Talacko v Talacko

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 7393 of 1998

HELENA MARIE TALACKO AND OTHERS	Plaintiffs
v
JAN EMIL TALACKO	Defendant

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JUDGE:	OSBORN J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	19 - 22 NOVEMBER 2007
DATE OF JUDGMENT:	24 APRIL 2008
CASE MAY BE CITED AS:	TALACKO & ORS v TALACKO
MEDIUM NEUTRAL CITATION:	[2007] VSC 128

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Long standing family dispute relating to extensive real property restituted to the defendant in Czech Republic, East Germany and Slovakia – Original proceeding settled in 2001 pursuant to agreed terms of settlement – Proceeding reinstated following alleged breach of terms – Separate trial of preliminary questions relating to issues of liability only – Alleged breaches of terms of settlement by defendant – Alleged repudiation or disentitlement by plaintiffs – Construction of the terms of settlement - Alleged uncertainty of terms – Nature and extent of rights and obligations under the terms - Terms breached by defendant – No repudiation or disentitlement by plaintiffs - Terms not void for uncertainty - Matters to be considered upon further trial of the proceeding.

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr S. Howells with Mr Sifris SC	Holding Redlich Lawyers
For the Defendant	Mr D. Williams	Findlay Arthur Phillips

HIS HONOUR:

Introduction

This proceeding concerns a claim by members of the Talacko family arising out of the alleged breach of terms of settlement by the defendant, who is another member of that family.

The terms of settlement (“the terms”) were effected in respect of a claim in this Court made by the plaintiffs, concerning properties formerly comprising the assets of Alois and Anna Talacko who were the parents of Helena (the first plaintiff), Peter (deceased) and Jan (the defendant).

The first plaintiff, Helena Marie Talacko, claims in her own right but by her litigation guardian (“Jan Emil” Talacko). The second to fifth plaintiffs are the children and wife of the late Peter Talacko and claim pursuant to his will. They are Alexandra Bennett (“Alexandra”), Martin Talacko (“Martin”), Rowena Talacko (“Rowena”), and Margaret Helen Beatrice Talacko (“Margaret”).

The matter has been fixed for hearing in the first instance with respect to issues of liability only.[1]
[1]Initially by order of Williams J made 4 November 2004, which order was varied in its terms by me on 8 November 2007.

Those issues are at core:

(a) whether the defendant has breached the terms;
(b)whether the plaintiffs have repudiated or otherwise disentitled themselves from relying upon the terms; and
(c)whether the provision of the terms with respect to relief consequential upon such breach is void for uncertainty.

It is necessary first to set out some background matters.

Background

In 1948, Alois and Anna Talacko left Czechoslovakia and settled in Australia, together with their three children Helena, Peter and Jan.

At the time of their departure from Europe, Alois and Anna owned extensive real property, including:

(a)five substantial buildings in the historic city centre of Prague known as the Prague 1 District;
(b)horticultural land on the outskirts of Prague at Repy;
(c)land in the suburbs of Prague (Kbely);
(d)a private forest at Sucha in the north east of Slovakia;
(e)an apartment building and adjacent vacant land in Dresden, Germany.

In the following years the relevant property of both Anna and Alois was vested in the State, both within Czechoslovakia and within East Germany.

Alois died in Melbourne in 1964 and Anna in Melbourne in 1984.

Following the cessation of communist rule in Czechoslovakia at the end of 1989, discussions took place between Helena, Peter and the defendant concerning the restitution of their parents’ property.

The plaintiffs allege that an agreement was reached between the three siblings to pursue such restitution together, and share the proceeds equally as between the three.

In 1991 following the passage of a series of restitution laws in Czechoslovakia, Helena, Peter and the defendant exchanged powers of attorney, declarations and testamentary documentation in order to give effect (as the plaintiffs allege) to such an arrangement.

In August 1991, the defendant also prepared documents setting out details of his parents’ assets with varying degrees of particularity and gave these to Peter and Helena.

In September 1991, the defendant made application for the restitution of the central Prague properties. At the time, he alone of the three siblings was residentially qualified to make such a claim, being both a Czech citizen and resident in the Czech Republic.

His brother Peter was granted residency rights shortly after the expiration of the deadline for making the relevant claims.

In March 1992, a series of properties within central Prague were restituted to the defendant either solely or in part. Thereafter, other properties forming part of his parents’ estate were either restituted to him or purchased by him.

In November 1995, Peter Talacko died.

In 1996, dispute arose over the payment of charges with respect to property jointly claimed by the plaintiffs and the defendant in Dresden.

In 1997, the defendant refused to co-operate in the sale of the Dresden property to a third party.

Dispute then continued between the plaintiffs and the defendant with respect to the parties’ entitlements and obligations concerning both the Dresden and the Prague properties.

In October 1998, this proceeding was instituted by way of writ, claiming equitable interests in the properties held by the defendant, which comprised assets formerly owned by Alois and Anna Talacko, and seeking relief for alleged breach of agreement, breach of trust and breach of fiduciary duty.

Those proceedings were settled on 23 February 2001 on the following terms:

In full settlement of the matters the subject matter of the proceeding the plaintiffs and the defendant agree as follows:
1.The defendant to transfer all the right, title and interest that he has or shall have, to such person or entity as shall be nominated by the plaintiffs, in respect of the following:
(a) Kiefernstrasse 19 and Kiefernstrasse 19b, Dresden, Germany;
(b)17.4473 hectares of land in Repy, as defined in the particulars under paragraph 6 in the amended statement of claim herein;
(c)approximately 0.8 hectares of land in Kbely, as defined in the particulars under paragraph 6 in the amended statement of claim herein;
(d)approximately 364 hectares of land in Sucha, as defined in the particulars to paragraph 6 of the amended statement of claim hereto.

This clause does not apply to any interest in land purchased by the defendant as from this date.
2.To give effect to paragraph 1, the defendant will sign all necessary documents and give all necessary documents and attend at any place as required by law in respect of the signing of such documents.
3.If by reason of applicable law, or some other cause, paragraph 1, or any part thereof, cannot be given effect to within 12 months of the date of these terms in respect of a particular property or properties. The defendant shall at the direction of the plaintiffs and at their cost, take all reasonable steps to sell back property or properties at best market value and shall pay the net proceeds of such sale, after the deduction of all expenses, to the plaintiffs or at their direction.
4.The plaintiffs to be responsible for and pay in the first instance all transfer costs, expenses, taxes, duties, levies and charges in any way payable in respect of the transfer or sale of the properties.
5.The defendant to pay to the solicitor for the plaintiffs the sum of $150,000 in part payment of the plaintiffs’ costs on or before 23 June 2001.
6.In the event that the defendant breaches any term, condition or warranty in this agreement, then the plaintiffs shall be entitled to enter judgment for an order that the defendant pay equitable compensation for breach of fiduciary duty in respect of each of the Properties and interests in the Properties (as defined in the amended statement of claim) recovered or obtained by him, together with the costs of entering such judgment, and the production of these terms of settlement shall be conclusive evidence of the defendant’s irrevocable consent to the entry of such judgment.
7.The parties shall forthwith consent to orders of the Court that the proceeding be struck out with no order as to costs, together with a right of reinstatement for the purpose of enforcing these terms.
8.The parties agree to release each other from all actions, suits, demands, liabilities and costs arising out of or in any way related to the subject matter of the proceeding.
9.The defendant warrants that:
(i)he has not reduced his right, title and interest in the properties the subject of these terms since the commencement of the proceeding;
(ii)the properties the subject of these terms, or any of them, are not encumbered;
(iii)that he shall not deal with the properties the subject of these terms otherwise than in accordance with these terms; and
(iv)that until transfer or sale he will pay costs, taxes and expenses associated with each property the subject of these terms.

Questions of Construction

The plaintiffs submit that the construction of the terms of settlement falls to be determined in accordance with well recognised principles of construction:

(1) The language of a term is generally assigned its natural and ordinary meaning, read in the light of the contract as a whole but where it is ambiguous surrounding circumstances may be taken into account in assigning the presumed meaning. The surrounding circumstances include the matrix of mutually known facts, and the background, object, context and commercial purpose of the transaction, in the objective sense of what reasonable persons in the position of the parties would have had in mind: Codelfa Construction Pty Ltd v State Rail Authority (NSW)[2]; Schenker & Co (Aust) Pty Ltd v Maplas Equipment & Services Pty Ltd[3]; Manufacturers' Mutual Insurance Ltd v Withers[4].[5]
(2) It is well established that the task of construction of a written instrument requires the whole of the instrument to be considered: Re Media, Entertainment and Arts Alliance; Ex parte Hoyts Corporation Pty Ltd[6].[7]

[2]347-352.

[3][1990] VR 834.

[4](1988) 5 ANZ Insurance Cases, 60-853.

[5]Spunwill Pty Ltd v BAB Pty Ltd at 299 (Santow J).

[6](1993) 178 CLR 379, 386-387.

[7]Big River Timbers Pty Ltd v Stewart (1999) 9 BPR 16,605 ( Mason P); see also Chitty on Contracts, vol 1, para 12-075.

The defendant likewise submits that the terms are to be construed according to ordinary contractual principles, most notably, that the meaning of the document signed by the parties is to be determined objectively.

In my view, the fundamental principles governing the construction of the terms were stated by the High Court in Toll (FCGT) Pty Ltd v Alphapharm Pty Ltd:[8]

This Court, in Pacific Carriers Ltd v BNP Paribas,[9] has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.[10]

[8](2004) 219 CLR 165, 179 [40].

[9](2004) 218 CLR 451.

[10]Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, 461-462 [22].

