Manieri and Anor v Cirillo

[2014] HCATrans 300

[2014] HCATrans 300

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne   No M110 of 2014

B e t w e e n -

FRANK MAINIERI AND GELSOMINA COMANDE

Applicant

and

RITA CIRILLO

Respondent

Summons for reinstatement

CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 19 DECEMBER 2014, AT 9.37 AM

Copyright in the High Court of Australia

MR M.C. McKENZIE:   If your Honour pleases, I appear for the appellants, the applicants here this morning.  (instructed by the applicants)

MR J.S. GLOVER:   If the Court pleases, I appear for the respondent, Mrs Cirillo.  (instructed by Clayton Utz Lawyers)

HER HONOUR:   Yes, Mr McKenzie.

MR McKENZIE:   Your Honour, this is an application seeking to reinstate an application for special leave.  There is a summons of 18 November and a short affidavit from Gelsomina Comande which was sworn 18 November.  It identifies that she had misunderstood the requirements of the Court concerning the need to file the appropriate further documentation and had thought that she had to await the Court being in touch with her to say that she could then do that.  It seemed to me – perhaps if I can say it from the Bar table – some misunderstanding about the difference between serving it on the other party and filing it with the Registry.

HER HONOUR:   Yes.

MR McKENZIE:   She seeks leave in the circumstances to have the matter reinstated as it was summarily struck out pursuant to the Rules and an appropriate timetable then for the filing of the relevant documentation.

HER HONOUR:   Yes, thank you.  Yes, Dr Glover.

MR GLOVER:   Your Honour, the respondent opposes this application on three bases, the first of which is that the applicants have not provided a sufficient explanation for their failure to comply with the Rules of Court in the affidavit.  The second basis is that the prospects for success of this application are poor.  The third basis is that the respondent will suffer prejudice if this application is successful.  Your Honour, would you like to hear me on the question of the sufficiency of the explanation for the delay?

HER HONOUR:   I would be most assisted by hearing you on the prospects of success.

MR GLOVER:   Sure.  I will take you to the application for special leave to appeal, in which there are four grounds.

HER HONOUR:   Yes.

MR GLOVER:   Generally it is submitted – pursuant to section 35A of the Judiciary Act that no matter is propounded about which there is some difference of judicial opinion.  No question of principle warrants consideration by this Court and the interests of the administration of justice generally do not provide a reason for overturning this judgment. 

So, looking to the first ground, it is essentially a factual matter, your Honour.  The applicant asserts that it was incorrect that an oral agreement was found to the effect alleged between the parties, being an oral agreement for Mr Mainieri, the applicant son, and his partner, to look after Mrs Cirillo suitably for life.  Now, an oral agreement to that effect was found by the first instance judge.  An oral agreement to that effect was confirmed by the Court of Appeal.

Further, the Court of Appeal said that the oral agreement in combination with other representations gave rise to the appropriateness of equitable relief to restrain the applicants’ unconscionable conduct.  In short, the trial judge found that her version of the arrangements whereby the property would be sold and the proceeds would be paid in reduction of the mortgage over the Budds Street property, his Honour said that was the only explanation of the facts which fitted the circumstances and the Court of Appeal, in an orthodox kind of way, examined how that could be enforceable as an agreement on a contractual basis and also found that the agreement could form part of an arrangement which could give rise to equitable relief. 

Now, the second ground of argument looks particularly to the equitable relief.  It says that the Court of Appeal erred in finding that the oral agreement was admissible in equity, referring, I expect, your Honour, to the fact that the oral agreement could form part of the basis of a constructive trust or equitable lien as to proof of facts in the circumstance which went against conscience that the applicants retain the benefit of the reduction of their mortgage debt.  Well, that essentially is a factual matter as well, your Honour.

HER HONOUR:   You are saying, are you, no question of principle is raised ‑ ‑ ‑

MR GLOVER:   There is no question of principle, your Honour.  The Court of Appeal found that the facts justified equitable relief quite independently of the enforceability of this arrangement as a contract and when they say admissible in equity I think that is a compendious reference to the basis for the award of equitable relief.  That is the second ground, your Honour.

