inadmissible as Mr Leventis’ state of happiness is irrelevant. The deed was executed.
Paragraph 23 is inadmissible. Post-execution conversations are not admissible.
Paragraph 23 is irrelevant and hence inadmissible. Post-execution conversations are inadmissible.
Mr Jones KC abandoned his contentions about Codelfa.[30]
[30] T 8 February 2023 T 134 L 18-30.
Paragraph 25 is irrelevant hence inadmissible.
The letters mentioned in paragraph 26 are already in evidence.
Paragraph 27 is likewise irrelevant.
As all paragraphs of the unsworn evidence of Mr N have been determined to be inadmissible, no point is gained by that document being converted into an affidavit.
Mr Glick KC made a call for all notes, emails and documents in relation to Mr N’s instructions given for the preparation of his affidavit made 5 February 2023 and his unsworn evidence. By the end of the fourth day of the trial of this proceeding the call had not been answered and on the fifth day Mr Jones KC said no documents were produced.
The analysis given thus far of the admissibility of proposed affidavit evidence of Mr N has focused on relevance and matters of form (all permissible in a s 79 application but not under s 69ZT of the Family Law Act in a parenting application) yet the foregoing analysis has passed over, without meaningful consideration, a central platform of the contentions of the second and third respondents, namely the justice and the equity of making orders in accordance with the wife’s proposal, the effect of which, so Mr Jones KC submitted, would shut out the second and third respondents from relief.
With considerable force Mr Jones argued that the effect of the wife’s proposal is that the interests in this litigation of the second and third respondents will be extinguished without any form of compensation, which Mr Jones said was anathema to the requirement of s 79(2) of the Family Law Act that a court considering an application for the alteration of property interests must not make orders unless persuaded that to do so is just and equitable.[31]
[31] Stanford v Stanford (2012) 247 CLR 108.
To better understand that proposition, it is necessary, even at this stage of the trial under the rubric of a ruling on evidence, to descend to the detail of the competing contentions. Most of what follows on point has been derived from the parties’ pleaded cases.
In her statement of claim the wife contended that at all relevant times the husband and wife pooled their financial resources using two accounts maintained with National Australia Bank, one ending in …54 and the other ending in …81. The wife pleaded that the Leventis Family Trust was settled by deed on 3 November 2010. She pleaded that under the trust deed, Mr Leventis was appointed, trustee, designated beneficiary and income default beneficiary, as defined in the trust deed. She pleaded as well that the husband and wife, along with their children plus the second and third respondents are beneficiaries.
The wife pleaded that at all relevant times, the trustee (the husband) exercised control over the trust fund which was made up of the settled sum, all money and other property in the nature of capital or income acquired or accepted by the trustee together with trust investments and property, as defined.
The wife pleaded that Mr Leventis exercised control over trust income in each financial year and that at all relevant times, the husband as trustee determined to pay trust income to one or more beneficiaries or to accumulate trust income. She pleaded that between the date on which the trust was settled and the commencement of the proceeding, the wife and her children regularly received distributed trust income and, as beneficiaries, made loans to the trust. She also pleaded that the second and third respondents never received distributed trust income nor made beneficiary loans.
The wife pleaded that the trust assets were “property of the parties to the marriage or either of them” within the meaning of s 79(1)(a) of the Family Law Act and therefore the trust assets were amenable to orders under s 79.
In their defence and counterclaim dated 9 November 2020 the second and third respondents admitted they were Mr Leventis’ parents and the existence of the Leventis Family Trust but otherwise did not plead to the matters to which the wife pleaded as set out above because, so they said, no allegation of fact was raised against them. They admitted that they are beneficiaries under the Leventis Family Trust. They admitted that Mr Leventis was at all relevant times appointor, trustee, designated beneficiary and income default beneficiary. They admitted the terms of the trust.
Paragraph 11 of the second and third respondents’ defence and counterclaim recorded what amounted to their primary contention in this case. It was as follows –
“They do not admit paragraph 11 and say further that the trust was primarily set up for the benefit of the [Leventis family] and as such, [Mr Leventis] acted in his capacity as trustee in accordance with the wishes and instructions of his parents the [Leventises].”