Insofar as contextual matters are concerned, it may be observed that the opening words of the terms are as follows:

In full settlement of the matters the subject matter of the proceeding the plaintiffs and the defendant agree as follows …

The original terms were constituted by a handwritten document (written in several hands) and produced at the conclusion of a mediation. The opening words of the terms and the circumstances support the view:

(a)that the drafting may not be as precise as would be the case if the terms were the product of extended reflection;
(b)that the terms reflected a compromise entered into between persons having a prior history of dealing with each other with respect to the subject matter of the terms which may inform the meaning of factual references; and
(c)that the terms were intended to achieve finality as between the parties in respect of the subject matter of the proceeding.

Clause 1

Clause 1 provides:

The defendant to transfer all the right, title and interest that he has or shall have, to such person or entity as shall be nominated by the plaintiffs, in respect of the following:
(a) Kiefernstrasse 19 and Kiefernstrasse 19b, Dresden, Germany;
(b)17.4473 hectares of land in Repy, as defined in the particulars under paragraph 6 in the amended statement of claim herein;
(c)approximately 0.8 hectares of land in Kbely, as defined in the particulars under paragraph 6 in the amended statement of claim herein;
(d)approximately 364 hectares of land in Sucha, as defined in the particulars to paragraph 6 of the amended statement of claim hereto.

This clause does not apply to any interest in land purchased by the defendant as from this date.

The terms of clause 1 are relatively straightforward. They provide that the starting point of the settlement is an agreement by the defendant to transfer specified property for the benefit of the plaintiffs entirely.

Nevertheless, six matters deserve further preliminary consideration. First, the defendant’s interest in the properties is described as “all the right, title and interest (the defendant) has or shall have … in respect of” the specific properties (my emphasis). I accept such description was apt to encompass interests in land in respect of which the defendant had made restitution claims which were not finalised at the date of settlement.

A potentially more difficult question is whether the obligation to “transfer” extends to rights to alternative land or compensation which might be granted with respect to claims for restitution of the specified land.

I accept the submission of Mr Williams that the words “right, title and interest” in land are ordinarily to be understood as embracing rights in rem only. The words “right, title and interest” are apt to describe a legal or equitable estate or interest in the land or in the present case, the civil code equivalent pursuant to the relevant law.

It is strongly arguable the words “in respect of” are sufficiently wide, however, to describe other interests relating to the land including specifically potential rights to alternative land or compensation granted upon the determination of restitution claims with respect to any of the nominated properties.

It is unnecessary to attempt to finally determine the hypothetical potential ambit of the phrase “right, title and interest… in respect of” in the present case, having regard to the sequence of events which has occurred and which I shall describe below.

Secondly Czech law permits different ownership of land and fixtures upon it. The interests potentially transferable were not necessarily directly comparable to interests in land under Victorian law.

Thirdly it is to be noted that there is no sunset provision contained in clause 1 as to when the rights which it is contemplated may accrue, must accrue. More particularly it is not provided that such rights are limited to those as shall accrue within a period enabling their transfer within 12 months (this brings a time limit adopted in clause 3). It is not contemplated the terms will necessarily be capable of complete performance without some material delay.

Fourthly the clause contemplates transfer to a nominee of the plaintiffs. The evidence is that such a nomination was necessary for an effective transfer pursuant to Czech law. At the date of settlement, land could only be transferred to a citizen of the Czech Republic, or to a corporate entity incorporated pursuant to Czech law.

It follows that the parties must have contemplated some time would be taken up by the nomination process.

Fifthly it is to be observed that the obligation to transfer under clause 1 is not expressly time limited.

Sixthly the description of the relevant properties varies in the manner in which they are particularised:

(a) the Dresden property is described by street number;
(b)the Repy property is defined by area, general location and reference back to the amended statement of claim;
(c)the Kbely land is similarly defined but the area is said to be approximate;
(d)the Sucha land is similarly defined but the area is again said to be approximate.

In each case a further description of the land would be necessary for the purposes of effecting transfer. The evidence is that the origin of the descriptions in the terms is to be found in two lists of properties prepared by the defendant prior to the commencement of the proceedings between the parties[11] and describing the property interests held by his father and mother at the date his parents fled from Czechoslovakia. The relevant properties were further described in evidence before me and in particular by way of the evidence of the defendant. As at the date of settlement, the properties and more particularly the defendant’s interest in them required further particularisation before transfer documentation could be prepared.
[11]Exhibits G and H.

Clause 2

Clause 2 provides:

To give effect to paragraph 1, the defendant will sign all necessary documents and give all necessary documents and attend at any place as required by law in respect of the signing of such documents.

The evidence is that the transfer pursuant to Czech law of a right of ownership to real property required first a written agreement between the owner as seller and the purchaser of the land, building or both, and secondly, the registration of the transfer in the Real Estate Register initiated by a formal application for registration of transfer submitted by the purchaser or the seller or both. The Cadastral Office registers the transfer with retroactive effect as of the date of delivery of the application to the Real Estate Register. If the transfer is not registered in the Real Estate Register, the ownership right to such real estate does not pass to the purchaser.

There is some dispute as to the ambit of clause 2 of the terms. In my view, first, the words “to give effect to” are not intended to introduce obligations exclusive of other steps necessary to perform the defendant’s obligation to transfer. Secondly, the obligation to sign and give all necessary documents is, however, self-evidently not an obligation to “prepare” all necessary documents. Thirdly, both the general obligation to transfer and the specific obligation to sign and give, must be understood to be underpinned by the implied obligation to co-operate to give effect to the contract:

It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract.[12]

[12]Butt v McDonald (1896) 7 QLJ 68, 70-71 (Griffith CJ); Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126, 142.

The amended statement of claim pleads two implied terms:

The parties and each of them would
(i)do all things reasonable, and necessary to be done by them and each of them to carry the agreement into effect;
(ii)co-operate fully with each other party and act in good faith in seeking to carry the agreement into effect.

The defendant did not take issue with the first term pleaded, but contests the second.

It is not in my view necessary to finally decide whether the second term is to be implied as pleaded, but I doubt that it is. The reasonable onlooker would not have readily inferred that the defendant accepted such a general and ill-defined obligation having regard to the history of the matter. This said, however, it seems to me that in one particular respect the parties must be taken to have contemplated the defendant would act in good faith. It was reasonably necessary if the plaintiffs were to have the benefit of property the subject of claims as yet undetermined and falling within the scope of clause 1, that the defendant would prosecute such claims in good faith. An obligation to act in good faith in this respect should be implied in order to protect vulnerable parties from conduct which would subvert the original purpose for which the contract was made. It should be regarded as an ad hoc implication meeting the tests laid down in BP Refinery (Westernport) Pty Ltd v Shire of Hastings[13]; see Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL & Ors.[14] The defendant’s implied obligation to do all things reasonable and necessary to be done to give effect to the agreement embraced an obligation to act in good faith in this respect.
[13](1977) 180 CLR 266.
[14][2005] VSCA 228, [25] (Buchanan JA).

Clause 3

Clause 3 provides:

If by reason of applicable law, or some other cause, paragraph 1, or any part thereof, cannot be given effect to within 12 months of the date of these terms in respect of a particular property or properties, the defendant shall at the direction of the plaintiffs and at their cost, take all reasonable steps to sell such property or properties at best market value and shall pay the net proceeds of such sale, after the deductions of all expenses, to the plaintiffs or at their direction.

The opening phrases of clause 3 specify a precondition to its operation. The ordinary meaning of the words “cannot be given effect to” is in contrast to words such as “are not given effect to”.

The clause is concerned with frustration of clause 1 by reason of factors external to the parties. The words “by reason of applicable law, or some other cause” refer to such a cause.

Such a construction gives clause 3 a complementary role to clause 1, which imposes the primary obligation to transfer the defendant’s interest in the specified properties. The land in issue is not necessarily to be regarded simply as a commercial asset. It formed part of the plaintiffs’ claimed family inheritance. The effect of the settlement was thus not merely to give them financial compensation but part of this inheritance. It should thus not be readily assumed that the parties intended to provide for sale of the property as an outcome, save in circumstances where the transfer of the land to the plaintiffs could not occur.

In turn, restriction of the circumstances in which the secondary obligation to sell crystallises, protects the defendant against the potentially onerous obligations involved in selling diverse properties of complex characteristics in three jurisdictions.

I therefore do not accept that as the defendant contends, the opening words of clause 3 should be read in effect as “if any part of paragraph 1 is not given effect within 12 months of the date of these terms …” Such a construction does not give full and proper effect to the language adopted by the parties and is not supported by the weight of contextual consideration.

The defendant’s further submissions focussed particularly upon the interpretation of the words “at the direction of the plaintiffs” which condition the obligation of the defendant to sell.

The defendant submits that the effect of the condition is that if the circumstance initially specified in clause 3 arises, the defendant is under an obligation to sell the property in issue. He submits that the words “at the direction of the plaintiffs” govern the mode of sale, but not the obligation to sell, which it is submitted automatically supersedes the obligation to transfer under paragraph 1 once the terms of the initial words of clause 3 are met.[15]
[15]The defendant did not in fact attempt to sell any property in accordance with this construction, nor seek any directions as to the mode of sale as he contends the clause required.

The contrary view is that the use of the word “shall” connotes a mandatory obligation (as the defendant submits) but one which the plaintiffs contend arises only upon the giving of a direction to sell. The word “shall” qualifies the word “sell” not “direct”. The clause provides the defendant shall “at the direction of the plaintiffs … sell” not that the defendant “shall sell in accordance with the direction of the plaintiffs”.

In my view, this construction accords better with the ordinary meaning of the language than that submitted on behalf of the defendant.

The defendant further submits that the clause should be construed as giving effect to an agreement intended to finalise the dispute with expedition.