The third ground is that it is said that the Court of Appeal erred in finding that the terms of the written agreement between the parties did not necessarily preclude the imposition of a constructive trust of the kind ordered by the trial judge.  Well, it is not asserted what the basis of that preclusion might be.  There was nothing, it is asserted in the contract between the parties which ruled out the possibility of equitable relief.  You have to justify why equitable relief is unavailable if one makes a claim or asserts a ground of appeal of that kind.  So the basis of any reason for why a constructive trust is necessarily inappropriate has not been shown.

Then passing to the fourth ground, the last ground, the Court of Appeal found that a declaration of constructive trust was in excess of the needs of the plaintiff, erred in finding that having regard to what was promised or represented by the respondent to the applicants in the nature of her change of position on the assumption thus created, she derived an equity which could best be satisfied by an equitable lien over the property. 

Well, the judgment of the Court of Appeal did, indeed, justify the equitable lien and the lien was particularly suited to circumstances where no interest in the increment in the value of the underlying property is alleged.  Mrs Cirillo just wants her money back and it is thought that the equitable lien causes the least inconvenience to the parties, does not require any expensive taking of accounts.  It gives the plaintiff back what she wants in a minimal kind of way.

HER HONOUR:   Tailored relief for which equity is known.

MR GLOVER:   Yes.  Constructive trusts do raise a lot of problems because the question is when does the constructive trust arise, what is the value of the property as at that date and you have to get valuations for what it might be - all that is unnecessary with a lien.  You just give Mrs Cirillo back the money she claims to have lost.  So no basis has been alleged for why it is inappropriate.  Those are essentially the submissions. 

HER HONOUR:   Thank you.

MR GLOVER:   Would your Honour care to hear a little bit about the type of prejudice that Mrs Cirillo might suffer or ‑ ‑ ‑

HER HONOUR:   If you wish.

MR GLOVER:   Well, it is not a huge prejudice but Mrs Cirillo is entirely deprived of resources.  She has no money.  She has had no money for four and a half years that this matter has continued.  Mrs Cirillo is not young and it is thought to be highly undesirable to keep from her the prospects of success in this litigation which she is – I will not say living for, but it is significant for her. 

Finally, on the basis of the exercise of your Honour’s discretion, exercising that according to law means essentially that you have to find

some basis for it and it is submitted, your Honour, that there is essentially no basis other than the strength of the application itself because the applicants assert that they misunderstood or misinterpreted the terms of a perfectly plain and unambiguous section.  There is a further section of the Rules which talks about the consequences of effectively a misunderstanding or a misinterpretation.

It is asserted that the – the applicants do not assert that English is not their first language.  They do not assert that they are in any way inveigled or encouraged to misunderstand the position by any action by the respondent or whoever their legal adviser is.  There is, it is submitted, effectively no basis for your Honour to find that the applicants have sufficiently justified their non‑compliance with the Rules.  That is the case for the respondent, your Honour.

HER HONOUR:   Thank you, Dr Glover.  Anything in reply, Mr McKenzie.

MR McKENZIE:   Yes, your Honour.  I wonder if I might deal briefly with the issue of the prejudice alleged.  That has to be tested, in my respectful submission, against the prospect that if this application for special leave were reinstated, it would be a matter of the further documentation being provided and then a special leave application coming on.  That would not be any significant time and the prejudice is extremely minor, particularly bearing in mind the reference to four and a half years of what has gone on so far.  So, perhaps on the question of prejudice, I would invite your Honour to not be moved.

On the question of sufficient explanation, the Rules are quite clear in the sense that unrepresented litigants do trouble this Court from time to time as best they can.  There are documents and there are guidelines.  There is reference to service but there is also reference to awaiting the Court to take a step or not take a step.  The applicants have just said we misunderstood.  We would hope that that was not held against us in a final manner because that will bring to an end this application totally and they just seek the discretion, the exercise.  In those circumstances, they really can do more, I think, than say we missed the deadline and we do not think we should be penalised to the extent that my friend is suggesting would be appropriate. 

I would like to talk briefly about the substance of the application as put.  The application for special leave you have been taken to.  For these purposes, I understand the Court would have the respondent’s submissions in front of it – Dr Glover’s submissions.

HER HONOUR:   Yes.

MR McKENZIE:   The background as identified is a matter of common discussion arising from the circumstances.  So the background simply talks about the history of the parties. 

HER HONOUR:   I have that, yes.

MR McKENZIE:   If I could take you to paragraph 2, your Honour.