In response to the wife’s pleading that at all relevant times Mr Leventis has had the capacity to exercise discretionary powers to cause any trust assets to become his or the wife’s property, the second and third respondents denied the allegation. They went further. The following was their pleading on point –
“They deny paragraph 15 and say that the trust was established and conducted primarily for the benefit of the [Leventis family]. Further, even if he had capacity to exercise discretionary powers to cause any trust assets to become his property or [Ms Leventis’] property, he never did so.”
The second and third respondents further pleaded by way of defence and counterclaim that they made loans totalling $2,780,211 as at 30 June 2015. That represented a denial of the wife’s pleading in paragraph 16(c) of her statement of claim pursuant to which she asserted that the Leventis family never made beneficiary loans. While it was true that the second and third respondents did not say to whom they advanced loans totalling $2,780,211 it was readily apparent that they were putting in issue in this litigation that a very considerable sum had been advanced by them, which was in the nature of a loan, and which they said ought to be taken into account in this s 79 application. In paragraph 77 of their defence and counterclaim they clarified the position by pleading that they loaned the trust amounts in excess of $2 million.
If they were correct in that contention, funds advanced by them to the trustee of the Leventis Family Trust may take the character of funds that did not assume the character of trust property. That was very much a triable issue.
Of course, proving that contention fell to witnesses beyond Mr N. Mr Leventis and his parents were the obvious persons to prove all acts, facts and matters by which the phenomenon of loans were made out as well as the precise advances that aggregate $2,780,811 as the second and third respondents contended.
The wife pleaded the existence of a joint venture. She said it was entered into in late 2001 or early 2002 between the husband, the wife and the second and third respondents, that it was partly verbal and partly implied. To the extent that it was verbal it was allegedly constituted by conversations between the wife, the husband and the second and third respondents in 2002 as well as being constituted by conversations between the husband and wife in late 2001 and early 2022. Essentially, the wife pleaded that terms of the joint venture agreement included –
(a)pooling finances between Mr Leventis and Ms Leventis (jointly) with the finances of the second and third respondents to purchase and maintain real estate;
(b)the husband and wife jointly along with the second and third respondents would hold equitable interests in any joint venture property commensurate with the monetary contributions of each;
(c)the husband would become the registered proprietor on behalf of the husband, the wife and the second and third respondents;
(d)on the sale of joint venture property the husband, the wife along with the second and third respondents would be repaid their capital contributions and each would receive by way of profit a share of any net proceeds of sale commensurate with the contribution of each; and
(e)once the payment referred to in the immediately preceding sub-paragraph was made, the husband, the wife and the second and third respondents would elect whether to reinvest in further pooling so as to purchase a new joint venture property.
The second and third respondents denied the existence of the joint venture agreement alleged by the wife. Whether their advances took the form of a loan in fact and in law or whether those advances were made in the performance of a joint venture agreement were hotly disputed factual matters calling for determination. The answer to each was not likely determined by a simple construction of the deed of trust constituting the Leventis Family Trust. The existence of the joint venture agreement alleged, its composition, its construction and the role (if any) of the matrix of fact[32] are to be determined after hearing from each of the wife, the husband, the second respondent and the third respondent. I expect that each will be cross-examined in considerable depth and with particular vigour on every aspect of the formation, terms and performance of the joint venture alleged.
[32] For a useful examination of those concepts, my article repays close reading: Joshua D. Wilson, Contractual Composition, Construction and the Matrix of Fact (2003) 89 Australian Construction Law Newsletter 36.
Similarly, having regard to the characterisation alleged by the second and third respondents of advances aggregating $2,780,811 as loans but not as monetary contributions to any joint venture, I expect that sophisticated evidence will be adduced about not only the date and amount of each advance but the antecedent conversation or contemporaneous written document by which it will be possible to ascertain that the parties to the loan not only intended to create legal relations[33] but the precise terms including repayment obligations of each advance constituting the relevant loans and any default thereunder. Those issues are not likely to be determined by reference only to the deed of trust.
[33] Ashton v Pratt (2015) 88 NSWLR 281.