The terms contemplated that clause 1 ought to be the primary mechanism. However, if that mechanism could not be given effect to within 12 months, the terms contemplated moving to the secondary mechanism in clause 3. This would conclude the arrangements with the greatest possible expedition in the event the primary mechanism proved ineffective within the nominated period.

This submission begs the question whether in fact the taking of reasonable steps to sell a property at best market value, and the payment of the net proceeds of such sale to the plaintiffs, would in fact be more expeditious than a transfer of the property to the plaintiffs, if such transfer became practically feasible after the expiration of 12 months. There is no sensible basis upon which to conclude that it necessarily would. It certainly would not do so in the case of a transfer process commenced but not completed during the 12 month period due to some practical difficulty causing short delay.

Conversely, the construction for which the plaintiffs contend allows the ongoing benefit of the prospect of transfer to be assessed against the probable costs and difficulty of sale. Mr Williams (for the defendant) submitted that if it were intended that the clause convey this benefit to the plaintiffs, there would be no need for the sunset provision of 12 months. It seems to me, however, that it was plainly the parties’ intention in the first instance that the properties would be transferred to the plaintiffs. It is not surprising that the fall back alternative of sale should be agreed to arise only after 12 months and in specified circumstances. As I have said, the alternative of sale did not give the plaintiffs part of their inheritance and also had the potential to impose extensive and potentially difficult practical obligations upon the defendant. It was certainly not one which was necessarily for the defendant’s benefit.

It is to be noted that clause 3 applies if paragraph 1 “or any part thereof, cannot be given effect to within 12 months”. It would follow that if any claim with respect to the specified property remained outstanding after 12 months, then on the defendant’s construction, whatever the then status of that claim or its ultimate success, no transfer of such property to the plaintiffs could be required thereafter. This is so draconian a consequence that it does not favour the defendant’s construction.

The plaintiffs also submit that the use of a variant of the phrase “at the direction of the plaintiffs” in the ultimate phrase of the clause is significant:

… and shall pay the net proceeds of such sale, after the deduction of all expenses, to the plaintiffs or at their direction.

The plaintiffs submit that this use of a variant of the phrase “at the direction of” connotes an option because payment is to be made to the plaintiffs unless they choose to direct otherwise.

Contrary to this submission, it seems to me that in this context the phrase is concerned with mode of payment and that, if anything, the second use of the phrase tends to support the defendant’s construction of the first use of the phrase as one concerned with mode of sale.

Nevertheless, I do not regard this consideration as determinative. Both the natural meaning of the words used and the other contextual matters I have referred to favour the plaintiff’s construction of the phrase “at the direction of”.

Moreover, whether the words “at the direction of” themselves be regarded as simply empowering the plaintiffs to direct the defendant to sell in a particular manner (as the defendant contends) or not, I am not persuaded that the clause read as a whole requires the plaintiffs to direct a sale if the initial requirements of the clause are met.

The clause does not so expressly provide, and it is not necessary to imply such a requirement to give it efficacy. Further, there are substantial reasons to doubt that this was the parties’ intention (which I have referred to above) and the implication cannot be said to “go without saying”.[16]
[16]Cf Codelfa Construction Pty Ltd v State Rail Authority of NSW 149 CLR 337, 346-347 (Mason J).

Clause 4

Clause 4 provides:

The plaintiffs to be responsible for and pay in the first instance all transfer costs, expenses, taxes, duties, levies and charges in any way payable in respect of the transfer or sale of the properties.

The operation of this clause appears relatively straightforward. Insofar as some charges the subject of it may require ascertainment in the course of a sale, the costs in issue may be regarded as giving rise to an obligation which crystallises when the relevant charge is ascertained and levied.

The operation of the obligation to pay “in the first instance” was also the subject of contention. Once again, the better view is that the obligation to pay in the first instance is dependant on ascertainment of the appropriate charge. Insofar as such ascertainment might occur at the time the defendant held proceeds of sale, he would be entitled to deduct such ascertained costs as were unpaid pursuant to clause 3.

Clause 5

Clause 5 provides:

The defendant to pay to the solicitor for the plaintiffs the sum of $150,000 in part payment of the plaintiffs’ costs on or before 23 June 2001.

The defendant paid the sum payable pursuant to this clause.

Clause 6

Clause 6 provides:

In the event that the defendant breaches any term, condition or warranty in this agreement, then the plaintiffs shall be entitled to enter judgment for an order that the defendant pay equitable compensation for breach of fiduciary duty in respect of each of the Properties and interests in the Properties (as defined in the amended statement of claim) recovered or obtained by him, together with the costs of entering such judgment, and the production of these terms of settlement shall be conclusive evidence of the defendant’s irrevocable consent to the entry of such judgment.

It is this clause pursuant to which the plaintiffs now seek primary relief.

Clause 7

Clause 7 provides:

The parties shall forthwith consent to orders of the Court that the proceeding be struck out with no order as to costs, together with a right of reinstatement for the purpose of enforcing these terms.

Pursuant to this agreement the Court ordered by consent on 28 February 2001 that the proceeding be dismissed with no order as to costs. The proceeding was reinstated by order of Gillard J made on 8 July 2005.

Clause 8

Clause 8 provides:

The parties agree to release each other from all actions, suits, demands, liabilities and costs arising out of or in any way related to the subject matter of the proceeding.

This clause provides for a mutual release.
Clause 9

Clause 9 provides:

The defendant warrants that:
(i)he has not reduced his right, title and interest in the properties the subject of these terms since the commencement of the proceeding;
(ii)the properties the subject of these terms, or any of them, are not encumbered;
(iii)that he shall not deal with the properties the subject of these terms otherwise than in accordance with these terms; and
(iv)that until transfer or sale he will pay costs, taxes and expenses associated with each property the subject of these terms.

There is dispute concerning the performance of warranties II, III and IV raising individual issues of construction arising on the facts to which I shall further refer.
The Performance of the Terms

I shall set out a skeleton account of relevant dates involving dealings as between the parties and their representatives. That history is somewhat complicated by the continuing history of the determination of restitution claims by Czech authorities and the parties’ response to those determinations. Although this latter history complicates the narrative it is necessary to make some reference to it in order to understand the terms of the communications between the parties.

Following the making of consent orders in this Court at the end of February 2001, Alexandra instructed a Czech attorney named Svoboda to advise and assist the plaintiffs with respect to the transfers of land contemplated under the terms. These instructions were given on 1 March 2001. In the event the process of advice proved relatively lengthy.

Svoboda’s evidence is that there were complications and delays, first in searching relevant title details, secondly in establishing an appropriate corporate nominee to receive property on behalf of parties who were not Czech citizens, and thirdly in resolving the most advantageous manner in which to proceed from a taxation point of view.

Again in the immediate aftermath of settlement, the solicitors for the defendant Messrs Findlay Arthur Phillips wrote on 6 March 2001 to the plaintiffs’ solicitor advising that the defendant would sign transfers relating to the Dresden properties at the German Embassy in Prague.

During 2001 Svoboda carried out initial title searches.

On 9 October 2001, the solicitor for the plaintiffs wrote to Findlay Arthur Phillips attaching a schedule of monies payable relating to the Dresden properties and requesting payment.

On 29 October 2001, Findlay Arthur Phillips advised that they no longer had instructions to act for the defendant.

In March 2002, the Czech Land Office made successive determinations relating to land at Kbely and at Repy. On 20 March 2002, land at Kbely was restituted to Helena (who by that date was able to claim as a Czech citizen although not resident in the Czech Republic) and the defendant in one eighth shares each.

On 21 March 2002, some land at Repy was restituted to Helena and the defendant and some to the defendant alone. Other applications were refused on the grounds that the land had been built upon.

On 26 April 2002, the defendant appealed the decision of the Land Office of 21 March 2002 and alleged that Helena was not entitled to restitution.

In May 2002, a corporate entity was established in the Czech republic on behalf of the second, third and fourth plaintiffs.

On 5 June 2002, Svoboda wrote to the defendant requesting details of his property holdings in the Czech Republic and Slovakia and seeking his co-operation in achieving a transfer of the properties. The letter also asked why the defendant had appealed the 21 March 2002 decision of the Land Office.

On 19 September 2002, the defendant responded to Svoboda asserting that he had complied with the terms of settlement and questioning the nature of Svoboda’s retainer.

On 16 April 2003, the defendant’s appeal concerning the decision of 21 March 2002 was dismissed.

On 15 June 2003, some further plots at Repy were restituted to the defendant and Helena in half shares and restitution was refused with respect to others because they had been built upon. The decision with respect to this latter land known as the “car park land” was appealed by the occupant of the land.

On 26 September 2003, Svoboda delivered a framework agreement to the defendant providing for future dealings with land in the Czech Republic and Slovakia, together with letters explaining their contents and asking that they be signed in order to give effect to the terms of settlement.

On 3 October 2003, Dammholz, a Sydney solicitor qualified to act in Germany and acting on behalf of the plaintiffs, delivered to the defendant a transfer agreement providing for the transfer of the Dresden land pursuant to the terms of settlement.

On 10 October 2003, Svoboda wrote to the defendant seeking an answer to the letter of 26 September and requiring a response by 7 November 2003.

On 20 October 2003, Svoboda wrote a letter dated 17 October 2003 in English to the defendant and his attorney Buresova demanding a response and attaching draft agreements and a Czech translation of the letter.

On 10 November 2003, the defendant wrote to Svoboda alleging harassment and saying he needed more time to consider the agreements and would reply in due course.

On 25 November 2003, the defendant wrote to Svoboda refusing to sign the documents saying they had nothing to do with the settlement and alleging repudiation by the plaintiffs of the terms.

On 29 November 2003, the defendant wrote to Dammholz refusing to co-operate in the execution of the Dresden transfer documentation.