HER HONOUR:   Yes.

MR McKENZIE:  

The applicants live together as man and wife in a home located in Coburg, Victoria.  The respondent, Mrs Cirillo, is Mr Mainieri’s mother.  In order –

So this flows from the decisions made by the Associate Justice in the first instance and then by the Court of Appeal.

HER HONOUR:   Yes. 

MR McKENZIE:   The significant part, if your Honour would bear with me:

to assist the applicants with the repayment of a mortgage secured over their home, the respondent promised to contribute the sale proceeds –

Now, it is said that is to assist the applicants.  It is clear from the material that it was not merely to assist the applicants.  It was also on the basis that Mrs Cirillo would stay and be provided with accommodation in that home.  The outcome is that there was a contract drawn and that has been much discussed in the judgments.  The issue of gift or non‑gift – the document itself did not give Mrs Cirillo the relief she sought and my friend argued and succeeded in having the oral arrangements put beforehand brought to the notice of the court and accepted.  The outcome of that was that there was then reference to the funds being applied to reduce the mortgage. 

Now, with respect, your Honour, the way I see it put in the application for special leave what is being said is once the oral material is brought in, the Court of Appeal then said we did not necessarily agree with all that the judge at first instance said but we accept that there was at least a collateral contract, oral, and that it gave rise to an obligation to apply the money to the mortgage.  That is the necessary connection that gives rise to the lien position.

That having been established, the Court of Appeal then says we are satisfied that there is a collateral contract.  We are therefore satisfied that it is appropriate that we look at the underpinning of that which relates to the mortgage being produced and that is the connection that gives the lien and otherwise the equitable relief sought would not be available.

As I understand the grounds, what is brought before the Court is the proposition that if it is the case that there is either a prior oral contract agreed or a collateral warranty as to the application of the funds, then that has to be unpackaged in a more specific way because, if I could put it to your Honour in this fashion, if it were a necessary collateral warranty that the money be applied to pay off the mortgage then, in my respectful submission, it is open and it is part of what the applicants wish to say, to say that there is a corollary to that whereby Mrs Cirillo is not at liberty, if that is the collateral warranty that would be used to pay off the mortgage, to then, as it were, without good reason and without proper basis in good conscience, to choose to say I am now no longer going to live here and therefore I call for the repayment to me of the amount I am entitled to.

One of the things that struck me – I did not have the privilege of being involved in either of the hearings – was that there was specific reference in the material to say that there is no misconduct or failure to offer the care and assistance to Mrs Cirillo by the applicants.  As I read the way the grounds are framed, my understanding and the form of any formal application to specify the ground would be to say that the appropriate course is if, as is found by the Court of Appeal, there is a collateral warranty that ties it to the mortgage and ties it to the land, then that collateral warranty and the obligations arising thereunder, give rise to similar equitable and “in good conscience” obligations on the part of Mrs Cirillo.

So if it is going to be paid to the mortgage and that is binding then you cannot, within a matter of some months, choose then to say, well, I am now going to walk.  I want the money back and somehow or other reinstate your mortgage.  That is how I understood the grounds to have been prepared, to say it is difficult to – in the course of foreshadowing how this might unfold – say anything other than once it has happened that there is this understanding between the parties and it is finally revealed, as it were, in the way the Court of Appeal has analysed it, then it seems to me that it is well open to the High Court to give leave to say that is deserving of further analysis.  There should be an opportunity for that to at least be put to the Court on the matter of leave to appeal and the special leave application should go forward and it picks up the notions as to what the true understanding was, what the matters of conscience and equity are in play about.

So as to the question of success, I invite the Court to perhaps take the position, if there is a basis upon which special leave could be seen to be possible, then that opportunity should be given to these applicants.  Thank you, your Honour.

HER HONOUR:   Yes, thank you. 

This is an application for reinstatement of the applicants’ application for special leave to appeal.  The applicants, Mr Mainieri and Ms Comande, live together as a married couple in a home in Coburg, Victoria.  The respondent, Mrs Cirillo, is Mr Mainieri’s mother.  In order to assist the applicants with a pressing debt secured by mortgage over their home, the respondent sold her home and contributed $240,000 of the proceeds of sale to the applicants to be applied in reduction of their mortgage.  In turn, they undertook to allow the respondent to live with them indefinitely in their home and take care of her.

