JUDGE:	Kyrou J
WHERE HELD:	Melbourne
DATE OF HEARING:	7-9, 12-15, 21, 26-30 October 2009
DATE OF JUDGMENT:	24 November 2009
CASE MAY BE CITED AS:	Talacko v Talacko
MEDIUM NEUTRAL CITATION:	[2009] VSC 533

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EQUITY – Breach of terms of settlement – Entitlement to enter judgment for equitable compensation for breach of fiduciary duty – Failure to share with siblings family properties recovered by way of restitution after the fall of the former communist regimes in Czechoslovakia and East Germany.

EQUITY – Principles for assessment of equitable compensation for breach of fiduciary duty – Robust approach due to defendant’s conduct making accurate assessment impossible – No allowance for defendant’s personal exertion – Date for valuation of properties subject to fiduciary duty – Selection of exchange rate.

PENALTY – Whether principles apply to an assessment of equitable compensation by the Court – Whether principles apply where there is an admission of liability for relief sought.

CONTRACT – Construction – Uncertainty – Election and repudiation where plaintiffs pursued parallel proceedings in the Czech Republic – Damages for breach.

SPECIAL REFEREE – Valuation of properties – Adoption of special referee’s report – Rule 50.04 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic).

PRACTICE AND PROCEDURE – Preliminary question tried before final hearing – Question cannot be re-agitated at final hearing – Rule 47.04 of the Rules.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr S J Howells with Ms L Kinda	Holding Redlich
For the Defendant	Mr D J Williams	Findlay Arthur Phillips

TABLE OF CONTENTS

PART 1 – INTRODUCTION AND SUMMARY......................................................................... 1

PART 2 – FACTS......................................................................................................................... 3

(1) Facts taken to be admitted – amended statement of claim dated 18 May 2000.................... 3

(2) Factual findings based on evidence at trial....................................................................... 17

PART 3 – CLAUSE 6 OF THE TERMS OF SETTLEMENT........................................................ 19

(1) Ruling made on 8 October 2009 on the effect of cl 6 of the Terms..................................... 21

(2) Interrelationship between cl 6 and the release in cl 8 of the Terms.................................... 25

(3) Meaning of ‘Properties’ in cl 6 of the Terms..................................................................... 27

(a) ‘Properties’ is defined by reference to paragraph 6 and not paragraph 24 of the 2000 ASC..... 28
(b) ‘Properties’ does not include interests purchased by the defendant...................................... 31
(c) ‘Properties’ does not include those restituted after 23 February 2001.................................. 32
(d) Properties falling within paragraph 6 of the 2000 ASC..................................................... 33
(e) Determination regarding the properties referred to in cl 6 of the Terms............................... 39

PART 4 – SPECIAL REFEREE.................................................................................................... 39

(1) Questions referred to special referee................................................................................ 39

(2) Special referee’s reports................................................................................................... 40

(a) Special referee’s valuation of Prague 1 Properties............................................................. 43
(b) Special referee’s valuation of land in Řepy....................................................................... 43
(c) Special referee’s valuation of land at Suchá...................................................................... 44
(d) Special referee’s valuation…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Talacko v Talacko

Details

AGLC: Talacko v Talacko [2009] VSC 533
Case: [2009] VSC 533
Decision Date: 24 November 2009

CaseChat Overview and Summary

Talacko v Talacko is a case involving the dispute over the distribution of family properties recovered by the defendant from Czechoslovakia and East Germany following the fall of the communist regimes. The plaintiffs, who are the siblings of the defendant, sought equitable compensation for the defendant's breach of fiduciary duty by not sharing these properties with them. The matter was heard in the Supreme Court of Victoria. The central legal issues were the entitlement of the plaintiffs to equitable compensation for the breach of fiduciary duty, the principles governing the assessment of such compensation, and the date for the valuation of the properties. Additionally, there was a question of whether the principles of penalty apply to the assessment of equitable compensation when there is an admission of liability for the relief sought.

The court found that the defendant breached their fiduciary duty by not sharing the recovered properties with the plaintiffs. Due to the defendant's conduct, which made an accurate assessment of the properties' value impossible, the court adopted a robust approach in determining the equitable compensation. The court held that no allowance should be made for the defendant's personal exertion in recovering the properties, and that the valuation date should be set based on when the properties were recovered. The court also considered the appropriate exchange rate for the valuation. Regarding the principles of penalty, the court concluded that these principles apply to the assessment of equitable compensation when there is an admission of liability for the relief sought.

The court adopted the special referee's report for the valuation of the properties, in accordance with Rule 50.04 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic). The court ruled that a preliminary question tried before the final hearing cannot be re-agitated at the final hearing, as per Rule 47.04 of the Rules. The court also addressed the uncertainty in the construction of the contract, the election and repudiation where the plaintiffs pursued parallel proceedings in the Czech Republic, and the damages for breach.

The final orders of the court were that the defendant was liable to pay equitable compensation to the plaintiffs for the breach of fiduciary duty, and that the amount of compensation would be determined based on the principles and factors outlined in the judgment. The court also ordered that the special referee's report be adopted for the valuation of the properties. The plaintiffs were further awarded costs of the proceedings up to and including the preliminary hearing.

Orders