On 3 February 2004, Svoboda wrote to the defendant enclosing a copy of the Dresden transfer documentation.

On 10 February 2004, Svoboda arranged for Dr Blahoutova to translate the agreements into Czech and deliver them to the defendant. Blahoutova did so.

On 20 February 2004, Svoboda delivered Czech translations by hand to the defendant’s home in Prague at Hastalska 12.

After servicing authorities and an insurer in Dresden (at the request of the plaintiffs) billed the defendant in respect of his share of the Dresden property, his attorney Buresova wrote to German authorities on 19 January 2005 saying he was not liable for service charges.

On 7 July 2005, the defendant entered into a written lease of land at Repy with one Tusjak and received rent from that time.

On 30 August 2006, by decision of the Land Office, further plots at Repy were restituted to Helena and the defendant.

On 26 September 2006, by decision of the Land Office, certain land at Kbely was not restituted to the defendant and Helena.

On 28 December 2006, by decision of the Land Office, some former military land plots at Repy were restituted to the defendant and Helena and some were not.

Alleged Breaches of the Terms

In summary, the plaintiffs allege that the defendant has breached the terms of settlement:

(a)by lodging the appeal of April 2002 against the Land Office decision of 21 March 2002, allegedly in breach of clause 9(iii) of the terms requiring the defendant not to deal with the properties the subject of the terms otherwise than in accordance with them, and further in alleged breach of the defendant’s duty to co-operate[17] (ASC [22] and [23]);
[17]Amended Statement of Claim November 2007.
(b)by letter of 19 September 2002 failing and refusing to provide confirmation of title details and an explanation of the above appeal in response to Svoboda’s letter of 5 June 2002 in alleged breach of the defendant’s duty to cooperate (ASC [25]);
(c)by refusing in November 2003 to sign the proposed agreement relating to various Czech properties in alleged breach of clause 2 of the terms (ASC [29]);

(d)by failing and refusing to transfer the Czech properties in circumstances where it is alleged the law of the Czech Republic obliged him to effect such transfer (ASC [29B]);
(e)by failing and refusing in November 2003 to sign the proposed transfer documentation relating to the Dresden properties and by failing to articulate any objection to such documentation in alleged breach of clause 2 (ASC [33] and [34]);
(f)by failing and refusing to attend at the offices of the plaintiffs’ solicitors in Prague in February 2004 in order to sign the proposed transfer documentation relating to the Czech Republic and Dresden properties in alleged breach of clause 2 (ASC [37]);
(g)by failing and refusing to sign Czech language versions of the proposed transfer documentation in alleged breach of clause 2 (ASC ]39]);
(h)by failing to disclose in alleged breach of the warranty contained in 9(ii) of the terms:
(i)the encumbering of the property at Repy by way of competing claims, asserted third party rights of possession and occupation and by the presence of improvements including public buildings, roads and infrastructure;
(ii)that the property at Sucha was the subject of court proceedings in which 18 hectares was being claimed from a third party who had obtained an unlawful transfer of such land (ASC [42]);

(i)by failing to pay taxes and costs due with respect to the properties in Dresden, allegedly in breach of 9(iv) of the terms requiring that until transfer of the land the defendant would pay “costs, taxes and expenses associated with each property and the subject of these terms”;
(j)by offering the property in Slovakia for sale, allegedly in breach of the warranty that the defendant would not deal with such property;
(k)by entering into a lease agreement with one Tusjak in respect of a portion of the land at Repy, allegedly in breach of the obligations under 9(iii) of the terms requiring the defendant not to deal with the property otherwise than in accordance with the terms.

The Amended Defence

The defendant:

(a)denies that the lodging of the appeal on 21 March 2002 breached the terms;
(b)admits correspondence with Svoboda in June and September 2002 but denies his letter breached the terms;
(c)admits receipt of the proposed framework agreement in September 2003 but says:
(i)it was not open to the plaintiffs to call for transfers more than one year after the terms were entered into; and
(ii)the documentation forwarded went beyond transfer documentation of the type contemplated by the terms;

(d)denies his refusal to sign the proposed framework documentation was wrongful;
(e)denies that the proper law of sub-clauses 1(b) and (c) of the terms was the law of the Czech Republic and says the proper law of the terms was the law of Victoria and further denies breaching the obligations alleged under Czech law;
(f)says that the plaintiffs were not entitled to call for a transfer of the Dresden property more than one year after the terms were entered into and that the documentation was complex and in the German language unaccompanied by translation into either the Czech or English language so he could comprehend them;
(g)denies that the Dresden transfer documentation constituted a proper and effective transfer agreement and that he failed to articulate proper objection to it;
(h)takes issue with the status of Svoboda and does not admit failing to attend to execute transfer documents at Svoboda’s office;
(i)says that by calling on the defendant to execute transfer documents in the form requested, and by instituting a claim for relief based on this refusal to execute such documentation, the plaintiffs have insisted on performance of the terms in a manner fundamentally inconsistent with such terms and have thereby repudiated the terms, which repudiation is accepted;
(j)denies that he knew certain of the properties were encumbered at the date of entering into the terms;
(k)denies that he is liable under the terms for the whole of the costs and taxes payable with respect to the Dresden property pending transfer pursuant to the terms, alternatively says he was liable for a part of such charges only after the plaintiffs took into account income received from the Dresden property and advised him of any balance owing and the plaintiffs have not informed him of any such balance owing. Alternatively, the plaintiffs have waived any breach with respect to non-payment of costs and taxes in respect of the Dresden property;
(l)denies he has offered the property in Slovakia for sale and that he has breached the terms by so doing;
(m)denies he has purported to lease property at Repy to Tusjak and that he has breached the terms by so doing;
(n)denies that the plaintiffs are entitlement to judgment in accordance with clause 6 of the agreement;
(o)says further that clause 6 is so uncertain as to its meaning or effect as to be void for uncertainty;
(p)says the relief sought would impose a penalty not reflective of any loss suffered by the plaintiffs as a consequence of breach of the terms, and that he is entitled to avoid such terms as imposing a penalty;
(q)further says the defendant has acquiesced in the plaintiffs’ construction of clause 3 of the terms and waived any entitlement they may otherwise have had to a different construction of clause 3. Further it would be unconscionable if the plaintiffs were to resile from the common assumption upon which the parties proceeded in respect to the meaning of clause 3.

The issues raised by the pleadings with respect to breach of the terms and consequent liability which I have summarised above fall to be determined as preliminary issues save for the question of penalty in respect of which I have previously ruled the allegations raised should not be decided on a preliminary basis.

Although the pleadings raise a series of complex issues, I have come to the view that it is sufficient in the first instance to consider the plaintiffs’ case with respect to the Dresden transfers. I do so in part because it is apparent that the settlement was founded upon an agreement to transfer specified properties. Accordingly, it is difficult to conceive of a more fundamental breach of the terms than a failure to transfer property in accordance with it.

I do so secondly because the issues raised with respect to the Dresden transfers crystallise relatively simply the core contentions of the parties.

On 6 March 2001, the Melbourne solicitors for the defendant wrote to the solicitor for the plaintiffs under the heading “Re: Talacko ats Talacko, Transfer of German Properties” and stated in part:

We are instructed that our client wishes to sign the transfer papers personally rather than by an attorney. However, our client is about to return to Prague for an indefinite period. As such, our client suggests that the papers be forwarded to him in Prague and he will attend at the German Embassy in Prague and sign them there.
Our client’s address in Prague is:
Mr Jan Talacko
Hastalska 12
11000 Praha 1
Czech Republic.

The evidence is that in October 2003, Dammholz prepared on behalf of the plaintiffs transfer documentation with respect to the defendant’s interests in the Dresden properties.

The evidence further establishes that Dammholz was qualified to prepare the necessary documentation at that time and is qualified to give evidence before this Court as to its adequacy.

The uncontested evidence of Dammholz is that the relevant transfer documentation complied with German law.[18]
[18]Such transfer documentation required execution as a notarial deed.

Further, it is admitted that the transfer documentation was received by the defendant when it was forwarded to him for signature.

I am satisfied that the plaintiffs proffered to the defendant transfer documentation which he was required to sign and give to the plaintiffs’ legal representatives in order to effect a transfer of the Dresden properties in accordance with clauses 1 and 2 of the terms.

The defendant seeks to justify his refusal to execute the Dresden transfer documentation on two primary bases:

(a) the effluxion of one year since the making of the terms; and
(b) the fact that the documentation was in German.

The first proposition turns on the question I have addressed above at [49] to [67]. I do not accept that it is implicit in clause 3 of the terms that the right to require a transfer pursuant to clause 1 terminated after the effluxion of one year.

There is no evidence of a frustrating circumstance satisfying the clause 3 requirement that the transfer could not be effected in this time. Further for the reasons I have given even if such a circumstance existed the obligation to transfer did not cease unless the plaintiffs’ elected to obtain a sale under clause 3.

It is also apparent that the documentation was required to be in German to be effective, and that the terms did not require a translation to be provided to the defendant, although they did entitle the defendant to the payment of costs with respect to the transfer transaction. There is no evidence that the defendant requested that an independent translation of the documentation be undertaken or sought to obtain advice about it.

When Dammholz first forwarded the transfer documentation to the defendant on 3 October 2003 the covering letter stated:

The contents of our draft is very brief and straightforward and simply says that you transfer all of your interest in subject properties to Margaret and Helena Talacko. You may of course obtain a translation in the English or Czech language, however, for practical reasons the original and signed document must be in the German language.

The terms of this letter were entirely reasonable and appropriate having regard to the terms of settlement.

The documentation itself further recited the fact of an offered opportunity for translation.