Part of this arrangement was expressed in a contract drawn by Mr Mainieri’s solicitor.  It was agreed that in consideration of a “gift” from the respondent, the applicants would accommodate and look after her for life.  After the respondent sold her home, and the proceeds had been applied in reduction of the applicants’ mortgage, and she had moved in the relationship broke down irretrievably, causing the continuation of the living arrangements to become impractical.

However, when the respondent asked for her money back, the applicants refused, on the basis that it had been given to them as a gift and they were not obliged to repay it.  The respondent subsequently commenced proceedings in the Supreme Court of Victoria, relevantly seeking equitable relief by way of constructive trust or equitable lien in respect of the applicants’ home.

On 7 August 2013, the Supreme Court (Randall AsJ) found that the respondent should be granted a constructive trust over the Coburg property.  Before his Honour the applicants contended that evidence of oral exchanges between the parties regarding the payment of the $240,000 into the mortgage over the applicants’ home was not admissible pursuant to the parol evidence rule.  The applicants conceded that should the evidence be admissible the respondent would be entitled to the relief which she sought.

His Honour found that the oral evidence was admissible, despite the parol evidence rule, on the basis that the agreement between the parties was partly oral and partly written, and that the use of the word “gift” in the agreement led to ambiguity which the Court was entitled to resolve by reference to the earlier conversations.  The applicants subsequently appealed to the Court of Appeal of the Supreme Court of Victoria.

On 17 September 2014, the Court of Appeal (Nettle AP, Hanson and Santamaria JJA) found in favour of the respondent, but imposed an equitable lien rather than a constructive trust, considering it to be a more appropriate form of relief.  Their Honours found that there existed a partly oral and partly written agreement between the parties, and that even if the written instrument was regarded as the sole repository of the agreement, the applicants’ oral statement that they would apply the proceeds of sale of the respondent’s property in reduction of the applicants’ mortgage constituted a collateral warranty.

Whilst the Court of Appeal denied that there was sufficient ambiguity in the use of the word “gift” in the written instrument to warrant admission of the oral evidence, the Court accepted the respondent’s argument that the evidence about the oral arrangement was admissible in support of the respondent’s claim for equitable relief.

On 15 October 2014, the applicants applied to this Court for special leave to appeal from the decision of the Court of Appeal. On 18 November 2014, the applicants filed a summons and an affidavit of Ms Comande in order to reinstate their application. That application had been deemed abandoned, pursuant to rule 41.10.4.1 of the High Court Rules 2004 (Cth), owing to the applicants’ failure to file a draft notice of appeal and written case within 28 days of applying for special leave to appeal.

The applicants were represented at trial and before the Court of Appeal and have been represented before this Court today.  In her affidavit, Ms Comande states that her failure to submit the requisite documents was due to a misunderstanding about the procedures of this Court.  She states that she thought that after filing her application for special leave the High Court would tell her if she was “granted leave to proceed to the next stage”.  Ms Comande also apologises to this Court for misunderstanding the procedures.

The respondent opposes the application for reinstatement on three bases put by counsel, submitting, one, it should be refused because the applicants did not disclose a sufficient explanation for the delay, two, the respondent will suffer prejudice if the application is allowed and, three, that the application has no prospects of success.

The principles for determining whether an application for reinstatement of proceedings should be granted are uncontroversial.  Important considerations include the length of any delay, the reasons for delay and any prejudice the respondent will suffer if the reinstatement of the application is granted.  The merits of the case should not generally be taken into account at this stage, however, an exception to this principle occurs where an extension of time would be futile because an applicant’s case must ultimately fail.

Whilst the respondent’s submission as to the prejudice to be suffered by the respondent has been taken into account, the length of delay in this matter is not substantial in the context of that prejudice.  In addition, the delay appears to have arisen, as Mr McKenzie explained, as a result of the applicants’ belief, albeit erroneous, that they were complying with the relevant procedures of this Court.  However, the crucial point is that the applicants’ application for special leave to appeal has no prospects of success and does not raise a question of public importance which warrants consideration by this Court.  In those circumstances, it would be a futile exercise of the discretion available to allow the applicants’ application to reinstate the application for special leave to appeal.

The order of the Court is that the applicants’ summons filed on 18 November 2014 is dismissed with costs.

AT 10.06 AM THE MATTER WAS CONCLUDED