Further, even on the wife’s own pleading she asserts that under the joint venture agreement, the parties to the joint venture agreement acquired an equitable interest in one or more parcels of land although the husband may have been the registered proprietor of the relevant parcel of land. Section 79 of the Family Law Act requires me to determine the legal and equitable interests of the parties.[34] It follows that in order to do that I am compelled to examine all acts facts, matters, circumstances and things giving rise to the creation of any equitable interest to be claimed by the second and third respondents, presumably in reliance upon a purchase resulting trust.
[34] Stanford v Stanford (2012) 247 CLR 108.
Other factual conflicts about the wife’s pleaded claims emerged from the second and third respondent’s defence and counterclaim including those in paragraphs, 22, 23, 26, 29, 34, 37, 46, 58, 63, 67, 69 and 73 to name but a few. The resolution of the disputed facts embedded in the competing contentions in those paragraphs cannot be achieved by resort solely to a construction of the Leventis Family Trust. Other more detailed and more searching evidence is involved. After all, it was Lord Stowell who uttered the following in 1822 which remains today as valid as his Lordship’s observations were in the year in which judgment in The Juliana[35] was delivered –
“A court of law works its way to short issues and confines its views to them. A court of equity take a more comprehensive view and looks at every connected circumstance that ought to influence its determination upon the real justice of the case.”
[35] (1822) 165 ER 1560, 1567. See also Chief Justice James Alsopp, “The judicialisation of values” [2018] FedJSchol 14 (at [22]) as well as Jenyns v Public Curator (Qld) (1953) 90 CLR 113, 119.
On the third day of debate following the commencement of the trial Mr Jones KC announced that a second version of the deed constituting the Leventis Family Trust existed. He said Mr N may have had a role in the creation of that document and that the circumstances of the creation of that document are likely to be relevant to this case. Mr Jones submitted that whatever may be the fate of the admissibility of Mr N’s affidavit of 5 February 2023 and his unsworn evidence document, it is essential that the correct version of the trust deed is before me. The exchange unfolded in the following manner[36] (with errors in the original) –
[36] T 9 February 2023 T 244 L 33 – T 245 L 11.
MR JONES – Yesterday afternoon, for the first time, I became aware of – I think the court is aware too that ..... which has – had written amendments in the schedule.
HIS HONOUR – Thank you very much for reminding me.
MR JONES – Sorry, your Honour.
HIS HONOUR – Forgive me for interrupting you. At about 20 past 4 yesterday, despite my making an order, which was served at 4 commanding registry to produce the subpoena prior to 4.15 – and I make no criticism of the registry because they came in breathless at 20 past 4 but the documents in response to the subpoena have arrived.
MR JONES – Thank you.
HIS HONOUR – And if anyone wants to see them - - -
MR JONES – We would.
HIS HONOUR – - - - please, liaise with my associate.
MR JONES – Now, that’s the first of it. Now, this document, which I have never heard of before is in the form of the trust deed. It has a stamping – I think it’s vertical on 25 February. The same details as was on the other form of the trust deed. And, in the schedule, you’ve got writing and it purports the initial by [Mr N] and it changes the appointor, the designated beneficiary. Now, I want to explore and not be shut out of calling [Mr N] on that document. Can I inquire? Is there any impediment to me just subpoenaing him as part of my case?
Mr Jones submitted that he may simply subpoena Mr N to ask him questions about his knowledge about alterations to the schedule of the trust deed pursuant to which changes were purportedly effected to particulars concerning the appointor and designated beneficiary. The bundle of documents produce by Mr N in response to a subpoena issued to him were made available to all parties. Documents were inspected and then returned to my associate without more.
Three other documents fell into sharp focus, each purportedly dated 6 February 2011. The first was a letter from the husband to the trustee of the Leventis Family Trust (to himself, in other words) in which he purported to resign as the appointor of the trust “effective immediately on acceptance of the role by [Mr B Leventis].” A dispute surrounded the efficacy of that document although Mr Glick KC eschewed any suggestion that the document was in any way fraudulent.