The defendant did not reply to this letter by seeking a translation. On 29 November 2003, he wrote to Dammholz in the following terms:

I have received your letter of October 3 2003.
The contract is in German and I cannot understand it.
Moreover, your request appears to be outside the terms of the settlement.
In any case, your client’s actions in the Czech Republic and elsewhere since April 2001 can only amount to a repudiation of the settlement.

This written refusal to respond reasonably with respect to the documentation received from Dammholz in October 2003 was followed by a continuing failure to either execute the documentation or stipulate a basis on which the defendant would do so.

For the reasons I have stated above:

(a)the use of the German language in the transfer documentation did not justify this refusal to sign;
(b)the request made on behalf of the plaintiffs for execution of the documents was not outside the terms of settlement because of the effluxion of time.

By way of secondary defences with respect to the plaintiffs’ allegations concerning the Dresden transfers, the defendant contends:

(a)that the plaintiffs repudiated the terms by calling on the defendant to execute transfer documentation fundamentally inconsistent with the terms; and
(b)that the plaintiffs have acquiesced in the defendant’s construction of clause 3 of the terms since mid 2002 and thereby both waived any entitlement they might otherwise have had to contend for any other construction of clause 3 and rendered it unconscionable to assert an alternative construction of clause 3.

This last proposition was not pursued at trial. Nor could it have been. There is no evidence that the plaintiffs relevantly acquiesced in the defendant’s construction of clause 3. On the contrary, the evidence is that the plaintiffs proceeded on the basis that they were entitled to a transfer of the specified properties after the passage of one year.

Further, the defendant’s case as to repudiation was refined in final address as follows:

41.By requiring the defendant to execute transfers after clause 1 had ceased to have effect, and further by requiring him to execute the Svoboda documents despite the numerous respects in which those documents went beyond the obligations contained in the Terms, the plaintiffs were seeking to perform the contract in a manner substantially inconsistent with their obligations. Their obligations were to give effect to the Terms in such a manner that the defendant got what he had bargained for – an expeditious end to, and release from, any obligations to the plaintiffs. That is indeed the only benefit which the defendant obtained from the Terms. It is a benefit which he would have been largely deprived of by the course on which the plaintiffs were intent, and in which they persisted (including by the making of threats of legal action, and ultimately in taking such action).
42.In these circumstances, the plaintiffs’ conduct in demanding the execution of the various transfer and other documents, and in persisting with such demands, was repudiatory.

Acceptance of repudiation
43.It may be doubted whether either of the letters written by the defendant in November 2003 (to Dammholz CB 298 and to Svoboda CB 230) in which he asserted that there had been repudiation by the plaintiffs amounted to an acceptance of such repudiation. Any allegation that they did so is not pressed. Accordingly, the effective acceptance of repudiation occurred on the filing of the defence herein on 21 June 2006 in which, by paragraph 18(e), the defendant expressly accepted the repudiation.

It can be seen that the defence case is that the alleged repudiation was not accepted until 21 June 2006.

It follows that even on the defendant’s own case, the defendant failed to execute the Dresden transfers between their delivery in October 2003 and June 2006, during which period the terms remained on foot.

The reasons offered for the defendant’s failure to execute the documentation were variously described in evidence by the defendant, but I am satisfied that the fundamental reason was simply that he did not accept the plaintiffs were entitled, as a matter of fairness, to a transfer of the properties the subject of the terms. In turn, he wished to evade compliance with his obligation to execute the transfer documentation. Thus, he variously stated concerning his obligations with respect to the terms:

·It was his job to recover the property and he had to correct the evils of the past;
·You don’t offer a bunch of flowers to someone who attacks you;
·He did all the work;
·He spent a lot of money by way of incidental costs in pursuing recovery of the land;
·Helena did nothing by way of comparable effort;
·Peter visited the country but couldn’t bear it and didn’t want to come back[19]
·“I know I spent a lot of time a lot of … a lot of expenses and I could not see that somebody could come along and get the benefit of all my work without moving a finger and I think on reflection if that was the case I would do the same thing again because that’s how I felt at the time.”[20]

[19]“He couldn’t bear the dirt, the filth, the smell and the destruction of characters.”

[20]Speaking of his appeal against the grant of land to Helena at Repy.

These views are to be understood against a background of serious antipathy to the plaintiffs arising in a context of perceived family grievance exemplified by the following statement about the list of properties prepared by the defendant in 1990:

This document I prepared in 1990 after I visited Czechoslovakia, 1991 and 1990 as well. After I visited to the Czechoslovakia for the first time. This document was given to my - I gave it to my brother. He informed me that he gave a copy of it to my sister, and I was very upset because I had not been talking to my sister for years after she threw my mother out of her house. I tried desperately and the - when the Czech and communism was over in Czechoslovakia I tried to rectify my relation- my relation with my sister, and I asked her to come along to my youngest son 21st birthday. The whole thing was an utter disaster. She left. Slapped my daughter and she said she'll never visit my place again. From then on I knew I could no longer have any relations with her.

It follows that I am satisfied:

(a)that the defendant was obliged to execute and deliver up the Dresden transfer documentation provided to him;
(b)that the failure to do so was actuated by extraneous considerations, inconsistent with the plaintiffs’ obligations under the terms and forms part of a larger body of evidence supporting the view that after receipt of the Dresden transfer documentation the defendant refused to proceed with the terms.

Repudiation

Although it may not strictly be necessary to do so having regard to the terms in which the defendant’s case was ultimately advanced with respect to repudiation, it is desirable for the sake of completeness to consider further the defendant’s allegations that the plaintiffs’ conduct prior to the delivery of the Dresden documentation constituted a repudiation of the terms.

The allegation of repudiatory conduct is founded upon complaints:

(a)that the plaintiffs sought transfers at a point in time when they were no longer entitled to do so by reason of the effluxion of one year after entry into the terms;
(b)that the draft documentation provided to the defendant for the purposes of effecting the transfer of properties in the Czech Republic and Slovakia (“the framework agreement”) was fundamentally inconsistent with the defendant’s obligation pursuant to the terms; and
(c)that the German documentation was not accompanied by an appropriate translation.

For reasons I have already stated, I do not accept that the first and third propositions have a sound basis. The second proposition requires consideration of the documentation in issue. This was provided to the defendant by Svoboda under cover of a letter dated 26 September 2003, which summarised its components and requested signature in the following terms (omitting formal parts):

You will find enclosed the following draft agreements and powers of attorney:
(i)Agreement, with annexed lists of restituted properties subject to the agreement;
(ii)Agreement on future assignment of claims and annexed assignment agreement – in respect of the Repy un-restituted land;
(iii)Agreement on assignment of [accrued] claims – in respect of the Repy un-restituted land;

(iv) Power of attorney.

In fulfilment of the Settlement dated 24 February 2001 before the Victorian Supreme Court, Australia, my clients require that you now promptly sign the above documents and send back to me the signed original of each document. The other powers of attorney will be annexed upon signature of the agreements by my clients, who are referred to as the plaintiffs therein.

The draft agreement contained detailed recitals by way of preamble and then stated that its object was to set out the procedure for the transfer of land to such persons or entities as should be designated for this purpose by the plaintiffs pursuant to the agreement in order to implement and give full effect to the terms. The agreement further sought as an object, to set out the procedure for transfer of ancillary compensation claims in respect of certain unrestituted land, as set out in part 3 of the agreement.

It also provided the further object:

JET (the defendant) hereby undertakes to carry out the terms of this Agreement in good faith and using his best endeavours. He will act at all times in the spirit of the Settlement and in such manner as to protect the best interests of the Plaintiffs. In particular, he undertakes not to take any action or cause any omission that would in any way obstruct, hinder, endanger or unreasonably delay the transfer of the legal title in the Land to the designated transferees.

Part 2 of the agreement provided for a procedure for the transfer of land. It contemplated that following the signing of the agreement, the plaintiffs’ legal representative would present the defendant with draft agreements relating to the Repy land, the Kbely land and the Sucha land.

It required the defendant to transfer the land described to nominated entities.

It provided for the payment of a token price for the various parcels of land.

It provided for the grant of powers of attorney by the defendant to the legal representatives of the transferees facilitating registration of the transfers.

It provided for an undertaking by the defendant to assist in and not endanger the process of registration of the transfers.

Part 3 of the agreement provided for the concurrent signing of an agreement for the assignment of claims with respect to compensation arising from land office decisions refusing restitution of land at Repy.

It further provided for the signature by the defendant of a power of attorney enabling Svoboda to represent the defendant in appeal proceedings against any decision of the land office not to restitute certain other plots at Repy, and to sign an agreement for the future assignment of such claims as and when they were determined by the relevant Czech authorities. It required the defendant to procure any third party employed by or acting on his behalf including his professional advisers to abide by and observe the provisions of the agreement.

The fourth part of the agreement provided for dispute resolution.

The fifth part of the agreement stated:

5.1This Agreement does not affect any rights and obligations existing between the Parties prior to the date of the signature of this Agreement. …
5.3This Agreement is executed in two counterparts in the English version and two counterparts in the Czech version. Both (the defendant) and the Plaintiffs (collectively) shall receive one counterpart in Czech and one counterpart in English.
5.4In the event of any discrepancy between the English and Czech version, the Czech version shall prevail.
5.5This Agreement enters into effect when signed by the Parties hereto (or their legal representatives).
5.6The parties acknowledge that they have read and understood the terms and conditions contained in this Agreement. In witness of their true and earnest will to accept the obligations arising for them from this Agreement, they attach their signatures hereto. The Parties hereby acknowledge receipt of respective copies of this agreement.

The annexures to the agreement and tendered in evidence described by lists parcels of land in the Repy area, the Kbely area and Holesovice area, and the Sucha area. They further set out a series of agreements relating to the assignment of claims. They also set out a form of power of attorney from the defendant in favour of Svoboda.

No reply was received from the defendant to Svoboda’s initial letter containing the above documentation and, on 10 October 2003, a request for response was made, threatening recourse to this Court if the documents were not executed by 7 November 2003. A copy of this letter was forwarded to the defendant’s legal representative in Prague, Dr Buresova.

A further set of the documentation was forwarded to the defendant and Dr Buresova on 17 October 2003, again demanding execution of the documents.

On 10 November 2003, the defendant responded to Svoboda reciting a history of the correspondence and acknowledging receipt of draft agreements and a power of attorney with a request that they be promptly signed and returned. The response noted that a copy of the correspondence had been sent to Dr Buresova “despite the fact that she is not instructed in the matters that you raise”. It continued:

This quick succession of correspondence together with the threats contained therein amounts to harassment which I find offensive .
Given the length of the documents, it is only appropriate that I be given sufficient time to study them, which I will do. I will return to you in due course.

On 25 November 2003, the defendant replied more fully:

I have considered the documents that you enclosed in your letter of 26^th September, including a power of attorney and lengthy contracts which purport to be drafted under the terms of a settlement agreed 23^rd February 2001. In your letter you claim that these are draft agreements, but then ask me to sign them. Furthermore, the agreements state that there are two versions one in Czech and the other in English and that where there are any discrepancies the Czech version will apply. Yet you have not supplied me the Czech versions. Under these circumstances, no reasonable person could sign any document irrespective of its contents.
Notwithstanding the inconsistencies, it is quite apparent that the documents that you have demanded that I sign do not conform with the settlement.
In fact, these documents diverge so far from the terms of the settlement that your clients’ threats of legal action ring empty. Given this attempt to coerce me into signing documents which clearly do not have anything to do with the settlement together with the various acts and omissions of your clients since April 1991, the only sensible conclusion is that your clients have repudiated the settlement and decided to do so some time ago.
As you must be aware, I am not in breach of the settlement. Given this fact and the facts mentioned above any application to the Supreme Court of Victoria for judgment will be vigorously defended. Should your clients proceed with an application, I will produce this letter together with your correspondence and the documents you are asking me to sign in evidence. Furthermore, given the nature of the documents you have provided, I will be seeking costs on a solicitor-client basis.

It can be seen that the divergence from the terms of settlement complained of is not particularised, but that the allegation of repudiation is expressly made.

As I have already noted the defendant’s response to the Dresden transfer documentation of 29 November 2003 also made a broad and unparticularised allegation that the plaintiffs’ actions “in the Czech Republic and elsewhere since April 2001 can only amount to a repudiation of the settlement”.

The amended defence[21] alleges in part that the documentation enclosed with Svoboda’s letter of 26 September 2003 went beyond a mere transfer of property in accordance with clause 1 of the terms of settlement in that it included the transfer of other properties and included other terms onerous to the defendant including, but not limited, to the granting by him of a power of attorney in favour of a person nominated by the plaintiffs.
[21][26].

By paragraph 39A, it is alleged that by calling upon the defendant to sign the proposed framework agreement relating to the Czech and Slovak land and the proposed Dresden transfer agreement, and by commencing the present action consequent upon such failure the plaintiffs continued to insist on performance of the terms in a manner fundamentally inconsistent with such terms and have thereby repudiated them.

In final address it was submitted:

(a)the framework agreement included land at Kolarova Road, Holesovice which was not the subject of the terms;
(b)the agreement was a framework agreement providing for further transfer documentation, which was not itself necessary as a matter of law;
(c)the documentation included powers of attorney with respect to the conduct of claims in the defendant’s name and it was unreasonable to expect him to execute such powers in favour of the plaintiffs’ lawyer;
(d)the framework documentation included present assignments of future rights (including in personam rights) when the terms required only that such rights be transferred (if at all) when they accrued to the defendant;
(e)the documents included warranties by the defendant which he was not required to give pursuant to the terms;
(f)the documents did not include Czech language versions which were, by reason of the terms, the legally effective version of the framework agreement.

I accept criticism (b) above is correct. Perhaps most fundamentally as Dr Ordnungova (who gave evidence as to Czech law as an independent expert on behalf of the plaintiffs) conceded, the terms did not require a framework agreement of the type put forward.

Nevertheless it is difficult to regard the request to execute one as an unreasonable step in attempting to give effect to the terms when regard is had to:

(a)the need to better ascertain and describe the property the subject of the terms for the purpose of effective transfer; and
(b)the need to establish legal mechanisms appropriate under the law of the Czech Republic and Slovakia in order to give effect to terms effected in Victoria.

I turn then to the two specific matters identified in the amended defence (other than the allegation made with respect to the effluxion of time).

The first is the inclusion of property not covered by the terms. It appears that the documentation did include property at Holesovice of limited nature, which had not been included in the terms. It is also apparent that reference to such property could readily have been struck out and that its inclusion might be said to demonstrate the wisdom of a framework agreement to better point the way forward.

Further, it is apparent that insofar as property owned by the defendant is concerned, the agreement correctly listed a whole series of properties he was required to transfer to the plaintiffs. In my view the inclusion of the Holesovice property cannot be regarded as repudiatory. It was a matter readily met by objection and severance.

The defendant sought to rely on the statement of Lord Wright in Ross T Smyth & Co v TD Bailey & Co.[22] It is appropriate to set the relevant passage out in full.
[22][1940] 3 All ER 60 at 72.

It must not be forgotten that repudiation of a contract is a serious matter, not to be lightly found or inferred. I cannot do better than quote the words of Lord Selborne in Mersey Steel & Iron Company v Naylor, Benzon & Co., 9 App. Cas. 434, at p. 438, where he says that you must look at the:
… actual circumstances of the case in order to see whether the one party to the contract is relieved from its future performance by the conduct of the other; you must examine what that conduct is, so as to see whether it amounts to a renunciation, to an absolute refusal to perform the contract, such as would amount to a rescission if he had the power to rescind, and whether the other may accept it as a reason for not performing his part …

The facts of that case are significant. The appellants had failed to pay for an instalment, not because they were either unwilling or unable to pay, but in a mistaken view of the legal position. It was held that there was no repudiation. At p. 445, Lord Watson scouted the idea that any departure whatever from the terms of the contract must be sufficient to entitle the other to set it aside.
I do not say that it is necessary to show that the party alleged to have repudiated should have an actual intention not to fulfil the contract. He may intend in fact to fulfil it but may be determined only to do so in a manner substantially inconsistent with his obligations, and not in any other way. However a mere honest misapprehension, especially if open to correction, will not justify a charge of repudiation. Here, there was no actual breach on the appellants' part. There was at most no more than offer or suggestion. This, I think, becomes clear when the whole course of the transaction before and after the amended invoice is taken into account. If that invoice had been seriously intended by the appellants or seriously regarded by the respondents, there must have been some reference to it at the time, and some claim to rescind there and then. In fact, it was first referred to when it was relied upon in the arguments before the Appeal Committee. It has the appearance of an afterthought and a lawyer's point.[23]

[23]Referred to with approval by Lord Wiberforce in Federal Commerce & Navigation Co Ltd v Molena Alpha Incorporated (The 'Nanfri') [1979] AC 757 at 778.

In the present case likewise, I am satisfied that the defendant now seeks to rely on “a mere honest misapprehension … open to correction”. The mere inclusion of the Holesovice property in the long list of particularised lots contained in the framework agreement cannot on any sensible basis be regarded as repudiatory.

Both the stated objects of the agreement and the provisions of clause 5.1 together with the evidence as to the plaintiff’s instructions to Svoboda and his own evidence support this view.

In so finding, I proceed on the basis the question of repudiation is to be ascertained objectively:

Repudiation is not ascertained by an inquiry into the subjective state of the mind of the party in default; it is to be found in the conduct, whether verbal or other, of the party in default which conveys to the other party the defaulting party’s inability to perform the contract or promise or his intention not to perform it or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way.[24]

[24]Per Brennan J Laurinda Pty Ltd v Capalaba Shopping Centre (1989) 166 CLR 623, 647.

In Green v Sommerville[25] Mason J stated:

It is a general principle of the law of contract that the court will not readily infer from a party's insistence on a wrong construction of a contract that he is unwilling to perform it according to its true construction.

[25](1979) 141 CLR 594, 611.

In the present case there has been no repudiatory persistence in an untenable construction of the terms.[26]
[26]See Summers v Commonwealth (1918) 25 CLR 144, 152 (Isaacs J) applying Cohen & Co v Ockerby & Co (1918) 24 CLR 298, and the statement of Lord Parmoor in Morris v Baron & Co (1918) AC 1. The decision of Isaacs J was affirmed on appeal ((1919) 26 CLR 180).

This is not a case where the plaintiffs knew the framework agreement made provisions contrary to the proper construction of the terms.[27]
[27]Cf Dimond v Moore (1931) 45 CLR 159 and Satellite State Pty Ltd v Jacquet (1968) 71 SR(NSW) 126.

In D.T.R. Nominees Pty Ltd v Mona Homes Pty Ltd[28] Stephen, Mason and Jacobs JJ stated:[29]

No doubt there are cases in which a party, by insisting on an incorrect interpretation of a contract, evinces an intention that he will not perform the contract according to its terms. But there are other cases in which a party, though asserting a wrong view of a contract because he believes it to be correct, is willing to perform the contract according to its tenor. He may be willing to recognize his heresy once the true doctrine is enunciated or he may be willing to accept an authoritative exposition of the correct interpretation. In either event an intention to repudiate the contract could not be attributed to him. As Pearson LJ observed in Sweet & Maxwell Ltd. v. Universal News Services Ltd:[30]
"In the last resort, if the parties cannot agree, the true construction will have to be determined by the court. A party should not too readily be found to have refused to perform the agreement by contentious observations in the course of discussions or arguments..."