The second document dated 6 February 2011 was a letter from Mr B Leventis to Mr B Leventis, allegedly writing in his capacity as trustee of The Leventis Family Trust stating that he wished to resign as appointor of the trust, “and if you accept to appoint you to the role. If you accept please sign below.” Under that the same person wrote “I [Mr B Leventis] accept the role as appointor of The [Leventis] Family Trust” and he signed the document.
The efficacy of that document was also in issue.
The third document dated 6 February 2011 were minutes of a meeting of The Leventis Family Trust held 6 February 2011. Those minutes do not record, as minutes customarily do, who attended the meeting. Mr Leventis signed the minutes so it might fairly be inferred[37] that he was present. The point was not debated. Whether anyone else was present (or for that matter entitled to be present) was not stated although agenda item 1 mentioned “discussion around assignment of roles” and a discussion was unlikely if only the husband was present. The minute recorded two resolutions as having been passed. The first was as follows –
“The designated beneficiary/ies have been changed from [Mr Leventis] to [Mr B Leventis] and [Ms C Leventis]. This change is effective immediately.”
[37] BNMB Transport Pty Ltd v Mercedes-Benz Australia Pacific Pty Ltd & Anor [2016] FCCA 2047, Richard Evans & Co Ltd v Astley [1911] AC 674, Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1, Luxton v Vines (1952) 85 CLR 352, Holloway v McFeeters (1956) 94 CLR 470, Girlock (Sales) Pty Ltd vHurrell (1982) 149 CLR 155, Jones v Dunkel (1959) 101 CLR 298, Trustees of the Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278, Tinkerbell Enterprises Pty Ltd v Takeovers Panel and Ors [2012] FCA 1272, J & A Vaughan Super Pty Ltd (Trustee) v Becton Property Group Ltd [2014] FCA 581, The MatterOfPetrolink Pty Ltd, Re; Smith v Bone [2014] FCA 1024, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission (ACCC) (2007) 162 FCR 466, Lithgow City Council v Jackson (2011) 244 CLR 352, Australian Competition and Consumer Commission v Metcash Trading Ltd (2011) 198 FCR 297 and Ashby v Slipper [2014] FCAFC 15.
The second resolution related to the role of appointor. It provided as follows –
“The Trustee, [Mr Leventis], has made the decision to resign as the appointor and [Mr B Leventis] has accepted the position as the appointor. Please see the attached letters of resignation and acceptance of the role.”
The efficacy of that minute is also in issue in this case, although no allegation of fraud attend it, as Mr Glick submitted. Having regard to the challenge to those three documents being one of effect, the circumstances of their creation seemed to be secondary.
Mr Glick informed me that he intends to make a call for the production of notes, probably from Mr N, in respect of the 6 February 2011 meeting. That will prolong the trial.
Mr Glick also informed me that the second and third respondents are likely to face a Jones v Dunkel[38] inference unless they call Mr N. Further, he said he needs to inspect Mr N’s file before cross-examining Mr N if Mr N is to give viva voce evidence. Whether Mr N is permitted to give viva voce evidence will involve a consideration of issues identified in Aon Risk Services Australia Ltd v Australian National University.[39] For that matter no application to issue a subpoena to Mr N has yet been sought.
[38] Jones v Dunkel (1959) 101 CLR 298.
[39] (2009) 239 CLR 175.
Based on the foregoing, my conclusions of the issues agitated on the first five days of the trial of this proceeding may now be stated.
First, Mr N’s 5 February 2023 affidavit is inadmissible and it will not form part of the evidence in this case.
Second, leave is refused for Mr N to make, file and serve an affidavit in the form of the document styled “unsworn evidence of [Mr N].”
Third, evidence about the advances made by the second and third respondents is admissible as it goes to their claim that they are owed over $2 million.
Fourth, evidence about a second, different version of the Leventis Family Trust is relevant as it is critical that the correct version of the trust deed is in evidence.
Fifth, the three documents dated 6 February 2011 are relevant to the husband’s contentions that he resigned as trustee. Whether those instruments are effective or invalid remain live issues.
The trial will now resume.
I certify that the preceding one hundred and six (106) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Wilson. Associate:
Dated: 14 February 2023
33
0