In this case the appellant acted on its view of the contract without realizing that the respondents were insisting upon a different view until such time as they purported to rescind. It was not a case in which any attempt was made to persuade the appellant of the error of its ways or indeed to give it any opportunity to reconsider its position in the light of an assertion of the correct interpretation. There is therefore no basis on which one can infer that the appellant was persisting in its interpretation willy nilly in the face of a clear enunciation of the true agreement.

[28](1978) 138 CLR 423.

[29]432.

[30](1964) 2 QB 699, 734.

In Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd[31] Samuels JA, with whom Clarke JA agreed, said:[32]

Whether the party propounding an erroneous construction of the contract has put forward that construction in good faith is relevant to the question whether he evinced an intention not to be bound by the contract. (My emphasis, citations omitted)

[31](1992) 27 NSWLR 326.

[32]355.

In that case the respondent had made a bona fide assertion with respect to the contract and had not evinced an intention to regard itself as free of its obligations. Conversely, the appellant’s response based on a different, but also erroneous, construction of the contract went so far as to refuse to perform any further obligations under the contract and was characterised as constituting repudiation.

The critical question is whether the inference of objective repudiation can be drawn. Thus, in Cole Sopov & Anor v Kane Constructions Pty Ltd Maxwell P and Kellam JA observed[33] with respect to the decision of the High Court in DTR Nominees:

What mattered was not the bona fide belief of the alleged repudiator but the character of its conduct: rather than “persisting willy nilly”, the repudiator was engaging in genuine disputation with the other parties about the true construction of the contract. The inference of repudiation could not reasonably be drawn.

[33][2007] VSCA 257 [15].

In the present case there is no basis for concluding that the inclusion of the Holesovice property in the framework agreement was other than a bona fide mistake which would have been rectified if identified. The plaintiffs were engaged in a genuine effort to implement the terms. Further, there was no willy nilly persistence in a false construction of the terms.

The amended defence further specifically raises the inclusion of a request to execute a power of attorney in favour of a person nominated by the plaintiffs as going beyond the terms and founding the allegation of repudiation.

Svoboda’s evidence was that the power of attorney was appropriate if not strictly necessary:

There might have been other ways of doing it but what I considered was they were appropriate, because there were ongoing restitution proceedings and we needed to have some kind of influence on these restitution proceedings.

It seems to me that such a mechanism was one which could have been utilised to give effect to the terms, but was not one which the defendant could have been required to agree to if he objected to it. In particular, it was open to the defendant to object to the potential personal liability for costs in consequence of proceedings conducted in his name, but not for his benefit. As the evidence of Dr Ordnungova made clear, it was not, in strictness, necessary that the defendant place himself in this position in order to perform the terms.

Once again, however, the relevant portion of the framework agreement was clearly severable and I am satisfied that the proposed power of attorney was put forward honestly as a convenient mechanism to implement the terms. The power of attorney was open to objection, but no specific objection was taken. Rather, the defendant chose for unrelated reasons to simply refuse to proceed with the terms. It was not a case of conscious persistence in a particular construction of the terms, in a situation where the plaintiffs should have understood and accepted the specific matters now complained of should not be persisted in.

In summary, I do not accept that the framework documentation proffered by Svoboda constituted a repudiation of the terms either by reason of the inclusion of some false title details or the provision of the proposed power of attorney or the combination of these matters.

Likewise, I do not accept that there are other matters falling within the generic but unparticularised description pleaded “other terms onerous to the defendant” which evidence a repudiation. The other matters referred to in submission related to the requirement for a framework agreement as such, the present assignment of future rights (which I shall assume for present purposes went beyond the requirements of the terms), supplementary warranties which the terms did not require the defendant to give, and the failure to supply the Czech version of the documentation. Each of these matters whether considered individually or cumulatively is susceptible to a similar analysis to the matters I have already referred to. In summary:

(a)the framework agreement including the components now complained of was put forward honestly and in good faith by the attorney for the plaintiffs in order to provide a better defined series of mechanisms for the performance of the terms;
(b)the plaintiffs relied in good faith upon the expertise of their attorney;
(c)although such an agreement was not strictly required in order to give effect to the terms, it cannot be regarded as unreasonable in principle;
(d)the specific components of the framework agreement to which objection has been taken were clearly severable from core provisions which better defined procedures for the transfer of property to which the plaintiffs were entitled;
(e)the failure to initially supply the Czech version of the framework agreement was rectifiable and was in fact rectified when complaint was made in this respect;
(f)otherwise no objection was taken contemporaneously to the specific components of the framework agreement now complained of nor to the appropriateness of a framework agreement as such;
(g)the matters complained of go to the mode of performance of the defendant’s part of the terms and were open to refinement and correction;
(h)the matters complained of do not constitute refusal by the plaintiffs to perform any part of their obligations pursuant to the terms;
(i)the matters complained of are “lawyers points” and do not in fact constitute the reasons the defendant refused to proceed with the performance of the terms.

It follows that I do not accept that the plaintiffs had engaged in repudiatory conduct as at the date the defendant received the Dresden transfer documentation and thereafter failed and refused to execute such documentation.

Further Alleged Breaches of the Terms

Although it is strictly unnecessary having regard to the conclusions I have already expressed, I shall for the sake of completeness deal in a summary fashion with the other allegations made on behalf of the plaintiffs concerning alleged breaches of the terms by the defendant.

The plaintiffs complain (ASC 22) with respect to the defendant’s appeal against the decisions of the Land Office on or about 20-23 March 2002. In my view, the appeal is not readily characterisable as a breach of the terms. It constituted an assertion by the defendant of rights to land, but such assertion was not necessarily inconsistent with a transfer to the plaintiffs of the defendant’s interest in accordance with the terms thereafter. It was not in my view a “dealing” with the land in breach of warranty 9(iii) contained in the terms as alleged in the amended statement of claim.

The plaintiffs further allege (ASC 25) that the defendant breached the terms by failing to provide title particulars of his land when requested by the plaintiffs’ solicitors. On the evidence I do not accept that it was necessary for the defendant to supply the plaintiffs with these particulars. Such particulars were ascertainable by way of search at the appropriate registry. Indeed the evidence discloses that they were obtained by the plaintiffs’ legal representatives despite the defendant’s failure to provide them. Insofar as the process of transfer may have been delayed by a failure to provide the particulars, I am not satisfied that it was materially delayed. Accordingly, it is difficult to characterise the failure to provide particulars as a failure to do something reasonably necessary to the performance of the terms.

The plaintiffs also allege that Czech law required the defendant to prepare the transfer documentation relating to his land in the Czech Republic subject to the terms (ASC 29-29A). In my view the defendant’s obligation falls to be decided by reference to the terms themselves. His obligation was to sign and give transfers. The evidence as to Czech law (including that of Mr Svoboda) does not satisfactorily establish that the defendant should be regarded as having an exclusive obligation under the law of that jurisdiction to prepare the transfers.[34] Further, he could not have done so until transferees were nominated by the plaintiffs, which it appears did not occur until Svoboda’s framework agreement was produced.
[34]Mr Hrodek said: “… it is not clear from the terms of settlement who was to prepare the first draft of the agreements or who should prepare and sign first these agreements.”

The plaintiffs allege that the defendant breached the terms by failing to execute the framework agreement (ASC 29, 37 and 39). For the reasons I have already identified I do not accept that the framework agreement constituted documentation which he was in strictness required to execute.

The plaintiffs allege (ASC 42) that the Repy land was in part “encumbered” at the date of the terms and contrary to warranty 9(ii). Warranty 9(ii) is concerned with encumbrances affecting “the properties the subject of these terms”. This may be contrasted with warranty 9(i) which relates to the defendant’s “right title and interest in the properties the subject of these terms”. Nevertheless, the warranty must sensibly be directed to land in which the defendant had or claimed an interest at the date of the settlement of the terms.

It is alleged the Repy land was encumbered by reason of the fact that it was in part subject to as yet undetermined claims for restitution or other limits upon the ownership of it, and by “certain asserted rights of possession and occupation by the presence of improvements including public buildings, roads and other infrastructure.” It is also alleged that the land at Sucha was the subject of court proceedings as the result of the transfer of some 18 hectares to a third party.

The evidence discloses that substantial parts of the 17.443 hectares at Repy referred to in the terms were affected by competing claims of third parties including, in particular, possessory claims arising from interests in development which had taken place upon the land during the period of its ownership by the State. Further, at the date of the terms the Sucha land had been in part misappropriated and was the subject of a claim for restitution on the part of the defendant which was ultimately successful.

An “encumbrance” is a burden or liability, particularly a charge or mortgage on the title to land. In my view the intention of the warranty was to exclude encumbrances constituted by in rem rights in the sense explained by Dr Mares:

16.Czech law distinguishes between the third parties’ rights which are (i) of the in rem nature and (ii) the third parties’ contractual rights. The third parties’ rights in rem are effective toward all third persons (erga omnes) and relate to the object (real estate) of the legal relationships while the contractual rights are effective only towards parties of the legal relationships (inter partes).
17.According to Czech law, all limitations of the ownership right in rem and third parties’ rights in rem related to the real estate require registration in the Real Estate Register in order to come into legal existence. Thus, if no rights in rem are registered in the Real Estate Register, it is possible to conclude that there are no existing limitations of the ownership right or third parties’ rights of the in rem nature encumbering the relevant real estate. Typical limitations or third parties’ right of the in rem nature include (i) a pre-emptive purchase right, (ii) easements and (iii) a mortgage. Generally, where there is a transfer of real estate to a new owner the in rem third parties’ rights do not cease to exist and bind the new owner as well. The rights in rem bind a purchaser irrespective of whether the purchaser is bona fide or not. Bona fide is presumed in the case of rights in rem registered in Real Estate Register.
18.Contractual third parties’ rights and limitations do not require registration in the Real Estate Register or any other publicly available register in order to come into existence. Thus, it is not possible to verify whether there are such limitations or third parties’ rights without the cooperation of the owner who would provide the legal documents establishing such contractual third parties’ rights. Contractual third parties’ rights and limitations are represented, for example, by leases (tenancy) and other rights of use, retention, contractual pre-emptive rights and agreements on the future transfer of the real estate. Depending on the nature and the contractual conditions of the individual third parties’ rights and limitations, in case of transfer of such real estate some of the contractual third parties’ rights and limitations cease to exist (i.e. do not bind the new owner) while other contractual third parties’ rights and limitations do not cease to exist (i.e. bind the new owner). Typically, the contractual pre-emptive purchase rights cease to exist while the leases (tenancy) do not cease to exist in case of transfer.

The warranty in 9(ii) is not a warranty as to ownership or entitlement to ownership. It is a warranty as to the absence of encumbrances in the above sense.

Section 4 of the Victorian Transfer of Land Act 1958 gives “encumbrance” an extended meaning embracing competing interests, claims and demands. This is not, however, its ordinary meaning, and in my view, the terms do not use the words in this extended sense.

Robinson’s Transfer of Land in Victoria[35] summarises the distinction as follows:

Encumbrance in respect of land is given an extended meaning by including an estate, interest, mortgage, charge, right, claim, or demand which is or may be had made or set up in or upon or in respect of land (s.4). Under s.57, a notice of intention to acquire by an acquiring authority whether endorsed on a certificate of title or made available under the provisions of that section is deemed to be an encumbrance for the purposes of s.42. The meaning so given is wider than given to the word for the purposes of unregistered conveyancing. The recital of seisin in a conveyance on sale is that the seller is seised of an estate free from encumbrances (or subject to the encumbrances afterwards specified (whether by way of monetary charges in the subsequent recitals or in the description of the property where existing subjective easements, leases, and restrictive covenants are incorporated by reference)).

[35](1979) Law Book Co Ltd, 190.

In the context of the terms (which included outstanding restitution claims known to the plaintiffs) it is my view that the defendant should be understood to have warranted that the land referred to in clause 1 had not been encumbered in the sense I have referred to under Czech law, but not to have warranted as to the absence of competing claims to ownership. A like view as to competing claims should, in the circumstances, be taken with respect to the Sucha land [36]
[36]There was no comparable evidence as to Slovak law bearing on the complaint made with respect to the Sucha land.

It is only if such claims had crystallised in registered interests as at the date of the terms that the land the subject of the terms could be said to be relevantly encumbered.

The Czech properties registered in the defendant’s name up to December 2005 are described in the affidavit of Dr Mares. His evidence is that none of these properties are subject to valid registered rights of the sort I have identified. This evidence is supplemented with that as to the terms of grants by the Land Office. The history of the defendant’s claims to title pursuant to the restitution laws was also explored in cross-examination.

Ultimately, however, encumbrances in the relevant sense of third party rights in rem appearing on the register at the date of settlement were not proven in respect of the land in issue. For the reason I have explained, the competing claims to proprietary interests upon which the plaintiffs rely were not in my view “encumbrances”.

The plaintiffs further allege (ASC 44) that the defendant breached the terms by failing to pay costs, taxes and expenses relating to the Dresden properties. I accept that there was a failure of the defendant to pay government charges with respect to the Dresden property incurred subsequent to the terms, even if such liability is regarded as limited to one third of such charges in proportion to the defendant’s interest in the land. Rowena gave evidence of agreement by the plaintiffs in 2001 to focus on the transfer of the properties and pursue the costs associated with Dresden after completion of such transfer. This did not constitute a waiver of the defendant’s obligation to pay. The defendant was not advised either expressly or implicitly that he was not required to honour his obligations. Moreover, although the defendant was not advised of some charges for which he was liable, there is evidence that in part such charges were the subject of direct demand from the municipal authorities to the defendant and the defendant simply refused to pay any part of them. The evidence discloses that in 2005 and 2006 the defendant received invoices for outgoings with respect to the Dresden properties. He complains that such invoices were not for one third of such outgoings. I accept the evidence of Mr Dammholz that the municipal authorities were entitled to invoice him as a joint tenant for the entire charges. I am also satisfied that the defendant deliberately failed to pay any part of such charges contrary to his obligations pursuant to the terms. Further there is no evidence of income during the latter years which ought to be set off against such sum.

It seems clear, however, that the plaintiffs had elected not to terminate the obligation to transfer land on the basis of non-payment of charges relating to the Dresden property up until well after the refusal to transfer the Dresden properties.[37] It is this refusal which I regard as the critical breach with respect to those properties.
[37]Sargent v ASL Developments Ltd (1974) 131 CLR 634 (Stephen and Mason JJ).

The plaintiffs further allege (ASC 46) that the defendant offered the property in Slovakia for sale and that such offer constituted a breach of the warranty in clause 9(3) of the agreement. I do not accept that simply to offer the land for sale would amount to a “dealing” with it in the relevant sense. There was at best an attempted dealing. Further, the offer alleged was not satisfactorily evidenced, although the defendant himself deposed to an attempted purchase by his former manager and conceded in cross-examination that his manager engaged in “negotiations” for sale on his behalf.

The plaintiffs allege that the lease of the land at Repy to one Tusjak was a dealing inconsistent with the terms (ASC 49). The evidence as to Czech law supports the conclusion that the purported lease to Tusjak was not in fact effective at law. If this conclusion is accepted (as it must be on the evidence) then it seems to me that the lease transaction was also properly characterised as an attempted dealing rather than a dealing. Further and in any event the purported lease was terminable on three months’ notice and continued an existing occupancy. It is strongly arguable that the terms were not intended to preclude dealings with the land which were not prejudicial to the interests of the plaintiffs and in this regard “otherwise than in accordance with these terms”. For these reasons I do not accept the plaintiffs should succeed on the basis of this alleged breach.

Uncertainty

The defence contends that even if breach of the terms is established, clause 6 of the terms is so uncertain as to its meaning or effect as to be void for certainty.

I do not accept this submission. There is in my view no uncertainty that the breach which I have found with respect to the transfer documentation relating to the Dresden property falls within the trigger description of “breaches any term, condition or warranty of this agreement”. Further, it is apparent that such breach was not a trivial breach but a substantial and continuing one.

It seems to me that the terms of clause 6 are plain save for the phrase “for breach of fiduciary duty in respect of each of the Properties and Interests in the Properties (as defined in the amended statement of claim) recovered or otherwise obtained by him.”

This phrase is in turn to be understood by reference to the amended statement of claim served on 19 May 2000. This statement of claim advanced claims based in part upon alleged breaches of fiduciary duty and sought inter alia equitable compensation.

Clause 6 is to be understood as requiring the payment of equitable compensation for the breaches of fiduciary duty alleged in the amended statement of claim in respect of each of the properties and interests in the properties referred to in that statement of claim and recovered or obtained by the defendant.

The relevant statement of claim alleges inter alia that in 1991 the siblings Helena, Peter and the defendant agreed that any interest in the properties identified in the statement of claim, recovered or obtained by any one or more of the siblings would be held by the relevant sibling for the benefit of himself or herself and the others in equal shares.

In consequence it is alleged the defendant has acquired properties in the course of a fiduciary relationship and subject to fiduciary duties.

Further, it is alleged he has failed to account for the shares he holds in such property for the benefit of the plaintiffs. As a result the plaintiffs have suffered loss and damage.

The final ascertainment of the relevant property recovered or obtained by the defendant as envisaged by clause 6 of the terms can and should be undertaken upon the trial of the further issues in the matter. The plaintiffs’ claim is based upon lists of property prepared by the defendant and given to his brother Peter in or about 1990. The further and better particulars delivered on behalf of the defendant make clear that he does not contend that the descriptions of property in issue cannot be given any meaning. Rather, he contends that they are susceptible of alternative meanings. The question of what precise meaning should be adopted, should be left to the further hearing of the matter. The dispute may prove to be confined upon further particularisations of the claim for equitable compensation.

Likewise, the matters properly to be taken into account in the assessment of equitable compensation for breach of fiduciary duty are also in my view matters to be ascertained upon the further hearing of the matter and cannot without further investigation be regarded as inherently incapable of proper ascertainment.

In summary, the clause will require application to the facts of the matter and its consequences will require ascertainment. It is not itself in terms, however, which prevent either sensible application to the facts or the ascertainment of its consequences. It has not been demonstrated to be void for uncertainty.

The true principle is that it is “only if the court is unable to put any definite meaning on the contract that it can be said to be uncertain”.[38]
[38]Meehan v Jones (1982) 149 CLR 571, 578 (Gibbs CJ).

The defendant has not been able to demonstrate that this is such a case, but I will reserve to him the right to reagitate the question of uncertainty (if he so desires) upon the completion of the hearing of the further evidence in the matter.

Conclusion

In summary I am of the opinion that the defendant has breached the terms in the manner I have identified.

The plaintiffs have not repudiated the terms or otherwise disentitled themselves from relying upon them.

Clause 6 of the terms is not on its face bad for uncertainty, but I reserve to the defendant the right to further contend that it is uncertain upon the further trial of the matter.

I propose to give the parties the opportunity to seek to agree to a procedural framework for the further resolution of the proceeding and to formulate the orders they seek consequential upon the above preliminary decision.

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[2008] VSC 128

24 April 2008